Frequently Asked Questions:

  1. You must be single
  2. You must be at least age 62
  3. Marriage duration – ten continuous years
  4. Your spouse MUST be COLLECTING a RETIREMENT or DISABILITY benefit if divorced for less than two years.

The requirement that your ex-spouse be receiving a benefit does not apply if the following conditions are met as “Independently Entitled Divorced Spouse” status will apply:

  1. You and your ex are at least age 62
  2. You are single
  3. Marriage duration – ten continuous years
  4. You and your ex have been divorced for at least two years

Yes, a person can lose some or all monthly benefits if he or she is under the Full Retirement Age(FRA) for all of 2018 and his or her earnings for the year exceed $17,040. A person may lose benefits if he or she reaches full retirement age in 2018 and if he or she earns over $45,360, but only those earnings earned before the month he or she reaches FRA count toward the $45,360 limit. The amount of loss depends on the amount of earnings in excess of these earnings limits. In no case will a person lose benefits for earnings earned after reaching FRA.

For purposes of this test, “earnings” include not only wage or earned income not unearned income, such as pensions, dividends, rental income or IRA withdrawals. It should be noted that benefits are not truly “lost” as benefits at full retirement age will be increased to account for benefits withheld due to later earnings.

It depends. When benefits are computed, Social Security uses the highest 35 years of earnings during age 22-Age 60. If the current earnings exceed the lowest year used in the computation, the benefits will increase. If the current earnings are less, then there will be no change.

FRA means the age when people reach full retirement age. It depends upon your date of birth. See SSA.gov to see your FRA.

The biggest filing mistake people make is failure the impact of the new filing rules of 2015.When you file for a benefit, any benefit before your FRA, it will be reduced.  Most people know this, but they do not know that later filings will also be reduced even if it is after FRA and no longer early.  Suppose you file for your benefits early while planning on filing later, such as the case for spousal benefits. Even though you may not have filed early for the spousal benefit, it will be reduced as if you did.  These are the new rules.  They apply to all benefits with the exception of widow benefits.

The Social Security system’s cost will exceed its income this year, the first time that has happened since 1982.  This means current taxes do not support current benefits paid.

The Social Security system is a “pay as you go” system, meaning benefits are dependent upon the collection of current payroll taxes.

This year the Social Security trust fund surplus is being used to make up the difference between taxes collected and benefits paid.  The social security surplus will run out in 2034.  When this happens benefits are expected to be decreased by 25% because current collected taxes only support 75% of benefits paid.

Many are under the impression the system will go bankrupt at some point by the time they retire or during retirement.

That’s simply untrue.  While the program faces a funding shortfall by 2034, it is not going broke, because this would mean that no one would be paying payroll taxes.  In other words, no one is working.

If nothing changes to the current system, there will be a reduction of benefits, but the system is not going bankrupt.  Changes would be required for the program to be able to pay full Social Security benefits.

It is important to realize this is not the first time we have faced this problem.

In the 70’s we faced similar issues.  We implemented the current retirement ages to fix the shortfall.  In the past full retirement age was 65 and then was delayed.  I expect this to happen again.  I believe there will be new delayed retirement dates for retirees.  I also expect retirees to have to wait beyond age 70 for increased benefits.

Another expected change is to eliminate the Social Security wage base.  You may be familiar with the fact that you only pay Social Security taxes on a certain amount of income.  We can expect to pay Social Security taxes on all income in the future.

Yes, Congress needs to solve the problem and does not seem to be in any rush to do so, but I believe they will get to it, probably at the last minute when everyone is screaming for a solution.  They don’t seem to have much desire to deal with it today.

Moving Forward Financially After A Divorce | Part 1

Financial decisions that need to be made after a divorce.

Moving Forward Financially After A Divorce | Part 2

Financial decisions that need to be made after a divorce.