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Old 10-28-2015, 09:31 AM   #21
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Sorry, I wasn't clear enough for you.

What I meant was the possibility of limiting benefits based on your NW or other income. For example, "you have $2MM in an IRA, you don't need SS at all" sort of thing.
Possible in terms of income, IMO. It would be a mostly unworkable mess to try to do it along the lines of net worth, though. Which means that for the relatively well-to-do LBYMer, I doubt there's much cause for alarm.
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Old 10-28-2015, 09:34 AM   #22
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I also read in paper they are robbing Peter to pay Paul. The disability part of the fund is about empty and they are going to shift funds from SS retirement fund to bulk it up. Well if memory serves, that fund isn't funded so fully either.... Avoiding the problem as long as possible I guess is the plan.


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Old 10-28-2015, 09:36 AM   #23
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I'm not sure, but I think I will be affected by this. I am 67 and have been receiving divorced spousal social security benefits for the past year, with the understanding that my own SS is still growing until I am 70 (when I planned to switch over to it).
W2R, I think my situation is the same as yours except I am still married to the spouse in question. Last December I reached full retirement age and applied for my spousal benefit. I am currently letting my own entitlement go unclaimed until I am 70. I can't figure out what this agreement means to people in our situation. Are we grandfathered or not?

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If my understanding is correct, this bill will mean that I will be immediately shifted over to my own benefits which right now are barely greater than my divorced spousal benefits, but less than my own benefits would be at age 70. Then they would remain at the lower ("age 67", not "age 70")
level for the rest of my life, no matter what I do.

Or worse, that that shift won't even happen unless I do it myself. This is very confusing to me and it sure happened fast.
Are we going onto our own entitlement or do people over 62 get to go ahead with the age 70 scheme? If we are forced onto our own entitlement in mid year, we may lose any of the 8% we have earned since it appears to be awarded at the end of the year. We also lose the difference between our own benefit and the spousal times the number of months we have been collecting since, without the age 70 schemes, we probably would have collected at full retirement age.

I rather doubt, for some reason, that they will just take care of any switching for us. Where did you see that people over 62 that were doing what we are would be affected? I guess when I saw 62, I thought people over 62 could still run this scheme even if they haven't started it yet.

Color me confused too.
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Old 10-28-2015, 09:37 AM   #24
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Some of us are already on spousal or divorced spousal benefits, and waited to do this until FRA in order to allow our own benefits to grow until age 70 (at which point some of us planned to switch to our own, by then higher benefits). I am not sure but there is a concern that the pending legislation will change SS law on us in midstream so that we cannot get our full (age 70) benefits when we are 70.

Quote:
Originally Posted by Forbes Article (link below)
I’ve never heard of a change in Social Security law that eliminates benefits for people already collecting, but this is what’s in this bill. This will cost millions of households tens of thousands of dollars. Worse, it will induce those who have suspended their benefits in order to collect higher benefits at 70 to restart their benefits at permanently lower levels in order to maintain their family’s immediate living standards.
Forbes Welcome

The Forbes article discussed this a little bit.

I know that in my case, had I known this in advance I would NOT have collected my divorced spousal benefits at all. I have always planned on, and counted on, my full age 70 benefits from age 70 on.

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Are we grandfathered or not?
Tadpole, I am not very good at interpreting these things. But for what it's worth (possibly very little), my understanding is that we are NOT grandfathered.
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Old 10-28-2015, 09:41 AM   #25
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The only source so far on this is Kotlikoff, and this is his bread and butter. I'm a bit skeptical things are as severe as he claims, especially the part that reduces current payments.
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Old 10-28-2015, 09:43 AM   #26
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We'll need to keep politics our of this discussion if we want it to continue ..
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Old 10-28-2015, 09:46 AM   #27
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Originally Posted by W2R View Post
Some of us are already on spousal or divorced spousal benefits, and waited to do this until FRA in order to allow our own benefits to grow until age 70 (at which point some of us planned to switch to our own, by then higher benefits). I am not sure but there is a concern that the pending legislation will change SS law on us in midstream so that we cannot get our full (age 70) benefits when we are 70.



Forbes Welcome

I know that in my case, had I known this in advance I would NOT have collected my divorced spousal benefits at all. I have always planned on, and counted on, my full age 70 benefits from age 70 on.

Tadpole, my understanding is that we are NOT grandfathered.
That's not the case. Kotlikoff said

Quote:
Worse, it will induce those who have suspended their benefits in order to collect higher benefits at 70 to restart their benefits at permanently lower levels in order to maintain their family’s immediate living standards.
Note induce, not force. If you don't fall for the inducement, you still get your higher benefits at 70.
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Old 10-28-2015, 09:47 AM   #28
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won't happen - one of the founding principles of SS (and any other social insurance program) is that need is presumed
Right. One of the other principles was the promise that the SS number would never be used as an official ID number for other purposes. Politicians break promises all the time and I maintain that taxation of benefits for those with higher income is a form of means testing.

Right now I'm reading a book on the development of SS and I agree- the founders were adamant that it NOT be a form of welfare for people in need, but available to everyone who contributed. Years ago when I met Bob Myers, who was involved as a newbie actuary, and asked him about means-testing for SS to save the program, he said it was a bad idea because it would discourage individual saving.

Sorry, I guess I'm veering off into Political. To get back to the OP- I suspect the provision they're trying to change was an oversight (how many pages would the SS code take up if printed? easy to miss unintended consequences) and few people noticed it till Kotlikoff picked up on it.
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Old 10-28-2015, 09:54 AM   #29
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That's not the case. Kotlikoff said


Note induce, not force. If you don't fall for the inducement, you still get your higher benefits at 70.
Thanks, that would sure be ideal. I did notice that the word "induced" was used (and quoted it from the Forbes article in my post above too), but for some reason I wondered if the usage of that word is at all firmly founded in the bill itself. I would be thrilled if they would just obligingly end my present payments and allow me to arrange to continue as before.

I guess time will tell if that is really what is going to happen or not.
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Old 10-28-2015, 09:57 AM   #30
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Right. One of the other principles was the promise that the SS number would never be used as an official ID number for other purposes. Politicians break promises all the time and I maintain that taxation of benefits for those with higher income is a form of means testing.

.
then I'm sure when you studied for course 200 (or course 5) you remembered the mnemonic PRINCIPLES for principles of social insurance programs? The N is need is presumed

Pay as you go
Relationship between benefits and earnings
Individual equity versus social adequacy
Need is presumed
etc
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Old 10-28-2015, 09:58 AM   #31
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The only source so far on this is Kotlikoff, and this is his bread and butter. I'm a bit skeptical things are as severe as he claims, especially the part that reduces current payments.
True, but, since the change might have a lot of reach-back implications in terms of permanently lost previous income, people need to be able to take action yesterday.

For example, if they make it apply to me personally, I have already lost about $21,000 of income I would have otherwise have collected plus an additional 1700+ for each month I am confused and not switched. So it's important that the details come out quickly. (At least to me.) If we are grandfathered then it is to my advantage to continue to delay my claim. If not, each month I don't make a claim on my own entitlement, I forgo $1700 in income.
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Old 10-28-2015, 09:59 AM   #32
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won't happen - one of the founding principles of SS (and any other social insurance program) is that need is presumed
Good to know.
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Old 10-28-2015, 09:59 AM   #33
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I also remembered at a conference Myers getting up and saying that the move to tax SS benefits also violated the founding principles.


No one knew more about SS than he.
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Old 10-28-2015, 10:00 AM   #34
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The only source so far on this is Kotlikoff, and this is his bread and butter. I'm a bit skeptical things are as severe as he claims, especially the part that reduces current payments.
I agree that Kotlikoff's language is extreme "devastating, Draconian".
But, when I read the text, I get the impact on current retirees. This is from subsection 831(b) using the link above:

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7 ‘‘(3) In the case of an individual who requests that
8 such benefits be suspended under this subsection, for any
9 month during the period in which the suspension is in effect—

11 ‘‘(A) no retroactive benefits (as defined in subsection (j)(4)(B)(iii)) shall be payable to such individual;

14 ‘‘(B) no monthly benefit shall be payable to any
15 other individual on the basis of such individual’s
16 wages and self-employment income; and

17 ‘‘(C) no monthly benefit shall be payable to
18 such individual on the basis of another individual’s
19 wages and self-employment income.’’

(3) EFFECTIVE DATE.—The amendments made
25 by this subsection shall apply with respect to bene-
1 fits payable for months beginning at least 180 days
2 after the date of the enactment of this Act.
OTOH, the "deeming" portion in subsection 831(a) explicitly says:
Quote:
22 (3) EFFECTIVE DATE.—The amendments made
23 by this subsection shall apply with respect to individuals who attain age 62 in any calendar year after 2015.
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Old 10-28-2015, 10:03 AM   #35
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wow that's a heck of a grandfather clause
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Old 10-28-2015, 10:04 AM   #36
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They do have means testing. It's in the form of taxation of SS benefits if your income is over certain levels.
+1 Very true!

And, IIRC, the income limits for additional taxation are not inflation adjusted. So the tax goes up almost every year.
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Old 10-28-2015, 10:06 AM   #37
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EFFECTIVE DATE.—The amendments made
23 by this subsection shall apply with respect to individuals who attain age 62 in any calendar year after 2015
.

So, if one hit 62 in 2015, the old rules apply?
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Old 10-28-2015, 10:09 AM   #38
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Wow. Very interesting. One of the arguments frequently used by the wait till 70 crowd is that they will have plenty of warning of proposed legislation so as to take evasive action before any law modifying SS benefits is enacted. I first heard of this today. It looks like it will be passed by the house tomorrow, the senate shortly thereafter and then signed into law by the President when - next week?
Is this really the same thing?

The assumption/hope for wait til 70 is that once you are 62, your choice to wait won't be penalized vs taking it at 62. Either your benefit is locked in even if you haven't started to collect, or it is somehow adjusted so that the decision not to take at 62 is not retroactively a bad one.

In other words, say you could've gotten 1500/month at 62, or 2500/mo at 70. You wait til 70, but at 69, benefits are halved. The hope is that either you are grandfathered at 2500 (+inflation as usual), or somehow they make you whole for the 1500/month you would've gotten for 7 years. Otherwise, had you known it was going to go this way in advance you would've taken 1500 for 7 yrs before benefits got halved so it's not fair to those who waited. Not saying that can't happen, but it is an assumption/hope, and maybe not a safe one.

This change just sounds like they are cutting off a loophole. I don't see that there's an actuarially different decision you would've made based on this information. At least that's how I understand it. You may have decided to take at 62 rather than 70, but there's no actuarial difference in those, and in fact you still got a few years between 62 and 70 where you got the extra spousal benefit.

In other words for this case, if you are 69 now and knew 7 years ago that this change was coming, should/would you have done something different because it is clearly a better choice with this change?

EDIT: And now I see the post that this change doesn't affect anyone already eligible, so that shows a precedence for not changing the rules midstream and penalizing the wait til 70 crowd. Still not a guarantee that they'll stick to that precedence but it does show that today's politicians are aware of it.
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Old 10-28-2015, 10:13 AM   #39
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As close as I can tell, this impacts us. I'm 68, I filed and suspended at 67 so that my wife could get spousal benefits on my record. She was a SAHM for most of our marriage and doesn't quite hit the 40 quarters for her own benefit, so we're talking about the difference between $1,000+ per month and zero.

I haven't done the math yet, but I'm guessing that the value of increasing my benefit by deferring an additional nn months is less than the loss of her entire benefit for nn months.

In my case, I was thinking about starting in Jan 2016 anyway for non-financial reasons, so this probably just seals the deal.

I can't complain a lot. I understand that from a single worker's perspective, any spousal benefit is "extra" that the single worker doesn't get. So this just reduces the extra.

I have to think that the SS customer service people are not looking forward to talking to everyone impacted by this over the next 6 months. I'm glad that I already have an appointment date.
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Old 10-28-2015, 10:16 AM   #40
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.

So, if one hit 62 in 2015, the old rules apply?
For Section 831(a), yes. I'm not sure which section is more important to you.
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