Social Security Administration Stops Sending Paper Statements

Social Security Administration Stops Sending Paper Statements

For budget reasons, the SSA stopped sending benefit statements in April. This change is anticipated to save $30 million in fiscal year 2011 and $60 million in fiscal year 2012, which begins October 2011. Just over 10 years ago, the Social Security Administration (SSA) began mailing out annual statements of expected Social Security benefits.  You probably remember receiving the black, white, and green statements right before your birthday.  With the statements, you can verify your projected benefit and confirm that your contributions and earnings record were recorded correctly. According to the SSA, they’re working on making an electronic version of the benefit statement available, but no estimated date has been announced. In the meantime, the SSA’s Retirement Benefits Calculator is available online now, and shows your retirement benefit estimates at age 62, at your full retirement age, and at age 70.  Amounts shown in the calculator are based on your prior and anticipated future work earnings amounts. Using the calculator, you can also build scenarios where you estimate your benefit based on different future earnings amounts and “stop work” ages – something you couldn’t do with the old paper statements! To use the Retirement Benefit calculator, click here to link to the SSA Retirement Benefit calculator.  Review the information on the page about who can use the Retirement Benefit Estimator; look at the right for the big red button that says “Estimate Your Retirement Benefits” (big red button on the right) and click on it.  Next you’ll be directed through a privacy statement and then you’ll need to enter personal identifying information.  Enter last year’s income on the next screen, and...

The U.S. Budget – What Will It Mean for Retirement Programs?

Earlier this week, I was fortunate to attend the “Retirement Income Summit” offered by Investment News. Sessions at the Summit included the expected topics: investments, taxes, client behavior, insurance, retirement strategies, etc. One of the sessions I found extremely informative was the Washington Insider’s View, presented by Jamey Delaplane of Davis & Harmon, a D.C. law firm I remember from my early actuarial career as very involved in helping insurers understand and implement tax strategies on behalf of the insurers they worked for and the clients served by those insurers. It’s hard to avoid talk about federal spending these days, and much of Jamey’s presentation revolved around the retirement implications of the upcoming federal budget discussions.  Jamey referenced a survey by Matthew Greenwald & Associates on behalf of the National Institute on Retirement Security.  That survey found that “nearly 80% of Americans believe leaders in Washington do not understand how hard it is to prepare for retirement in this economy. Some 83% say government should make it easier for employers to offer pensions, and 81% believe that Washington leaders need to give a higher priority to ensuring more Americans can have a secure retirement.” On the other hand, Jamey noted that with the current budget status, there are “no sacred cows”.  On the table are the mortgage interest deduction, reductions in the tax incentives to save for retirement and life insurance and annuity cash value accumulations, and of course Social Security and Medicare.  With respect to many of these tax benefits, he noted that many of the discussions focus on “upper income” Americans, with the possibility of phaseouts, additional taxes, and/or means testing. He described the upcoming debt ceiling vote as...
About that Social Security tax reduction…

About that Social Security tax reduction…

Several people have asked me if the reduction in Social Security taxes in 2011 will impact their actual benefit amount. In short, the answer is “no”.  At least, not directly. What’s actually happening is that for the first time ever funds in the government’s GENERAL account are being used to pay into the Social Security trust fund.  And we all know that there are no excess funds in the GENERAL account, so in essence we’re borrowing to pay to add to the Social Security trust fund to the tune of 2% of earned income (up to the maximum for each person contributing) in 2011.  So, the funding level is the same as it would have been without the tax cut, but the funds come from borrowing from the GENERAL fund rather than having you pay in the full 6.2% of salary that you’d normally pay. This is for the year 2011 only. As long as benefits remain at current levels, there will be no impact on your benefits due to the 2% tax “reduction” in 2011.  But as we all know, the GENERAL fund gets its revenue from… oh, yes, taxes.  At some point, taxes will need to be raised to pay for this 2011 reduction. How does this impact your planning? Not at all, immediately.  However, we have been assuming for the past year that taxes will increase to the year 2000 levels as soon as the current tax cuts expire.  We have also assumed that Social Security levels will increase at levels less than the rate of inflation to reflect that there may be future reductions in Social Security payments. ...