Notes on Social Security
The Federal Trade Commission (FTC) reports that Social Security beneficiaries have lost $6.7 million in two months resulting from a new, highly effective scam. This is how it works: Someone calls you and says they are with the Social Security Administration (SSA), stating they regret to inform you that your Social Security payments have been suspended due to suspicious activity, or they claim you’ve been involved in a crime. Oddly enough, they then ask you to pay them money — preferably by gift card!1
Apparently, scammers like gift cards because they can use the money quickly with no paper trail. This may sound like an obvious ploy, but bear in mind that it is a widely successful scam. Those in retirement become understandably concerned when one of their primary sources of income is threatened. Be aware, however, that the SSA would never call and threaten to stop paying your benefits or ask you for money, and certainly not ask to be paid by gift card.2
The instinct to be alarmed when our income is threatened is perfectly natural. One way to help avoid this feeling is to develop multiple streams of income as part of your retirement income planning process. In addition to Social Security, you can develop a secondary income stream by repositioning assets into a guaranteed level of lifetime income through the use of an annuity. If you’d like to learn more, please give us a call.
Another question near-retirees often ponder is whether to start drawing Social Security benefits early in the process or wait and let them accrue. Often times, retirees are better off delaying benefits as long as possible. One exception may be if you are in poor health. If you are diagnosed with a terminal illness with a limited life expectancy, it may be prudent to start taking benefits. However, consider whether or not you really need the income and how much your spouse may receive once you’re deceased. In other words, it may be worth delaying benefits to increase the amount your spouse receives if you don’t actually need the money right away.3
Some individuals retire and then decide retirement is just not for them. In fact, more than 50 percent of people nearing retirement say they expect to re-enter the workforce at some point after they retire. This phenomenon has been dubbed “unretirement,” taking its cue from Millennials who enjoy jumping in and out the workforce.4
The SSA will even let you pay back your benefits so they can accrue longer if you decide to go back to work within 12 months of applying for them. You must be under age 70, submit the appropriate form and pay back all benefits to date. You can reapply later and enjoy a higher benefit just as if you’re drawing it for the first time.5
In regard to how well SSA funds are holding up, there’s a new concern stemming from the current administration’s immigration policy. Unauthorized workers paid about $12 billion in tax revenues for Social Security in 2010 alone.6
According to Alan Greenspan, former chairman of the Federal Reserve, immigrants have been contributors to our Social Security, Medicare and Medicaid programs for as long as they’ve been in place. If the workforce is reduced due to a cutback in immigration — whether documented or undocumented — taxpayers may end up footing the bill. With America’s population aging quickly and fewer workers entering the job market, there is a drag on investment, growth and payroll tax revenues. If we continue down this current path, Greenspan says, Social Security benefits will need to be cut by as much as 24% in the future, or taxes will have to be raised.7
1 Katie Pelton. KKTV News. April 15, 2019. “Voice of the consumer: Social Security scam reports skyrocketing.” https://www.kktv.com/content/news/Voice-of-the-consumer-Social-Security-scam-reports-skyrocketing-508588551.html. Accessed April 15, 2019.
3 Liz Weston. Los Angeles Times. April 14, 2019. “Don’t make this Social Security mistake when planning retirement.” https://www.latimes.com/business/la-fi-money-talk-social-security-delay-20190414-story.html. Accessed April 15, 2019.
4 Kimberly Anne Smith. Bankrate.com. April 12, 2019. “How ‘unretiring’ to go back to work can affect your Social Security benefits.” https://www.bankrate.com/retirement/social-security-benefits-affected-unretiring-work/. Accessed April 15, 2019.
6 Catherine E. Shoichet. CNN. April 15, 2019. “Undocumented immigrants are paying their taxes today, too.” https://www.cnn.com/2019/04/15/us/taxes-undocumented-immigrants/index.html. Accessed April 15, 2019.
7 Insurance News Net. April 2019. “Ex-Fed Boss Greenspan Urges More Immigration And Less Social Security.” https://insurancenewsnet.com/oarticle/ex-fed-boss-greenspan-urges-more-immigration-and-less-social-security#.XLUt8y-ZNAY. Accessed April 15, 2019.
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Annuities are insurance contracts designed for retirement or other long-term needs. They provide guarantees of principal and credited interest, subject to surrender charges. Annuity guarantees and protections are backed by the financial strength and claims-paying ability of the issuing insurance carrier.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
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