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Most Americans are not on target to have adequate retirement savings by the time they are 67 years old. Photo by Jupiterim...

Report: 4 out of 5 Americans have less than a year’s income saved for retirement

Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil; and he will answer as many as he can.

Major challenges to successful retirements are not going away.

Paltry wage gains have led to even more paltry retirement savings balances. Health care costs are rising. Social Security and Medicare are under pressure because of long-term deficits. Plus, those on the upper end of income and education scales are living longer, which is a positive development, except that they must now also make their retirement funds last longer.

The National Institute on Retirement Security has cataloged these challenges and outlined a number of other sobering statistics in a study published this week.

Here are some of the key findings from the report:

  • Four out of five working Americans have less than one year’s income saved for retirement.
  • 57 percent of working age Americans do not have any money in an employer-sponsored retirement plan.
  • 77 percent of Americans are not on track to have adequate retirement savings if they retire at age 67.
  • The top 25 percent of income earners are five times more likely to have retirement accounts than those in the bottom 25 percent.

It is, of course, much easier to document these problems than to do much about them. That is why I predict we will, unfortunately, continue to see a steady parade of gloom-and-doom assessments of our golden years.

The retirement prospects of most folks north of age 60 are already set in wet cement (quickly on its way to becoming stone), but younger people can still benefit from the kinds of policy and behavioral shifts needed to redirect the retirement needle onto a positive trajectory.

So with the 2018 midterms only 48 days away, it is not too early for everyone to think about your candidates, how they stand on retirement issues, and how these positions will shape your voting decisions. If there are specific election-related retirement questions you’d like me to address, please send them to me.

And now, this week’s reader mailbag.

Ken – Virginia: I am 91 years old and have been covered with Parts A and Part B of Medicare for as long as I can remember. Last week I received a “Medicare Premium Bill” for $1,339 for a five-month coverage period and was told it was due immediately. I have never received a bill like this in my life! Do you know why I might have received this bill, and whether I should pay it? I have not had any success in getting any information. Help!

Phil Moeller: This bill seems suspicious to me.

If you receive Social Security benefits, and I assume you do, your Part B premiums must be paid out of those benefits. Unless there has been some change in your Social Security, there would be no reason to be billed for a back payment of these premiums.

Social Security is responsible for managing the payment of Part B premiums. I would call Social Security and tell them about this bill to see if it’s fraudulent or legitimate.

Please let me know how it turns out, including the name of the entity that is asking you for the payment. Perhaps this is a scam that needs to be publicly reported.

Ken: Thank you for answering. On your advice, I got aggressive and requested a personal meeting with a Social Security agent. I did meet with them yesterday and after more than two hours they stated an error had been made and that they have corrected the problem.

They also stated that since I had sent them a check for the billed amount, I should place a “do not pay” statement with my bank. I did this because they told me if the check is cashed, it could take months to receive my repayment.

Dean – Georgia: I am 54-year-old male and was just diagnosed with stage 4 prostate cancer that has spread to my spine and other organs. I’ve been told I have three to five years to live. After I pass away, will my wife be able to get my Social Security and Medicare benefits?

Phil Moeller: I’m sorry to hear about your diagnosis and wish you the very best.

In terms of planning, your wife would be entitled to claim a survivor’s benefit based on your Social Security earnings record once she is at least 60 years old. If your disease qualifies you to claim Social Security disability benefits, this might be a wise thing to do.

The way Social Security calculates disability benefits might give you and your wife more money than she would receive should you die before reaching the normal earliest claiming age of 62. This is something you should carefully research with a Social Security representative. If you hit a stone wall, let me know.

Your wife is entitled to receive the highest possible benefit for which she is eligible, but she cannot receive two benefits. So, if her own retirement benefit would be larger than yours, you should not worry about figuring out how to maximize your own benefit. In that case, though, it makes even more sense for you to seek disability benefits now so that you’d have some money coming in before you die.

Medicare covers only individuals, not families. So, your wife would need to get her own coverage when she becomes eligible for Medicare.

Vicky: After 35 years of marriage, my husband and I divorced. I am 68; he is 77. He was married once before for 16 years. I already receive my own Social Security retirement benefit. Should he die before me, will I qualify for his Social Security amount? Does the fact he was married before affect this?

Phil Moeller: Someone already receiving Social Security who is unmarried, or married again after age 60, is eligible to file for what would be referred to as an excess ex-spousal survivor benefit. It should equal the amount your survivor benefit exceeds your own retirement benefit. His prior marriage should not affect your own benefit.

Anonymous: If a disabled 61-year-old divorcee remarried and has been on Supplemental Security Income (SSI) for 12 years, can Social Security force them take their ex-spousal benefit early, even if it would be sharply reduced from what they would get by waiting to claim?

This doesn’t seem fair, but if it’s permitted, would they always get this lower benefit? When their ex-spouse dies, can they qualify for a higher benefit? Lastly, if this person remarries, when would they be eligible for a new set of spousal benefits?

Phil Moeller: Under SSI rules, recipients can be required to take Social Security benefits as soon as they are eligible, even if the benefits will be reduced by claiming them early. Here is what a former Social Security claims representative told me when I posed this question to him:

Yes, as a condition for receiving SSI, a person must file for any and all other benefits for which they could qualify as soon as they are eligible. SSI is a needs-based program of last resort, so you can’t choose to receive SSI while passing on other benefits to allow them to grow to a higher rate.

The earliest that this person could qualify for divorced spousal benefits on a living ex’s record is at age 62, so she’d have to take her benefits then if she qualifies regardless of the fact that her rate will be reduced for age. If she didn’t file, they’d stop her SSI anyway. The age reduction would be permanent for as long as her ex- is living but would not carry over to her potential survivor rate.

A new marriage would need to be in existence for at least a year in most cases before spousal benefits could be paid. However, the one-year requirement is waived if the person was eligible for auxiliary or survivor benefits on another person’s record in the month prior to the new marriage, or if they are the biological mother or father of the new spouse’s child.

Also, although this person couldn’t receive divorced spousal benefits on a living ex’s record if they remarry, they could potentially receive survivor benefits on a deceased ex’s record if their remarriage occurs at or after they reach age 60.