Who Does This Impact?

The beneficiaries include firefighters, police officers, teachers, and other public-sector positions.

What are the Provisions and How Do They Affect Public-Sector Workers?

According to congress.gov, the bill eliminates the Windfall Elimination Program, which in some cases can lower Social Security benefits for individuals who also receive a pension or disability from an employer that didn’t withhold Social Security taxes.

The bill also eliminates the Government Pension Offset, which in some cases can lower Social Security benefits for spouses, widows, and widowers who simultaneously received a government pension.

What Is the Foundation for the Changes?

Most jobs are covered by Social Security. However, many workers spent their lives in state and local government jobs that Social Security doesn’t cover, so they have been eligible for a pension in place of it. While Social Security doesn’t cover their government jobs, some workers may have held other jobs in the past or alongside their current jobs that do allow them to pay into Social Security and be eligible for those benefits.

The provisions were originally meant to prevent certain beneficiaries from receiving higher Social Security benefits than earned. Critics of the provisions claimed they led to unfair reductions for some people. Therefore, the provisions were eliminated after many years of political red tape.

How Can You Apply for Benefits?

If you previously filed for Social Security benefits and they are partially or completely offset, you don’t have to take any action aside from verifying that the SSA has your current mailing address and direct deposit information. This can be done online through the “my Social Security account” here: www.ssa.gov/myaccount

If you are receiving a public pension and are interested in filing for benefits, you can file online at ssa.gov/apply or schedule an appointment to speak with a representative.

When Can People Expect the Increased Payouts?

The increased payouts will begin this year. Also, more than 2 million Americans will receive a lump sum payment of potentially thousands of dollars to cover the shortfall in the benefits they should have received in 2024.

Discuss with a Financial Professional

Higher payments each month don’t necessarily mean that you now have more money to spend frivolously. The extra money in your bank account could be used toward working to pay down debt, invested for financial independence in retirement, or managing generational wealth or charitable giving wishes. Consider scheduling an appointment with a financial professional to discuss options you can pursue that may benefit you in the short- and long-term and align with your financial goals.

Important Disclosures:

Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by LPL Marketing Solutions

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Sources:

H.R.82 – 118th Congress (2023-2024): Social Security Fairness Act of 2023 | Congress.gov | Library of Congress

Biden signs Social Security bill that raises benefits for some public workers : NPR

Social Security Fairness Act signed into law by Biden: What to know

If Social Security not fixed, retirees face automatic cut in 2033 : NPR

Social Security Fairness Act: Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) update | SSA

The post The Social Security Fairness Act and How It Aims to Impact Public Workers appeared first on Choice Bank.

What Age Do I Qualify for Social Security?

The qualifying age for Social Security depends on your birth year and whether you want to opt for early, full, or late retirement. Those born between 1943 and 1954 have a FRA of 66. After that, your FRA increases by a few months depending on the year you were born; if you are born after 1960, the FRA is 67.

Early retirement is possible for those as young as 62, though you receive much smaller monthly payments. You may choose to wait and receive a higher amount for your monthly checks by not collecting benefits until the age of 70.

How Much Will I Receive for My Social Security Payment?

Your work credits determine your Social Security payment amount, your average annual earnings, and the number of years you worked.

You may see these calculations by creating an SSA.gov account to view your updated Social Security statement each month.

The average monthly benefit amount for Social Security is $1,831, and the maximum benefit is around $3,627.

Am I Allowed to Work While Receiving Social Security Benefits?

Yes, you may work while you are collecting Social Security benefits.

If you are at full retirement age or older, you can earn as much as you want and continue receiving your full Social Security benefits.

If you retire early, earnings from working wages may temporarily and partially decrease your benefit amount until you reach full retirement age.

Before full retirement age, the maximum allowed earnings from wage income before a reduction in benefits occurs is $21,240.

Will I Pay Taxes on Social Security Benefits?

Whether you pay taxes on your Social Security benefits depends on your other earnings and (if married) your spouse’s earnings if you file together.

If you have a combined income between $32,000 and $44,000, 50% of your benefits are taxed.

If your income exceeds that, 85% of your benefit amount is taxed.

When Will I Receive My Monthly Social Security Payment?

Payments for Social Security benefits are made via direct deposit, either to a prepaid debit card or directly to your bank account.

Payments are spaced throughout the month based on your birthdate.

If your birthdate is on the 10th of the month or before, your payment will be deposited on the second Wednesday of each month.

If your birthdate is between the 11th and 20th of your birth month, your pay date will be the third Wednesday. Dates after that receive payment on the fourth Wednesday of each month.

How Do I Apply for My Benefits?

You can apply for your benefits four months before they are scheduled to start by going to your local Social Security office, visiting SSA.gov to create an online account, or by calling 1-800-772-1213.

Be prepared to present specific documentation such as your birth certificate and other documents requested on Form SSA-1.

What if I Have Other Questions?

There are many resources out there, and they can all be overwhelming. Our financial experts are here for you to discuss your questions on social security.

Meet with our team

Important Disclosures:

This material was created for educational and informational purposes only and is not intended as tax advice. If you are seeking tax advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

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Obviously, the underlying assumptions used can affect one’s perception of the solvency of Social Security, but it’s clear some action needs to be taken. However, even experts disagree on the best remedy. So let’s take a look at what we do know.

Just the Facts

According to the Social Security Administration (SSA), approximately 70 million Americans currently collect some sort of Social Security retirement, disability, or survivor benefit. Social Security is largely a pay-as-you-go system, with today’s workers and employers paying the benefits for today’s retirees.

How much do today’s workers pay? Well, in 2024, the first $168,600 of an individual’s annual wages is subject to a Social Security payroll tax, with half paid by the employee and half by the employer, where self-employed individuals pay all of it. Payroll taxes collected are put into the Social Security trust funds and invested in securities guaranteed by the federal government. The funds are then used to pay out current benefits.

The amount of your retirement benefit is based on your average earnings over your working career. Higher lifetime earnings result in higher benefits, so if you have some years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily.

Your age at the time you start receiving benefits also affects your benefit amount. Currently, the full retirement age is rising to 67 in two-month increments, as shown in the table.

What Is Your Full Retirement Age?

Note: If you were born on January 1 of any year, refer to the previous year to determine your full retirement age.

You can begin receiving Social Security benefits before your full retirement age, as early as age 62. However, if you retire early, your Social Security benefit will be less than if you had waited until your full retirement age to begin receiving benefits.

Specifically, your retirement benefit will be reduced by 5/9ths of 1% for every month between your retirement date and your full retirement age, up to 36 months, then by 5/12ths of 1% thereafter.

For example, if your full retirement age is 67, you’ll receive about 30% less if you retire at age 62 than if you wait until age 67 to retire. This reduction is permanent — you won’t be eligible for a benefit increase once you reach full retirement age.

Demographic Trends

Even those on opposite sides of the political spectrum can agree that demographic factors are exacerbating Social Security’s problems — namely, the number of retirees is increasing and the birth rate is decreasing. This means that, over time, fewer workers will have to support more retirees.

According to the SSA, Social Security is already paying out more money than it takes in. However, by drawing on the Social Security trust fund (OASI), the SSA estimates that Social Security should be able to pay 100% of scheduled benefits until fund reserves are depleted in 2033.

Once the trust fund reserves are depleted, payroll tax revenue alone should still be sufficient to pay about 76% of scheduled benefits. So at that time, if no changes are made, beneficiaries may receive a benefit that is about 24% less than expected.2

Possible fixes

While no one can say for sure what will happen (and the political process is sure to be contentious), here are some solutions that have been proposed to help keep Social Security solvent for many years to come:

• Allow individuals to invest some of their current Social Security taxes in “personal retirement accounts”
• Raise the current payroll tax
• Raise the current ceiling on wages currently subject to the payroll tax
• Raise the retirement age beyond age 67
• Reduce future benefits
• Change the benefit formula that is used to calculate benefits
• Change how the annual cost-of-living adjustment for benefits is calculated

Uncertain Outcome

Progress on addressing Social Security’s financial challenges has been slow. However, the SSA continues to urge all parties to address the issue sooner rather than later, to allow for a gradual phasing in of any necessary changes.

Although debate will continue on this polarizing topic, there are no easy answers, and the final outcome for this decades-old program is still uncertain.

In the Meantime, What Can You Do?

The financial outlook for Social Security depends on a number of demographic and economic assumptions that can change over time, so any action that might be taken and who might be affected are still unclear.

But no matter what the future holds for Social Security, your financial future is still in your hands. Focus on saving as much for retirement as possible, and consider various income scenarios when planning for retirement.

It’s also important to understand your benefits and what you can expect to receive from Social Security based on current law. You can find this information on your Social Security Statement, which you can access online at the Social Security website, ssa.gov, by signing up for a my Social Security account.

Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivor, and disability benefits. If you’re not registered for an online account and are not yet receiving benefits, you’ll receive a statement in the mail every year, starting at age 60.

Meeting with a financial professional can also help you determine what your Social Security outlook may look like. Connect with one of our team members today!

Resources:

• Read Fast Facts & Figures About Social Security, 2023
• Read 2023 OASDI Trustees Report

Important Disclosures:

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional.

Your Bank (“Choice Bank”) provides referrals to financial professionals of LPL Financial LLC (“LPL”) pursuant to an agreement that allows LPL to pay the Financial Institution for these referrals. This creates an incentive for the Financial Institution to make these referrals, resulting in a conflict of interest. The Financial Institution is not a current client of LPL for advisory services. Please visit https://www.lpl.com/disclosures/is-lpl-relationship-disclosure.html.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

This article was prepared by Broadridge.

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The post How Secure is Social Security? appeared first on Choice Bank.

Delay Social Security Benefits

You can increase your monthly benefit if you delay claiming Social Security past your full retirement age. You will accrue delayed retirement credits that will boost your monthly benefit by 8% for each year of delay between your full retirement age and age 70.

Suspend Social Security Benefits

If you took Social Security benefits before your full retirement age and age 70, you may suspend your payments and earn delayed credits, helping boost your monthly benefit by 8% for each year of suspended benefits to age 70.

Work 35+ Years

Social Security benefits are calculated using your 35 highest-earnings years, making it important to have at least 35 years of full-time work. Working beyond your full retirement age can help boost your earnings qualification number and your monthly benefit amount.

Social Security Survivor Benefits

When one spouse passes away, the surviving spouse can claim the deceased’s benefits if higher. Delaying survivor benefits until the deceased spouse’s full retirement age or older helps increase the surviving spouse’s monthly benefit.

Social Security Survivor Benefits for Children

Children of a deceased worker can qualify for benefits until age 18 or 19 while a full-time high school student and for a child diagnosed with a disability up to age 22. A widow or widower caring for a child under 18 may also qualify for benefits.

If you are married, maximize your lifetime benefits using these strategies:

Use the Social Security Spousal Benefit Strategy

Married couples can use this strategy where one spouse claims benefits up to 50% of their spouse’s benefit if the benefit is higher than their own. Ex-spouses are also eligible to use this strategy if married for at least ten years.

The Spousal Split

Using this strategy, the lower-earning spouse takes SS retirement benefits at an earlier age, such as 67, and the higher-earning spouse delays their benefits until age 70. This scenario allows access to some SS retirement benefits earlier and a higher benefit amount down the road.

Understanding how claiming benefits at specific ages and using Social Security strategies will impact your situation over time is important. A financial professional can help calculate your benefit amount or go to www.ssa.gov to register and calculate your benefit amount at specific ages. Once you have your information, you can determine what age is appropriate for you.

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by Fresh Finance.

LPL Tracking # 1-05359383

The post Understanding Social Security Strategies appeared first on Choice Bank.