When will Social Security Stimulus Checks Arrive?

Many Social Security beneficiaries wonder what the status of their stimulus check is.
Many Social Security beneficiaries wonder about the status of their stimulus check.

There have been a few hiccups in the distribution of stimulus checks, and some people may have to wait months before their check is delivered. Most of us are able to monitor the status of our check by using the IRS’s Get My Payment tool. However, for many Social Security beneficiaries, they’ll see a message that says “Payment Status Not Available.” That’s because most Social Security recipients don’t file tax returns.

Motley Fool’s ’s recent article entitled “Social Security Beneficiaries: Here’s When You’ll Get Your Stimulus Check” advises that if you are unable to track your payment, here’s when you can expect to receive your stimulus money if you’re collecting Social Security benefits.

Those first to see their stimulus checks will be the ones who have their direct deposit information on file with the IRS. The agency will deposit the stimulus check straight to their bank account.

However, if you receive your benefits in the mail via paper check, or if you’re not certain if your bank account information is on file, you can provide your information through the Get My Payment tool. This will help you get your check faster.

While using direct deposit will ensure you get your check the quickest, you can get your check in the mail instead if your bank account info isn’t on file. The IRS started sending stimulus checks the week of April 20, and it expects to mail out about five million checks per week. At that rate, it could take 20 weeks for all checks to be delivered.

Whether you receive your check in days or months will depend on your income. The IRS is sending checks in a particular order, and those with the lowest-income individuals will get their checks first. If your income is nearer to the $99,000 per year income limit (or $198,000 per year for married couples), you might not receive your check until late August or early September.

If your income is somewhere in the middle, it’s estimated that you’ll get your check sometime this summer.

If you’re receiving Supplemental Security Income (SSI), you’ll see your stimulus payment in early May, according to the IRS. Whether you receive that money via direct deposit or paper check will be based on whether the IRS has your bank account information on file.

The COVID-19 pandemic has caused a real financial hardship for millions of Americans, and waiting for your stimulus check can be stressful, especially if money is tight and you need the extra money. However, it’s a little easier when you can at least calculate when your cash is expected to be delivered.

For more information on Social Security benefits see https://galligan-law.com/social-security-benefits-what-happens-when-a-spouse-dies/

Reference: Motley Fool (April 27, 2020) “Social Security Beneficiaries: Here’s When You’ll Get Your Stimulus Check”

 

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How Do I Stop COVID-19 from Eating Up My Retirement?

Covid-19 has complicated retirement planning.
Covid-19 has complicated retirement planning.

COVID-19, as well as the efforts taken to slow the spread of the disease, have caused financial and health crises throughout the country, especially for seniors. As a result, financial and other life decisions for seniors and those planning for retirement are much more complicated than they were just a few months ago.

The USA TODAY recently published an article entitled “What you can do if coronavirus is threatening your retirement” that examined some of the challenges and opportunities people should consider as they move into retirement, especially during the current pandemic.

Decrease your 401(k) contributions. As you hit 50, you’re able to make catch-up contributions to your 401(k) and IRA accounts. For 2020, you can contribute up to $6,500 annually to a 401(k) and, if you’re over 50, up to $1,000 above the $6,000 annual limit to either a traditional or Roth IRA. You might look at reducing your contributions. If you have credit card debt or a car loan, paying that off that before retiring might be more important than building your nest egg. When you retire, your savings would be your main source of income.

Take some money out of your IRA. You can withdraw funds from either an IRA or a 401(k) at age 59½. If you’re still working, and your employer has a 401(k), you can continue to contribute to it as long as you are eligible. However, you must start withdrawing funds when you reach 72. You can’t continue contributing to a traditional IRA once you reach that age, but that’s not the case with Roth IRAs. The longer you can leave your savings untouched (or keep adding to them), the more you will have when you retire.

Think about your wheels. Ask yourself if you really, really need a new or fairly new car at all. If yes, notice that the down payment on a lease is typically lower and so are the monthly payments. After the lease term is up (usually three years), you can get a lease on a new car and do it again. Know that it takes about five years to pay off a new car loan and you will be driving it payment-free for 10 or more years, if you keep it for 15 years. Therefore, buying an affordable vehicle may be a better choice.

Take your Social Security now. When you turn 62, you can start collecting Social Security retirement benefits. You’ll get another opportunity at age 65 or later (depending on your birth year) and at 70, you’re required to take it. In 2020, if you begin collecting benefits at age 62, the maximum monthly payment is $2,265; at 65 or later, the monthly benefit is $3,011; and at age 70, the maximum benefit is $3,790. Usually, you’d want to wait as long as you can to take the benefit, because your monthly income will be higher when you need it most (i.e., when you’re older).

Look into a reverse mortgage. They often get a bad rap, but there are situations when it may make sense. If your home is your largest asset, and you need cash and have no other way to get it, a reverse mortgage may be your best option. However, to get one, your mortgage must be paid off (or nearly so).

Downsize. Consider selling your home and buying smaller digs. By downsizing, you might be able to pay cash for a smaller home and use the rest of the proceeds from the sale of your old house to pay off other debt.

Other Ideas. You can also lessen your debt load, plan to keep your current car a few years loner and plan to work a year or two longer. A few other ideas are to join AARP, trim your household expenses, see if you can cut your cellphone bill, take advantage of senior discounts and pre-plan your funeral.

For more information on Covid-19 and retirement planning see https://galligan-law.com/should-you-cut-retirement-savings-efforts-during-the-coronavirus-pandemic/

Reference: USA TODAY (April 13, 2020) “What you can do if coronavirus is threatening your retirement”

 

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Is Long Term Care Insurance Really a Good Idea?

Clients are often concerned that long term care insurance is too costly, but it may not be compared to the cost of private paying long term care.

Forbes’ recent article entitled “Is Long-Term Care Insurance Right For You?” says that a big drawback for many is the fact that long term care insurance (“LTCI”) is expensive. However, think about the costs of long term care. For example, the current median annual cost for assisted living is $43,539, and for a private room in a nursing home, it’s more than $92,000.  In many urban areas it is much higher, so utilizing long term care insurance my be best.

Another issue is that there’s no way to accurately determine if in fact you’ll even need long term care. Much of it depends on your own health and family history. However, planning for the possibility is key and unfortunately most clients don’t plan for long term care either with insurance, retirement or in their estate plans.

Remember that Medicare and other types of health insurance don’t cover most of the cost of long term care—what are known as “activities of daily living,” like bathing, dressing, eating, using the bathroom and moving. Medicare will only pay for medically necessary skilled nursing and home care, such as giving shots and changing dressings and not assisted-living costs, like bathing and eating. Supplemental insurance policies generally don’t pay for this type of care.  Those who meet financial guidelines may receive care provided under Medicaid or other benefits such as Veterans benefits.

It is important to shop around as there are no one-size-fits-all long term care insurance policies. Check the policy terms and be sure you understand:

  • The things that are covered, such as skilled nursing, custodial care, assisted living and in home care
  • If Alzheimer’s disease is covered as it’s a leading reason for needing long-term care
  • If there are any limitations on pre-existing conditions
  • The maximum payouts, including if maximum payouts are by day or year
  • If the payments are adjusted for inflation, which depending on the time of purchase might be key
  • The lag time until benefits begin
  • How long benefits will last, including whether there are lifetime caps on the amount paid or time periods paid
  • If there’s a waiver of premium benefit, which suspends premiums when you are collecting long-term care benefits
  • If there’s a non-forfeiture benefit, which offers limited coverage even if you cancel the policy
  • If the current premiums are guaranteed in future years, or if there are limits on future increases
  • How many times rates have increased in the past 10 years
  • If you purchase a group policy through an employer, see if it is portable (if you can take it with you if you change jobs).

Typically, when you are between 55 to 60 is the most cost-effective time to buy LTCI, if you’re in good health. See my prior blog on this point.  https://galligan-law.com/when-should-i-consider-long-term-care-insurance/   The younger you buy, the lower the cost. However, you will be paying premiums longer. Premiums usually increase as you get older and less healthy. There’s a possibility that you’ll be denied coverage, if your health becomes poor. Therefore, while it’s not inexpensive, buying LTCI sooner rather than later may be the best move.

The best thing to do is to consult your financial advisor and your insurance agent on whether a LTCI policy, and which, will work best for you.

Reference: Forbes (April 17, 2020) “Is Long-Term Care Insurance Right For You?”

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