Tag Archives: Scott Matteson

Understanding Social Security benefits

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Courtesy Michigan State University Extension

By Scott Matteson, Michigan State University Extension


A majority of us go to work every day and probably never stop to think about when we are going to retire, let alone if we will ever collect Social Security when we do. According to the Social Security Administration (SSA) there are currently 173.5 million people working and paying social security taxes. Of the money being collected through the tax, 85 cents of each tax dollar is paid to the 62 million people currently receiving benefits of which 46 million are retirees and their families. In addition, 15 cents of each tax dollar goes into a trust fund and less than one penny per tax dollar is spent to manage the program.


How do you qualify for Social Security? First, you should apply for a social security number if you do not already have one; this allows the SSA to track your earnings while you are working and to track your benefits when you start receiving them. Qualification is based on a credit system. You earn one credit for $1,200 in earnings per year up to a maximum of four credits per year. It takes 40 credits to qualify for benefits; in other words, ten years of work.


How do you determine what your full retirement age is? Most people will tell you they think full retirement age is 65 but it’s not quite that simple. According to the SSA if you were born in or prior to 1943, congratulations! You are considered to be at full retirement age and can draw a full retirement. If you were born from 1943 to 1960, your age of full retirement increases gradually as shown in the following chart:

When should you begin taking SSA Benefits? It really comes down to how comfortable you feel and what you can afford to live on. You can elect to begin receiving benefits as early as age 62. For example, if you begin receiving benefits at age 62 and your retirement age is 66 you can expect your benefit to be 30% less than if you would have waited. The opposite is true if you wait until age 70. If you delay receiving benefits, they will increase by a certain percentage depending on date of birth as shown in the chart below.

For further help in determining when you may want to begin taking SSA benefits visit www.socialsecurity.gov/myaccount and sign up for a free account. The site will give you estimated figures for early, full and delayed benefits. Along with this you will be able to see disability benefits if you were to become disabled and survivors benefits when you die.


For additional information the Social Security Administration has two great publications they can be found at the following links: Retirement Benefits and When to Start Receiving Retirement Benefits.


Michigan State University Extension offers financial management and home ownership education classes. For more information of classes in your area, visit MI Money Health.


This article was published by Michigan State University Extension. For more information, visit https://extension.msu.edu. To have a digest of information delivered straight to your email inbox, visit https://extension.msu.edu/newsletters. To contact an expert in your area, visit https://extension.msu.edu/experts, or call 888-MSUE4MI (888-678-3464).



Seven simple rules to understand beneficiary forms

3-bottom, Citizen Journalism, How-To's, Senior Living,
Courtesy Michigan State University Extension

By Scott Matteson, Michigan State University Extension


“To be distributed pursuant to my last will and testament” sounds straightforward when leaving one’s possessions to their heirs. But what happens if that IRA, bank account or other important account has a beneficiary form attached to it? In the eyes of probate court, it is simple. The beneficiary form wins every time. Beneficiary forms override wills.


Why? Because beneficiary forms give heirs the ability to circumvent the probate process in order to receive funds in a timelier manner.


Beneficiary forms can cause a loved one to be disinherited. This mainly occurs because account holders forget and fail to update their forms. To prevent this from happening, you should coordinate your beneficiary forms with your overall estate plan and review designations every few years, especially after a life-changing event such as marriage, divorce, birth or death. You have the option not to name beneficiaries, and then funds would flow to your estate and be paid out per your last will and testament.


Whom can you name as beneficiaries?

  • Individuals
  • Trusts
  • Charities
  • Other organizations (Church, University, etc.)
  • Your estate
  • No one at all

Whom should you not name as beneficiaries?

  • Minors – Set up a trust payable at age 25 for those under 18 or 21, depending on laws in the minor’s state.
  • Disabled persons – Small inheritances can prevent them from getting government benefits
  • Avoid naming your estate on retirement plans – Required to be taxed and paid out within 5 years if estate is named.

7 simple rules to remember:

  1. Do not leave beneficiary lines blank – Leaving lines blank or not naming beneficiaries will likely have your heirs end up in probate court. If assets go to your estate, they may become exposed to creditors.
  2. Use trusts for beneficiaries who are minors – Most states place restrictions on minors and usually a court will appoint a guardian to handle the funds. Establish a trust receivable at age 25 and name the trust as the beneficiary.
  3. Understand key rules – When designating Beneficiaries ask questions and read the fine print. Remember Beneficiary forms, in most cases, override wills.
  4. Let your beneficiaries know – Tell your Beneficiaries what you have named them on and where to find contact information for the advisor and where to locate important documents. Also, give important contact information to your advisor.
  5. Check and re-check – Make sure Social Security numbers, telephone numbers and addresses are correct. Make sure names are properly spelled and figures are accurate.
  6. Use percentages instead of dollar amounts – Due to fluctuations in markets, values of accounts will rise and fall. By using percentages your heirs will still receive their portion of intended inheritance.
  7. Name contingent beneficiaries – Avoid assets being transferred to your estate and going through probate in case of primary beneficiary death by naming contingent beneficiaries when appropriate.

For additional information, read about the designation of beneficiary forms or how naming the wrong people or failing to update documents can create a mess for your heirs. Kiplinger included another story about the dangers of mistakes on beneficiary forms.


Michigan State University Extension offers financial management and homeownership education classes. For more information of classes in your area, visit MI Money Health.


This article was published by Michigan State University Extension. For more information, visit https://extension.msu.edu. To have a digest of information delivered straight to your email inbox, visit https://extension.msu.edu/newsletters. To contact an expert in your area, visit https://extension.msu.edu/experts, or call 888-MSUE4MI (888-678-3464).



The effects of financial infidelity

3-bottom, Citizen Journalism,
Courtesy Michigan State University Extension

By Scott Matteson, Michigan State University Extension


“To have and to hold from this day forward, for better or for worse, for richer, for poorer, in sickness and in health, to love and to cherish, from this day forward until death do us part.”


Most of you who are married probably read the first few words and recognized them right away as part of the traditional vows used during a wedding ceremony. What do the words have to do with money? There’s the for richer, for poorer aspect but maybe we should add, instead of death do us part, until trust issues do us part.


According to a survey conducted by the National Endowment for Financial Education (NEFE) in cooperation with Forbes and conducted by Harris Interactive two in five Americans admitted to financial deception with partners. In other words approximately 41 percent of people who combined their money with their partners have been financially unfaithful to that partner. The best term to describe the practice is financial infidelity.


Financial infidelity occurs when couples with shared finances lie to one another. If you have ever hidden a minor purchase, financial statements or bills from your partner the act results in being financially unfaithful. According to the survey, 75 percent said financial infidelity affected their relationship.


Fortunately, financial infidelity is reversible. Talk honestly, become transparent. You will have to come to the point of full disclosure with your family financials and begin to work through the issues and regain any lost trust. Below are some suggestions on how to get started. 

  1. Have an open discussion about your finances with your partner and come clean on all deceptive practices.
  2. Discuss needs vs. wants and the whys of overspending
  3. Track your spending and develop a spending plan
  4. Create smart goals to work toward common ground and eliminate outstanding debt
  5. Keep on talking. Don’t shut down the lines of communication.

This process will help partners to understand each other’s money values in addition to preventing a majority of conflicts that can arise regarding family finances. It is important to listen to each family members concern so everyone is on the same page and feels ownership to the plan moving forward. Revisit your plan periodically and decide together if revisions are necessary. 


For additional information visit the National Endowment for Financial Education. Michigan State University Extension offers financial management and home ownership education classes.


This article was published by Michigan State University Extension. For more information, visit https://extension.msu.edu. To have a digest of information delivered straight to your email inbox, visit https://extension.msu.edu/newsletters. To contact an expert in your area, visit https://extension.msu.edu/experts, or call 888-MSUE4MI (888-678-3464).






Money talks that you should be having with your aging parents

3-bottom, Citizen Journalism, Community Health, How-To's, Senior Living, , ,
Courtesy Michigan State University Extension

By Scott Matteson, Michigan State University Extension


“Silence is golden” or so the saying goes, but is it always a good idea? Silence is not golden when it comes to the subject of your parents’ living expenses, healthcare and elder care costs. According to the Fidelity Intra-family Generational Finance Study (FIGS), 4 out of 10 families have not had a conversation with their elderly parents about living expenses, healthcare, and elder care costs. One reason, as stated in the study, is that parents worry that their adult children are counting too much on a future inheritance, while children don’t want to upset their parents.


Because of this reasoning, the subject of money becomes taboo and needed conversations are not happening.


According to the FIGS study, children and parents didn’t believe having a conversation about living expenses, healthcare, and retirement was difficult to start. The difficulty comes with the depth and the detail of the conversation and when to start having the conversations. The important thing to remember is don’t wait until an emergency to have the conversation.


Below is a list of topics and ages when discussing retirement issues that can help avoid future emergency conversations:

Age 50AARP Eligible, Senior Discount Programs, Catch up contributions of $1,000 for IRA and $5,500 for 401k, 403b and TSP
Age 55401k or retirement withdrawals without 10 percent early penalty
Age 59 ½Take from any retirement account without 10 percent early penalty including Roth IRA, as long as it’s been held for 5 years.
Age 62Earliest age to collect Social Security. Eligible for reverse mortgages.
Age 65Eligible for Medicare (Apply 3 months before 65th birthday) – otherwise Medicare part B and prescription drug coverage part D may cost more money
Age 66Full retirement if born between 1943-1954 Can collect Social Security without reduction and no offset on amounts earned.
Age 70Maximum Social Security accrual – time to start.
Age 70 ½IRA and 401k contributions must stop. Must begin taking required minimum distributions


Before beginning a conversation on a sensitive subject such as money, you have to realize that the conversation is not a democracy; your parents have made decisions about their money all of their life and they are not about to stop now. Remember, it is your parents’ money and their decision. Below are 10 suggestions to aid in having a conversation concerning retirement, living expenses, healthcare, and elder care.

  1. Start Discussions Early. Do not think that it will only take one talk. The earlier you begin discussions, the more time will be on your side and the easier the discussions will become.
  2. Include all family members. Make sure all siblings are included in the discussions. This way, everyone in the immediate family is fully aware of all decisions made and are not getting information passed on to them that may or may not be accurate.
  3. Explain the purpose of your conversation. Communication is integral. Explain your concerns about how your parents will be cared for and how they feel about their financial future.
  4. Understand your parents’ need to control their own lives. The conversation is not about preserving your inheritance. It is about your parent’s right to be able to live their life how they want to live it.
  5. Agree to disagree. It is okay to disagree; the conversation is not about who is right or who is wrong.
  6. Use good communication skills. Listen to understand not to reply. If you don’t understand, then ask for clarification.
  7. Ask about records and documentation. Do not be afraid to ask where pertinent records are located and who would need to be contacted concerning them are.
  8. Provide information. If you come across information you deem to be useful in helping to make appropriate decisions, provide it to everyone involved in your ongoing discussions.
  9. Re-evaluate if things aren’t working well. Do not be afraid to take some steps backwards if conversations are not being productive.
  10. Treat your parents with respect. Always respect your parent’s wishes regarding decisions concerning their living expenses, healthcare and elder care.

For more in depth information about talking with aging parents about retirement please click on the following links: Aging and Money and When to Start Receiving Retirement Benefits. Additional information can also be found here.


This article was published by Michigan State University Extension. For more information, visit https://extension.msu.edu. To have a digest of information delivered straight to your email inbox, visit https://extension.msu.edu/newsletters. To contact an expert in your area, visit https://extension.msu.edu/experts, or call 888-MSUE4MI (888-678-3464).