Concerns about the health of Social Security have been voiced since the program’s first days of existence. Policy debates center on how much revenue the payroll taxes generate and whether or not this revenue can match the expected outflows of the program. Other debates involve which inflation measure is the best one to use for indexing benefits. This debate usually includes a trick to slow the spending by using an inflation index that is lower than the Consumer Price Index. Lost in most discussions of Social Security is the large impact this program has on the US economy. Many senior citizens rely solely on Social Security to fund their retirement. The US economy actually relies on Social Security as a major component of consumer spending. Most economists estimate that consumer spending ...

Recently, the Demand Institute division of the U.S. Conference Board released a study called “The Shifting Nature of U.S. Housing Demand: The U.S. housing market is growing again – but not as we knew it.”  Among the broad conclusions are that rentals will be more popular, homes will be smaller, and most Americans still view home ownership as a good investment in their future. The study’s findings not a total surprise Increased demand for rentals is not a surprising result. Many homeowners who lost their houses to foreclosure will be forced to rent as they rebuild their credit. In addition, young adults have traditionally rented while saving for a down payment. In the real estate boom, some bought without down payments, sure; but new lending standards are requiring almost every...

As everyone knows, this is an election year. Although many analysts on cable news networks, Sunday morning talks shows and in major newspapers claim to know who will win in November, the reality is that no one knows. Anything can happen on the long road leading up the elections. We do know one thing, however: in years when an election is hard-fought, politicians seem to believe that fear sells best. That means politicians from both parties will highlight the stress the federal government’s budget faces, and Social Security will be the centerpiece of that debate. Some politicians will question the long-term sustainability of Social Security, pointing out that the trust fund is expected to run out of money at some point in the future. This is all based on projections and estimates. The tru...

Social Security benefits vary based on when you start taking them. You are eligible for full benefits at your full retirement age (which will be between 65 and 67 depending on when you were born). You can start taking benefits earlier than that, but beware that the monthly payment may be up to 20 percent lower if you do. Delaying benefits results in an increase in the amount you receive every month. In case those rules aren’t complex enough, married couples have additional choices which offer their own set of penalties and benefits. A spouse is eligible to receive half of their spouse’s benefit level. Assuming the wife earns more, if the husband in this example is able to receive $750 a month but his wife’s benefits total $2,000 a month, filing for the spousal benefit would increase ...

A recently issued report highlighted the growing problem of poverty among senior citizens. The Employee Benefit Research Institute (EBRI) provided a detailed look at poverty rates among people who are at least 50 years old. The changes in those rates from 2001 to 2009 are surprising. Among those aged 50 to 64, poverty increased from 9.1 percent in 2001 to 12.3 percent in 2009. This is the time when many are getting serious about retirement planning and if one in eight people of this age are facing poverty, they will be unable to prepare for a secure retirement. The impact of Social Security benefits seems to help those who do retire to meet minimal financial concerns. The poverty rate among those who are between the ages of 65 to 74 also rose over that time frame, from 8.4 percent to 9.4 p...

The best time to start taking Social Security benefits is one of those questions with no right answer. Even if you can do the difficult math required to understand the differences between the net present values of all available options, you can not predict accurately how long you will receive the benefits. Social Security offers some level of inflation-protected income for life, but no one truly knows how long they will live. That makes even the most complex calculations only an estimate of what is really best, and then your specific circumstances could change everything. Is there a benefit to delaying your Social Security benefits? According to a recent article in The Wall Street Journal, if you are healthy, you can enjoy a large benefit from delaying the start of your benefits. In “How...

Planning for retirement includes a great deal of thought about Social Security, especially the question of when to begin taking Social Security benefits. Accepting benefits early can allow you to start enjoying retiring sooner but that decision comes with a price. Delaying benefits, on the other hand, can be financially rewarding in the long-term, and the amount of the monthly benefit can increase about 8 percent for each year you continue working. Although you might be able to start receiving benefits when you are 62, that increase could make a delay worth considering. So when is the best time to start drawing Social Security? Ultimately, when to start receiving benefits is a complex decision and the right answer for you depends upon a number of personal factors. One of the most important...

It is often said that there only two things that can’t be avoided in life – death and taxes. By taking care of ourselves, we seek to put the first one off as long as possible. But for the latter, we face taxes every day and at least once a year, submit forms to the IRS in the painful process of filing our income taxes. Almost everyone is completely honest when doing their taxes because the large penalties for cheating far outweigh the small potential for gains. However, sometimes we can make mistakes and those who have ended up communicating with the IRS to fix an error would usually rather never to do that again. The fact that the IRS is so tough to work with makes identify theft even more painful if the identify thief uses your personal information to claim an illegal tax refund. And...

Your full retirement age is somewhere between 65 and 67 for determining when you are eligible to begin receiving Social Security benefits. Those benefits can be started early or late, depending upon your personal circumstances. A delay could have some financial advantages. If you were born after 1943, each year you delay starting your benefits adds 8 percent to the monthly benefit payment. For those born earlier than that, each year adds at least 7 percent to your benefit payment. Increases are calculated monthly so delaying for as little as one month beyond your full retirement age will increase the benefit you receive. In deciding when to start taking benefits, one problem that you may face is that you need monthly income to meet your living expenses. Job losses make early benefits very ...

Youth is wasted on the young, according to the Irish playwright George Bernard Shaw. His wisdom can be applied just as easily to retirement. Many people wait too long to retire, working until the time their bodies wear out and missing out on the potential enjoyment of their golden years. That’s why it’s unfortunate to see a trend towards delayed retirements. Since the middle of the 1990s, the average retirement age has risen by two years, from 62 to 64 for men, and from 60 to 62 for women, according to a recent study done by the Center for Retirement Research at Boston College. Their analysis used data compiled by the US Census Bureau. Why have seniors been retiring later in life? Researchers noted that the trend toward later retirement was driven by several factors. In some ca...