Your indispensable guide to Social Security

By: Elliot Raphaelson

There is no question that Social Security issues are important to the American public. It is not unusual for me to receive more than 100 responses from readers when I write a Social Security-related column.

Regular readers know that I frequently reference Andy Landis as a source. He has just updated his book, "Social Security: The Inside Story" (www.andylandis.biz), which I consider an indispensable resource on the topic. His book is up-to-date, comprehensive, well-organized and easy to understand. He provides numerous helpful examples. In each chapter, he includes Social Security references so readers can read the associated regulations that were discussed.

The book provides a useful overview of Social Security and chapters on retirement benefits, family benefits, survivor benefits, disability benefits and Medicare. There are references to available calculators for estimating your benefits, hints on effective filing, and a very important chapter on maximizing your benefits.

The chapter on maximizing Social Security benefits is particularly useful. Landis discusses the advantages of postponing filing for benefits up to age 70, which increases your benefits by 8 percent for every year you wait past full retirement age (FRA). Another advantage in doing so is that widow/widowers might be entitled to a larger benefit if you choose this option. Filing for widow/widower benefits only does not preclude filing for benefits based on your work record at a later time.

The chapter also discusses restricted application for "spousal only" payments. This option allows you to file for your spousal benefit after you reach your FRA, and then to file for your benefits based on your work record up to age 70. Unfortunately, many Social Security representatives do not understand this option. When I have written about this option, I have been amazed at the number of readers who write complaining about the ignorance of many Social Security Administration representatives.

Note that this option is available only to individuals who were born before January 2, 1954. And to qualify, your spouse would have to have already filed for his/her benefits. You must not have received a reduced retirement benefit or spousal payment before.

It would make sense to use this option only if your payment at age 70 is higher than your spousal payment at FRA. If you meet these qualifications, it can be a valuable tool.

Many of the options and tools discussed in this book will help you make the right decisions. You cannot depend on advice from SSA representatives. Many financial planners are far from experts in Social Security as well. I recommend that it is in your best interests to become an expert in Social Security before it is time to apply for benefits. Making the right decision can provide you with hundreds of thousands of additional benefits.

Many divorced individuals do not understand their Social Security options. If your previous marriage lasted at least 10 years, and you either have not remarried or remarried after age 60, you may have benefits you are not aware of. You can't depend on the SSA to inform you. For example, many individuals believe that because their ex-spouse remarried, it affects their benefits. This is false; it has no impact.

If your ex predeceases you, it is possible that you are entitled to larger benefits than you previously were receiving. For example, assume your ex worked until age 70 and was receiving $2,000 per month in Social Security benefits, and he/she died. If you are single, or remarried after age 60, you are entitled to whichever is greater, your ex-spouse's benefit or the benefit you are now receiving.

Landis' book covers this and other topics in great detail.

If you have any relatives approaching retirement age, one of the best gifts you can provide is a copy of this book. It can make their retirement much more prosperous. Making the right Social Security choices is critical. Making the wrong choices is expensive and difficult to undo.


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A retired executive of Chase Manhattan bank, Elliot Raphaelson joined The Savings Game after decades of experience as an advisor, teacher and author in the field of personal finance. His writing has appeared in The New York Times, Town & Country, Vogue, Self, Savvy and Working Woman magazines. For ten years he has worked as a certified mediator and trainer in a Florida county court.

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Elliot Raphaelson

A retired executive of Chase Manhattan Bank, Elliot Raphaelson joined The Savings Game after decades of experience as an advisor, teacher and author in the field of personal finance. He has taught courses in personal financial planning at The New School for Social Research and at the Military Academy at West Point, as well conducting seminars for Chase, Dow Jones & Co. and other corporations.

Past publications include Planning Your Financial Future (Wiley, 1982), and his writing has appeared in The New York Times, Town & Country, Vogue, Self, Savvy and Working Woman magazines. For ten years he has worked as a certified mediator and trainer in a Florida county court, where he helps resolve personal financial problems of every description.

Women & Retirement: Don't Wait, Start Saving Today

Poor and alone isn’t the retirement any of us dream about. And the following statistics conjure up some very scary images:

(Sources: Dee Lee’s Everywoman’s Money: Financial Freedom; Social Security Administration.)

  • More than 50% of all marriages fail.
  • After a divorce, the average woman sees her standard of living drop by as much as 30%.
  • The average age of widowhood is 56 years old.
  • The average woman lives to 80. (The average man, age 74.)
  • The poverty rate for elderly women is twice that of elderly men.

Fortunately, it’s never too late to start investing or to invest more!

Of course, the steps you need to take to ensure that you have enough money during retirement depend, in large measure, on your current age and situation. Here’s a breakdown of some things to consider, depending on just how long you have until retirement.

Gen X

As a group, younger women tend to be savvier than their older sisters about managing their money. And that’s a good thing because getting an early start is half the battle. During your younger years, the key is to save whatever you possibly can. That’s because the magic of compounding becomes all the more powerful the longer your time horizon. Consider this: If you save money throughout your 20s and then quit saving at 30, chances are you’ll come out dramatically ahead of someone who starts saving in their 30s and contributes for twice as long.

Baby Boomers

Perhaps, surprisingly, for a generation of women who accomplished so much in the workplace and in politics, boomer women are less in charge of their financial lives than their younger sisters.

Older baby boomers are starting to set their sights on the end of their working days. But for many women of this generation, early retirement isn’t a likely option. In fact, many will have to work longer or even take on a second job to make up for years of poor retirement savings.

Recognizing that many people are nearing retirement unprepared, the government is making it easier for them to save. Folks aged 50 or older will be able to make slightly higher contributions to their IRAs via “catch-up” contributions of up to $6,500 in 2014. Increased contributions will also be permitted in 401(k) accounts. This might not sound like a lot, but over several years, it can make a big difference.

Divorcées and Widows

One issue that can affect women of any age is divorce. When Prince Charming turns out to be more toad than prince, many women feel unprepared to manage finances on their own.

While nobody wants to assume they’ll wind up getting divorced or widowed at an early age, the fact remains that you need to take personal responsibility for making sure you have a comfortable retirement. With a bit of planning, it shouldn’t be too hard. By saving more now, you’ll free up time during retirement to focus on the things that really matter, like showing your granddaughter what being a happy old lady is all about!

So how much will you need to retire?

That depends. A quick rule of thumb is you will need 80% of your pre-retirement income in order to live comfortably. For others you’ll need more — that is, if your idea of retirement involves more than shuffleboard and a rocking chair!

Recommended reading: The Random Walk Guide To Investing by Burton G. Malkiel

The Best Ways to Prevent Identity Theft

The best way to keep an eye out for identity theft is to read your statements from credit card companies, banks and credit unions, and to routinely check your credit reports for suspicious activity.

Credit reports. You know that you need to check your credit report at least once a year! Whether you need to correct errors, make sure you are not the latest victim of identity theft, or keep closer track of your bill-paying habits, your credit report is the key to protecting the financial you.

By federal law you have free annual access to your credit report, and you can attach a “fraud alert” to your credit report as protection against identity thieves who might apply for credit using your name. You can order your report at https://www.annualcreditreport.com.

Review your free credit report from each of the three major credit bureaus: Equifax, Experian, TransUnion. If an identity thief is opening financial accounts in your name, these accounts may show up on your credit report. Look for inquiries from companies you’ve never contacted, accounts you didn’t open, and wrong amounts on your accounts. Also be sure your personal information – like your social security number, address, name or initials, and employers – are correct.

According to AnnualCreditReport.com, make sure you recognize the accounts and loans on your credit report. Then, check that the information on your credit report is correct: your name, account status (open or closed), history, etc. If you find information that you believe is not correct, contact the company that issued the account or the credit reporting company that issued the report.

For more information read this article published by Consumer Financial Protection Bureau.

Financial accounts and billing statements. Look closely for charges you did not make. Even a small charge can be a danger sign. Thieves will sometimes make a small debit against your checking account and then, if the small debit goes unnoticed, return to take much more.

Don’t ignore bills from people you don’t know. This is another potential red flag. A bill on a debt you never borrowed may be an indication that someone else has opened an account in your name. Contact the creditor to find out.

Paperwork and old files. Be sure that anything you toss in the trash or recycle bin does not contain any personal or confidential information. A quick way to prevent thieves from stealing your identity this way is to shred all documents or use one of these handy little stamps.

When it comes to identity theft, it’s true: An ounce of prevention is worth a pound of cure!

Understanding The Spousal Benefits of Social Security

by Daniel G. Mazzola, CPA, CFA

IMAGE ©  LARRYHW

IMAGE © LARRYHW

Social Security has been described as the one product all Americans buy yet none understand. Though flippant, this characterization sadly rings true. In 2012 the Social Security Administration paid benefits to over 56.3 million Americans, the overwhelming majority of whom had no idea how eligibility is determined, the manner in which payouts are calculated, or the extent to which family members may collect on the earnings record of the primary breadwinner.

Many of those eligible for social security are not aware of an interesting feature called the spousal benefit. Spousal benefits allow one spouse to collect a retirement benefit based on the working record of the other spouse, regardless of his or her own earnings history.

As an example, we will use a married couple (Mr. and Mrs. Smith) with the husband employed while the wife stays at home to maintain the household. Social Security regulations allow Mrs. Smith at full retirement age (currently 66 for those born in 1943 through1954) to receive a spousal benefit of 50% of Mr. Smith's payout, even though she has no record of employment outside the home. Had Mrs. Smith worked during her lifetime to earn enough credits for social security coverage, she would then be entitled to the greater of the spousal benefit (50% of Mr. Smith's) or one derived from her own record.

According to the Bureau of Labor Statistics, in 2012 both spouses were employed in 47.4% of American "married couple" families; this rate increases to 59.0% for "married couple with children" units.

With reductions in benefits for filing before full retirement age and delayed credits (until age 70) for applying afterward, married couples need to consider a planned strategy for collecting their social security  benefits. Strategies have been designed to assist them in maximizing social security payouts.

New Social Security rules were signed into law on November 2, 2015 which changed the right to file a restricted application for those born on or after January 2, 1954.

If you were born on or before January 1, 1954, are currently married, or are divorced and eligible for a benefit on an ex-spouses's record, once you reach full retirement age (assuming you have NOT yet claimed your benefits) you can use a restricted application to claim a spousal benefit, while letting your own benefit continue to grow.

Spousal benefits add another layer of complexity to an already challenging question: "When should someone take their social security benefits?'

There is, obviously, no one-size-fits-all answer. The many nuances of the program, combined with an individual's lifestyle, health status, and financial resources should all be considered before reaching such an important decision. Yet while perplexing, social security is too important a topic not to educate oneself and become cognizant of the varied features and options.

As Americans, we pay for social security retirement benefits in the form of payroll taxes remitted through a lifetime of working. It would be imprudent not to take full advantage of all it has to offer.

Take Steps to Protect Yourself from Credit Fraud

by Stacy Francis, CFP®, CDFA

The FTC says that the average victim of identity theft is unaware of the problem for 12 months. You don't want to let 12 months go by before finding that you're a victim. Follow these top tips to protect yourself from credit fraud.

  • Reduce the number of cards you carry in your wallet; just one or two are sufficient for everyday use. Keep your others at home. This practice minimizes the amount of information a thief can steal.
  • Make sure you keep as little personal information in your wallet as possible. Don't carry your Social Security card, birth certificate or passport with you on a routine basis.
  • Install a lockable mailbox at your residence to reduce mail theft.
  • Make photocopies of all of your credit cards, including account numbers, expiration dates, and issuer phone numbers, so that you can notify creditors quickly in case of theft or loss.
  • Sign any new cards as soon as you receive them. Don’t give a thief the possibility of putting their John Hancock on your card.
  • If a credit card bill is late, call the card issuer's customer service number immediately. This is one of the first signs that your credit card number has been stolen.
  • Review your statements carefully each month to make sure all charges are accurate.
  • Never leave your purse or wallet unattended at work or in church, restaurants, health fitness clubs, parties, or shopping carts. Never leave your purse or wallet in open view in your car, even when your car is locked.
  • Never give anyone a card number or other personal information over the telephone even if you made the call, unless you can positively verify that the call is legitimate.
  • Memorize your passwords and personal identification numbers (PINs) so you do not have to write them down. Be aware of your surroundings to make sure no one is watching you input your PIN.
  • Buy a shredder. For only $30 you can have the piece of mind that your credit card information will not get in the wrong hands. Shred pre-approved credit card offers, credit card receipts, copies of airline tickets, travel itineraries, and anything else that displays your credit card information before putting them in the trash.
  • Check your credit report at least once a year. Request your free credit report online or by calling 1-877-322-8228. You can also contact any of the following “big three” credit reporting agencies: Equifax, Experian, or TransUnion.
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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.

Stop Flirting With Disaster

by Stacy Francis, CFP®, CDFA

Nobody likes (or needs) to spend much time thinking about a possible future disaster. But sometimes an ounce of prevention is worth a lot more than a pound of cure. Losing precious documents to disasters such as theft, fire, earthquake or flood can cost you countless hours and thousands of dollars as you try to restore them. Buying a fireproof safe will set you back about $100. You decide.

Savvy Ladies' Tip: Buy a fireproof safe online (Google “fireproof safe”) and have it delivered right to your doorstep. Then store these documents inside:

• Birth certificates, marriage certificate, divorce papers • Passports • Social Security cards • Title to your home (the deed) • Title to your car (the pink slip) • Will, trust, and power of attorney • Advance directives (living will, health care) • Insurance policies (car, home, long-term care) • Stocks and bond certificates • Photographs of your possessions (for insurance purposes)

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Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.