by Daniel Kittell | Accounting News, Fraud, IRS, News, Resources
While a majority of the population is covered by Social Security (SS) to some degree, many do not fully understand the program, resulting in frustration and confusion when it comes time to receive benefits. In an effort to curb miscommunication or misgivings, the Social Security Administration (SSA) has increased its informational output in recent years. The SSA’s 2017 fact sheet provided numerous statistics for future and current recipients, and we’ve outlined the top stats below.
- There are 171 million individuals covered by Social Security
- To qualify for benefits, you must “earn” 40 work credits in your lifetime, with the ability to collect up to 4 credits annually (valued at $1,300 per credit)
- 71% of recipients are retired workers (in 2017)
- SS payouts accumulate 8% from ages 62 to 70, so if you’re close to retirement, a great way to boost your payout is to wait to enroll
- The remaining 29% of benefits will go to the disabled and survivors
- In 2017, approximately 16% of benefits will be received by disabled workers and the remaining 13% goes to survivors of deceased beneficiaries
- In 2017, 62 million Americans will receive $955 billion in benefits
- Funding is acquired from 3 sources: interest on the program’s asset reserves, a 12.4% payroll tax on all earned income and the taxation of the benefits themselves
- 61% of seniors rely on their SS benefits for at least half their monthly income
- 48% of married seniors and 71% of unmarried retirees depend on Social Security for at least half their income
- Of unmarried seniors, 43% rely on benefits for about 90% of their income
- Close to half of single seniors look to Social Security to provide the majority of their income each month
- Most 65 year olds will live approximately 20 more years
- In 1960, the average life expectancy was 70, but it has since increased to 79, which means it is wise to factor in a longer lifespan since the program is only intended to account for 40% of wages in retirement
- By 2035, the senior population is set to grow by 65%
- Currently, those 65 and up number 48 million people, but the impending retirement of many baby boomers means that number could grow to 79 million over the next 18 years
- By 2035, the worker-to-recipient ratio will decline by 21%
- Presently, the worker-to-beneficiary ratio is 2.8-to-1, but experts estimate that ratio could drop to 2.2-to-1 in the next 18 years
- In the event of a long-term disability, about 90% of workers have protection
- While 67% of the private workplace does not offer long-term disability insurance, Social Security covers approximately 90% of workers ages 21 to 64 in the event of a work ending disability
- Of workers ages 20 to 49, about 96% do have protective insurance for survivors
- Since one in eight 20 year olds won’t live to see age 67, at least the majority of those who work in covered employment have survivors protection insurance for surviving spouses and children
- One third of workers report having nothing set aside for retirement
- With a potential 23% cut in benefits in 2034, the fact that 31% of the current working population has no money set aside, leaving them fully reliant on Social Security, is less than promising
In conclusion, although Social Security will be around for the long run, and likely covers more income than many believe, it would be wise to find secondary funding for retirement since Social Security was never intended to serve as your principal source.
by Amanda O'Brien | Accounting News, Bookkeeping, Tax Planning, Tax Planning - Individual, Technology
A new survey conducted by Rasmussen Reports for the Consumer Federation of America ? the COUNTRY Financial Security Index – shows a gap between what Americans think they’re spending and what’s happening in reality.
Only 9 percent of the 3,000 respondents of the survey said their lifestyle is more than they can afford, yet 21 percent say they spend more than they make at least a few months every year.
The survey suggests the so-called “perception gap” could shrink if more people used a household budget. Those who budget are more likely to set monthly savings goals (61 percent) than those who don’t (30 percent), COUNTRY Financial says.
Other tips:
Review your spending behavior. Take a look at where the money goes every month and make adjustments where needed, Brannan says.
Start a spending and savings plan. Put money in jars or envelopes or start a Christmas fund. When the money’s gone, stop spending. Some people are even stashing their extra cash under their mattress or in a bedframe outfitted with a safe. In fact, safe sales are up 40 percent from a few years ago, SmartMoney reported.
Rethink expenses. When Joe Mihalic earned an MBA from Harvard Business School that resulted in more than a $100,000 debt, he vowed to repay his debt quickly. He blogged about giving up dinner dates and movies, missing parties and weddings, ending 401(k) contributions, and staying home for Christmas. He stopped buying clothes, sold a second car and motorcycle, rented a spare bedroom, and started a side business. He told Fortune magazine, “A lot of people in this country – regardless of socioeconomic status – have an unhealthy obsession with things and experiences and statuses. We shop brands; we drop names. We try to keep up with the Joneses. We comfortably tolerate an unhealthy level of debt.”
Involve your children in your financial plan. Explain your goals for retirement savings and other things you value, Laura Scharr, principal of Ascend Financial Planning LLC in Columbia, South Carolina, told Fox Business. “Be honest and upfront with your children,” she said.
The COUNTRY Financial survey says budgeters and those who don’t budget do have one thing in common: They miss the mark on their savings goals. Of budgeters, 57 percent achieve their savings goals half the time or less, while the number is 54 percent for the non-budgeters.
How are Americans making ends meet when the budget runs out?
- 36 percent raid their savings accounts.
- 22 percent use credit cards.
- 14 percent adjust their spending next month.
Full Article: http://www.accountingweb.com/topic/cfo/survey-shows-americans-need-spend-less-save-more-set-budget
by Amanda O'Brien | Accounting News, Bookkeeping, IRS, Tax Planning - Individual, Tax Preparation - Individual
To commemorate National Financial Literacy Month, a national telephone poll of 1,005 adults was conducted by Harris Interactive on behalf of the American Institute of CPAs (AICPA). The purpose of the survey was to find out what Americans would most likely forego in a financial pinch as well as their overall feelings about their finances.
Here is what the survey revealed:
- 41 percent said they would cut back on eating out, making it the most popular money-saving action.
- 21 percent said they would cut off cable TV.
- 8 percent said they would end cell phone service.
- 8 percent said they would stop downloading songs and digital products.
The survey also found, however, that Americans are still amazingly frugal and farsighted when it comes to planning for their financial futures. Only a small number would take actions that could hurt their long-term financial well-being:
- 2 percent said they would stop contributions to retirement accounts.
- 1 percent said they would skip utility payments.
- 1 percent said they would put paying rent or mortgage payments.
“Financial success depends on setting clear goals and priorities and sticking with them in good times and bad,” said Jordan Amin, chair of the National CPA Financial Literacy Commission. “While it’s clear that Americans’ priorities are changing, these results suggest that in tight times, they won’t jeopardize tomorrow to deal with the financial challenges.”
Since 2007, the AICPA has conducted an annual survey of Americans to determine their top financial concerns and assess their financial well-being. In 2011, 29 percent of Americans said they were “worse off” than “better off,” compared to the prior year’s 16 percent. Today, 24 percent say they are better off, while 23 percent say they are worse off.
This year, 94 percent of survey participants said they have financial concerns of one sort or another. Interestingly, for the first time in three years, the price of gas – not retirement – is the top financial concern in America.
Addition survey findings include:
- 41 percent said basic living expenses, including the cost of gas, uninsured medical expenses, and lack of emergency savings, as their top financial concern.
- 27 percent said their main concerns are related to long-term goals, such as paying for education and saving for retirement.
- 53 percent reported they are in the same financial position as they were the prior year.
- 35 percent of those aged 18 to 44 say their financial situation has improved over the past year, compared with 13 percent of older adults.
- 31 percent of college graduates say they are better off today, compared with 22 percent of those who have not completed college.
The CPA profession has a comprehensive financial literacy program – 360 Degrees of Financial Literacy – to help Americans achieve long-term financial success. The website is the centerpiece of the program, with tools, calculators, and advice to help Americans understand and manage their financial needs during the ten life stages, from childhood to retirement.
The site is a rich resource for small and mid-sized CPA firms, giving them tools and information to help explain key issues, not only to their clients, but to members of their communities and the media. The AICPA regularly hears stories from CPAs who find that their clients go on to use Feed the Pig.org, to educate their children about financial issues.
Harris Interactive conducted the telephone survey on behalf of the AICPA within the United States between March 8 and March 11, 2012, reaching a nationally representative sample of 1,005 adults eighteen and older by landline and mobile phone.
Full Article: http://www.accountingweb.com/topic/cfo/aicpa-survey-reveals-americans-concerns-about-finances-and-saving
