Apply For Social Security Now… Or Later?

When should you apply for benefits? Consider a few factors first.

Now or later? When it comes to the question of Social Security income, the choice looms large. Should you apply now to get earlier payments? Or wait for a few years to get larger checks?

Consider what you know (and don’t know). You know how much retirement money you have; you may have a clear projection of retirement income from other potential sources. Other factors aren’t as foreseeable. You don’t know exactly how long you will live, so you can’t predict your lifetime Social Security payout. You may even end up returning to work again.

When are you eligible to receive full benefits? The answer may be found online at socialsecurity.gov/retire2/agereduction.htm.

How much smaller will your check be if you apply at 62? The answer varies. As an example, let’s take someone born in 1949. For this baby boomer, the full retirement age is 66. If that 61-year-old baby boomer decides to retire in 2011 at 62, his/her monthly Social Security benefit will be reduced 25%. That boomer’s spouse would see a 30% reduction in monthly benefits.¹

Should that boomer elect to work past full retirement age, his/her benefit checks will increase by 8.0% for every additional full year spent in the workforce. (To be precise, benefits increase by .67% for every month worked past full retirement age.)² So it really may pay to work longer.

Remember the earnings limit. Let’s put our hypothetical 61-year-old baby boomer through another example. Our boomer decides to apply for Social Security at age 62 in 2011, yet stays in the workforce. If he/she earns more than $14,160 in 2011, the Social Security Administration will withhold $1 of every $2 earned over that amount. $14,160 is the 2011 earnings limit, unchanged from 2010.³

The earnings cap disappears at full retirement age (66 in this case). If our boomer keeps working past 66, he or she may keep 100% of Social Security benefits regardless of earned income level.³

How does the SSA define “income”? If you work for yourself, the SSA considers your net earnings from self-employment to be your income. If you work for an employer, your wages equal your earned income. (Different rules apply for those who get Social Security disability benefits or Supplemental Security Income checks.)⁴

Please note that the SSA does not count investment earnings, interest, pensions, annuities and capital gains toward the current $14,160 earnings limit.⁴

Some fine print worth noticing. If you reach full retirement age in 2011, then the SSA will deduct $1 from your benefits for each $3 you earn above $37,680 in the months preceding the month you reach full retirement age.⁴ So if you hit full retirement age early in 2011, you are less likely to be hit with this withholding.

Did you know that the SSA may define you as retired even if you aren’t? This actually amounts to the SSA giving you a break. In 2011 – assuming you are eligible for Social Security benefits – the SSA will consider you “retired” if a) you are under full retirement age for the entire year and b) your monthly earnings are $1,180 or less. If you are self-employed, eligible to receive benefits and under full retirement age for the entire year, the SSA generally considers you “retired” if you work less than 15 hours a week at your business.^2,4

Here’s the upside of all that: if you meet the tests mentioned in the preceding paragraph, you are eligible to receive a full Social Security check for any whole month of 2011 in which you are “retired” under these definitions. You can receive that check no matter what your earnings come to for all of 2011.⁴

Learn more at socialsecurity.gov. The SSA website is packed with information and user-friendly. One last little reminder: if you don’t sign up for Social Security at full retirement age, make sure that you at least sign up for Medicare at age 65.

 

This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of Statler Financial Services, Inc. This information should not be construed as investment advice. Statler Financial Services, Inc., does not give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.. http://www.petermontoya.com, http://www.montoyaregistry.com, www.marketinglibrary.net

 

Statler Financial Services, Inc. is registered as an investment adviser with the state of Florida. The presence of this Web site on the Internet shall in no direct or indirect way to be construed or interpreted to suggest Statler Financial Services, Inc. is soliciting to sell advisory services or offering to sell advisory services to residents of any other state other than the state of Florida.

Citations

1 – socialsecurity.gov/retire2/agereduction.htm [7/11/10]

2 – socialsecurity.gov/retire2/delayret.htm [8/16/10]

3 – ssa.gov/pressoffice/colafacts.htm [10/21/10]

4 – ssa.gov/pubs/10069.html [1/10]

 

Why People Want Independent Financial Advisors

A new perception has taken hold: “independent” is better.

Times have changed – and so have financial advisors. Today, people don’t want financial advice from a salesman. Instead, they want a relationship with a financial professional who is candid, trustworthy and thoroughly educated, who provides personalized financial consulting for each client.

That search often leads them to a fee-based or fee-only financial advisor or a Registered Investment Advisor.

A pleasant alternative to Wall Street. A paradigm shift is happening, and the traditional brokerage houses are lagging. While old-school “stock brokers” have gone the way of the wooly mammoth, you still have a sales-first mentality in place at big banks and Wall Street brokerages. If you’re employed by one of them, the mantra is simple: make a sale, earn a commission.

As they try to serve their clients, these “wirehouse” brokers regularly contend with sales quotas and the inherent potential for conflicts of interest. It wears on them: a 2010 survey revealed that only 15% were “very satisfied” at their firms, and another 20% wanted to leave within two years.¹

Given the tarnished reputations of so many giant banks and brokerages, it isn’t surprising that consumers are turning elsewhere for financial advice. Here are three popular destinations.

A fee-based financial advisor has structured his or her practice to promote earning income from fees instead of commissions. The emphasis is on advice. An independent, fee-based financial advisor also has freedom – freedom to choose the most appropriate products and services for your risk tolerance and investment goals. (More about that in a moment.)

Fee-only financial advisors earn no commissions at all. They derive 100% of their income from client fees – annual management fees or hourly or per-project consulting fees. With this compensation arrangement, you know that a fee-only advisor is available to help you address myriad issues in your financial life, not simply those that could lead to a commission.

A Registered Investment Advisor (RIA) usually works to manage the assets of high net worth investors. An RIA receives management fees and does not receive commissions. The management fees usually represent a percentage of the assets a client has invested. RIAs have to register with the Securities and Exchange Commission and any states in which they operate.² Individuals, couples, families and institutions with sizable wealth management concerns often turn toward RIAs.

Even as the market has struggled since the end of 2007, independent Registered Investment Advisors have gained a greater share of assets under management in the U.S.³

People need unbiased advice. That’s probably the #1 reason why people seek an independent financial advisor. They know that the advice they receive is not influenced by sales incentives or directives. There is often a candor to the discussion that may not always be present at a bank or a brokerage.

People want more investment choices. An independent financial advisor is free to offer investments from dozens, maybe hundreds of companies, rather the investments of a single company. In addition, that independent advisor can unhesitatingly tell you if an investment is or isn’t appropriate for your financial situation.

This is the age of independence. When it comes to the financial future, no one wants to be “sold” – just advised. That’s why we’ve seen the rise of a new kind of financial advisor who puts the client relationship first.



This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of Statler Financial Services, Inc. This information should not be construed as investment advice. Statler Financial Services, Inc. does not give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.. http://www.petermontoya.com, http://www.montoyaregistry.com, http://www.marketinglibrary.net
Statler Financial Services, Inc. is registered as an investment adviser with the state of Florida. The presence of this Web site on the Internet shall in no direct or indirect way to be construed or interpreted to suggest Statler Financial Services, Inc. is soliciting to sell advisory services or offering to sell advisory services to residents of any other state other than the state of Florida.

Citations

1 – bankinvestmentconsultant.com/news/pirker-aite-wirehouse-advisors-2667209-1.html [6/1/10]

2 – investopedia.com/articles/financialcareers/06/whatisaRIA.asp [6/11/10]

3 – fa-mag.com/fa-news/5548-independents-make-headway-despite-downturn.html [5/10/10]

“Obamacare” – Separating Facts from Myths

What does health care reform include … REALLY?

Confusing doesn’t even begin to describe it. Throughout the very long debate over health care reform, a great deal of misinformation (spurred by presumption or misunderstanding) was circulating. Additionally, many changes and alterations to the proposed law were made along the way. At this point, some of the arguments your friends, neighbors or co-workers continue to debate don’t even factor into the legislation signed by President Obama. So what’s the truth behind the Affordable Health Care for America Act?
Q: Will I be forced to change insurance?
A: No. That’s a MYTH.
If you’re satisfied with your current plan, you can keep it.²

Q: Will illegal immigrants now be covered by our money?
A: No. That’s a MYTH.
In fact, undocumented immigrants are expressly excluded from coverage. Only legal immigrants who pay their share will be covered.³

Q: Will I go to jail or be harassed by the IRS if I don’t have health coverage?
A: No. That’s a MYTH.
In 2014 Americans (except Native Americans, Inmates or those with religious objections) will be required to have health insurance or pay an annual penalty. True. However, the law prevents the IRS from using levies, liens or seizing property. Additionally, the IRS cannot impose criminal penalties (such as time in jail).⁴

Q: I heard there was going to be a 10% tax increase across the board. Is that true?
A: No. That is a MYTH.
While there will be tax implications, most of the biggest changes apply to medical manufacturers, insurers and pharmaceutical companies. In fact, some Americans may see no changes at all. Tax changes that could affect average individuals include …
• A 10% sales tax on indoor tanning (yes, really)
• A 0.9% increase on the Medicare tax rate
• A 3.8% tax on investment income for individuals earning more than $200,000 and households earning more than $250,000 ⁵
• Taxes on high-end or “Cadillac” health care plans (this excise tax would not begin until 2018 and only apply to insurers of plans that exceed $10,200 annually for individual coverage, or $27,500 annually for family coverage) ⁶

Q: Will the government now pay for abortions?
A: No. That’s a MYTH.
The law already in place which prevents using federal money to fund abortions (except in cases of rape, incest, or danger to a woman’s life) is not being altered. ²

Q: Will I have to pay for other people’s abortions?
A: No. That’s a MYTH.
Those opposed to abortion will not be forced to assist in funding them. You can simply select a plan that does not offer them. This applies not only to people who may have objections to abortions on moral grounds, but also to those who simply have no reason to pay an extra premium for that type of coverage (such as women past their child bearing years or single men). ¹
Q: Does the “Public Option” mean the government will run health care?
A: No. That’s a MYTH … and a non-factor at this point.
In fact, the “public option” did not make it into the final legislation that President Obama signed. THERE IS NO PUBLIC OPTION. Even before it was dropped from the bill, it was misunderstood to be government-run health care – wherein the government would make your health care decisions. Rather, it would have been government-provided insurance option to compete with private insurance.⁵

Q: Will my Medicare benefits be cut in order to extend care to others?
A: No. That, too, is a MYTH.
Brooks Jackson, director of FactCheck.org, says that although the reform package includes $500 billion in “cuts”, it does NOT include traditional Medicare benefit reductions.⁸

Q: Does this mean that “death panels” are now a reality?
A: No. And they never were.
This myth was based on misunderstanding of a provision in the original bill that required payment, by Medicare, for health care practitioner-led end-of-life counseling. This is not part of the law.⁷

For more answers, you can visit http://www.whitehouse.gov/healthreform

These are the views of Peter Montoya Inc., not the Statler Financial Services, Inc., and should not be construed as investment advice. Statler Financial Services, Inc. does not give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. http://www.petermontoya.com, http://www.montoyaregistry.com, http://www.marketinglibrary.net

Statler Financial Services, Inc. is registered as an investment adviser with the state of Florida. The presence of this Web site on the Internet shall in no direct or indirect way to be construed or interpreted to suggest Statler Financial Services, Inc. is soliciting to sell advisory services or offering to sell advisory services to residents of any other state other than the state of Florida.

Citations

1 – cnn.com/2010/POLITICS/03/23/health.care.timeline/index.html?hpt=T1 [3/23/10]
2 – signonsandiego.com/news/2010/mar/23/health-care-myths-realities [3/23/10]
3 – poder360.com/article_detail.php?id_article=3994 [3/24/10]
4 – insurancenewsnet.com/article.aspx?id=174568 [3/24/10]
5 – americasnewsonline.com/healthcare-bill-does-very-little-to-hinder-health-insurance-companies-903/ [3/24/10]
6 – americasnewsonlineboston.com/business/personalfinance/managingyourmoney/archives/2010/03/tax_implication [3/24/10]
7 – theglobeandmail.com/news/world/no-death-panels-but-obamas-reforms-do-bring-change/article1508653 [3/22/10]
8 – timesfreepress.com/news/2010/mar/24/medicare-changes-misrepresented-advocates-say [3/24/10]