Social Security

Working Until 70

June 11, 2018 By Twila Van Leer

Used to be that 65 was the age workers expected to retire. Social Security and Medicare kicked in then and there wasn’t much reason to work beyond that benchmark.

Things have changed. Many employers have stopped offering retirement pensions and tacking on more working years may significantly improve a worker’s income from Social Security. People are living longer and many workers actually want to continue being actively engaged beyond 65.

People who research such things have concluded that working beyond 65 is a good idea for many people.

There are things you need to know when looking at the issue for yourself. One is the RMD – the Required Minimum Distribution that the IRS requires you to draw from a 401(k) or IRA. After the reach 70.5 years of age, the RMD becomes effective. The money you have access to is dubbed “Spend Safely in Retirement Strategy.” While it doesn’t make up for the savings you have failed to accumulate, it helps your overall income picture.

As many as half of all pending retirees benefit from this method of creating a steady income stream.

American workers typically retire at 63 and begin collecting Social Security between ages 62 and 64. For typical retirees, SS payments represent about two-thirds of their retirement income. If they wait until they are 70 to start drawing the federal money, it can represent up to 85 percent of their income.

If working fulltime until 70 isn’t an appealing thought, some people opt for working “just enough” to get them by while postponing their SS payments until they are 70, when SS benefits peak.

Given all these factors, 70 has become the new 65, personal finance experts agree. People today expect more than a subsistence situation when they retire and they can considerably enrich their retirement by waiting.

Statistics show that the number of over-65 workers is increasing. Those working or looking for work represented 10,8 percent of the workforce in 1985. As of March this year, the figure was 19.5 percent. And surveys among workers indicate that the figure will continue to rise.

Medicare Fraud Over $60 Billion

June 29, 2016 By Twila Van Leer

Medicare fraud caused over $60 billion in fraud every year. — Medicare loses over $60 billion in fraud every year.

Medicare Fraud Extensive

Medicare fraud is a huge problem. Thousands of older Americans depend on Medicare to help them meet medical expenses, but fraudsters are taking a big scoop from the federal funds before they get to legitimate health care providers, a recent article in the AARP Bulletin says.

Medicare Fraud Causes Multi-billion Dollar Losses

Medicare fraud is estimated to cause more than $60 billion per year. In one very infamous case, a Texas thief methodically siphoned some $375 million from the fund over a five-year period, using a variety of methods. That man now faces life in prison, but the heavy toll taken by unscrupulous people continues to scrape billions from the heath care program.

Fraud Tactics

Fraud and abuse involves such tactics as phantom outpatients, “ghost” clinics, undelivered services, over-billing and identity theft using Medicare information, the AARP reported. The problem is so large the program’s administrators don’t even have a reliable bottom line or a methodology for arriving at the fraud rate. Many experts believe the $60 billion estimate may be too low. They say that fraud could suck off up to 30 percent of the $600 billion per year the program spends.

Large Size Opens Door To Fraud

The problem lies partly in the sheer size of the program, according to Shantanu Agrawal, who is quoted in the AARP article, He is director of program integrity at the Centers for Medicare and Medicaid Services (CMS). He points out the number of claims made every day in the huge system – some 4.5 million. More than a billion dollars are paid out every day.

That volume inherently opens the door to fraud, he said. “We are larger than the largest private payers in the country.” In addition, Medicare is a much more open system than the majority of private payers. Laws required that Medicare admit providers who meet a base set of requirements. They are then allowed to treat patients and bill for those services.

Pre-paying

CMS is trying several methods to ferret out fraud. One approach is by making provider reviews on a pre-pay basis, withholding payment until the applicant has been approved. The agency has made tens of thousands of site visits over the past two years in an effort to close down “false storefronts.” Working with private payers by exchanging data that may identify irregularities has saved the program hundreds of millions, Agrawal said.

Identifying Fake Doctors

The agency also has been more successful in identifying fake doctors. New tools provided by the Affordable Care Act make inroads into the number of unlicensed fraudulent providers. Connections have been made among more than 100 different databases on the state and federal levels. More than 500,000 providers have been removed from the billing system through this effort, he said.

Effects On Medical Research

It is not only patients and legitimate health care providers who suffer from Medicare fraud, experts point out. Medical research that relies on billing data, hospital rankings and cancer studies can be skewed by fraudulent reporting. In some instances, patient deaths have been attributed to fraudulent care.

Legitimate providers are increasingly blowing the whistle on those that they are aware are scamming the system., but they take a risk of repercussions if a case goes against their charges.

Under pressure from critics, program administrators are tightening their oversight, but the challenge is huge and growing.

Retirement Plans Are Not Always Available

June 22, 2016 By Twila Van Leer

Many employees don't have access to a company retirement plan. — Many employees don’t have access to a company retirement plan.

Retirement systems in America are not always available to people. The The Pew Charitable Trusts is an organization that helps states and cities to design
retirement systems that are affordable. They have conducted a study that identified areas of the country that have the most access to retirement plans. The results revealed that access varies more among the nation’s metropolitan areas than across states as a whole.

For instance, workers in Grand Rapids, Mich. had the greatest rates of access, at 71 percent and those in McAllen, Tex., the lowest at 23 percent, the Pew study showed in a comparison of 104 metropolitan areas. Overall, the nationwide percentage of workers who had access to a plan was 58.

Fewer Employers Offer Retirement Pensions

With fewer companies offering standard retirement pensions, the importance of a workplace retirement plan is increasingly important to those looking at retirement. Workers are looking more to a 401(k) or other option to help them supplement their anticipated Social Security.

Retirement savings plans offered by employees give people the ability to save for retirement.

Even so, 40 percent of full-time private sector employees say they don’t have access to an employer-supported plan. Local governments look at the reality and are concerned that helping retirees to survive financially may come home to roost with them. Policy questions are on local agendas and state agendas as officials look at the possibility of stresses on such programs as Medicaid, food assistance and other support systems.

State-run Savings Plan

Illinois has enacted a state-run retirement savings plan for some workers who have no workplace access. The plan will go into operation in 2017.

Federal Government Concerns

The federal government has concerns as well, particularly as the long-range health of Social Security is in question. Several policies to encourage savings have been instituted, including the Pension Protection Act of 2006, which enabled prospective retirees to make automatic contributions to a 401(k) plan.

myRA

President Obama created myRA, to assist people who don’t have access to a company retirement plan so they can save individually. myRAs will be invested solely in government bonds and will be backed by the U.S. government.

Pew found that the Northeast, Upper Midwest and Pacific Northwest regions of the country have the highest rates of worker access to retirement savings plans, while the areas with the lowest rates are in the South and parts of the West.

When To Begin Social Security

June 9, 2016 By Twila Van Leer

A growing number of Americans are starting to withdraw Social Security benefits before reaching full retirement age, according to a research poll conducted by Associated Press and the NORC Center for Public Affairs and reported by the AP.

Forty-four percent of those polled said they will look to Social Security for their main means of financial support after retirement and they will start collecting before they reach 65 or 66, the benchmark for receiving full benefits.

Benefits Reduced If Collect Early

Social Security regulations allow retirees who were born in the period from 1943 and 1954 to begin collecting as early as 62 years of age, but the benefit is reduced by up to 30 percent. That can have a significant effect on the long-term benefit.

Retirees who wait until they over 66 years of age see considerable increases in their monthly benefit, according to experts at the AARP Public Policy Institute. For each additional year past 66, the amount of retirement pay rises by 8 percent. The benefits top out at age 70, at which time the retiree is receiving the maximum amount.

Individual Circumstances Affect Retirement Decisions

But many Americans can’t or don’t want to wait that long to begin collecting, depending on their individual circumstances. Health and other considerations may weigh heavily in decisions to retire. Some people who lose their employment while approaching retirement are not able to get another job and early withdrawal of Social Security funds is a necessary option.

Social Security Main Source Of Income

Social Security is becoming more and more the main source of anticipated income for the retirement crowd. Fewer companies are offering standard retirement plans, opting to offer employees 401(k) and other plans to provide for their old age years. Only 43 percent of those polled said they are expecting a traditional pension.

Supplementing Social Security

Some workers, about 50 percent, reported that they also have other padding, such as a regular savings or IRA account, but some Social Security is by far the most commonly anticipated source, the survey found. Some 86 percent of those polled said they expect Social Security to contribute to their retirement income.

Retirement Age Rising

The average retirement age has been rising, as more Americans, particularly women, see the necessity for working longer to make retirement affordable. The average age for males is 64, and 62 for females. Compared with other countries, the American retirement ages still are relatively young.

Many factors enter into the retirement decision, including life expectancy data that show there are differences between rich and poor and among ethnic groups.

Questions about the solvency of the country’s most–drawn on retirement finance source have been a troubling aspect of the issue for some time. Since 1984, the program’s trust fund has run a surplus, but that is expected to end by around 2020 when the Baby Boomer generation hits the retirement ranks. The Social Security Administration believes interest income from the fund should be able to handle the increase until 2034, but at that point, the possibility of shrinkage in benefits could become a reality unless the issues are addressed. The matter is part of the current presidential debates taking place before the November elections. Democratic front-runner Hillary Clinton sees a need for expansion of the program, while likely Republican candidate Donald Trump has declared it should not be changed.

Getting The Most Out Of Social Security

October 23, 2015 By Twila Van Leer

For many Americans, Social Security benefits will be the mainstay of their retirement income. There are things you should know that will maximize the benefit and enhance your retirement years.

Remember that you can apply for benefits based on your own lifetime earnings or those of a living spouse, but not both. Survivor benefits are payable after the death of the spouse. The program automatically gives you the largest benefit among these options. Children are eligible for benefits, too.

Consider the age at which you want to start collecting benefits. It makes a difference in the amount you will receive. If you file before “normal retirement age” the monthly amount is decreased for life. Normal retirement age at present is 66 if you were born in 1954 or earlier and through 1960. The target age is 67 for those born in 1960 or later. There is a great financial advantage if you can delay collecting your benefits until you are 70. At that point, the monthly benefit increases by 8 percent for every year past the “normal” retirement age.

If you make a claim based on spousal benefits and later want to switch to benefits based on your own earnings, you can do so. But you must have reached your full retirement age. For instance, you may want to collect a spousal benefit from 66 to 70, then switch to personal benefits, which will have grown over those years. However, if you file before you reach regular retirement age, the program will give you the higher amount of the spousal benefit or your own, but not both.

For married couples, a wife might retire early and receive a reduced benefit. Then, when the husband reaches normal retirement age, he can file for spousal benefits for her. Then if he waits until 70 to receive his own full benefit, they have a combination of higher benefits. Before taking steps, consider your relative ages and who earned the most.

If you are divorced, you can claim spousal and survivor benefits on your ex’s earnings if you were married at least 10 years and are not currently married. After age 60, if you remarry, you can keep the survivor benefit.

If the spouse dies you can collect the larger survivor’s benefit. The amount will be larger if you can delay the request until normal retirement age. If you have significant Social Security earnings of your own, it may be wise to take the survivor’s benefit early and put off collecting on your benefits until later. Play with the numbers and get advice from an expert if you have doubts.

You can contact the Social Security Administration at ssa.gov, 800-772-1213. The AARP offers information by visiting aarp.org/sscalculator. A number of books giving detailed information and formulas can be found in a local library or at book stores.