Basics on Social Security:
For clients of all ages questions about Social
Security always come up during the planning process.
Here is a quick review of the basics:
your earnings up to $97,500 are taxed for social
security. If you are salaried you pay 6.2% and
your employer pays 6.2%. If you are self-employed
you pay 12.4%
SS taxes stop at $97,500 of income, Medicare
taxes have no earnings limit. They are currently
1.45% for you and 1.45% for your employer
question I most often get is "will benefits
be around when I retire?". Currently there
are 3.3 workers for each SS Beneficiary, by
2032 it is projected to be only 2.1 workers
per beneficiary. At the current rate the scenario
doesn't look good. My guess is that to compensate
for this shortfall of funding the government
will eliminate the earnings cap for the social
security tax. That at least seems to be the
latest talk in Washington as a way to save the
Basics on SS Benefits:
monthly benefits are based on your PIA (Primary
Insurance Amount). This is the amount you would
recieve if you retired at full retirement age.
qualify qualify for benefits you must be fully
insured: you must have earned 40 credits which
is equal to about 10 years of work.
working Spousal Benefits: at full retirement
age eligible for 50% of other spouses PIA. At
age 62 early spousal benefits would equal approximately
32 to 35% of PIA.
Spouse: eligible for higher of own PIA or the
benefit mentioned above depending on retirement
age. This can be affected by eligibility for
coverage or Gov pension offset.
benefits early or not? If you wait to take benefits
at full retirement age it will take an estimated
11 years to come out ahead of taking the benefits
early. This comes down to a decision on working
you have claimed early benefits the earnings
limit is $12,960 for 2007 up to the year you
reach full retirement age. If you earn more
you will see a reduction in SS benefits = to
$1 for every $2 you earn over the limit.
you attain full retirement age in 2007 (65 +
10 mos) your earnings limit is $34,440 (if you
are receiving benefits). After this age there
is no earnings limit while receiving social
at 65. Diverges from SS Full Retirement Age
A (Hospital Insurance) is financed through payroll
taxes and is usually premium free.
B (Medical Insurance) has monthly charge, generally
$93.50/month. May be higher depending on income.
D (prescriptions) generally about $24/month.
Enrollment dates are Nov 15th to Dec 31 each
a lot to think about!
Social Security + Medicare + Retirement is a challenge.
Having a comprehensive retirement planning strategy
can take the guesswork out of it.
is up and there are a lot of forces at work in
the market. I have my own personal opinions about
the underlying problems, but the only thing that
matters is taking an objective look at where we
may be headed. It's looking like gains are going
to be more challenging to come by. We are paying
the price of a debt financed economy that may
take awhile to work through. The good news is
the market is still hanging tough despite all
the negative news. The disconcerning news is all
the potential unknowns.
Diversification is the only way to play this market.
It should be interesting through the end of the