Women’s Independent Press

By Patricia Thibault
Social Security District Manager in Pittsburgh, PA

Summer will be here before we know it. That means millions of high school and college students will be searching for jobs. Whether a new worker is beginning the career of a lifetime or just earning some extra money for the school year to come, there is one question that is likely to be on each new worker’s mind when they see their first pay stub: Where’s the rest of my money?

Generally, employers are required to withhold Social Security and Medicare tax from a worker’s paycheck. The amounts you pay in Social Security and Medicare taxes are matched by your employer. Usually the money that is withheld is referred to as “Social Security taxes” on the employee’s payroll statement. Sometimes the deduction is labeled as “FICA taxes,” which stands for Federal Insurance Contributions Act. So let us tell you how that money is being used, and what’s in it for you.

The taxes paid now translate to a lifetime of protection, when you eventually retire or if you become disabled. In the event that you die young, your dependent children and spouse may be able to receive survivors benefits based on your work. Today you probably have family members — grandparents, for example — who already enjoy Social Security benefits that your Social Security taxes help provide.

You may be a long way from retirement now, so you may find it hard to appreciate the value of benefits that could be 40 or 50 years away. But consider that your Social Security taxes could pay off sooner than you think. Social Security provides valuable disability benefits — and studies show that a 20-year-old has about a three in 10 chance of becoming disabled sometime before reaching retirement age.

Another bit of helpful advice for young workers: be wary if you’re offered a job “under the table” or “off the books.” If you work for any employer who pays you only in cash, understand that you’re likely not getting Social Security credit for the work you’re doing.

Want to learn more about Social Security and what it means to young workers? If so, we invite you to enjoy a webcast: Social Security 101: What’s In It For Me? The webcast will fill you in on the details you should know to get the most out of Social Security. Check it out at www.socialsecurity.gov/webinars/social_security_101.html .

If you have questions about Social Security, the best place to go is online — to www.socialsecurity.gov  .

By: Mary Grace Musuneggi
www.MFGPlanners.com

Many of our clients have grown up in Western Pennsylvania; an area of ethnic and cultural diversity. This area brings with it the basics of a strong work ethic. Growing up as the daughter of a hard-working, strict Irish Catholic mother, I understood the rhetoric of all the various philosophies that inundated this region. No matter what the nationality, religion or family dynamics; the values were all there. Hard work, family unity, the importance of the home.

Although there were times that my mother barely had enough income to feed us day to day, she would sometimes work two jobs to be sure that we had a roof over our head. That roof came in the form of owning a home. Homeownership was without a doubt the most formidable goal for families. In my neighborhood, I only knew one family that rented.

Owning a home reiterated the voice of “Gone With the Wind,” that “land” is the most important thing you could own. The American Dream. Our circle of acquaintances and family believed that owning a home brought with it security, safety and success.

Today’s economy has challenged these beliefs, as owning a home today can bring with it excessive debt, no security, a lack of safety, struggles; and in fact, can be the source of owning an asset that is worth a whole lot less than what it was worth when it was purchased.

While for many generations passing on a family home to children was an important goal; today passing on a home with a mortgage or especially one that is “underwater” can create serious financial issues for an heir.

We had been taught that we should never rent. Why pay to add equity to someone else’s real estate when we can add equity to our own. If we were paying rent, we could easily turn that rent into a house payment? But today the argument is that if real estate does not appreciate, then during the first 5 to 10 years of owning a home with a 30-year mortgage most of your payments are going towards interest. And then there is the overlooked “costs of ownership” like landscaping, maintenance, painting, appliances, issues with plumbing, heating, electric; or roof repairs.

And considering that many studies have shown that most people who have purchased a home since 2006 have lost money; the rules have changed. Renting now needs to be seen as a viable housing option.
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But on the other hand, with housing prices so low, wouldn’t this be the best time to buy?

So who should rent?

Young people coming out of college with large education loans and credit card debt.

People without substantial down payments.

Those with no emergency funds and household savings.

Someone not prepared to stay in their home for at least 5 years.

Seniors who like their freedom to travel extensively and not be tied to their home.

Retirees who don’t want to carry a mortgage during their retirement years.

Those who don’t have the skills or income to handle their home maintenance issues.

Singles who don’t want the responsibilities of yard work and household chores.

Parents who can’t afford to pay the mortgage and all household expenses; and at the same time also pay for adequate life insurance and education funding to protect their children’s futures.

Future retirees who are unable to invest in their retirement while they are investing in a home.

Anyone who thinks other assets will grow faster than their home equity will grow.

So the decision to own vs. rent depends on the person and their circumstances. Although this may just be the right time for you to buy; it is very obvious that over the last 6 years many owners should have been renters.

Like all financial decisions, knowing all the upsides and downsides; being knowledgeable and understanding all the ramifications, is the best way to make the right decision for you and your family.