Book Social Security Made Simple – Mike Piper
Retire Richly. Retirement Finances. Social Security Made Simple. Mike Piper. Wallet clip with notes
Understanding Social Security is paramount for effective retirement planning in the United States. So suggests Mike Piper in this book. Despite its significant role in retirement finances and pension income of US retirees, the Social Security system is often perceived as complex and confusing. Individuals frequently make decisions regarding their benefits and retirement age that can result in substantial financial losses to their retirement savings. The book aims to provide clarity and understanding to social security income in a concise and accessible manner. "Social Security Made Simple - Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less" is organized into four parts - Social Security Basics; Rules for Less Common Situations; Social Security Planning: When to Claim Benefits; Other Related Planning Topics.
RATINGS FOR SOCIAL SECURITY MADE SIMPLE BY MIKE PIPER
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SOCIAL SECURITY MADE SIMPLE TOP THEME OF RETIREMENT INCOME ELIGIBILITY
Understanding Benefit Eligibility and Calculation: The book clearly outlines the foundational requirements for receiving Social Security retirement benefits, stating that individuals generally need to be at least 62 years old and have earned 40 Social Security credits throughout their working years. It further explains that the primary insurance amount (PIA), which is the benefit received at full retirement age, is the cornerstone of benefit calculations and is directly tied to an individual's earnings history. The book demystifies this process, assuring readers that while the SSA handles the complex calculations, understanding the role of their earnings record is crucial.
Exploring Spousal and Survivor Benefit Options: Beyond individual retirement benefits, the book sheds light on the significant benefits available to spouses and survivors. It details how spouses may be eligible for benefits up to 50% of their spouse's PIA under certain conditions, even with limited or no work history of their own. Furthermore, the book explains that widow(er) benefits can potentially reach 100% of the deceased spouse's PIA, providing crucial financial support to surviving family members. The text also extends this information to divorced individuals, explaining eligibility for benefits based on a former spouse's record, provided certain criteria are met.
Strategizing the Optimal Claiming Age: A central theme of the book is the importance of strategically deciding when to claim Social Security benefits. It underscores that claiming before full retirement age results in a permanently reduced monthly benefit, while delaying beyond FRA leads to a larger monthly payment, up to age 70. The book discusses the concept of a breakeven point for delaying benefits and compares the potential payout of delaying Social Security to other retirement income options, suggesting that for many, waiting can lead to a greater lifetime income. The text also introduces more advanced strategies, such as the restricted application (for those eligible), which can further optimize benefits for married couples.
SOCIAL SECURITY MADE SIMPLE EXPLAINS SOCIAL SECURITY INCOME AND BENEFITS
"How Retirement Benefits Are Calculated" is fundamental as it introduces the concepts of full retirement age (FRA), which varies based on the year of birth, and the primary insurance amount (PIA), which is the benefit received at FRA. The chapter clearly explains that PIA is based on the 35 highest-earning years of a worker's earnings history, adjusted for wage inflation. It also highlights the actuarial adjustments for claiming benefits before or after FRA, with benefits reduced for early claiming and increased for delayed claiming up to age 70. Understanding these calculations is essential for estimating potential benefits and making informed claiming decisions.
"Spousal Social Security Benefits" demystifies a crucial aspect for married individuals. It outlines the eligibility requirements for spousal benefits, including the length of marriage and the spouse's entitlement to benefits. The chapter details how spousal benefits are calculated, generally as up to 50% of the working spouse's PIA if claimed at full retirement age. It also explains the reduction for claiming spousal benefits early and how spousal benefits interact with a spouse's own retirement benefit, including the concept of deemed filing, which, due to the Bipartisan Budget Act of 2015, now applies even beyond full retirement age for those younger than 62 as of January 1, 2016. The strategic implications of claiming spousal benefits are significant for married couples.
"Widow(er) Social Security Benefits," provides essential information for surviving spouses. It details the eligibility criteria, such as the length of marriage and the age of the survivor. The chapter explains that the widow(er) benefit can be 100% of the deceased spouse's PIA under certain conditions, particularly if the surviving spouse claims at or after their full retirement age and the deceased spouse had not yet filed. It also clarifies how the benefit is calculated if the deceased spouse claimed early or late and the impact of claiming widow(er) benefits prior to full retirement age. The interaction of widow(er) benefits with the survivor's own retirement benefits is also covered.
"Social Security Planning: When to Claim Benefits," offers critical insights into optimizing benefit claiming. Chapter 9 discusses the breakeven point for single individuals deciding between claiming early (age 62) and delaying until age 70, suggesting that waiting is generally advantageous for those expecting to live past their early 80s. It also compares the "payout" of delaying Social Security to returns from other retirement income sources, often favoring the delay. Chapter 10 focuses on claiming strategies for married couples, emphasizing that delaying benefits for the higher-earning spouse can significantly increase the total benefits received over both lifetimes, including potential survivor benefits. It notes that the incentive to delay for the lower-earning spouse is less pronounced as it primarily impacts benefits received while both spouses are alive.
PERSPECTIVE OF MIKE PIPER, AUTHOR OF BOOK SOCIAL SECURITY MADE SIMPLE
Mike Piper is a CPA (Certified Public Accountant) and the author of several personal finance books, as well as the popular blog ObliviousInvestor.com. His background as a CPA suggests a foundation in financial principles and attention to detail. The existence of his blog and a series of "Made Simple" books indicates a commitment to making complex financial topics accessible to a broad audience.
SOCIAL SECURITY MADE SIMPLE PROVIDES CLEAR, CONCISE AND PRACTICAL INSIGHT
Clarity and Accessibility: The book lives up to its title by explaining intricate Social Security rules in a clear, concise, and easy-to-understand manner. Piper avoids overly technical jargon and uses straightforward language, making the information accessible to readers without a strong financial background. The use of examples throughout the book effectively illustrates complex concepts and calculations.
Conciseness: The goal of explaining Social Security in "100 Pages or Less" forces the author to focus on the most relevant and impactful information. This brevity is a significant strength for readers who want a quick yet comprehensive overview without getting bogged down in excessive detail.
Practical Focus: The book prioritizes information that is most likely to factor into retirement planning. It doesn't attempt to be an exhaustive encyclopedia of every Social Security rule but instead focuses on the core aspects that affect the majority of retirees. The inclusion of chapters on claiming strategies and related planning topics like taxation and asset allocation enhances its practical value.
Chapter Summaries: Each chapter concludes with a "Simple Summary" that effectively reinforces the key takeaways. These summaries serve as excellent quick references and help solidify understanding.
SOCIAL SECURITY MADE SIMPLE PROVIDES RELATIVELY BRIEF, STALE, US-CENTRIC CONTENT
Lack of Deep Dive: By its very nature of being "in 100 Pages or Less", the book cannot provide an exhaustive analysis of every single Social Security rule or nuance. The author explicitly acknowledges that it is "not intended to serve as a 100%-comprehensive guide to every aspect of Social Security". Readers with highly specific or complex situations may need to consult more detailed resources or professionals.
Potential for Information to Become Outdated: Social Security rules and regulations can change over time. While the book addressed changes up to 2015, future legislative actions or administrative interpretations could render some of the information less accurate. The author does acknowledge this possibility.
General Advice: As stated in the disclaimer, the book provides general information and not personalized financial advice. While the examples are helpful, individual circumstances can vary significantly, and readers should not rely solely on this book for making critical retirement decisions without considering their unique situations and potentially seeking professional guidance.
Limited Coverage of Disability Benefits: The author notes that disability-related benefits are not covered in this book. Readers interested in this aspect of Social Security will need to consult other resources.
WHO SHOULD READ SOCIAL SECURITY MADE SIMPLE BY MIKE PIPER
Individuals approaching retirement (within 5-10 years): This group will find the information on eligibility, benefit calculation, and claiming strategies particularly relevant for their immediate planning needs.
Current retirees: Even those already receiving benefits can benefit from understanding the rules related to taxation, earnings test (if still working), and potential do-over options.
Younger individuals engaged in long-term financial planning: A foundational understanding of Social Security can inform their savings and investment strategies.
Anyone seeking to demystify the complexities of the Social Security system: The book's accessible language makes it suitable for readers with varying levels of financial literacy.
HOW DOES SOCIAL SECURITY MADE SIMPLE COMPARE TO OTHER BOOKS?
In Social Security Made Simple, its author Mike Piper recommends "Social Security: The Inside Story" by Andy Landi for those interested in disability benefits. Social Security Administration publishes official publications that are comprehensive but may be dense and less accessible to the average reader.
Social Security Made Simple differs from other books in the following ways:
Brevity and Focus: Its commitment to explaining the essentials in under 100 pages differentiates it from longer, more comprehensive guides.
Clarity and Simplicity: The author's writing style and use of examples prioritize understanding for the non-expert reader. The "light bulb" concept truly reflects the book's aim to provide clarity.
Practical Orientation: The inclusion of planning strategies and related topics enhances its usefulness for retirement planning.
Timeliness: Its incorporation of recent legislative changes made it current for its readers in 2015-2016.
SOCIAL SECURITY MADE SIMPLE - MIKE PIPER - RETIREMENT FINANCES - CONCLUSION
"Social Security Made Simple" by Mike Piper is a valuable resource for anyone seeking a clear and concise understanding of the Social Security retirement benefits system. It effectively demystifies a complex topic through straightforward explanations, practical examples, and helpful chapter summaries. While not a substitute for personalized financial advice or an exhaustive treatise, its brevity and accessibility make it an excellent starting point for individuals approaching or in retirement, as well as those planning for the future. The book empowers readers with the foundational knowledge necessary to navigate the Social Security landscape and make more informed decisions about their retirement benefits. Despite the potential for some details to evolve over time, the core principles and strategies outlined in this book remain highly relevant for effective retirement planning.
FREQUENTLY ASKED QUESTIONS ABOUT SOCIAL SECURITY MADE SIMPLE BY MIKE PIPER
When can I start receiving Social Security retirement benefits?
Many readers will want to know the earliest they can access these benefits. The book clearly states that to be eligible for Social Security retirement benefits, you must meet two primary conditions: be age 62 or older and have earned 40 Social Security "credits" over your career. Social Security credits are earned by working in jobs where you pay Social Security taxes or through self-employment income. The amount of earnings required for a credit is adjusted annually; in 2016, it was one credit for each $1,260 of covered income, with a maximum of four credits that can be earned per year. Even if you earn the full amount for four credits early in the year, you still receive all four. The earliest month you can receive a benefit payment is generally the month after your 62nd birthday, unless your birthday falls on the first or second day of the month, in which case you are considered age 62 for the entire month. It's important to understand the difference between being eligible (meeting the requirements to file) and entitled (actually filing and receiving benefits).
How is the amount of my Social Security retirement benefit determined?
Understanding how benefits are calculated is crucial for retirement planning. The book explains that the size of your monthly retirement benefit depends on your earnings history and the age at which you first begin taking benefits. The calculation involves understanding your "full retirement age" (FRA) and your "primary insurance amount" (PIA). Your FRA is determined by your birth year, ranging from 65 for those born in 1937 or earlier to 67 for those born in 1960 or later. Your PIA is the benefit you would receive if you started taking benefits at your FRA and is based on your "average indexed monthly earnings" (AIME). Calculating AIME involves listing your year-by-year earnings up to the maximum taxable amount, adjusting prior years' earnings for wage inflation, selecting your 35 highest-earning years, totaling those earnings, and dividing by 420 (the number of months in 35 years). While the Social Security Administration performs this calculation, understanding the concept is important. For those becoming eligible in 2016, the PIA is calculated using a formula with different percentages applied to various AIME ranges. Claiming benefits before your FRA will result in a reduced monthly benefit, while waiting until after your FRA (up to age 70) will lead to a larger monthly benefit.
What happens if I work while receiving Social Security retirement benefits?
Many retirees consider working part-time, and the earnings test is a significant factor to understand. The book explains that for years before your full retirement age, if you work while claiming your own retirement benefit, your Social Security benefit may be reduced. Specifically, for every $2 your annual earnings exceed a certain amount ($15,720 in 2016), your Social Security benefit for that year will be reduced by $1. It's important to note that this reduction is applied by withholding benefits until the required amount is met. However, the earnings test does not apply after you reach your full retirement age; at that point, you can earn any amount without a reduction in benefits. Furthermore, in the year you reach your full retirement age, the exempt amount is higher, and the reduction is $1 for every $3 of excess earnings, and earnings after you reach FRA are not considered. Additionally, upon reaching FRA, your benefits will be recalculated to account for months where benefits were reduced or withheld due to the earnings test. There's also a "grace year" rule in your first year of retirement where the earnings test might not reduce benefits for any "non-service month" (a month with low earnings or no substantial self-employment services).
ABOUT MIKE PIPER, AUTHOR SOCIAL SECURITY MADE SIMPLE
Mike Piper is the author of several personal finance books and the popular blog Oblivious Investor. He is a Missouri Licensed CPA. Mike's writing has been featured in many places, including The Wall Street Journal, Money Magazine, AARP Magazine, Forbes, CBS News, MarketWatch, and Morningstar.
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