Chapter_14

The Future of Social Security

In June 2022, the Social Security Board of Trustees released its annual report on the financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to become depleted in 2035, one year later than projected last year, with 80 percent of benefits payable at that time.

The OASI Trust Fund is projected to become depleted in 2034, one year later than last year’s estimate, with 77 percent of benefits payable at that time. The DI Trust Fund asset reserves are not projected to become depleted during the 75-year projection period.

In the 2022 Annual Report to Congress, the Trustees announced:

  • The asset reserves of the combined OASI and DI Trust Funds declined by $56 billion in 2021 to a total of $2.852 trillion.
  • The total annual cost of the program is projected to exceed total annual income in 2022 and remain higher throughout the 75-year projection period.

“It is important to strengthen Social Security for future generations. The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually,” said Kilolo Kijakazi, Acting Commissioner of Social Security. “Social Security will continue to be a vital part of the lives of 66 million beneficiaries and 182 million workers and their families during 2022.”

Other highlights of the Trustees Report include:

  • Social Security paid benefits of $1.133 trillion in calendar year 2021. There were about 65 million beneficiaries at the end of the calendar year.
  • During 2021, an estimated 179 million people had earnings covered by Social Security and paid payroll taxes.
  • The cost of $6.5 billion to administer the Social Security program in 2021 was a very low 0.6 percent of total expenditures.
  • The combined trust fund asset reserves earned interest at an effective annual rate of 2.5 percent in 2021.

For more information, click here.

Teaching Suggestions

  • Ask students if they or their family and friends are concerned about the future of Social Security?  If so, what are their concerns?
  • Ask students to make a list of documents they will need to establish their social Security account.

Discussion Questions

  1. What might be some reasons for the asset reserves to decline by $56 billion in 2021?
  2. Do you agree that Social Security will continue to be a vital part of the lives of 66 million beneficiaries and 182 million workers and their families during 2022?  Why or why not?
  3. What percent of individuals age 65 and older would live in poverty without Social Security benefits?
  4. Would it be better for you to start getting benefits early with a smaller amount for more years, or wait for a larger monthly payment over a shorter time period?
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Digital Investments in Retirement?

Your retirement savings represent years of hard work and sacrifice. The assets held in retirement plans, such as 401(k) plans, are essential to financial security in old age – covering living expenses, medical bills and so much more – and must be carefully protected.  That’s why plan fiduciaries, including plan sponsors and investment managers, have a strong legal obligation under the Employee Retirement Income Security Act to protect retirement savings.  These fiduciaries must act solely in the financial interests of plan participants and adhere to a high standard of care when managing plan participants’ retirement holdings.

In recent months, some financial services firms have started marketing investments in cryptocurrencies as potential investment options for participants in 401(k)s.  At this early stage in the history of cryptocurrencies, however, the U.S. Department of Labor has serious concerns about plans’ decisions to expose participants to direct investments in cryptocurrencies or related products, such as NFTs, coins, and crypto assets.

President Biden’s recent executive order on ensuring responsible development of digital assets highlights the significant financial risks digital assets can pose to consumers, investors and businesses in the absence of appropriate protections. 

Cryptocurrencies can present serious risks to retirement savings, including: 

  • Valuation concerns.
  • Obstacles to making informed decisions.  
  • Prices can change quickly and dramatically. 
  •  Evolving regulatory landscape.

Based on these concerns, the United States Department of Labor has issued a compliance assistance release for plan fiduciaries focused on 401(k) plan investments in cryptocurrencies.

For more information, click here.

Teaching Suggestions

  • Ask students if they, their friends or relatives have 401(k) plans.  If so, has anyone invested in Cryptocurriencies in their retirement plans and what have been their experiences?
  • Ask students to prepare a list of potential dangers in investing in cryptocurrencies or other digital investments.

Discussion Questions

  1. Why is the U.S. Department of Labor concerned about people investing in digital assets for their retirement plans at this time?
  2. Should the federal government prohibit 401(k) plan providers from investing in cryptocurrencies in participant’s retirement plans?  Why or why not?
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Your Baby’s Social Security number

If your child is born in a hospital, the most convenient way to apply for a Social Security number is at that hospital before you leave.

When you give information for your child’s birth certificate at the hospital, you’ll be asked whether you want to apply for a Social Security number for your child. If you answer “yes,” you will be asked to provide both parents’ Social Security numbers. Even if you don’t know both parents’ Social Security numbers, you can still apply for a number for your child.

There are many reasons why your child should have a Social Security number. You need a Social Security number to claim your child as a dependent on your income tax return. You may also need a number for your child if you plan to do the following for your child:

  • Open a bank account.
  • Buy savings bonds.
  • Get medical coverage.
  • Apply for government services.

You can find more information by reading the publication, Social Security Numbers for Children. Share this information with people who are having a baby. Applying for a Social Security number at the hospital will save them time and let them focus on their new bundle of joy.

For more information, go to:

Teaching Suggestions

  • Ask students to make a list of reasons why their child should have a Social Security number?
  • What might be the consequences of not getting a Social Security card for your new born?

Discussion Questions

  1. Why should you get a Social Security card for your child?  Is it mandatory?
  2. What is the best and easiest way to apply for a Social Security card for a newborn?
  3. Why must all the documents be either originals or copies certified by the issuing agency?
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Lost Your Social Security Card?

Consider whether you really need to get a replacement card. Knowing your number is what’s important, after all. You’ll rarely need the card itself — perhaps only when you get a new job and have to show it to your employer. If you really must replace your card, go to www.socialsecurity.gov/ssnumber before visiting your local Social Security office.

The first step is to learn what documents you need. The Social Security Administration requires a U.S. driver’s license, a state issued non-driver identification card, or a U.S. passport to prove your identity. Sometimes you may also need to prove your current U.S. citizenship or lawful noncitizen status with a birth certificate or passport.

All documents must be either originals or copies certified by the issuing agency. The Social Security office won’t accept photocopies or notarized copies of documents. They also can’t accept a receipt showing you applied for the document.

Once you’re clear on what documents you’ll need, the second step is to print and fill out the Application for a Social Security Card.  Finally, the third step is to bring or mail your application and original documents to a Social Security office. Then, the online process will take you to a screen where you can find the address of your local office.

In some areas, you can request a replacement Social Security card using your online my Social Security account if you meet certain requirements. Simply access your account and follow the instructions to replace your Social Security card. It’s safe, convenient and secure.

You can replace your Social Security card for free if it’s lost or stolen. Avoid service providers who charge you a fee to get your replacement card. You’re limited to three replacement cards in a year, and 10 during your lifetime. Legal name changes and other exceptions don’t count toward these limits. Changes in immigration status that require card updates may not count toward these limits. Also, you aren’t affected by these limits if you can prove you need the card to prevent a significant hardship.

The Social Security office will mail your card as soon as all of your information has been verified. Your replacement card will have the same name and number as your previous card.

For more information, go to:

Teaching Suggestions

  • Ask students if anyone has lost his/her Social Security card.  If so, did they replace it?  Why or why not?
  • Under what circumstances should you replace your lost Social Security card?  Explain.

Discussion Questions

  1. What steps must be taken to replace a Social Security card?
  2. Why must all documents be original to be submitted to Social Security?
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Social Security Benefits Increase in 2022

Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 5.9 percent in 2022. The 5.9 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2022. Increased payments to approximately 8 million SSI beneficiaries began on December 30, 2021. (Note: some people receive both Social Security and SSI benefits). The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.

Some other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $147,000 from $142,800.

Social Security and SSI beneficiaries are normally notified by mail starting in early December about their new benefit amount. Most people who receive Social Security payments are able to view their COLA notice online through their personal my Social Security account. People may create or access their my Social Security account online at www.socialsecurity.gov/myaccount.

For more information, click here.

Teaching Suggestions

  • What might be a secure and convenient way to receive COLA notices online and save the message for later?
  • Ask students to trace the history of automatic Cost-of-Living Adjustments (COLA).

Discussion Questions

  1. How can you avoid falling victim to fraudulent “Social Security” calls and internet “phishing” schemes?
  2. What is the purpose of the COLA adjustments?
  3. What is the official measure used by the Social Security Administration to calculate COLA?
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Resources to help you avoid scams during the COVID-19 Pandemic

Scammers are taking advantage of the coronavirus pandemic to con people into giving up their money. During this time of uncertainty, knowing about possible scams is a good first step toward preventing them.

Beware of these corona-related scams:

Vaccine, cure, air filters, and testing scams

The FTC warned  about an increasing number of scams related to vaccines, test kits, cures or treatments, and air filter systems designed to remove COVID-19 from the air in your home. There is no vaccine for this virus, and there is no cure. If you receive a phone call, email, text message, or letter with claims to sell you any of these items–it’s a scam.

What to do instead: Testing is available  through your local and state governments, but these tests are not delivered to your house.

Fake coronavirus-related charity scams

charity scam is when a thief poses as a real charity or makes up the name of a charity that sounds real to get money from you. Be careful about any charity calling you and asking for donations. Also be wary if you get a call following up on a donation pledge that you don’t remember making–it could be a scam.

What to do instead: If you are able to help financially, visit the website of the organization of your choice to make sure your money is going to the right place.

“Person in need” scams

Scammers could use the circumstances of the coronavirus to pose as a grandchild, relative or friend who claims to be ill, stranded in another state or foreign country, or otherwise in trouble, and ask you to send money. They may ask you to send cash by mail or buy gift cards. These scammers often beg you to keep it a secret and act fast before you ask questions.

What to do instead: Don’t panic! Take a deep breath and get the facts. Hang up and call your grandchild or friend’s phone number to see if the story checks out. You could also call a different friend or relative. Don’t send money unless you’re sure it’s the real person who contacted you.

Scams targeting Social Security benefits

While local Social Security Administration (SSA) offices are closed to the public due to COVID-19 concerns, SSA will not suspend or decrease  Social Security benefit payments or Supplemental Security Income payments due to the current COVID-19 pandemic. Scammers may mislead people into believing they need to provide personal information or pay by gift card, wire transfer, internet currency, or by mailing cash to maintain regular benefit payments during this period. Any communication that says SSA will suspend or decrease your benefits due to COVID-19 is a scam, whether you receive it by letter, text, email, or phone call.

What to do instead: Report Social Security scams to the SSA Inspector General online at oig.ssa.gov .

For more information, go to: click here.

Teaching Suggestions

  • Ask students if they or their families have received calls from scammers. If so, what was their response?
  • Ask students to prepare a list of actions to take if they receive calls from scammers. Share the list with others.

Discussion Questions

  1. Why is it important to do your homework when you donate to a charity? should you donate in cash, by gift card, or by wiring money?  Why or why not?
  2. What should you do if you receive a call, an email, text message, or a letter claiming that an air filter system will remove COVID-19 from the air in your home?
  3. How would you handle any communication which claims that Social Security will suspend or decrease your benefits due to COVID-19 pandemic?
Categories: Chapter 9, Chapter_14, Frauds and Scams | Tags: , | Leave a comment

Social Security Benefit Suspension Scam

The Inspector General of Social Security,  is warning the Americans about fraudulent letters threatening suspension of Social Security benefits due to COVID-19 or coronavirus-related office closures. The Social Security Administration (SSA) will not suspend or discontinue benefits because their offices are closed.

The Inspector General reports that Social Security beneficiaries have received letters through the U.S. Mail stating their payments will be suspended or discontinued unless they call a phone number referenced in the letter. Scammers may then mislead beneficiaries into providing personal information or payment via retail gift cards, wire transfers, internet currency, or by mailing cash, to maintain regular benefit payments during this period of COVID-19 office closures.

Even though local SSA offices are closed to the public due to COVID-19 concerns, Social Security employees continue to work. Social Security will not suspend or decrease Social Security benefit payments or Supplemental Security Income payments due to the current COVID19 pandemic.

Remember Social Security will never:

  • threaten you with benefit suspension, arrest, or other legal action unless you pay a fine or fee;
  • promise a benefit increase or other assistance in exchange for payment;
  • require payment by retail gift card, cash, wire transfer, internet currency, or prepaid debit card;
  • demand secrecy from you in handling a Social Security-related problem; or
  • send official letters or reports containing personally identifiable information via email.

If you receive a letter, text, call or email that you believe to be suspicious, about an alleged problem with your Social Security number, account, or payments, hang up or do not respond. The Social Security Administration  encourages you to report Social Security scams using their dedicated online form, at https://oig.ssa.gov. For more information, please visit https://oig.ssa.gov/scam. Members of the press may make inquiries to Social Security OIG at oig.dcom@ssa.gov.

For information, click here.

Teaching Suggestions:

  • Ask students if they or their family members have received calls from government imposter scammers. If so, how did you or your family respond to such calls?
  • Ask students to make a list of possible actions that individuals can take to combat Social Security imposters.

Discussion Questions

  1. If you believe you have been a victim of Social Security or an IRS impersonator scam, what actions should you take to prevent such calls in the future?
  2. How do scammers play on emotions like fear or greed to convince people to provide personal information or money in cash, wire transfers, or gift cards?
  3. Why do fraudsters often demand payment via retail gift card, cash, wire transfer, internet currency, such as Bitcoin, or prepaid debit card?
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What You Should Know About Applying For Retirement

Approaching and preparing for retirement can be a daunting task, but Social Security makes it as easy as possible. Social Security has eliminated the forms, signatures, wait time, and appointments. The agency has now made it easy, convenient and secure to apply. You can complete online retirement application in as little as 15 minutes from your preferred location, at a time most convenient for you.  However, before you apply, consider how you’ll like to receive benefits, your health, and whether anyone else in your family can get benefits on your record.

The age you choose to retire affects the amount of benefits you receive and when you can start receiving them. If you start them any time before your full retirement age, Social Security reduces your monthly benefit. Depending on your year of birth, your full retirement age is likely between age 66 and 67. You may start receiving benefits as early as age 62 or as late as age 70.

If you elect to receive benefits before you reach full retirement age, and continue to work, it can affect your benefits. The Retirement Estimator  calculates a personal estimate of how much your benefit will be at different ages and “stop work” dates. You can use it to find the best combination for your situation.  You can read about other things to consider before you make your decision about when to begin your benefits. If you’re ready to apply, you can do it online.

For more information, click here.

Teaching Suggestions

  • Ask students to debate the statement, “It is never too early to begin planning for retirement”.
  • What information will you need when you apply for retirement?

Discussion Questions

  1. Why is it important to start retirement planning when you are still young?
  2. Would it be better for you to start getting benefits early with a smaller monthly payments for more years, or wait for a larger monthly payment over a shorter time period?
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Time to Start Preparing for Retirement

Even if you just started working, now is the time to start preparing for retirement. Achieving the dream of a secure, comfortable retirement is much easier with a strong financial plan.

Tip 1: Start Early

Social security Administration’s retirement planning resources are helpful to you at any stage of your career. Their calculators, Benefit Eligibility Screening Tool, and disability resources are all available on our benefit planners website.

Tip 2: Be Informed

What’s the best age to start receiving retirement benefits? The answer is that there’s no single “best age” for everyone and, ultimately, it’s your choice. The most important thing is to make an informed decision, based on your individual and family circumstances.

Tip 3: Estimate the Benefits You Might Get

Knowing the amount of money you could get is pivotal in planning your finances.  With the Retirement Estimator, you can plug in some basic information to get an instant, personalized estimate of your future benefits. Try out different scenarios, such as higher or lower future earnings amounts and various retirement dates to see the various potential effects on your future benefit amounts.

For more information, click here.

Teaching Suggestions

  • Ask students to prepare a list of several retirement planning sources available from various governmental and private organizations.
  • What actions you can take to prepare for retirement right now? Share your list with colleagues, friends, and relatives.

Discussion Questions

  1. Why is it important to start planning for retirement as early as possible?
  2. Why should you save now for retirement? Isn’t Social Security enough during retirement years?
  3. What are some ways to invest to reach your retirement goals and never outlive your savings?
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The Future of Social Security

The Social Security Board of Trustees released its 2019 annual report on the long-term financial status of the Social Security trust funds. The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) trust funds are projected to become depleted in 2035, one year later than projected last year, with 80% of benefits payable at that time.

The OASI trust fund is projected to become depleted in 2034, the same as last year’s estimate, with 77% of benefits payable at that time. The DI trust fund is estimated to become depleted in 2052, extended 20 years from last year’s estimate of 2032, with 91% of benefits still payable.

The Board of Trustees usually comprises six members.  Four serve by virtue of their positions with the federal government, Secretary of the Treasury and Managing Trustee; Commissioner of Social Security, Secretary of Health and Human Services and Secretary of Labor.  The two public trustee positions are currently vacant.

For more information, click here.

Teaching Suggestions

  • Ask students if they are concerned about the future of Social Security. Do they believe that Social Security will be there when they retire?
  • Ask students to debate the issue, “Social Security is not sustainable over the long term at current benefit and tax rates.”

Discussion Questions

  1. What is the outlook for future Social Security and Medicare costs in relation to GDP?
  2. What might be the implications of rising Social Security and Medicare costs?
  3. How are Social Security and Medicare financed?
  4. How do longer life expectancies and early retirements affect the future of Social Security?
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