Even if it doesn’t look important enough when you are young, social security benefits are a lifeline for older Americans. As you know that you get these benefits from the taxes that you pay as a working individual, but GoBankingRates claims that there’s no guarantee that you will get social security benefits. Yes, it’s not guaranteed and you should know how not to miss out on the eligibility for this much-needed support.
Social Security Earning Test
If you are still earning when laying claim to the SS benefits, you need to pass the Social Security Earning test. The authorities in 2021 withheld $1 for every $2 you earned over $18,960. For full-time retirees, the test is a bit more lenient.
To be eligible to get SS, you first need to work certain years and pay taxes. That’s how you earn credits. You get one credit for every $1,470 earned in income and need at least 40 credits to receive benefits once you reach the age. It translates to at least 10 years of work.
Debt that qualifies for garnishment
Even though private lenders cannot stop your SS check, other debts can hurt your check by as much as 15%. These include alimony, child support and restitution, federal student loans, and other tax and non-tax debt.
Covered under the Civil Service Retirement System
If you were a federal employee hired before 1984, you are likely covered under Civil Service Retirement System. In such a case, you don’t get SS unless made eligible by another job or through spousal benefits.
Covered by the Railroad Retirement Act
Some railroad workers also lie outside the purview of social security as they are covered by the Railroad Retirement Act. The contributions towards this fund are more, but so are the retirement benefits. You get this support if you worked as a railroad worker for at least 30 years.
Don’t qualify for divorced spouse’s benefits
If you want to be eligible to lay spousal benefit claims on their SS, you need to be married for at least 10 years before the divorce. Also, if you remarry someone else before 60, you become ineligible.
You moved very far after retirement
Although U.S. retirees are allowed to receive their SS benefit in a foreign location, there are a few countries that are not supported in this regard. You include special permissions in the case of Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan. Cuba and N. Korea are completely blacklisted.
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Consumer Confidence Low As President Joe Biden’s Opinion Polls Drop
The American economy is currently experiencing its highest inflation for the past 40 years. The record-high consumer price index is currently standing at 7.5% – up from 7% last month. This is the highest annual increase in the consumer price index since 1982.
The Stats Are In
Indeed, according to the New York Post, Americans are not happy with the state of their economy. Furthermore – they seem large, to be unhappy with the commander and chief as well – the American president Joe Biden. According to the University of Michigan’s consumer sentiment index, consumer sentiment is at the lowest in a decade. A separate poll showed that one-third of Americans do not approve of a single thing President Joe Biden has done whilst in office. The University of Michigan’s consumer sentiment – measures how optimistic consumers are about their future and their economy.
The latest index came in at 61.7 for February 2022. This is a huge drop of 19.7 percent since February last year and 8.2 percent since last month. Furthermore, it is also the lowest it has been since October 2011 when the index stood at 60.9.
American’s Hesitant About Their Future
As it stood Americans were only slightly optimistic about the economy. Furthermore, consumers seem to have a lot of fear or bad expectations about the future of the economy. This is indicated by the future expectations index which stood at 57.5 percent. This has been a huge 18.8 percent drop from last year – 70.7%, respectively.
Such a decline in these indices can be attributed to high inflation, which in turn leads to a more difficult economy and less confidence in the government and its policies. This tide together with the fact that the long-term economic outlook is at its worst in a full decade can also explain this phenomenon.
America Disproves Of President Biden
With the massive 7.5% increase in the consumer price index – the average household will have to add $276 to its expenses. Food, shelter, and electricity were the three highest contributors to the latest consumer price index. This is according to the Bureau of Labor Statistics. Perhaps, largely because of many of these aforementioned statistics, 58% of Americans have expressed disapproval for President Joe Biden’s performance whilst in office. One-third of those interviewed for the polls could not even site a single the president had done that they liked or approved of.
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Closed-End Funds A Great Investment Choice For US Retirees: Know Its Advantages
Most retirees fail to save a decent amount from their retirement and Social Security benefits. Individuals in search of higher profits should consider investing in closed-end funds. However, these funds have higher risks with higher returns than conventional investment options. The closed-end funds provide stocks and bonds cheaper than the market price. CNBC reports that more than 500 closed-end funds were worth $296 billion by Jan 31. Mutual funds in the US are worth $24.3 trillion. Retirees need to understand the attributes of these funds and the probable downsides before investment.
The Market Is Full Of Risks
The closed-end funds provide various shares at a lower value and enable the individuals to trade them in the stock market at the standard price. The share price depends upon the fund’s assets and the investor’s supply chain. The report suggests that the closed-end funds are usually sold at a discount. CNBC quoted Robert Finley, principal at Virtue Asset Management in Chicago, who said, “For fixed-income funds, we are seeing a little better returns…..sometimes because they are at a discount, anywhere from 3% to 10% of NAV. From our point of view, that provides some protection in a rising-rate environment. When the overall market tends to have a pullback, closed-end funds tend to get oversold. So we’ll look through and see if there are any specific areas discounted.”
Investors Need To Make Smart Choices
Several experts manage the investment of these funds, including stocks, bonds, and others; the funds derive profits every quarter each year. CNBC reports that 62% of the closed-end funds are bond investments. The market is volatile, and investors need to exercise caution during investment and trading. Investors should choose stocks with good market history and high-profit rates. CNBC reports that federal mortgages have a 3% to 5% return while corporate debts yield a 5% to 7% return. Experts advise against having more than 15% of the assets in closed-end funds. Investors need to look into the share prices and manage their trades smartly. The leverage for several closed-end funds varies greatly; it can also incur huge losses if not handled carefully.
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Muni Bonds Come With Higher Medicare Premiums During Retirement
Municipal bonds are a primary choice among investors to evade taxes. The muni bonds can incur higher Medicare deductions from the post-retirement income. Individuals should be aware of the pros and cons of investing in muni bonds. CNBC reports that President Biden announced a probable increase in tax rates; this led to a higher demand for these bonds. The US muni mutual and ETFs are worth $96.8 billion at present. The government has not entertained the idea of a tax surge. However, the bonds still draw investors’ interests due to several unique attributes.
Several Individuals Opt For Muni Bonds
Due to unexpected Medicare costs, the muni bond investment can be a bane for many investors. CNBC quoted Matthew Chancey, certified financial planner at CostalOne, who said, “There are a lot of moving parts, and you need to have someone look at it holistically.” The retirees should consider the higher Social Security tax and Medicare deduction before being awestruck by their high returns and present tax stability. CNBC reports that retirees with the Social Security payments and modified adjusted gross income (MAGI) above $44,000 (for joint filers) and $34,000 (for individual filers) are taxable for more than 85% of their Social Security income.
Medicare Premium Will Increase For Retirees Above MAGI Threshold
CNBC states that the Medicare Part B premiums have witnessed a 14.5% increase, to $170.10 per month. The threshold MAGI for retirees is $182,000 and $91,000 for joint filers and individual filers, respectively. Retired couples with MAGI above $75,000 will have to pay $578.30 under Medicare premium. The reports suggest the retirees may suffer more due to the increase in Medicare Part D, including prescription medicines. In the higher income bracket, retirees will have to pay $77.90 per month in 2022. The retirees need to calculate the deductions before investing in the bonds.
CNBC quoted Mary Kay Foss, certified public accountant and CPA faculty at CalCPA Education Foundation in Walnut Creek, California, who said, “It’s something that taxpayers seem so aware of because if they get into this higher bracket, they have to pay higher premiums for a full year.” Experts suggest that retirees should not give up on muni bond investment; instead, they need to consider all sides of the coin before getting their hands into it.
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