Social Security benefit cuts: new bill wants to end file and suspend

[mathjak107]

a big ploy for increasing social security  when it comes to spousal benefits  is file and suspend . a new bill has been submitted which can end that for millions receiving benefits  while letting their own grow .

social security expert larry kotlikoff explains the bill



http://www.pbs.org/newshour/making-sens ... -benefits/

[dualstow]

Code: Select all

end file and suspend

I thought it was a computer command when I saw the title.

[Libertarian666]

a big ploy for increasing social security  when it comes to spousal benefits  is file and suspend . a new bill has been submitted which can end that for millions receiving benefits  while letting their own grow .

social security expert larry kotlikoff explains the bill

http://www.pbs.org/newshour/making-sens ... -benefits/

This is a perfect example of why relying on government programs is unwise, assuming you have another option of course.

[mathjak107]

yep , this is a biggie . this will drive many right in to poverty .

that divorced woman collecting a spousal benefit so her own could grow a bit larger , the wife who couldn't work whose husband has to delay to 70 and now she gets no spousal benefit to hold them over .

these are going to effect  the middle top low wage earners badly .  this is also not just for new filers . this is retroactive and will be taken away from those getting it .

[Libertarian666]

Actually, I believe a very small proportion of the population does anything like this. Most people take benefits as soon as they can get them, and that's the end of the story.

[mathjak107]

Nope. only 35% of men and 38% of women take benefits at 62 .
Women are higher because they file for their own usually early while the husband tends to delay.  most of the stats you see are skewed because it includes every one collecting at 62 , even kids who started pre 62 .

Back in the 1980's 55% filed early.

most file at full retirement age today . but file and suspend is very important to wives who didn't work or divorced women . it allows divorced women to let their own grow while collecting a spousal which many desperately need .  same with  a couple with wives without their own work record .

usually these are lower income earners who delay as long as possible since they are underfunded and can't retire early .. suspending allows the wife to collect even though the husband does not file .


there are other reasons  for file and suspend as well as singles can use it to delay while giving them the right to get a lump sum check after fra  in case they are ill or need care .

[MachineGhost]

First they undo the payback provision so you can refile at 70 and now this?  Screws are tightening.

Just take off the SS cap already!!!!!!!!!!!!!!!!!!!!!!  You dirty rotten filthy stinkin' pricks.

[MachineGhost]

Not a fair option. Workers exceeding the cap already get waaaaay less proportionally than they pay in. Would employers still match the full amount? Another tax on employers. Great idea.

As a compromise, we could go back to covering 90% of workers as it was at SS inception.  Its down to about 80%ish coverage right now.  I don't know what kind of new upper $ limit would get us back to 90% but it could be done and indexed to inflation thereafter.

The employer may pay the other half in accounting terms but the funds are ultimately coming out of the wage-earner's salary.  Just like corporations don't really pay any taxes as they're all passed onto the consumer.  So the way to deal with this is either decrease the salary which is unrealistic from a competition standpoint or simply not increase it as much as before the SS cap increase during future pay raises.  Either way, it will all normalize across the economy (and arguably a hell of a lot better than local minimum/living wage increases).

I'm not familiar with what the richest 5% earning above the SS cap get in terms of SS benefits, but their net rate is not 12.4% so complaining about a reduction in benefits seems proportionate to their lower net SS rate.  If we were to remove the SS cap completely, then fairness would dictate they get full SS benefits.  I'm not sure how well that would go over politically.  No one likes that idea of some rich fat cat drawing a five figure SS check while there are impoverished old people eating cat food.

[img width=800]http://i.imgur.com/EZRDEez.png[/img]

[Fred]

I think Obama said something about cracking down on social security filing strategies in one of his state of the union addresses. Nobody really knew what he was talking about at the time but this sounds like it might be part of it.

The only social security filing strategy I have going for me is delaying until age 70 (I'm now 66 + 3 months) but I'm starting to wonder if this is wise given the current progressive climate. Eventually the SS trust fund is going to run out and they are going to have to do something about it by law. The way things are going I can see an elected progressive congress deciding that it isn't fair that one person should get a bigger social security check than another person and will thus make them all the same.

So what do y'all think. I can start claiming today and putting the money in the PP or I can follow the conventional wisdom to delay.

[MachineGhost]

So what do y'all think. I can start claiming today and putting the money in the PP or I can follow the conventional wisdom to delay.

You will have plenty of warning before such a change would be implemented, so don't take any hasty actions now you will come to regret later. 

Fixing SS to be sustainable is really easy and the drama is just gamemanship for political purposes.  Don't forget we're also a currency issuer where inflation and credibility is the only binding constraint on issuing too much transfer payments relative to productivity.  Japan is doing fine and they don't even have much productivity to speak of compared to the US of A.

I recall the payroll tax increase needed, assuming we keep the current SS cap in place, was around 3.9% or so to extend solvency out to 2075.  Unfortunately, that burden won't be distributed fairly anymore than the current SS tax is, unless we lift the SS cap.

[MachineGhost]

Social Security isn't nearly as broke as Medicare. If you want to worry, try and figure out where you're going to get the cash to pay for healthcare in retirement, when they cut your benefits and raise your premium.

I'm not touching this one.  Canada is our canary in the coal mine for that approach.  But hey, it could be worse.  It could be socialized medicine like the fantastic Veterans Administration!!! 

[mathjak107]

i have no intention of sticking it out more than another year or so before i file .

as it is it may not be worth delaying since once i file my wife gets a 4k adder to hers which she took at 62  so every year we delay she does not get another 4k  adder in spousal benefit .

my full is about 30k so 1/2 is 15k .  my wifes full is 10,700.00  so 15k less 10,700 gets added to her early benefit when i file .  that is a lot to give up  .

but we will see friday when i have the consultation at fidelity  with their new social security tool and consultant on the subject .  should be interesting .

[mathjak107]

they have been making all sorts of changes to ss through the years .

Here are a number of previous changes to the SS Act:

Before file and suspend was enacted in 2000, a spouse with no work record always had to wait for her spouse to collect in order for her to collect.

Phasing out student benefits over 4 years for students over age 19 or in post-secondary school.

No longer paying benefits for the month you turn age 62.

No benefits for children in the month you are born, unless you were born on the 1st or 2nd day of of the month.

No COLA's factored in for any year before the year you turn 62 (decoupling), and a new formula for computing benefits which involved indexing earnings. These 2 changes, which began with people becoming eligible after 1978 lowered monthly benefits, on average by hundreds of dollars per month.

Eliminating the minimum benefit for both current and future recipients.

Offsetting Social Security disability benefits by the amount of compensation paid by federal, state, and local governments to disabled persons.

Ending benefit entitlement for the mother or father caring for an entitled child when the child reaches age 16 instead of 18.

Limiting entitlement to the lump-sum death benefit to an eligible spouse or children. Before, distant relatives, funeral homes, etc., could claim the lump sum.

A gradual increase in the age of eligibility for full retirement benefits from age 65 to age 66 in 2009 and age 67 in 2027.

Taxation of benefits: initially-inclusion of up to 50% of Social Security benefits in the taxable income of higher income recipients The income thresholds (adjusted gross income plus one-half of Social Security benefits) were set at $25,000 for single individuals, $32,000 for couples Currently, made up to 85% of Social Security benefits subject to the income tax for recipients whose income plus one-half of their benefits exceed $34,000 (single) and $44,000 (couple).

Eliminated "windfall" Social Security benefits for certain workers who also receive pensions from noncovered employment.

Retroactivity of benefits reduced from 12 months to 6 months in some cases and no retroactivity in other cases.

[barrett]

That's quite a list, math. Getting rid of file and suspend will definitely mean a huge increase in poor, old women in this country.

[mathjak107]

it could  but then again most folks file by full retirement age anyway so the spousal benefit would start then . only 8%  of filers actually wait until 70 .

for us it is a moot point since i will only wait another year or so at best .  perhaps even filing after the fidelity meeting on friday if giving up more than 4k in additional  spousal increases a year makes waiting not worth it .

[MachineGhost]

for us it is a moot point since i will only wait another year or so at best .  perhaps even filing after the fidelity meeting on friday if giving up more than 4k in additional  spousal increases a year makes waiting not worth it .

Makes sure you take notes about what SS software they are using so we can get access to it ourselves, if possible.

[mathjak107]

it is their own in house proprietary

[mathjak107]

restricted application will still be a good ploy as long as the spouse is 62 or older in 2015.

that is where my wife files early , at fra i can file for 1/2 hers leaving mine to grow .

nothing is being suspended so that is still good .

but if you are younger then 62  in 2015  then no good . the only benefit you ever get is your own . you can get a spousal kicker added if 1/2 the other spouses full is greater then your full  just as it works now when you file pre fra .

Effective Date For Elimination Of Restricted Application
Notably, though, the new rules for restricted application applies only to those who attain age 62 in any calendar year after 2015. Thus, it appears that today’s retirees who are full retirement age (or simply who are already at least age 62 in 2015) will still be able to utilize a restricted application. Only future retirees – those who turn 62 in 2016 or later, which means those who would have been planning to engage in a restricted application in 2020 or later – will lose access to the Restricted Application claiming strategy.

micael kitches just did an article today on this .


https://www.kitces.com/blog/congress-en ... 9-57061137

[mathjak107]

looks like they amended the part where checks would stop for those already using file and suspend and will keep that going . only those not yet doing it will be effected .

we are still waiting confirmation this  change is in deed fact .

[mathjak107]

went to the aarp sponsored seminar this morning and they were clueless on the ss changes which just passed the house .

tomorrow is my consultation with the fidelity staff. i will report back tomorrow on it .

[mathjak107]

fidelity just called to cancel  tomorrow . they are pulling the tool out of use until the new changes are nailed down .

[MachineGhost]

fidelity just called to cancel  tomorrow . they are pulling the tool out of use until the new changes are nailed down .

ught that sucks