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Friday, August 17, 2012

so·cial [soh-shuhl] se·cu·ri·ty [siˈkyo͝oritē]

SOCIAL SECURITY  – Some of us think there won’t be any left by the time it’s our turn but I believe there will.  True, “baby boomers” are turning 65 at the rate of about 10,000 a day,  but not all of them are taking their benefit right away (which can be claimed at a reduced rate beginning at age 62). 

Guideline #1 - You get less money when you take your benefit early.
Guideline #2 - You get more money if you take your benefit later. 

The difference between taking your benefit as early as possible or waiting until age 70 is that waiting provides for a benefit that is 76% higher.  But this also means you will have to depend on your other financial resources while you wait to reach 70 in order to get that increased amount. 

For example, consider retiring and taking your benefit at age 62 with an annual benefit of $16,440 a year. If you wait until age 66 and 6 months (depending on what year you were born), the benefit would increase to $23,376 annually; wait until you reach age 70 and you would receive $30,528 which is close to double.
If you’re married it may make sense to take the lower income-earners benefit sooner to help defray the cost of living expenses. This way you also lock in the largest possible survivor benefit for the remaining spouse. 

Those born between January 2, 1943 and January 1, 1955, reach full retirement age for Social Security at 66.  If you work and are full retirement age or older, you keep all of your benefits, no matter how much you earn. For people younger than full retirement age, there is a limit to how much you can earn and still receive your full benefit. Anyone younger than full retirement age in 2012 will have $1 deducted from their benefit for every $2 earned above $14,640. Yeah I know, this gets complicated and is a lot to remember.

Other Stuff  You May Not Know About Social Security:
  1. Social Security benefits are calculated using your 35 highest-paid years while working.
  2. There is no additional benefit to waiting beyond age 70.
  3. Spouses can claim benefits. Spousal benefits may be worth as much as 50% of the higher earner's Social Security payment. Two-income married couples who have reached full retirement age can even claim Social Security twice by signing up for spousal payments, then later switching to payments based on their own work record. 
  4. The Social Security wage limit for 2012 is $110,100 meaning you pay no additional Social Security tax on amounts earned over that wage limit. The base wage limit is typically adjusted every year for inflation.
  5. If you began collecting your Social Security within the last year and then change your mind, you can repay all the benefits received, and reapply for a potentially higher benefit at a future date.
  6.  6.  If you work for someone else, only your wages count toward Social Security’s earnings limits. If you are self-employed, only your net earnings from self-employment are counted towards calculating your benefit. Social Security does not count income such as other government benefits, investment earnings, interest, pensions, annuities, and capital gains. 

    A Brief and Wonderful History of Social Security
          Although formally the Social Security Act was not enacted until 1935, it all started during the Great Depression in the early 1930's as "social insurance". Poverty rates amount senior citizens exceeded 50% and the stock market crash along with bank failures, destroyed many American's retirement savings [insert your comments about the lost decade of the 2000's here]. 

    It was President Franklin D. Roosevelt's first term when the act was passed by Congress as part of the New Deal. The goal was to help the most fragile members of society (the elderly, those effected by unemployment, poverty, widows and fatherless children).

For more information on the history of Social Security, follow this link:  

 Refresh your memory regarding FDR's "New Deal" initiative by clicking here:

      My MacGyver Moment:   Have a stripped wood screw that just keeps spinning like the one in my back door?  This is apparently not that uncommon. If you don't have a longer screw to replace it with or if a longer one won't do, try this:  Remove the screw and put a couple of toothpicks into the screw hole. I used three but put in enough to fill the hole. Then break off the ends sticking out and put the screw back in. Rumor has it chopsticks, steel wool and golf tees also work. Who knew?

The IRS does not endorse any particular individual tax return preparer. For more information on tax return preparers go to

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