Fixing Social Security

The Social Security Trust Fund is projected to run out of money by 2035.  It means fixing Social Security is now a hot topic.  We’ll share two proposed ideas on this episode of Monday Morning Money.

Video: Fixing Social Security

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The Plans for Fixing Social Security

Social Security 2100

Social Security Expansion Act

Proposed by Senators Peter DeFazio (NY) and Bernie Saunders (VT)

Larger Benefits

Social Security 2100 changes the calculation of your retirement benefits.  The changes result in an increase of about 2%

The language of the Social Security Expansion Act is vague.  It states benefits will increase.

A Different Cost of Living Adjustment

Both proposals would change the cost of living adjustment. They will use the CPI-E.  This measure better accounts for the rising costs for senior citizens.  It gives more consideration to things like prescriptions and medical care.

Less Income Tax on Your Social Security Benefits

The House Bill will reduce income taxes on your Social Security benefits.  Currently up to 85% of your retirement benefits can be taxed.

The Senate Bill does not address income taxes on Social Security benefits.

A Larger Minimum Benefit

Both proposals would increase the minimum benefit to 125% of the poverty level.

Paying For It

The House Bill would gradually increase Social Security taxes. The tax rate will rise from 12.4% of eligible income to 14.8% over several years.  It would also assess Social Security taxes on earned income over $400,000 per year.

The Senate version would tax all earned income, and remove the earnings cap. It would also tax all forms of income for those who make more than $250,000 per year.  This includes things like dividends and capital gains.

More Videos About Social Security

Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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What’s the Worst Month for Stocks?

What’s the worst month for stocks?  The answer may surprise you.  It did me.  We’ll spend the next two minutes talking about it and why it matters.  Here’s a hint, it has to do with the upcoming Federal Reserve meeting.  This is What’s Happening Now.

Podcast: What's Happening Now: What's the Worst Month For Stocks? (2:26)

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The Worst Month for Stocks

If I had to guess the worst month for stocks, I would have said January.  As it turns out, August is the worst month for stocks.

Only two months—August and September—have a negative average return.  The rest are positive.

Click on the graph to enlarge

August Has Been Rough – Sometimes.

August has been a bad month for stocks.  But that doesn’t mean you should make any major decisions.  In the past 25 years,  August produced gains in the stock market 17 times. 

Six of the eight times stocks fell during the month, it was ugly. 

Click on the graph to enlarge.

Why does this matter?  The Federal Reserve meets at the end of July.  Most anticipate an interest rate cut.  But if it doesn’t happen, it could start a sell off in the stock market—starting in August.

Stay Informed.

What’s Happening Now is a podcast talking about current events which  impact your bottom line.  

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Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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Is This The Top of the Stock Market?

The S&P 500 recently closed over 3,000.  And many people are wondering if this is the top of the stock market?  At least one firm believes stocks are headed higher—much higher.  

Podcast—What's Happening Now: Is This The Top of the Stock Market? (3:40)

We have been following First Trust Portfolio’s commentary for some time.  You can read their post about their increased forecast and the methodology they use, here

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Is This The Top of the Stock Market?

As most of you know, we are not in the prediction business.  Most who are have limited success.  But, it rarely stops anyone from trying.  

The stock market will either go up or down from here.  The only way we will know who guessed correctly is to wait and see.  We rarely believe any of them to be reliable indicators of future performance.

We are certainly hopeful the S&P 500 passes the 3,250 mark.  But, if it doesn’t, we won’t be surprised.

Is this the top of the stock market

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Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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The New DNA Testing Scam

There is a new DNA testing scam targeting retirees. We’ll talk about how they are doing it and what you can do to protect yourself on this episode of What’s Happening Now.

Listen Now: What's Happening Now-The New DNA Testing Scam

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Complete the form to the right to submit your question or comments.

Enter Your Question Here

Consumer Level DNA Testing

Over the past few years, there has been a rise in consumer level DNA testing. It has centered around finding out where in the world your family originated. Companies like Ancestry.com and 23 and Me have made these tests readily available.

Also, 23 and Me has an option where you can find out more about certain genetic health conditions. This can help you determine if you are at risk for certain hereditary diseases.

DNA Testing Scam

The New DNA Testing Scam

We received a notification from the Ohio Department of Insurance about a new DNA Scam. They target retirees and in some cases bribe them to complete DNA tests. And they try to convince their victims Medicare will pay for the tests.

They try to get critical information from you. They ask for your Medicare number and your Social Security number.

Medicare will only pay for the DNA test if they are medically necessary.

Sharing your Medicare or Social Security number can lead to identity theft.

Protect Yourself

Here are some steps you can take to protect yourself.

Consult Your Doctor.

Ask your physician if they believe a DNA test would be beneficial. If they believe it will, have them order the test. They will refer you to a reputable lab for the test. They will also be able to submit the request to Medicare.

Use One of the Known Consumer Providers.

We don’t have any experience with 23 and Me. And we cannot attest to their services or the results they provide. But they should be able to provide you some information at a published cost. And they should be able to do it without obtaining your Social Security number.

Do Not Share Your Information

You should not share critical information with people you do not know and trust. When someone has information like your Social Security and Date of Birth, they can do a lot of damage. Guard this information carefully and only share it with trusted sources.

Check With People You Know and Trust.

If you get a call like this, get the name of the company, a phone number, and the name of the person calling. Then do some research. Call your family, call your doctor, call us before you proceed. Let those around you help you do the research before you jeopardize your identity.

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Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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How Social Security Spousal Benefits Impact Your Retirement

If you’re married, Social Security spousal benefits can impact your retirement.  Today we’ll take a deeper dive into how they work.  And if you are no longer married, we have a bonus tip for you at the end.

Video: How Social Security Spousal Benefits Impact Your Retirement.

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Whether you’re married now, or were married, you should be aware of the provisions for Social Security spousal benefits. This allows you to receive an income based on your spouse’s earnings if their income was more than yours.

Here is how it works.

Computing Social Security Spousal Benefits

When you’re married, and you’re the lower earning spouse, your Social Security benefit will be

  1. Your own benefit based on your own earnings, or
  2. A spousal benefit equal to one half of your spouse’s earnings.

Here’s some numbers. (Click the images to enlarge)

Here are some key things you need to know.

Your Age Matters

Social Security reduces your benefits if you retire early. The spousal benefit portion of your income faces a bigger discount. So if you were born after 1960, your normal retirement age is 67. Your benefits get discounted 30%. The spousal benefit gets discounted 32.5%.  (Click image to enlarge)

The Higher Earning Spouse Must Also Receive Benefits

You can apply for your own benefits any time after age 62. However, you won’t receive spousal benefits until your spouse starts their Social Security.

So if your spouse continues to work, you can receive your $800 per month adjusted for your age. Then when your spouse retires, you can get the spousal benefit, adjusted for your age.

If Higher Earning Spouse Retires Early, It Reduces the Spousal Benefit.

Social Security computes your spousal benefit based on the higher earning spouses actual benefit.

So if the higher earning spouse retires early, the maximum spousal benefit will also be reduced.

Spousal Benefits Do Not Benefit From Delayed Retirement Credits

If you delay retirement beyond your normal retirement age, your primary benefit increases. The delayed retirement credits add 8% each year you delay your benefits until age 70. But these delayed retirement credits don’t apply to spousal benefits.

Your spousal benefit is capped at half of your spouses benefit at their normal retirement age.

The higher earning spouse will see their benefits increase for delaying retirement. But, the spouse will not. 

Bonus Tip:  Divorced spouses can file on their former spouse’s earnings record.

If you meet certain conditions, you can claim a spousal benefit on your former spouse’s social security record. Here’s how. (Click Image to Enlarge)

Your ex doesn’t have to be receiving their Social Security in order for you to file for spousal benefits.

And your age will factor into any discounts you may face.

Social Security has a lot of wrinkles and moving parts. And often times it can be tough to work through it.  Spousal benefits can have a significant impact on your retirement income.  Knowing some of the key decision points can help you plan for a better retirement.

Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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5 Reasons to Start Your Social Security at 62

For most of us, waiting to take your Social Security makes sense.  But here are 5 reasons to start your Social Security at 62.

Video: 5 Reasons to Start Your Social Security at 62

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5 Reasons to Start Your Social Security at 62

Last week we showed you one way you can evaluate your Social Security decision. The numbers will say you should wait to start your benefits. And the strategy can work for you, if you live long enough.
 
But it raises the question: Does it make sense to start your benefits early? Sometimes it does. And here are 5 reasons to start your Social Security benefits at age 62.

Early Retirement...

5 Reasons to Start Social Security at 62
Many Americans plan to work beyond age 65. For a large number, an early retirement isn’t a choice.   For those who retire early, they may not be able to afford to delay their Social Security.  
 
Most of us will rely on Social Security and savings for our retirement income.   For our savings to last, we need to watch the withdrawal rate.  Withdrawal rates above 4% increase the risk of running out of money.
 
If you retire early, pay attention to how not having Social Security will impact your savings.  If it increases your risk of running out of money, you may want to start your benefits.

Not Married

5 Reasons Social SEcurity
One of the biggest reasons to delay Social Security is to improve Spousal and Survivor benefits. 
 
If you’re not married, you don’t have to worry about it. 
 
The numbers may show waiting is beneficial.  But, not having a spouse may simplify your decision.  Your choice can become more about what you want to do and not necessarily about the numbers.

Waiting Works, If You Live Long Enough

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When doing the math, waiting to take Social Security can be beneficial if you live long enough. 

For some, there may be known health issues which make reaching the breakeven point questionable. 

But you shouldn’t make this choice based solely on your health.  You also need to consider benefits for your spouse.  Waiting can improve both spousal and survivor benefits.

The System Has Problems, and Government is a Bigger Problem

5 Reasons to Start Social Security

Social Security faces some future financial issues.  If our elected leaders fail to act, future benefits could be cut by as much as 21%.  

And with the way things work in Washington DC today, fixing it might be a real challenge. 

You might lack faith in our elected officials to fix the problem.  If so,  you may want to start your benefits as early as possible.  This way you could get more before benefits are adjusted.

Be careful though.  It may get fixed.  And if you start your benefits, you have limited opportunities to change your mind.

You're More Fortunate Than Many

Start Social Security at 62

For some, Social Security benefits won’t really matter.  If you fit into this category, you may want to take your benefits early.

Social Security becomes bonus income to help you do the things you want to do.

It also keeps your income lower, which can reduce your taxes.  

Waiting Still Makes Sense, But...

Most of the time, it makes sense to delay Social Security.  But, there are some times when it can make sense to start your Social Security benefits early. For some, it may be a  necessity rather than choice. The important thing for you, take a few moments and look at the numbers. Make sure you are making a good decision for you and your family.

Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

Watch Other Episodes of Monday Morning Money

Catch up on the previous episodes of our weekly video series, Monday Morning Money.  You can also see them on our facebook page and our YouTube channel.

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2019 Mid Year Update – Wow!

The days have flown by, and it is time for our 2019 Mid Year Update. It’s hard to believe the year  is half over.  In today’s podcast, We’ll talk about how things did in the investment world and share some interesting facts. 

Podcast: 2019 Mid Year Update (7:39)

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Enter Your Question Here

In a Word, “Wow!”

It is hard to imagine getting off to a better start.  Every major asset class surged higher. 

US Stocks

The US Stock market started with a bang.  Following a rough fourth quarter in 2018, all segments of the US stock market have surged to start the year.  Large company, mid caps, and small caps all posted double digit gains.

International Stocks

Likewise, companies outside the US shined brightly. Both developed economies and emerging nations posted strong results.

Bonds

When interest rates fall, as they did in the first half, bond prices go up.  The bond market was solid in the first half.

Alternative Assets.

Real Estate generated the best results of the first half.  Natural resources and gold also produced strong results.

Mid Year Update 2019: The Asset Allocation Quilt

Our Asset Allocation Quilt is always a popular post.  This abbreviated version shows the annual returns over the past several years.  And, it also includes the results for the first half of 2019.

Click on the image above to enlarge.  To see the funds we use as proxies for the asset class returns, click on the image to the left to enlarge.

If you would like to download a copy of the Mid Year Update 2019 Asset Allocation Quilt. Click Here.

Looking ahead to the Second Half....

It was an interesting first half.  Talk of a recession and the ongoing trade war between the US and China dominated the recent headlines.  And the Wall Street “brain trust” remains cautious with their second half predictions.   The average prediction for the second half calls for a flat stock market.  An outcome which would disappoint nobody.  But remember, take those predictions with a grain of salt.  What will happen in the second half of 2019?  Stay tuned.

Two interesting nuggets...

2019 is the Third Year of the current presidential term.  The average return during the past 23 third year’s has been 16.1%.  This goes back to 1927. 

1939 was the last time the stock market was negative during the third year of a president’s term. 

While these tidbits are interesing, they offer no predictive value. As we commonly say, past performance does not predict future results. 

Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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