Proposed changes to SS???

[Newventurer]

I have not been able to track down the source of this article that I received in an email. Maybe this is old news, or just rumor...will try to find out more.

Just found it : Investment News
White House budget proposal targets Social Security benefits White House budget proposal targets Social Security benefits

President Obama's plan takes aim at strategies used by upper-income claimants to increase their benefits

By Darla Mercado
Mar 7, 2014 @ 12:28 pm (Updated 4:18 pm) EST

President Barack Obama's 2015 budget proposal has targeted one of the best retirement income planning tools on advisers' shelves: Social Security-claiming strategies.

Buried on the 150th page of the 214 page, $3.9 trillion budget for 2015, which was released on Tuesday, is a sentence spelling out the plan to prevent duplicative or excessive benefit payments through the disability insurance program and Social Security. “In addition, the budget proposes to eliminate aggressive Social Security-claiming strategies, which allow upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits,” the budget reads.

 

[Midpack]

Here

White House budget proposal targets Social Security benefits

Not a big surprise, as the author acknowledges, but the likelihood of anyone getting a budget passed intact is near zero anyway.

 

[pb4uski]

....Buried on the 150th page of the 214 page, $3.9 trillion budget for 2015, which was released on Tuesday, is a sentence spelling out the plan to prevent duplicative or excessive benefit payments through the disability insurance program and Social Security. “In addition, the budget proposes to eliminate aggressive Social Security-claiming strategies, which allow upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits,” the budget reads.

...“I'm sympathetic with the administration's concern that the claiming strategies have become the purview of financial planners,” said Alicia H. Munnell, director of the Center for Retirement Research at Boston College. “The people who use it are high-income people with the flexibility to game the system to their benefit.”

“That thwarts the basic intent of the program,” she added. “We are all in it together, and you put money into it when you work, and you get money when you retire.”....

Correct me if i'm wrong, but isn't file and suspend available to ALL social security beneficiaries? I concede that it is easier to do if you continue to work or have other income or assets to support yourself during the deferral period.

 

[ejman]

Well, this could certainly diminish the entertainment value of all those "When and how to take SS" threads...

 

[Texas Proud]

Kinda a straw man IMO when they say 'upper income strategy'.... since anybody can do it, it is not only an upper income option...


I am one who really does not think that there should be an option to take spousal benefits for a good number of years and then start to take full benefits at 70... I think that when you apply for benefits, you should get the maximum benefits you qualify for at the time you apply... if it is spousal benefits, then that is all you get... if it is your own, then that is all you get...

Now, I do believe that if the spouse is making less than the other, when the larger payment person dies, the other should get the survivor benefit....

 

[Options]

...

Maybe this is old news, or just rumor...will try to find out more.

...

Or...with a hopelessly gridlocked and unbelievably dysfunctional Congress...maybe it'll go nowhere just like his chained CPI proposal did. This isn't news. It's noise. Political postering by both sides disguised as a budget proposal. We don't have media in this country. We have PR outlets. I don't make decisions based on this stuff.

 

[Theduckguru]

If you look at the life expectancy between high and low wage earners, you will see why lower income people do not benefit very much from delay.

 

[Htown Harry]

Omigosh, here's another one, hidden on page 191!

Other revenue raisers and loophole closers:

Require non-spouse beneficiaries of deceased
IRA owners and retirement plan participants
to take inherited distributions over no more
than five years

 

[growing_older]

There's also switch to chained CPI in there somewhere. All trial balloons, most of these were in last years budget too. Until Congress gets involved this is just positioning for debating a budget. Nothing really to see here yet.

 

[Texas Proud]

There's also switch to chained CPI in there somewhere. All trial balloons, most of these were in last years budget too. Until Congress gets involved this is just positioning for debating a budget. Nothing really to see here yet.

There was a lot of reporting that chained CPI was taken out of the budget...


IMO, why give up a chip at the start.... he can get something for that one....

 

[MichaelB]

Leaving politics out of the conversation will make the thread more helpful and add it it's longevity.

 

[ziggy29]

If you look at the life expectancy between high and low wage earners, you will see why lower income people do not benefit very much from delay.

Not to mention that many times, lower income individuals don't have the financial resources to "file and suspend" so they don't get benefits until they are 70.

 

[REWahoo]

Tit for tat, followed by the pig...

 

[growing_older]

Well, if we can put politics aside, then on the merits, some of these ideas are kind of sensible, some not so much.

I do NOT like the idea of the chained CPI. It models consumer behavior, but it models what they do BECAUSE there is inflation in the prices of goods they really want, so they substitute something inferior. If you are modeling some macroview of the economy as a whole, you probably want to capture this behavior to see how your economy will grow or shrink in the forecast. But when consumers are forced to buy inferior goods because they are priced out of what they really want due to inflation, the act of substituting goods does not reduce inflation. This one doesn't seem sensible.

As for file and suspend, the rules for SS provide some accounting to allow spouses who didn't work, who worked less, or who were just lucky to have a much higher earning spouse to have an option of claiming either their own benefit or a reduced version of their spouses benefit, along with some ways to claim at different times if the spouses have different ages or different plans for retirement. Using file and suspend to claim one kind of benefit, then switching to another seems like abuse of those rules and provides additional benefit to a select group willing to game the system beyond the intent of allowing the different choices for spouses. That's a loophole I wouldn't mind closing.

What I didn't hear was any strategy for increasing Social Security revenue, such as raising caps on income, which could guarantee the solvency of the program. It seems obvious that will have to happen sooner or later and the longer we wait the worse the problem gets. But politically no one seems to want to touch it.

 

[Midpack]

I do NOT like the idea of the chained CPI. It models consumer behavior, but it models what they do BECAUSE there is inflation in the prices of goods they really want, so they substitute something inferior. If you are modeling some macroview of the economy as a whole, you probably want to capture this behavior to see how your economy will grow or shrink in the forecast. But when consumers are forced to buy inferior goods because they are priced out of what they really want due to inflation, the act of substituting goods does not reduce inflation. This one doesn't seem sensible.

Looking for changes that we'll "like" has gotten us no where.

Employee/taxpayers certainly aren't guaranteed wage parity with CPI, median income has declined for decades. They've had to 'substitute something inferior for goods they really want' for decades. Are you saying Soc Sec recipients should be guaranteed no change in how CPI/COL adjustments are calculated from the status quo, or do you have a compromise suggestion that differs from chained CPI? Or do you think employee/taxpayers who's wages haven't kept up for decades should pay even more to leave Soc Sec unchanged? Or maybe just the rich (per below).

What I didn't hear was any strategy for increasing Social Security revenue, such as raising caps on income, which could guarantee the solvency of the program. It seems obvious that will have to happen sooner or later and the longer we wait the worse the problem gets. But politically no one seems to want to touch it.

Extend solvency 20-30 years from what I've seen, substantial but not an opened ended "guarantee."

I hope there's sacrifice by recipients and taxpayers both, not excluding either. Making the rich pay more with no increase in the benefits seems a little unfair conceptually, HOWEVER we need individual tax reform (clearly at the top IMO) so it may be part of the overall answer.

And then there's Medicare/Medicaid, a much bigger issue than Soc Sec. I don't know why we kid ourselves by looking at entitlements separately. What's the point in making Soc Sec solvent when the bigger entitlement issue is right in front of our faces?

The solutions all [-]suck[/-] hurt, but I'd rather get on with it so we can all try to plan accordingly.

 

[kyounge1956]

Omigosh, here's another one, hidden on page 191! Other revenue raisers and loophole closers:

Require non-spouse beneficiaries of deceased IRA owners and retirement plan participants to take inherited distributions over no more than five years

I hope this doesn't go through. Not everyone has a spouse to leave their IRA to—I never married and my mom is a widow. Why should our beneficiaries have to pay more taxes when they inherit than a surviving spouse? I doubt that either my IRAs or my mom's are big enough to cause problems, but it's possible for someone who does inherit a large account and has to distribute the entire balance over only five years to be pushed into a higher tax bracket and end up losing much of the money to the IRS. It's all described in Ed Slott's books.

 

[M Paquette]

Look, folks. This here is an election year. NOTHING IS GOING TO CHANGE! Really. Heck, Congress is already effectively shut down until after the elections, and then we get a whole month+ of a lame duck session, lots of bills to rename post offices and whatnot, maybe a continuing resolution or three, and not much else, because there's a whole new Congress coming in soon, and they'll want to do their own thing... ("Meet the new boss; Same as the old boss...")

Anything in 2015? Not really. No drama wanted, as it might make fodder for the 2016 presidential and congressional campaigns. In 2016? Hah!

Meanwhile, in every back room and caucus, from now til 2017:

So, no worries. Be happy! Go out and feed the squirrels. (Fatten them up for the hunting season...)

 

[Options]

Leaving politics out of the conversation will make the thread more helpful and add it it's longevity.

While I agree leaving politics out of threads is often most productive, unfortunately it is the politics of SS that will impact financial decisions that all of us make. Mike Lofgren's excellent book, "The Party's Over: How Republicans Went Crazy, Democrats Became Useless and the Middle Class Got Shafted" is highly instructive as to why nothing will come of this piece of so-called "news" regarding SS. I only think of politics in terms of how it impacts my financial decisions.

 

[REWahoo]

A moderator asks you not to do it, so you quote his request and do it anyway? That'll surely earn you a brown star...

 

[Options]

A moderator asks you not to do it, so you quote his request and do it anyway? That'll surely earn you a brown star...

With all do respect, you missed the point entirely. I was not discussing "politics", which I have no interest in anyway. I was simply stating that a wise investor considers the entire circumstances of his operating universe--politics included--when making financial decisions. In this instance, the choice (on my part anyway) is to ignore this "news" until something more substantial develops.

 

[REWahoo]

With all do respect, you missed the point entirely.

What sort of respect is "do" respect?

 

[Options]

I don't know, the opposite of "don't" respect, maybe?

 

[Bestwifeever]

Thanks for another interesting discussion, everyone.