Interesting article on SS strategies

[gerntz]

Quote:

Originally Posted by Independent I don't know how we determine what Social Security was "supposed to be". I can say that the first monthly benefit, as mentioned above, came from the 1939 formula which was: So the higher replacement ratio for lower income workers has been there since the beginning. http://www.ssa.gov/policy/docs/ssb/v18n5/v18n5p13.pdf

Good data. Thanks.

And it's still true even when the higher income folks try to improve their fate somewhat.

[gerntz]

Quote:

Originally Posted by youbet Only choices that are actuarially equivalent should be part of the SS system.

Why's that? Seems this encourages being married - a good thing for society I think.

[NW-Bound]

The administration is looking to stop "File-and-Suspend" saying that it is an "aggressive move" that allows well-to-do retirees to "manipulate" their SS filing decisions.

See: 'File-and-suspend': A Social Security strategy under fire: Thomson Reuters - MSN Money.

This is why I do not want to think or plan too far ahead on SS because I still have 8 years to FRA. A lot will change from here to then.

Excerpts follow:

"... a White House official, speaking on background, confirmed to me that the target is a benefit claiming strategy known as file-and-suspend - a twist on the more straightforward strategy of delayed filing to earn a higher monthly benefit down the road. Although it's technically available to anyone, the White House thinks the strategy is being used to unfair advantage by high-income seniors and wants to shut it down because of the added benefit cost it imposes on the Social Security program.

Any change to file-and-suspend would require congressional action, so don't expect anything soon. But words like "aggressive" and "manipulate" are unusually strong for a federal budget document, so let's look at what file-and-suspend is about - how it's used and whether it makes sense to target it for elimination.
...
Here's how it works: The spouse with the higher PIA - typically the man - files for benefits at his full retirement age (FRA), then immediately files a notice to suspend payment of those benefits. That permits the lower-PIA spouse to file for a spousal benefit, which is equal to half the husband's benefit.

That gets some benefit flowing to the household while the husband continues to accrue higher benefits until he files to start payments, perhaps as late as age 70; the wife then converts to her own full benefit. (Note: The spouse can convert to her full benefit only if she waits until her FRA to file for a spousal benefit.)"

[pb4uski]

There is a similar thread on this so perhaps they should be merged.

Since ALL couples can file and suspend, this initiative will really hurt savers (those how have saved for retirement and can use savings to carry them through the years they suspend receiving benefits), and not high-income. You could have a high-income couple who hasn't saved for retirement and therefore do not have the resources to suspend their benefits. Conversely, you could have a middle-income LBYM couple who have prudently saved for retirement and could use those savings to carry them through the suspend years that will be denied this benefit. Another group it will hurt is those with reasonably good non-COLA pensions who can rely on their pension benefits during the suspend years and use the higher COLAed SS benefits to secure their later years and protect themselves from inflation. But I'll admit that threatening high-income people makes for good main street politics for the administration.

As I think someone mentioned in another thread, another aspect of this is that lower income people receive more benefits in relation to what they pay in to SS than do higher income people and file and suspend is one way that higher income people who have saved can make the playing field a bit more level.

It'll be interesting to watch.

Since DW and I are close to the same age, it doesn't make a world of difference to me but my plan is to file and suspend at FRA and then wait until 70 but if we can't then I suppose we would just both take SS at FRA or perhaps DW will take hers at 62 or FRA and then I'll take mine at 70 and she'll get bumped up to 1/2 of my FRA.

We are a few years (and thankfully a different administration) away from having to make those decisions.

[ziggy29]

Just as with the ability to pay back everything and refile later, frankly I don't expect to have any "strategies" available to me when I get there -- it's the Gen X curse. The good stuff is all taken away before I can benefit from it.

[NW-Bound]

Quote:

Originally Posted by pb4uski There is a similar thread on this so perhaps they should be merged...

Yes, I see it now, the one started by ejman. I'll ask the mods to merge. Thx.

[braumeister]

Quote:

Originally Posted by ziggy29 it's the Gen X curse. The good stuff is all taken away before I can benefit from it.

Damn whippersnappers! Shut up and eat your brussels sprouts. When I was your age ...

[W2R]

Quote:

Originally Posted by pb4uski There is a similar thread on this so perhaps they should be merged. [...]

Done, so both threads on this topic are combined in this thread.

[ejman]

I suspect that all of this effervescence will in the near future lead to a much simpler more limited SS benefit schedule where for example if one partner wishes to make sure the surviving partner benefits then the first partner will have to agree to a reduction in benefits so that benefits paid are actuarially equivalent through additional partners as well. The elimination of the collect and repay and then later refile gambit a few years ago was a shot across the bow - much more coming and probably sooner rather than later. That one was done by a simple rule change. I don't know to what extent that approach will be followed in the future but there may well be a "shoot first and ask questions latter"

[Alan]

Quote:

Originally Posted by ziggy29 Just as with the ability to pay back everything and refile later, frankly I don't expect to have any "strategies" available to me when I get there -- it's the Gen X curse. The good stuff is all taken away before I can benefit from it.

Too many politicians monitoring sites like this that highlight all these goodies?

[NYEXPAT]

Quote:

Originally Posted by thefinancebuff +1. If you want to benefit someone else you have to reduce your own benefits. Right now someone could marry multiple times each lasting 10 years and the taxpayers just pay multiple ex-spouses for no reason.

+1 I think most Divorced guys would love to see that! As a happily Divorced/remarried guy, I don't care what the Ex does, nor do I have any control!

[pb4uski]

Quote:

Originally Posted by Alan Too many politicians monitoring sites like this that highlight all these goodies?

It's the NSA.