The Internal Revenue Service announced that employees in 401(k) plans will be able to contribute up to $19,500 next year.

The IRS announced this and other changes in Notice 2019-59 (PDF), posted today on IRS.gov. This guidance provides cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2020...

On January 31, 1940, the first monthly Social Security check was issued to Ida May Fuller of Ludlow, Vermont. She received $22.54, according to https://www.ssa.gov/history/imf.html. She was 65 years old at the time. She passed away at 100 years of age.

Ida May Fuller worked for three years under the Social Security program, paid a total of $24.75 in payroll taxes, and collected $22,888.92 in Social Security benefits.

Today, nearly 70 million people receive some form of assistance from Social Security. You and I will never receive the return on our contributions that Ms. Fuller received, but Social Security can and does play a role in supplementing savings accumulated over a lifetime.

Recognizing that Social Security supplements other sources of income, we can take proactive measures that maximize benefits while avoiding the pitfalls that poor choices can create.

With that in mind, let’s review potential financial Social Security potholes that can cost you money.

1. Collecting benefits too soon.

You may begin receiving your retirement benefit at age 62…at a reduced rate. You probably know this, but let’s talk turkey.
 
If you were born in 1960 or later, full retirement age is 67. At age 62, your monthly benefit amount is reduced by about 30% of what you would receive if you waited until you are 67. The reduction for starting benefits at 63 is about 25%; 64 is about 20%; 65 is about 13.3%; and 66 is about 6.7%.
 
In casual conversation, it’s common for folks to ask us, “When is the right time for me to begin receiving benefits?” We usually respond with a less-than-definitive, “It depends,” because many variables, both objective and subjective, factor in.
 
If you have questions, let’s talk. We believe it’s important to tailor our thoughts and recommendations to your specific circumstances.

2. You collect prior to your full retirement age while still working.

If you are under full retirement age for the entire year, Social Security deducts $1 from your benefit payments for every $2 you earn above the annual limit. For 2019, that limit is $17,640. Ouch!
 
In the year you reach full retirement, Social Security deducts $1 in benefits for every $3 you earn above a higher limit. The 2019 income limit is $46,920. Only earnings before the month you reach your full retirement age are counted.
 
In many cases, the price of collecting Social Security while working and under full retirement age can be costly.

3. You are unaware that your Social Security may be taxed.

IRA and 401k contributions may be deducted from income. However, Social Security taxes paid by the employee are not deductible. But that doesn’t necessarily translate into tax-free Social Security income.
 
If you file a federal tax return as an “individual”  and your combined income (excluding Social Security) runs between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits. Earn more than $34,000, and up to 85% of your benefits may be taxable.
 
If you file a joint return, the threshold rises to $32,000 and $44,000, respectively.

4. You decide to defer the spousal benefit.

The longer you wait to take Social Security, the greater the monthly benefit, up to age 70. So, why not employ the same strategy for your spouse, if money isn’t the primary issue? Unfortunately, that may not be a wise choice.
 
The most your spouse may receive is 50% of the monthly benefit of the primary account that you are entitled to at full retirement age.  If your spouse waits past his or her full retirement age, he or she is leaving money with the government.

5. Remarriage and your benefit. It’s complicated.

You may already be aware that divorced spouses are eligible for benefits tied to their former marriage.
 
Eligibility is determined by these criteria:

• You were married for at least 10 straight years.
• You are at least 62 years old.
• Your ex-spouse is eligible for retirement benefits.
• You are currently unmarried.

 
However, if you remarry, you lose the rights to your former spouse’s benefits unless your new marriage ends, whether by death or divorce.
 
I understand that the monthly Social Security check you receive may pale in comparison with the new journey you are about to begin, but it’s important that you are aware of the financial component.

6. How many years have you worked?

Most of us understand one simple concept: the longer we wait to take Social Security (up to age 70) the higher the benefit (spousal benefit may be an exception–see #4).
 
We also understand that higher wage earners can expect to receive a higher benefit. But did you realize that your monthly benefit is also based on your highest 35 years of earnings?
 
What if you haven’t worked 35 years? Social Security averages in zero for those years, which reduces your benefit. If you have at least 35 years but some of those years are low earning years, they will be averaged in, creating lower benefit versus continued employment at higher wages.
 
Are you still working in your 50s or 60s? Great! Those afterschool jobs in high school or years when your income may have been low are removed from the benefit calculation if you’ve exceeded 35 years of income.
 
When we are factoring in pensions and retirement savings, those extra dollars may or may not amount to much, but I believe it is something to be aware of.
 
For some folks, Social Security may seem simple. For others, it feels as if you’re entering a complicated financial maze. If you have questions about Social Security or are uncertain how to proceed, feel free to give me a call.

You’ve saved money all your life. Or, maybe you sold your business after investing years of hard work. You’ve chosen the smart path and have a comfortable nest egg as you set sail into retirement.
But always be on guard! Criminals seek to trick you into willingly handing over your hard-earning savings.
I hope I have your attention.     

Elder financial exploitation quadrupled from 2013 to 2017, according to the Consumer Financial Protection Bureau.
Specifically, these activities originated from unknown scammers, family members, caregivers, or someone in a nursing home. They involved more than $6 billion, with an average loss of $34,200. But in 7% of these instances, losses exceeded $100,000.

In 2017, elder financial exploitation reports totaled 63,500. Sadly, these reports probably represent just a small fraction of actual incidents.

According to the FBI, more than 2 million seniors were victimized in the past year. Even former FBI Director William Webster, 95, was targeted in 2014. Webster was promised $72 million and a new car…if he paid several thousand dollars to cover shipping. Ultimately, the caller was arrested. But not before his relatives in Jamaica had successfully scammed other U.S. citizens out of hundreds of thousands of dollars.

It won’t happen to me

If you’re thinking, “This can’t happen to me,” think again. The best and brightest can fall victim to a seasoned swindler.
While scams are only limited by the criminal imagination, the U.S. Senate’s Committee on Aging highlighted some of the more common scams in a report entitled, Protecting Older Americans Against Fraud. Included are the top nine scams. Please familiarize yourself with this list. If you have any questions, we would be happy to talk with you.

1. IRS impersonation scams

Scammers impersonating IRS officials claim you owe money and pressure you to settle immediately. If victims make an initial payment, they will often be told that new discrepancies have been found in their tax records, which must be satisfied with another payment.
 
Don’t fall victim! The IRS will never call you to demand immediate payment. If there is a question about your return, you’ll receive a letter, and there is a process to appeal any disputed amount.

2. Robocalls and unsolicited phone calls

Robo-dialers can be used to distribute prerecorded messages or connect the person who answers the call with a live person. IRS scammers may use this tactic.

Robocalls often originate overseas, and numbers are usually spoofed to hide their true identity. Have you recently received a call from someone whose phone number has your prefix? If you don’t recognize the number, it’s likely spoofed and not local.

The FTC has warned not to give out personal information in response to an incoming call. Identity thieves are clever. They often pose as bank representatives, credit card companies, creditors, or government agencies. They hope to convince victims to reveal their account numbers, Social Security numbers, mothers’ maiden names, passwords, and other identifying information.

Unsure who you are talking too? Just hang up the phone.

3. Sweepstakes scams / Jamaican lottery scam
 
Sweepstakes scams continue to claim senior victims who believe they have won a lottery and need only take a few actions, i.e., sending cash to the con artists in order to obtain their “winnings.”
 
Sometimes, it’s best not to answer a call if you don’t recognize the number. If it’s a friend, they’ll leave a voicemail message.

4. “Can you hear me?” “Are you there?” scams
 
The goal: get your voice print saying, “Yes.” Then, the scammer charges your credit card using your “Yes.”
 
If asked, don’t respond. Just hang up. If you get a call, don’t press 1 to speak to a live operator to be removed from the list. If you respond in any way, it will likely lead to more robocalls–and more scams.

5. Grandparent scams
 
“Hi Grandma/Grandpa, guess who?” When you respond, “This sounds like ‘Sally’,” the fraudster will say “she’s” in trouble and needs money to help with an emergency, such as getting out of jail or paying a hospital bill.
 
If you send cash, expect “her” to call you again, asking for more cash. Victims who were duped later said they had wished they had asked some simple questions that only their true grandchild would know how to answer.

6. Computer tech support scam
 
Whether a computer pop-up screen or an alleged caller from Microsoft, scammers claim your PC is infected with a virus. Please note, Microsoft will never call you to inform you they have detected a virus.
 
Do not give control of your computer to a third party that calls you out of the blue. Don’t give them your credit card.

7. Romance scams
 
More and more Americans are taking to the Internet to find a partner. While some find love, others find financial heartache.
 
Be wary of individuals who claim the romance was destiny or fate. Be cautious if an individual declares his or her love but needs money from you to fund a visit. Or claims cash is unexpectedly needed to cover an emergency. These are huge red flags.
 
 8. Identity theft
 
This was the most common type of consumer complaint in 2016, with nearly 400,000 complaints.
 
Placing a freeze with the major credit bureaus helps prevent credit cards or loans from being taken out in your name. If you believe you are a victim, call the companies where the fraud occurred, place a fraud alert with the credit bureaus, and file a report with your local police department.

9. Government grant scams
 
In the most common variation of this scam, consumers receive an unsolicited phone call from a con artist claiming he or she is from the “Federal Grants Administration,” or the “Federal Grants Department”–agencies that do not exist.
 
Always remember, grants are made for specific purposes, not because you are a good taxpayer.
 
Do not wire funds to cover fees for the so-called grant.  Government grants never require fees of any kind. If you do, you’ll likely get more requests for additional unforeseen “fees.”
 
And, don’t give out bank information or personal information to these swindlers. Scammers pressure people to divulge their bank account information so that they can steal the money in their account. 
 
You wouldn’t give bank information to a stranger at the supermarket. You don’t know them. So, why give personal information to someone you don’t know who unexpectedly contacted you?
 
Always remember, you are in control. When in doubt, hang up.
 
That is how you protect yourself.
 
If you suspect elder financial abuse, the American Bankers Association suggests the following steps:

• Talk to elderly friends or loved ones. Try to determine what may be happening to their financial situation, such as a new person “helping” them with money management, or a relative using cards or credit without their permission.

 

• Report the elder financial abuse to their bank. Enlist their banker’s help to stop it and prevent its recurrence.

 

• Contact Adult Protective Services in your town or state for help. Report all instances of elder financial abuse to your local police—if fraud is involved, they should investigate.

 
Be on alert
 
Attached is a list of useful tips. Place it near your phone. These cards can be a useful tool to help protect you against swindlers.

Final thoughts
Our mission is to help you reach your financial goals. We are proactive in our recommendations. But sometimes, a good defense is the best offense. It’s heartbreaking to hear stories of theft. We don’t want you to become a victim and another government statistic

Despite average intra-year drops of 13.9%, annual returns positive in 29 of 39 years