Further Cuts to Social Security Could Be Ahead

Further Cuts to Social Security Could Be Ahead

scissors cutting a piece of paper with the word "budget" on itFor many Americans, the bulk of retirement planning revolves around expectations of their future Social Security benefits. However, our estate planning attorneys have seen firsthand that the reality of these benefits isn’t always exactly what people expect; due to changes in government policy.

Texas Rep. Sam Johnson, chair of the Social Security subcommittee, hopes to preserve the program while improving retirement security with a piece of recently introduced legislation that would significantly cut Social Security benefits.

Upon introducing the bill, entitled the Social Security Reform Act of 2016 (H.R. 6489), Chairman Johnson stated, “For years I’ve talked about the need to fix Social Security so that our children and grandchildren can count on it to be there for them…My commonsense plan is the start of a fact-based conversation about how we do just that.”

The Social Security Board of Trustees has already warned lawmakers that the program is on course to fail. Indeed, this year’s Trustees Report predicted that workers would face a 21% cut in benefits starting in 2034 if Congress did nothing to reform the program.

For most workers, the reform bill would considerably cut Social Security benefits. In fact, a letter from Social Security’s Office of the Actuary showed that workers making around $50,000 annually would see benefit checks reduced by between 11% and 35%. Virtually every income bracket, besides the very bottom, would see a reduction. The plan would also completely eliminate costs of living adjustments (COLA) for retirees earning more than $85,000.

The Social Security Reform Act of 2016 hopes to ensure Social Security will be there when Americans need it by modernizing the benefits calculation process and using a more accurate measure of inflation for the annual Cost of Living Adjustment. The bill also updates the full retirement age at which workers can claim benefits from 67 to 69 years old to better reflect Americans’ longer life expectancy, while still maintaining the age for early retirement.

Chairman Johnson’s bill also proposed raising the minimum benefit for those who earned less and limiting the size of benefits for spouses and children of higher-income earners. After eliminating the Retirement Earnings Test, workers would also have flexibility in choosing whether to receive benefits without a penalty while they are working or delay retirement and wait to receive benefits. Saving for retirement would also be encouraged by phasing out Social Security’s tax on benefits for workers who stop working due to a disability.

Opponents to Chairman Johnson’s bill prefer strategies such as increasing taxes above the Social Security cap or raising the Social Security tax itself. There is also a bipartisan effort to enact a payroll tax to help keep Social Security funded. Congress will deliberate and vote on Johnson’s proposal in 2017.

Regardless of the outcome of Chairman Johnson’s bill, retirement planning can be a confusing and intimidating process. However, our estate planning attorneys in Long Beach, Orange County, Corona, Palm Desert and Palm Springs are always available to help navigate your family to peace of mind.

How To Recognize and Prevent Phone Scams Against Seniors

scam artist stealing from seniorIn the past few years, we’ve seen a growing number of convincing telephone scams that target the elderly. As elder law and estate planning attorneys that work with senior citizens every day, we hope that by providing information about some common scams, we can prevent you or your elderly family members from being taken advantage of. Here’s our list of the most common telephone scams that target seniors:

The Grandparents Scam

Of course, scams happen every day, but con artists predictably bolster their efforts and take advantage of people’s generosity during the holiday season. For example, one common ploy known as the “grandparent scam” includes a desperate sob story about a relative in trouble who needs money to be able to get home for the holidays.  In many cases, these defrauders may even search the internet looking for information that helps to convince the victims to trust the caller and give out cash.

The IRS Scam

Another one of the most common and intimidating ploys used against the elderly is known simply as the IRS scam. The caller threatens the victim with being arrested for unpaid taxes or a fake debt unless they pay up by providing their credit card or bank routing information over the phone. In some cases, the scammers even change the caller ID information or give out fake badge numbers to convince victims that the call is legitimate.

The Holiday Donation Scam

Even worse are the pitches that request year-end, tax-deductible holiday donations to impostor charities or fundraising events. The scammers pander to sympathetic seniors with pleas to help those in need over the holidays before convincing the victims to provide their credit card information or even social security numbers over the phone.

Our Advice

The best advice that we can give to help you ensure that you or your elderly family members don’t fall victim to holiday scams is to do your research. Before offering your help to anyone claiming to be connected to you, verify the emergency or request with a call to a trusted family member first, and never conduct a financial transaction with a caller who insists on secrecy. If you or your senior relative receives a call about making a charitable donation over the holidays, make sure to verify the number of the organization independently and ask for detailed information about the charity before sending money.

Finally, if you receive a call from someone claiming to be an IRS agent without receiving a mailed letter first, hang up immediately. The IRS will never call to demand immediate payment, threaten legal action if you refuse to pay, or require you to use a specific payment method for any debts. If you did receive a letter from the IRS stating that you owe taxes, call the agency directly at 1-800-829-1040 for more information.

Our estate planning attorneys in Corona, Orange County, and Long Beach have seen multiple seniors fall victim to these scams, and we are committed to bringing awareness to these issues to prevent any further fraud victims.