THINKING RETIREMENT – ANDY LANDIS-The new year brings a variety of changes and opportunities from Social Security, especially if you have a “Magic Birthday” in 2014.  Read on to learn the impact on your pocketbook.

January news for everyone:

  • Are you getting Social Security now?  Everyone on Social Security gets a 1.5% Cost of Living Adjustment (COLA) effective your January payment.  Every year Social Security gets a raise exactly equal to inflation, as measured by the Consumer Price Index (CPI).  Last year inflation was 1.5% so your payment goes up that much.  The idea is that Social Security will always have the same buying power, no matter how long you live.
  • Are you on Medicare?  Medicare premiums are not going up!  They’ll stay the same $104.90 for most people.  High-income retirees pay more than that, but their payments will also be the same as 2013.
  • Do you have high work income?  The Social Security taxable earnings ceiling rises to $117,000 this year.  That means that if you earn over the ceiling, you’ll pay Social Security taxes on the first $117,000.  That’s up from $113,700 in 2013.
  • Worried about Social Security solvency?  We’re one year closer to the year Social Security will have a financial shortfall—2033.  Not a crisis, but it’s getting closer.

Magic Birthdays.  Are you having one of these birthdays this year?  You might want to contact Social Security.

  • Age 60.  If you are a widow or widower, you can draw Social Security from your deceased spouse or former spouse.  At 60 the payments will be reduced, and there are limits on your work income.  If you have your own Social Security work record, taking a widow’s payment early can be part of an early retirement strategy.
  • Age 62.  Your first eligibility for Social Security retirement is 62.  The payment amount will be reduced and there are limits on your work income.  It makes sense if you need the income.  And it can be part of an early retirement strategy if you can get a higher widow’s payment at 66.  Note that while you’re under 66, you can earn $15,480 with no reduction in your Social Security.  Earnings over $15,480 will cause some of your Social Security to be withheld.
  • Age 65.  Everyone turning 65 should contact SSA to ask about Medicare.  You must get this right—you can be penalized for filing for Medicare too late or too early.  Call or visit SSA 2-3 months before your birth month.
  • Age 66.  This is your Social Security “Full Retirement Age.”
    • You can work and draw Social Security at the same time, with no Social Security penalty, starting with your birthday month.
    • In the months before your birthday month, you can earn much more money the year you turn 66.  The threshold for no reduction is $41,400, and only earnings before your birthday month count toward that.
    • You can take spouse-only payments and hold your own payments in reserve.  It’s called the “Restricted Application” strategy.
    • Age 70.  Your Social Security will grow no higher for ages past 70.  Take your Social Security this year if you haven’t already.  And if you were getting spouse-only payments, it’s time to switch to your own Social Security.

Be sure to check with SSA for details if any of these affect you.  And as always, keep on planning

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