Marketplace

Green Cards and Social Security

Question: I have 2 questions: 1: Is it true only US Citizens can collect SS when they retire; Green card holders do not qualify?

2: I have a Net Worth of about $300K, making up of Cash (60%), Stocks (25%), real estate (10%) and 401K(5%). Should I have a personal financial planner to handle my finances? If so, do you have any recommendations, and how much would it cost? Thank you. Ed, Seattle, WA

Answer: Green Card or Permanent Resident Card holders pay Social Security taxes, and receive Social Security benefits when they retire (as long as they've worked for 10 years before retiring). Immigrants can get more information at the Social Security Administration's website.

Your second question is a much bigger one. Briefly, my bias is no, you don't need to hire a financial planner. That is, not until you can do the basics of financial planning on your own. No matter what, you'll need to educate yourself first. Here's why: Over the years, one of the biggest mistakes I've seen people make is turning their money over to a professional and assume they'll do all the work. That's a recipe for trouble. And it takes time to find a good planner that you'll want to work with.

However, if you'd like a quick check up that focuses mostly on your portfolio (rather than the whole estate), Ive become a fan of the financial planning services offered by several of the major mutual fund companies. The fees are minimal, and the ones I have looked at are steeped in modern portfolio theory and sound personal finance practice. For instance, they won't try and get you to heavily trade stocks and bonds. You do have to be comfortable working over the phone and by email. The advice is limited, so I'd take it with a grain of skepticism. But it's also a nice way to check your assumptions and preferences.

04/21/08 by Chris Farrell

Permalink

Social Security Do-Over?

Question: This morning, rushing my kids to get them ready for school and myself to work, I overheard someone talk about borrowing from his/her own social security account, interest free. Please, Is there such a thing? Is there a website? I don't have a crises, though I lived below Houston and to the west of Christie Street when 911 happened, but I never looked for any help related to that. I'm a person in lots of debt, credit card(divorce) and student loan, single mother with two kids trying to start a new career, possibly start a small non-for-profit cultural center - lounge in my neighborhood. A loan such as this could be the answer. Thank you, Malu. Brooklyn, NY

Answer: What you heard was a report by Bob Moon. He looked into what can be called the Social Security "do-over." But it doesn't involve borrowing from your Social Security account.

When people retire early, say, at age 62, they take a reduced monthly benefit. Well, it turns out that you can change your mind, reapply, and get the bigger payments that go to those who wait to collect benefits. The catch? You must send the government a check covering the benefits you've been paid (But that payment is without interest or adjusting for inflation. That's probably where you heard the word "interest".)

For others that are interested in the Social Security do-over, they can check out the website of Laurence J. Kotlikoff, economics professor at Boston University. He's also the head of the financial-planning software company ESPlanner. (It's at www.esplanner.com.)

For instance, he ran numbers for me a while back for a couple who retire at 62, have $300,000 in savings, and an additional $100,000 each in retirement assets. They want their money to last until they're 100. If they apply for benefits at 62, each gets $17,921 a year. Fast-forward eight years. Had they waited until age 70 to file, they would get $31,005 each, for a total of $62,010 a year. To get those higher payouts now, they'd each write a check for $118,957. That's a hefty sum. But the cost of getting that same payout by buying the cheapest commercial annuity would be 40% higher. When you include earnings from the couple's other assets and factor in their 30-year time horizon, Kotlikoff calculates that their annual aftertax spending can go from $58,765 to $70,420.

Your concerns are far different. I would suggest that you get in touch with the National Foundation for Credit Counseling (NFCC) to deal with your debts. It's the largest national nonprofit credit counseling organization. Their website is www.nfcc.org.

06/23/08 by Chris Farrell

Permalink

Military benefits and Social Security?

Question: I will be receiving my Navy Reserve retirement pay when I turn age 60. I also paid into the Social Security system the entire time. Will I receive full Social Security benefits when I retire at age 65, or will that amount be reduced by the amount I am receiving from the military retirement? Bob, Lodi, CA

Answer: According to the Social Security Administration, there are 9.4 million military veterans receiving Social Security benefits. That means that almost one out of every four adult Social Security beneficiaries has served in the United States military. Veterans and their families make up almost 40% of the adult Social Security beneficiary population.

Your military pension should not reduce your Social Security payments. "You can get both Social Security benefits and military retirement," says Social Security on its website. "Generally, there is no reduction of Social Security benefits because of your military retirement benefits. You'll get your full Social Security benefit based on your earnings."

02/19/09 by Chris Farrell

Permalink

Social Security and military retirement pay

Question: I will be receiving my Navy Reserve retirement pay when I turn age 60. I also paid into the Social Security system the entire time. Will I receive full Social Security benefits when I retire at age 65, or will that amount be reduced by the amount I am receiving from the military retirement? Bob, Lodi, CA

Answer: According to the Social Security Administration, there are 9.4 million military veterans receiving Social Security benefits. That means that almost one out of every four adult Social Security beneficiaries has served in the United States military. Veterans and their families make up almost 40% of the adult Social Security beneficiary population.

Your military pension should not reduce your Social Security payments. "You can get both Social Security benefits and military retirement," says Social Security on its website. "Generally, there is no reduction of Social Security benefits because of your military retirement benefits. You'll get your full Social Security benefit based on your earnings."

by Chris Farrell

Permalink

Social Security $250 stimulus check

Question: There was a brief mention of this on I believe it was the 2/13/09 show (on KPCC in Los Angeles). I have cut and will paste the portion of that show in which I am interested:

Dimsdale: Unless you're on Social Security, in which case you get a $250 check.

Vigeland: OK, so that's a separate part of the stimulus package. You want to give us a few more details about that?

Dimsdale: You also get a $250 check if you're a veteran with a pension and disabled people have a $250 check.

When are these checks going to be sent? This is the ONLY place I've heard about this. I can find nothing about it on the White House web site (lousy search app on that massive site). Randi, Long Beach, CA

Answer: You can get information on the $250 check from Social Security Administration at www.ssa.gov/payment

According to the SSA:

"President Obama recently signed the American Recovery and Reinvestment Act of 2009. This act provides for the one-time payment of $250 to individuals who get Supplemental Security Income (SSI) or Social Security benefits.

We expect everyone who is entitled to a payment to receive it by late May 2009. No action is required on your part.

We are currently working on the details regarding how we will issue nearly 55 million one-time payments to our beneficiaries."

The Administration will post any updates on the SSA website. You don't need to do anything to get the money. The payment will be made to you automatically. You'll get the money the same way you get Social Security--either through direct deposit or a check in the mail. As for veterans that don't get Social Security or Supplemental Security Income will get their $250 payment automatically from the Department of Veterans Affairs.

03/16/09 by Chris Farrell

Permalink

Economic stimulus check

Question: I turned 62 on April 5, 2009, and I will receive my first Social Security check in June. Will I get the $ 250.00 stimulus check or will I miss out on it? I have not been able to determine the eligibility requirements. Thanks for your help. Thomas, Chesapeake City, MD

Answer: No, it looks like you will miss out. According to the Social Security Administration, only "individuals eligible for Social Security, SSI, Veterans, or Railroad Retirement benefits at any time during the months of November 2008, December 2008, or January 2009 may be eligible for the one-time payment."

04/29/09 by Chris Farrell

Permalink

$250 is in the mail

Question: Hello Chris. I got a letter stating that the 250.00 checks would be mail by the end of May. I notice that some people have already gotten theirs. My question: is there a website you can see when these checks go out and how they might be sending them on certain days? Or where the names of people and when they might be sending them. Thank you very much Donna, Spring, TX

Answer: According to the Social Security Administration, the federal government sent out the first of its more than 50 million payments on May 7th. The $250 payment to those on Social Security and Supplemental Security Income (SSI) are being mailed out on a staggered schedule throughout May. The agency requests that you don't contact them about your payment unless you haven't gotten it by June 4th. You can read the entire statement here.

05/18/09 by Chris Farrell

Permalink

"Claim and suspend" Social Security

Question: Is it worthwhile for me to defer receiving Social Security benefits for a few years until I actually need them? I am started receiving benefits at age 62 and am now 66. I would like to defer the payments until the age of 71 or longer, if possible. I have heard that the payments can be stopped and restarted at a later date, but I have been unable to locate any information on this on the Social Security website. Do you have any suggestions or comments? I am a faithful listener. Thank you for the informative and entertaining programs you present each Sunday night! Nancy, Mountain View, CA.

Answer: The tactic is commonly known as "claim and suspend." If you voluntarily suspend your Social Security payments you will earn retirement credits that will permanent increase your future monthly benefits. It can be a smart strategy if you earn enough to support yourself without the Social Security money. If the numbers work in your favor, suspending will increase the amount of future monthly Social Security benefits you'll receive. Those benefits are valuable since they're default free, payable for life and protected against increases in the consumer price index.

You can elect to suspend if you are at your full retirement age, which is age 66 for those born between 1943 and 1954. You must be 70 and under to do it. So, you can't defer to 71. You should be able to go to any Social Security office and make the request and the form. You can also call 1-800-772-1213. Anne Tergesen, a terrific reporter at the Wall Street Journal (and former colleague) did a nice piece on this.

For those interested in going into much more detail, the Center for Retirement Research at Boston College looked into claim -and-suspend. The information is good but the article is dense and scholarly.

06/30/09 by Chris Farrell

Permalink

Delaying Social Security

Question: I keep reading that for every year after age 62 you delay SS your payments go up an average of 8%. Is this assuming you keep working? Thanks. Bob, St Paul, MN

Answer: You're right that your benefits go up by 8% a year by delaying retirement if you were born in 1943 or after. The increase in benefits stops at age 70. This part of the benefit calculation isn't dependent on your work history. It's age based.

The Social Security Administration's website has a lot of useful information. You can look this table to see the impact of holding off retirement after age 62 on an annual and monthly basis.

08/24/09 by Chris Farrell

Permalink

Social Security penalty?

Question: I'm a professor at Duke University. However, I used to work at a state university, and in the 7 years I worked there, I did not contribute to Social Security except Medicare (we had the option to "opt out")- instead putting money into a TIAA-CREF 401(k). Now, I've worked at Duke (a private school) for 4 years and plan to continue, but I've heard about the "windfall elimination provision" and am wondering how badly the 7 years I worked elsewhere will decrease my eventual Social Security benefits. If I work in my current job for, say, 18 or 25 or 30 years, am I still going to get "penalized" for the 7 years that I didn't contribute, and if so, by how much? Thanks- love your show, by the way! Mohamed, Durham, NC

Answer: Well, like so much in personal finance, it all depends. (I should probably have that phrase programmed into my computer.)

Some background: It used to be that the Social Security formula worked in the favor of people who didn't contribute for a time into the system. The formula assumed that they were long-term, low-wage workers. In practice, that meant they got a Social Security benefit that represented a higher percentage of their earnings and a pension from a job where they did not pay Social Security taxes. Congress passed the "Windfall Elimination Provision" to remove that formula-calculation advantage. Instead, the formula is now adjusted for circumstances like yours.

So, if you worked in your current job for 18 years (as in your question) you will take a haircut on your Social Security payout. But there are few exceptions. The most important is if you have substantial earnings for 30 years (again, as in your question) you won't. Social Security has a nice explanation of the formula, its impact on your potential benefit payout, and the exceptions at this section of the Social Security website.

09/15/09 by Chris Farrell

Permalink

Take Social Security now or later

Question: I am still employed and am almost 67 years young. Is better to wait till I am 70 1/2 to collect Social Security benefits or take them now? Barbara, Palos Hills, IL

Answer: Yes, you are young. By the way, question is whether you take it now or by age 70. The age 70 ½ date comes from when you have to start taking money out of a traditional IRA or 401(k). But there is no benefit to waiting past age 70 to start drawing on Social Security. That's when you reach the maximum payout.

I can't give you a definitive answer. A lot of factors play a role in dealing with your question, from earnings to taxes. But I can do one better. I can send you to the website with the best online Social Security calculator. It's analyzenow.com. It offers several simple but comprehensive Social Scurity calculators.

The website was created by Henry "Bud" Hebeler. He's quite a character. In 1956, he left Boston with a graduate degree in engineering from MIT for a job at Boeing in Seattle. Some three decades after he made that trip in a Volkswagen Beetle, he retired as president of the company's giant aerospace unit. It wasn't long before Hebeler started a new career dispensing conservative financial advice on his web site. And he has thought carefully about the trade-offs between taking Social Security at different retirement ages, ranging from early (age 62) to late (age 70).

11/04/09 by Chris Farrell

Comments (0)

Permalink