UBCC BLOG: SOCIAL SECURITY, THE NEXT FRONTIER

BY MELINDA RIZZO

Running a business is hard work.
 
Fold in a global pandemic, persistent labor and supply chains shortages, and cashing in those business chips might start to look pretty good, even if you’re not quite at full retirement age.
 
Take a deep breath.
 
While planning for a comfortable and secure retirement should be decades in the making, for many business owners – and workers – the business of living gets in the way.
 
David Bilger, founder and owner of Bilger & Co., CPAs LLC in Quakertown, said he’s noticed an uptick in retirement activity since the pandemic began.
 
“I think people are more anxious to quit – and in record numbers, but they are also concerned about if they quit early they may not have enough money” to fund their later years, he said.
 
Beyond a reduced means in retirement, others are concerned about how they’ll pay for medical insurance until they reach age 65, the age in which Medicare kicks in.
 
“I think for many, the confusion over Medicare is what plan should I pick- which plan is best for me,” Bilger said.
 
At 65 years – and within three months either way – of the month in which you turn 65, you must sign up for Medicare “or you’re penalized for life” with higher premium payments, he said.
 
Those working for a firm with 20 employees or more, can “opt out” of using Medicare and stay on their company’s medical plan, while those working for companies with less than 20 employees must opt in.
 
Beyond Medicare, Bilger said it’s important to set realistic expectations and not to rely on Social Security to provide a comfortable retirement.
 
“I tell clients to figure on Social Security funding about 25 to 33 % of their monthly living expenses” with savings, a pension, investments or other income revenue making up the rest, he said.
 
For some, working part time helps close the income gap.
 
If you’ve heard 70 is the new retirement age, you’re not alone.
 
Waiting until age 70, which for many is a few years past their full retirement age, can add a significant dollar amount to Social Security’s monthly benefit.
 
For those with chronic health conditions, who are in less than ideal health or don’t have a history of longevity on their sides, working just to the full retirement age may make more sense.
 
Beyond monthly benefits consider these factors when deciding when to retire and begin taking benefits:

• Do I enjoy my work, and do I want to continue working?
• Am I healthy enough to continue working until age 70?
• Do I have financial goals the additional working years will help me meet?
• Does working up to or beyond my full retirement age make sense for me?

 
“Many [people] make a retirement decision and don’t base it off of professional advice. A financial advisor or CPA can offer advice on the best financial plan based on projections and their own situation,” Bilger explained.
 
Throughout the ages economic security – especially as old age approaches – has been a vital factor in survival.
 
Whether that was a full granary, abundantly filled wine skins, jugs of olive oil or other wealth commodities, these items represented not just comfort but survival.
 
Every day in the U.S. about 10,000 baby boomers – or the “third wave” of this generation – retire. The post World War II baby boom generation is considered to be those born between 1946 and 1964. This cohort represents more than 78 million people.
 
Signed into law in 1935 by President Franklin D. Roosevelt, among Social Security’s founding goal was to establish worker benefits in their old age.
 
“Among the common misconceptions about Social Security is that it’s an entitlement, it’s not,” said Robert “Bob” Podraza, a financial advisor and president of Robert James Investments in Quakertown.
 
At a rate of 12.4%, Social Security taxes are paid by employers and their employees who share the tax tab by paying 6.2% each into the fund, the Internal Revenue Service website said.
 
Some file for benefits as soon as they’re eligible, or at the minimum age of 62, because they want to stop working. Others may file early out of fear that Social Security program itself “will run out of money,” he said.
 
Waiting to file or begin taking benefits could mean larger monthly payments, and for those over their full retirement age, there are no limits on the amount of earned income, or a resulting additional tax impact to their Social Security benefits.
 
“Delaying to age 70 [really] for anyone…the larger [those benefits] will be,” Podraza said.
 
“The key is full retirement age,” he explained.
 
Podraza recommends becoming familiar with the Social Security website www.ssa.gov early, by opening up a my social security account.
 
The website’s retirement estimator allows individuals to calculate in real time their monthly benefit based upon various retirement age numbers, including full retirement and benefits at age 70.
 
The calculator also illustrates the percentage of benefits you’ll lose, if you retire at the minimum age for everyone, or 62.
 
And www.ssa.org allows you to monitor your benefits and contributions, to ensure the correct employee wages are logged into the system.
 
FAQs provide quick response for the most commonly asked questions about Social Security.
 
If you would like more information on social security related topics check out our directory of chamber member who specialize in these areas at https://web.ubcc.org/search.

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