Quote of the Week
“Just because you are offended doesn’t mean you are right.” Unknown
Thanksgiving is a time to pause and reflect on many things we often take for granted, health, time spent with loved ones, or just getting through another day in this weirdest of years. It’s easy to forget that we Americans still have a lot to be thankful for in such a tumultuous time. Our doctors, health care workers, teachers, and front-line workers taught us a lesson in courage as they kept our economy and society moving forward this year under extreme duress.
In the epic battle for the stock market, the vaccine beat the virus last week. This battle will be waged for the next few months or so until the vaccine is distributed. The Dow was up +2.21%, the S&P 500 was up +2.27%, and the Nasdaq was up +2.96%. So far this week (as of Tuesday), the battle is a draw. It looks like the vaccine is ahead because we are moving quickly into Quad II, which is good for equities. We are adding six new stocks to the portfolio at a 2% exposure to each stock. The stocks we added recently have performed very well since we put them in the portfolio. We are still maintaining our exposure to China, Japan, energy, and corn, along with the Swiss Franc.
With the appointment of Janet Yellen as Treasury Secretary and Jerome Powell remaining Chairman of the Federal Reserve, we are pretty sure that their mandate will be to drive the value of the dollar down, thus increasing inflation. As the dollar’s value goes down, it costs more dollars to buy the same goods or services. Remember, in Quad II, growth increases and inflation increases. So, if the dollar is going down, our investments in the Swiss franc, energy, and a commodity such as corn should appreciate.
Quad II is an especially good Quadrant for the stock market, so we will be nibbling back into more equities. However, we are concerned that the virus will get out of control, and we will be forced to take extreme measures with the economy. That obviously will have a negative effect on the markets. So, we will be cautious going forward and not put all ten toes over the edge of the diving board.
Social Security Retirement Benefits
Social Security was originally intended to provide older Americans with continuing income after retirement. Today, though the scope of Social Security has been widened to include survivor, disability, and other benefits, retirement benefits are still the cornerstone of the program.
How do you qualify for retirement benefits?
When you work and pay Social Security taxes (FICA on some pay stubs), you earn Social Security credits. You can earn up to 4 credits each year. If you were born after 1928, you need 40 credits (10 years of work) to be eligible for retirement benefits.
How much will your retirement benefit be?
Your retirement benefit is based on your average earnings over your working career. Higher lifetime earnings result in higher benefits, so if you have some years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily. Your age at the time you start receiving benefits also affects your benefit amount. Although you can retire early at age 62, the longer you wait to retire (up to age 70), the higher your retirement benefit.
You can find out more about future Social Security benefits by signing up for a my Social Security account at the Social Security website, ssa.gov, so that you can view your online Social Security Statement. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivor, and disability benefits. If you’re not registered for an online account and are not yet receiving benefits, you’ll receive a statement in the mail every year, starting at age 60. You can also use the Retirement Estimator calculator on the Social Security website, as well as other benefit calculators that can help you estimate disability and survivor benefits.
Retiring at full retirement age
Your full retirement age depends on the year in which you were born.
Tip: If you were born on January 1 of any year, refer to the previous year to determine your full retirement age.
If you retire at full retirement age, you’ll receive an unreduced retirement benefit.
Retiring early will reduce your benefit
You can begin receiving Social Security benefits before your full retirement age, as early as age 62. However, if you retire early, your Social Security benefit will be less than if you wait until your full retirement age to begin receiving benefits. Your retirement benefit will be reduced by 5/9ths of 1 percent for every month between your retirement date and your full retirement age, up to 36 months, then by 5/12ths of 1 percent thereafter. For example, if your full retirement age is 67, you’ll receive about 30 percent less if you retire at age 62 than if you wait until age 67 to retire. This reduction is permanent — you won’t be eligible for a benefit increase once you reach full retirement age.
However, even though your monthly benefit will be less, you might receive the same or more total lifetime benefits as you would have had you waited until full retirement age to start collecting benefits. That’s because even though you’ll receive less per month, you might receive benefits over a longer period of time.
Delaying retirement will increase your benefit
For each month that you delay receiving Social Security retirement benefits past your full retirement age, your benefit will increase by a certain percentage. This percentage varies depending on your year of birth. For example, if you were born in 1943 or later, your benefit will increase 8 percent for each year that you delay receiving benefits, up until age 70. In addition, working past your full retirement age has another benefit: It allows you to add years of earnings to your Social Security record. As a result, you may receive a higher benefit when you do retire, especially if your earnings are higher than in previous years.
Working may affect your retirement benefit
You can work and still receive Social Security retirement benefits, but the income that you earn before you reach full retirement age may affect the amount of benefit that you receive. Here’s how:
- If you’re under full retirement age: $1 in benefits will be deducted for every $2 in earnings you have above the annual limit
- In the year you reach full retirement age: $1 in benefits will be deducted for every $3 you earn over the annual limit (a different limit applies here) until the month you reach full retirement age
Once you reach full retirement age, you can work and earn as much income as you want without reducing your Social Security retirement benefit. And keep in mind that if some of your benefits are withheld prior to your full retirement age, you’ll generally receive a higher monthly benefit at full retirement age, because after retirement age the SSA recalculates your benefit every year and gives you credit for those withheld earnings
Retirement benefits for qualified family members
Even if your spouse has never worked outside your home or in a job covered by Social Security, he or she may be eligible for spousal benefits based on your Social Security earnings record. Other members of your family may also be eligible. Retirement benefits are generally paid to family members who relied on your income for financial support. If you’re receiving retirement benefits, the members of your family who may be eligible for family benefits include:
- Your spouse age 62 or older, if married at least one year
- Your former spouse age 62 or older, if you were married at least 10 years
- Your spouse or former spouse at any age, if caring for your child who is under age 16 or disabled
- Your unmarried child under age 18
- Your unmarried child under age 19 if a full-time student (through grade 12) or over age 18 and disabled if disability began before age 22
Your eligible family members will receive a monthly benefit that is as much as 50 percent of your benefit. However, the amount that can be paid each month to a family is limited. The total benefit that your family can receive based on your earnings record is about 150 to 180 percent of your full retirement benefit amount. If the total family benefit exceeds this limit, each family member’s benefit will be reduced proportionately. Your benefit won’t be affected.
How do you apply for Social Security retirement benefits?
The SSA recommends that you apply three months before you want your benefits to start. To apply, fill out an application on the SSA website, call the SSA at (800) 772-1213, or make an appointment at your local SSA office.
Copyright 2020 Broadridge Investor Communication Solutions, Inc
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These are the opinions of Larry Lof and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.
The S&P 500 is an index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly.
Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.