Social Security Service May Get Worse

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Despite a large increase in its budget for 2023, the Social Security Administration has admitted that service to beneficiaries seeking out help will not improve for most of this year—and in some areas, it will deteriorate, according to the AARP Bulletin.  Areas which are supposed to get worse are getting help on the 800 number and getting a decision on disability benefits.  The SSA got a 6% increase in its budget for 2023, which gives it $14.1 billion to spend.  But the agency says that most of that money is already spent and it doesn’t think customer service will improve until fiscal 2024.

You May Live Longer Than You Think : Financially Plan For It

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The Wall Street Journal recently ran an article entitled “Plan on living past your life expectancy,†which emphasized the fact that with people living longer, many outlive their money.  There are many reasons that this could happen, among them claiming Social Security too early, passing up the opportunity to buy annuities or long-term-care insurance, or simply mis budgeting.  Life expectancy refers to the average number of years someone will live from a given age, while longevity refers to how long someone might live if  everything goes well.  Many people, unfortunately, are ignorant of their so-called longevity risk, which is the probability of living a very long life.  Speak with your financial advisor to see if you are prepared for a long retirement.

Social Security Pressured By Congress To Improve Service

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After a flood of customer complaints which have gotten even worse following pandemic-related shutdowns, the Social Security Administration, SSA, is under intense pressure from Congress.  Leaders of the House Ways and Means Committee wrote a letter to acting SSA commissioner Kilolo Kijakazi which said, in part, “Many people, some of whom are elderly…have had to wait more than six hours to get help. …People have had to come back multiple days to get service.â€Â  Those who called faced a similar situation with much longer than average wait times.  “Agency-wide, we are at our lowest staffing level in 25 years, driven by years of insufficient funding,†Social Security spokesperson Nicole Tiggemann said in an email to AARP.

 

It’s Official : Social Security Payments To Rise By 8.7% In 2023

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The Social Security Administration announced that starting in January, Social Security checks will increase by 8.7%, the largest cost-of-living COLA increase since 1981.  The increase will benefit 70 million Social Security recipients benefits which will go from $1,699, on average, to $1,814.  This will be welcome news for those who have been struggling with high inflation.

Tips On When To Take Social Security

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If you are thinking about taking early retirement, think again.  With the stock market in a funk and inflation soaring, this is a painful time for everyone but especially those who are living on a fixed income.  When thinking about retirement, don’t look at the average life expectancy as the most probable outcome.  This is an average, and many people live much longer.  Sharon Carson, executive director of retirement insights for J.P. Morgan Asset Management, told USA Today that you should plan for 35 years of retirement if you are a non-smoker in excellent health.  She also says that the lower your expected long-term investment return (which is typical as you get older), the more it pays to wait longer before claiming Social Security.  So, for instance, a woman who expects a long-term investment return of 5.5% and has a life expectancy of 88 should consider claiming at age 70.

Social Security Checks Projected To Go Up Up 8.7% In January

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According to an estimate by Mary Johnson, a policy analyst for the Senior Citizen League, an advocacy group, Social Security Payments could see the largest increase since 1982 in 2023.  That’s the good news.  The bad news is that inflation is still very high so the 8.7% increase may not mean much as far as purchasing power goes.  For the average retiree who currently gets a check for $1,656, the cost-of-living hike would bring them an additional $144.10 a month in 2023, making the average payment $1,800.

 

Social Security Payments To Leap In The Double Digits Come January

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Social Security payments are expected to rise by more than 10% next January given the soaring inflation that we have experienced.  Mary Johnson, policy analyst at The Senior Citizens League, cautions that this number may be too high, particularly if inflation cools later in the year.  The best case scenario : A huge increase in January while inflation cools to a reasonable level in 2023.

Inflation Soars To Level Not Seen Since 1981

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U.S. consumer inflation hit 9.1% last month, a rate that we have not seen in more than four decades.  There’s good news and bad news here.  Seniors will get the biggest increase in Social Security than they have seen in decades.  And if you own your own home, you will be in a better financial situation than those who are renting because, as long as you have a fixed-rate mortgage, your payments won’t go up.  The biggest cost increase right now is gas, up 11.2% from the previous month and up 60% from a year ago.  This is followed by groceries, which are up 12.2% from a year ago.  Let’s hope that the Federal Reserve can get this economy back on track.

How To Maximize Social Security Benefits

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Many people make the mistake of taking Social Security as soon as possible rather than their normal retirement age.  This can have a huge negative financial impact if you live a long life.  If you are in good health, most financial planners tell you to wait until you are 70 years old in order to maximize your benefits.  The Wall Street Journal regularly writes a report on various financial questions, one of the latest from a 64 year-old who was planning on waiting until she turned 68 before filing for Social Security.  However, she is thinking of taking it now because the huge cost-of-living (COLA) increase which will likely come next January.  Glenn Reffenach of the Journal wrote, “Not to worry.  Actually you already are qualifying for these adjustments.  The Social Security Administration on its website spells out how a person’s benefits are calculated and how COLAs, in specific, fit into that calculation.  Here’s the wording:

You are eligible for cost-of-living benefit increases starting with the year you turn age 62.  This is true even if you don’t get benefits until your full retirement age or age 70.â€

In essence, your Social Security benefit is recalculated each year even if you haven’t filed for benefits yet.

Inflation Driving Seniors Back Into The Workforce

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Inflation in the U.S. hit a 40 year high of 7.9%, which is causing financial problems for many seniors.  Economists say that this is forcing many retirees back into the workforce.  Thankfully, this may ease staffing shortages which has hit a number of industries.  “We’re beginning to see the migration of the older cohort who expected to live on fixed income in a low interest-rate and low-inflation environment, Joseph Brusuelas, chief economist at RSM US LLP, told The Wall Street Journal.  “Really what you’re dealing with is an inflationary shock that has elicited a change in behavior,†he said.   The share of people over 55 either working or looking for a job rose to 38.9% in March from 38.4% in October.  That translates to more than 480K people in that age group entering the labor force during the last six months.