couple social security

[perinova]

Just read some SS docs.

Am I correct reading the social security rule that for a couple the social security benefits is at least 1.5 times the benefit of the highest earner?

I was checking with my wife if she should go back to work after raising the kid, to complement SS.
That would mean she can just relax and enjoy life. No reason to burn gas, buy work clothes, ...

 

[REWahoo]

That's the way I understand it. The lower earning spouse will get a minimum of 50% of the higher earning spouse's SS benefit. And that's what I've been plugging into FIRECalc...

 

[MasterBlaster]

Just a caution that SS rules may change as budgets get lean and deficits go up.

I wouldn't count on the present rules being available at some later date when you retire.

 

[Jarhead*]

That's the way I understand it.  The lower earning spouse will get a minimum of 50% of the higher earning spouse's SS benefit.  And that's what I've been plugging into FIRECalc...

Yep. An interesting glich is that my wife had no earnings.(Homemaker). My wife gets 50% of my Soc. Sec.

My wife's sister who worked about 7 or 8 years of their marriage receives less Soc. Sec. than my wife, who had no contribution years. (Her husband didn't participate in Soc. Sec.)

My wife calls it her "Welfare Check".

 

[Nords]

My wife calls it her "Welfare Check".

Mine says that if SS had to live with me she'd be eligible for a lot more!

 

[REWahoo]

My wife calls it her "Welfare Check".

Maybe she calls it that when you're around...

But, I also don't kid myself. The home represents more of my net worth than I should be comfortable with, but I can't imagine living anywhere else. My wife, on the other hand, (when the "Big Guy" decides it's my time), will , without a doubt be calling a Real Estate Agent".

...but she calls it "deferred listing compensation" when you aren't.

 

[astromeria]

I can't understand why nobody talks about phasing out this provision when discussing Social Security reform. It's only after cutting this completely that I'd even consider increasing payroll taxes, cutting other SS benefits, or increasing taxes on SS benefits.

Yeah, I know that the Promise-Keeper/home-school crowd would go bananas, but...so what

 

[perinova]

Your question is close to asking
"why don't we phase out SS all together"
"why don't we do means testing"

The poor benefits from SS - and this provision - much more than the rich.
Increasing payroll taxes would affect the high wage earners more.
Means testing would favor spenders against savers.
Phasing out would favor the young.
This provision favors stay a home moms.

All the provisions that don't favor me should be deleted.

 

[youbet]

All the provisions that don't favor me should be deleted. 

Well put perinova.  Indeed, SS is a social program and benefits lower income folks at the expense of higher income folks in most cases.  And I'm not sure there is anything wrong with that.  It's going to be interesting to monitor the coming wars debates over changes to SS as it is bound to be class warfare at its finest!

 

[macdaddy]

As part of helping my parents put together a retirement plan, I was playing around with the official social security calculator. My dad has pretty much maxed out contributions every year since he was 17 and it says his benefit will be $2450 (in today's dollars) at 68 (they don't need SS until then + both sets of grandparents will alive in their 90s + no illnesses). So if my mom is entitled to at least 50% of that ($1225/mo), then they are looking at 3675/mo or $44,100 a year (w/ COLA), which is a lot more than I expected... (I was expecting somewhere in the 20k per year range).

 

[astromeria]

I think macdaddy shows who benefits most from this provision: high wage earners. This provision was designed when almost all women stayed at home, especially mothers. Nowadays, most women work (for pay--we all work!), even mothers. Has nothing to do with whether it benefits me or not--I'll probably make a little more due to the provision as I made very low pay in my early years, then was a SAHM for 10 years, and finally retired early--I have a lotta zeroes on my SS form.

 

[youbet]

I think macdaddy shows who benefits most from this provision: high wage earners.

High wage earners receive the highest SS payouts.  But, their payouts are disproportionally less than low wage earners when considering their higher contribution level.  The SS system is indeed progressive, favoring low wage earners.  The debate is whether it is progressive enough.

 

[astromeria]

I meant that the provision to give an additional 50% of the higher-wage-earner's SS to the lower-earning spouse favors high wage earners. I think this provision has outlived its usefulness since most women work these days. I don't think women who work at middle-income wages need to be supporting upper/upper-middle class wives of high-earning men in this way. And I say this as a woman who both worked and stayed home at different times so I have no personal axe to grind. It's just that when I think about how to adjust to the SS shortfall, this seems like the least necessary provision.

 

[youbet]

I meant that the provision to give an additional 50% of the higher-wage-earner's SS to the lower-earning spouse favors high wage earners.

It's not an additional 50% to the lower-earning spouse.  It gurantees that the lower-earning spouse's benefit will be at least 50% of the high-earning spouse's benefit.  But, I know what ya mean.......


SS and federal income tax are systems that, in addition to funding government and government programs, redistribute wealth.  As society changes, our desired algorithms for the redistribution change.  It will always be a battle royal!

Your proposal sounds as good as any other!  And the fact that you personally would receive less, proves your proposal is genuine.  But, despite the fact there are fewer stay at home spouses these days, there are still some who would be devastated by your proposed change and will rightfully scream to be heard.

It will be interesting!

 

[perinova]

I meant that the provision to give an additional 50% of the higher-wage-earner's SS to the lower-earning spouse favors high wage earners. I think this provision has outlived its usefulness since most women work these days. I don't think women who work at middle-income wages need to be supporting upper/upper-middle class wives of high-earning men in this way. And I say this as a woman who both worked and stayed home at different times so I have no personal axe to grind. It's just that when I think about how to adjust to the SS shortfall, this seems like the least necessary provision.

That most women work these days mean that this provision is not useful: If accurate it also means that no money will be saved removing it!
That won't solve the SS problem.

For young folks who didn't look into this already. If you look at SS as a whole and the 2 points of inflexion to compute benefits, low wage earners benefit most. In 2006 SS gives
90 percent of the first $7,872/mo plus
32 percent of over $7,872 and under $47.460 plus
15 percent of over $47,460 and under $94,200
00 percent of over $94,200

With the 50% provision: For the spouse that would be half of that of the same income
135 percent of the first $7,872/mo plus
48 percent of over $7,872 and under $47.460 plus
22.5 percent of over $47,460 and under $94,200
00 percent of over $94,200
I don't know how the provision can benefit high wage earners?

It benefits a spouse of a high wage earner who stayed home and play tennis all day. But SS is limited to $94,200 and as you mentioned yourself how many families is that anyway?
It also benefits families where in most case the spouse was NOT ABLE to work because he/she was caring for a child, sometimes a disabled child. So I am not so sure it is the least necessary provision.

Two equal wage earners:
90 percent of the first $15,742/mo plus
32 percent of over $15,742 and under $94.920 plus
15 percent of over $94,920 and under $188,400
00 percent of over $188,400
How about cutting benefit for dual career couples?
This will save plenty of money HaH the SS debate will be really fun!

 

[perinova]

That most women work these days mean that this provision is not useful: If accurate it also means that no money will be saved removing it!
That won't solve the SS problem.

For young folks who didn't look into this already. If you look at SS as a whole and the 2 points of inflexion to compute benefits, low wage earners benefit most. In 2006 SS gives
90 percent of the first $7,872/year plus
32 percent of over $7,872 and under $47.460 plus
15 percent of over $47,460 and under $94,200
00 percent of over $94,200

With the 50% provision: For the spouse that would be half of that of the same income
135 percent of the first $7,872/year plus
48 percent of over $7,872 and under $47.460 plus
22.5 percent of over $47,460 and under $94,200
00 percent of over $94,200
I don't know how the provision can benefit high wage earners?

It benefits a spouse of a high wage earner who stayed home and play tennis all day. But SS is limited to $94,200 and as you mentioned yourself how many families is that anyway?
It also benefits families where in most case the spouse was NOT ABLE to work because he/she was caring for a child, sometimes a disabled child. So I am not so sure it is the least necessary provision.

Two equal wage earners:
90 percent of the first $15,742/year plus
32 percent of over $15,742 and under $94.920 plus
15 percent of over $94,920 and under $188,400
00 percent of over $188,400
How about cutting benefit for dual career couples?
This will save plenty of money HaH the SS debate will be really fun!

That's funny I just noticed that I could delete one of my post in "FIRE and money". Anyway... I meant /year in my post above.

 

[2B]

Why is social security going broke? Is it the 50% to non-contributing spouses? NO. We need more and higher paid workers.

There is already a massive incentive for educated women of childbearing age to forego having children altogether or just have one or two. Then she's back at work making a paycheck.

Most "modern" countries are suffering from a critically low birthrate. That's why the social welfare systems are starting to crack all around the world. Think Japan, Europe and the US. Russia has just offerred a cash incentive for additional babies as was done during the Soviet era.

Since most of our government expenditures seem to address social engineering issues, it would seem that we should increase the incentive for strong families.

I know all this talk of SS being in trouble is just right wing wacko propaganda. Al Gore showed me the "lockbox" where my future SS payments will come from if we don't let those evil conservatives ruin social security.

 

[MooreBonds]

Why is social security going broke? Is it the 50% to non-contributing spouses? NO. We need more and higher paid workers.

I offer the following question from personal experience (through an employee).

I wonder how the SSA trust fund estimates future draws in terms of divorcees? In my employee's case:

48 male
44 female

Wife never worked "officially" (i.e. she had housecleaning jobs she did for cash) and was a "stay at home mom". She wanted a divorce (went for some high-flying married 32 year old man..who subsequently dumped her and moved on).

She is now screwed, because she is divorced, with just a handful of SSA credit years when she was a teen/young adult working at a grocery store. Now, she is living on her own, and will have to start accumulating SSA credits to draw any meaningful SS.

Given the outrageously high divorce rates in this country, I wonder how the SSA trust fund calculates the impact of divorced people who are no longer elligible for the spouse benefit of 1/2 of the highest earner because they are divorced? Does anyone know?

--Peter

 

[Martha]

'If you are divorced after at least 10 years of marriage, you can collect retirement benefits on your former spouse's Social Security record if you are at least age 62 and if your former spouse is entitled to or receiving benefits. If you remarry, you generally cannot collect benefits on your former spouse's record unless your later marriage ends (whether by death, divorce, or annulment)'.

http://www.ssa.gov/gethelp1.htm

 

[2B]

So Peter76's wife will remember him fondly in her later years.