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November 2014

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Five Social Security Changes Coming in 2015

Social Security recipients will receive 1.7 percent bigger checks in 2015, the Social Security Administration announced last month. And some groups of workers will begin receiving benefit statements in the mail with a list of taxes paid and an estimate of their future retirement benefit. Here’s a look at the new Social Security benefits, taxes and services workers and retirees will experience in 2015, according to U.S. News & and World Report.

Bigger payments: The 1.7 percent cost-of-living adjustment is expected to result in the typical retiree getting about $22 more per month. This change will increase the average monthly benefit for retired workers in January 2015 from $1,306 before the cost-of-living adjustment to $1,328 after. The average benefit for retired couples who are both receiving benefits is projected to increase by $36 to $2,176 per month.

Social Security payments are automatically adjusted each year to keep up with inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers. Previous cost-of-living adjustments have ranged from zero in 2010 and 2011 to 14.3 percent in 1980. The 1.7 percent increase retirees will receive in January is similar to the 1.5 percent adjustment for 2014 and 1.7 percent increase in 2013.

Higher tax cap: Most workers pay 6.2 percent of every paycheck into the Social Security system until their earnings exceed the tax cap. The maximum taxable earnings will increase next year from $117,000 in 2014 to $118,500 in 2015. About 10 million of the 168 million workers who pay into Social Security are expected to face higher taxes as a result of this change. People who earn more than the taxable maximum do not pay Social Security taxes on that amount or have those earnings factored into their future Social Security payments.

Larger earnings limits. Social Security beneficiaries who are under age 66 can earn as much as $15,720 in 2015, before $1 in benefits will be withheld for every $2 earned above the limit. Retirees who will turn 66 in 2015 and have signed up for Social Security can earn up to $41,880 before every $3 earned above the limit will result in one benefit dollar being withheld. However, once a retiree turns age 66 there is no limit on earnings and Social Security payments are recalculated to give the retiree credit for the withheld benefits.

Your statement might be in the mail: If you will turn age 25, 30, 35, 40, 45, 50, 55 or 60 next year and don’t have a Social Security online account, you can expect to receive a paper Social Security statement that lists your earnings history, taxes paid and expected benefit about 3 months before your birthday. And after age 60 workers will receive a statement annually. The SSA expects to send nearly 48 million Social Security statements each year. These mailings, which were sent annually to all workers age 25 and older between 1999 and 2011, were suspended in April 2011 to save money. Statements are also available online at any time via www.socialsecurity.gov/myaccount, and 14 million people have created personalized accounts using this service.

The maximum benefit increases: The maximum possible Social Security payment for a worker who signs up at full retirement age will be $2,663 per month in 2015, up $21 from $2,642 in 2014.

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Medicare Premiums to Remain Flat in 2015

Most Medicare beneficiaries will pay monthly premiums of $104.90 for 2015, the same as this year and last year, while cost-sharing for hospital and skilled nursing stays will increase slightly, the Obama administration said last month.

The premiums cover doctor’s visits, outpatient care and medical supplies under what is known as Part B of the federal insurance program for people over age 65. Higher-income seniors pay more. An individual whose tax return shows income between $85,000 and $107,000, for example, will pay $146.90 a month.

Annual deductibles for most people using services under Part B will also remain unchanged for 2015 at $147, federal officials said. The deductible for admission to a hospital under Part A of the program is increasing to $1,260 for the first 60 days of a period of illness in 2015, up from $1,216 this year.

Beneficiaries in skilled nursing facilities will pay $157.50 a day after their 20th day there in 2015, up from $152 a day this year.

Health and Human Services Secretary Sylvia Mathews Burwell said the steadiness in premiums was a sign of slowed cost growth within Medicare, which she attributed in part to the 2010 federal health law.

Economists and health policy experts have tussled over the extent to which the law’s provisions, which include incentives for hospitals and physicians to coordinate care and to avoid costly readmissions, have contributed to the slowdown.

Some have suggested that the weak economy of recent years has also prompted people to cut back on their use of medical services.

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New Book: Unretirement: How Baby boomers Are Changing the Way We Think About Work, Community and the Good Life

In his latest book, Chris Farrell, who writes for Bloomberg/Businessweek, thoroughly explores in a new way of thinking about an aging workforce in “Unretirement.”  He notes that Americans are living longer, on average. One might think you would think longer life expectancy is cause for celebration. Yet some people lament about the downside of living longer — especially with the leading edge of the baby boom generation filing for Social Security and Medicare benefits — are commonplace.

What fuels widespread fears isn’t really aging, but retirement. The catchphrase “America can’t afford to grow old” that echoes from Senate hearing rooms to neighborhood conversations is really a statement that “seniors can’t afford retirement, let alone a decent retirement.” Rather than savor the good life during their elder years, popular discussions concentrate on how near-and-future retirees of America face the prospect of eking out an existence like a “battered kettle at the heel” in William Butler Yeats’ bleak image.

Farrell says he does not buy the gloomy predictions. Instead, he says an aging population will leave behind the traditional image of retirement, the last third of life defined by saying goodbye to the workplace forever, picking up stakes for the Sunbelt and enjoying years of leisure. We’re at the early stages of a long, difficult transition toward a different vision of the elder years, less a model of disengagement from work and neighborhood to one of continuing engagement in work and community.

Peter Drucker, the late philosopher of management, noted that every once in a while society crosses a major divide. “Within a few short decades, society rearranges itself—its worldview; its basic values; its social and political structure; its arts; its key institutions,” wrote Drucker in Post-Capitalist Society. “Fifty years later there is a new world.”

The real beneficiaries from the boomer unretirement experiment are workers. Unretirement will affect how they view their jobs and careers, their expectations about the mix of work and leisure, engagement and meaning throughout a lifetime. “Older workers are going to change the workforce as profoundly as women did,” says Deborah E. Banda, senior advisor, AARP Education and Outreach. “The changes they are making in the work place will benefit all generations, not just older workers.” Laura Carstensen, head of Stanford University’s Center on Longevity, agrees: “I think young people will benefit enormously from the transition of working longer.” The 235-page book costs $26 and is available in most bookstores.

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MoneyRates.com Publishes List of Best and Worst States for Retirement

The size and growth of the senior population, economic factors and crime were some of the key five categories used to rank Hawaii as the No. 1 and Iowa as the No. 2 states to retire in based on the latest findings from MoneyRates.com.

Weather and life expectancy at age 65 were also considered for the ranking of the best and worst states to retire in 2014, according to MoneyRates.com recent study, which ranked Alaska at the bottom of the list.

“You might not expect to see Hawaii and Iowa listed side by side,” writes Richard Barrington, senior financial analyst for MoneyRates.com, noting that while Iowa did not excel in any one category, it was well above average in four out of the five. “Its strongest suit was low crime rates, with a combination of low property and violent crime rates placing Iowa in the top 10 nationally in that overall category.”

Top Five States For RetirementWhile Hawaii scored well for its climate, the category in which Hawaii ranked No. 1 out of all 50 states was life expectancy for people at age 65 today.

“There is just something about the place that agrees with people,” Barrington says. “One caution is that Hawaii has the highest cost of living of all 50 states, but it does somewhat offset that by having the lowest property taxes as a percentage of property value.”

Rounding out the list of the top five states to retire in are Idaho, Florida and Vermont, respectively.

Florida is a shoe-in for most retiring Americans, boasting the highest percentage of its population age 65 or older of any state.

“Obviously, the climate is also a plus, but choose your neighborhood carefully,” Barrington warns. “Florida is one of the 10 worst states for crime.”

Worst Five States For Retirement: While some might assume Alaska’s ranking as the worst state to retire is attributed to its cold climate, it’s actually the state’s economy and low population of those 65 and older that catapults the state to last place.

“Alaska has a high cost of living and a weak job market — a bad combination,” Barrington says. “But those are just some of the problems, as Alaska ranked below average in every category in this study.”

Alaska is preceded by Louisiana, Tennessee, Illinois and Nevada, respectively, as the worst five states to retire.

And, the combination of a weak job market and high property taxes put Illinois in the bottom 10 for economic factors.

“If you are wondering how the job market affects people who are retired, keep in mind that more and more older Americans are taking part-time jobs these days, plus living in an economically disadvantaged area is unpleasant whether you are looking for work or not,” Barrington says.

Overall, he adds, retirees live in states that both rate as the best and worst for seniors.

“And no doubt many of them enjoy life there,” he says. “However, if you are considering relocating, the above may just give you a timely warning about what to look out for before you settle on one of these states.”

For access to the 50-state list click here.

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New Study Identifies Best Cities for Retirement

Although sunny Florida comprises half of the top 10 places to retire, seniors planning their retirement need to consider much more than weather in the state.

“The most significant factors retirees should consider when planning their retirement is wealth.  Can they support themselves in retirement without the compensation they have earned while working?” Marc A. LeFebvre, an instructor with the Heider College of Business at Creighton University, tells WalletHub that “Health considerations are also a significant factor. If you’re in poor health the insurance coverage you receive from your employer might entice you to hold off retiring.”

Affordability, jobs, activities, quality of life and health care were the five key dimensions used to determine that Tampa, Fla. is the overall No. 1 best place to retire among the nation’s 150 largest cities, according to the study.

Cities in warm climates comprise the overall top best retirement spots with Grand Prairie, Texas ranking second; Orlando, Fla. ranking third; St. Petersburg, Fla., ranking fourth and Scottsdale, Ariz. ranking fifth.  In fact, Florida comprises half of the top 10 overall places to retire.

But with many older Americans working longer years, and many local economy’s  struggling to rebound from the Great Recession, its more than warmth that makes a state ideal for retirement, data show.

Two California cities rank in the top 10 worst cities to retire, with Fresno, Calif. in 143rd place and Stockton, Calif. in 145th place.

East coast cities populate the majority of the overall worst cities for retirement, with New York, N.Y. in 147th place; Philadelphia, Pa. in 148th place; Newark, N.J. in 149th place and Providence R.I. ranking as the worst retirement location.

Chicago, Ill. rounds out the top worst cities to live in 146th place.

Nashville, Tenn., ranks as having the lowest adjusted cost of living, followed by Memphis, Tenn.; Birmingham, Ala.; Augusta, Ga. and Tulsa, Okla., respectively.

Alternately, cities with the highest adjusted cost of living include New York, N.Y.; Honolulu, Hawaii; San Francisco, Calif.; Yonkers, N.Y. and Jersey City, N.J.

While living factors are important, retirees should also consider socialization opportunities and comfort level, says John Grable, professor of the College of Family and Consumer Sciences at University of Georgia.

“It is more important to find a community in which one shares values, cultural identity, and social networks than it is to find the least expensive place to live,” Grable says. “For some people, this may mean living in a large city where costs are high. For others this may mean moving to a small southern town where costs are low.”

Cities included in the study were chosen based on population size, and costs were assessed under the assumption that many retirees would have fixed incomes.

Data used to create these rankings is courtesy of the U.S. Census Bureau, the Federal Bureau of Investigation, the Council for Community and Economic Research and other outlets.

To see the data supporting the study results, click here.

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