Congress Planning to Close Social Security Loopholes

Not really the subject of this thread, but I am curious.

Didn’t the laid off workers collect back wages once the government “reopened”?

You both offer some very good arguments and I agree/disagree with some of them.

Except for the 401K disagreement.

A roth carries the same risk as a traditional 401K. i.e.stock market investment. Should everyone be penalized because some do not pay attention to their business? I realize that all companies don’t offer a match...but many do. That is free money. A good tax benefit for both employer and employee. How the Fed allowed themselves to be screwed out of that tax money is curious to me. I fully expect for the tax benefit to evaporate.

IMHO, the 401K/IRA was invented to give incentive to people to save for their later years. They can always put a contribution in cash.
Even if they end up with $10,000 at retirement, that might be more than they would have had. Most folk aren’t good about looking to the future or putting money back.

A roth carries the same risk as a traditional 401K. i.e.stock market investment.

There's no requirement for an IRA or 401(k) to be invested in equities. But, if you don't do so -- it's unlikely to keep up with inflation.

You can put it in long-term Treasury bonds. For that matter, you can put it in a money market fund. You won't get any significant interest now, but you won't lose money.

Managing your investments really isn't that hard. Split it between an equity index fund and a bond index fund, and rebalance every year. You'll match or outperform most mutual funds.

Or, you can choose a lifecycle fund, that automatically adjusts your allocation as you approach and pass retirement age.

There were two "furloughs." One for Sequestration, which was different from the government shutdown. Sequestration happened first. As I understand it, some agencies avoided furloughs altogether. Others, like the FAA, quickly ended their furloughs when chaos hit airline traffic (Congress allocated money to pay the air traffic controllers in less than 48 hours - an almost unheard of legislative pace).

Others, like the Defense Dept, furloughed hundreds of thousands nurses (even those at Walter Reed caring for combat wounded), doctors, maintainers, intelligence specialists, cops, engineers - you name it.

Those salaries were never paid back.

One especially interesting bit of treachery - Barack Obama said he was going to take a pay cut to his Presidential salary in "solidarity" with the workers who were furloughed.

In a Budget Gesture, Obama Will Return 5% of His Salary

He lied.

He never took a pay cut.

White House won't say if Obama kept promise to return 5% of his salary in solidarity with budget sequester furloughs but his tax return hints that he never did

I didn’t know that. Thanks.

Congress Planning to Close Social Security Loopholes

Yeah. The worst loophole of all are people who want money from Social Security. Gotta close that one first.

Even though I am some what of a control freak...I may look at a lifecycle fund. Just to see what they have to offer. I always learn good stuff on this site.

We agree on the invest in cash or TBonds pitfalls. But any little bit just might help them at some later date. Or knock them out of Fed assistance. Who knows?

A financial writer came up with the "couch potato" portfolio years ago.

It's real simple: put 50% into a S&P 500 index fund, and 50% in an intermediate-term bond index fund. Once a year, rebalance them to 50-50 by moving money one direction or the other.

You'll sell equities when they are high (and take a profit), and buy them when they are low -- and hopefully take a profit on the bonds, since they tend to move counter to equities.

He studied the result of this strategy going back decades, and it beat almost every mutual fund except >50% S&P index equity fund. Long-term, 100% equities does the best, but with a lot of volatility and thus risk when you start withdrawing, or if you panic and cash out near the bottom.

You can replicate a lifecycle fund by starting with a 75% equity - 25% bond fund when you are in your 20's, and each year, adjust the ratios by one point: 74-26, 73-27, etc. You can adjust the start and end ratios according to your comfort level with volatility in equities.

It's not a good idea to completely cash out your equities until you are in the last years of your life and don't have much left. Otherwise, you risk inflation exceeding your return from bonds.

Others, like the FAA, quickly ended their furloughs when chaos hit airline traffic (Congress allocated money to pay the air traffic controllers in less than 48 hours - an almost unheard of legislative pace).

I don't remember Congress actually giving them money.

What happened was Congress said: stop screwing around and use the money we have already budgeted for you, but you refuse to use.

The FAA intentionally furloughed operational controllers, instead of suspending development projects and other activities that weren't needed during that time.

In other words, they threw a fit.

I had it explained to me by the social security rep at the court house. This option is still open to us due to our age.

I am drawing SS. My wife is 63, at age 66 she can apply for SS, then suspend it and draw off of mine which is $500 per mo more than what hers would have been. When she turns 70, she stops drawing from mine and starts drawing hers. During this 4 year period her account grows to more than what she was drawing off of mine by about $300 per mo. Her take home pay effectually doubles.

This sounds convoluted, but this is what I read off the SS website, and exactly how the SS rep explained it to me.

Since she is 63 years of age in 2015, this “loophole” is still open to her. In other words, she can still do it. This change in the law applies to “The amendments made by this subsection shall apply with respect to individuals who attain age 62 in any calendar year after 2015.” as quoted from HR1314

Arew you the one listening in at the Congressional coat closet? Sounds like you’ve heard their scheming before!

Thank you, redfreedom.

What happened was Congress said: stop screwing around and use the money we have already budgeted for you, but you refuse to use.

Not exactly.

The FAA, like any government agency, has certain accounts to spend money on things. When I worked in Washington DC and the Pentagon, we referred to these a "colors" of money. Some are for procurement, some Operations and Maintenance, some for Overseas Contingency Operations (wars), etc.

http://www.cnn.com/2013/05/02/travel/faa-furlough/

After 40,000 flights were delayed and 1,900 cancelled in just the first few days, Congress moved very, very, very quickly to "re-program" money so it could be used for salaries.

President Obama had to sign it.

Sequestration was used as a political game, with many employees being used as pawns. The DoD took a huge hit in funds, midway through the Fiscal Year, and said that was why they had to furlough so many. But, Hagel played political games with it. He "exempted" politically correct "sexual assault" briefers who had been on the job only 2 weeks. The propaganda that every member of the military was a sexual rapist was going strong at that point in 2013. The truth was, these PC priestesses were doing nothing of value for the military. Hagel also exempted Navy shipyard workers, because he and Obama could not stand the blow back from their union, and the "optics" looked really ugly.

But those Sequestration furloughs (that were never paid back) devastated the DoD and some other agencies.

Military civilian medical workers quit after furloughs Nearly 3,400 military medical workers quit this year in the months when furloughs were threatened or being carried out because of spending cuts known as sequestration. The vast majority of those losses were with Army medical facilities. Lt. Gen. Patricia Horoho, the Army's surgeon general, says one out of 20 of her civilian medical doctors, nurses and other health workers -- or 2,700 out of 42,000 civilian health employees -- left their jobs for work elsewhere. She said departing staffers included highly skilled clinicians, scientists, researchers and other health workers. Eighteen percent were doctors and nurses, her staff says. Medical support assistants, dental assistants, medical records technicians and administrative support personnel also quit or retired.

That had horrible effects that military and military families are still dealing with.

In the meantime, since 2013, we have paid out almost 1 Trillion in "benefits" to illegal invaders. This was a political game, and real people were caught in the cross hairs.

I should add, that I never knew this until after I retired, but before my wife turned 62. Our financial adviser at Edward Jones gave us a handout that described it exactly as I stated, she verified it, then I went to the SS site, then my wife & I had the in person chat session with the SS rep.

I hope you situation falls into the grandfathered category too.