Budget deal would nix popular Social Security claiming strategies

Investment News ^ | Oct 28, 2015 | Mark Schoeff Jr.

[<1/1,000,000th%]

The Dems are cutting social security again?

All the House Dem members voted for this as well as almost half the Republicans.

[SkyPilot]

This was a loophole that ran around the intent of Social Security, and anyone who argues otherwise is a liar.

I do not doubt that many of the very folks here who complain about debt, deficits, and spending were taking advantage of this.

There IS a difference between the welfare takers and things like Social Security and Medicare. The latter are contritbuted by those who pay into it. But don't abuse it in this way!!! I have seen (for years) these ads about how to use a "trick" in Social Security to scam the system. Those that argue that it was "the law" can now argue with themselves that it is "against the law" now. Their moral authority is muted.

I have also come to believe that many "Financial Advisers" are the scum of the earth. They will line their own pockets as the ship goes down, and when it does they will quickly move on to the next scam or Ponzi Scheme.

[clintonh8r]

It isn’t abuse. The law as presently established clearly permits it. Apparently all the ads you saw weren’t very effective as it was reported today that only about 100,000 people actually participate in this (my wife does).

It isn’t “against the law now”, as the law has not yet been changed, and it never will be against the law for those who are in the program. It just will simply cease to exist, at some time in the future, for new enrollees. Those enrolled will continue to receive the benefit.

There are far bigger problems with SS than this one.

[GailA]

Makes sense, a lot of women are my age had very little work history, they were homemakers, care takers of their children.

I’ve remarried and now is 7 years, my new husband made much more money than my late husband did, once we are married 10 years do I qualify to draw under his or am I stuck where I am. He is 75, to my 67. But I have more health issues. He is also Ret. SCPO, that I know I can’t draw off of as we were not married during his service period. He did 20 years in the Navy, taught JR. College for 20 years. I know I don’t come under either pension.

But would like to maximize what I draw per month, to meet bills that come with owning a house and be able to afford decent food not crap that will run down my health more.

[CottonBall]

“Why punish real people who put into the system fairly”

SS is socialized security. The hardest workers subsidize the low earners.

[napscoordinator]

The hardest workers subsidize the low earners.

Nonsense. First of all hardest worker subsidize the low earners......what nonsense. You are trying to say that McDonald’s workers are not hard workers? BS. And perhaps you mean higher paid workers subsidize the low earners which is BS too because the highest paid workers are only taxed to 118K and then get the highest monthly SS check. The low workers have their entire check taxed and then get a very small SS check.

[doug6352]

Under this new crackpot bill, which passed the House of Representatives in secret and without public debate, no one else can receive Social Security benefits until the person with the work record begins receiving benefits. So a housewife who was divorced after 30 years of marriage must wait for her ex-husband to begin receiving benefits before she can begin receiving her spousal benefit.

[CottonBall]

Look at the calculations on the SS website you’ll see how wrong you are. You are taking the liberal stance, or the one liberals want ignorant people to believe.

First, if someone works at McDonald’s their entire career, they are likely in management eventually. In fascist states like California that set the wages for managers, they would do pretty well.

Do the math yourself by looking at the 3 tiers of the SS calculations that use a retiree’s AIME, or average indexed monthly earnings. In the first tier, 90% of your AIME count toward your PIA (primary insurance amount). Those in this tier alone get back more than they paid in, by far.

The 2nd tier drops rather quickly, giving a retiree credit for only 32% of what they earned. Some in this category might get back what they paid in, some won’t. Depends where they are in the earnings range and how long they collect SS.

Those earning in the last tier will never come close to getting their money back, not even just the amount they paid in if not self-employed, much less the total paid in for them by an employer and themselves.

All calculations are indexed for COLAs.

My husband is 50 and wanted to ‘max out’ his SS before retiring. I doubted that paying in more would actually be a good thing, given our increasingly fascist government. So I did the calculations for his situation. If he works until 67, he’ll pay in over $152,000. (I counted his Medicare portion too, because he will get nothing more in Medicare benefits for paying in more since it is 100% socialized.)

This $152k is only my hubby’s portion - add his employer’s and it’s over $300,000!

If he lives to the average male lifespan of 83 and starts collecting at 67, he’ll get $40,000 more than if he quits today and doesn’t pay in one more dime.

It is nothing more than a ponzi scheme depending on the hardworking dupes to keep supporting it.

So, hubby quit work and we are going Galt. It is freedom!

BTW, when socialized security is cut - the top earners will be the ones taking a bigger hit. I recommend everyone quit paying into it as soon as they can.

[AllAmericanGirl44]

As a divorced woman myself, the way I understood it was that if I re-married, I would no longer be able to collect under my ex-husbands SS. Not that I’m of that age yet, but that was how I understood it.

Maybe justlurking can clarify.

[justlurking]

As a divorced woman myself, the way I understood it was that if I re-married, I would no longer be able to collect under my ex-husbands SS. Not that I’m of that age yet, but that was how I understood it.

That may be true, but it's not something that this law is changing, unless you were planning to use a "file-and-suspend" strategy.

[justlurking]

And perhaps you mean higher paid workers subsidize the low earners which is BS too because the highest paid workers are only taxed to 118K and then get the highest monthly SS check. The low workers have their entire check taxed and then get a very small SS check.

Nope, that's not the way it works.

The payroll tax is flat, up to 118K per year (in 2015).

Over your lifetime, the highest 35 years of wages are used to calculate your benefit. If you don't have 35 years of earning, 0 is used for the remaining years.

Wages are indexed by average wage growth (which is similar to inflation, but not exactly). So, at retirement, you have what is called AIME, or average indexed monthly earnings.

The AIME is then plugged into a formula to determine your benefit. You might be thinking: they take my AIME, multiply it by 50% (or whatever), and that's my benefit. So, everyone gets a benefit proportional to the wages that were taxed. Right?

But, that's not how it works. In 2016, the calculation is:

1. 90% of the first $856 of your AIME, plus
2. 32% of your AIME from $856 to $5,157, plus
3. 15% of your AIME from $5,157 to $9,833.

If you do the math, the person that contributes the maximum amount to Social Security every year for 35 years will receive a benefit of $2,848 at their full retirement age (FRA). That's 29% of their AIME.

Repeat the calculation for a median AIME, like $5,157/month. Their Social Security Benefit at FRA would be $2,148/month, or 42% of their AIME.

Finally, at a low income level: $856/month. Their benefit would be $770/month, or 90% of their AIME.

As you can see, Social Security is already means-tested. Low-income wage earners receive a much higher replacement of their income in retirement, vs. between 1/4 and 1/3 for higher income workers.

[GailA]

I think the rule is you have to be married 10 years then you can draw which ever is the highest, government keeps the other spouses. Just as the kept what little I earned.

When we file it is filed under his SS #.

I know I can’t draw off his Navy pension, as we were not married during that time frame, nor his teacher’s pension. Not that it is all that much. But his basic pay was way more the last 10 years of his teaching career than my late husband made. A couple hundred a month extra would be a big help, especially if I’m still making a house payment which is half my SS. We figured we get more out of the old big house and after a year on the market could not unload it for what it was worth...neighborhood was nice, but to close to Memphis and it’s taxes and crime. We paid off some bills, and put the rest into the 12 yr old starter house we bought. 2 old people didn’t need a house that was 2 stories, 3,800 sq ft sitting on top of a big hill.

[JediJones]

The idea that you are getting what you paid is a canard. If that’s what you think, then would you sign a document right now saying you will only ever collect exactly what you paid into it?

If everyone signed that, the program would be permanently solvent. Obviously the problem is most people are collecting payouts out of the program that far exceed the amounts they paid into it. It’s a completely unsustainable ponzi scheme that must be phased out one way or another.

And absolutely all of the bogus disability claims from people who haven’t even reached retirement age need to be rejected completely.

[Theodore R.]

R-Ky.

This could become the new symbol for betrayal.

[AllAmericanGirl44]

That makes sense, thanks for the reply. Guess I’ll have to look into it and see where things stand.

Best of luck with your home!