Freeman's Blog


June 25th, 2015 by

social security history

Some Americans are already feeling anxious about the state of the Social Security program. Will there be enough for you to live on in your golden years? Will it be enough? Research shows that the Social Security program is in bigger trouble than we anticipate (see my previous blog).

Possible Solutions For Social Security

A 2014 study by the National Academy of Social Insurance (NASI) looked at potential solutions addressing Social Security’s funding shortfall in terms of their impact (based on current actuarial data) and public opinion.

The most popular revenue-enhancing changes — “strongly” or “somewhat” favored by more than four out of five survey respondents — were to gradually raise the FICA payroll tax rate (paid by both workers and employers) from 6.2% to 7.2% over 20 years, and to gradually eliminate the taxable earnings cap over 10 years so that all earnings would be taxed.6

In 2015, workers’ earnings up to a maximum of $118,500 are subject to the payroll tax; the earnings cap is indexed annually for inflation. Raising the taxable earnings cap to $230,000 (which would cover 90% of all earnings by U.S. workers, a target set by Social Security legislation) would reduce the funding gap by 29%. Eliminating the earnings cap altogether would reduce the gap by 74%. Gradually raising the payroll tax would address about 52% of the shortfall.7

A majority of survey respondents oppose benefit reductions, such as reducing or eliminating benefits for high-income beneficiaries, raising the retirement age, and reducing the cost-of-living adjustment (COLA). In fact, 70% to 80% of respondents favored potential benefit increases, including raising the COLA, raising benefits for those who are 85 and older, reinstating survivor benefits for college students, and raising the minimum benefit. Of course, any benefit enhancements would only increase the deficit and would have to be offset by revenue increases.8

SSA-logo These reforms could work with the current Social Security system, but some legislators have suggested a more fundamental shift toward privatization ­— allowing younger workers to divert some or all of their payroll taxes from Social Security to private accounts. However, this approach would increase the current Social Security deficit, and it raises questions about the long-term security of a private savings program.

6–9) National Academy of Social Insurance, 2014

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM Don’t rely solely on Social Security for your retirement income. It’s not a safe move.  Let me help you establish SAFE ways to ensure you reach your retirement goals.
Meet me for a FREE retirement strategy consultation
at my office at 1-833-313-7233 | MD, VA & DC. 


June 24th, 2015 by

social security challenges

Underestimated Challenges Facing Social Security

In May 2015, researchers from Harvard and Dartmouth published a report suggesting that actuaries for the Social Security Administration have been underestimating the demographic challenges facing the program since 2000.1 The fact that Social Security is in trouble was not a surprise, but the possibility that the day of reckoning might come sooner than previously projected generated considerable media attention and may spur renewed political debate.

Social Security is the centerpiece of America’s retirement safety net. Nine out of 10 retirees and eight out of 10 workers are counting on the program as an important source of retirement income.2

Regardless of your age and working status, this might be a good time to look at the challenges facing the program and the potential solutions for addressing its fiscal problems.

Battling Demographics

There is no mystery to the fundamental problem. Because of Americans’ longer life spans and lower birth rates, there are not enough workers to support the growing number of beneficiaries. In 1955, there were 8.6 workers for each beneficiary. The number of workers per beneficiary fell to 4.0 by 1965 and 3.2 by 1975. Currently, there are only 2.8 workers contributing to Social Security for each beneficiary. By 2035, this is expected to drop to 2.1, at which point it will level off.3

Since 2010, the Social Security system has been supplementing its revenues from trust funds built up during the period when revenues exceeded expenses. Based on current actuarial projections, these funds will run out in 2033, at which point the program might be able to pay only 77% of scheduled benefits; the percentage falls to 72% by 2088.4

Although the Harvard-Dartmouth researchers did not offer a specific date when the funds might run out, they found that the program’s expenses have been consistently underestimated since 2000, primarily because they were not fully adjusted for increasing life spans.5

1, 5) Journal of Economic Perspectives, Spring 2015
2) Employee Benefit Research Institute, 2015
3–4) Social Security Administration, 2014

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM Don’t rely solely on Social Security for your retirement income. It’s not a safe move.  Let me help you establish SAFE ways to ensure you reach your retirement goals.  Meet me for a FREE retirement strategy consultation at my office at 1-833-313-7233 | MD, VA & DC. 


June 10th, 2015 by

Having a legal will is an essential step to help ensure that your money is distributed according to your wishes. However, in some cases you may also want to make provisions through a trust. Unlike a will, certain trusts might accomplish goals during your lifetime, provide greater control of your money after your death, offer tax benefits, and/or avoid the often expensive and time-consuming probate process.

comparing trust

Basic Terms and Structures

A trust is a legal arrangement under which one person or institution controls property given by another person for the benefit of a third party. The person giving the property is referred to as the trustor (or grantor), the person controlling the property is the trustee, and the person for whom the trust operates is the beneficiary. With some trusts, you can name yourself as the trustor, the trustee, and the beneficiary.

A testamentary trust becomes effective upon your death and is usually established by your last will and testament. One common use of a testamentary trust is to ensure that monies left to children or others are distributed by a trustee who is chosen by you to carry out your wishes and work in the best interests of your heirs.

A living trust takes effect during your lifetime. When you set up a living trust, you transfer the title of all the monies you wish to place in the trust from you as an individual to the trust. Technically, you no longer own the transferred monies. If you name yourself as trustee, you maintain control of those dollars and can buy, sell, or give them away as you see fit. However, this option may negate any estate tax benefits.

Living trusts can be either revocable or irrevocable. A revocable trust can be dissolved or amended at any time while the grantor is still alive. An irrevocable trust may be modified or revoked only with the consent of the trustee and the beneficiary, depending on state laws. Both types of living trusts avoid probate and may provide other benefits not offered by a will or a testamentary trust (see chart above). A testamentary trust is irrevocable by definition, but the grantor could change it by amending the will that established the trust.

Trusts and Their Costs

Trusts involve up-front costs and often have ongoing administrative fees. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional and your legal and tax advisors before implementing a trust strategy.

I want to help you live your retirement years stress-free. Let me guide you on your retirement planning path.
Let’s get started today!
Contact my office for a FREE consulation at
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Freeman Owen, Jr - Host of SAFE MONEY TALK on CBS The Big Talker 1580AM
June 4th, 2015 by

It should come as no surprise that American family life has changed over the past four decades, but U.S. census data reveals just how widespread this change has been. In 1970, about 40% of households were married couples with children under 18 living at home. By 2012, only 20% of households fit this structure (see chart).
Although basic principles of budgeting and saving apply to all households, nontraditional families are less likely to feel financially secure than traditional families.1

Here are a few specific ideas that might be helpful for nontraditional situations.

Blended and Divorced Families

  • Set clear expectations for financial responsibilities. Well-defined guidelines might help avoid unnecessary conflicts.
  • College financial aid applications typically base their formulas on the parent who has primary custody. However, if you share custody with your ex, you might receive more aid if the parent with a lower household income fills out the forms.
  • Update your will and beneficiary designations to reflect your family situation. Be sure to take appropriate steps to provide for children from a previous marriage.

Single Parents

  • You may have to make hard choices to balance paying for your children’s college education and planning for your own retirement. Remember that children from single-parent households may qualify for a higher level of college financial aid than they might in two-parent households.
  • Have a current will that designates a guardian for your children and outlines other contingency plans. Life insurance companies generally will not pay a death benefit to minor-age children, so it’s important to identify a financial administrator for your estate. This person may be the child’s physical guardian or someone else.

Unmarried Couples

  • Make sure you understand the laws of your state and local government, and the policies of your employer. Register your domestic partnership, if possible.
  • Define legal arrangements through appropriate documents. For example, your partner may need financial and health-care powers of attorney to make decisions on your behalf. If you own a house together, specify what happens in the event of a separation.

Single Households

  • Maintain a healthy emergency fund and increase your retirement dollars. Without dependents, you should be able to save more; but without a partner’s financial contribution, you might need more money for emergencies and a comfortable retirement than you would if you were married.
  • Be sure to have a will and other estate documents in place. If you die without a will, the state may decide who receives your estate.

Regardless of your household structure, you might benefit from professional guidance tailored to your situation. By focusing on your overall objectives, a professional can provide education, identify strategies, and help you consider options that could have a substantial effect on your long-term financial situation.

Source: 1) Money, December 2014

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM Taking the first step in your retirement planning isn’t easy! Let me help you stay on track for your retirement goals.  Meet me for a FREE retirement strategy consultation at my office at 1-833-313-7233 | MD, VA & DC.