A recent study of college debt among retirees showed an increasing trend of Social Security benefits being withheld to cover delinquent loans, with the ...
The Center for Retirement Research study also looked at the potential impact of the Biden administration’s student debt relief program, which is currently on hold. Because the pool of retirees with student loans is still quite small, the study took sample pools from 2010, 2013, 2016 and 2019. If the current trend of almost 25% of student loan borrowers in old age being delinquent holds, the withheld dollars will add up quickly. “However, for households that are just making ends meet, even a small decline in income can have significant consequences,” the study found. But more important, one distinct feature of federal student loans is that federal payments, including Social Security and disability benefits, can be withheld by the U.S. Whereas less than 2% of current Social Security recipients still hold federal student loans, the average retired borrower owes more than $30,000 after originally taking out around $46,000.
Social Security is one of those topics clients often think they know all about. And you know what that means??"fertile ground for trouble and poor financial ...
You can help clients make decisions with eyes wide open by asking them about their retirement plans and Social Security before their actual retirement. Of course, some individuals who fall into this category worked some of their careers in jobs where they did pay Social Security taxes. Clients often don’t understand the financial implications of their decisions to collect Social Security early at age 62, at 65 ( “traditional” retirement age), or at their FRA (which maxes out at 67 for those born in 1960 or later). Myth #4: Every worker is eligible for Social Security benefits. Particular government and railroad employees do not pay the taxes used to fund Social Security benefits and are not eligible for them. Myth #3: Social Security is only for people who are no longer working. And if they choose a Medicare Advantage or Part D (prescription coverage) plan, they can elect to have Social Security deduct and pay those premiums directly to their insurer. They can earn delayed retirement credits for each month that benefits are suspended, leading to a higher benefit in the future. You may have clients stride into your next meeting with the news that they filed for Social Security—without consulting you. Their unexamined decision could cost them quite a sum in total benefits over their lifetimes and affect what they leave to Social Security is one of those topics clients often think they know all about. Benefits were not taxed until 1984 following President Reagan’s signing of a bipartisan bill of Social Security amendments.