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How will same-sex marriage affect SS/Pensions?
Old 07-01-2013, 09:08 AM   #1
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How will same-sex marriage affect SS/Pensions?

Does anyone know how this SCOTUS ruling will affect the future ability of SS/government pensions to pay additional benefits that they had not previously had to consider? I assume that there will be a negative impact on these funds.

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  • Social Security: Same-sex couples who are married in a state where marriage is legal are now entitled to spousal and survivor benefits which can amount to thousands of dollars in additional income over a lifetime. Regarding spousal benefits specifically, there are a number of planning strategies that are now on the table and will allow couples to maximize their collective benefits. The ‘file and suspend’ strategy is one of many. To name just a few of the other benefits, for couples who have minor dependent children, the child may also be eligible for benefits at the time one spouse claims benefits. In addition, same-sex couples who end up divorcing would be eligible for benefits based on their ex’s record as long as their marriage lasted at least 10 years, they are not currently married, they are 62 or more, and their ex is entitled to retirement or disability benefits.
  • Entitlement to government and military pension and health care benefits: Same-sex couples who are entitled to a pension through their military service or government employment will have the peace of mind that this income stream will continue to their spouse when they pass away. Prior to this change, married same-sex couples often spent a great deal of money on life insurance policies in order to provide a lump sum to their spouse because they knew their spouse would be denied spousal income benefits. Going forward, many gay couples will be able to significantly reduce or eliminate this coverage for this purpose. In addition, the spouse would have access to health care benefits, worth thousands of dollars of savings.
How Gay Marriage Ruling Gave $36,000 in Benefits to a Client | Financial Planning
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Old 07-01-2013, 09:27 AM   #2
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Quote:
Originally Posted by mickeyd View Post
Does anyone know how this SCOTUS ruling will affect the future ability of SS/government pensions to pay additional benefits that they had not previously had to consider? I assume that there will be a negative impact on these funds.

How Gay Marriage Ruling Gave $36,000 in Benefits to a Client | Financial Planning
If you're looking for the dollar impact on the SS Trust Fund, I think we'll get a good estimate next year when the SS Trustees Report comes out. The actuaries will include the benefits you listed in their total cost. They also include a discussion which covers the major changes from one year's report to the next. I'd look for "repeal of DOMA" as one of the those items.

My guess is "not a lot". There won't be that many SS marriages. I'll make an uninformed guess that for most SS couples, the lower earning spouse makes enough that the 50% spousal retirement benefit is irrelevant. The biggest dollar amount may be survivor benefits paid in old age, where the lower income spouse gets to step up to the higher income spouse's benefit.
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Old 07-01-2013, 09:48 AM   #3
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If you're looking for the dollar impact on the SS Trust Fund, I think we'll get a good estimate next year when the SS Trustees Report comes out. The actuaries will include the benefits you listed in their total cost. They also include a discussion which covers the major changes from one year's report to the next. I'd look for "repeal of DOMA" as one of the those items.

My guess is "not a lot". There won't be that many SS marriages. I'll make an uninformed guess that for most SS couples, the lower earning spouse makes enough that the 50% spousal retirement benefit is irrelevant. The biggest dollar amount may be survivor benefits paid in old age, where the lower income spouse gets to step up to the higher income spouse's benefit.
My guess as well. Unless the trustees publish something before then, any numbers we see are likely to be pure speculation.
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Old 07-01-2013, 10:20 AM   #4
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And how will it affect tax receipts?
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Old 07-01-2013, 11:10 AM   #5
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I doubt it will have any affect at all. Although the media industry makes it seem like 30% of the population is gay, in reality they are only around 3% of the population. There are too few of them for it to make any difference.
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Old 07-01-2013, 11:15 AM   #6
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...in reality they are only around 3% of the population.
Your source?

I ask because I don't think anyone can realistically determine this number...
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Old 07-01-2013, 11:20 AM   #7
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Your source?

I ask because I don't think anyone can realistically determine this number...

I heard/read the three percent figure somewhere else (don't remember where), but just looking at wikipedia seems to corroborate that number.

Demographics of sexual orientation - Wikipedia, the free encyclopedia

Using google this ABC report says the number is 4%.

http://abcnews.go.com/Health/william...5#.UdGs0PnvtSk

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Old 07-01-2013, 11:21 AM   #8
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Originally Posted by ESRwannabe View Post
I doubt it will have any affect at all. Although the media industry makes it seem like 30% of the population is gay, in reality they are only around 3% of the population. There are too few of them for it to make any difference.
+1
Some gay groups like to say 10% of the population, but recent polls of people that self identify as LGBT are around 3.8%. Since there are always people that won't admit to anything, I figure 5% would be closer. But the same point holds: probably not enough to make a difference for SS.
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Old 07-01-2013, 11:28 AM   #9
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Originally Posted by ESRwannabe View Post
I heard/read the three percent figure somewhere else (don't remember where), but just looking at wikipedia seems to corroborate that number.
Wikipedia is known to have less-than-accurate info on a number of subjects and I am highly suspect in this number. I really do not believe we will ever know the % - not that it really matters.

Here's info from Gallup pointing out the difficulty of coming up with an accurate number:

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Americans now tend to overestimate the gay population in America. While most expert estimates place America's homosexual population at 10% or less, Americans tend to guess that the number is higher, around 20%.
What Percentage of the Population Is Gay?
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Old 07-01-2013, 11:34 AM   #10
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The issue is not so much how many are gay, but how many are entering into same sex marriages. So from an impact to SS/pensions is it better to look at, in states where same-sex marriage is legal, the percentage of same sex marriages occurring as compared to different sex marriages.
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Old 07-01-2013, 11:35 AM   #11
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A key point for me is closeted gays would not necessarily be claiming spousal benefits, so really, only the self-identified GLBT population is what would be considered for the financial effect on SS.

This was an interesting article with lots of links on LGBT population size (along with the comments). How Many Gay People Are There In America? Nope — You’re Wrong. | The New Civil Rights Movement
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Old 07-01-2013, 11:39 AM   #12
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Originally Posted by jollystomper View Post
The issue is not so much how many are gay, but how many are entering into same sex marriages. So from an impact to SS/pensions is it better to look at, in states where same-sex marriage is legal, the percentage of same sex marriages occurring as compared to different sex marriages.
That ratio would likely overstate the inferred ratio of same-sex marriages to all marriages since the gay marriages in a gay marriage state would likely include a significant number of couples from other states that do not allow gay marriage.
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Old 07-01-2013, 01:04 PM   #13
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Regarding tax receipts:

Gay Couples More Educated, Higher-Income Than Heterosexual Couples - US News and World Report

Many Same-Sex Couples May Pay More in Taxes After Marriage - ABC News
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Old 07-01-2013, 01:26 PM   #14
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As far as my state is concerned, I'd assume it's already been taken into account. Several years ago, the state supreme court ruled that it violated the state constitution to not provide benefits to domestic partners. As a result, health care and retirement benefits apply to domestic partners. Other than the health care benefits, I don't think it costs the state any more as pension benefits are actuarially reduced for a spouse, should the option be taken to provide survivor benefits. In theory, it should be a wash.
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Old 07-01-2013, 02:03 PM   #15
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Our taxes will go up significantly if we get married, because both of us make relatively high incomes, so in our case, the government will see a net gain in tax revenues from our marriage. As for social security, since we both make incomes in excess of the maximum, our social security payments will both be about the same, and neither of us will benefit from getting the other person's benefits. Marriage is really a tax penalty for Federal, State and SS benefits if you have dual income high earners. The main benefit to me will be not having to paying income taxes on the imputed value of the health care benefits that I get from being on my partner's health care plan, which amounts to about $2,500 per year in extra taxes right now. Other than that, I'm not seeing much financial benefit from a taxation standpoint.
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Old 07-01-2013, 02:13 PM   #16
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And how will it affect tax receipts?
A 2004 study by the Congressional Budget Office estimated that it would increase government revenue by nearly $1 billion a year over 10 years.

http://www.cbo.gov/sites/default/fil...exmarriage.pdf
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Old 07-01-2013, 02:14 PM   #17
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Originally Posted by mickeyd View Post
Does anyone know how this SCOTUS ruling will affect the future ability of SS/government pensions to pay additional benefits that they had not previously had to consider? I assume that there will be a negative impact on these funds.

How Gay Marriage Ruling Gave $36,000 in Benefits to a Client | Financial Planning

No doubt there will be some level of additional expense for SS and gov't pension funds. Time and actual numbers will be required before the exact amount of impact can be figured.

An interesting question is whether the talk of challenging the 10 year rule will turn into action. Apparently some same sex couples who have been in a committed relationship for years feel that the 10 year rule should not apply to them. They would have married years ago (probably more than 10 years ago) if the laws had allowed it. So despite only marrying now, a dependent spouse should receive spousal SS.
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Old 07-01-2013, 05:14 PM   #18
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What I cant understand is why one would be interested in this question. It's fact, no more debate. Also the answer is clear enough. Could more people drawing from the same pot possibly increase the amount available for each drawee?

Ha
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Old 07-01-2013, 08:30 PM   #19
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What I cant understand is why one would be interested in this question. .....
Interest in this question is financial, and rather complex. There are fiscal pluses and minuses to both revenues (e.g. marriage income tax penalties, inheritance taxes, SS benefit taxation w/higher outside income, etc.) and benefits (spousal insurances, SS, Medicaid, other public assistance). Controversial assumptions are important in gauging the overall impact of Scotus ruling. Most of what I've read suggests a net fiscal gain for US gov't (inc revenue & benefits), although the numbers vary widely from insignificant to huge. Of course, time will tell over the next several years.
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Old 07-01-2013, 09:34 PM   #20
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What I cant understand is why one would be interested in this question. It's fact, no more debate. Also the answer is clear enough. Could more people drawing from the same pot possibly increase the amount available for each drawee?
For SS and pensions specifically that is probably the case. However, for a same sex couple deciding whether to marry or not, particularly later in life, I can see that it would be something to think about just like it may be for opposite sex couples. That is because, the only benefits are not just SS and pensions. When looking at the entirety of benefits in some instances marriage would be financially beneficial while in others it might not. A married couple might pay more in income taxes, for example. Someone eligible for SSI or Medicaid as a single person might not be eligible as a married person, and so on. In short, being married doesn't just involve financial benefits but can also involve financial penalties.
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