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Agressive SS Claiming Strategies Under Review?
Old 06-30-2015, 09:52 AM   #1
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Agressive SS Claiming Strategies Under Review?

I am not sure if this has been mentioned in any other threads, but this the first time I've seen a mention about possibly closing some of the SS claiming strategies as mentioned in this article:
3 Retirement Loopholes Seem Likely To Close | ETF.com

Quote:
‘Aggressive’ Strategies For Social Security
Obama's budget also proposed to eliminate "aggressive" Social Security claiming strategies, which it said allow upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits.
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Old 06-30-2015, 02:56 PM   #2
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Well, when a couple who both worked and contributed to SS try to claim spousal benefit while deferring one benefit, they call it "aggressive".

When a couple where only one worked and contributed to SS, and the non-working spouse got 1/2 without contributing any, what do they call it? Free money?
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Old 06-30-2015, 03:26 PM   #3
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Loopholes?

They make the rules.
They publish the rules.
We follow the rules.
And we're exploiting loopholes?
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Old 06-30-2015, 04:00 PM   #4
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Quote:
Originally Posted by NW-Bound View Post
Well, when a couple who both worked and contributed to SS try to claim spousal benefit while deferring one benefit, they call it "aggressive".

When a couple where only one worked and contributed to SS, and the non-working spouse got 1/2 without contributing any, what do they call it? Free money?
Amen.
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Old 06-30-2015, 04:32 PM   #5
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Quote:
Originally Posted by NW-Bound View Post
Well, when a couple who both worked and contributed to SS try to claim spousal benefit while deferring one benefit, they call it "aggressive".

When a couple where only one worked and contributed to SS, and the non-working spouse got 1/2 without contributing any, what do they call it? Free money?
+1. It's not like they're capping SS contributions for dual income couples to the same level as single income couples.
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Old 06-30-2015, 05:06 PM   #6
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Originally Posted by braumeister View Post
Loopholes?

They make the rules.
They publish the rules.
We follow the rules.
And we're exploiting loopholes?
Some of those rules are pretty old and did not affect that many people... until someone started telling people about it and people found out that it was better...

The other possibility is unintended consequences... they did it for a certain group of people and then later realized that people changed their behavior so they could fit in that rule... costing the system much more than planned...
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Old 06-30-2015, 05:34 PM   #7
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I don't have much issue with them killing the back door Roth contribution... it was a mistake to allow it to begin with as it just circumvented the income limits. I'm indifferent on them killing stretch IRAs.
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Old 06-30-2015, 06:30 PM   #8
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If you somehow refuse to pay the Social Security tax, you can be pretty sure an agent will eventually contact you. If you don't then pay you can be pretty sure to be arrested. If you don't want to be arrested and resist, you might get hurt, or killed.

This is normal operations.

But filling out a government form in compliance with government regulations is aggressive?
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Old 06-30-2015, 06:40 PM   #9
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The backdoor Roth conversion is definitely a loophole. They wrote laws that conflicted each other; that's nothing new. Just look at ACA for example. Backdoor Roth conversion was not really meant to be.

The stretch IRA is not a loophole. They meant to allow the heirs to withdraw the inherited IRA over their lifetime and wrote the law that way, but now change their mind and want to tax it sooner.

The spousal benefit is not a loophole either. They allowed it, actually created convoluted rules for it, and now changed their mind.

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Originally Posted by hnzw_rui View Post
+1. It's not like they're capping SS contributions for dual income couples to the same level as single income couples.
A very good point! Working married couples also get taxed in their working years more than two single adults living together, SS and also income tax. They really want to apply the screw to married working couples.

Think about it. A guy has his non-working wife drawing 1/2 of his benefits. And his ex(es) also each draws 1/2 too, if he was married to them for 10 years each. For them, SS is the gift that keeps on giving. If it were his 401k, he would have to cut them his share, not out of the taxpayer's fund.

They do not know or care to know what "aggressive" SS claiming is.
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Old 06-30-2015, 09:25 PM   #10
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The article makes some references to the president's budget proposal from a few months ago, and adds a few quotes from experts.

I just searched "retirement" on a site with all bills filed this session of Congress. No hits for any bills that appear to address these issues, at least not from their captions.

Move along, nothing to see here?
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Old 06-30-2015, 10:35 PM   #11
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Originally Posted by NW-Bound View Post
Well, when a couple who both worked and contributed to SS try to claim spousal benefit while deferring one benefit, they call it "aggressive".

When a couple where only one worked and contributed to SS, and the non-working spouse got 1/2 without contributing any, what do they call it? Free money?
Thanks so much for pointing this out. Most folks cannot even think how unfair it really is.
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Old 07-01-2015, 08:28 AM   #12
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Move along, nothing to see here?
Hopefully thats the case, until something happens.
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Old 07-01-2015, 09:29 AM   #13
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If I didn't have to pick an SS withdrawal strategy when using the retirement calculators, I would ignore the whole topic, figuring it won't be the same by the time I get there.
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Old 07-01-2015, 10:35 AM   #14
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I noticed the author also opined that any changes would probably not affect those taking SS or getting near the age to take SS.
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Old 07-01-2015, 11:09 AM   #15
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+1 I noticed that too and it is consistent with what I have been suggesting.
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Old 07-01-2015, 11:12 AM   #16
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Yes, stick it to the kids. They are still young and have time to get used to working till 70.
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Old 07-01-2015, 11:17 AM   #17
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That is what they did when the migrated the retirement age from 65 to 67 back in 1983. It impacted people who were born in 1943 or later... or people who were 40 or younger in 1983 when the changes were adopted.

See When did full retirement age change to age 66? | Social Security: Information & Updates
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Old 07-01-2015, 12:19 PM   #18
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I have always heard speculation that those that are > 55 would probably not be subject to any significant changes in SS. Seems reasonable, but who knows what evil lurks.
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Old 07-01-2015, 12:29 PM   #19
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Quote:
Originally Posted by NW-Bound View Post
Well, when a couple who both worked and contributed to SS try to claim spousal benefit while deferring one benefit, they call it "aggressive".

When a couple where only one worked and contributed to SS, and the non-working spouse got 1/2 without contributing any, what do they call it? Free money?
Many years ago when I first learned about SS, I read that SS benefits are a mixture of "individual equity" and "social adequacy".

For example, we all know that high income people get both higher dollar benefits and lower replacement ratios than low income people. That's both sides in one sentence.

I've always assumed that spousal benefits were part of the "social adequacy" intent. Sure, the married person who averaged $90k paid the same taxes as the single person who averaged $90k. But, somewhere in all the compromising, they decided that the married couple needed more for an "adequate" retirement than the single person. Call it "free money" if you like, but I'd use the same words for the initial 90% band.

The mind-bendingly complex joint claiming rules just grew out of those general ideas. I don't know if I'd say "aggressive" strategies, I might say "complex". I'd hope that policymakers would try to decide whether something simpler would still meet the program's goals.
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Old 07-01-2015, 04:05 PM   #20
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IMHO these are just more example of dividing the country between the "rich" and "not rich", or as so stated by politicians: to make the rich pay their share. Even though the rich already pay much more than their share. Put more bluntly wealth redistribution.
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