Safe Money and the Plain Truth

Why the financial services industry is stacked against the American Retiree

Archive for the ‘Retirement’ Category

Is A Reverse Mortgage Right For Me?

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Reverse mortgages are versatile and flexible. Often times they are used more as a financial planning tool than a mortgage. Information and exposure is the key because as more and more people learn about reverse mortgages, the more they will become a mainstream product.

Each year new records are set regarding reverse mortgages in the numbers of people using them. Their time has come and the uniqueness of these products will create more and more situations where their use will be considered mainstream. These uses can and will include income, access to money for the extras in life, health care issues, home improvements and modifications, charity gifts, assisting a family member and as cash reserves.

Even though their popularity has grown some of the most basic facts about reverse mortgages are often misunderstood and unclear. A relatively short industry history and rapid product evolution have bombarded consumers with information that at times is confusing or misleading.

Do you sign away your house? Can you lose your house? Will my income stop? These are some of the misconceptions associated with reverse mortgages. The truth is the truth and we will examine each of these points carefully. Our goal is to provide accurate information about these products and to make the consumer aware of the many options available so the very best decision can be made for the consumer’s personal situation.

If you’d like more information just let me know and I’ll send you a booklet  discussing reverse mortgages.  This booklet provides an insight to the most common questions asked by consumers.

Written by brantleyw

September 30, 2009 at 1:11 pm

Can I Work and Receive Social Security

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I get a lot of questions surrounding Social Security benefits as you can imagine.  One of the more common ones is, “Can I keep working and get money from Social Security?” 

YES! You can work and receive Social Security
benefits at the same time. While you work, your
earnings will reduce your benefit amount only until
you reach your FRA(Full Retirement Age). In any year you are under FRA for the entire year, you are entitled to $800 a month
or $9600 for the year. See the example below to
understand how this works.

EXAMPLE: Earnings – $20,960 ($8000 over
the $12,960 limit) during the year. Their
Social Security benefits will be reduced by
$4000 ($1 for every $2 they earn over the
limit), but they will still receive $5600 or
their $9600 in benefits for the year. ($9600
minus $4000=$5600)

Starting with the month you reach FRA, you can
receive your benefits with no limit to your earnings.
Make sure to contact your Social Security Office at
the beginning of the year you reach FRA if you are
not already receiving your benefits. If you delay
taking your Social Security benefit beyond your
FRA, benefits will increase by a certain percentage
up to age 70.

Written by brantleyw

September 27, 2009 at 4:12 pm

The New Math of Social Security

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This was a recent article that was published by Smartmoney.com.  Definitely worth a read if you are on Medicare.   

COME JANUARY 2010, seniors may do a double take after seeing their Social Security checks. The two to three percentage-point increase in benefits they usually get each year won’t be there.

That’s because, for the first time in three decades, there likely won’t be a cost of living adjustment (COLA). “People notice when their checks don’t change, says Bruce Meyer, a professor at the University of Chicago’s Harris School of Public Policy.

In the context of degraded home prices and investment losses, the change will feel like a loss to many seniors, even though benefit amounts for 2010 won’t shrink. Social Security benefits are adjusted every year to keep up with inflation, so that seniors can retain their purchasing power. Adjustments are based on the consumer price index for urban wage earners (CPI-W) between the third quarter (July-September) of the previous year and the third quarter of the current year. The 2010 COLA will be based on a period marked by sharp drops in prices and deflation.

Democratic lawmakers are trying to lessen the perceived pain. Rep. Carolyn McCarthy (D., N.Y.) introduced legislation last week that would provide a one-time $150 payment for Social Security beneficiaries to compensate for the lack of an adjustment.
Still, anxious seniors should keep in mind that they will actually come out ahead of inflation. “In a sense, older people are going to do fine because the cost of living is down and they’re not going to have their benefits cut,” says John Laitner, the director of the Retirement Research Center at the University of Michigan.

Here is the good and bad about a flat COLA.

Reasons to Fret

Next COLA increase will be in 2012: Not only won’t seniors receive an adjustment for 2010, but the Social Security and Medicare Trustees project no cost of living adjustment for 2011 and only a modest 1.4% increase in 2012. That means seniors won’t see higher payments until 2012. Of course, the Trustees report is a forecast, and next year’s report, which will take into account new data, could be revised.

Rising health-care costs: Older people get hit more by rising health-care costs than younger people do, says Pamela Herd, an associate professor of public affairs and sociology at the University of Wisconsin. That’s because seniors are disproportionate users of the health-care system and pay about 20% higher out-of-pocket health care costs than does the rest of the population. So while inflation hasn’t really been a concern, health-care costs are increasingly eating into seniors’ Social Security checks.

Higher Medicare premiums for some: Medicare Part B premiums have increased almost every year to keep pace with the growth in Part B expenditures. (Part B insurance helps pay for some services not covered by Part A, generally on an outpatient basis.)

For most of the 42 million Part B beneficiaries, the amount of the monthly Social Security COLA each year has been more than enough to offset the increase in the Part B premium – resulting in net increases in benefits, according to the Kaiser Family Foundation. But next year and in 2011, about 8% of Part B beneficiaries will be subject to higher premiums, sums that will be deducted from their Social Security payments. According to Kaiser, they’ll pay $104.20 a month in 2010 and $120.20 in 2011, up from $96.40 this year.

On the Upside

The benefit bump: Social Security beneficiaries got an atypically large 5.8% increase in benefits in 2009 – the biggest in more than 25 years. That outsize increase was primarily because of 2008’s spike in oil prices, says Laitner. But since then the CPI increase was lost as energy prices fell. It was an excessively high COLA that raised the purchasing power of seniors’ benefits, actually putting them “ahead where they should be,” says Andrew Biggs, a resident scholar at the American Enterprise Institute, a nonprofit public policy group.

Seniors are better off than most: While the poverty rate increased from 2007 to 2008 and median household income fell, both indicators remained statistically unchanged for people 65 and older, according to last week’s Census report. “So the official data say that group is doing quite well – and all those numbers predated the 5.8% increase in Social Security benefits” this year, says Meyer of the University of Chicago.

Written by brantleyw

September 16, 2009 at 6:13 pm