fbpx

Common Social Security Scams

social security scam

Turning 65 means a lot of great things – you’re eligible for Medicare, you’re at or near your full Social Security age, and of course, you can get into some museums, buy Amtrak tickets, and eat at certain restaurants for a discounted price. Unfortunately, you may also be targeted by criminals trying to steal your Social Security number. It’s important to recognize what these common Social Security scams look and sound like so you can avoid them.

Continue reading

Social Security’s Decreased Buying Power

Social Security’s Decreased Buying Power

Some are worried about the state of Social Security since the latest report found that starting next year, the program’s annual cost will exceed its income. Some speculate that since the program’s trust fund is expected to be depleted by 2034, cuts are inevitable. But, there should be a more immediate worry facing beneficiaries than a theoretical future policy change: Social Security’s decreased buying power.

There are several reasons why you can’t rely solely on Social Security in retirement, and the fact that benefits have lost 33% of their buying power since 2000 is one of them. And, they will continue to lose buying power as long as the Cost of Living Adjustments (COLA) are below the inflation rate. Inflation rates have been around 2% which is relatively low, but still enough to eat away at retirees’ savings and value of a Social Security check: If you retire at age 65 and the inflation rate stays at 2% per year, $75,000 will have the same buying power as $50,000 when you are 85.

To make matters worse, the costs of some services that retirees spend more money on than the average American are rising faster than the overall inflation rate, such as healthcare, housing, and food. Since 2000, prescription drug prices have risen 352%, Medicare Part B premiums have risen almost 200%, along with home owners’ insurance and real estate taxes. The Senior Citizens League projects the cost-of-living adjustment for 2020 to be 1.7%. Since 2000, retirees’ expenses have increased twice as fast as the annual COLA adjustment to Social Security.

There are reasons why you should be worried about inflation, especially in retirement. This could especially be a problem if higher tariffs on Chinese goods raises the inflation rate in the third quarter, after the COLA adjustment is decided for the year. Inflation can erode the buying power of your Social Security benefit, as well as your personal savings.

There’s no telling what the inflation rate could be 15 years from now when you’re already retired and relying on Social Security and your savings – in the 1970’s the inflation rate was over 7%. And there’s no guarantee that COLA adjustments would keep up with an increased inflation rate.

If you need a plan to combat inflation and Social Security’s decreased buying power, contact the professionals at Peak Financial Freedom Group. They can help you create a plan for a long retirement. Click here to schedule your no cost, no obligation financial review today.

The State of Social Security

The State of Social Security

The annual report on Social Security’s financial condition was recently released, and many are worried about the program’s solvency. The annual cost of the program is expected to exceed its income for the next 75 years starting in 2020. And, the trust fund that covers retirement benefits is expected to be depleted by 2034. This seems grim, but it’s unlikely that the program will disappear. Here are 3 important things about Social Security to keep in mind.

This does not spell doomsday for Social Security

The current projections are based on estimated economic growth, tax collections, inflation, and other factors. If these exceed expectations, the trust fund will last longer. And, even when the reserves run out, the program will continue to receive funding from Social Security taxes indefinitely. It is estimated that taxes will be able to pay for 77% of Social Security benefits for the next 75 years.

Future changes to the program might not affect you

Those already receiving benefits are unlikely to be affected by future changes to Social Security. However, high-income retirees might see changes to their benefit in the future. It’s possible that taxpayers with incomes over $250,000 per year could see their benefits reduced, or taxed at a higher rate. Right now up to 85% of your benefit can be taxed. This could mean that it’s even more important for higher-income retirees to strategize when it comes to tax minimization and Social Security benefit maximization.

There are still strategies you can use to maximize your benefit

Even though there are reasons why you can’t rely solely on Social Security in retirement, it can still provide you with reliable income in retirement. This is especially valuable as lifespans increase. Since there may be changes to Social Security in the future, it’s important to have a strategy for maximizing your benefit. You can do this by working for at least 35 years, because your benefit is based on your average monthly earnings during your highest-earning 35 years.

There are good reasons to take Social Security benefits at any age, but don’t take them earlier than you planned just because you think the program is about to run out of money. If you start collecting Social Security at age 62, your benefit will be reduced. You will receive your full benefit between the ages of 65 and 67, depending on the year you were born, and you will receive 8% more than your full benefit for every year after that you delay. If you wait until you are 70, you will receive 132% of your full benefit, but no more than that if you delay longer.

It can be good to reassess your Social Security maximization strategy every few years, or when new laws are passed or reports come out. The professionals at Peak Financial Freedom Group can help you with Social Security maximization strategies based on your unique needs and financial situation. If you don’t have a plan for when to start taking Social Security benefits or have an outdated plan, click here to schedule your no cost, no obligation financial review today.

A Change to Social Security

A Change to Social Security

Social Security may be in jeopardy: The latest projection from the trustees of Social Security and Medicare shows that the program won’t be able to pay out full benefits by 2035 if Congress makes no changes. The program is already running low on funds, and there have been budget cuts over the past few years.

This is just one reason why you can’t rely solely on Social Security in retirement. Most recently, the Social Security Administration has slowly stopped mailing out most Americans’ Social Security benefit statement and encouraging people to access their statements online. From 2012 to 2018 the number of people who reviewed their online statement dropped from 96% to 43%.

The research shows that when these statements are only available online and are not mailed to recipients, they are less likely to make the optimal decisions when claiming their benefits. So if you’re under 60, be aware that the only Americans who will still receive paper benefit statements are those 60 and over who have not claimed their benefits and did not set up an online account. Most important, if you are nearing the age at which you’ll claim benefits you should create an online account and check your statements regularly.

Research shows that when people review their Social Security benefit statements they are less likely to claim at a younger age, as if you claim before your full retirement age your benefit will be reduced. Working longer and waiting to claim at, or past, your full retirement age could be a strategy to get the most out of your Social Security benefit. If you wait until age 70 to claim your benefit, it could be up to 132% of your benefit if you had claimed it at your full retirement age. However, there are many factors to consider when deciding when to start collecting.

To make an online account, either look for a letter with an activation code or go onto the Social Security administration’s website and use a valid email address to create an account with your Social Security number and address.

Even if Social Security is not in jeopardy, it’s important to have a comprehensive retirement plan in place. The professionals at Peak Financial Freedom Group can assess your finances and help to create such a plan for you. Take the first step by clicking here to schedule your no cost, no obligation financial review today.

Peak Financial Freedom Group
2520 Douglas Boulevard, Suite 110
Roseville, CA 95661

DISCLOSURE: All presentation data is provided and intended to be used for general educational purposes only and is not intended as a solicitation for you to buy or sell any financial product. None of the material in this presentation is intended to give you, nor are the presenters engaged in giving you, specific tax, investment, real estate, legal, estate, retirement, or financial advice, but rather to serve as an educational platform to deliver information; nor is it intended to show you how the strategies presented can specifically apply to your own tax, investment, estate, financial, or retirement position, but rather to offer an idea of how these principles generally may apply.

Stocks, bonds, or mutual funds have risks and can lose principal, even with a stop loss, and there is no guarantees of gains, as past performance is not indicative of future positive investment results. The sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund a new portfolio and/or annuity may have tax consequences, early withdrawal penalties, or other costs and penalties as a result of the sale or liquidation. You can’t invest directly into a stock market index. A fixed index annuity with an income rider can protect your savings from losses and provide you guaranteed lifetime income, but you could incur surrender charges, gains aren’t guaranteed, you’ll pay a fee, and guarantees are backed by the financial strength claims paying ability of the issuing annuity company.

Illustrations/projections displayed within this presentation are hypothetical in nature and should not serve as the sole determining factor in making financial decisions. Consult with a qualified investment, tax, legal, and/or retirement advisor before making any decisions. By contacting Peak Financial Freedom Group, you may be offered additional information regarding the purchase of financial products. Seminars, radio shows, TV productions, book releases, magazine and book promotions are sponsored, promoted and paid for by Peak Financial Freedom Group, LLC. If you place assets under management with our firm, we are paid an advisory fee, and if you purchase an annuity from our firm, we are paid commissions from an insurance company.

Investment Advisor Representatives of and Advisory Services offered through Fiduciary Solutions, LLC, a Registered Investment Advisor. Peak Financial Freedom Group LLC is primarily a fixed insurance sales organization and provides no Advisory Services. PFFG Insurance Agency LLC, CA License #0N14103, is a licensed insurance agency and provides no Advisory Services. Peak Financial Freedom Group LLC, PFFG Insurance Agency LLC, and Fiduciary Solutions LLC are separate affiliated entities. Insurance products and services provided by PFFG Insurance Agency LLC and independent agents.

Jim Files CA Insurance License #0F06511 Dan Ahmad CA Insurance License #0732913

© 2020 Peak Financial Freedom Group