Take the Social Security Quiz!




Social Security Benefits Can Be Garnished to Pay Student Loans


Did you know that if you don’t pay your student loans on time, the EDUCATION DEPARTMENT can garnish your Social Security benefits?

“n the 2015 fiscal year, according to the Government Accountability Office, the government garnished the Social Security benefits of almost 114,000 student loan borrowers over 50 years old, reducing their benefits, on average, by more than $140 per month.”

That is wrong on so many levels. Having the Education Department take your retirement benefits paid for by the Social Security Administration. And guess what? You can’t discharge student loan debt in bankruptcy!

Oh, but you think this can’t affect many people? Think again.

“Americans over 60 years old are the fastest-growing category of student loan borrowers, having roughly quadrupled in number between 2005 and 2015…”

Not only are older Americans the fastest growing group of student loan borrowers and they “account for just a sliver of the more than $1.5 trillion in total outstanding student loan debt they’re more likely than younger borrowers to be behind on payments.”

This is bad, folks. Very bad. Growing debt levels hurt your retirement flexibility. And what exactly are you borrowing for to begin with? To help little Johnnie? Don’t do that. Please.

Let him go to community college for two years first, to prove he’s up for the task of attending university.

If he can’t get out of community college with shining colors, you certainly don’t want to risk you retirement on a 4 yr school.

Think long and hard before you go into debt for student loans for any reason!


Why Judy Pays $9,623 in Tax and Jane Pays 0 on $80,000

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This is the chapter where we show you the insane consequence of IRA distributions and how it can lead to a doubling, tripling even quadrupling of your taxes.

We use Judy as the example. She is in the 22% tax bracket. But pays 32% MORE in taxes on an IRA distribution. How could this be?

Well, welcome to the insanity of the tax code, my friends. For middle and lower income taxpayers the tax code is absolutely stacked against you when it comes to IRAs.

Here’s why. For every $1 extra dollar you take out in IRAs you are not only adding that $1 extra dollar to your taxable income, you are also adding an extra 85 cents of income because of your Social Security benefits.

In real numbers, an extra $1 actually increases your taxable income by $1.85. And that is how someone in the 22% bracket pays 32%, or more, in taxes on IRA distributions.

Crazy isn’t it??? This is why I focus so heavily on provisional income. Because once you go over a certain provision, not only will your actual income be taxed but your Social Security will be as well. Again, $1 IRA distribution means you have $1 more as income plus 85cents of your Social Security will now be subject to taxes too.

Oh, it even gets worse. That extra $1 of IRA distribution could also increase your Medicare premiums AND make you pay tax on your dividends and capital gains, whereas before they were tax free.

$1 in extra income can hit you in 4 different places for increase taxes and premiums!

But hey, Congress will fix it, right? This can’t be allowed. Yeah, keep thinking that. Congress will do the least amount of work to raise the most revenue for the government as they can.

As long as people don’t gripe about the insanity of the tax code, Congress won’t act.

WHy don’t people gripe, you may be wondering? Because they don’t know what is going on. I didn’t know what was going on, myself, until some insurance agent told me back in 2011.

Frankly, I thought he was full of it but he insisted. So, I did some research and couldn’t’ believe it. He was right! But very few people were talking about this, even the professional tax people I follow.

Hardly anyone understood the ramifications. And thus the taxpayer didn’t either.

This is why I wanted to write this book to begin with, to be a Paul Revere of sorts about how the tax man is coming and he doesn’t play fair. He relies on your ignorance to take more of your money.

The fact you are here, reading and watching this though means you can no longer claim ignorance. Now you need to do something. and that is tell others.

Avoid the quadruple tax!



Big Social Security COLA Coming For 2019???

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Well this could be good news.

The folks over at the fool.com are giving us reasons to think that the Social Security Cost of Living Adjustment for 2019 could be the largest since 2012.

Given what I posted two days ago on how inflation is destroying Social Security beneficiaries purchasing power, a 3% or more COLA is long coming.

We’ll see if it comes to fruition. But, as the fool points out, it looks pretty set.

The problem with Social Security adjustments is that it’s based on the CPI-W which is more an analysis of cost increases for working people, not retirees. So, things a retiree may be affected by may be counted less in the CPI numbers than what affects a worker.

Energy, for instance, represents less than 5% of the CPI-W. Does the average retiree have a larger energy expense? How about health care? etc.

Until the COLA adjustment is made more geared towards retirees there is nothing we can do other than be happy when a larger COLA comes down the pike, like seems will happen next year.  We shall see.


Social Security Survivor Benefits Vs. Own

A Plan For Widow(er)s


My wife is 4 years younger than me. Thus, it’s easy to predict she will survive me. I’m a man and older.  Go to a nursing home and look around, not many men.

She needs to have a plan for when I’m gone.  And this is something I think about..a lot.

Where does a widow go for proper guidance? The Social Security Administration?   Well, unless you’re new to my email list, you’ll know how I feel about that.  Just watch this video from my Youtube channel on how the Social Security Administration CONTINUES to shortchange widows even though they’ve been informed about what they’re doing for years!

In fact, one of my friends just asked me a question this morning about a strategy for taking her OWN benefit vs. her SURVIVOR benefit.  So, as I typically do, I go to my go-to person on all things Social Security, Elaine Floyd, and read her posts. Thousands upon thousands of answers Elaine provides to financial advisors.  (I’m interviewing Elaine for my podcast in September, by the way. I’ll keep you posted.)

“Widow client, just turned 62, wants to file early on her own record and restrict her application to allow her Survivor benefit under her husband’s record to grow to her her FRA. When she went to the SS office the associate told her that if she filed early for hers it would “freeze” her Survivor benefit and she wouldn’t be able to get the full amount at her FRA.

Did she just receive bad info from the SS office or is there something that I’m missing?”

Elaine’s response:
“She got wrong information from SSA. Survivor benefits are not included in deemed filing. She should go ahead and file for her own retirement benefit.”

If I told  you how many times I’ve heard,read and been told “She got wrong information from SSA…”  you’d never talk to me again, because I’d do ALL the talking!

By the way, notice the word “she” in Elaine’s answer.  Very rarely do I hear “He got wrong information from the SSA.” Why? Because generally the man files his benefits under normal conditions and dies before his wife does. For the man there are not many rules to contend with. Pretty simple.  (Truly, it shouldn’t be, but if you’re dead set on filing at 62, you don’t have much planning to do.)  It’s the surviving wife who’s left to figure things out.

So, what’s the point of this email?

Simple. Understand the difference between your OWN benefits, your Spousal Benefits and your SURVIVOR benefits!

The rules have changed for your benefits and your spousal benefits due to the bipartisan legislation signed in 2015 by President Obama.   The rules have NOT changed for SURVIVOR benefits though.

This mean if you are a widow you can take your own benefit early.  That is the benefit you earned by your own work history. This benefit will be reduced, but come your Full Retirement Age (FRA) you can switch out to your SURVIVOR benefit which is not reduced. My friend is considering this exact option as we speak and our discussion is what prompted me to write this email.

Her reduced benefit on her own record is $1100 a month but her SURVIVOR benefit will be $2300 a month at her FRA, at 66. If she so chooses, she can get her own benefit now and then in 4 short years get more than double by switching to her SURVIVOR benefit!

Yet, the good folks at the SSA will most likely say “just get your survivor benefit now, because it’ll pay more.” And that is correct. It will pay more NOW, but much, much less in the future.  They are trained to maximize your benefits for today, not for the future.

If she took her Survivor Benefit now it would be around 80% of that $2300, or $1840, and she’ll NEVER get any of her own benefit at all.  So if she sacrifices $700 a month for 4 years because she’s taking a reduced benefit off her own record, she’ll be in a much stronger financial position. Given she’s in good health, she’s going to be around for quite some time. And we don’t want her eating Ramen Noodles at 82!

I have a ton of  videos on my Youtube channel that talks about this.   Here is the playlist just for Social Security Planning. I invite you to visit the channel.  In fact I encourage it. You can see all the comments on there from people about their own planning, maybe people in a similar circumstance as you.

Please have a plan for your surviving spouse.  Put something together so she can at least have one less hurdle to jump when she is on her own.

Why You Should NOT Rely Solely On Financial Planning Software

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Time For A Social Security Quiz…

Fun right? But read on, this is going to be incredibly important for you. 

When I was running an analysis on cash flow in retirement for a client, we’ll call them Bob and Jane, I noticed something horrific.  See below if you can identify what is wrong. 
Here’s a hint. Bob is the higher earner and in this scenario we have him dying at the age of 80. 

Anything jump out at you?

Well if you notice in the year after Bob dies, Jane’s Social Security is only $20,173.   Of course, if you’ve been following my emails and/or blogs you’ll know that Jane will actually receive the greater of her own benefit or what Bob was receiving at his death.

In this case Bob was receiving around $46,000 in Social Security benefits.  Yet, the software has Jane only retaining her own benefit.  This is a $26k mistake, made annually.  And as much as I wish it so, this is NOT user error.  This is a programming error.  The developers simply do not understand how Social Security works well enough to program the correct information.

This program also has Bob and Jane paying tax in GA even though they certainly will not given their total income.

Unfortunately, in the 20+ years I’ve been a professional financial planner, this is not an exception to the rule.  It is the rule. Just last night, I was looking at a different program because I’m very familiar with the  retirement planning professional this software group retained on their staff. Their Social Security models have issues too.

I’ve seen another software program run retirement scenarios where the retiree has a 100% success rate even though the retiree doesn’t have enough money to pay off his debts.  How can this be? Well if the investment return assumptions are 6.5% for a conservative portfolio we can make a lot of retirements look great, on a computer.

I’ve had other programs say a retiree needs $4 million to retire. When in fact, they probably need all of $800k or so.

At the end of the day, software is, and will forever be, junk in, junk out.

So, what does this mean for you? Well, you need to be careful with your software-generated retirement plan.  Make sure the numbers are legit.  Ask questions.  Make sure your planner knows what the heck he or she is talking about.  If they are just saying “Look Ms. Smith, you’re going to be okay because the computer says so.”  That does not inspire confidence.   The HUGE firms are more guilty of this than the smaller firms in my opinion.  The HUGE firms offer boilerplate financial planning with an off-the-shelf program that a lot of times was designed specifically for them.  Again, not confidence inspiring.

I use the software as a tool to help present a plan to a client. It certainly is not the end-all solution because the program is only as good as the developers behind it.  Who are those people? Do they know what they’re doing? Do you really want to trust your retirement to them?

Do a double and triple take with ANY financial planning document that is presented to you.

Lastly, if someone says your financial planning is good to go because they did a “Monte Carlo” analysis and you’re at at 95% success rate, the first thing you should say is… “That’s great! Is that before or after taxes and fees?”

Here’s a podcast episode and accompanying blog I did on this topic. Again things aren’t always what they seem and YOUR financial planning is too important not to know everything that went into making your financial plan.

As always, contact me with any thoughts, questions or concerns.

Inflation Is Destroying Your Social Security Benefits

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Social Security benefits have been reduced by 34% in REAL dollars since 2000 according to a study by the Virginia Senior League.

This is happening even with the Cost of Living Adjustments for Social Security benefits.

Let’s put it like this. In 2000 you had $1 in Social Security benefits. That $1 could buy you a loaf of bread, let’s just say.

Fast forward 18 years and now that loaf of bread costs $2. But your $1 dollar of Social Security benefits has only grown to $1.66. This means you can no longer afford that loaf of bread.

That is what’s going on with the REAL Inflation rate, i.e., what the true cost increases for retirees, vs. the Social Security Cost of Living Adjustments.

This is not good folks. It means you are losing purchasing power each and every year you are on Social Security. Purchasing power is the ONLY thing that matters. Actual dollars don’t matter. Purchasing power per dollar is what matters. Always remember that.

Oh, don’t forget you are also paying tax on your inflated dollars as well which puts you even further behind.

Not good.


Social Security Survivors Benefits


We review the specific document from the Social Security Administration that discusses Survivor benefits. Below we’re going to post verbatim highlights from the document…

You definitely want to read this yourself. There is A LOT going on here. So think this through before doing anything rash. It’s very important:

How To Apply For Social Security Survivor Benefits

“You cannot report a death or apply for survivors benefits online. We should be notified as soon as possible when a person dies.

In most cases, the funeral home will report the person’s death to us. You should give the funeral home the deceased person’s Social Security number if you want them to make the report.

If the deceased was receiving Social Security benefits, you must return the benefit received for the month of death and any later months.

Who Receives Survivor Benefits?

Certain family members may be eligible to receive monthly benefits, including:

A widow or widower age 60 or older (age 50 or older if disabled);
A surviving divorced spouse, under certain circumstances;
A widow or widower at any age who is caring for the deceased’s child who is under age 16 or disabled and receiving benefits on their record;
An unmarried child of the deceased who is:
Younger than age 18 (or up to age 19 if he or she is a full-time student in an elementary or secondary school); or
Age 18 or older with a disability that began before age 22.

Widow(er) Of Covered Worker

If you are the widow or widower of a person who worked long enough under Social Security, you can:

receive full benefits at full retirement age for survivors or reduced benefits as early as age 60.
If you qualify for retirement benefits on your own record, you can switch to your own retirement benefit as early as age 62.

What If You Remarry?

If you remarry after you reach age 60 (age 50 if disabled), your remarriage will not affect your eligibility for survivors benefits.

A few other situations:
If you already receive benefits as a spouse, your benefit will automatically convert to survivors benefits after we receive the report of death.
If you are also eligible for retirement benefits (but haven’t applied yet), you have an additional option. You can apply for retirement or survivors benefits now and switch to the other (higher) benefit at a later date.
For those already receiving retirement benefits, you can only apply for benefits as a widow or widower if the retirement benefit you receive is less than the benefits you would receive as a survivor.
If you became entitled to retirement benefits less than 12 months ago, you may be able to withdraw your retirement application and apply for survivors benefits only. If you do that, you can reapply for the retirement benefits at a later date when they will be higher.

Surviving Divorced Spouse

If you are the divorced spouse of a worker who dies, you could get benefits the same as a widow or widower, provided that your marriage lasted 10 years or more.

Benefits paid to you as a surviving divorced spouse won’t affect the benefit amount for other survivors getting benefits on the worker’s record.

If you remarry after you reach age 60 (age 50 if disabled), the remarriage will not affect your eligibility for survivors benefits.

Switch To Your Own Benefit?

If you receive benefits as a widow, widower, or surviving divorced spouse, you can switch to your own retirement benefit as early as age 62. This assumes you are eligible for retirement benefits and your retirement rate is higher than your rate as a widow, widower, or surviving divorced spouse.
In many cases, a widow or widower can begin receiving one benefit at a reduced rate and then, at full retirement age, switch to the other benefit at an unreduced rate.”


Social Security For Divorcees – Part 2


If there is any one thing you can take away from my Youtube channel is that if you’re a divorcee, when you receive SPOUSAL benefits that has NO affect, none whatsoever, on your ex’s benefit.

Please do not forget this. Your benefits are not tied to your ex’s. Which mean that any divorce decree you signed is completely irrelevant. That letter you signed carries NO weight. Nothing.

No judge is going to say “Oh, sorry Ms. smith, you signed this letter that says you won’t get your benefits.” Nope, not going to happen.

If anything, you may be able to hold out for MORE of the total assets in the division because YOU are going to receive less benefits.

Think about it like this. Your hub has $500,000 in his 401k. You have 0. You have no Social Security benefits on your own record because you didn’t work. So, your benefit will be solely the spousal benefit, which is half of his.

The judge is going to split the 401k in half, 50/50 under the QDRO rule.

So maybe you should throw it out to the judge that because you did the work at home and made no income you essentially sacrificed your own Social Security benefits and thus should be given more of the 401k than a 50/50 split because you’re only getting $1400 when he is getting $2800.

I have NO CLUE if that would hold any water. But certainly something to think about.

Either way, just remember, your benefit will not affect your ex’s. Do not fall for the idea that a divorce decree will be held against you. It won’t.

Episode #60 – “Social Security Checks Are Lower Than Many Americans Expect”


Social Security checks are less than retirees expect according to a study reported on by USA Today. (The link to the article is below).

I have a couple problems with the article first. To begin with it says “future retirees who were surveyed expect to receive $1,628 on average each month. But those surveyed who are already in retirement say they are only collecting $1,257.

“That’s a big difference,” Ambrozy says. “It’s like taking a 25% pay cut.”

There’s absolutely nothing odd at all about what a future retiree EXPECTS from Social Security and what a current retiree RECEIVES.

Two completely separate issues there. Not sure why the author didn’t get that.

Secondly, the article states that the average Social Security check is only $1,410 a month. The implication is that if that is the average check and future retirees are banking on $1,628 a month, there is a big disconnect there.

Well, you need to ascertain WHO the average recipient is receiving that check and compare that person to WHO the future retiree is.

Is the average recipient 75 years old and the future retiree 55? That’s 20 years of difference. Can’t use an average for someone who’s already been receiving Social Security for over 10 years with someone who is 10 years away from receiving it! That’s bad journalism.

But, be it as it may, I still wanted to go over how you can figure out your future benefits. Remember, everything is based on your AIME, Averaged Indexed Monthly Earnings.

Your AIME is simply your 35 highest years of income, added together and then divided by 420. Once we get that number we apply the actual bend points to get your PIA. PIA is the amount of Social Security you’ll get at your Full Retirement Age(FRA).

Seems confusing? Don’t let it get you down. Just watch the video. I show you a couple examples of how this works.