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 Government 
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6 Changes Coming to Social Security Next Year

Social Security CardEvery year, about this time, we start looking to the coming year, and what changes will be coming for our finances. Many aspects of our finances are affected by the changes put into place each year. The IRS announces tax brackets, we learn about new contribution limits on tax-advantaged retirement accounts, and we find out about other benefits, including Social Security.

The coming year, 2013, promises to be interesting on a number of levels. Changes are coming in health care as some of the provisions of the Patient Protection and Affordable Care Act come into play, and as contribution limits — including those on IRAs for the first time in a few years — head higher. There are also quite a few changes coming to Social Security in 2013.

Here are some of the items that you can expect to be different, starting next year:
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 Government 
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Series I Bonds Interest Rate Update (Nov 2012)

Savings BondsGuess who just released inflation data for September? The Bureau of Labor Statistics!

Guess who can now calculate how much a Series I bond will be yielding once the inflation/variable portion of the interest rate is reset in November? We can!

Just to recap, the interest rate you get on a Series I bond is a calculation that takes into account the variable rate, which resets every March and November, and the fixed rate, which is set during March and November but remain fixed for the life of the bond. The calculation is pretty simple but we built this Series I bond interest rate calculator just to make it easier.

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 Government 
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How to Correct Mistakes on Your Social Security Statement

Social Security CardEvery year after you turn 25, you should receive a Social Security Earnings Record. Sometimes, this is referred to as your Social Security statement. Your Social Security Earnings Record contains information about how much you have made in your years of employment, and your statement also contains information about your expected benefits later on.

As with any statement, there is always the chance that errors will occur. Your Social Security statement might include mistakes related to your name, date of birth, and your earnings. You want to make sure that all of the information is accurate. If information is inaccurate, you can contact the Social Security Administration and provide the necessary documentation to correct the mistake.

If your date of birth or name is wrong, it is usually fairly simple to supply the accurate information. A birth certificate can help, as can an approved ID. If you have recently changed your name, it makes sense to double-check the accuracy of your Social Security statement.

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 Government 
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IRS Identifies 2 Million Fraudulent Tax Returns

You might not be surprised to learn that the IRS has a fraud detection system, I suspect it’s similar to the system they use to pick which returns to audit, but you might be surprised to find that it has detected roughly two million “potentially fraudulent” tax returns last year. It’s an increase of 72% from the previous year and that doesn’t count the million (actual number is around 900,000) tax returns that were part of “Operation Mass Mail.” Operation Mass Mail was a scheme in which tax cheats submitted fraudulent returns that were automatically voided before they were processed (unfortunately, tens of thousands of those returns were actually legitimate).

It’s part of a larger story about how the IRS is underfunded and how it’s been unable to keep up with demand. Apparently, you could only get to someone on the phone after waiting for an hour and the IRS could only answer one out of every 9 calls it received from taxpayers wondering where their refunds were. It really makes you wonder if the IRS is mismanaged or if they simply don’t have enough people. Unlike other agencies, it seems like IRS is one that we’d want to fully fund since it’s responsible for collecting our revenue. :)

 Government, Personal Finance 
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Reading Your Social Security Statement

Social Security CardFor years, I would receive a Social Security statement. This statement contains information about how much money you’ve earned (and contributed to the Social Security program), as well as information about your estimated benefits later on, when you can begin taking Social Security payments.

Recently, the Social Security Administration began doing away with the paper statements and started offering statements online. It’s now possible to use the Internet to get access to your Social Security statement. This is convenient, because it makes it possible to access your information anytime. You have to create an account with the site, but once that’s done, you have access to your Social Security statement, as well as access to information about taking benefits. You can even apply online for retirement and disability benefits.
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 Government 
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Social Security Full Retirement Age

I don’t spend a lot of time writing about Social Security because I’m only in my early 30′s. If the topic of Social Security comes up with my friends, it’s usually followed by disparaging comments about how it’s underfunded and won’t exist in thirty years when I’m eligible to start receiving it (which probably isn’t that far off). Sadly, the solvency of Social Security is (mostly) simple math. New workers contribute, older retirees withdraw, and the system works similar to a Ponzi scheme, except everyone knows it. The tricky part comes when you start messing with the contributions, such as with the payroll tax cuts, or you don’t leave the contributions alone.

When the money starts looking tight, you can always start pushing out the “full retirement age.”

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 Government 
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What is Inflation? And Why Should You Care?

One of the topics that we have heard a lot about as the economy lurches slowly toward recovery is inflation. But what is inflation? We hear about all sorts of incarnations of inflation, from core inflation to stagflation. While getting into the nuts and bolts of inflation can be a complex exercise, some general knowledge about inflation can help you learn a little bit more about a very real force that can have a very real impact on your finances.

As you listen to monetary policymakers talk about inflation, and as you read about changes to the CPI, it helps to have a general idea about what is going on. That way, you will be prepared to make more informed decisions about what to do with your money.

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 Government 
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2011 Budget Cuts Compromise Revealed

I personally think this whole debate on cutting the budget is a little silly, especially now, and that both parties are to blame. On one hand, it’s a little disingenuous for the Republican party to demand lower spending when we had massive spending bills during the Bush Administration. On the other, the 2011 budget should’ve been settled last year when Democrats had control of both chambers of Congress. That said, we are where we are and here are the nitty gritty details of the budget compromise reached last week.

The budget cuts are to cut spending by $40 billion (the fiscal year ends in September 30th) and it is the largest biggest cut made in a single year, made even more stunning by how little time we have left in the year (less than six months until October 1st). Part of the $40 billion is covered by $12 billion in reductions that started at the beginning of the fiscal year, Oct. 1, 2010; but the remaining $28 billion starts now(ish).

If you’re curious to see them all, CNN Money compiled a list and has offered some commentary here.

It seems like there’s a lot of penny pinching here or there but not much attention paid to the biggest pieces of our spending. Case in point: The Pentagon would receive $5 billion to be partially offset by $4.2 billion in eliminated military earmarks, with the difference made up elsewhere. I’m all for making sure we’re supporting our troops but there can be some belt tightening in the development efforts (rather than support/operations). When you look at a family budget, you don’t save much when you ask the kids to take an allowance cut.

What do you think about all this?

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