Tuesday, December 21, 2010 Social Security "Do-Over" Loophole Closed
As many elder law commentators predicted, the Social Security Administration has eliminated a loophole that had allowed Social Security recipients to start receiving benefits when they first became eligible without being permanently locked in to the lower benefit level.
Although you can collect Social Security benefits starting at age 62, if you do, your benefits will be significantly lower than if you wait until your full retirement age or even later. About half of Americans file at 62, but "in most cases it's a costly mistake," says retirement journalist Mark Miller.
A little-known provision of Social Security law had allowed beneficiaries to have their cake and eat it, too -- to apply for benefits when they first became eligible and later withdraw their application for early benefits and reapply and receive full retirement benefits. The catch was that the recipient had to pay Social Security back all the money they had pocketed so far. But no interest was due on the benefits received, so the money was in effect an interest-free loan. The policy was designed to provide an escape hatch for those who took early retirement and then went back to work.
Under the new rules, retirees may withdraw their Social Security applications only once and only within 12 months of first receiving benefits.
Due to the payback requirement, the "do-over" strategy was available only to more affluent recipients and was little used, although word had been spreading. In 2007, Social Security processed only about 500 withdrawal applications, but that number had more than doubled to 1,015 in 2009 and processing the new applications was becoming an administrative headache for the agency.
For a USA Today article on the rule change, click here. Saturday, July 24, 2010 Recent poll shows Americans are losing faith in Social Security system
File this entry in the "tell us something we don't know" file:
Battered by high unemployment and record home foreclosures, most Americans seem to have lost faith in another fundamental part of their personal finances: Social Security. A USA TODAY/Gallup Poll finds that a majority of retirees say they expect their current benefits to be cut, a dramatic increase in the number who hold that view. And a record six of 10 non-retirees predict Social Security won't be able to pay them benefits when they stop working. Skepticism is highest among the youngest workers: Three-fourths of those 18 to 34 don't expect to get a Social Security check when they retire.
The public's views are far more dire than the calculations of Social Security's trustees. Last year, they projected the system would begin running in the red in 2016, as the Baby Boom generation retired, and the trust fund would be exhausted in 2037. Then, Social Security — which celebrates its 75th anniversary next month — could finance about three-fourths of current benefits through the payroll tax.
Source: USA Today (July 20, 2010)
Full story: http://www.usatoday.com/news/washington/2010-07-20-1Asocialsecurity20_ST_N.htm
Friday, February 19, 2010 Social Security Will Run a Deficit This YearSocial Security's annual surplus nearly evaporated in 2009 for the first time in 25 years as the recession led hundreds of thousands of workers to retire or claim disability. The impact of the recession is likely to hit the giant retirement system even harder this year and next. The Congressional Budget Office had projected it would operate in the red in 2010 and 2011, but a deeper economic slump could make those losses larger than anticipated.cc"Things are a little bit worse than had been expected," says Stephen Goss, chief actuary for the Social Security Administration. "Clearly, we're going to be negative for a year or two." Since 1984, Social Security has raked in more in payroll taxes than it has paid in benefits, accumulating a $2.5 trillion trust fund. But because the government uses the trust fund to pay for other programs, tax increases, spending cuts or new borrowing will be required to make up the difference between taxes collected and benefits owed. Experts say the trend points to a more basic problem for Social Security: looming retirements by Baby Boomers will create annual losses beginning in 2016 or 2017. "The moment of truth has arrived," says Rep. Paul Ryan, R-Wis., top Republican on the House Budget Committee. "This is a wake-up call." Social Security took in only $3 billion more in taxes last year than it paid out in benefits — a $60 billion decline from 2008, according to federal data.
Source: USA Today
Full story: http://www.usatoday.com/NEWS/usaedition/2010-02-08-1Asocialsecurity08_ST_U.htm?csp=34 Tuesday, October 13, 2009 Recession pulls seniors back into workforce
The worst U.S. economic recession in 70 years is forcing senior citizens out of retirement, leaving them fighting for jobs in a weak labor market or risk homelessness, according to a private study. The study by Experience Works, released on Tuesday, showed 46 percent of the 2,000 low income people over 55 years who participated needed to find work to keep their homes. Nearly half of them had been searching for work for more than a year. Experience Works is the nation's largest nonprofit provider of community service, training and employment opportunities for older workers. The study was conducted in the past two months and covered 30 states and Puerto Rico. "These people are at the age where they understandably thought their job-searching years were behind them," said Cynthia Metzler, president and CEO of Experience Works. "But here they are, many in their 60s, 70s and beyond, desperate to find work so they can keep a roof over their heads and food on the table." According to the study, many of the participants had no intention of working past their 60th birthday, but had to change plans after being laid off or following the death of a spouse. Over a third of the participants had retired. Ninety percent of respondents 76 years and older planned to continue working for the next five years.
Source: Reuters (22 September 2009)
http://www.reuters.com/article/domesticNews/idUSTRE58L5P920090922 Thursday, October 08, 2009 Number of Social Security Beneficiaries Jumps by 19%The number of retired workers who began collecting Social Security benefits jumped by a record 19% in the 2009 fiscal year that ended Wednesday as aging Baby Boomers and the unemployed chose to retire early. More than 2.6 million retired workers entered the Social Security system, up from 2.2 million in fiscal 2008. That's a much bigger increase than during past recessions. "There are just not enough jobs for older people," says Richard Johnson, senior fellow at the non-partisan Urban Institute. "They have no choice but to go on Social Security." The number of disabled workers receiving first-time benefits also soared to nearly 1 million, an increase of 100,000 over the previous year, according to Social Security Administration records. Those two factors are putting new pressure on Social Security's finances. The program paid out $6 billion more in August than it took in. It's projected to run in the red for the next two years before returning to a surplus in 2012. "We have the combination of more people filing for early retirement and disability benefits at the same time that we have a reduction in the size of the workforce," said Stephen Goss, Social Security's chief actuary. The figures are affected both by the lengthy recession, which has sent unemployment to 9.7%, and by Baby Boomers who began reaching the early retirement age of 62 in 2008.
Source: USA Today (2 October 2009)
Full story: http://www.usatoday.com/news/nation/2009-10-01-social-security_N.htm |