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Bob’s Journal for 1/7/20

Published on: Jan 07 2021

Some Notable Events That Grabbed My Attention This Week

Social Security Continues to Let Down Beneficiaries

Near the end of 2020, the Inspector General (IG) of the Social Security Administration (SSA) issued more reports on the agency’s shortcomings.

A report in December was divided into several sections. One key section focused on a study of SSA’s attempts to follow its policy of locating and contacting individuals or estates who likely are entitled to benefits through a recently deceased beneficiary.

The IG reviewed a sample of cases and determined that in most cases SSA made no attempt to locate or contact the people who might be entitled to benefits.

Elsewhere in the report, the IG studied cases in which beneficiaries were underpaid. In past reports (some three dozen in the past four years, according to The Washington Post) the IG identified areas in which SSA systematically made mistakes that resulted in underpayments to particular categories of beneficiaries.

The latest report found that most of the time SSA made no attempt to contact beneficiaries who were underpaid. Most of those who were underpaid received no notice from the agency and had no idea they were being underpaid.

Two additional reports were issued by the IG in November. One report focused on individuals who claimed retirement benefits before full retirement age while the other studied surviving spouses whose benefits were offset by government pensions.

When someone receives retirement benefits before full retirement age but continues to earn income from working, the monthly benefits are reduced when the earned income exceeds certain levels. But once the beneficiary reaches full retirement age, the monthly Social Security benefits are supposed to be increased to restore the benefits that were withheld in earlier years.

The IG found that the monthly benefits were not adjusted properly for more than half the beneficiaries whose cases were studied. Sometimes, SSA overpaid the beneficiaries. Other times, the beneficiaries were underpaid.

The IG also found a large group of beneficiaries whose benefits were not adjusted at all after they reached full retirement age. For the surviving spouses, whose benefits were reduced because they earned government pensions, the IG found many of these beneficiaries were not properly advised by SSA.

The reduction from receiving a government pension would be less in many cases if a surviving spouse delayed claiming the survivor’s benefits for a few years. SSA’s policy is that reps are supposed to advise the surviving spouses of the advantages of delaying a claim for benefits.

But the IG found this usually wasn’t done. The surviving spouses received lower (or no) benefits because they weren’t accurately advised of the best choices for them.

There’s no surprise here to longtime readers. They know that SSA often isn’t a good source of information. Mistakes in advice and benefit calculations occur too often.

That’s one reason I wrote my recent book, Where’s My Money: Secrets to Getting the Most out of Your Social Security. It tells you clearly what your benefit options are in different situations and how to determine the best choice for you. You can find it on or

Long-Term Care Costs Keep Rising

The annual cost of long-term care from Genworth is out, and it shows the costs increased again.

Genworth has been compiling the survey since 2004. It now surveys 435 cities and towns across all 50 states.

The data is classified by type of care: assisted living, nursing home care and home care. It also can be broken down by state or metropolitan area within the state.

The good news is the cost of care is increasing at a lower rate than it used to. In some areas and for some types of care, the cost increases are close to the Consumer Price Index rise.

But the cost of long-term care still is substantial, and it is increasing.

From 2004 to 2020, the national average cost of a year in assisted living increased from $28,800 to $51,600. That’s a total increase of $22,800, or 79.17%. It is an annual rate of increase of $1,425, or 3.80%.

The rates of increases for nursing homes and home care increased at lower rates. The rates and increases, of course, vary around the country, with higher-cost areas having higher-than-average costs of long-term care.

Genworth’s annual survey is interactive and available on its website.

The survey shows the importance of planning for a time when you or your spouse might incur this large and increasing expense. Review my past articles in the Archive on the members’ section of the website for ideas.

Lessons from 2020, Outlook for 2021

I’m not a fan of the typical year-end predictions and forecasts for the next year. Most are outdated within 60 days.

But there are a couple of interesting pieces I recently came across. I don’t agree with everything in them. But they’re thought-provoking and worth reading.

One is a summary of lessons learned from 2020. Among them are:

We should pay more attention to tail risks (low probability but high cost events).

People care more about narratives to explain the world than the world itself.

Politicians don’t always behave in a rational self-interested way.

The other article is a forecast of the top political and economic risks of 2021 from the Eurasia Group. Some interesting entries:

The COVID risks and impact won’t end when widespread vaccination begins.

U.S.-China tensions will broaden and become more complicated.

Cyber conflict will create unprecedented technology and geopolitical risk.

The Data

New unemployment claims for the latest week declined by 3,000 to 787,000.

Continuing claims declined by 126,000 to 5.07 million.

The number of people receiving benefits from all the unemployment compensation programs declined by 420,000 to 19.2 million.

Private payrolls declined by 123,000 in December, according to the ADP Employment Report. That’s the first monthly decline since April.

The biggest job declines were in leisure and hospitality firms, with most of the job cuts coming from businesses with more than 1,000 employees.

During the pandemic, the ADP report consistently has reported fewer jobs than the Department of Labor’s monthly reports.

The PMI Manufacturing Index for December climbed to 57.1 from 56.7 in November.

The ISM Manufacturing Index for December was even stronger growth. The index rose to 60.7 from 57.5 in November.

The ISM Services Index for December indicated growth also increased in that sector. The index rose to 57.2 from 55.9 in November.

But the PMI Composite Index for December indicated overall economic growth slowed during the month. The Composite Index was 55.3, down from 58.6 in November. The Service Index component accounted for the lower growth, falling to 54.8 from 58.4.

Factory Orders for November increased 1.0%, following a revised 1.3% increase in October. That’s the seventh consecutive month orders increased. Orders for nondefense capital goods, a measure of business investment, increased 0.5%.

The Markets

The S&P 500 rose 0.41% for the week ended with Wednesday’s close. The Dow Jones Industrial Average gained 1.34%. The Russell 2000 increased 4.13%. The All-Country World Index (excluding U.S. stocks) added 1.93%. Emerging market equities improved by 2.13%.

Long-term treasuries lost 2.76% for the week. Investment-grade bonds declined 1.61%. Treasury Inflation-Protected Securities (TIPS) fell 0.01%. High-yield bonds dropped 0.28%.

On the currency front, the U.S. dollar fell 0.33%.

Energy-based commodities increased 3.85%. Broader-based commodities rose 4.24%, while gold added 1.39%.

Bob’s News & Updates

The number of regular viewers for my Retirement Watch Spotlight Series continues to increase. You should sign up because I make in-depth presentations of key retirement finance topics. You can watch these online seminars from the comfort of your home or office at times you choose. To learn more about my new Spotlight Seriesclick here.

A recent five-star review of my book on said, “A complete retirement guide! One of the best books on this topic!” Click for more details about the revised edition of “The New Rules of Retirement.”

If you’re interested in my books, check my author’s page.

I’m a senior contributor to the blog. You can view my contributor page here.


May 2022:
Congress Comes for your Retirement Money
A devastating new law has just been enacted, with serious consequences for anyone holding an IRA, pension, or 401(k). Fortunately, there are still steps you can take to sidestep Congress, starting with this ONE SIMPLE MOVE.

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