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://www.galliganmanning.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://www.galliganmanning.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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Would an Early Retirement and Early Social Security Be Smart?

Older employees who have been laid off need to consider the long-term repercussions of taking Social Security early.
Older employees who have been laid off need to consider the long-term repercussions of taking Social Security early.

For older employees who are laid off as a result of the pandemic, the idea of an early retirement and taking Social Security benefits early may seem like the best or only way forward. However, cautions Forbes in the article “Should You Take Social Security Earlier Than Planned If You’re Laid Off Due to COVID-19?,” this could be a big mistake with long-term repercussions.

In the recession that began in 2008, there were very few jobs for older workers. As a result, many had no choice but to take Social Security early. The problem is that taking benefits early means a smaller benefit.

In 2009, one year after the market took a nosedive, as many as 42.4 percent of 62-year-olds signed up for Social Security benefits. By comparison, in 2008, the number of 62-year-olds who took Social Security benefits was 37.6 percent.

You can start taking Social Security early and then stop it later. However, there are other options for those who are strapped for cash.

There is a new tool from the IRS that allows taxpayers to update their direct deposit information to get their stimulus payment faster and track when to expect it. There is also a separate tool for non-tax filers.

Apply for unemployment insurance. Yes, the online system is coping with huge demand, so it is going to take more than a little effort and patience. However, unemployment insurance is there for this very same purpose. Part of the economic stimulus package extends benefits to gig workers, freelancers and the self-employed, who are not usually eligible for unemployment.

Consider asking a family member for a loan, or a gift. Any individual is allowed to give someone else up to $15,000 a year with no tax consequences. Gifts that are larger require a gift tax return, but no tax is due. The amount is simply counted against the amount that any one person can give tax free during their lifetime. That amount is now over $11 million. By law, you can accept a loan from a family member up to $10,000 with no paperwork. After that amount, you’ll need a written loan agreement that states that interest will be charged – at least the minimum AFR—Applicable Federal Rate. An estate planning attorney can help you with this.

Tap retirement accounts—gently. The stimulus package eases the rules around retirement account loans and withdrawals for people who have been impacted by the COVID-19 downturn. The 10% penalty for early withdrawals before age 59½ has been waived for 2020.

If you must take Social Security, you can do so starting at age 62. In normal times, the advice is to tap retirement accounts before taking Social Security, so that your benefits can continue to grow. The return on Social Security continues to be higher than equities, so this is still good advice.

For more information on how the coronavirus has affected retirement planning see https://www.galliganmanning.com/massive-changes-to-rmds-from-stimulus-package/

Reference: Forbes (April 15, 2020) “Should You Take Social Security Earlier Than Planned If You’re Laid Off Due to COVID-19?”

 

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