Monday, April 28, 2014

Claiming Social Security Retirement Too Early can be a Big Mistake

Most seniors claim their Social Security retirement benefit too soon.
As they enter their 60s workers usually understand that they can claim their Social Security retirement benefit at any time between age 62 and 70. But they don't understand the full implications of this crucial decision. 
Most of them decide to claim their benefit sooner rather than later. In my opinion, this is more often than not a mistake.   
Full retirement age (FRA) is 66 for people born between 1943 and 1954. If you claim before your FRA, you receive reduced benefits. The longer you wait, the more you increase the monthly benefit you will receive based on your work record. This reduction (or increase) in benefits is permanent: it will continue for the remainder of your life. Even if you live to be 100 years old or more.
Your decision to claim early may reduce your spouse's benefits as well. If you are married and are the higher earner spouse, waiting to take Social Security retirement will usually provide a higher survivor benefit for your spouse if he or she outlives you. The earlier you claim, the more the survivor’s benefit will be reduced.   
Unfortunately, claiming early is the popular choice. Most workers start taking their benefits before they reach their FRA. According to the Social Security Administration Annual Statistical Supplement for 2012, 74% of retired workers elect to claim their benefits early. This means they will receive reduced benefits for the remainder of their lives and diminish the survivor benefit available to their spouse. 
Perhaps because they have lower income from other sources, relatively more women (76.4 percent) than men (71.3 percent) elect to claim reduced benefits.
Experts Agree that Claiming Early is Usually a Mistake
According to the The Center for Retirement Research at Boston University “[i]f you’re approaching retirement, when you claim benefits is the most important financial decision you’ll likely make.”
Most experts believe that claiming early can be a huge mistake that can cost retirees a lot of money over the rest of their lives. People don’t adequately consider the long term consequences of their action. People don’t understand how risky it is to claim early.
Social Security retirement is a unique benefit that can be a particularly valuable resource as you age and your other assets and sources of income dissipate. Unlike most other resources, Social Security increases each year to offset the effects of inflation. It is not subject to the whims of the stock market. And it is government guaranteed.   
And unlike your other resources, Social Security is a benefit that you cannot outlive. The reality is that people are living longer. If you and your spouse are both age 65 today, the probability is that at least one of you will live to age 90. Few people have saved enough to protect themselves from this “longevity” risk.
Longevity risk may be your biggest potential source of financial insecurity in retirement. You don’t want to enter your late 80s with your savings dried up and your sources of income reduced. But you can protect yourself from longevity risk by maximizing your Social Security – a source of income that grows each year to keep pace with the growth in the cost of living.

But Isn’t Social Security Going Broke?

Don’t be brainwashed into thinking that Social Security won’t be there for you in the future. That seems very unlikely. Politicians want to get re-elected. And they know that seniors who have a vested interest in protecting Social Security are more likely to vote than any other age group. (See: Why Older Citizens are More Likely to Vote: Retirees have valuable government benefits to protect).
This means that while making even minor changes to Social Security is politically difficult, politicians are not going to let it go broke. It is much more likely that Social Security will get the tweeks it needs to stay strong for the next 50 years. Even if there are changes, any significant reduction in benefits will almost certainly be applied only to younger workers.
The bottom line: if you are in your 60s today, you can count on Social Security. It should be there for the rest of your life. And it won’t run out like your savings might if you live too long. Social Security should remain as your most reliable source of retirement income, even as you and/or your spouse live well beyond age 90.

The Math: Benefit Reductions and Increases

Here is the math on how early vs. delayed claiming affects your Social Security retirement benefit.
Reduced retirement benefits can be claimed as early as age 62. For workers who reach age 62 in 2005 through 2016, the maximum reduction is 25 percent. For example, if your FRA benefit is $1,000 a month, you can claim and receive a benefit of $750 a month at age 62.
Increased retirement benefits are received by insured workers who postpone their retirement beyond FRA. Their benefits are increased for each month of nonpayment beyond their FRA up to age 70. This increase is called a “delayed retirement credit.” 
The total credit possible per year for delayed retirement credits is 8 percent for workers who reach age 62 in 2005 or later. This means that insured workers who wait until age 70 to start receiving benefits will receive a 32% increase in their monthly benefit for the rest of their lives. For example, if your FRA benefit is $1,000 a month, you can wait to claim and receive a benefit of $1,320 per month at age 70.
In other words, by waiting until age 70 to claim, you will increase your monthly benefit by 76% over what you receive if you claim at age 62.
The amount you receive when you first get benefits sets the base for the amount you will receive for the rest of your life. Your retirement payments will change each year based on cost of living adjustments. But these proportionate reductions or increases are permanently locked in.  
To estimate your particular benefit amounts go to

Issues to Consider Before you Decide

When to claim Social Security is surely one of the most important decisions we face at retirement. Delaying your claim is the smart choice for many people but not for everyone. The best choice for you will depend on your personal circumstance including your current cash needs, your health situation, your family longevity, and your future financial needs.
A Social Security Administration (SSA) booklet notes that there are many issues to consider as you make your decision, such as:
  • Are you still working?
  • Do you come from a long-lived family?
  • How is your health?
  • Will you still have health insurance?
  • Are you eligible for benefits on someone else's record?
  • Do you have other income to support you if you decide to delay taking your benefits?
  • Will other family members qualify for benefits with you on your record?

Too Important to Take Lightly 

When to claim Social Security is a critically important decision that most seniors are making without adequate information and consideration of the long term consequences. But it is vital to your future financial security and standard of living.
According to A. Barry Rand CEO of AARP “the typical older American has an income of about $22,000 a year, and Social Security accounts for about half of a typical older family’s income.” And even if you are a higher middle income couple, Social Security is likely to make up 20% or more of your retirement income.
Claiming your benefit should not be a casual decision. Spend some time considering the implications for you and your spouse.
Social Security is complicated with many tricks and traps. Strategies have been developed to help you maximize your benefits. And computer programs have been developed that can help you understand the financial implications of your decisions.
You can research these on your own. Or you may want to seek some expert guidance from a financial planner, accountant or lawyer who is knowledgeable about Social Security before you make any decisions. It’s worth the investment of your time and a few dollars. Maximizing benefits can make a difference of $100,000 or more in income over the lifetimes of a dual income married couple.
Other Resources:
Before you file to claim your retirement benefit I suggest you read the SSA booklet “When To Start Receiving Retirement Benefits.”Also see SSA, What Is The Best Age To Start Your Benefits?
And take 3 minutes to watch the video: Social Security: It Pays to Wait
To estimate your particular benefit amounts go to
Delay is not right for everyone. If you really need the income or don't expect to live beyond age 80, you might be better off claiming early. For an article discussing reasons you might want to claim early see: When It Makes Sense To Take Social Security Income At 62
I have used a planning strategy called "file and suspend" myself to maximize my family's benefits. Here is a link to my blog article about it.
A number of articles and books have been written to help consumers make smart decisions and maximize their Social Security Benefits. Here are some examples:

Sunday, April 13, 2014

Long-Term Care Commission Sets Additional Public Meetings

The Pennsylvania Long-Term Care Commission is working on recommendations on how to improve the long-term care system in Pennsylvania. 

The commission has until Dec. 31, 2014 to submit a plan to the governor that will set priorities and guidelines to improve the current long-term care system. As part of the development of that plan, the commission is seeking public input.

The commission is accepting written comments from the public through June 27, 2014. In addition, it is holding public meetings across the state where attendees will be permitted to provide verbal comments and feedback on the state of long-term care. 

The initial public meeting was held in Harrisburg last Friday, April 11. Additional public meetings have been set for the times and locations listed below.  
For more information on the Commission see my recent post at:, or visit its webpage here or call 717-425-5719 or 1-800-654-5984 (TDD users).   

Here is a list of upcoming Public Hearing dates and locations:

Thursday, May 8, 2014, in Mercer, PA
Time: 9 a.m. – noon
Mercer County Career Center
776 Greenville Rd.
Mercer, PA 16137

Friday, May 9, 2014, in Allison Park, PA
Time: 1 – 4 p.m.
A.W. Beattie Career Center
9600 Babcock Blvd.
Allison Park, PA 15101

Friday, May 30, 2014, in Williamsport, PA
Time: 9 a.m. – noon
Pennsylvania College of Technology
1 College Ave.
Williamsport, PA 17701

Friday, June 6, 2014, in Blue Bell, PA
Time: 1 – 4 p.m.
Montgomery County Community College
Central Blue Bell Campus
340 Dekalb Pike
Blue Bell, PA 19422

Friday, June 20, 2014, in Lords Valley, PA
Time: 9 a.m. – noon
Pike County Training Center
135 Pike County Blvd.
Lords Valley, PA 18428
If you intend to provide verbal comments at a public meeting, you must register to attend the meeting two business days prior to the meeting.To register to present verbal comments or to attend the public meeting, please go to the registration page and follow the registration instructions by clicking here. You may also register by calling, 717-425-5719 or 1-800-654-5984 (TDD users) with your name and phone number.
Verbal comments at a public meeting will be limited to five minute to allow others time to share their comments. 

Written comments and feedback may be submitted through June 27, 2014 via email to:
or via US mail at PO Box 2675, Attn: OLTL POLICY, Harrisburg, PA 17105.

Saturday, April 12, 2014

Power of Attorney: Things You Need to Know

“I am the master of my fate: I am the captain of my soul.”
So wrote 19th Century poet William Ernest Henley, expressing a human desire that may be harder to attain in the 21st.  Life expectancies have soared over the past 100 years.  But, as we live longer, the risks increase that due to accident or illness we may someday need help in making everyday financial and health care decisions. It is a risk we all face.   
In the event you are ever unable to make financial or medical decisions for yourself, who will decide for you?  Will you remain the master of your fate?
There are legal tools that can help you ensure that you will always have as much control as possible over your financial affairs, your personal decisions, and your health care treatment no matter what may happen to you physically or mentally.  The most important of these is the power of attorney.
With a power of attorney you give someone you trust the authority to act on your behalf, make decisions for you, and be your advocate in the event that you are unable to do these things for yourself.  The person you authorize is called your “agent.”
Your power of attorney is so important that you should not rely on a simple or standard document.  It should be carefully crafted to meet your individual situation, preferences and goals. 
Your agent will only be able to act in ways that are authorized in the document.  For example, if you want a family member to have access to your medical information in the event of a health care crisis, your power of attorney should grant that authority.  
Many people want their family to be able to protect their assets from loss to health care costs in the event of a long term illness. If the document does not contain the proper language, you family may be at risk of financial devastation.     
Here are some critical issues you should consider for  your power of attorney.
1.  Asset Protection. Do you want to authorize your agent to protect your assets from health and long-term care costs?  If so, your agent may need to transfer ownership of your assets to your spouse or children.  This authority must be clearly stated in the document, or your agent may not have the ability protect your assets for your family. A standard power of attorney won’t include this power, so you may need to raise this issue with your lawyer.  
2.  Authorization of your Health Care Representative. A power of attorney can help ensure that you will always receive the types of medical treatment you desire, avoid unwanted procedures, limit your pain, and be treated with care, dignity and respect.  To achieve these goals, your power of attorney can empower a trusted person to serve as health care agent to advocate for you. Your document can also provide some directions to your decision makers by expressing your values and philosophy about the health care treatment you want to receive, especially at the end of life.     
Appointment of a health care agent with broad authority to act for you is particularly important because of the federal privacy regulations referred to as HIPAA. These federal rules may cause health care providers to deny your family access to your health information and participation in your care. The inclusion of appropriate language in your health care power of attorney will authorize your agent to get the information needed and make the best informed decisions on your behalf.  
3.  Avoiding Abuse. In the wrong hands, a power of attorney can be an instrument of financial abuse and exploitation. The danger of abuse is particularly acute when the document includes the authorization to make transfers of your assets. Your power of attorney needs to walk the fine line between your goal of protecting the financial security of your loved ones and ensuring that you will always be able to receive and pay for the care you need. 
4.  Naming Successor Agents. Just as you may someday be unable to make financial and health care decisions, there is always a possibility that the person you choose as your agent may become unavailable or unwilling to serve.  Make sure you deal with this possibility by appointing a back-up agent.
Conclusion.  A power of attorney may someday become your most important legal document.  It may be of invaluable assistance to you and your family.  But, an ill-considered power of attorney can lead to disaster.  This is one document where you don’t want to cut corners.  You and your family could someday pay a heavy price. 

Saturday, April 5, 2014

2014 Survey details the cost of Long-Term Care Services and Supports

Each year Genworth surveys nearly 15,000 long term care providers in 440 regions nationwide to determine the cost of various long-term care services. The resulting details informs consumers regarding the costs and can help them plan to meet their needs in their preferred location and care setting. 
This past week Genworth issued its survey report for 2014.  
What is Long-Term Care
Long-term care refers to the types of assistance you may need if you have a prolonged physical illness, disability or severe cognitive impairment (such as Alzheimer’s disease) that keeps you from living independently. These limitations may prevent you from carrying out basic self-care tasks, such as bathing, dressing or eating, called Activities of Daily Living (ADLs). And you may need assistance with Instrumental Activities of Daily Living (IADLs), including meal preparation, money management, house cleaning, medication management, and transportation.
About 70 percent of people age 65 or older will need long-term care services and supports at some point in their lifetime.
Unfortunately, the costs of long-term care services and supports are typically not covered by Medicare or other health insurance. It can easily bankrupt the recipient and destroy a family's financial security. [Of course, the impacts of long-term care extend far beyond dollars, affecting the careers, personal and emotional lives of caregivers. See the related Genworth Report: Beyond Dollars for more on these impacts.]
The Genworth survey and related resources provide both national and local cost of care information that can help families understand, prepare for, and perhaps limit the potentially catastrophic impacts of long-term care.
Care Costs for Williamsport and Wilkes-Barre/Scranton/Hazleton
Long-term care is provided in a variety of settings. Costs vary by setting and by location. The Genworth survey provides a list of costs incurred in various settings in each state. The methodology used is described here.
A separate cost of care resource can be used to dig down into costs on a local basis. In Pennsylvania, Williamsport and Scranton-Wilkes-Barre-Hazleton are placed in separate regions. The median annual costs for various services in Williamsport and the Scranton-Wilkes-Barre-Hazleton areas are as follows:
Homemaker Services
$43,472 Williamsport
$43,472 Scranton-Wilkes-Barre-Hazleton
Home Health Aide Services
$43,472  Williamsport
$45,760  Scranton-Wilkes-Barre-Hazleton
Adult Day Health Care
$26,125 Williamsport
$16,900 Scranton-Wilkes-Barre-Hazleton
Assisted Living Facility
$35,280 Williamsport
$27,360 Scranton-Wilkes-Barre-Hazleton
Nursing Home (semi-private room)
$100,624 Williamsport
$96,725   Scranton-Wilkes-Barre-Hazleton
Nursing Home (private room)
$108,624 Williamsport
$99,280   Scranton-Wilkes-Barre-Hazleton
Facility based costs continue to increase more rapidly than home care costs. This has been a long-term trend. But costs for both facility and home care are staggering. 
Planning, preparation, and expert assistance are more important than ever. Pennsylvania residents can meet with an elder law attorney at Marshall, Parker and Weber to set up a plan that will help protect you and your family.
In addition, Marshall, Parker and Weber offers life care planning services that helps Pennsylvania families find and finance the care they need. Contact certified elder care coordinator Karen Griswold for more information on how life care planning can benefit your family.