Plant Growing In Savings Coins – Investment And Interest Concept

December 2019 – Retirement Solutions Newsletter

Table of Contents:

How to Give Like a Billionaire When You Don’t Have Billions to Give
Take This Quiz: The Social Security Retirement Earnings Test
For College Savings, 529 Plans are Hard to Beat
Should I sign up for an identity theft protection service?

How to Give Like a Billionaire When You Don’t Have Billions to Give

Since Bill and Melinda Gates and Warren Buffett created the Giving Pledge in 2010, more than 200 of the world’s wealthiest individuals and couples have committed to giving the majority of their wealth to philanthropic or charitable causes.
Although the Giving Pledge only invites billionaires to join, “it is inspired by the example set by millions of people at all income levels who give generously — and often at great personal sacrifice — to make the world a better place.”*
You don’t have to be a billionaire to embrace the spirit of the Giving Pledge: When people come together to give, regardless of wealth, they can improve the lives of others.

Decide which causes matter most to you
Giving Pledge billionaires are a diverse group, coming from 23 countries and ranging in age from their 30’s to their 90’s. While they’re all dedicated to philanthropy, they support many different causes.
For example, Giving Pledge member Sara Blakely pledged to help empower women to prosper when she signed the pledge in 2013. She has since donated money to build homes for impoverished families and funded entrepreneurial programs for girls.
One of the newest signers of the Giving Pledge, Robert F. Smith, focuses on causes that support equality for African Americans. In May 2019, he told graduates of Morehouse College that he was paying off their student loans via a grant that is worth an estimated $40 million.
What causes are you passionate about? What are your values? Do you want to make an impact locally or globally? Aligning the causes you support with what’s meaningful to you can help deepen your long-term commitment to giving back.

Write down why you are giving
Director and producer George Lucas and his wife Mellody Hobson joined the Giving Pledge in 2010. Like other members, they wrote a statement explaining why they wanted to join and what they intended to accomplish.
“My pledge is to the process,” Lucas wrote; “as long as I have the resources at my disposal, I will seek to raise the bar for future generations of students of all ages. I am dedicating the majority of my wealth to improving education.”*
Lucas fulfilled part of this pledge by creating the George Lucas Educational Foundation to transform education through innovation.
Writing down your own intentions can help clarify your philanthropic goals and serve as a reminder of the impact your gift could have.

Inspire and learn by going public
The Giving Pledge hopes to “inspire conversations, discussions, and action, not only about how much, but also for what purposes/to what end.”*
Even if you normally prefer to keep your charitable work private, being open about the causes you support might help inspire others to give back.
Other perks of going public include being able to exchange ideas and lessons learned with others, and the opportunity to meet people in your community or around the world who share your commitment.
Connect generations through giving
A major goal of the Giving Pledge is to encourage long-term family giving that will help make the world a better place for generations to come.
Sharing your passion for helping others with your children or grandchildren can be especially rewarding. Setting family goals, choosing worthy causes, and volunteering together are ways that you can help unite generations and make philanthropy part of your family’s legacy.

*To learn more about the Giving Pledge and those who have signed it, visit

Take this Quiz: The Social Security Retirement Earnings Test

Can you work and receive Social Security retirement benefits at the same time? Yes, but the Social Security Administration (SSA) will apply an earnings test. Part or all of your monthly benefit may be withheld if you earn too much.

To help avoid surprises, take this quiz to find out what you know — and don’t know — about Social Security earnings test rules.


  1. The retirement earnings test applies only if you are receiving Social Security benefits and are…
    1. Under age 62
    2. Under full retirement age
    3. Full retirement age or older
    4. Age 70 or older
  2. Which of the following types of income count toward the earnings test?
    1. Wages earned as an employee and net self-employment income
    2. Pension and retirement plan income
    3. Interest and dividends
    4. Both 1 and 2
    5. All of the above
  3. Benefits that are withheld are lost forever.
    1. True
    2. False
  4. The earnings test may affect family members who are receiving which types of benefits?
    1. Disability benefits
    2. Spousal benefits
    3. Dependent benefits
    4. Both 2 and 3
  5. What special rule applies to earnings for one year, usually the first year you claim Social Security retirement benefits?
    1. A monthly earnings limit applies to any earnings after you claim retirement benefits.
    2. Earnings during the first year after you claim retirement benefits can’t be counted if you retired after 40 years of continuous employment.
    3. Earnings during the first year after you claim retirement benefits will not reduce your Social Security benefit if you retired from a government job.


  1. 2. If you have not yet reached full retirement age (66 to 67, depending on your year of birth), your Social Security retirement benefit may be reduced if you earn more than a certain annual amount.
    In 2020, $1 in benefits will be deducted for every $2 you earn above $18,240. In the calendar year in which you reach your full retirement age, a higher limit applies. In 2020,$1 in benefits will be deducted for every $3 you earn above $48,600. Once you reach full retirement age, your earnings will not affect your Social Security benefit.
    The SSA may withhold benefits as soon as it determines that your earnings are on track to surpass the annual limit. The estimated amount will typically be deducted from your monthly benefit in full, so you might not receive benefits for one or more months before they resume.
  2. 1. Only earned income, such as wages from an employer and net self-employment income, count toward the earnings limit. Unearned income — such as other government benefits, investment earnings, interest, pension and retirement plan distributions, annuities, and capital gains — doesn’t count.
  3. 2. Benefits that are withheld are not really lost. Your benefit will be recalculated at full retirement age to account for the months benefits were withheld. You’ll receive the higher benefit for the rest of your life, so assuming you live long enough, you’ll eventually recoup the total amount you previously “lost.”
  4. 4. Benefits paid to family members (such as your spouse or dependent children) based on your earnings record may also be reduced if you’re subject to the earnings test. The earnings test does not apply to disability insurance benefits.
  5. 1. Many people retire mid-year and have already earned more than the earnings limit. So in the first year you claim retirement benefits, a monthly earnings test may apply, regardless of your annual earnings.

For example, let’s say that you claim benefits at age 62 on September 30, 2020 and have already earned more than the 2020 earnings limit of $18,240. Then, you take a part-time job that pays you $1,000 per month for the rest of the year. You’ll still receive a Social Security benefit for October, November, and December because your earnings are less than $1,520, the monthly limit that applies in 2020.

For College Savings, 529 Plans are Hard to Beat

Raising kids is hard enough, so why not make things easier for yourself when it comes to saving for college? Ideally, you want a savings vehicle that doesn’t impose arbitrary income limits on eligibility; lets you contribute a little or a lot, depending on what else happens to be going on financially in your life at the moment; lets you set up automatic, recurring contributions from your checking account so you can put your savings effort on autopilot; and offers the potential to stay ahead of college inflation, which has been averaging 3% to 4%per year.1 Oh, and some tax benefits would be really nice, too, so all your available dollars can go to college and not Uncle Sam. Can you find all of these things in one college savings option? Yes, you can: in a 529 plan.

529 college savings plans offer a unique combination of features that are hard to beat when it comes to saving for college, so it’s no surprise why assets in these plans have grown steadily since their creation over 20 years ago.

Eligibility. People of all income levels can contribute to a 529 plan — there are no restrictions based on income (unlike Coverdell accounts, U.S. savings bonds, and Roth IRAs).

Ease of opening and managing account. It’s relatively easy to open a 529 account, set up automatic monthly contributions, and manage your account online. For example, you can increase or decrease the amount and frequency of your contributions (e.g., monthly, quarterly), change the beneficiary, change your investment options, and track your investment returns and overall progress online with the click of a mouse.

Contributions. 529 plans have high lifetime contribution limits, generally $350,000 and up.(529 plans are offered by individual states, and the exact limit depends on the state.) Also, 529 plans offer a unique gifting feature that allows lump-sum gifts up to five times the annual gift tax exclusion — in 2020, this amount is up to $75,000 for individual gifts and up to $150,000 for joint gifts — with the potential to avoid gift tax if certain requirements are met. This can be a very useful estate planning tool for grandparents who want to help pay for their grandchildren’s college education in a
tax-efficient manner.

Tax benefits. The main benefit of 529 plans is the tax treatment of contributions. First, as you save money in a 529 college savings plan
(hopefully every month!), any earnings are tax deferred, which means you don’t pay taxes on the earnings each year as you would with a regular investment account. Then, at college time, any funds used to pay the beneficiary’s qualified education expenses — including tuition, fees, room, board, books, and a computer — are completely tax-free at the federal level. This means every dollar is available for college. States generally follow this tax treatment, and many states also offer an income tax deduction for 529 plan contributions.

But 529 plans have some potential drawbacks.

Tax implications for funds not used for qualified expenses. If you use 529 plans funds for any reason other than the beneficiary’s qualified education expenses, earnings are subject to income tax (at your rate) and a 10% federal penalty tax.

Restricted ability to change investment options on existing contributions. When you open a 529 college savings plan account, you’re limited to the investment options offered by the plan. Most plans offer a range of static and age-based portfolios (where the underlying investments automatically become more conservative as the beneficiary gets closer to college) with different levels of risk, fees, and management objectives. If you’re unhappy with the market performance of the option(s) you’ve chosen, you can generally change the investment options for your future contributions at any time. But under federal law, you can change the options for your existing contributions only twice per year. This rule may restrict your ability to respond to changing market conditions, so you’ll need to consider any investment changes carefully.

Getting started
529 college savings plans are offered by individual states (but managed by financial institutions selected by the state), and you can join any state’s plan. To open an account, select a plan and complete an application, where you will name an account owner (typically a parent or grandparent) and beneficiary (there can be only one); choose your investment options; and set up automatic contributions if you choose. You are then ready to go. It’s common to open an account with your own state’s 529 plan, but there may be reasons to consider another state’s plan; for example, the reputation of the financial institution managing the plan, the plan’s investment options, historical investment performance, fees, customer service, website usability, and so on. You can research state plans at the College Savings Plans Network.
1 College Board, Trends in College Pricing, 2014-2018

Should I sign up for an identity theft protection service?

Unfortunately, data breaches are now normal, everyday occurrences in our society. As a result, many companies are offering services to help you protect your personal information. If you want an extra layer of protection, an identity theft protection service is a good option. However, the term “identity theft protection service” can be misleading. The reality is that no one service can safeguard all of your personal information from identity theft. What most of these companies actually provide are identity theft monitoring and recovery services.

A monitoring service will watch for signs that an identity thief may be using your personal information. This typically includes tracking your credit reports for suspicious activity and alerting you whenever your personal information (e.g., Social Security number) is being used. The recovery portion of the service usually helps you deal with the consequences of identity theft. This often involves working with a case manager to help resolve identity theft issues (e.g., dealing with creditors or placing a freeze on your credit report). And depending on the level of protection you choose, the service may also provide reimbursement for out-of-pocket expenses directly associated with identity theft (e.g., postage, notary fees) and any funds stolen as a result of the identity theft (up to plan limits). Identity theft protection services usually charge a monthly fee. Entry-level plans that provide basic protection (e.g., Social Security number and credit alerts) can cost as little as$10 a month, while plans that offer more advanced features (e.g., investment account monitoring) will cost more.

Keep in mind there are steps you can take on your own to help protect yourself against identity theft, such as:

  • Check your credit report at least once a year for errors
  • Periodically review your bank and debit/credit card accounts for suspicious charges/activity
  • Obtain a fraud alert or credit freeze if necessary
  • Have strong passwords, use two-step authentication, minimize information sharing, and be careful when shopping online