Can You Explain Social Security, please?
Published: Fri, 12/12/14
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Ask The Expert: Evan Farr Answers Your Elder Law & Estate Planning Questions |
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Can You Explain Social Security, please?If you cannot view the image below, please read the article on our blog.
 Q. I am 62 and getting ready to retire. I am really confused about how Social Security works. Can I start collecting now, or do I need to wait until I am 65? Also, what is all this about credits? I thought Social Security was determined based on the number of hours worked in a lifetime? There is just so much information out there and I want to make sure that I understand what's to come, before making any decisions. Can you explain Social Security eligibility and how credits work? Thank you for your help! A. Social Security is the foundation of retirement in America, and it is important to become knowledgeable about how it works because what people don't know about the system can hurt them financially. For millions of Americans, Social Security benefits will be their only source of income after they retire. And, for many entering retirement, the knee-jerk reaction is to file for benefits at 62, as soon as they are eligible. However, that decision can cost hundreds of thousands of dollars through their retirement years. We recently created a Social Security FAQ to help clarify why waiting to take Social Security benefits can be beneficial, and to clear up any areas of confusion when it comes to Social Security and earning credits for single people, spouses, divorcees, disabled people, widows, and widowers. Below are excerpts from our FAQ page that will hopefully help answer your questions: Q. What are Social Security Credits? A. Credits are the "building blocks" the Social Security Administration (SSA) uses to find out whether you have the minimum amount of covered work to qualify for each type of Social Security benefit. If you stop working before you have enough credits to qualify for benefits, your credits will stay on your record. If you return to work later on, you can add more credits so that you can qualify. No benefits can be paid if you do not have enough credits. Please see this video for more details. Q. How are Social Security Credits Earned? A. When you work and pay Social Security taxes, you earn up to a maximum of four "credits" for each year. The way you earn a credit has changed over the years.
A. You may claim early benefits starting at age 62, but they will not be the full benefits you would receive by waiting for your full retirement age. The full retirement age (FRA) is 65-67, depending on when you were born. For those born before 1938, the age is 65 and for those born in 1938 or later, the FRA gradually increases by monthly increments. If you were born in 1960 or later, your FRA is 67. To determine your retirement age, visit the Social Security website here. Q. How can I maximize my benefits when planning for Social Security and retirement? A. Because your ultimate pay-out is based upon the top 35 years of your earning career, obviously you should try to earn as much as you can. Another way to possibly increase benefits is to wait until you reach your full retirement age before claiming them (I say "possibly increase" because by waiting, you of course take the small risk of dying before you claim your benefits). Another way to possibly increase benefits is to wait even longer to retire - continuing to work after you reach FRA allows you Social Security monthly check to build up, because Social Security retirement benefits are increased (the percentage increase depends on your birth date) if you delay your retirement beyond your FRA (note that this benefit increase does not apply once you turn 70. This won't be an option for everyone, but if you are able to delay retirement (and don't die), you can reap the reward of larger monthly checks. However, just because you wait does not necessarily mean that you'll receive more in retirement benefits over your lifetime; if you live to an average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62 or any other age. For lots of additional details about Social Security, including spousal benefits, please visit our Social Security FAQ page. In 2015, Social Security recipients will see their benefits rise 1.7%, thanks to annual cost-of-living (COLA) adjustments. Beginning in January 2015, for the average retiree, monthly benefits will rise $20 to $1,310. For more details, please see the Key Elder Law Dollar Amounts on our Website. What if you are living on social security alone and you or a loved one becomes incapacitated? You must take this into account when planning for retirement. Every adult over the age of 18 should have an Incapacity Plan that includes a Financial Power of Attorney, an Advance Medical Directive, and an Advance Care Plan. Just as important is that you get special medical certifications in place in connection with your Power of Attorney so that your Agent under your POA will be able to obtain a Reverse Mortgage for you if you don't have one in place while you're still mentally competent. At the Law Firm of Evan H. Farr, P.C., we provide these special medical certification forms for all of our elderly clients as part of our Level 1 Incapacity Planning. If you don't have an Incapacity Plan in place, now is the time to get started. Call us today at 703-691-1888 in Fairfax, 540-479-1435 in Fredericksburg, or 202-587-2797 in Washington, DC to set up an appointment for a no-cost consultation. Critter Corner: Will Medicaid Pay for Assisted Living?  Dear Baxter, My father is in the early stages of dementia, and is considering assisted living. If my father is eligible, does Medicaid cover assisted living, or only nursing home care? Thanks for your help! Anita Sistance ---------------- Dear Anita, Assisted living has become an increasingly popular alternative to nursing care when our aging loved ones need attention and care outside the scope of our capabilities. For those who do not require around-the-clock care, there is a greater degree of autonomy in assisted living than in nursing homes. However, for those relying on Medicaid for long-term care assistance, assisted living is not always an option. An assisted living facility (ALF) is different from a nursing home or skilled nursing facility because in assisted living, there are typically nurse aides rather than actual nurses, and ALFs are designed for people who need a lesser degree of assistance with activities of daily living. In all states, Medicaid covers nursing home care for someone who is financially eligible, but in some states, such as Virginia, Medicaid does not provide any coverage for assisted living. At this time, forty-four states do offer some level of financial assistance to individuals in assisted living. Keep in mind that the term "assisted living" is not used consistently across each state, nor are their definitions or benefits the same. Terms used include: residential care, adult foster care, personal care homes, supported living and several other variations. Some states pay only for personal care services received in assisted living, while others include nursing services, and/or room and board costs. The Centers for Medicare and Medicaid Services (CMS) sets certain guidelines on how each state must spend its Medicaid dollars, but each state is permitted considerable latitude within those guidelines. Most states that help with the cost of assisted living do so through their Medicaid waivers instead of with general Medicaid dollars. In Virginia, there is one Medicaid waiver program that is theoretically available to individuals with Alzheimer's disease or dementia who require the services of ALFs. However, there are an extremely limited number of positions available and a very long waiting list, making the waiver essentially illusory. Virginia also has a separate program, called the Auxiliary Grant (AG), which is not part of Medicaid but can help certain people with very low income pay for an AG bed in and ALF. Unfortunately, not all ALFs participate in the AG program, and those that do typically have very few AG beds, and they become available less frequently than nursing home beds. Although the AG program is administered by the local Medicaid agencies in each County and City, AG is not a type of Medicaid. When is assisted living not enough for a loved one? According to Dr. Catherine Hawes, a professor of health policy and management at the Texas A&M Health Science Center, "Anyone with moderate to severe cognitive impairment and problem behaviors like resisting care or becoming alarmed if someone tries to help them shower generally belongs in either a dementia unit with well-trained staff or in a nursing home. In standard assisted living, "there's not enough staff to help." Assisted living is also not enough for seniors with complicated medical conditions that require regular monitoring. Assisted living doesn't provide much health care, so residents risk going in and out of hospitals for conditions that could perhaps be treated in a nursing home. Medication management (a program to provide the right dose at the right time) can take place in either type of facility, but in most states assisted living staff cannot legally administer medication, and may only hand it to a resident. Therefore, someone whose dementia means that moments later he or she won't remember to swallow their pills, may easily fall off his or her drug regimen. Assisted living can pose a problem for seniors with incontinence, too. Housekeeping staff in assisted living typically change linens weekly. This would not work well for someone who needs help getting changed several times a day and needs the sheets changed more frequently. Further, federal regulation provides greater protection for nursing home residents. State regulations govern assisted living, and they vary widely. Assisted living facilities can evict people at any time and basically for any reason. Nursing homes can only discharge people for a small handful of reasons, and must always make a "safe discharge." Nevertheless, assisted living can work well for people with mild cognitive impairment who desire privacy (private apartments being more common) and who are sociable and alert. Do you have a loved one who is suffering from dementia? Are you considering long-term care options, including assisted living or nursing home care? Persons with dementia and their families face special legal and financial needs. At the Virginia and DC Medicaid Planning Law Firm of Evan H. Farr, P.C., we are dedicated to easing the financial and emotional burden on those suffering from dementia and their loved ones. If you have a loved one who is suffering from dementia, we can help you prepare for your future financial and long-term care needs. We help protect the family's hard-earned assets while maintaining your loved one's comfort, dignity, and quality of life by ensuring eligibility for critical government benefits. Call 1-800-399-FARR to make an appointment for a no-cost consultation in any of our offices: Fairfax, Virginia; Fredericksburg, Virginia; or Washington, DC. Arf Arf, Baxter |
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