So who else knows about the Windfall Elimination Provision (WEP), a nasty and cruel retaliation from Reagan to Massachusetts* for being the only state to vote against him. Social Security does not get reduced if retirees have other pensions EXCEPT for Mass. state government employees, however pitiful their pensions. My modest social security was further reduced by 60% at age 70 because I had worked for Mass. for 13 years. For some cockamamie reason that's considered double dipping though if the pension came from anywhere else, it wouldn't. Rather than have to work in the private sector for 10 years after state retirement to get full social security, if you retired from Mass. government, you have to pay another 30 years into social security to get your benefits. If I had known this at the time of state retirement I could have delayed my state pension to max on social security.
28
Designed for married couples with children - a homemaker wife and bread-winning husband - the system stills serves single individuals quite well and is NOT at all complex as the "get-everything-you-can-advisers" warn.
Our society is moving toward less marriage, more dual earners (married or not), more singles retiring.
The mess some make of their lives and marriage(s), the people who cannot plan or do simple arithmetic, well, those are the people who should buy "the" book du jour.
"The book covers filing and suspending, 'deeming' rules that are too complicated to explain here . . ."
Maybe cover it in Books, or Worried-Well (health) section?
Our society is moving toward less marriage, more dual earners (married or not), more singles retiring.
The mess some make of their lives and marriage(s), the people who cannot plan or do simple arithmetic, well, those are the people who should buy "the" book du jour.
"The book covers filing and suspending, 'deeming' rules that are too complicated to explain here . . ."
Maybe cover it in Books, or Worried-Well (health) section?
2
The system discriminates against unmarried workers. Surviving spouses and children receive significant benefits even if they contributed little or nothing to SS.
23
By retiring at 64 I was able to participate in several "Passport in Time" archeological projects with the U.S. Forest in the Sierra Nevada Mountains . The physical demands required of my wife and I would not have been there if I had waited until 70 to retire.
Moving from high cost New York City to rural Nevada more than made up for reduced Social Security payments. Carpe Diem while you can!
Moving from high cost New York City to rural Nevada more than made up for reduced Social Security payments. Carpe Diem while you can!
24
Isn't it totally ridiculous that one needs a book to understand the myriad of rules of Social Security and they cannot be simplified for the average person. Pathetic.
27
I recently prevailed in a Social Security claim which took 18 months of stress to resolve. I happen to be an attorney but I know little if anything about Social Security Law. Most Social Sec attorneys specialize in disability. If your issue is something else- - forget about finding legal help. This book would have helped. Whoa to those who go there and believe what they tell you ! I had to go to their office 7 times (taking time off from work to do so) because over the year and a half they failed to issue a determination. Their 800 tel number is useless. Each time I was told something different and incorrect about the law on this issue and that they did not understand why my claim was lost !
25
Those of us who spend (or spent) our working lives writing and interpreting government regulations are offended by the implication that such regulations have been or are or may be written with the purpose of ensuring that men, women and transgender persons (collectively, "humans") subject thereto are unable to derive the maximum potential benefits therefrom to which any such humans may be entitled without reference to relevant interpretative releases, procedures and other official documents constituting "regulations" (as hereinafter defined) intended to define the facts and circumstances under which such humans may be entitled to constructive receipt of such benefits (without prejudice to reassessment within applicable statutes of limitations).
42
I've always been happy with the individuals at both Social Security and Medicare. I'm unhappy with those who seek to cut vital Social Security Disability Benefits without any need to do so. I also received an email from a progressive lobbying group that Lindsay Graham is forming a small group of Senators to look at ways to cut Social Security for everyone to have more money for war. I think the individuals running the program have more credibility than those who seek to destroy it.
30
Did you believe the e mail about Sen Graham? Or was it scare tactic to raise money for thr liberal group?
7
It is no coincidence that we have a complicated and expensive retirement system given that Wall Street is the single largest lobbying organization in the US. Most of us do not have defined benefit pension plans anymore and are forced to put our retirement funds into the casino that is Wall Street, with lots of shady and badly managed financial products and a stock market that is so manipulated it seems to crash every 10 years. Social Security should be our only pension system and every employer and employee should contribute.
19
SS does have peculiarities - one in particular I was told about but sounded ridiculous, really, not possible, why would the government allow this - until I took advantage of it.
Your social security office won't inform you of this benefit; and you'll receive no happy notification of your eligibility. It's all up to you. Gee - should I even tell you about this? - will this lead to its abolition? It should be abolished because it's blatantly unfair - but if one doesn't take advantage of this benefit one is giving up on a thousand dollars/ month of non-penalized benefit.
Do you know about spousal 'file and suspend'? Look it up. You're welcome.
Your social security office won't inform you of this benefit; and you'll receive no happy notification of your eligibility. It's all up to you. Gee - should I even tell you about this? - will this lead to its abolition? It should be abolished because it's blatantly unfair - but if one doesn't take advantage of this benefit one is giving up on a thousand dollars/ month of non-penalized benefit.
Do you know about spousal 'file and suspend'? Look it up. You're welcome.
10
Every time you choose to have a benefit, like FSA or transportation expenses, in pre-tax dollars, you earn less towards Social Security. For people who have maxed out on Social Security contributions (due to high income) in a given year, these pre-tax benefits might make sense. But the more you depend on Social Security benefits for retirement, the lower the benefit from pre-tax programs.
12
That is very valuable information - thank you
7
I have been a financial advisor for almost thirty years. I continue to be amazed by the financial illiteracy in our country. Unless you proactively take a course there is little in the American Educational system that prepares one to manage their finances and the intricate laws that have been created to deal with our tax system and Social Security.
Every high school in this country should have a financial literacy course offered so that all Americans have a basic understanding of how to mange their personal finances during the various stage of their lives.
In my industry it is often more important to educate people about their financial options then to manage their money. If one does not understand all of the options available to them they can make poor choices that will impact them for their lifetime.
Since financial education is not a money making proposition it is one that often gets overlooked in the financial planning process.
Every high school in this country should have a financial literacy course offered so that all Americans have a basic understanding of how to mange their personal finances during the various stage of their lives.
In my industry it is often more important to educate people about their financial options then to manage their money. If one does not understand all of the options available to them they can make poor choices that will impact them for their lifetime.
Since financial education is not a money making proposition it is one that often gets overlooked in the financial planning process.
25
I couldn't agree more! I have a certain nostalgia for the shop and home ec classes I took in high school (cooking, sewing, woodshop and metal shop), but in the limited scope of a school day, they have less relevance than personal finance. Such a class should include everything from banking, loans, and retirement savings to taxes, healthcare, and insurance (life and health) -- all of the things which are so vitally important to understand as you become indeoendent.
20
The one fact that no one mentions in any discussion is the fact that the baby boom was a temporary phenomenon. There will come a time when that particular bubble will have passed. No discussion of social security mentions that fact, let alone discusses when the dire arithmetic they keep pushing will get less dire on it's own.
16
The continuation of Social Security relies on good will among generations. It is an income transfer program. Married couples may play with the system to yield more than deserved benefits but they hurt all of us in their pursuit. Shame on well-to-do couples who do this. More rules will come to rectify their greed.
10
The one rule that might "rectify their greed" would be to lift the FICA cap which is currently at $117,000. Furthermore, if they are playing the system it is because the system allows it.
23
Nothing is as opaque as social security for those of us who also are also eligible for foreign pensions, public or private (because we had to pay into both systems). The rules change with treaties over the years, making it impossible to know how much you will be able to count on in the end. Never mind fluctuating currencies. Ugh.
10
While the article focuses primarily on Social Security, the worst disgrace of all is our tax system. I have no problem at all with the amount I eventually owe and might even be willing to pay a little more actually, provided everyone else did. But I deeply resent the hours and hours and hours it takes me to figure out how to get there, as well as the feeling that there may still have been some key provision buried in the fine print that I might have missed. Out of sheer (foolish?) stubbornness I refuse to hire a tax accountant; doing so would feel like surrender.
12
SS is a maze and mystery because:
1. The self interest, self righteous US Congress with rotten to the core politicians with their use abuse, misappropriation of peoples SS money for other uses and the accounting of the same through trickery, and thuggery. Then later to cover up the US Congress managed to pass so called paper reduction ACT. Sure enough in this day of computers, digital and Internet technology everything can handled electronically. But the Legislative and Judicial Branches of Government generate billions of tons of paper work, all at tax payer's expense.
2. From the SS Commissioner at National HQ at One Security Blvd, Baltimore MD, to local so called Filed Offices, that have been reduced by some over 80% incompetency is worst ever. The SS Info on the SS Web site and the so called Call Centers except for some less then 10% diligent personnel, the who system is a waste of time facade.
3. The SS field offices are only open from 8:30 AM to 2:30 PM M,T, T & F. On Wed from 8:30 till 12:30 PM. Average wait time on the phone is 25 to 30 minutes.
4. One has to wait some over 30 days for an appointment to see some SS worker. 7 times out of 10 the person who made the appointment for a specific date of time, after having made gross errors calls in sick and the new person has not the foggiest about subject of the interview or appointment. Nor will these same SS workers provide the record or print outs that the SS client is entitled by law.
conti
1. The self interest, self righteous US Congress with rotten to the core politicians with their use abuse, misappropriation of peoples SS money for other uses and the accounting of the same through trickery, and thuggery. Then later to cover up the US Congress managed to pass so called paper reduction ACT. Sure enough in this day of computers, digital and Internet technology everything can handled electronically. But the Legislative and Judicial Branches of Government generate billions of tons of paper work, all at tax payer's expense.
2. From the SS Commissioner at National HQ at One Security Blvd, Baltimore MD, to local so called Filed Offices, that have been reduced by some over 80% incompetency is worst ever. The SS Info on the SS Web site and the so called Call Centers except for some less then 10% diligent personnel, the who system is a waste of time facade.
3. The SS field offices are only open from 8:30 AM to 2:30 PM M,T, T & F. On Wed from 8:30 till 12:30 PM. Average wait time on the phone is 25 to 30 minutes.
4. One has to wait some over 30 days for an appointment to see some SS worker. 7 times out of 10 the person who made the appointment for a specific date of time, after having made gross errors calls in sick and the new person has not the foggiest about subject of the interview or appointment. Nor will these same SS workers provide the record or print outs that the SS client is entitled by law.
conti
10
Every time I deal with a govt worker, I always thank the person for providing a service and doing their job. Despite crazy laws and confusing systems, these people do their best to provide these services. Cheerfully.
43
who's responsible for electing politicians - voters or corporate campaign contributors? our problems are systemic, and i don't see decision-makers in any hurry to reconstruct the system to be more functional.
13
Voters are still ultimately responsible for electing politicians, they can make their decisions on the basis of campaign ads or sound bytes, making corporate contributors important, or they can make their decisions based on what the particular individual has done in the past, determined by research and not either his ads or his opponent's, in which case all the donations in the world will not matter. The problem lies in the fact that too many of the voters are either too lazy or too stupid to take the time to check on a candidate but rely on others; their union president, their boss, or the editorial pages of their favorite newspaper to tell them who to vote for.
6
Why not just arrange for what you can understand and kick back and enjoy life otherwise, without falling into the trap of unending financial calculations? Do you really want to spend the rest of your life in that frame of mind?
20
Because arranging is easier said than done.
12
This article could not be more timely. Just yesterday, I spent hours dealing with our local Social Security office trying to untangle why it had taken more than six months to process my daughter's application for disability benefits. This is just the latest battle in a relentless 18-year war to get her the help she needs, from medical care to private insurance coverage to Medicaid benefits to education. The "game" is so complicated and time-consuming that I had to quit my job 15 years ago to take it on full-time. Frankly, I've gotten quite good at it, but what a waste of my energy when I could have spent that time just being her mother. As my younger daughter so aptly stated yesterday, when I was nearing the end of my very long rope, "It's hard enough to be the parent of a child with disabilities. Why to they make it so much harder?" The same can be said for Veterans and the elderly.
Republicans talk about these benefits as if they spring from a golden fountain, and one needs only to walk to the village square with a bucket to receive them. In reality, it's more like going to the Colosseum to do battle with bureaucratic tigers; you win only if you survive the fight. And the fight is rigged against you.
Republicans talk about these benefits as if they spring from a golden fountain, and one needs only to walk to the village square with a bucket to receive them. In reality, it's more like going to the Colosseum to do battle with bureaucratic tigers; you win only if you survive the fight. And the fight is rigged against you.
103
Thank you for posting about Social Security's disability program. It is far too difficult to make a legitimate claim these days. Maybe the NYT will take on your issue without using phrases like, "benefits bonanza". Best of luck with those tigers--I sense they've met their match.
1
As difficult as it is to negotiate the system, you didn’t “have to quit your job 15 years ago to take it on full time.”
I can assure you that there are mothers who have disabled children,who do not have the financial luxury of “quitting their jobs to take it on full time”.
A close friend of mine is an accountant who is working around the clock at tax time, to support her family .One of her sons is severely autistic.She’s been negotiating the same system you have for the past 18 years, has had at least 18 surgeries of her own during this time,serious illness, and has negotiated her sons benefits without quitting her job.
I can assure you that there are mothers who have disabled children,who do not have the financial luxury of “quitting their jobs to take it on full time”.
A close friend of mine is an accountant who is working around the clock at tax time, to support her family .One of her sons is severely autistic.She’s been negotiating the same system you have for the past 18 years, has had at least 18 surgeries of her own during this time,serious illness, and has negotiated her sons benefits without quitting her job.
8
To DJS: Just to clarify, I had to quit the job that required me to actually be present during business hours doing something other than spending hours on the phone with government agencies/doctors/insurers who also work only during business hours. I have since built a business as a freelance writer and editor, working from home largely for people in other time zones, so I can do the bulk of the work on my own schedule, not unlike an accountant. That allows me to be "on call" for the numerous medical and bureaucratic emergencies that seem to occur weekly, and therefore spend a large part of my time working late into the night. I am fortunate that I work in a profession that gives me that freedom, but foregoing the health insurance and retirement benefits that an real employer offers -- not to mention sleep -- doesn't feel like that much of a "luxury."
15
A few years ago, when I went to my local SS office, the people there claimed they did not know about "file and suspend". I had to print out the option from the SS web site and show it to them. And check out the 1.7% pay increase. The 2015 form they sent out is not 1.7% over your 2014 $ amount. SS employees at SS can't even do math.
4
SS choices and strategy are simple compared to the morass of Medicare.
8
They tell you to wait until your maximum age to collect. If you're in good health, have other sources of income and can afford to wait, then by all means do so. But no one is promised tomorrow, and why eat cat food waiting out the promise of a few hundred dollars extra? I encouraged my mother to take it as early as she possible could. Oh, and if you collect early, when you reach the age at which it would have given you more to collect, you can repay all that you've taken, just to get the higher benefit. Right. How many of us can do that? I find the system is built on delay, delay, delay you might not make it and we get to keep it.
12
When I worked for Social Security, I learned that if one were planning to reduce earnings to retirement level anyway, it often WAS beneficial to take the monthly sum (even though reduced) early and receive those payments for many months. The percentage of loss would not be recovered for many years, in many cases. I don't know whether SSA still offers this for consideration, but when I read recent"expert" advice, it always seems to center on waiting for the full amount. This is one good choice, but not everyone's best choice.
17
The option of repaying to SS what you have collected and then collecting the higher amount is no longer available. It expired about three years ago, just when I attempted to exercise it.
8
The commentator has overlooked three facts. First, life expectancies have risen over time and health has improved. Thus, increasingly people keep on working longer or may well have investments to carry them, thus reducing the need for early benefits. Second, most men marry younger women who earn less and work less outside the home. Third, women live longer than men. As a result, responsible married men should delay benefits as long as possibe.
2
Every financial retirement instrument should be as simple as Social-Security -- the only uncomplicated one.
My experience with Social-Security has been transparent, including the annually-updated retirement estimates provided to all who pay into SS. My benefit filings at age 66 and refiling for survivor's benefits at 69 were easily accomplished without visiting a SS office. Every contact was helpful, including the SSA website (also helpful for Medicare filing at age 65).
Not so easy with my other retirement fund. I have a modest university-type retirement account "assortment" (contracts varied over the years), which is part annuity. I find it impossible to comprehend. Funds' explainers don't penetrate my modest intelligence. I've reached 70-1/2 and take the minimum distributions. I want whatever's left when I die will go to my children, not to the fund; therefore, I'm afraid to start the clock on the annuity portion that might eat any leftovers. Although post-retirement fund advice is free for large accounts, advice incurs fees for small ones like mine, and is provided verbally (written comprehension is my stronger suit, until it comes to the multiple fine-print contracts -- I'd rather read my 20-inch thick, ancient dictionary).
Don't knock Social-Security. It works for the little people.
I'm the category American who is well-served by SS. I'm not savvy enough for commercial retirement products.
My experience with Social-Security has been transparent, including the annually-updated retirement estimates provided to all who pay into SS. My benefit filings at age 66 and refiling for survivor's benefits at 69 were easily accomplished without visiting a SS office. Every contact was helpful, including the SSA website (also helpful for Medicare filing at age 65).
Not so easy with my other retirement fund. I have a modest university-type retirement account "assortment" (contracts varied over the years), which is part annuity. I find it impossible to comprehend. Funds' explainers don't penetrate my modest intelligence. I've reached 70-1/2 and take the minimum distributions. I want whatever's left when I die will go to my children, not to the fund; therefore, I'm afraid to start the clock on the annuity portion that might eat any leftovers. Although post-retirement fund advice is free for large accounts, advice incurs fees for small ones like mine, and is provided verbally (written comprehension is my stronger suit, until it comes to the multiple fine-print contracts -- I'd rather read my 20-inch thick, ancient dictionary).
Don't knock Social-Security. It works for the little people.
I'm the category American who is well-served by SS. I'm not savvy enough for commercial retirement products.
29
I worked for Social Security 1974-1981 as a frontline interviewer for the applications process (a "claims representative.) As a customer-service-oriented person, I was proud of the job because of the opportunity it gave me to help people. And our job WAS to help them to complete forms fully and to make best choices for their benefits. I know that greater computerization and streamlining has greatly reduced these face to face contacts, but I have to hope that the spirit of them survives.
20
Agent Orange is an overlooked, VA administered, government benefits program for 3 million Vietnam (and some Korean DMZ) vets, and their millions of spouses, dependents and survivors. It's a free umbrella medical benefits and insurance program for those who served in VN and Korean DMZ. (Actually not free but "prepaid" by their service.)
The program has been expanded over the years to cover a wide variety of illnesses including heart disease, diabetes and many cancers including prostate and lung. Veterans are entitled to no cost medical treatment from the VA and disability payments and surviving spouses are entitled to tax free "DIC" payments for the rest of their lives.
A Viet Nam vet friend of mine died of a heart attack about 10 years ago but heart disease wan't added to the list of covered Agent Orange diseases until 2009. His widow was unaware that she was eligible for $1400 per month tax free as a surviving spouse. An American Legion volunteer helped her submit the necessary paperwork and she started receiving life long benefits within a few months.
As they age, most Viet Nam era vets will become eligible. Lifetime likelihood of heart disease is over 50%, diabetes is 33% and prostate cancer is 15%.
A surviving spouse only needs to prove husband's service in VN (or Korean DMZ in 60s) with a form DD 214, marriage certificate and qualifying cause of death certicate. Any of these diseases need only be a CONTRIBUTORY cause of death, which is a fairly low threshold.
The program has been expanded over the years to cover a wide variety of illnesses including heart disease, diabetes and many cancers including prostate and lung. Veterans are entitled to no cost medical treatment from the VA and disability payments and surviving spouses are entitled to tax free "DIC" payments for the rest of their lives.
A Viet Nam vet friend of mine died of a heart attack about 10 years ago but heart disease wan't added to the list of covered Agent Orange diseases until 2009. His widow was unaware that she was eligible for $1400 per month tax free as a surviving spouse. An American Legion volunteer helped her submit the necessary paperwork and she started receiving life long benefits within a few months.
As they age, most Viet Nam era vets will become eligible. Lifetime likelihood of heart disease is over 50%, diabetes is 33% and prostate cancer is 15%.
A surviving spouse only needs to prove husband's service in VN (or Korean DMZ in 60s) with a form DD 214, marriage certificate and qualifying cause of death certicate. Any of these diseases need only be a CONTRIBUTORY cause of death, which is a fairly low threshold.
3
The most devastating thing for me in Social Security is that I could not take my full earned benefit nor could I take my ex-husband's benefit. Why? I made the mistake of being a public school teacher in California for twenty years. Although I had already earned enough in the previous twenty years and in subsequent years to qualify for Social Security, I could only get half of my earned pension. I could not get my husband's pension at all because I had worked for the government! I am however grateful for what I do get, and I consider efforts to reduce or end the Social Security system to be evil and cruel.
21
I too am a victim of the vindictive law that deprives California public school teachers of over 50% of any social security pension that they may have earned in other jobs before or after they were teachers. Normal people receive all sorts of retirement benefits and pensions from their past employment and can still collect the full Social Security benefits they have earned. But anyone who has worked in the private sector and then becomes a public school teacher in California will forfeit over 50% of their earned Social Security. Unjust, downright criminal, but true.
7
Worse, the latest is that the LAUSD is trying to dump teachers with only a few years to go to retirement. Not only do they cheat them out of a pension but the person has no social security to fall back on.
9
Same in Texas too. Very sad and makes no sense, if you've paid in enough to qualify and particularly if you're a surviving spouse.
4
Disappointing article as it had no examples of what the couples did not get or how/why the author of the book "landed them an extra $50,000." One clear example might have convinced me to buy or read the book, but as it is, the article was almost as mysterious and complex as they purport SS to be. (By the way, sometimes getting more money is not the paramount concern, especially if there is a myriad set of complicated bureaucratic maneuvers needed. Many of us feel comfortable with what we have.)
16
Yeah, I really wondered about that. It makes it sound like the couple got handed a check for $50K but that seems unlikely. Is it that they got $50,000 extra -- over 15 years? At any rate, it sounds like a teaser to make you read the book.
4
the easy answer: you each take the other's SS spouse's benefit at 66 while suspending your own till 70.
5
Social security is just another re-distribution government scheme. We pay taxes in when we are working and then get taxed when we take it out. We need some real reform in government.
7
Social security works for my wife and me. The challenge will be if we ever need a "skilled nursing facility" at upwards of $8000/month even in Mississippi. Private nursing costs even more. Do the math--it quickly turns into real money. The article seems to assume that healthy life goes on until you reach your actuarial number and then just--poof!
20
Let me simplify it: you will sell your home, and use that money to pay for skilled nursing care until it runs out. If you are very lucky, the house is valuable and will pay for several years of nursing care. If you are not lucky or are fairly poor -- don't own a home or that home lost most of its value in the housing crisis -- then you will run out of money and have to go on Medicaid. Medicaid WILL pay, but you will be forced into a shabby facility in a shared room.
Again, if you are lucky, by the time this happens, you will be so lost to old age, disability and dementia, you won't care.
Again, if you are lucky, by the time this happens, you will be so lost to old age, disability and dementia, you won't care.
13
Life is complicated. And no more so then because we have no idea what tomorrow may bring.
But if a study of our Social Security System can help the average citizen gain an understanding of both Present Value and Shared Risk then if nothing else we might have a few better citizens.
It is certain that we need a better informed electorate, especially in regard to elder care and old age insurance.
But if a study of our Social Security System can help the average citizen gain an understanding of both Present Value and Shared Risk then if nothing else we might have a few better citizens.
It is certain that we need a better informed electorate, especially in regard to elder care and old age insurance.
8
Born in 1949, I was the first college graduate in my 'linthead' and 'tobacco factory' family. Social Security allowed my parents to invest in my future, rather than support their Depression-ravaged parents.
It is sad that people view Social Security as an investment account from which they must squeeze every dollar possible. It is not an 'investment' but insurance against the unpredictable blows of life - early death, being laid off at 63, disability, and loss of family assets in old age. Social Security Works because it is a compact between generations that spreads risk across all wage earners. It is a crucial thread in our tattered social fabric. It cannot 'go broke' unless Americans break that social contract with each other.
It is sad that people view Social Security as an investment account from which they must squeeze every dollar possible. It is not an 'investment' but insurance against the unpredictable blows of life - early death, being laid off at 63, disability, and loss of family assets in old age. Social Security Works because it is a compact between generations that spreads risk across all wage earners. It is a crucial thread in our tattered social fabric. It cannot 'go broke' unless Americans break that social contract with each other.
57
Michael L Reynolds; I worked for SSA for over 39 years. Thanks for your comment; nicely and beautifully said.
11
Michael L Reynolds; I worked for SSA in Baltimore for over 39 years and am proud of it. Thank you for your accurate and nicely stated comment.
8
Here's a tip that I bet isn't in the book. For some years I was self employed and received unreported payments, a lot of it in cash. I reported and paid taxes on every penny. Now that will result in increased SS payout. I know someone who also worked self employed but who did not report the income but now is receiving minimal SS payments and cannot show proof of income from tax returns to refinance a liar loan mortgage to a fixed rate.
20
Gee greed from those that want as much as they possibly can get, greed by those who get complex rules to assist them, greed is the problem. A simpler system is good, but greed being reduced would be better.
10
Social Security has become a hot topic for two reasons. First, the Fed's zero interest rate policy suddenly made the bonuses for delaying Social Security (for up to eight years) the best guaranteed investment around. Second, brokers and advisors seized on this factoid as an opportunity to call their clients or prospects with good news: "You've got $50,000! Now let's talk about these other products I sell." It would help if those riding the current frenzy over Social Security (it will vanish if and when interest rates go up and stocks recover their upside potential by tanking) directed as much energy toward strengthening the system, not gaming it. A German pension expert told me that the rich spousal benefits in Social Security, granted when most middle-class widows had never worked outside the home, are largely unheard of in other public retirement systems. Now that U.S. women have their own work histories and the spousal benefit remains, the gaming that Dr. Kotlikoff recommends is possible. The most shocking numbers related to Social Security: Two members of a high-earning couple will be able, by waiting to age 70 for benefits, to collect about $7,000 a month. They'll bank it.
21
Ex spouses who were married 10 years or more are also eligible. Lets say Mr Moneybags is maxed out on his Soc Sec lifetime earnings and is now happily married after three bad marriages that each lasted 10 years, all four spouses, the current and three EXs are all eligible for (undivided) spousal benefits. Mr Moneybags is a walking income multiplier!
Anyone who is currently unmarried and approaching the finish line can throw any poor worthy a Soc Sec bone by marrying them a year before death, nobody is adversely effected.
Anyone who is currently unmarried and approaching the finish line can throw any poor worthy a Soc Sec bone by marrying them a year before death, nobody is adversely effected.
9
One of the things about social security I was not aware of until recently was that it is adjusted for inflation. A pension is usually a fixed amount so it loses value over time. Because of that I think SS is the best retirement system we have now. When I took a retirement planning course when I was 27 in 1979 we were told to not rely on social security as he felt it would be phased out. The instructor said that interest on savings (5% at the time in a savings account), laddered CDs, investing, and a pension would be our ticket to the good life. Fast forward and social security is still here but private company pensions have gone by the wayside. Few can use interest on their savings at a fraction of 1% for a decent retirement. We are told to start retirement planning in our 20s but by the time we hit 65 many of the earlier assumptions have changed--except for one, saving as much as possible. The assumptions we have now about retirement will have changed again in 30 years.
34
Re: "One of the things about social security I was not aware of until recently was that it is adjusted for inflation."
The cost of living adjustment calculation excludes things like food and fuel so it is lower than inflation. A nominal COLA is usually accompanied by an increase in the deduction for Medicare.
The cost of living adjustment calculation excludes things like food and fuel so it is lower than inflation. A nominal COLA is usually accompanied by an increase in the deduction for Medicare.
12
I am waiting as long as possible to begin collecting my SS retirement benefit. Next month, I will be 68. I hope to begin collecting at age 70. Until recently, I was making enough to get by on part time income, but my get up and go to do work has recently gotten up and gone. I have an IRA which is bigger than most, but not enormous, and I am expecting a small inheritance within the next year that might represent around one year of living expense.
My plan is to live on the inheritance and IRA withdrawals until age 70, and from there on out, on SS and minimum IRA withdrawals. I never understood the idea of trying to time the initiation of SS monthly retirement checks to maximize a lifetime payout. I am more interested in a plan that maximizes my ability to have a secure monthly income when I no longer care to work.....which is about now. So if I croak before age 82 or so, I will not maximize my lifetime SS retirement benefit. But who cares? I will be dead.
My plan is to live on the inheritance and IRA withdrawals until age 70, and from there on out, on SS and minimum IRA withdrawals. I never understood the idea of trying to time the initiation of SS monthly retirement checks to maximize a lifetime payout. I am more interested in a plan that maximizes my ability to have a secure monthly income when I no longer care to work.....which is about now. So if I croak before age 82 or so, I will not maximize my lifetime SS retirement benefit. But who cares? I will be dead.
24
Good for you, I got mine as soon as possible as will my wife. Neither of us has opportunities to make a lot of money and we do have bills to pay. What is not understood is for the average person it does not matter when you start your total payments are about the same. So take it when you want to retire and not make money from a job any more. Simple!!!
8
SS is just like Obamacare.Where some can game the system and make out like bandits,while other,personally responsible people, pay for their own care.Best is just to simplify your life,as much as possible and be honest,not entitled.
3
I think you're very confused about this because both systems were instituted to combat gaming the system and allow everyone a fair chance for insurance against catastrophic illness or poverty in old age. The shame is that many forces are very effective at undermining those systems!
19
Truth be told the claims of making $100's extra in SS due to clever claiming strategies is a bit overstated. The gist of these strategies is roughly speaking "wait" with the key assumption (and the one driving the big $$$ claims) is that you live into your 90's. Thus waiting for the higher benefits and then claiming them over a few decades provides a "big win".
There is some truth to this type of analysis -- SS provides "longevity insurance" -- if you live a long life then you'll be glad you followed Kotlikoff's advice -- live long / collect big SS check or die young (ok, too young like 72) then you can didn't really need SS and all your other retirement assets.
It's important to note that the vast majority of seniors begin SS at 62 or once they retire from work. Perhaps there is a special delight in receiving a check from the gov't each month. We probably need to think carefully if we say 99% of our elders are wrong and one economist is right (I'm an economist as well).
There is some truth to this type of analysis -- SS provides "longevity insurance" -- if you live a long life then you'll be glad you followed Kotlikoff's advice -- live long / collect big SS check or die young (ok, too young like 72) then you can didn't really need SS and all your other retirement assets.
It's important to note that the vast majority of seniors begin SS at 62 or once they retire from work. Perhaps there is a special delight in receiving a check from the gov't each month. We probably need to think carefully if we say 99% of our elders are wrong and one economist is right (I'm an economist as well).
15
Taking SS early is costly, whether 99% do it or 99.99% do. It costs one roughly 8% a year. Said another way, you make 8% more a year waiting. It also takes 10 years or more to "make up" the loss by waiting. If your health suggests you will not live the 10 years, by all means take it. But if you have other resources and "enjoy" a longevity risk, you would be wise to consider deferring.
6
Kotlikoffs's software analysis is much more sophisticated than what you imply. The result of plugging in my information, for example, was absolutely DONT wait til age 70 to apply!
7
For detailed assistance with Medicare, contact your State Health Insurance Assisance Program (SHIP). Here's a link to their site.https://shipnpr.shiptalk.org/shipprofile.aspx?AspxAutoDetectCookieSupport=1
I am a state certified counselor in California and we assist individuals with all aspects of Medicare, especially those individuals new to Medicare.
I am a state certified counselor in California and we assist individuals with all aspects of Medicare, especially those individuals new to Medicare.
9
My experience with SHIP, corroborated by other friends who had the same experience, is that they are undertrained, mis informed volunteers who are not worth dealing with.
4
The single most important thing for people to remember is that people who write books about things like "How to maximize your SS benefits" are in the business of SELLING BOOKS. They literally could not care less whether or not their advice does you any good, because you already bought the book and you're not going to come back in 20 years and demand your money back.
If you are not a member of the 1%, SS is not that complicated. Very few people are in a position to benefit from schemes like "file and suspend" - and yes, I absolutely meant the negative connotation of the word "scheme". What the author is talking about here is ways to "game" the system to squeeze out benefits it was never meant to provide. (But don't you dare call THEM "moochers"!)
Sure, the question of when to start benefits is a crapshoot - so what? Here's a hint - Every single financial decision you have ever made or ever will make in your life was/is a crapshoot. Make your best guess and live with the consequences. SS is the closest thing 99% of us will ever have to a "sure thing". So take it and enjoy life, instead of wasting your life worrying about what hindsight will show you.
If you are not a member of the 1%, SS is not that complicated. Very few people are in a position to benefit from schemes like "file and suspend" - and yes, I absolutely meant the negative connotation of the word "scheme". What the author is talking about here is ways to "game" the system to squeeze out benefits it was never meant to provide. (But don't you dare call THEM "moochers"!)
Sure, the question of when to start benefits is a crapshoot - so what? Here's a hint - Every single financial decision you have ever made or ever will make in your life was/is a crapshoot. Make your best guess and live with the consequences. SS is the closest thing 99% of us will ever have to a "sure thing". So take it and enjoy life, instead of wasting your life worrying about what hindsight will show you.
61
I respectfully disagree. Unless you are single there are many different life situations that can affect your total lifetime benefits from Soc Sec., if you want to stick your head in the sand and don't want to plan (substitute "scheme" if you like) to maximize probable benefits for you and your spouse and dependents fine, but it's not noble to be dumb.
10
From a time use perspective, the whole thing with many tax deductions is ridiculous. For many people, you could save more money just by using that collective time performing a part-time job or using coupons/groupons/online shopping websites.
When they make it difficult to use deductions, they are really telling you that they don't want you to use it. It's being passive-aggressive.
When they make it difficult to use deductions, they are really telling you that they don't want you to use it. It's being passive-aggressive.
3
OK. So what are the names and contact information of the people that can understand the SS code? And how will I know they are who they say they are?
7
If you are able to have saved $500,000 lets say, and get Alzheimers in your 60's or 70's, you will probably spend all that money on a nursing home. My mother did. When she ran out of money she went on Medicaid which paid for it but naturally, they require that you pay your SS and any other income also.
I myself lost a good job when I was in my 50's and was never able to replace it with another good job so when I was suicidal I decided to take SS at 63. Social Security saved my life.
Were it not for Social Security they'd be tens of millions of homeless people wandering the streets. They'd also be tens of millions of retired elderly living with their adult children rather than being independent.
Whether it complicated or not, both Social Security and Medicare are a life saver. Thank God for big Government programs. Too bad we don't have Universal Healthcare for all, a $15 an hour minimum wage, free (or almost free) college for all qualified students, and more assistance for those in need. We're a country that glorifies war but can't seem to find the money to create jobs. Where is FDR when you need him. Oh well.
I myself lost a good job when I was in my 50's and was never able to replace it with another good job so when I was suicidal I decided to take SS at 63. Social Security saved my life.
Were it not for Social Security they'd be tens of millions of homeless people wandering the streets. They'd also be tens of millions of retired elderly living with their adult children rather than being independent.
Whether it complicated or not, both Social Security and Medicare are a life saver. Thank God for big Government programs. Too bad we don't have Universal Healthcare for all, a $15 an hour minimum wage, free (or almost free) college for all qualified students, and more assistance for those in need. We're a country that glorifies war but can't seem to find the money to create jobs. Where is FDR when you need him. Oh well.
142
FDR is dead, all those foolish ideas are not capable of being supported by our economy. Just who do you think is going to pay for all this pie in the sky stuff. How about those who donate to Dems to extort these sorts of benefits, lots of money there. Note the government does not create any jobs, our jobs are in China etc. bring them home.
1
@vulcan Tennnessee "The government does not create any jobs ... ". See multiple pages of government jobs here, listed alphabetically: http://www.usa.gov/directory/federal/
Note that these are only the federal government jobs. You can look up state, county and city government jobs yourself.
Note that these are only the federal government jobs. You can look up state, county and city government jobs yourself.
7
FDR? Out FDR memories got spent on Mr. Hope & Change.....Wall St's man with his feet on the ground
1
Americans want government to work. Most want the social programs that go with a working government. But some issues, repeated over and over, make Americans lose confidence in government. We give up on the idea that government can do anything competently. As such, incidents play right into the hands of the Tea Party and other right wing groups. Thanks, Social Security. Thanks IRS. You are destroying any hope of a progressive agenda.
2
I would like the government to go away from my life.
No they don't "play into the hands of the Tea Party", they reflect the reality. The federal government does almost nothing very well and having all these programs makes lots of opportunities for corruption. Folks like you rejected a competent manager of large organizations for an individual who was a community organizer (get more stuff from the government) and an expert at promising a lot and avoiding the constitution. Try to vote for a competent individual not Hillary who could not even run the state department properly. Get your "progressive agenda" from your state government, mine does not want one and can't afford one either. I bet your state can't afford it either so perhaps a charity needs to be created by you and similar individuals.
2
Build your own roads, too? Or is that not getting into your life? OK, how about enforcing food quality, certification of 'professionals', police and fire departments. We have a volunteer fire dept here, but it is the town that bought the firehouses and the equipment.
6
Unlike regular retirees I was forced at age 55 to retire on Disability. The extra years means that I will collect a good deal more than a retiree. Being eligible for Medicare at that age has been a benefit that helped the most since I spent a good deal of time going to doctors and receiving prescriptions that are not generic and are expensive. I use the doctors a good deal less now at 64 but prescription costs are still high when you add in the Doughnut hole I used to fall into in April. Compare the costs for my wife who we paid $600 a month on average and after the ACA kicked in we've been paying $950 a month and with higher deductibles. She went on Medicare this year and we are saving almost $750 a month.
I say all this because this is not the way I planned to retire. First a layoff changed my plans and then the disability did. I was self employed for 30 years and expected to work until 65. I've learned to deal with changes as they come and any plans you make won't always work out the way you thought. It's good to read this book and plan better but plan for the worst too.
I say all this because this is not the way I planned to retire. First a layoff changed my plans and then the disability did. I was self employed for 30 years and expected to work until 65. I've learned to deal with changes as they come and any plans you make won't always work out the way you thought. It's good to read this book and plan better but plan for the worst too.
10
Even applying for social security puts you in a maze:
Last Fall, knowing I would turn 70 this Spring, I phoned Sicial Security to initiate my application for benefits once I turned 70. The person I spoke with told me it was "too soon to apply."
That same week I received a letter. From Social Security. Telling me I was time to initiate an application. Which I did. On the web.
I was told, via the web, to check back in a week. For an update. Waiting a week, the answer was to wait for a letter. In the mail.
I applied on Nov 4, 2014. Many phone calls and months later, two days ago in fact, a letter arrived!
Yay!!!
Meanwhile, a great deal of confusion and worry: I got a second, duplicate Medicare Card. What did that mean? More phone calls. Now my letter tells me another is on the way!
It will be a relief once I get a check and the government straightens out the Medicare deductions and my own continuing Medicare payments. Many phone calls related to that. Fingers crossed here!
Single Payer health care and a simpler Social Security System, please!
Last Fall, knowing I would turn 70 this Spring, I phoned Sicial Security to initiate my application for benefits once I turned 70. The person I spoke with told me it was "too soon to apply."
That same week I received a letter. From Social Security. Telling me I was time to initiate an application. Which I did. On the web.
I was told, via the web, to check back in a week. For an update. Waiting a week, the answer was to wait for a letter. In the mail.
I applied on Nov 4, 2014. Many phone calls and months later, two days ago in fact, a letter arrived!
Yay!!!
Meanwhile, a great deal of confusion and worry: I got a second, duplicate Medicare Card. What did that mean? More phone calls. Now my letter tells me another is on the way!
It will be a relief once I get a check and the government straightens out the Medicare deductions and my own continuing Medicare payments. Many phone calls related to that. Fingers crossed here!
Single Payer health care and a simpler Social Security System, please!
31
No Single Payer ever the current system is too expensive and messy already. The solution to using the phone is to apply on the internet. Computers are better than humans at doing these sorts of things.
' I got a second, duplicate Medicare Card. What did that mean? '
I received Medicare at 65 but waited until I was 66 to apply for SS. My initial Medicare Card had T as its suffix to my SS#. After I started receiving SS, I got a new card with A as its suffix. This is standard operating procedure. No worries.
I received Medicare at 65 but waited until I was 66 to apply for SS. My initial Medicare Card had T as its suffix to my SS#. After I started receiving SS, I got a new card with A as its suffix. This is standard operating procedure. No worries.
6
Thank you, D Flinchim.
Time and again I have asked them "why the T" and not the A - like everybody else. Thanks for assuring me I will now get an A!
Time and again I have asked them "why the T" and not the A - like everybody else. Thanks for assuring me I will now get an A!
2
Too many unneeded words and no it is not going broke it is a government program by a government that coins money instead of trading a chicken for a pig. Without the guarantee of it by all governments to accept each other currency without that it is just a piece of paper or metal. Clarify the words instead of using the whys and wherefores. Try using the EZ form the IRS uses and you will save more money.
1
Does no one else find it a little unseemly that those who have been most successful at creating wealth have found a way to take more money out of a system that was meant to care for the less well off in retirement?
50
The original 1935 Social Security law contained the first national unemployment compensation program, aid to the states for various health and welfare programs, and the Aid to Dependent Children program. This is probably where the concept of "Social Security taking care of you in your old age" started.
Social Security benefits were never meant for people to completely live off of in retirement. That is a myth that has persisted since it's inception in 1935. People need to save money, invest etc. as much as possible.
Social Security benefits were never meant for people to completely live off of in retirement. That is a myth that has persisted since it's inception in 1935. People need to save money, invest etc. as much as possible.
1
Seems to me that some people making money on the book on info that is
readily available for free. Their assertions of getting people such amounts of money should be explained in article rather than just accepted as 'truth'.
Unless the book is going to tell you how to scam the system, I doubt worth
the price of purchase.
readily available for free. Their assertions of getting people such amounts of money should be explained in article rather than just accepted as 'truth'.
Unless the book is going to tell you how to scam the system, I doubt worth
the price of purchase.
4
Your faith in government may cost you big money. It is true that there are many excellent SSA staffers who work hard to get their customers the maximum amount they can for those willing to "work the system". But there are not enough of them. Although books such as these are helpful, many use startling anecdotes of actual situations that enable large payouts for those willing to jump through hoops that most often require some postponement of current income for future benefit. Fine if you have longevity genes and are healthy at 62 or 66 and have sufficient current income. Most people are best served to wait for 66, but the wife/husband delay 62 and 71 gambit (very popular and simple) can be very lucrative for those willing to work the system. The most egregious program was the start-suspend-restart gambit which provided people a "put" on their other retirement benefits has been eliminated, unfortunately.
One of the wisest things we could do for "soon to be" retirees is provide financial counseling in their 62nd. year to help navigate the coming decisions about SSA rules.
My wife and I did our homework at that time, and quickly realized that working and waiting as long as possible to claim benefits was the correct strategy for us.
I explain to my soon to be retiring friends that to your average middle class person, a social security account is like having a tax free, interest bearing, (growing at 8%+COLA), account of nearly a million dollars in which you will you never be able to access the principal but be able to spend the interest for the rest of your life. Why wouldn't you want to sit on that, keep working as long as practical, and maximize the payout.
My only regret is that, at the beginning of our working lives, we are not able to have an option to increase our contribution to social security. If I could have doubled it, there would have been no need for a pension, or 401K, to be comfortable in my later years.
But so many of our friends and relatives see the promise of a monthly benefit check at age 62 as an option they couldn't resist.
It makes me wonder what the overall U.S. payout would be if everyone maximized their options instead of taking the money at the earliest opportunity.
My wife and I did our homework at that time, and quickly realized that working and waiting as long as possible to claim benefits was the correct strategy for us.
I explain to my soon to be retiring friends that to your average middle class person, a social security account is like having a tax free, interest bearing, (growing at 8%+COLA), account of nearly a million dollars in which you will you never be able to access the principal but be able to spend the interest for the rest of your life. Why wouldn't you want to sit on that, keep working as long as practical, and maximize the payout.
My only regret is that, at the beginning of our working lives, we are not able to have an option to increase our contribution to social security. If I could have doubled it, there would have been no need for a pension, or 401K, to be comfortable in my later years.
But so many of our friends and relatives see the promise of a monthly benefit check at age 62 as an option they couldn't resist.
It makes me wonder what the overall U.S. payout would be if everyone maximized their options instead of taking the money at the earliest opportunity.
13
Great for you. For me I live a somewhat frugal life, have enough money and greatly dislike managers that I had to put up with. Now I do as I want, don't hear any unethical suggestions, and have time to exercise and follow my interests. Others might like their job and bosses but I bet most would be happy to be without them.
10
As a programmer/analyst on IBM mainframes, my job went to India in 2006. I had two pensions, and what seemed to be a Good IRA, so I waited until I was 63 in March of 2007 before applying for SS. (My son was in grad school at the time). My IRA tanked by 45% in the great recession, so I was glad I started SS 'early'. Since my wife is only 3 yrs younger than I, I guess we have to look into survivor's benefits. Meanwhile she gets half of what I would have gotten if I had waited, albeit unemployed, until 66. She is still employed and healthy, and her personal SS check will be more than mine if she continues to work until 70. Needless to say we like SS.
11
Many local government employees aren't covered by the social security system. You hear about under funded local government pension systems but they only provide benefits to long term employees. Many local government employees make more than $100 K and I think their pension systems pay them more than the max payable under social security. Professionals such as city planners, government accountants, police officers, and educators who change employers in their careers can end up getting no retirement benefits at all. One reason for pervasive local government corruption is that the employees lose their retirement benefits if they quit or are fired before they have worked their required terms of 25 years or whatever even if they get another job in the same state doing the same work.
7
Yes, we do elect our legislators to work for us, supposedly, but I wonder how much they understand the ramifications of the complexities of Social Security and other financial progams. I don't have much faith that they do, then enter the lobbyists who manage to pressure and confuse them even more. What a way to govern!
14
Yes this is why to keep the federal government out of many things. The more that they do the more opportunities for corruption and meddling.
This sounds simply like a knee jerk reaction. SS is not all that complicated if you do a little homework. having been responsibly self-employed all my life I know what it's like to pay 15.3% (plus taxes on my net income) of every paycheck to SS while losing a lot of ground to the free market Wall Street wolves. SS is a bastion against those folks. A balanced view of where govenment does well and doesn't do so well is needed rather than simplistic this or that
thinking.
thinking.
9
As a divorced woman born between 1944 and 1954 who earned more than her former spouse (but not so much that it's worth him claiming Social Security on my benefits) many of the "Social Security" games don't apply to me. It's mostly whether it's worth taking it at 62 or 66 (I'm not waiting until 70).
There may be many people in my situation, but we get brushed off when Social Security retirement advice to people in my age bracket is dispensed. It seems to be all about spousal benefits...
There may be many people in my situation, but we get brushed off when Social Security retirement advice to people in my age bracket is dispensed. It seems to be all about spousal benefits...
13
If you were married more than 10 years, you could collect on your ex's benefits starting at age 62 while letting your own benefits grow and then switch to the higher amount on your record at age 70.
3
If you were married for at least ten years, then you are eligible for spousal benefits. You could file for spousal benefits (a restricted application) at age 66 and then claim your benefit at age 70.
3
That is not true due to the deemed filing rules before you are full retirement age of 66. If you were previously married or still married if you file for SS at age 62 it is a "deemed" filing and you will get whichever benefit is higher.
Also, if you file at 62, your benefits (whichever one you get) will be reduced for life. You will not get your own higher benefit at age 70.
This only works if you wait until full retirement age to file and then you can get 50% of your ex-spouses benefit and wait until age 70 to get your own full benefit.
Also, if you file at 62, your benefits (whichever one you get) will be reduced for life. You will not get your own higher benefit at age 70.
This only works if you wait until full retirement age to file and then you can get 50% of your ex-spouses benefit and wait until age 70 to get your own full benefit.
2
Mr. Lieber, on a similar note, how about shining your light on the Kafkaesque situation of American expatriates as relates to retirement and taxation? The U.S. is one of only two countries in the world that taxes its citizens based on citizenship, as opposed to residency. The FATCA law is a nightmare for us, and not just because it eats up a ridiculous amount of our time and money.
One example: expats are effectively not allowed to have a mutual funds or a private pension plan abroad, due to the punitive reporting and taxation regime of the IRS. But non-rich Americans like myself are not allowed to have one in the US, either.....simply because we don´t make enough money. If I were rich, and cleared the threshold of the Foreign Earned Income Exclusion, then I could invest in a tax-deferrred U.S. pension plan. But because I´m not rich, I can´t have a 401(k), a Roth, or anything but a mutual fund (no tax deferral, sorry). And because of the onerous reporting requirements, some major U.S. brokerage firms are dumping expat clients, too.
American law currently assumes expats are tax cheats and money launderers, imposing automatic, massive penalties simply for having, say, a mutual fund in Spain. The fact that, like myself, one has lived in Spain for over 20 years doesn´t suffice to prove to the IRS that, rather than being a criminal, I am a hardworking American who simply lives abroad. Like what you describe in your article, this too is shameful.
One example: expats are effectively not allowed to have a mutual funds or a private pension plan abroad, due to the punitive reporting and taxation regime of the IRS. But non-rich Americans like myself are not allowed to have one in the US, either.....simply because we don´t make enough money. If I were rich, and cleared the threshold of the Foreign Earned Income Exclusion, then I could invest in a tax-deferrred U.S. pension plan. But because I´m not rich, I can´t have a 401(k), a Roth, or anything but a mutual fund (no tax deferral, sorry). And because of the onerous reporting requirements, some major U.S. brokerage firms are dumping expat clients, too.
American law currently assumes expats are tax cheats and money launderers, imposing automatic, massive penalties simply for having, say, a mutual fund in Spain. The fact that, like myself, one has lived in Spain for over 20 years doesn´t suffice to prove to the IRS that, rather than being a criminal, I am a hardworking American who simply lives abroad. Like what you describe in your article, this too is shameful.
11
Every individual SS situation is different. As a divorcee for the past 40 years or so, my social security face to face informational interview at age 65 with a very knowledgeable rep in Walnut Creek CA was full of valuable advice.
He advised me to wait until full retirement age (66 for me) to collect since then I have the options. I can claim half of my ex's and grow my claim to age 70. Then flipping over to my own higher full age SS retirement at that time.
If my ex dies, party time and a small amount of justice, I get all of his. He currently lives in a 4 million dollar house. I rent. Hmmmm. Caveats are: you must not have remarried before the age of 60 and prove, with license and divorce decrees filed, to have been married for at least 10 years to the ex you choose to claim on.
My claim does not diminish what my ex gets; he does not have to be collecting at the time I am; and there can be multiple wives who meet these requirements who all get the same from SS.
My biggest fear was the government could change the rules in the middle of the game. Not so according to the rep...they only change rules going forward, not retroactively.
One small victory for underpaid women of a certain age and situation in the USA. A pity all this is necessary but that is a different story.
He advised me to wait until full retirement age (66 for me) to collect since then I have the options. I can claim half of my ex's and grow my claim to age 70. Then flipping over to my own higher full age SS retirement at that time.
If my ex dies, party time and a small amount of justice, I get all of his. He currently lives in a 4 million dollar house. I rent. Hmmmm. Caveats are: you must not have remarried before the age of 60 and prove, with license and divorce decrees filed, to have been married for at least 10 years to the ex you choose to claim on.
My claim does not diminish what my ex gets; he does not have to be collecting at the time I am; and there can be multiple wives who meet these requirements who all get the same from SS.
My biggest fear was the government could change the rules in the middle of the game. Not so according to the rep...they only change rules going forward, not retroactively.
One small victory for underpaid women of a certain age and situation in the USA. A pity all this is necessary but that is a different story.
18
Well I have an ex from many years ago, I don't think she should get anything from those years that we were not married. She worked and should collect on her earnings not mine. This is basically double or more dipping, should not be allowed.
1
I recently wrote to Mr. Kotlikoff about the "windfall elimination provision" of social security, having seen his articles online. He tried to be helpful and referred my question to his colleagues. I ultimately gave up trying to figure out what formula social security used to "reduce" my benefit under this provision. I also gave up trying to understand why social security "raised" my benefit this year, determining that I had had too much deducted from my benefit and then just as precipitously lowered it back again because they had made a "mistake" in doing the previous action. In dealing with the financial complexities of almost every "system" out there, there is frustration and incomprehension. You would have to devote your life to understanding all the rules. Social Security has more than its share of employees who are clueless. Social Security needs some kind of "ombudsman" office to address citizen needs, just like the IRS has. Mr. Kotlikoff cannot fulfill that role, even though he tries.
5
I am a retired civil servant, retired from the Defense Department. I worked full time in private industry, before starting at DoD Federal. During my government career I worked two and three part time jobs to earn quarters to qualify for Social Security. Under the 1970's standards, I paid in over 30 years in SS quarters. The Windfall Elimination tables were modified in the 1980's and my benefit was cut to 80% less than private industry pensioners who paid in the same amount. All civil servants, Feds, state, local, teachers, fire, and police are being cheated out 80% of their benefits because of a 1934 law written before private industry had pensions.
what has to be the most contradictory table in Federal government is the one used for determining Social Security qualifying quarters for civil servants. As we struggle with a 7 dollars minimum wage, Social Security sets a minimum qualifying wage at over 10 dollars an hour. Any civil servant earning minimum wage in a second or post career job does not earn enough to qualify for Social Security despite paying into it.
So, why is no one addressing the huge disparity between the Qualifying Quarters Wage Table and the Minimum Wage? Why do I have to earn 8 times more than my private industry pension buddies to receive the same Social Security benefit? I could have earned 50% more in private industry, but I was dedicated to serving the armed forces.
what has to be the most contradictory table in Federal government is the one used for determining Social Security qualifying quarters for civil servants. As we struggle with a 7 dollars minimum wage, Social Security sets a minimum qualifying wage at over 10 dollars an hour. Any civil servant earning minimum wage in a second or post career job does not earn enough to qualify for Social Security despite paying into it.
So, why is no one addressing the huge disparity between the Qualifying Quarters Wage Table and the Minimum Wage? Why do I have to earn 8 times more than my private industry pension buddies to receive the same Social Security benefit? I could have earned 50% more in private industry, but I was dedicated to serving the armed forces.
11
This is bad but it is not everyone it is only those as you did who have private employment.
The complications for SS are the direct result of politicians dipping into the pool of money for all kinds of benefits that have nothing to do with retirement income. The pool was there because SS took in more money than it paid out. The difference was supposed to be invested to support future beneficiaries.
Today, over half of SS payouts go to people under 65. Yes, that is correct. The two largest groups are persons disabled and family dependents. If the wage earner who contributed to SS is married multiple times, each spouse married over 10 years is entitled to an SS payment for life. Each child is entitled to a benefit until 21 or older if in college.
Those disabled deserve support. However, the cost should not be put on the backs of those retired. Of course, as the SS fund is depleted, the cost falls back on the taxpayer.
Then, of course, there is the fraud in both SS and disability.
I don't know where the $100,000 unrecognized benefit came from in this article. It had to be the value of an unclaimed lifetime benefit of the principal or spouse or not filing for disability. Although tax deductible, the non taxed return on many of these state college education fund programs is much less than the after tax return of many private funds. Both have the risk of a decline in value based of the volatility of value of the investments. The $2,550 medical fund shield is lost if you can't use it for the categories allowed within the specified year.
Today, over half of SS payouts go to people under 65. Yes, that is correct. The two largest groups are persons disabled and family dependents. If the wage earner who contributed to SS is married multiple times, each spouse married over 10 years is entitled to an SS payment for life. Each child is entitled to a benefit until 21 or older if in college.
Those disabled deserve support. However, the cost should not be put on the backs of those retired. Of course, as the SS fund is depleted, the cost falls back on the taxpayer.
Then, of course, there is the fraud in both SS and disability.
I don't know where the $100,000 unrecognized benefit came from in this article. It had to be the value of an unclaimed lifetime benefit of the principal or spouse or not filing for disability. Although tax deductible, the non taxed return on many of these state college education fund programs is much less than the after tax return of many private funds. Both have the risk of a decline in value based of the volatility of value of the investments. The $2,550 medical fund shield is lost if you can't use it for the categories allowed within the specified year.
3
Hi Gene,
Dependent children are eligible until 18 or 19 depending on their age when they finish HS. Benefits do not continue to 21 regardless in college or not.
Each spouse/ex spouse is entitled to a benefit either based on her EX's earnings or her own, only one at a time (benefit and spouse).
Dependent children are eligible until 18 or 19 depending on their age when they finish HS. Benefits do not continue to 21 regardless in college or not.
Each spouse/ex spouse is entitled to a benefit either based on her EX's earnings or her own, only one at a time (benefit and spouse).
1
The excess of FICA tax revenue over benefits outlaid WAS and IS invested in Special Purpose US Treasury Bonds. That was one of Alan Greenspan's ideas that Congress put in the 1983 reform bill.
Here's the interest earned by year
http://www.ssa.gov/oact/progdata/annualinterestrates.html
And you can learn a lot about SS funding, etc. at
http://www.ssa.gov/OACT/progdata/fundFAQ.html
Here's the interest earned by year
http://www.ssa.gov/oact/progdata/annualinterestrates.html
And you can learn a lot about SS funding, etc. at
http://www.ssa.gov/OACT/progdata/fundFAQ.html
1
Our "democratic" Congress allows the important people of that institution, the ability to sneak in an amendment that will benefit a lobbyist or his/her project or local business, or change a word or a phrase that will include or exclude a preferred beneficiary. The other fact is that laws are often written by lobbyist and presented by their lackeys. Other laws are written by the majority, mostly the chairpersons and their closest allies. Now consider the fact that many times these laws are passed without having been previously presented and whose thousands of pages are not even seen by those who vote them, much less scrutinized for favoritism, and you have an administrative perfect confusion. The affirmation that we are responsible because we vote for these people, is really a way of trying to cover the myth of our democracy, that the voters are in control. Everything from the tight control of the chambers by their leaders, to the universe of lobbies, to the exclusion of the minority from the elaboration of the laws, to the need of congressmen to scrounge for money, contributes to the dubious practices of our Congress. Before you can blame us for not getting rid of them, we would need the information on their misdeeds. The Supreme Court allows billionaire to influence elections, the lobbyists insist that they serve an important social purpose, the politicians insist that they are "only responding" to their voters. There is an excuse available to everybody.
38
The whole thing has always been and will continue to be a roll of the dice. When one goes to any calculator to try to figure out when to retire or when to take benefits, one of the first questions asks how long one expects to live - the one million dollar question to which there is no good answer (a family member developed ALS in her late sixties - no amount of exercise, eating right and being "in good health" predicts that or prevents it OR one can be killed by a drunk driver). Much of the advice (apparently including this book) is written for couples and not the least helpful to the single. Not all should wait to 70 (not all need to; not all are able to). What determines when to retire is as complex as the SS rules - job situation, general health, desire to do other things etc.
Note: the question of "deeming" seems to apply to families grappling with disability and SSI, not retirement issues. SS disability of various types is a complicated, but separate, area.
Note: the question of "deeming" seems to apply to families grappling with disability and SSI, not retirement issues. SS disability of various types is a complicated, but separate, area.
23
I agree; my mother worked for many years, but she died at 57 of MS. Again, nothing you could game or prevent. She never got one cent of Social Security or Medicare, despite a terrible disability and staggering health costs.
You cannot logically ask people "how long you expect to live". EVERYONE who is not actively dying of some disease will think "of course I will live to be 99 and die in my sleep!" But hardly anyone ever does so.
Even people who are obese and chain smoke, do not sit there saying "yeah, I'll likely die youngish". That's just not human nature.
Actually my concern is that people today are living longer -- but retiring EARLIER. A big chunk of people over 55 lost their jobs in the recession. SS is their ONLY option at 62, if they can hang on that long. And taking it early means a huge cut (30%) in your benefits.
The system was designed so that people could retire at 65 (and get Medicare too!) and it was munged up by Reagan, trying to raise to age and ensure more people died like my mom before getting a penny back. But instead the opposite happened.
I resent bitterly that I have to work an extra TWO YEARS to collect what I have paid into for 50 years! And they snuck this through when the victims (those born in the late 40s and 50s) were only in our 20s and it was so far off, we lacked the motivation to get really, really angry about it. Now we are screwed.
You cannot logically ask people "how long you expect to live". EVERYONE who is not actively dying of some disease will think "of course I will live to be 99 and die in my sleep!" But hardly anyone ever does so.
Even people who are obese and chain smoke, do not sit there saying "yeah, I'll likely die youngish". That's just not human nature.
Actually my concern is that people today are living longer -- but retiring EARLIER. A big chunk of people over 55 lost their jobs in the recession. SS is their ONLY option at 62, if they can hang on that long. And taking it early means a huge cut (30%) in your benefits.
The system was designed so that people could retire at 65 (and get Medicare too!) and it was munged up by Reagan, trying to raise to age and ensure more people died like my mom before getting a penny back. But instead the opposite happened.
I resent bitterly that I have to work an extra TWO YEARS to collect what I have paid into for 50 years! And they snuck this through when the victims (those born in the late 40s and 50s) were only in our 20s and it was so far off, we lacked the motivation to get really, really angry about it. Now we are screwed.
16
I'm not an expert here, but I am sure that for MOST PEOPLE, the decisions are that complicated.
AND that almost all of the complication were installed by folks in Congress, to benefit mostly the wealthy.
AND that almost all of the complication were installed by folks in Congress, to benefit mostly the wealthy.
32
The wealthy don't depend on SS. This is a middle class issue- for people who would value an extra few hundred dollars per month. SS benefits are greatly skewed toward lower wage individuals since they need the help. The maximum SS available to someone 66 who has paid in the maximum their entire working career is $2,500 per month.
5
For the wealthy? From my experience with some people who spent years working either off the books or earned a good bit of their income under-reporting it the Social Security minimums have been very good to them. When one person works and reports all their income and gets $25K a year while the person who under-reported gets $15K you can't help but think of the inequities of the system.
4
What you forget is that the very rich are very greedy. They want to squeeze every advantage they can out of Social Security even though they coukd very well live without it. I don't really begrudge them for that because they did pay into it; however, I do believe FICA deductions should apply to higher salaries than it does. My mother's SS income was $1000. If it hadn't been for half of my Dad's pension (also $1000), a frugal lifestyle, paid up mortgage and very small inheritance from her mother, she was close to using all her savings before she died.
13
I thought my ex was a fool for taking SS at 64. But after he died at 66 from a cerebral hemorrhage, I'm glad he did.
26
It is a very tough decision. Take it early, and you can enjoy several good healthy years as a healthy 60-something -- perhaps visiting grandchildren or traveling or a hobby. But then you take a permanently lower check. What if you live to 90?
On the other hand, postpone it to 67 (!!! the new official age of full benefits) and what if you die young? My grandfather retired at 62 (in 1961) and took a reduced benefit -- but he got to enjoy 4 years in the Arizona sunshine before he died. If he'd waited, it would have been one measly year of retirement after he paid into the system for over 50 years.
On the other hand, postpone it to 67 (!!! the new official age of full benefits) and what if you die young? My grandfather retired at 62 (in 1961) and took a reduced benefit -- but he got to enjoy 4 years in the Arizona sunshine before he died. If he'd waited, it would have been one measly year of retirement after he paid into the system for over 50 years.
12
I have prostate cancer that has spread. I still waited till 70 so I could get the maximum SS benefit every month. Why would I do that when I have cancer and am likely to die before I reach the "Break Even Point"?
I don't want to live with regrets. I find it hard to imagine lying on my death bed regretting that I didn't take my social security earlier. But if I do manage to live beyond the "Break Even Point" and I sure as hell would feel bad if I took my SS early and every month my check was only 2/3rds of what it would have been if I had waited a few more years.
If you think you need the money at 62 you're going to need it a lot more at 80 and beyond.
I don't want to live with regrets. I find it hard to imagine lying on my death bed regretting that I didn't take my social security earlier. But if I do manage to live beyond the "Break Even Point" and I sure as hell would feel bad if I took my SS early and every month my check was only 2/3rds of what it would have been if I had waited a few more years.
If you think you need the money at 62 you're going to need it a lot more at 80 and beyond.
28
I did the numbers with age 80 as the death point. Taking it at 62 was still better. The other consideration is what you do for a living. If you are a desk jockey you can probably work later. If you are a plumber or electrician your worn out body won't carry you pass 65. Try installing faucets while lying on your back with the lowest portion of your spine resting on the cabinet edge for 40+ years. Or climbing up and down a step ladder 300-400 times a day running voice and data cables and getting up and down off the floor wiring electrical and telephone outlets. That's why I feel it's unfair of the government to keep raising the retirement age and penalizing everyone alike.
18
you would wait if you are married, and were the higher earner...after you died your wife would then switch to your (higher) SS payments for the rest of her life...
3
My expected lifespan is 86. Unless i die of leukemia or some other atomic age disease. So waiting won't pay off for me.
I take issue with the notion of figuring out a "break-even" age as the basis for deciding when to start Social Security, presuming that you have the option of waiting. What many people worry about is having "life left over at the end of the money." Life expectancy estimates are averages but the risk (and benefit) is that you have as good a chance of living longer than the average as living shorter. Social Security payments are for life, no matter how long it lasts - doesn't it make sense to maximize the size of those payments? Especially when they are adjusted for inflation. Think of it as valuable annuity insurance against outliving your money.
I don't think any one old enough to be faced with the decision of when to start taking social security has to worry about the system running out of money, or even of Congress changing the rules in a way that makes social security less beneficial for them, given the strength of their voting block.
I don't think any one old enough to be faced with the decision of when to start taking social security has to worry about the system running out of money, or even of Congress changing the rules in a way that makes social security less beneficial for them, given the strength of their voting block.
23
If you defer taking SS payments, your future payment goes up and that's obviously a good thing. But you're also giving something up -- namely the amount SS would have paid you over the years you deferred taking payments. That amount, if invested, might increase your retirement income as much as SS "waiting" would.
For example, in my case, I elected to take SS payments at my "full retirement age" of 66. I plan to work until age 69. In the meantime, I have increased my 401k contribution by the full amount of the SS payments I am collecting. You don't have to immediately spend the money SS gives you.
For example, in my case, I elected to take SS payments at my "full retirement age" of 66. I plan to work until age 69. In the meantime, I have increased my 401k contribution by the full amount of the SS payments I am collecting. You don't have to immediately spend the money SS gives you.
30
Good point -- and let's remember that the money is PRO-RATED. They did all the actuarial work years ago.
If you take it early, you get less of a check BUT they have income averaged and you get about the same total amount (assuming a normal lifespan) as taking it later (a bigger check, but fewer YEARS of collecting).
If you take it early and keep working, bank the money -- you will end up about the same at age 70 as you would have anyways.
A lot of people are unrealistically optimistic about living to 90 and beyond. Even if you do, chances are excellent you will spend those final years in a nursing home, staring blankly at a wall.
If you take it early, you get less of a check BUT they have income averaged and you get about the same total amount (assuming a normal lifespan) as taking it later (a bigger check, but fewer YEARS of collecting).
If you take it early and keep working, bank the money -- you will end up about the same at age 70 as you would have anyways.
A lot of people are unrealistically optimistic about living to 90 and beyond. Even if you do, chances are excellent you will spend those final years in a nursing home, staring blankly at a wall.
6
Aren't you limited in the amount you can earn before SS is heavily taxed/reduced?
3
I think one of the biggest contributors to retirees getting short changed on Social Security is the availability of applying for benefits on the Internet. I was shocked to read several years ago that the Social Security application for retirement benefits was "streamlined" in order to simplify the application process and encourage more people to apply on the Internet, reducing office traffic. The fact is that the factors to consider when deciding when start benefits are somewhat complex, and does not lend itself to a streamlined Internet form, in many cases.
18
Exactly. Government bureaucracy is moving to all 'online' and that is a big mistake.
The internet is fine for simple straightforward cases. That's why it appears to be 'streamlined'.
However, if you have any further questions, concerns or special circumstances- it can easily become a frustrating nighmare.
There should always be recourse to knowledgeable, helpful navigators.
Face to face interaction should always be available.
Sometimes that is actually more streamlined than the internet.
The internet is fine for simple straightforward cases. That's why it appears to be 'streamlined'.
However, if you have any further questions, concerns or special circumstances- it can easily become a frustrating nighmare.
There should always be recourse to knowledgeable, helpful navigators.
Face to face interaction should always be available.
Sometimes that is actually more streamlined than the internet.
23
You are absolutely correct, and most career SSA employees such as myself, having a deep commitment to public service, deplore this "short shrift" approach to the taxpayer. One of the shortcomings of our website is that it lacks interaction with on-line representatives, similar to the "would you like to chat?" boxes that pop up on my banking site or even my ISP site when I make an inquiry. Those of us who review and process claims in the District Offices see the results of this every day. And another point which I feel compelled to make: SSA employees are NOT financial counselors and are forbidden by Agency policy to offer any advice with respect your benefit election choices. We are responsible for conducting a careful and thorough interview to ascertain every claimant's options, and explain these options in a straightforward manner. We urge claimants to take these options to a qualified professional to discuss the ramifications in the context of their total financial plan.
14
You still had better know what you are doing or have an outside person work with you who does. SSA makes mistakes.
A woman I know actually spoke directly w/ a SS rep, who informed her that she qualified for benefits from her ex-husband. She gleefully accepted - he had made dramatically more than she had so the benefits were higher. It didn't cost him anything so I assume he didn't even know.
Years later, perhaps at his death, SSA took a look at her situation as his beneficiary. It seems that she hadn't been married to him for quite 10 years, more like 9 years and 10 months or something like that.
She was then informed that she owed the federal government something like $31,000 in overpayments and that they intended to collect in spite of the fact that it was their mistake, not hers. She couldn't pay it back all at one time so they have been taking a chunk of her much diminished SS check each month.
Surprise!
A woman I know actually spoke directly w/ a SS rep, who informed her that she qualified for benefits from her ex-husband. She gleefully accepted - he had made dramatically more than she had so the benefits were higher. It didn't cost him anything so I assume he didn't even know.
Years later, perhaps at his death, SSA took a look at her situation as his beneficiary. It seems that she hadn't been married to him for quite 10 years, more like 9 years and 10 months or something like that.
She was then informed that she owed the federal government something like $31,000 in overpayments and that they intended to collect in spite of the fact that it was their mistake, not hers. She couldn't pay it back all at one time so they have been taking a chunk of her much diminished SS check each month.
Surprise!
1
It is crazy. One working -class individual has to learn about 401ks, investment options, life insurance, flex accounts, HSA accounts, tax rules for all of the above plus income tax, social security, disability, supplemental social security, vision plans, property taxes, mil rates, health insurance, enrollment periods, exceptions, drug coverage, generics, networks and ICD-9 coding (soon to be ICD-10), mortgages, mortgage insurance, interest rates, points, ARMS and APRs. And this doesn't begin to address daily concerns, such as house maintenance, computer issues, cars, car maintenance, car insurance, and most importantly, nutrition education, so that you can keep your brain functioning at peak every day so as to keep track of all this.
189
and most importantly…what do you have without good health? Wake up folks.
2
Mpls Maven just about sums it up. and if you believe that you are going to retire and never think about all this stuff again, you are totally wrong.
7
I hear you. This is how it is. But we all know it wasnt always like this (cars used to be easy to fix by yourself) and we all know economics ( you have car!) Dealing with all these choices is very difficult. Ask and ask again. Try to get friends or family with prior experience. Read alot and listen too. Dont be afraid to look dumb . Take action on issues--- Ask and ask again!
1
If the book does not discuss the required retirement account distributions and the potential to cause a significant amount of Social Security benefits being taxable it is worthless. The adjusted gross income level determining that taxation has not been changed in over 30 years.
21
That's called a tax increase anywhere but Washington.
7
thank you...I've written to my congress people and AARP about this (and gotten nowhere)...the "adjusted gross income level determining that taxation" should now be double what it is if it had been adjusted for inflation over the years
7
And it is true for Medicare too. The $170,000 MAGI break between the basic Medicare premium and the higher premium charge has not been adjusted for inflation in years.
2
Politicians love to complain about the complexity of government systems - taxes, medicare, medicaid. But they are the ones who craft the framework of these systems and they will hardly ever admit their responsibility in creating these mazes :-( There may be valid reasons for a particular requirement or rule, but they are not willing to study how a particular change affects the entire system.
13
My wife is a SSA employee who is a dedicated, compassionate woman. she along with her colleagues look out for the best interests of "their" clients. The major complaint about the soon-to- be-retired is their lack of understanding of the Congressionally imposed rules-most often brought on by their attendance at an ill-informed financial advisor's seminar. Her saddest story was of a man who dropped $86,000 in benefits for little gain with a breakeven point of 19 years. The financial advisor's advice and literature contradicted SSA's rules. Not even referring him to the SSA.gov website for confirmation helped. Her Advice: READ MULTIPLE BOOKS, READ THE SSA.GOV WEBSITE. LISTEN TO THE CLAIMS REP AT SSA. EDUCATE YOUR SELF.
110
I saw a couple of quotations from the book on the 'complexity' of the SS rules. The first was that a child who murders her parents is not eligible for survivor's benefits. Are we better off or not without that complex rule?
The second quotation dealt with benefits based on an ex-spouse's earnings. It talked about them 'evaporating' (or some such) if a wrong choice is made. If you have two ex-spouses & your own earnings record, you have three (plus) choices of level of benefits. Choosing one does not cause others to evaporate. You've simply made a choice.
People libel those sneaky SSA employees out to screw potential beneficiaries. I bet if you went to Joe Mohawk's wife or most of the other SSA folks they would explain your three choices clearly & indicate the advantages of each, ultimately allowing you to choose.
[BTW: You can choose the higher of the spousal benefits & delay taking your own to age 70. At 70 yours will be 32% higher than they would have been if your full retirement age was 66. If they're now higher than your spousal benefits, you can switch to those based on your own earnings. It's not simplistic. But it's pretty simple.]
The second quotation dealt with benefits based on an ex-spouse's earnings. It talked about them 'evaporating' (or some such) if a wrong choice is made. If you have two ex-spouses & your own earnings record, you have three (plus) choices of level of benefits. Choosing one does not cause others to evaporate. You've simply made a choice.
People libel those sneaky SSA employees out to screw potential beneficiaries. I bet if you went to Joe Mohawk's wife or most of the other SSA folks they would explain your three choices clearly & indicate the advantages of each, ultimately allowing you to choose.
[BTW: You can choose the higher of the spousal benefits & delay taking your own to age 70. At 70 yours will be 32% higher than they would have been if your full retirement age was 66. If they're now higher than your spousal benefits, you can switch to those based on your own earnings. It's not simplistic. But it's pretty simple.]
3
I agree, the SSA reps are not sneaky. I got a call from SSA and had to affirm I did not want to claim my ex-husbands SS benefits. I didnt want his benefits because my full benefits were greater than half of his. They told me what my choices were and it was an easy decision for me.
3
I agree with you about the skill of SSA staff. Here in NYC my experience with them both in person and on the phone has been excellent. But, the article's point that self-education is necessary but insufficient to master the SS system still stands. Like the tax system, the SS rules are hopelessly not understandable by anyone. Thus, no one can be held accountable for any mistake. Politicians know this and, I believe, keep it this way to both minimize benefits paid and discourage use of the system.
Yes. This. Years ago, I had a Ukrainian house cleaner who could not get over the piles and piles of paperwork Americans deal with inside their homes. It's only gotten worse. Health care bills are the worst. Thank you for taking on FSA. Some years we don't bother with FSA because we get fed up with questions about what the $6.60 charge was for, and the system's requirement of our immediate attention to said $6.60 charge. We need a movement to get rid of American complication, along with a movement to stop changing the clocks around twice a year. Invest with Vanguard. The rest are taking too much of your money.
31
American complexity. My parents kept all their important papers in a shoe box while raising five children during the 1950s through 1960s. By the time they were in retirement, they were using a four drawer legal file cabinet, to contain documents required for the two of them.
4
'...Services like Betterment, FutureAdvisor and Wealthfront, for instance, will invest your money in index funds for a reasonable fee...'
Or you could invest in index funds or Roth IRA with Vanguard for ridiculously low fees. Not sure why that is not mentioned in an article about investing for retirement.
Or you could invest in index funds or Roth IRA with Vanguard for ridiculously low fees. Not sure why that is not mentioned in an article about investing for retirement.
53
I was also surprised Vanguard wasn't mentioned.
3
Social Security may be "a Maze". Still, it is a "Maze" which is working, a rare thing in Washington. But I shudder to think what it could become if this Congress lays hands on it. We have seen what they can render......
76
I think it is the only thing from Washington that works. Years ago I was advised to apply for Social Security Disability. I applied online and it was easy. I listed the dozens of of doctor's visits, surgeries and tests by doctor and date. I didn't have to do it all at once and with a password was able to type it up over 3 day period. After I was finished I hit submit. A few hours later I got a call from a lady at Social Security that it had been received and that it would be investigated and I'have an answer within a few weeks. Seven weeks later I found a Federal check in my mail box for my monthly allowance plus 12 months back pay which is as far as they go back even though I hadn't had income for over 3 years. That as a Saturday. On Monday I got the letter telling me my application had been approved. This was nine years ago before they started giving it away as they do now. Two months later I got notice that I was signed up for Medicare and that premiums would be deducted from my SS check. They even deduct the Medigap policy premium. In the last 9 years their has never been a problem. No lost checks. No non payment of bills. I do my share of complaining about the government but I have no complaints with Social Security.
14
We need a national portable pension system. Retirement shouldn't be a gamble.
39
Social Security is portable. The only exceptions had been public and other employees such as nuns and priests who had either been exempt or were in public pension plans that did not include Social Security. That is no longer true. Federal pensions are now less generous but include Social Security, for example.
One baffling aspect is the confusion and unfairness faced by people who have been both public and private sector employees and are hit by a public pension offset. Their years in Social Security can go down the drain if they have been low earners in the jobs covered under SS. They will not have earnings sufficient to prevent the offset because years of higher earnings are required. There used to be a minimum benefit under SS but not any more. I have worked from the age of 16 under SS until age 30, then in public service, then not working due to illness, now working again but not able to find a good job. This is because of being out of the workforce for years and age, I believe.
I need the money so continue to work but will probably never get the benefits my years under SS should have provided.
Nevertheless, I see SS as an overall good system. I have seen survivor benefits help my spouse whose dad died at age 30 and my nephew who receives disability benefits and is gradually returning to the workforce. A friend's child with very severe autism receives SSI. We underestimate how good it is.
One baffling aspect is the confusion and unfairness faced by people who have been both public and private sector employees and are hit by a public pension offset. Their years in Social Security can go down the drain if they have been low earners in the jobs covered under SS. They will not have earnings sufficient to prevent the offset because years of higher earnings are required. There used to be a minimum benefit under SS but not any more. I have worked from the age of 16 under SS until age 30, then in public service, then not working due to illness, now working again but not able to find a good job. This is because of being out of the workforce for years and age, I believe.
I need the money so continue to work but will probably never get the benefits my years under SS should have provided.
Nevertheless, I see SS as an overall good system. I have seen survivor benefits help my spouse whose dad died at age 30 and my nephew who receives disability benefits and is gradually returning to the workforce. A friend's child with very severe autism receives SSI. We underestimate how good it is.
18
File and suspend, aye, that's the ticket. Our friends advised us of that option, a bit late in the game, but still with time to act on it, and their advice saved us enough to go to Paris (and back) for a month. I'm not saying we went, but it saved us enough to do it if we want to. This SS biz is an adult game, and it lasts for the rest of your life. If you can't figure it out for yourself (few can), get advice, good advice. And if you can manage it and will live about 12 years after your 70th, delay drawing. You make about 8% more a year, guaranteed. P.S. We need more side and back doors into SS for everyone. It should be our national retirement plan par excellence with a lot of additional op-ins. And save us from W's privatization schemes.
34
I have a bit of an issue with "making about 8% more" by waiting. This analysis seems a bit simplistic because it ignores the SS payments forgone by waiting. That money doesn't have to be spent; one could also choose to invest it, thereby also increasing one's retirement income.
17
Yes, it takes a decade or more at today's measly interest rates to make up the difference in foregoing SS at 62. Yes, increasing one's investment is a happy outcome with one's money, but only IF the market goes up. If not, if it is stagnant market, possibly over a decade, then one loses 8% p.a. And if markets tank, then that money (otherwise earning 8%) is down and out, possibly down 40-50% or more. After a certain age (fill in the blank) I do not want to be much in the markets at all. Better to annuitize with safe, low-cost instruments or maximize the benefits of the ersatz annuity that SS offers. Poorly funded longevity is a big financial risk for more and more of the non-smoking, exercising, and eating organic crowd.
9
I think all the calculators, at least the free ones, have an error in calculating the file and suspend strategies for a couple. They all seem to have the older spouse waiting until the younger spouse reaches max retirement age before filing & suspending. That means the older spouse loses the opportunity to reclaim the suspended benefits if health suggests.
I look forward to a review of what's in the book. This was mostly an article about the complexities of contemporary life and how we need experts to guide us--all true and I agree lamentable.
I guess the book is too complicated to discuss.
I guess the book is too complicated to discuss.
25
I am single and retired, have saved all my working life and have a variety of income streams (happy to say) but none of them is particularly easy to access. Applying for Social Security and Medicare was a minor nightmare, with many mistakes made (by them) along the way, including trying to access these bureaucracies through a terrible phone system, etc. If you have health problems, and most of us do after a certain age, you're also going to want and need a supplemental insurance policy as well as a policy to cover drugs. So, there you go, four challenges to figure out and track.
Then, if, like me, you are fortunate to have a variety of income streams from 403Bs, IRAs, small pension, etc., each of those instruments when you want to start cashing them out has lots and lots of rules and regulations. TIAA CREF, a giant company, which has held most of my money, provided me exactly ZERO in real advice, although they sat me down and tried to get me to give them more money. The guy that I wasted two hours with then sent me the wrong form to get the process started. I have had to initiate, try to understand and follow through on all the legwork to take the income that the Federal government requires me to take this year. It's a nightmare that makes the tax code look like Dick and Jane.
Then, if, like me, you are fortunate to have a variety of income streams from 403Bs, IRAs, small pension, etc., each of those instruments when you want to start cashing them out has lots and lots of rules and regulations. TIAA CREF, a giant company, which has held most of my money, provided me exactly ZERO in real advice, although they sat me down and tried to get me to give them more money. The guy that I wasted two hours with then sent me the wrong form to get the process started. I have had to initiate, try to understand and follow through on all the legwork to take the income that the Federal government requires me to take this year. It's a nightmare that makes the tax code look like Dick and Jane.
26
I applied for Medicare in 2006 and for SS in 2007. Both were very easy to manage. I did some of it by phone and most of it online. I did read up on it before applying so I knew what I needed to do. The SS rep was very helpful but I already knew a lot about it. I used the rep to confirm what I had already learned.
4
Unlike TIAA-CREF, Social Security reps were helpful and clear. I consider Social Security a national treasure to be guarded from Wall Streets' Ambassadors to Congress. TIAA-CREF is impossible for me to comprehend. When still employed, pre-retirement advisors were offered. Gentlemen (no women?) reviewed my multiple contracts (university changed contracts several times). I almost understand one advisor, but he left. Post-retirement advice is free to large accounts (my friends' accounts); advice to smaller accounts (mine) incurs fees. I called for information. It seemed grudgingly given and didn't feel trustworthy. The gentleman said that my annuity portion would be paid out in 10 equal installments over 9 years. I asked him to repeat that. He did. Same words. Huh? They used to present a variety of options. So, I'm taking minimum distributions now that I've reached 70-1/2 (afraid to start the annuity). I read their website, but I don't find what I need.
4
Last March, the Social Security Agency terminated my SSI disability because I had over $3,000 in assets. They said I had a policy valued at $3,158.93, so I showed them a letter from the insurance company that said the policy was valued at $750.09. Did that change anything, not on your life. When a bureaucrat at Social Security screws up, there is no one at fault and nobody to be accountable for the screw up. You are just left hanging in the wind. You can look at this anyway you want but the fact is that what SSI has done is illegal. Some idiot took the bread of the table of a 70 year old and they just swept the fact under the carprt.
21
If you want to know who knows where Every Red Cent of Social Security $ is, "talk" to a "Guardianship/Elder/Retirement lawyer". If you are "lucky" someone will thrust you into a secret (allegedly HIPPA rules) Guardianship proceeding, where they will make you a ward of the State, put you in a nursing home (in NY, it's called Mental Hygiene 81), and the "lawyers" will find out how to get the most out of your Social Security, on a document that declares you incapacitated, even if you are not. Those guardianship/retirement lawyers know how to find every Social Security penny..as long as it's for them! The rest of us can read the book.
17
If Social Security is disgustingly complex - try Medicare: take it straight or through an "advantage plan;" if straight Medicare what about a supplemental - and which company and which lettered plan and what about the deductible; and don't get me started on trying to sort through the Part D drug "benefit" with different costs and formularies from a half-dozen or more companies and the dreaded doughnut hole ahead where a $7 generic is really $107 against your "total drug costs" - I have trouble with this as a still working, still clear-minded 65 year old. I can't imagine someone 20 years older - and/or ill - trying to do what makes the most $ense. Worse than the cellphone and cable companies - if that's possible!
101
You are correct. If you use more than one or two meds, it is completely impossible to figure out which plan is best or when you will fall into the doughnut hole. I have a master's degree and could not figure out part D.
19
The rules make little sense. I have a drug that costs $650 a month. They pay for it but with it and another drug I go into the doughnut hole in April and have to spend over $4000 to go to catastrophic pay. I can get the one drug at a compounding pharmacy for $80 a month but they won't pay for it because compounded drugs are not FDA approved even though the individual compounds are. I pay the $80 out of pocket because it is $3000 a year less expense for the year doing it. Recently BCBS made me go back to a 12 hour cycle on one drug and take a more powerful form. I had an exception that allowed me to take a lower dose three times a day. I don't like the effect and I am paying the same copay as before but had to add another prescription of the same medicine in a different format to stay on the three times a day format. That meant another prescription copay. BCBS is using the FDA recommendation as an excuse to prescribe 60, 30 mg tablets instead of 90, 20mg tablets to save money while I pay more.
5
Agreed. There was a Times article recently--"Choosing a Health Plan Is Hard, Even for a Health Economist!"
4
Social Security isn't just for retirement. When my husband died, I and my two kids started collecting survivor benefits. Mine stopped when my youngest turned 16. Each of their stopped when they turned 18. But for those years? It was a lot of money, and is now paying for a significant portion of the kids' education.
What SS doesn't cover is me -- at least not until I reach retirement age. That's too bad, because after eight years of full-time caregiving (which enabled my husband to work for a good salary, and certainly kept him alive far longer than his original prognosis led us to expect), I'm having a very difficult time getting back into the workforce. I'd really like to work for another 15 years before starting to draw on my retirement benefits.
Still, the kids are set, and I'm grateful for what we got. And now, back to the resumes, the volunteer work, and the networking!
What SS doesn't cover is me -- at least not until I reach retirement age. That's too bad, because after eight years of full-time caregiving (which enabled my husband to work for a good salary, and certainly kept him alive far longer than his original prognosis led us to expect), I'm having a very difficult time getting back into the workforce. I'd really like to work for another 15 years before starting to draw on my retirement benefits.
Still, the kids are set, and I'm grateful for what we got. And now, back to the resumes, the volunteer work, and the networking!
52
I wish you all the luck in the world. Eight years of full-time caregiving.... Please, people, contemplate that! We do need to find some way to help those in these circumstances make up for lost time in the workforce.
2
I have been surprised by Social Security rules. During the month before I was vested in my public pension, I found that the benefits that I had earned working for several decades would be diminished if I got vested. If I had sat around I would get thousands more than I would get because I worked. That doesn't seem fair.
I have also been challenged by the guessing your life expectancy game, it seems that their should be a minimum payout to heirs. We should tax all income, including investment income to cover the program and return the retirement age to 65.
I have also been challenged by the guessing your life expectancy game, it seems that their should be a minimum payout to heirs. We should tax all income, including investment income to cover the program and return the retirement age to 65.
12
I think it's unfair if that if I find part time work and earn over a certain amount I will be penalized and my SS will be reduced. An insurance policy wouldn't do that. I would get what I signed up for.
Worse, if a person dies a month after he retires the money stops. If I could have invested that money I'd put in for almost 50 years the balance would have gone to my heirs.
Worse, if a person dies a month after he retires the money stops. If I could have invested that money I'd put in for almost 50 years the balance would have gone to my heirs.
1
Sorry, but all of SS is based on actuarial realities -- that some folks (like my mother and my uncle) will pay in for a lifetime but collect nothing (they died before age 65).
It is THEIR payments which then go to pay for people like my elderly aunt -- age 93 -- who retired at 65 and has collected benefits for 28 years (far beyond the norm).
That's how you build a rock-solid system like SS. If you give everyone back what they put in, then you cannot extend benefits to people who live an extra long time, or children who are orphaned or the disabled.
It is THEIR payments which then go to pay for people like my elderly aunt -- age 93 -- who retired at 65 and has collected benefits for 28 years (far beyond the norm).
That's how you build a rock-solid system like SS. If you give everyone back what they put in, then you cannot extend benefits to people who live an extra long time, or children who are orphaned or the disabled.
18
Social Security is a social safety net, it's not an investment tool, or asset building strategy for heirs. There are other financial mechanisms for those functions.
8
I hope in the near future that Social Security online software will be as common as online tax software to help guide us through the complexities of filing. Why do we expect senior citizens to navigate the shoals of Social Security, Medicare and possibly Medicaid when they may no longer have the cognitive ability or patience to engage in multi-criteria decision analysis, much less "game the system?"
19
Dr Kotlikoff's Maximizemysocialsecurity software is excellent, it allows you to play some "what if" scenarios, it's at least as simple as online tax software. Unlike tax software which has to be used on an annual basis SS software helps make what is basically a once in a lifetime decision, very few "do over" opportunities if you make a mistake.
A couple of basic considerations:
1)The 8% annual increase for deferring SS receipts ("file and suspend") isn't a bonus or reward, just actuarial recognition of collecting more per month over a shorter timespan.
2)If you file and suspend expecting a longer than average lifespan and you get bad news you can arrange with SS to recapture the amount that was deferred and then resume receiving the normal lesser monthly amount for the remainder of your life. If you die suddenly you're out of luck.
3)SS employees often provide inaccurate info. When I inquired about "file and suspend" the SS agent told me I couldn't do it, then I showed her a copy of Making Sense article and she called her supervisor who consulted her regs and came back and said "he's right". The SS agent muttered "you rich people are why SS is going bankrupt" while she processed my file and suspend. (Ft Lauderdale office)
4)There are number of free and fee based SS calculators, it's basically a once in a lifetime decision.http://moneyover55.about.com/od/socialsecuritybenefits/tp/Best-Social-Se...
A couple of basic considerations:
1)The 8% annual increase for deferring SS receipts ("file and suspend") isn't a bonus or reward, just actuarial recognition of collecting more per month over a shorter timespan.
2)If you file and suspend expecting a longer than average lifespan and you get bad news you can arrange with SS to recapture the amount that was deferred and then resume receiving the normal lesser monthly amount for the remainder of your life. If you die suddenly you're out of luck.
3)SS employees often provide inaccurate info. When I inquired about "file and suspend" the SS agent told me I couldn't do it, then I showed her a copy of Making Sense article and she called her supervisor who consulted her regs and came back and said "he's right". The SS agent muttered "you rich people are why SS is going bankrupt" while she processed my file and suspend. (Ft Lauderdale office)
4)There are number of free and fee based SS calculators, it's basically a once in a lifetime decision.http://moneyover55.about.com/od/socialsecuritybenefits/tp/Best-Social-Se...
5
In his interview on the News Hour with Paul Solomon, one of these "experts" disparaged the break-even calculation that many people should make when deciding when to begin SS. It's a simple math problem.
In my case as a single male, if I took SS at age 66 rather than 62, then I wouldn't recover the foregone SS income until I reached 78. That convinced me to start at 62 because I had been out of work for several years and needed some income security -- with two children in their late 20's who were not saving that well.
Now, at age 66, in hindsight, I made the right decision -- at least for now. When/if I reach 78, I'll revisit this decision.
In my case as a single male, if I took SS at age 66 rather than 62, then I wouldn't recover the foregone SS income until I reached 78. That convinced me to start at 62 because I had been out of work for several years and needed some income security -- with two children in their late 20's who were not saving that well.
Now, at age 66, in hindsight, I made the right decision -- at least for now. When/if I reach 78, I'll revisit this decision.
51
Taking SS at 62 because the break even point is so far out is the wrong way to look at it. Well, in most cases. If you are pretty darn sure you will die early, then, for sure, take it at 62. Or, if you really don't need SS to get by in your old age, then by all means, do as you please.
If, however, you will probably live an average or above average life span, and if you are even slightly worried about outliving your assets, then scrimping until age 70 has the benefit of providing a monthly payment that is about 85% higher than the payment available at age 62, inflation adjusted for as long as you live. What if you live to 90, 95, or 100?
SS is old age insurance - insurance against living too long and ending up on the cat food diet or burdening your children with your miscalculation.
A large majority of retirement advisors and researchers will give this same advice.
Oh, and if you are worried that you might leave money on the table if you die early, well, what do you care? After all, you'll be dead,
If, however, you will probably live an average or above average life span, and if you are even slightly worried about outliving your assets, then scrimping until age 70 has the benefit of providing a monthly payment that is about 85% higher than the payment available at age 62, inflation adjusted for as long as you live. What if you live to 90, 95, or 100?
SS is old age insurance - insurance against living too long and ending up on the cat food diet or burdening your children with your miscalculation.
A large majority of retirement advisors and researchers will give this same advice.
Oh, and if you are worried that you might leave money on the table if you die early, well, what do you care? After all, you'll be dead,
31
If you live past 78 then every day, or at least every month when that much smaller check is deposited, you will regret taking it early.
6
Michael, it is not that simple. First off, 78 is slightly longer than the average American man lives. I wouldn't count on living longer than that. If you do, that's great but the odds are against it.
Second, those years from 62-66 -- when you are relatively young and healthy -- are likely to be the BEST YEARS OF YOUR RETIREMENT -- when you can golf and spend time with grandchildren. If you pass that up to retire at 70, you get a bigger check but you are sicker and more tired and closer to death.
You will NEVER EVER get those years back. Do you think on your deathbed, you will be saying "gosh I sure wish I had worked those extra four years and spent that time in the office"????
Working til 70 isn't even possible for many folks, due to ill health or job loss. It is certainly easier if you work a white collar desk job (or if you LOVE your white collar desk job) than if you are a longshoreman or a logger or a waitress who stands on her feet 10 hours a day.
Second, those years from 62-66 -- when you are relatively young and healthy -- are likely to be the BEST YEARS OF YOUR RETIREMENT -- when you can golf and spend time with grandchildren. If you pass that up to retire at 70, you get a bigger check but you are sicker and more tired and closer to death.
You will NEVER EVER get those years back. Do you think on your deathbed, you will be saying "gosh I sure wish I had worked those extra four years and spent that time in the office"????
Working til 70 isn't even possible for many folks, due to ill health or job loss. It is certainly easier if you work a white collar desk job (or if you LOVE your white collar desk job) than if you are a longshoreman or a logger or a waitress who stands on her feet 10 hours a day.
14
I am 66, working, and not collected Social Security benefits. My wife collect SS benefits. I recently enrolled in Medicare (not at 65 as I was supposed to) replace the medical insurance I had through my wife's former employer. After comparing Medicare, including Part B supplemental insurance, with benefits from my current employer I decided that Medicare was the better deal. When the SS representative called me back about Medicare she ended the call by saying "Oh, your wife is collecting benefits. You can collect spousal benefits, half of her benefit, and we can pay you six months in arrears." For me that's about $7000 in unplanned income and something I never expected. My conclusion: those who think they understand all of the Social Security rules are kidding themselves.
71
Just what we need: Someone to tell the most educated (and highest earning) members of society how to increase their Social Security income; while the lowest income members (who likely won't read this book and can't afford advisors) struggle along. Add to that the fact that the system is underfunded and we've got a real mess.
The concept of spousal benefits was established when most men worked and most women stayed home. That's obsolete today. We need to change to a system of truly individual benefits, where social security taxes are divided equally into each spouse's account and they each get their own benefits. No complexity except for the increase in the monthly benefit for each year after 62 that one defers social security.
Even better would be to to replace Social Security with a system where individual benefits are both vested and funded. Social Security is neither.
The concept of spousal benefits was established when most men worked and most women stayed home. That's obsolete today. We need to change to a system of truly individual benefits, where social security taxes are divided equally into each spouse's account and they each get their own benefits. No complexity except for the increase in the monthly benefit for each year after 62 that one defers social security.
Even better would be to to replace Social Security with a system where individual benefits are both vested and funded. Social Security is neither.
26
'...The concept of spousal benefits was established when most men worked and most women stayed home. That's obsolete today. We need to change to a system of truly individual benefits, where social security taxes are divided equally into each spouse's account and they each get their own benefits...'
Agreed, as one of the reasons the system is underfunded is that the non-working women from the WWI and WWII generations have taken billions out of the system, not to mention Medicare, without having contributed one dime.
Married couples should get a set amount based on what they paid in, not one spouse pays in and the other gets another 50% for 'free'. (And that does not even include the billions, if not trillions, of dollars that Medicare pays for people over 65 who have never worked a day in their lives.)
Agreed, as one of the reasons the system is underfunded is that the non-working women from the WWI and WWII generations have taken billions out of the system, not to mention Medicare, without having contributed one dime.
Married couples should get a set amount based on what they paid in, not one spouse pays in and the other gets another 50% for 'free'. (And that does not even include the billions, if not trillions, of dollars that Medicare pays for people over 65 who have never worked a day in their lives.)
13
'...one of the reasons the system is underfunded is that the non-working women from the WWI and WWII generations have taken billions out of the system, not to mention Medicare, without having contributed one dime.'
They may not have contributed money into the system, but their contributions to their families' home lives, child-rearing, and other tireless efforts in support of their spouses who DID contribute--and often more than they might have without spousal support-- cannot be swept aside as undeserving of any financial recognition by our country. After all, many of the children they raised defended and died for the very country that you propose should show no financial recognition thereof. I heartily disagree with your dismissiveness.
They may not have contributed money into the system, but their contributions to their families' home lives, child-rearing, and other tireless efforts in support of their spouses who DID contribute--and often more than they might have without spousal support-- cannot be swept aside as undeserving of any financial recognition by our country. After all, many of the children they raised defended and died for the very country that you propose should show no financial recognition thereof. I heartily disagree with your dismissiveness.
199
Why are we arguing among ourselves over who deserves what?
Investment income taxes were lowered in the '80s at the same time FICA taxes rose. The economy borrowed workers' money to fight a deep recession, then to give more tax breaks to the fortunate. That $2.9 trillion loan is being called in now.
Do we hear a hearty, "Thank you for saving our bacon! Here's the first payment on our loan balance."
Nope. We hear about undeserving entitlement moochers and takers.
They are treating us like caged fighting bears. Why are we entertaining them with our disagreement?
Investment income taxes were lowered in the '80s at the same time FICA taxes rose. The economy borrowed workers' money to fight a deep recession, then to give more tax breaks to the fortunate. That $2.9 trillion loan is being called in now.
Do we hear a hearty, "Thank you for saving our bacon! Here's the first payment on our loan balance."
Nope. We hear about undeserving entitlement moochers and takers.
They are treating us like caged fighting bears. Why are we entertaining them with our disagreement?
29
When my father passed away three and half years ago, we expected some problems with helping my mom transition to being a widow. My dad had survivor annuities set up with both the Army and Post Office. A copy of his death certificate was all that was needed and the benefits transitioned to my mom without a problem. Life insurance benefits paid promptly. The transfer of finances was done by USAA without a hitch. Probate no problem. Social Security was a different animal. We provided the documents requested and heard nothing for almost fur months. We went to the local office and encountered a civil servant who was anything but civil. She claimed that a letter was sent requesting originals, sent to the wrong address. She implied it was our fault. Her supervisor hinted the documents we provided could have been faked. At this point, I was ready to punch somebody's lights out. Mom didn't need the stress, I spoke with the supervisor's boss and she said, everything was ok and she would take care of things and to her credit she did. I asked my congressman why the government doesn't have a common rule to report deaths and start benefits for the survivor. I never did get an answer. I have often wondered how much paperwork could be eliminated with common requirements across the various governmental departments.
94
Suggest watching the 60 Minutes report on CBS on March 15 re: Social Security and reporting deaths.
4
You need a new congressperson. in a similar situation, my mother was lucky to have John Duncan, Jr as her rep. She called his office in the morning and rec'd an answer that afternoon.
4
I was shocked and feel sorry when reading your story, then I saw the location, San Antonio. My guess is your mom lives in Texas. In Texas, the state government do their budget every two years so now I was not shocked anymore. It seems when a system is weaken in order to benefit an elite minority, only that minority can control the system's outcome.
1
His advice seems to be for couples only. What is his advice to a single person such as myself? Is the only advice I get to wait until I'm 70 years old? Not going to happen.
31
Hi Angela, We have a chapter -- 13 -- about single, never married people. But you may be single because you are divorced or widowed. If so, there are other chapters to read. Finally, you may be single now, but get married. If that's a possibility, yet other chapters are pertinent. The main story for those who are single and never married and who will never marry is to file and suspend at full retirement age and then restart your benefit at 70. This gives you the option, if you need a big dollop of cash before 70 due to an emergency, to request all your suspended benefits in a single lump sum. The cost of doing this, however, is having your retirement benefit reset to the level it was at when you suspend it.
best, Larry
best, Larry
20
Thank you for the reply Larry. I never expected to get a response from you. I am single never married, no kids. As for getting married in the future that remains to be seen. I did go to the local Social Security office last year and got a month by month print out of what my potential benefits would be based on when I retire. It was very enlightening.
2
Social Security is complicated because it is necessary for the agency to follow the laws passed by Congress. When Congress passes a law, the last thing anyone is thinking about is how complicated the implementation of that law will be, or how complicated explaining the law will be. Before all the streamlining, downsizing, demoralizing, and denigrating of federal employees began (in about 1981, see firing of air traffic controllers), Social Security Offices were staffed with well-trained employees whose primary goal was to help applicants and to make sure that they received all the benefits which they had earned -- that includes retirement, disability, and survivor benefits. Staffing levels now are often inadequate to meet the needs of the large volume of applicants. The American public has been misinformed and outright lied to for years by those who have always hated Social Security and want to eliminate it or find a way to turn it over to Wall Street. It did not have to be this way.
216
"Complicated Confusion" creates some decent paying jobs, although, un productive and a drag on the economy. I don't like it, but the only other "jobs" that Congress cares about are either in China, are here done by illegals or are in fast food/ retail.
The rest of us don't matter.
The rest of us don't matter.
2
I totally agree that the complexity of our tax, social security and financial investing laws require a PhD in. . . . what, not sure? Relatedly, I would much rather turn my retirement money over to a guaranteed pension system where I didn't have to worry about experiencing the "freedom" of being able to invest for retirement. I consider it a waste of my time and something I am not at all interested in.
23
What is a "guaranteed pension system"? Other than social security benefits (and some would argue they're not guaranteed" I don't know of any. I guess you could always buy government bonds with your retirement money if you're looking for a guarantee.
5
401Ks are "defined contribution".
The guaranteed pension system is called "defined benefit".
Many of the Greatest Generation and the older Boomers are collecting these now.
At one time, larger corporations had to offer them to get and retain great employees. Public employees took lower pay than their private counterparts in exchange for better pension benefits or earlier retirement.
The guaranteed pension system is called "defined benefit".
Many of the Greatest Generation and the older Boomers are collecting these now.
At one time, larger corporations had to offer them to get and retain great employees. Public employees took lower pay than their private counterparts in exchange for better pension benefits or earlier retirement.
5
A different take - I just turned 65. Getting on Social Security and Medicare was a slam dunk. Took all of 15 minutes online. I got a call back within 24 hours to confirm everything. A nice person on the phone, checking the details. They discussed what alternative I had, and addressed issues clearly.
The question "What age should I take benefits" is a bit more complicated, but I don't think a book about this is worth the price.
Ask yourself the question, " How long am I gonna live?" If you answer 80 - then take the money at 65. If you answer "90", then wait till your 67. Life's a bit of gamble - so is the timing of Social Security. If you wait til 67, and die at 75 you lose. If you take at 67 and live to be 95 you win big.
A benefit of doing SS at 65 is that they automatically deduct the monthly Medicare payment. So no monthly insurance bills, just a net credit to my bank account. Hard to beat.
I would give my experience with Social Security/Medicare an A+.
The question "What age should I take benefits" is a bit more complicated, but I don't think a book about this is worth the price.
Ask yourself the question, " How long am I gonna live?" If you answer 80 - then take the money at 65. If you answer "90", then wait till your 67. Life's a bit of gamble - so is the timing of Social Security. If you wait til 67, and die at 75 you lose. If you take at 67 and live to be 95 you win big.
A benefit of doing SS at 65 is that they automatically deduct the monthly Medicare payment. So no monthly insurance bills, just a net credit to my bank account. Hard to beat.
I would give my experience with Social Security/Medicare an A+.
183
I agree totally. Husband started getting 'his' at 70 and is has been self employed since. I applied for half of his at 66 , still working, and am now drawing the whole megillah at 68 ( still working). Yes, our situation is unusual AND good. The people at SS have been totally helpful and I expect the transition to Medicare B when I retire next year to be as simple. It's NOT that difficult if you educate yourself.
1
The complication, Bruce, comes in if you take your benefits at 65, then live to 95 and run out of money because your Social Security benefits were smaller than they would have been if you had waited until you were 70. Or if your widow is impoverished because you took your benefits early. Yes, you might "lose" if you die at 75 - but she might appreciate it if you waited to take your benefits. And why would you care that you "lost"? You'd be dead!
14
My experience also. If you can't get through on an initial phone call, a message says that they will call you back, and they do. No hassle, and checks are deposited like clockwork to your checking account. The timing re: when to begin taking benefits is really not too complicated. If SS were ever to be privatized, just think how complex it would be. I'll take "big government" any day. It works and it works well.
23
Ron I cannot agree at all. If it's too complicated for someone they need to read more. These guys are just selling books. My parents and grandparents had it right. Work forty years save as much as possible. Starting when you work put your money in medium risk funds from vanguard or American funds and leave it alone.
Pay off your mortgage as fast as possible then save it starting with the month after its paid . Medicare is easy and so is social security. Go to the local office and apply.
My parents and grandparents followed these simple rules and had hundreds of thousands saved when they retired. They did not make big salaries.
Americans are dumb and lazy. Read more if you don't know enough.
Pay off your mortgage as fast as possible then save it starting with the month after its paid . Medicare is easy and so is social security. Go to the local office and apply.
My parents and grandparents followed these simple rules and had hundreds of thousands saved when they retired. They did not make big salaries.
Americans are dumb and lazy. Read more if you don't know enough.
34
They lived frugal lives and probably in home they could afford !!!
4
Your grandparents and parents had the luxury of compounding I interest at decent rates. You can't make any money with a savings account in this economic climate.
45
Sorry, Brad from Greely, CO, but not everyone can afford a mortgage or even monthly savings on their two (or three, in some cases), mandatory part-time minimum-wage jobs (at places like Walmart or your local day care center). In which case, social security is crucial.
29
"There are democracies that don’t have this craziness"
--------------------------------------------
America is a corporate government. Our democracy is gone.
For all the laws and rules enacted, complexity is the purpose. Complexity benefits the class that can afford to hire experts. Simple.
--------------------------------------------
America is a corporate government. Our democracy is gone.
For all the laws and rules enacted, complexity is the purpose. Complexity benefits the class that can afford to hire experts. Simple.
154
Anyone with a high school education and basic math skills can spend the time doing their taxes, checking and understanding Social Security and Medicare benefits.
The systems are not that "complex," if you choose to care about yourself and do some work for yourself (gasp!).
Hired experts are no more than skilled "sales" people. They deal in fear and ignorance and convince some that is the only asset they possess.
The systems are not that "complex," if you choose to care about yourself and do some work for yourself (gasp!).
Hired experts are no more than skilled "sales" people. They deal in fear and ignorance and convince some that is the only asset they possess.
Oh boy, another article how to maximize my social security benefits. I'm a middle class, single guy, so things are pretty simple. Took my reduced benefit at age 62 (because I needed it), and am getting tired of the numerous articles telling me how much more money I can get out if I had delayed benefits to age 66, 70, or (?) 90. Well, the fact is I'm probably not going to live to age 90 (smoker, drinker, all sorts of bad things), so I opted to take what was on the table at the time. And, if we listen to the pundits, Social Security won't exist by the time I may be 90…..or earlier, depending on the particular doomsday forecast you follow.
I know my situation is simple, but I had no trouble figuring out all my benefit options, and have had no trouble signing up for or paying for Medicare, and have no complaints with the benefits provided, which are all spelled out in black and white.
I get very tired (old age may have something to do with it) with the myriad articles telling me how I'm cheating myself, or Social Security is cheating me out of millions of dollars. It really isn't true. Anyone with an IQ above 80 can certainly "figure out" the system, and do what's best for them, and don't need another "guru" to tell them what's best.
JimF from Sewell
I know my situation is simple, but I had no trouble figuring out all my benefit options, and have had no trouble signing up for or paying for Medicare, and have no complaints with the benefits provided, which are all spelled out in black and white.
I get very tired (old age may have something to do with it) with the myriad articles telling me how I'm cheating myself, or Social Security is cheating me out of millions of dollars. It really isn't true. Anyone with an IQ above 80 can certainly "figure out" the system, and do what's best for them, and don't need another "guru" to tell them what's best.
JimF from Sewell
79
The "pundits" telling you Social Security won't be there are the very people who would love for it not to be there. Their strategy is to make it happen by convincing enough people that it is inevitable.
I hope young people wise up and don't fall for this trick. Social Security will be there if we continue to insist on its being there. It will be tragic otherwise.
Paul Krugman has written many times about this subject. Read him if you want the reality-based analysis.
I hope young people wise up and don't fall for this trick. Social Security will be there if we continue to insist on its being there. It will be tragic otherwise.
Paul Krugman has written many times about this subject. Read him if you want the reality-based analysis.
15
Jim, your financial life is relatively simple, so it worked for you.
4
Don't sweat the load. SS is balanced so that if you take it early, you get less per month but you collect for an extra 4-5 years. Those years count for something. They are likely the healthiest years of your life when you can really ENJOY retirement (not stuck in a nursing home or Assisted Living).
If you get MORE by waiting til 70 -- well you are not likely to live as long as a 62 year old. I mean seriously people -- DUH! I guess everyone thinks that they will live to 99, with all their faculties intact and then die in their sleep. That's lovely but maybe 1 in 100 gets to do this.
The average lifespan for a man is about 75. If you retire at 62, you have 13 years! If you retire at 70, you have a measly 5 years. DO THE MATH. All the money in the world won't buy your youth or health back.
If you get MORE by waiting til 70 -- well you are not likely to live as long as a 62 year old. I mean seriously people -- DUH! I guess everyone thinks that they will live to 99, with all their faculties intact and then die in their sleep. That's lovely but maybe 1 in 100 gets to do this.
The average lifespan for a man is about 75. If you retire at 62, you have 13 years! If you retire at 70, you have a measly 5 years. DO THE MATH. All the money in the world won't buy your youth or health back.
3
What I don't like about the FSA is that you have to literally gamble with your money in an attempt to realize a tax savings because if you do not use up your FSA pledge it reverts back to the employer.
I agree people should not be allowed to use the FSA as a tax free parking lot, but who, over the course of the year, can predict how much eligible out of pocket expenses they will have.
Heck, you could click "send" on your employer's benefit site and need a root canal the next week.
On this one I think the employee should be allowed one re-do per year to either put more into the FSA up to the limit, or remove it and subject it to tax.
I agree people should not be allowed to use the FSA as a tax free parking lot, but who, over the course of the year, can predict how much eligible out of pocket expenses they will have.
Heck, you could click "send" on your employer's benefit site and need a root canal the next week.
On this one I think the employee should be allowed one re-do per year to either put more into the FSA up to the limit, or remove it and subject it to tax.
16
I believe that the law requiring that unspent funds revert to the employer at the end of the year is either going to be abolished or restricted beginning this year.
Anyone else know for sure?
Anyone else know for sure?
3
FSA should not be employer based at all; people who don't work for big employers lose out, and there is no reason that any unclaimed $s should go back to the employer - they should go back to the employee and just be subject to regular income tax.
15
Love this article - and let me quickly build for a moment on the author's mention of "flexible spending account[s]" (FSAs):
Another 'flavor' of that type of "benefit" is something called a "Heath Savings Account" (HSA) - and I was truly shocked to discover that when forced into that type of insurance plan, the HSA management company immediately notified the participants that they could "invest" their few shekels in the stock market! Do these people not have enough money to gamble such that they need to prey on the few tax-free dollars people save to pay medical bills?
Another 'flavor' of that type of "benefit" is something called a "Heath Savings Account" (HSA) - and I was truly shocked to discover that when forced into that type of insurance plan, the HSA management company immediately notified the participants that they could "invest" their few shekels in the stock market! Do these people not have enough money to gamble such that they need to prey on the few tax-free dollars people save to pay medical bills?
15
Also, it is my impression (correct me if I'm wrong) that the corporation "managing" your savings in your HSA takes a medium-sized cut for its efforts.
4
It shouldn't be this complicated but its unlikely to change.
I think its pretty clear the partner filing for spousal benefits at 50% of the higher earning partner should definitely wait until FRA to begin, as the early penalty is too large.
I think its pretty clear the partner filing for spousal benefits at 50% of the higher earning partner should definitely wait until FRA to begin, as the early penalty is too large.
5
I have looked at this Social Security thing six ways to Sunday, including Kotiloff's free calculators and many others. Delaying SSI, maximizing spousal benefit, etc is about opportunity costs. If you drain retirement savings early to delay SSI benefits, the long term investment returns that fund your long term retirement will be lower, offsetting higher SSI payments.
Basically, if you have multiple income streams, including moderate risk returns from invested savings, the actual dates are not as critical as suggested.
If all you have is SSI, keep working as long as you can to delay SSI.
Basically, if you have multiple income streams, including moderate risk returns from invested savings, the actual dates are not as critical as suggested.
If all you have is SSI, keep working as long as you can to delay SSI.
18
You may be right, but if you mean Social Security, don't call it SSI, which is a different thing = Supplemental Security Income.
21
SSI is not a retirement program. It is Supplemental Security Income. It is for disabled people who have not earned enough social security credits to qualify for regular disability benefits. A disabled child who has never worked at all can qualify for SSI.
25
Yes, but not only. SSI is also for retirees whose SSA benefits are below a certain threshold.
7
Thank you for this article. Please write more regarding the suffocatingly complex bureaucracies we experience throughout our USA lives.
It is an out-of-control overly complex bureaucracy that steals our precious life time and wastes our hard-earned money.
This is a huge tax on USA citizens that no one is talking about.
President Obama is someone who understands, appreciates and lives a streamlined lifestyle (considering).
Unfortunately, our institutional and corporate bureaucracies are way beyond the control of even our highest elected official.
Something has to be done.
Many other developed countries do more with less. Any solutions?
It is an out-of-control overly complex bureaucracy that steals our precious life time and wastes our hard-earned money.
This is a huge tax on USA citizens that no one is talking about.
President Obama is someone who understands, appreciates and lives a streamlined lifestyle (considering).
Unfortunately, our institutional and corporate bureaucracies are way beyond the control of even our highest elected official.
Something has to be done.
Many other developed countries do more with less. Any solutions?
59
Kotlikoff is a genius. I have known him for fifteen years and he has never steered me wrong. One of the few academics who could be making millions on wall street robbing from the poor to give to the rich who instead has followed his heart and his passion of seeking out the truth and helping the little guy. Anybody who thinks he is doing this to get rich off a book has never written a book.
96
About the last paragraph: Why does anybody need to pay an adviser (even a cheap one) to invest in Index funds? Pick the Vanguard Target Retirement fund of your choice, mail them your money, they will charge you not a single penny over the costs of the underlying funds (which are pretty darn cheap.)
While there are certainly legitimate discussions to be had over the exact mix of funds in a Target Retirement fund, I personally don't know enough to know which recommendation is "best", so I might as well go with Vanguard's suggestion.
While there are certainly legitimate discussions to be had over the exact mix of funds in a Target Retirement fund, I personally don't know enough to know which recommendation is "best", so I might as well go with Vanguard's suggestion.
105
Or, you might pay Betterment the princely sum of 0.15% annually to provide an internationally well diversified age appropriate mix of extremely low cost stock and fixed income ETFs with annual free rebalancing and tax harvesting thrown in.
2
And Vanguard has some nifty online tools that help you pick the right retirement fund as well as index fund for other investing.
2
Or you could pay Vanguard a big, fat, 0.00% for an "internationally well diversified age-appropriate mix of extremely low cost stock and fixed-income" index funds.
2
Aren't we trying to preserve Social Security, to fund the retirements of people who truly need it to live, rather than adding spousal benefits to people whose own benefits are going to be substantial?
44
If you've spent a lifetime paying into a system, when that bill comes due, you're owed your money.
44
Why do you say "adding?" They have been there forever. And are a godsend to families in which the spouse has not or been unable to work or has lower earnings than the other spouse.
10
The solution to that, is that all non-wage earnings such as from dividends, interest, rentals, etc., should be treated as wages; and that all earnings should pay a progressive FICA with no income cap. That would make Social Security quite solvent.
80
Thank you, Mr. Neubecker, for using words like "disgusting" and "shameful" and "profoundly embarrassing" (you may not have used all those words, but you could have). Most op/ed pieces are written by people who have an opinion one has to search to find. I'm delighted (not a word you used) that you pulled no punches. I've always maintained that, if something can't be explained easily, the person doing the explaining doesn't know what he/she is talking about and/or is purposely trying to confuse us for his/her own benefit. I will get the book you recommended (if it is still available). I hope to read more from you.
22
The author of the article is Ron Lieber, who writes a regular column on money for the NYTimes.
6
I'm 65 years old have 2 college degrees and earned a living in an intellectually challenging profession for 40+ years. Planning for retirement was more complicated than I ever imagined. Nothing has gone smoothly. There are fiscal surprises at every corner, and I'm not including Medicare - another challenging ride. It's a shame that we face the complexities of Social Security on our own. Complexities that are in my opinion equal to our tax code in which case I've relied on the assistance of CPA's during my career. There's no such help with Social Security unless you're willing to pay. The "E-Z" guides the government publishes aren't. I'm not surprised this book has such traction. Seventy-six million boomers are knocking on Social Security's door and they're not very gracious hosts. They have our money and don't want to make it easy for us to get it back. And no, I don't want to work until I'm 70. Thanks for asking.
94
Social Security and Medicare "have your money" like your CPA and money-advice-seminar-book "dealers." No can help unless you know what you want to do, rather than expecting to be told what you must do and how to do it.
3
Do the authors think their book will impact the Social Security rules they teach beneficiaries to navigate and possibly exploit, for example by impelling rule changes or by exacerbating the issue of whether the inflow of funds for Social Security is adequate for benefits in the longer term?
9
Educating yourself to obtain the best mix of available Soc Sec benefits is similar to minimizing income tax liability, are you "exploiting" the tax code when you take a deduction or credit? Are you worried about the impact on national debt when you take a deduction?
The authors didn't write the impossibly complex rules, they merely pull back the Wizard of OZ type curtain on the rules, isn't that a public benefit?
The authors didn't write the impossibly complex rules, they merely pull back the Wizard of OZ type curtain on the rules, isn't that a public benefit?
6