What’s New With Social Security?

Before the Bipartisan Budget Act of 2015 passed, the Social Security Disability Insurance Trust Fund was projected to be depleted sometime this year.

Congress shifted tax revenues from the Old Age and Survivors Insurance Trust Fund to keep disability benefits fully funded. However, Social Security still faces long-term shortfalls under currently scheduled funding and expenditures.1

While Social Security disability benefits are a good backstop, you may wish to consider purchasing your own disability insurance, particularly if you’re self-employed. And since government disability benefits don’t kick in for at least five months (and even a private insurance policy may have a waiting period), you also should consider setting aside an emergency fund.

If you’ve retired and are taking Social Security benefits, but also have other substantial income such as wages, self-employment, interest or dividends, you may owe federal income taxes on Social Security benefits. Joint return taxpayers with a household income between $32,000 and $44,000 could pay income taxes on up to 50 percent of benefits. If reported income is more than $44,000, you may have to pay taxes on up to 85 percent of your benefits.2

If you’re receiving Social Security benefits but have not yet reached full retirement age, earning extra income could result in some of your benefits being withheld. For example, if you earn more than $15,720 a year, $1 in benefits will be withheld for every $2 in earnings above that limit. The year you hit full retirement age, both your earnings limit and benefit amount increase, and in the following years, there’s no limit on earnings.3

Last April, two strategies that had long helped married couples optimize their Social Security benefits came to an end:

• File and suspend – file for spouse but earn delayed credits on their own benefit
• Restricted application – full retirement age beneficiary files for spouse only benefits

However, the suspend strategy remains intact for divorced couples: If an ex-husband or wife decides to suspend his or her benefit, the ex-spouse can still apply for a derivative benefit if eligibility requirements are met.4

In other Social Security news, on July 7, Rep. Walter B. Jones (R-NC) introduced H.R. 5670: Social Security Guarantee Act of 2016. This bill, which was assigned to a congressional committee for consideration, is designed to guarantee the right of individuals to receive Social Security benefits in full with an accurate cost-of-living adjustment each year.5

Give us a call for a complimentary Social Security analysis. We can help take the guess work out of taking your social security benefits and show you how they fit in retirement plan. 801-990-5055

Our firm assists retirees and pre-retirees in the creation of retirement strategies utilizing investment and insurance products. Advisory services offered through B.O.S.S. Retirement Advisors, a Registered Investment Advisory firm.. Insurance products and services offered through B.O.S.S. Retirement Solutions. To see a list of services please visit us at bossretirement.com/services.

This content is provided for informational purposes only. It is provided by third parties and has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.We are not affiliated with any government agency including the Social Security Administration.

1 Social Security Administration. 2016. “A Summary of the 2016 Annual Reports.” https://www.ssa.gov/oact/trsum/. Accessed Aug. 5, 2016.
2 Social Security Administration. 2016. “Benefits Planner: Income Taxes and Your Social Security Benefits.” https://www.ssa.gov/planners/taxes.html. Accessed July 12, 2016.
3 Social Security Administration. 2016. “Fact Sheet.” https://www.ssa.gov/news/press/factsheets/colafacts2016.pdf. Accessed July 12, 2016.
4 Rachel L. Sheedy. Kiplinger. February 2016. “Government Spells Out New Social Security Rules.” http://www.kiplinger.com/article/retirement/T051-C000-S001-government-spells-out-new-social-security-rules.html#. Accessed July 12, 2016.
5 Congress.gov. July 7, 2016. “H.R.5670 – Social Security Guarantee Act of 2016.” https://www.congress.gov/bill/114th-congress/house-bill/5670/text. Accessed July 12, 2016.