SS File and Suspend to End?

[Chuckanut]

I'm probably in the minority here, but here goes. Relying on a government loophole to fund your retirement is a flawed strategy.

+1

I have to agree. It's like assuming that Uncle Joe will leave you his $100,000 coin collection as he verbally promised 10 years ago.

 

[Chuckanut]

I would consider the whole spousal benefit to be a loophole. Being able to collect a larger SS benefit than a low paid worker by virtue of marrying a high earner, even if you never worked a day in your life, is quite an injustice.

How many times have you had your head handed to you since making that statement? You know, by people like stay at home mothers whose efforts allowed their husband to be the high earner.

No offense meant. Just curious.

 

[stephenson]

Gah ...this caught me by surprise ...hadn't even thought about my circumstances.

I'm 61 now, as is spouse ...I have full earnings history and she has very limited. I turn 62 3 Mar 2016 ...she turns 62 27 May 2016 ...

First Question ....are we the usual sort of couple that benefits from F and S?

Second Question ...if so, will we make it under the wire?

Gah!


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[mathjak107]

no , you need to be 62 in 2015

 

[ivinsfan]

So to be unaffected by the loophole closing it sounds like one has to be

*older than 62 by the date the amendment specifies,
*with a spouse already collecting,
*financially able to wait until 66 to claim spousal,
*and for the maximum loophole benefit have a spousal benefit that is more than one's own benefit at 66 but less than one's own benefit will grow to by age 70

This works for me. For my numbers with simple calculations, looks like it will give me a bonus of around $35k over the next 20 years, or an average of $1750 a year. I promise to give it to charity. If this interpretation is wrong, oh well.

Not to be nitpicky but I think it's 62 not over 62 unless you mean like 62 and 1 day older. We don't want the people between 62 and 63 to panic unnecessary.

 

[W2R]

+1

I have to agree. It's like assuming that Uncle Joe will leave you his $100,000 coin collection as he verbally promised 10 years ago.

I'm probably in the minority here, but here goes.

Forum members here comprise a group of uncommonly intelligent and forward looking individuals planning their retirement, and in my minority opinion none would rely completely on SS of any kind, or on Uncle Joe's coin collection, or on the Tooth Fairy, to fund their retirement.

 

[stephenson]

From press reports it sounded as if there was a 6 month extension from whenever the legislation was dated ...was a Reuters article ...


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[Bigdawg]

How many times have you had your head handed to you since making that statement? You know, by people like stay at home mothers whose efforts allowed their husband to be the high earner.

No offense meant. Just curious.

With that logical my DW and I raised two successful young adults as we both worked our way up the ladder. Now both high earners. Should we get an extra SS benefit? We cooked, cleaned the house and did laundry after we both worked a long day.

 

[Bestwifeever]

Not to be nitpicky but I think it's 62 not over 62 unless you mean like 62 and 1 day older. We don't want the people between 62 and 63 to panic unnecessary.

I believe you are right, of course.

 

[youbet]

How many times have you had your head handed to you since making that statement? You know, by people like stay at home mothers whose efforts allowed their husband to be the high earner.

No offense meant. Just curious.

In the case of SAHM's married to high wage earners, that couple should send in additional FICA dollars to fund a 50% of hubby's SS benefit for her. It's giving the SAHM, who's making the spouse's high wages possible, SS benefits without corresponding contributions that's the problem......

 

[youbet]

With that logical my DW and I raised two successful young adults as we both worked our way up the ladder. Now both high earners. Should we get an extra SS benefit? We cooked, cleaned the house and did laundry after we both worked a long day.

Yes. And you will. You'll both collect a nice SS check based on your own earnings.

 

[youbet]

I'm probably in the minority here, but here goes.

Forum members here comprise a group of uncommonly intelligent and forward looking individuals planning their retirement, and in my minority opinion none would rely completely on SS of any kind, or on Uncle Joe's coin collection, or on the Tooth Fairy, to fund their retirement.

You keep throwing in the word "completely" which was not originally used. That changes the meaning.

I think that FIRE wanabee's who counted on the SS file and suspend loophole to be more than a small and incidental part of their FIRE plans made an avoidable mistake.

While eliminating the file and suspend loopholes will be mildly annoying for a few, it's unlikely to be any sort of meaningful financial setback for the folks here for the reasons you describe above. And the elimination does seem to level the playing field a bit. We all pay FICA at the same rate. Why should married couples have this type of bonus opportunity when it comes time to collect?

 

[travelover]

How many times have you had your head handed to you since making that statement? You know, by people like stay at home mothers whose efforts allowed their husband to be the high earner.

No offense meant. Just curious.

I don't know what you are talking about. I've never had my head handed to me.

 

[stephenson]

Sorry ...here's part of the article ...from yesterday ...
++++++++++++++++++++++++++
.... budget law will curtail new file-and-suspends next year. Although the original bill language implied that benefits would be ended for spouses who already were receiving benefits under a spouse’s suspended filing. That would have been a damaging, unwise move since it would have pulled the rug out from people relying on benefits – and it would have been an administrative nightmare for the Social Security Administration. Congressional sources say that was never the intent, and that the language in the bill is being revised to clarify that only new file-and-suspends are disallowed, beginning 180 days after the bill is signed into law. (That means anyone still contemplating a file-and-suspend is looking at a six-month window to get the ball rolling.)
File-and-suspend was the price of getting a deal done to extend the solvency of Social Security’s disability insurance trust fund. The fund had been on course to run out of money late in 2016, which would have precipitated a disastrous 19 percent cut in benefits. The budget deal averts that cut by reallocating funds from the retirement trust fund – the right move and a big win for disability advocates. However, since Republicans insisted that any reallocation be accompanied by offsets elsewhere, the file-and-suspend reform was thrown in the mix. The long-range saving projected by Social Security’s actuaries were sufficient to satisfy that requirement ...


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[Katsmeow]

Note that it isn't just file and suspend that has changed. This also changes the ability of someone at 66 to take spousal while letting their own benefits grow into 70. (This is a change to the deemed filing rules).

I am in the group of people that will just miss having that opportunity. I turn 62 in 2016. In the old rules, I could have waited until 66 and taken spousal (half of DH's benefits -- he is already collecting SS) until 70 will letting my own benefits grown. That would have been worth about $50k to me.

I hadn't totally decided to do it. My other option was to take SS early instead. I've posted in other threads why I don't think waiting to 70 is necessarily always the right decision. One factor though in favor of waiting to 70 was the option of taking spousal at 66 and then waiting to 70.

Taking away that option probably does tilt me a bit more to taking SS early.

 

[Corporateburnout]

How many times have you had your head handed to you since making that statement? You know, by people like stay at home mothers whose efforts allowed their husband to be the high earner.

No offense meant. Just curious.

A former boss' wife did not work at all but was busy shopping and relaxing by the pool all day. They had no kids but she will collect 50% of his SS benefits. How is that fair?

 

[Chuckanut]

With that logical my DW and I raised two successful young adults as we both worked our way up the ladder. Now both high earners. Should we get an extra SS benefit? We cooked, cleaned the house and did laundry after we both worked a long day.

I have no idea what you should or should not get.

 

[Ed_The_Gypsy]

aside

For 2015, the maximum amount of taxable earnings is $118,500.

from the SSA website: https://www.ssa.gov/planners/maxtax.html

How much anguish could be avoided if there were no upper limit on SS taxes? Many times in my career I have made more than the upper limit, as have my colleagues and our managers. Personally, I would have been/will be happy to pay SS/Medicare taxes on every dollar I made or might make in the future. At the higher income levels, I can well afford it. It is such a simple thing that would have great general benefit as distinct from actions intended to reduce benefits. Has this issue been covered before somewhere? I am baffled. Thanks.

 

[athena53]

With that logical my DW and I raised two successful young adults as we both worked our way up the ladder. Now both high earners. Should we get an extra SS benefit? We cooked, cleaned the house and did laundry after we both worked a long day.

Sorry, no. You were supposed to contribute more to the economy by hiring people to cook, clean and do laundry- and contribute to SS for them, of course!

 

[meierlde]

from the SSA website: https://www.ssa.gov/planners/maxtax.html

How much anguish could be avoided if there were no upper limit on SS taxes? Many times in my career I have made more than the upper limit, as have my colleagues and our managers. Personally, I would have been/will be happy to pay SS/Medicare taxes on every dollar I made or might make in the future. At the higher income levels, I can well afford it. It is such a simple thing that would have great general benefit as distinct from actions intended to reduce benefits. Has this issue been covered before somewhere? I am baffled. Thanks.

Note that you do pay on every earned dollar in Medicare taxes. It is just the Oadsi part that is capped.

 

[homestead]

In the case of SAHM's married to high wage earners, that couple should send in additional FICA dollars to fund a 50% of hubby's SS benefit for her. It's giving the SAHM, who's making the spouse's high wages possible, SS benefits without corresponding contributions that's the problem......

It is important to remember that a lot of the SAHM's are raising the next generation of workers
paying into SS so the SAHM's are making a in-direct contribution.
These are workers who will be helping pay for our SS.

 

[ivinsfan]

A former boss' wife did not work at all but was busy shopping and relaxing by the pool all day. They had no kids but she will collect 50% of his SS benefits. How is that fair?

Fair doesn't enter into it ..it's the way the law is written right now..I'm learning a lot on this thread and I'm afraid comments like this will bring about a swift closing...I don't want that to happen.

 

[foxfirev5]

It is important to remember that a lot of the SAHM's are raising the next generation of workers
paying into SS so the SAHM's are making a in-direct contribution.
These are workers who will be helping pay for our SS.

Great point. A lot of us fail to look at the big picture.

 

[RetireAge50]

These kind of things are outside of my control so whatever.

 

[foxfirev5]

The program has been tinkered with from the start. Misallocation of trust funds?? Loopholes etc. I am firmly in favor of an actuarially neutral benefit plan that will pay out fairly if you collect at 60 or 80. Why not just take what I get at 62 and forget the rest? And I'm a guy who goes to great lengths to plan taxes and everything else far in advance. The SS puzzle looks pretty shaky and I don't see a clear resolution in the near or midterm future.