Legal Guide


eg: UK or Brides UK or Classical Art or Buy Music or Spirituality

Business & Money

Technology

Women

Health

Education

Family

Travel

Cars

Entertainment

Featured Sites

Disability Retirement Social Security

View:

On June 8, 1934, President Franklin D. Roosevelt announced his intention to provide a program for Social Security. It was his goal to help protect millions of workers from poverty in their senior years. Over the years many changes have taken place and Social Security is very different from the original plan. Here are the top ten reasons that Social Security isn't the best way to plan for your retirement.

1. There is no money left in Social Security's Trust fund. The original plan was for people to voluntarily put money into an insurance plan. The money was then put into a Trust Fund that would be used only for paying retirement benefits. If more money was taken in than paid out the balance would be placed in an interest bearing account. During President Lyndon Johnson's administration, the funds were made available for use in other government programs. For years Social Security has taken in more money that it has paid out; but instead of saving this surplus, the government spends the money and writes the Trust Fund an "IOU," a special issue government bond to be paid back starting in 2017. The problem is that when the money comes due, it will still have to come from somewhere - taxes.

2. Social Security is subject to double taxation. Originally, the plan was to have the money paid into the program be tax deductible for income tax purposes. During the Clinton Administration, Social Security benefits became taxable. Now, you pay income tax on the money that is deducted from your pay check that goes into Social Security. Then when you receive it, you may be taxed on all or part of your benefits if you have other income besides Social Security. You have now been taxed twice on the same money.

3. Social Security is not enough to live on. Even if you work hard your whole life and pay into Social Security, there is a very slim chance you will have enough to live comfortably in retirement. I know of a woman who spent most of her adult life raising her family. At age 50, she will have to work until she is 70 to receive $566 per month. No one can live on $566 per month.

4. High Social Security taxes prevent many people from being able to accumulate a savings account. Social Security and Medicare taxes are 15.3% of earned income. With inflation at an all time high, few can afford to put away anything extra.

5. The current system is not fixable. The only way to fix Social Security's problems is to raise taxes. This would have a major impact on average worker's household budgets, would cost hundreds of thousands of jobs, slow the economy, and take a bite out of any personal savings. Although hire taxes might relieve some of the problem, it most likely would not solve it, leaving the potential for future tax hikes.

6. Money is better spent in the hands of the people rather in the government's hands.

7. Social Security is not secure. As has been proven in the past, the laws and rules that govern Social Security change according to who is in office at the time. As new elected officials come in, new ideas come with them and change occurs.

8. As More people retire and live longer there are less people paying in. In 1950, there were 16 workers paying Social Security for every retired person receiving benefits. Today there are 3.3 per retiree. By the year 2020, there will be 2 workers paying in per retiree.

9. The more you make the more you pay. In the original program, participants would only have to pay 1% of the first $1,400 of their annual incomes into the program. Today, individuals must pay 15.3% of the first $94,200 and 2.95% on the rest of their income.

10. Being self employed gives you the choice between paying into Social Security and investing in yourself. For most of human history, people lived and worked on farms in extended families and this was the foundation of economic Security. They were self employed. As they grew older, children took over the family business and the retiree continued to receive income and benefits until death. When the Industrial Revolution developed, more and more people worked for other people. When they retired there was no more income. Thus Social Security was created. Today is no different than earlier times. If you own your own business, you can either have a family member take over the business or hire someone to run it when you are ready for retirement. You can receive income until you die and then you can Will the income to your heirs.

So, how does one solve the Social Security dilemma? Start a business that can continue to provide for you even after you are ready to retire. The best way to do this is to turn a hobby or interest into a business. There are many things you can deduct when you own a business that you cannot deduct ordinarily. For example, lets say you have a hobby of wood working. You have a room in your home and many tools you have purchased and you love to tinker and make decorative items out of wood. If you turn it into a business, now you can deduct all the tools and supplies you use to make the items. The room you use in your home can be deducted by claiming a percentage of the rent, interest, taxes, utilities, insurance, and repairs to the house. All of those things you are going to pay for whether you have a business or not. Much of your travel expense may be deductible now. As you travel to visit your children and grandchildren you can make the trip deductible by checking on new ideas and materials that will improve your products, attending trade shows, etc. You may travel to craft and trade shows to sell your products. If you choose to sell products over the internet, your internet costs will now be deductible. The list goes on and on. By making these things tax deductible you can limit what you pay into Social Security and invest that money in your business or a savings program of YOUR choice.

Owning a business is a good alternative to the current popular retirement plans. After you retire, you can keep doing what you love and create income to supplement your retirement and still keep tax deductions that most people loose in their retirement years. If you choose a business that you can train others to do, then that business can produce income after you stop and generate passive income to supplement your retirement. Owning a business gives you control over your quality of life when you choose to retire.

Disability Retirement Social Security

The rabbit had been able to elude the fox, hopping safely into the arms of a briar patch and out of the immediate reach of the hungry predator. Seeing that he would not be able to have the rabbit for a meal, he decided instead to show concern. “Are you alright, my friend?" he asked, trying to put on an expression of empathy.

“Quite well, thank you," replied the rabbit, still panting from the close call and looking to and from with suspicion.

“Very well, then," said the fox, who began to walk away. He paused, turned around, and added, “I promise not to try and harm you anymore."

“Are you quite serious?" asked the rabbit, surprised at this sudden announcement.

“Quite serious," the fox replied, then walked away. As he walked, he uttered under his breath, “At least -- not for today."

-- From “More Fables, Ancient and New"

At least once a month, I receive a call from an individual who has been on total disability with Federal Worker’s Comp for several years. The individual has been separated from service from the Federal Government or the Postal Service for more than a year, and suddenly the Office of Workers Compensation Program sends the individual to a Second Opinion doctor, and thereafter issues a declaratory finding that he or she is no longer disabled, and can return to work.

-- Not only has that individual lost his OWCP benefits, but he has also lost his right to file for disability retirement under FERS or CSRS.

This is because, under the rules and regulations for disability retirement, an individual must file with the Office of Personnel Management within one year from the date he or she is separated from Federal Service (See 5 C.F.R. Sec. 844.201(a)(1) , where it states that, "Except as provided in paragraphs (a)(3) and (a)(4) of this section, an application for disability retirement is timely only if it is filed with the employing agency before the employee or Member separates from service, or with the former employing agency or OPM within 1 year thereafter").

Thus, a word of caution for those many individuals who receive the non-taxable payments from OWCP -- continue to remain on OWCP for as long as possible, because it is certainly financially advantageous over the taxable annuity amount received from FERS/CSRS disability retirement -- but always remember that OWCP is not a retirement system. If they don’t cut your payments off today, there is always tomorrow (refer to the fox in the fable, above).

I always advise my disability retirement clients who are receiving OWCP benefits to remain on OWCP for as long as they can stand it (i.e., the persistent harassment, the constant oversight by so-called "2nd opinion doctors", etc.) -- but to always have the FERS/CSRS disability retirement annuity approved as a back-up source of income. Individuals may file for disability retirement concurrently while on OWCP -- but you simply cannot collect from both at the same time (See 5 C.F.R. Sec. 844.105, "Relationship to workers' compensation. (a) Except as provided in paragraph (b) of this section, an individual who is eligible for both an annuity under part 842 or 844 of this chapter and compensation for injury or disability under subchapter I of chapter 81 of title 5, United States Code (other than a scheduled award under 5 U.S.C. 8107(c)), covering the same period of time must elect to receive either the annuity or compensation.").

Thus, when OWCP terminates your payments (and there is a very good chance that this will happen at some point in the near future), it is a wise option to have your disability retirement benefits approved, but held in an inactive status. You have every right to elect one benefit over the other. Indeed, if you wanted to, you are allowed to go back and forth between OWCP and FERS/CSRS disability retirement.

As a secondary issue on this matter, take a close look at 5 U.S.C. Section 8106 on “partial disability", and compare that definition with the definition for disability retirement. In Section 8106 (OWCP), the definition states in paragraph (c) (2) that “A partially disabled employee who refuses or, neglects to work after suitable work is offered to, procured by, or secured for him, is not entitled to compensation." This means that if OWCP secures a job for you as a Walmart greeter (you know, those individuals who smile and say hello to you as you walk into the Walmart Superstore), and pay you the difference between your salary and what Walmart pays -- and you decide to say “no", OWCP has every right to cut off your payments.

On the other hand, under the laws concerning FERS & CSRS disability retirement, 5 C.F.R.Sec. 844.103 (a)(2) states that, in order to be eligible for disability retirement, the individual "must, while employed in a position subject to FERS, have become disabled because of a medical condition, resulting in a deficiency in performance, conduct, or attendance, or if there is no such deficiency, the disabling medical condition must be incompatible with either useful and efficient service or retention in the position."

The difference here is that, under OWCP, if you are 'partially disabled', if you are offered any job that OWCP believes you can do, you must accept it. On the other hand, under FERS/CSRS disability retirement laws, if you are partially disabled -- meaning that you simply cannot do at least one or more of the essential elements of your job -- then you are entitled to disability retirement benefits, and your agency or the Postal Service cannot simply offer you any job; they must offer you a job in the same pay or grade, and one in which you are qualified or, if you are in the Postal Service, then it must an accommodation in the same craft.

Under the former (OWCP), you have no control over your future (OWCP determines your future); under the latter (disability retirement), you can obtain disability retirement benefits, and then take control of your future and work at another job of your choice, and make up to 80% of what your (former) position pays, and still continue to receive your disability annuity.

Experiencing a medical disability is a traumatic, life-changing event. Financial concerns are always part of this life-changing event, and it is important to secure one's financial future to the greatest extent possible. Obtaining disability retirement -- both the annuity as well as the health insurance benefits -- is often the difference between a secure future and financial poverty. It is therefore extremely important to look upon disability retirement as a lifetime investment -- one which must be obtained with an aggressive plan and approach.

I am an Attorney who represents Federal and Postal workers from all across the United States, including Alaska, Hawaii and Puerto Rico. I do not charge for telephone consultations. If you would like to contact me, you may call me at 1-800-990-7932, or email me at DisabilityAtty@msn.com. My ad also appears weekly in the Federal Times.

More Articles from

Social Security Information Pg3

Related Articles
Author
Most Popular

•	Applying For Social Security Disability, by Albert Tobega
•	Disability Benefits Social Security, by Peggy Stevens2 Peggy Stevens2
•	Disability Retirement Social Security, by Christopher Anderson
•	Disability Under Social Security, by Jeff Van Persie
•	For Social Security Disability, by Lala C. Ballatan

About Author

Both Christopher Anderson & Patrick Altoft are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Christopher Anderson has sinced written about articles on various topics from Debts Loans, Real Estate and Sell Home. Christopher Anderson is part owner of Lone Peak Business Solutions, Inc. He wants to share his success as a business owner with others who desire to own their own. Christopher Anderson's top article generates over 40500 views. Bookmark Christopher Anderson to your Favourites.

Patrick Altoft has sinced written about articles on various topics from Internet Marketing, Landscaping and Keyboard Synthesizer. Robert R. McGill, Esquire DisabilityAtty@msn.com federa. Patrick Altoft's top article generates over 33100 views. Bookmark Patrick Altoft to your Favourites.

Consultant For Small Business
The Bottom Line on Moonlighting JobsGetting moonlighting jobs as a computer consultant for small businesses requires persistence and flexibility but the sacrifices you make now will pay-off later in t...