What You Need to Know About the Latest Social Security Scam

July 10, 2019

Social Security scams are hardly a new thing, but the latest one could cause you a fair amount of undue stress, not to mention put your finances at risk. Scammers have been calling seniors claiming to be Social Security Administration (SSA) reps and threatening to suspend benefits for those who don’t provide the information they ask for — information that could easily lead to identity theft.

As part of this scam, you might also get a call stating that there’s criminal activity linked to your Social Security number, and if you don’t resolve it, you’ll be putting your benefits at risk. Or, you may be asked to confirm your Social Security number so that the “SSA” can sort out a problem relating to your account.

If you’re collecting Social Security, it’s imperative that you recognize the makings of a scam and avoid giving out your Social Security number or other key pieces of personal information. Otherwise, you may indeed wind up with a very large problem on your hands.

Protect those benefits

Let’s make one thing clear: The SSA will never call you and threaten to suspend your benefits over the phone. If you receive a call along those lines, hang up. Furthermore, you should never, ever give out your Social Security number when the request is unsolicited.

Now you may, at times, get a call from the SSA asking for information, but because scammers can alter their numbers to make it seem like it’s the agency dialing you, it’s hard to know when those calls are legitimate or not. Your best bet, therefore, is to call the SSA back yourself at its main number — (800) 772-1213 — and speak to an agent directly following such contact.

Furthermore, if you do get a scam call, be sure to report it at once. The Federal Trade Commission (FTC) has a website dedicated to Social Security fraud, and sharing your experience could make it easier for them to investigate.

What if you’ve already fallen victim to fraud?

If you already gave out your Social Security number, or other pieces of personal information, in conjunction with the aforementioned scam, you’ll need to do some legwork to minimize the damage. First, contact the FTC — they’ll guide you through your next steps. Next, contact the SSA and explain that you’re worried your benefits are at risk. The agency should be able to advise you on what to do, and in some cases, it may even issue you a new Social Security number.

Furthermore, you may want to freeze your credit to prevent criminals from using your Social Security number to open new accounts in your name and rack up debt against them. And from there, you’ll want to monitor your credit report by checking it every few months to make sure there’s no fraudulent activity to be found.

The last thing you want to do is fall victim to a Social Security scam. So don’t let that happen. If a caller contacts you claiming to be the SSA, don’t believe it. Even if that call is legitimate, the issue at hand can be resolved by you calling the SSA back and dealing with it from a place of having initiated that contact.

Source: Maurie Backman from The Motley Fool

You Might Be On The Hook For Your Parents’ Nursing Home Costs

June 19, 2019

The annual cost of care study was just released by Genworth, showing the average private room in a nursing home – for the first time ever – costs over $100,000 a year. If that number doesn’t shock you, it should.

Imagine your parents needing this type of care. Now imagine that instead of your parents having to pay it, you must cover the bill. This might surprise you, but a little-known legal doctrine on the books in about half of U.S. states, called filial support laws, could hold you responsible for the long-term care bills of your parents or other family members.

While filial laws have been on the books for decades, the massively underfunded liability of future long-term care costs for today’s retirees is sparking a new look at these old rules. The cost of long-term care in the U.S. is becoming a serious issue for retirees and taxpayers.

Retirees must to set aside large portions of their savings, buy long-term care insurance, or rely on family or Medicaid. And while Medicaid serves as a de-facto safety net if you run out of money in retirement, the heavy reliance on the program is putting stress on state budgets and taxpayers to fund the system.

Legal Precedence Taking Shape

The most widely discussed and popularized case of filial laws being applied to long-term care costs came in 2012: Health Care & Retirement Corporation of America v. Pittas. In this case, the Pennsylvania appellate division upheld a lower court ruling that found an adult son liable for his mother’s $93,000 nursing home bill. The mother had left the country and was not covered by Medicare. Additional court cases have erupted since.

In a more recent case, Eori ex rel. Eori v. Eori, a Pennsylvania court upheld a finding of filial-support obligation from one brother to another to help pay for the long-term care support of their seriously ill mother. This was an interesting development because it applied the law outside of an existing debt and professional facility.

Laws on this matter vary significantly by state. Some state laws apply only from parents to children and children to parents. Others include siblings. Some, like Pennsylvania, have a very broad scope of what costs you could be liable for. Others, like Arkansas, limit it only to mental health care. Meanwhile, while some states do not have filial support laws, different doctrines may require spousal support for medical or other necessary expenses, like burial costs.

A Law is a Law

The applicability, constitutionality, and public benefit of these support laws have been questioned by numerous articles. I’ve seen articles by attorneys downplaying the laws by stating that the laws have existed for decades and never been applied. Well, that’s fine and dandy, but if the law is there, it’s what we like to call a law.

The Pennsylvania law wasn’t applied in this area until 2012. And decades ago we didn’t have the same long-term care funding issues that we face today. Granted, there are many laws that might be thrown out by a court if enforced today. However, it’s not clear if this is true with filial laws since some states have enforced them in recent years.

Another argument downplaying filial and support laws is that if the bills would otherwise be covered by Medicaid, you don’t have to worry because Medicaid can’t go after family members for the bill. That is true for the most part – Medicaid itself won’t likely be using filial laws to recoup bills it covers. However, the issue is not about Medicaid going after a child, it’s about the nursing home or other provider going after the money.

In fact, Pennsylvania courts in Eori have said it doesn’t matter if Medicaid would have covered it. Under the law, if the cost is there, you can recover it from family. The nursing home could ask Medicaid or the family member for support. So, while Medicaid itself can’t come after the child, the nursing home can, could, and has done so.

Another issue that has been raised about filial support laws is their state or federal constitutionality. There is some validity here. There appears to be a valid concern as to whether you can make someone pay for a family member’s nursing home bill if that person was not involved with it and made no promise to pay it. Well, in Pennsylvania the courts have found this law to be valid and have upheld it.

However, if you look at the history of a similar law, often called the “Doctrine of Necessaries or Necessities,” a few states have said it was unconstitutional. This law required a spouse to cover the medical liabilities, burial, and other support aspects of a deceased spouse. However, the courts focused on the gender inequalities and public policy implications of the rule as being outdated. It is not clear the gender rules would come into play with filial support obligations and is it not clear where filial laws would fall in a public policy debate.

Who Foots the Bill?

The public policy aspect is interesting. Opposition would say it is unfair and unjust to require children to cover their parents’ costs. This seems reasonable. The parents are grown and should be responsible for their own costs. Requiring the children to pay for them would push the burden onto a new generation and could create new hardships. But, on the other side, if the parents are unable to pay their bills, who else will? Should we stick the bill with the nursing home or care provider?

If the care recipient can’t make the payment, we need the pass the cost somewhere. If it goes to the service provider, they might stop providing care to non-wealthy individuals or raise their costs on others to offset non-payment.

The costs could also be passed onto the state in the form of Medicaid or other state payments. Well, this isn’t really being passed onto the state, it is being passed onto other taxpayers. So then, why should we the taxpayers have to pay for someone else’s nursing home costs? Shouldn’t parents have been saving for retirement instead of sending their children to a top tier college, paying for their children’s wedding and honeymoon, and putting a down payment on their house? If they didn’t save enough, taxpayers have to cover it, kicking the costs to the next generation and truly unrelated parties.

So, should the long-term care burden and costs be pushed onto taxpayers or kept within the family unit? Honestly, I would rather see families have to cover their own family’s costs. At a minimum, the public policy argument doesn’t break clearly one way or another.

Family Cost Leads to Better Planning

Keeping costs within the family unit might have a benefit.

Families might actually plan for long-term care. After all, it is easy to stick the bill to Medicaid, but it might feel more challenging sticking your kids with the bill.

States might want to consider supporting and furthering filial responsibility laws in the same way that long-term care insurance was supported by Medicaid partnership programs. Supporting filial laws could actually ease the burden on Medicaid, help state budgets, and reduce the need to further raise taxes by shifting the onus of planning, saving, and preparation back onto the individual.

We know today that the current system isn’t working. Supporting filial laws would be a move to support long-term care planning and personal financial responsibility, two things we should strive for as a society.

Source: Jamie Hopkins of Forbes.com

What Women Give Up When They Retire With Their Husbands

May 28, 2019

Women who retire when their husbands do may be giving up more wealth than they realize.

Married women overall are still in their peak earning years in their 50s and early 60s, while married men’s earnings are on the decline, says economist Nicole Maestas, an associate professor of health care policy at Harvard Medical School and the author of a recent study about couples’ income and retirement patterns.

As a result, married women typically sacrifice more Social Security wealth than married men when they retire early, says Maestas, who analyzed the University of Michigan’s Health and Retirement Survey of more than 20,000 people 50 and older.

Social Security benefits are based on a person’s 35 highest-earning years, so each additional year an older married woman works could replace an earlier year when her income was lower or she took time out of the workforce — for instance, to raise children. Because older married men are typically past their peak earning years, the same is not true for them, Maestas found.

But women do typically retire at the same time as their husbands, Maestas says. Since women in heterosexual couples typically marry men two or three years older, that means married women leave the workforce at younger ages.

Women face extra risks

Earlier retirements also mean less time to save for retirements that can stretch decades. That should give women pause, says Jean Setzfand, senior vice president of programs for AARP.

“We live longer. We spend more years in retirement. There are more years we have to consider financing,” Setzfand says.

Women’s longer life expectancies mean they’re likely to outlive their husbands, and they’re at greater risk of outliving their savings. Women are 80% more likely than men to live in poverty after age 65, according to the National Institute on Retirement Security.

Social Security checks, if they’re big enough, can be a powerful antidote to late-in-life poverty. Social Security benefits can’t be outlived, reduced by stock market downturns or stolen by fraudsters, Maestas notes.

Delay Social Security, if not retirement

People don’t have to claim Social Security when they retire, although many do. Thirty-nine percent of women and 35% of men in 2017 filed at the earliest age, which is 62, according to the Center for Retirement Research at Boston College. That locks them into checks that are significantly smaller than if they’d waited a few years.

Benefits rise by about 7% each year between age 62 and full retirement age, which is currently 66. After that, checks increase by 8% each year until benefits max out at age 70. A $1,000 monthly benefit at 62 could be over $1,300 at 66 or over $1,700 at 70, even if someone stops working.

No other investment can offer that kind of guaranteed return, which is why planners often encourage their clients to tap other retirement funds if that allows them to delay claiming Social Security.

It’s not just about money

Financial considerations are just one part of the decision, financial planners say. Couples also have to consider the emotional and psychological issues of retiring together or apart.

“The beginning of retirement is an exciting time, and many couples enjoy starting that journey together,” says Stephanie Mushna, a certified financial planner in Grand Rapids, Michigan.

People approaching retirement age are often keenly aware that their time on earth, and their good health, won’t last forever. That can make it harder to stick it out, especially if it’s at a job they don’t like. But working even a year or two longer can have a dramatic impact on the viability of a couple’s financial plan and the amount they can spend in retirement, planners say.

Other options are stepping down to a lower-stress job or one with more flexibility. Instead of traveling full time with a retired spouse, wives may be able to schedule some extended vacations, Setzfand suggests.

That assumes, of course, that women can find such jobs. Many of the women who will be most dependent on Social Security may be locked into jobs with little flexibility, she notes. Health concerns and caregiving for family members also can push women out of the workforce earlier than they expect.

Maestas understands that not every married woman wants or will be able to keep working, but she hopes her research will at least prompt couples to discuss their options.

“It often does make sense to at least delay claiming Social Security,” Maestas says. “But there’s not really one right answer for everyone.”

Source: MarketWatch.com

3 Myths That Will Ruin Your Retirement Security

May 16, 2019

Americans aren’t saving enough for retirement, and many people will have lives that last much longer than their money. While I’m not blaming the following myths for people saving so little, individuals don’t need any more reasons, or dumb financial advice, that encourages them to put off saving for retirement any longer.

Here are three widespread myths that contribute to people ignoring the steps needed to secure their retirements.

1) Once you retire you will spend less.

I hate to break it to you, this one is only true if you are forced into it being true. Would you rather plan ahead and have fun frolicking on the beach, or taking cooking classes in Italy, like the retirees who appear in retirement advertisements? Or would you prefer sitting on your front porch and watching the only entertainment you can afford:  cars driving down the street.

Let’s be real for a minute. If you have nothing to do all day, do you think you will spend more or less? I’ll guess that most people will probably spend MORE. All those trips cost money. Do you stop having friends or a social life? Doubtful. Also, the cost of basic goods you buy will increase over time.

Additionally, many people forget to factor in medical care into their retirement plans, assuming they have a retirement plan at all. Fidelity has estimated the cost of healthcare over a 20-year span for a 65-year-old couple who is retiring NOW to be about $280,000. Remember, this does not include things like nursing homes or long-term care. You may say, “I’m in great health. I could never spend that much.” Surprisingly, healthy people often end up spending more, mostly because they live longer. The last super fun point is that Fidelity estimate of $280,000 is for a couple retiring today. If you will be retiring in a few years, or a few decades, you can expect that number to be higher, perhaps much higher. If you are approaching the age of 65 seem and eager to sign up for Medicare, don’t expect your spending to drop in retirement even if you are the epitome of perfect health.

You may be able to cut back a bit when you first retire, but inflation will probably make those savings hard to maintain. I’m not even talking about the vacations, and travel, you want to take in your golden years. European cruise anyone? Inflation may be an issue for many older seniors as we continue to live longer and longer.

2) You can afford to live off Social Security alone.

I’ve often heard, “I’ve qualified for Social Security, so I’m all set.” I’m guessing that many people haven’t looked closely at their Social Security estimates to see and understand what they will actually be getting from Social Security.  Some people assume Social Security will be enough to live off in retirement, and with that in mind, they don’t need to save anything else.

Sadly, Social Security is really only designed to cover around 40% of a person’s pre-retirement income. With so many Americans already living paycheck-to-paycheck, I think it’s fair to assume most of us would really be struggling if our incomes were cut by 60%. I hate to pour more salt in this wound but there are many estimates that say medical costs will eat up at least half of many peoples’ Social Security checks, leaving them with roughly 20% of their pre-retirement incomes. Say it with me. OUCH!

Here’s an example. If you were taking home $10,000 per month and then suddenly only received $4,000, would you be able to pay your bills? Some may be able to get by for a while, others may not last a month.

3) You won’t owe taxes in retirement.

I’ll give you a half right if you think your tax situation may be different in retirement, or if you are one of the people who are planning on living off just a small Social Security check, you might not end up owing any income taxes. But in reality, most of us are going to owe some amount of tax in retirement.

Do you have an IRA, 401(k) or another retirement account? Many common sources of retirement income happen to be taxable. Pensions, IRA withdrawals and 401(k) withdrawals will all be taxed as ordinary income.

There is enough misinformation floating around the internet to drown a whale. Even with good information and advice, many peoples’ heads spin just thinking about retirement planning. Don’t take the approach of the ostrich, and just stick your head in the proverbial sand. Be proactive. Get your financial house in order and on track for your various financial goals. Maybe even go a step further, and work with a fiduciary financial planner.

Source: David Rae of Forbes.com

Gift Card Scam

May 8, 2019

Has someone asked you to go get a gift card to pay for something? Lots of people have told us they’ve been asked to pay with gift cards – by a caller claiming to be with the IRS, or tech support, or a so-called family member in need. If you’ve gotten a call like this, you know that the caller will then demand the gift card numbers and PIN. And, poof, your money is gone.

Scammers are good at convincing people there really is an emergency, so lots of people have made the trip to the Walmart or Target or CVS to buy gift cards to send these callers. And scammers love gift cards – it’s one of their favorite ways to get your money. These cards are like giving cash – and nearly untraceable, unless you act almost immediately.

So here’s the most important thing for you to know: anyone who demands payment by gift card is always, always, always a scammer. Try this gift card buying exercise out at home – especially when anyone asks you to pay with a gift card:

Q: Should I buy an iTunes, Google Play, Steam, Kroger, Walgreens, BestBuy, Amazon, CVS, Rite Aid or ANY OTHER gift card for someone who demands payment? For any reason?

A: NO.

Gift cards are for gifts, not payments. If you’ve bought a gift card and lost money to someone who might be a scammer, tell the company who issued the card. (The contact info might be on the card, but might require some research) Call or email iTunes or Amazon or whoever it was. Tell them their card was used in a scam. If you act quickly enough, they might be able to get your money back. But – either way – it’s important that they know what happened to you. And then please tell the FTC about your loss. Your report helps us try to shut the scammers down.

Source: Federal Trade Commission