By Edward Leone Jr. CFP RFC MBA DMD
Contact Information: edleonedds@gmail.com
303-478-6793
I view and hear many concerns over Social Security benefits and receive questions from time to time from those who qualify for benefits and are forced to retire early as a result of job loss or disability. Let’s review the basics regarding the Social Security Program:
When you receive a paycheck, you contribute 6.2% of your compensation to the Social Security system. Your employer matches that amount making the total contribution on your behalf 12.4%. 40 credits are needed to be eligible for benefits. You gain a credit for each $1,220 earned annually limiting the maximum number of credit to 4 per year. This means you must have engaged in an earning strategy (employment or business ownership) for a minimum of 10 years to qualify for benefits. Your benefit is calculated based on your 35 years of highest earnings. If you have worked for less that 35 years, the missed years are counted as zero. For 2015 the average benefit is $1,328 and the maximum benefit is $2,663. For 2015, the amount of earnings from which Social Security tax is drawn has been capped at $118,500. Information regarding your benefit projections comes in the form of a paper statement if you are over the age of 60. This information is also available to all who have an interest at http://www.ssa.gov. You may begin to take benefits as early as age 62 and can delay taking benefits up to age 70 with incremental benefit increases as a percent of your primary insurance amount: 62 75%, 63 80%, 64 86.7%, 65 93.3%, 66 100%(note that full retirement age is increasing to 67), 67 108%, 68 116%, 69 124% and 70 132%. There are a variety of options for those married couples where both spouses are employed. To maximize benefits, it is wise to consult with your financial planner in an effort to coordinate the timing of taking benefits. Those who have worked for some of their productive years in an environment where Social Security tax was not paid, may find benefits reduced or not available.
Among other issues which kick in on January 1, 2016 regarding Obamacare, the IRS will level heavy fines on employers who are inaccurate in the filing of forms 1094-C and 1095-C which report the health coverage an employer offers to employees. These fines will range from $250 to $500 per form depending on the deficiency of information. A form must be filed for each employee. You can see just how expensive this requirement is in time and effort, but the penalty fees can really add up.
There is much concern expressed in the media regarding the potential for the next economic bubble or an economic collapse. We hear about Greece, China, Euro zone debt and high unemployment, Japan and our own struggles with the U. S. economy. Our economic recovery is in its seventh year. The growth phase for the U. S. economy averages about six years. This particular economic recovery which began in 2008, has been uncharacteristically slow. Does this mean that we will continue to see economic recovery in this country a little longer into the future since the work force is shrinking, inflation is low and bank lending is also bellow norms? Let’s hope so. It is clear that many just do not have the discretionary dollars to spend on consumption as they once had. Public consumption is a large portion of the economic driver.
Many are aware that Alaska, Colorado, D.C., Oregon and Washington permit legal use of recreational marijuana. It appears that in this next election cycle California, Michigan, Ohio, Maine, Massachusetts, Arizona and Nevada may be considering a similar move. What does this all mean to our society and the relationship between state and federal law??
For The Record:
DJIA 18,086.45
S & P 500 2,126.64
NASDAQ 5,210.14
Suggested Reading: “Tools and Techniques of Employee Benefits and Retirement Planning” By Lemberg
Leonesmoneymonitormonthly's Blog 
Leave a comment