Social Security take-back -- RIP

For the countries sake I am glad that they did this. However, this does mean now I am really going to have to chose when to take social security, damn that sucks.
 
Thanks Rich. I guess we saw that coming. Congrats to Ha for getting in under the wire.

I did notice this:

In addition, beneficiaries entitled to retirement benefits may voluntarily suspend benefits only for the months beginning after the month in which the request is made.
Click to expand...

I have thought about suspending my SS payments from now (63.4) until I'm 66 or 70. Does anyone have any clue on how to figure your benefit at 66 or 70 if you collected for a period (1.4 yrs in my case) after 62 and before 66 or 70?
 
Oh well, I had intended to take advantage of that loophole one day. When it sounds too good to be true...
 
So it looks like you can still do it, you just have to withdraw within one year after you start receiving benefits.

I wonder why they don't just kill it effective immediately (now that Ha is all set :) ).
 
W2R said:
Wow, didn't Ha do this, this year? Good thing he didn't wait.
Click to expand...
I can't remember who posted the bit about it being threatened last August 29. Was it you, Rich? Thanks!

I filed the 521 the next morning. I had already decided that this was a good move, I was just fiddling with considerations about timing. The warning announcement posted on the board told me that the odds favored doing it pronto.

I think this change has been decided, and the comments period is just a formality. It may be required by some law or ruling. But the change is being spun as "an end to interest free loans". I can almost fill in the remainder-(loans largely and illegitimately benefitting those evil rich who fiddle the system on the backs of us poor and deserving citizens). Spin always exists for a reason. Parsing spin is an old and valuable intelligence methodology.

The redo was not my original strategy. I had felt that simply waiting until I was 70 was best. But in Dec 2008 I wanted every cent I could lay my hands on to be available for investing, and I figured starting SS would take some spending pressure off my portfolio. As it happened, they were able to give me 5 months or so in arrears also. So it did help me in this way, and I am grateful that I was able to payback and restart later, and grateful to board members who brought this to my attention.

Ha
 
"The agency is changing its withdrawal policy because recent media articles have promoted the use of the current policy as a means for retired beneficiaries to acquire an “interest-free loan.” "
 
jazz4cash said:
"The agency is changing its withdrawal policy because recent media articles have promoted the use of the current policy as a means for retired beneficiaries to acquire an “interest-free loan.” "
Click to expand...

It is the fault of the internet. I first heard about via Kiplinger, I knew most of the details 10 years ago from the Motley Fools/Intercst Early Retirement board. I am waiting for them to screw with the 72(t) next
 
jazz4cash said:
"The agency is changing its withdrawal policy because recent media articles have promoted the use of the current policy as a means for retired beneficiaries to acquire an “interest-free loan.” "
Click to expand...
Perhaps. But couldn't they also change the policy so that some interest would have to be paid back if that were the motivation?
 
Thanks, Rich, this is good news. I was planning on paying it back at about age 70 but was dreading the accounting, forms, walking the paperwork through, and dealing with clerks. There were nightmares similar to Sundays after brief vacations; how would I keep the thing on my do-do list so far in the future. Anyone else notice an uptick in laziness in the third year? ;)
 
Sadly I seem to have missed the cutoff by a couple of months. I turned 62 on 9/6/09, got my first check deposited 11/9/09! Would have been nice if they "grandfathered" us recent withdrawal planners, say for those starting benefits over the last year or so. I was planning to exercise withdrawal of benefits when I turned 70, as I was led to believe was legal with the SSA. I did know that changes were in the works but foolishly felt that they would be lenient with us recent claimants.

Anyone know, my wife began spousal benefits in January based on my benefits, i.e. 50%. Would it make sense to at least withdraw her application?

Thanks,
Chuck
 
Martha said:
I'm surprised they bothered. Someone had too much free time.
Click to expand...
"OK, guys, we have to figure out how we're going to save money for next fiscal year. This meeting is going to stay in session until we squeeze every last penny out of the budget."

Next we'll be reading headlines like "Social Security saves hundreds of millions of taxpayer dollars!!"
 
Martha said:
I'm surprised they bothered. Someone had too much free time.
Click to expand...

Yes, I'm basically surprised that this really made it to someone's radar screen. Good or bad, it seems like a real small fry relative to the effort it would take to do something. I can only imagine that changing these rules involves a ton of bureaucracy. They gotta have bigger problems than this?

-ERD50
 
ERD50 said:
Yes, I'm basically surprised that this really made it to someone's radar screen. Good or bad, it seems like a real small fry relative to the effort it would take to do something. I can only imagine that changing these rules involves a ton of bureaucracy. They gotta have bigger problems than this?

-ERD50
Click to expand...

I suppose someone thought that it was a fairness issue. I would suppose, that when you add in the value of an interest free loan the actuarial equivalence of the SS pension regardless of age is compromised.
 
I can't remember who posted the bit about it being threatened last August 29. Was it you, Rich? Thanks!
Click to expand...


I raised a tentative red flag last January:

http://www.early-retirement.org/for...payback-system-may-be-discontinued-47985.html

I used to feel that taking it at 62 was best, but now I'm pretty confident that waiting until 70 is the best strategy for me. Using the age 70 rate, I should be able to live comfortably on SS even if my investments dry up.

But I don't have to decide for a few years.
 
I may be paranoid, but I'd be really hesitant to do this even if it was still allowed, just due to the likelihood of means testing as the deficit reaches crisis proportions. I can already hear the cries of "millionaires on the SS dole".
 
jazz4cash said:
"The agency is changing its withdrawal policy because recent media articles have promoted the use of the current policy as a means for retired beneficiaries to acquire an “interest-free loan.” "
Click to expand...

If this was their main concern, they could have retained the "repay and restart", and disallowed any tax deduction or tax credit for back taxes paid on the repaid SS distributions. This would have offset any benefit from an interest free loan, especially WRT higher income folks.

My guess is that pressure was brought on someone by the commercial annuity industry.

I think this will be a hardship to anyone who has to go back to work more than 12 months after having started SS at 62.
 
travelover said:
I may be paranoid, but I'd be really hesitant to do this even if it was still allowed, just due to the likelihood of means testing as the deficit reaches crisis proportions. I can already hear the cries of "millionaires on the SS dole".
Click to expand...


I don't think you are overly paranoid. We seen pensions slashed in several European countries with virtually no warning, to expect that nothing of the sort will happen in the US I think is being at best optimistic and a worst hopelessly naive.

As I said from a fairness perspective this is probably a good thing, but it really complicate the SS decision.

Essentially age 62,you need to decide what your likely age expectancy, your ability to have a decent lifestyle while deferring SSN, calculate the tax impact of collecting vs deferring SS. Make estimates of your investment returns over the next say 5 years. Finally, you also must make an estimate of how likely Congress is to change the benefits in the next 5 years, without warning.

Of course if you are married the situation is significantly more complicated since your spouses age, life expectancy and their benefits also need to be factored in.
 
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