July Monthly Newsletter

Mid-Year Reality Check: Covering Your Bases in Uncertain Times More Details Ways Parents Can Help Their Boomerang Kids More Details Natural Disaster Planning for Small Businesses More Details Is it true that Social Security beneficiaries are being required to receive their payments electronically? More Details Is the Social Security Administration mailing out annual Social Security Statements? More Details

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This material is designed to provide information on the subjects covered. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Schnack Financial Group, Inc., its affiliated companies, and their representatives do not give legal or tax advice. Use of this material constitutes understanding and acceptance of these provisions. Schnack Financial Group, Inc. and specifically Randall Schnack, its president, is licensed to solicit and sell insurance, annuities and/or securities in the following jurisdictions only: AZ, CA (#0E19595), FL, GA, IL, IN, IA, MI, OH, NE, TX, WI. We are not able to discuss or sell insurance, annuities and securities to individuals or entities who reside outside of these jurisdictions. Residents living in any jurisdiction where we do not hold the appropriate license will be referred to an associate who is licensed in that resident's jurisdiction. This communication is strictly intended for individuals residing in the state(s) of AZ, CA, FL, GA, IL, IA, MI, OH, NE, TX and WI. No offers may be made or accepted from any resident outside the specific states referenced.

May Newsletter

Schnack Financial Group, Inc Randy Schnack President/CEO 227 South Blvd Oak Park, IL 60302-4712 708-386-2790 info@schnackfinancial.com www.SchnackFinancial.com

Schnack Financial Newsletter Helping you achieve your financial goals since '75 May 2012 Schnack Financial Newsletter

Hidden Taxes: What Is Your True Cost? We are pretty well aware of the taxes we must pay as U.S. citizens; income taxes, payroll taxes, sales taxes, property taxes, and gift and estate taxes, to name a few. We can easily see these taxes on our pay stubs, tax bills, and sales receipts. But, there are other taxes imposed on us that you may not be aware of. They are "hidden taxes." More Details Why Women Need Social Security Did you know that the first person ever to receive ongoing Social Security benefits was a woman? More Details Pay Down Debt or Save and Invest? There are certainly a variety of strategies for paying off debt, many of which can reduce how long it will take to pay off the debt and the total interest paid. But should you pay off the debt? Or should you save and invest? More Details What is personal liability insurance and do I have it? Personal liability insurance protects your assets if you injure another person or damage someone else's property. More Details What is umbrella insurance and why do I need it? Umbrella liability insurance (ULI) provides additional liability coverage in excess of the liability coverage provided by other insurance policies, such as homeowners, renters, and auto insurance. More Details

Refer a friend

This material is designed to provide information on the subjects covered. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Schnack Financial Group, Inc., its affiliated companies, and their representatives do not give legal or tax advice. Use of this material constitutes understanding and acceptance of these provisions. Schnack Financial Group, Inc. and specifically Randall Schnack, its president, is licensed to solicit and sell insurance, annuities and/or securities in the following jurisdictions only: AZ, CA (#0E19595), FL, GA, IL, IN, IA, MI, OH, NE, TX, WI. We are not able to discuss or sell insurance, annuities and securities to individuals or entities who reside outside of these jurisdictions. Residents living in any jurisdiction where we do not hold the appropriate license will be referred to an associate who is licensed in that resident's jurisdiction. This communication is strictly intended for individuals residing in the state(s) of AZ, CA, FL, GA, IL and MI. No offers may be made or accepted from any resident outside the specific states referenced.

Considerations in Claiming Social Security Retirement Benefits

First-time in history… Social Security Will Payout More than it Receives in 2010!

While states like Florida, Texas and California are contemplating changing their Teacher Retirement System benefits to remain solvent, other states also are debating what to do about their budget shortfalls. Those states that offer their employees both Social Security benefits and retirement programs are carefully looking at the government’s recent report on Social Security.  

The Social Security Administration just released a report that the system this year will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.

Stephen C. Goss, chief actuary of the Social Security Administration, said retirees would keep receiving their checks as usual. The problem is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.

 

Is this the Tipping Point That Results in Benefit Cuts?

Analysts have long tried to predict the year when Social Security would pay out more than it took in because they view it as a tipping point — the first step of a long, slow march to insolvency, unless Congress strengthens the program’s finances.

 

“When the level of the trust fund gets to zero, you have to cut benefits,” Alan Greenspan, former chairman of the Federal Reserve Board.

Social Security’s annual report last year projected revenue would more than cover payouts until at least 2016 because economists expected a quicker, stronger recovery from the crisis. Officials foresaw an average unemployment rate of 8.2 percent in 2009 and 8.8 percent this year, though unemployment is hovering at nearly 10 percent.

Although Social Security is often said to have a “trust fund,” the term really serves as an accounting device, to track the pay-as-you-go program’s revenue and outlays over time. Its so-called balance is, in fact, a history of its vast cash flows: the sum of all of its revenue in the past, minus all of its outlays. The balance is currently about $2.5 trillion because after the early 1980s the program had surplus revenue, year after year.

Now that accumulated revenue will slowly start to shrink, as outlays start to exceed revenue. By law, Social Security cannot pay out more than its balance in any given year.

A $29 Billion Shortfall This Year

Mr. Goss, the actuary, emphasized that even the $29 billion shortfall projected for this year was small, relative to the roughly $700 billion that would flow in and out of the system. The system, he added, has a balance of about $2.5 trillion that will take decades to deplete. Mr. Goss said that large cushion could start to grow again if the economy recovers briskly.

 

Indeed, the Congressional Budget Office’s projection shows the ravages of the recession easing in the next few years, with small surpluses reappearing briefly in 2014 and 2015.

After that, demographic forces are expected to overtake the fund, as more and more baby boomers leave the work force, stop paying into the program and start collecting their benefits. At that point, outlays will exceed revenue every year, no matter how well the economy performs.

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