Two months has just been added to your social security retirement age

  If you are turning age 62 in 2017, I have some bad news. You are no longer eligible for full Social Security benefits at age 66. Instead, your full retirement benefits have shifted to age 66 and two months. By 2022, full retirement age will rise again and again until the age of 67 for everyone born in 1960 or later. “How did this happen?” you might ask. For the answer you have to look back thirty-four years to the Social Security Amendments Act of 1983. Back then, the Social Security Trust fund was running out of money (sound familiar?). The same politicians that were responsible for spending your hard-earned savings came up with a series of adjustments to extend the financial stability of the system for another 50 years. One of the provisions was to increase the Social Security full retirement age from 65 to 67. In order to soften the blow, the increase was to be phased in over time. Some Americans would be grandfathered in, while others would benefit from an eleven-year delay. The end result, after all the foot dragging, was those who happened to be age 22 or younger in early 1983–born in 1960 or later–would get screwed. Welcome to the American political system. The significance of this increase in the full retirement age is that for those thinking of taking benefits at age 66; you will be taking “early” retirement, resulting in a 1.1% reduction for starting payments two months before the new full retirement age. That means that the benefit reduction or penalty for taking early retirement increases from 25% to...

Tackling Taxes

President Donald Trump introduced a flurry of tax proposals last week. Tax reform, as well as tax cuts, was included in his plan. Give him an “A” for effort in tackling something that no politician has dared to do since Reagan. Naturally, depending upon your political views, critics will disparage his efforts, claiming it is yet another tax break for the rich. Others will approve of at least some of his suggestions. On the surface, his plan would significantly reduce the marginal tax rates, increase standard deductions, repeal personal exemptions, limit itemized deductions and let corporations and businesses expense new investment, but not deduct interest expense. His proposal would also cut taxes at all income levels. The biggest benefits would accrue to those who make the most money. Analysts estimate that if his proposal were passed as is Federal revenues would drop by $6.2 trillion over ten years. If you include interest costs over that decade, the country’s federal debt will rise by $7.2 trillion. The president originally campaigned on a 15% corporate tax rate, but upped that number to a 20% tax rate. It appeared that dropping it by the original 15% would be a budget buster. Still, that is a hefty reduction from today’s 35% (although few corporations actually pay that rate). One great idea is to allow a 25% tax rate for pass-through businesses. That would allow entrepreneurs that own their own businesses to pay a 25% tax instead of their personal tax rate. There is some controversy over exactly what kind of businesses could benefit from the pass-through rate. But since small businesses account for...

Time to check your insurance policies

With Hurricanes to the left and right of us, maybe a review of your home owner’s insurance policy makes sense. You may find out that at today’s real estate values, you are under-insured. If you are like me, the last time you visited the insurance subject was during the Katrina/Sandy hurricanes. Since then, houses in some areas have appreciated by more than 30%. If so, a devastating event such as the widespread destruction recently caused by Harvey in Texas and Irma in Florida could really decimate what is probably your most valuable asset. Given the fact that hurricanes seem to be sprouting up all over the place, if you have been spared thus far doesn’t mean that you will miss the next one. The sad facts are that according to a real estate data company (Core Logic), over half of all homeowner insurance policies have a payout that is less than the cost of rebuilding a home in the event of a catastrophic loss. Remember, too, that for most homeowners, the insurance policies you have purchased automatically low-ball the replacement cost values of your home. As far as the insurance industry is concerned, it is your responsibility to make sure you have the appropriate amount of protection. And as a starter, did you know that most home owner’s insurance offers limited coverage for hurricane and tropical storm damage? If you want something like hurricane coverage, it often comes with its own high deductible.  In some coastal areas, you may need to purchase separate windstorm coverage. “It is important to know,” says Michelle V. Orlando, President of Cross Surety, Inc,...

Elder care in an age of confusion

Many Americans confess that they are confused when faced with the myriad of Medicare choices available to them. Others are simply not planning, nor saving enough to meet the challenge of health care costs in old age. In response, a whole new industry has sprung up nationwide. It’s called Life Care Planning, an off-shoot and a natural progression for those practicing Elder Law. What, you may ask, is Elder Law and why has it become so important? Attorneys that practice elder law are essentially advocates for the elderly and their loved ones. They routinely handle a range of legal issues that usually accompany an older or disabled person. Many of these topics have been covered in this column: Medicare/Medicaid planning, Social Security, retirement, long-term care insurance, rising health care costs and more. These lawyers can also help with wills, trusts, special needs, probate proceedings, durable powers of attorney, pet trusts and other estate planning matters. These too have been topics of many of my columns. Life Care Planning takes this concept a step further. In most cases, when someone becomes disabled or reaches a certain age there is a level of care that is required. Life care planners first identify the level of care an individual needs, locates the appropriate care givers, and then figures out and coordinates the necessary private and public resources necessary to help pay for it. But it doesn’t end there. Once we reach a certain age (or our infirmities escalate) someone needs to both monitor and try to predict the next level of care required and most of the time those responsibilities rest on...

Healthcare costs are strangling us

Recently, none other than the Sage of Omaha, Warren Buffet, has sounded the alarm on what he sees as the number one threat to American businesses—rising health care costs. His advice is that we better do something and do it quickly. While Congress bickers over how to repeal and replace Obamacare, there is still a large body of American politicians who believe we should simply return to the good old days. While they fiddle with adjusting insurer’s premiums, or gutting Medicaid, the entire healthcare system surrounding them continues to burn. While they debate whether you should be responsible for your own medical insurance and how much Medicare should cover, health care costs rise at the rate of hyperinflation. Our legislators and president are strangely silent on what happens to those whose employer does not provide health insurance because they can’t afford it; (which is the case for many in small businesses). And by the way, small businesses happen to be the main employer of American labor. They are also silent on what happens to those of us whose Medicare insurance premiums, plus uncovered medical expenses, become higher than their retirement income. Recent estimates put uncovered medical costs at $260,000 for these same retirees. Of course, there is always Medicaid for the impoverished among us. But even that program, if the House has its way, will be reduced by $1 trillion this year. The politicians are focusing on the symptoms and not the cause of our healthcare problems. Mr. Buffet, a Democrat, in his recent shareholder meeting, took time to address what he called the real problem for American business,...

Living together is not what it used to be

Times are changing. Over 12 million Americans now “live in sin,” as my parents would say, and their numbers are increasing every year. As long as they remain together, everything is copacetic, but what happens when they break up? Thanks to the economy, demographics, and life-style choices, young couples today are living together and having children despite their unmarried status. In my own family, my niece is pregnant, unmarried, and has no intentions of tying the knot. Although her partner is the love of her life, they have decided (for now) to keep it that way. And in today’s economy, there may be a lot of good reasons not to get married. Number one among them may be affordability. In my example, both parties are young and work in a drugstore, stocking shelves and clerking. They live with his mother because they can’t afford to get a place of their own. You might ask why in the world they have decided to bring a child into the world under these economic circumstances, but that’s none of my business and more and more young people see nothing wrong with it. It could be that like most unmarried couples they are going through what I call a “test-drive” period to feel more emotionally and financially secure before making a more permanent commitment. That happens all the time. However, there are other reasons why getting married is no longer the first choice. As earnings and education levels among men and women are flattening out, there is no longer a crying need by some women to get married just to make ends meet....