Come May 1, Social Security and Railroad Retirement checks for new recipients no longer will be mailed.
The Social Security Administration and the Railroad Retirement Board are going paperless — sending payment electronically (direct deposit) to those receiving retirement, disability and survivor benefits.
Those already receiving Social Security and Railroad Retirement benefits will have until March 1, 2013 to establish direct deposit at a financial institution, or arrange for the benefits to be credited to a debit card. An exception will be made for those at least 90 years old and those living in remote areas.
The agencies say that eight of 10 benefits recipients already receive them electronically.
Electronic payment eliminates the problem of lost or stolen checks, and makes it easier and more prompt for those away from home to ensure payments are available for use.
Beneficiaries who do not have bank or credit union accounts may obtain a Direct Express debit MasterCard.
For more information and assistance, go to www.GoDirect.org, or call, toll free, (800) 333-1795.
The 2 percentage point reduction in payroll taxes for railroad workers covered by Railroad Retirement, and bus and aviation workers covered by Social Security, will NOT have a negative impact on either the Railroad Retirement or Social Security trust funds, as has been wrongly alleged by some.
Beginning Jan. 1, all workers will see an increase in their paychecks as a result of Railroad Retirement and Social Security payroll taxes being cut from 6.2 percent to 4.2 percent. The purpose of the tax cut is to stimulate the economy through consumer spending that will snowball into increased demand for products and new hiring by employers.
For workers earning $50,000 annually, the additional take-home pay from the reduced payroll taxes will be some $1,000 in 2011. For those earning the maximum Social Security and Tier I Railroad Retirement taxable income, the additional take-home pay will top $2,000 in 2011.
The payroll tax deduction will NOT have a negative impact on the Railroad Retirement or Social Security trust funds because the legislation provides that the shortfall in the trust funds — as a result of the payroll tax cut — will be made up by a contribution to those funds from the U.S. Treasury’s General Fund.
The legislation is absolutely clear on this point. In Section 601(e) of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, it is stated:
“There are hereby appropriated to [the Social Security Trust Fund] amounts equal to the reduction in revenues to the Treasury by reason of the application of [the payroll tax cut].”
This was confirmed by the Railroad Retirement Board, which advises that the payroll tax-cut legislation “provides for the transfer of money from the general fund to the Social Security Equivalent Benefit Account, one of the trust funds from which the Railroad Retirement Board (RRB) pays benefits, in an amount equal to the revenue lost due to the reduced payroll tax rate.”
Separately, the Social Security systems chief actuary, in a Dec. 10 letter to Treasury Secretary Timothy Geithner, said, “The law specifies that Social Security will receive every dollar it would have gotten even without the payroll tax cut.”
And AARP Executive Vice President John Rother said in a press release that the payroll tax cut “has no financial impact on Social Security because the trust fund is made whole.”
Said President Obama in signing the legislation: “Social Security is a sacred compact that in return for a lifetime of hard work, America’s seniors will have a chance to retire with dignity. We have an obligation to keep that promise and safeguard and strengthen Social Security for seniors, people with disabilities and all Americans, both now and in the future.”
How long will you live after you retire, and will you have enough money to live on comfortably?
Good question. That’s why – before you retire – you should think about post-retirement economic security, because few things could be worse than money running out during what are supposed to be carefree years.
A balanced retirement portfolio should resemble a three-legged stool.
The first leg is your Tier I Railroad Retirement, Social Security or CalPERS (the California retirement system for public employees), plus Tier II Railroad Retirement and/or an employer pension.
The second leg is the equity in your home, plus your personal savings, such as certificates of deposit and mutual funds.
The third leg of this financial stool are annuities, IRAs, 401(k) plans and whole life insurance.
These three financial legs are the assets to support you through retirement. The fewer legs, or the lower value of any legs, could mean a less secure financial situation during retirement.
Determining available assets before you retire is essential. You may, for example, choose to wait another year or two before retiring and build up assets in one or more legs of your financial stool.
Younger members are wise to consider these financial legs long before they retire.
The UTU Insurance Association can help build the third leg of your financial stool prior to, and even during, retirement.
UTUIA whole life policies provide a death benefit while accumulating cash value. The death benefit protects your surviving family if you die; and the cash value becomes a source of tax-deferred savings available during your retirement years.
UTUIA annuities and individual retirement accounts (IRAs) earn guaranteed interest that is tax deferred until you draw down the balance. You may invest in UTUIA annuities up to age 85.
Existing IRAs and/or employer 401(k) plans may be rolled over into a UTUIA IRA.
To learn how the UTUIA can help make your retirement more secure, talk with a UTUIA field supervisor, call the UTUIA toll-free line at (800) 558-8842, or click here.