On Saturday, November 7, 2015 at 11:50:06 AM UTC-8, joetaxpayer wrote:
On 11/6/15 1:09 PM, Rich Carreiro wrote:
If I'm reading this correctly, does this mean that lots
and lots of "here's precisely how to apply for social
security" articles that have been written over the years
are now pretty much entirely inapplicable, at least for
people born after Jan 1, 1954?
http://finance.yahoo.com/news/social-security-changes-hit-couples-125929117.html
My wife is older than I am. I planned to take the spousal benefit at 66,
my full retirement age, when my wife is 70+. Her SS forecast is for
$3500/mo, so mine would have been $1750/mo while I let my benefit grow
for those 4 years before flipping to my own benefit. $84,000 congress
just stole from me. About $57K if we calculate present value.
Here's the best summary of the changes and implications I've found: <
https://maximizemysocialsecurity.com/updates-based-bipartisan-budget-act-2015>
(I use their software when optimizing and running scenarios for clients).
I'm not sure I'd characterize it as "stealing" -- since this "bonus" marriage benefit only appeared unintentionally about 15 years ago and was never really intended to be part of social security.
And contrary to a lot of the article about this characterizing it as a "popular" strategy, it's been an incredibly *rarely* exercised strategy. It's mainly of use to upper-middle income married folks, and even within that subset of the population, only
a tiny tiny subset knew about it -- mainly folks who had engaged professionals (like myself) who worked up the numbers for them.
As it is, about half of folks claiming SS benefits do so at 62 -- which is almost always not the right thing to do (if one has any other assets or income to draw on in order to postpone and increase future lifetime benefits).
Only about 2% of folks wait until 70.
The good news/ bad news? It seems that relatively few people did this.
Most claimed benefits as soon as they could, and didn't use any strategy
for maximizing benefits. The bad news, is that this was perceived as a
tool of the rich. The comments in many news articles for this change in benefits remarks that "it's good to see this taken away from the 1%,"
but what the posters don't get is that this strategy was possible for
most couples.
It's been *possible* for most (two-earner) couples, but it wasn't taken advantage of by the vast majority of them. There have been some more articles (and even books) which made the public more aware of it over the last couple of years, but even with
all that -- only the tiniest subset of the population knew about it or how to take advantage of it. Overwhelmingly, those who did use these strategies were folks with professional advisors.
When planning for clients, I've never included this (other than for folks *already* taking it) as anything other than bonus money. I.e., don't count on it, but if you do take this, it's "extra".
There really never was any justification for this loophole. SS already benefits married folks substantially over comparable earning singles and this was just total extra. (In fairness, SS benefits married, single-earner families a lot more than married
couples where both earn approximately equal money -- but even then, there's still some marriage benefit).
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