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F&S is attracting attention because you frequently hear words like "extra" or "maximize" and so forth attached to the scheme. Many who do not directly benefit thus see F&S as a way for a certain demographic to game the system and help themselves to extra portions. Am not saying that is true or false, just how the thing looks to some.
File-and-suspend
File-and-suspend is a variation on the more straightforward strategy of delayed filing to earn a higher monthly benefit down the road. Mainly, it permits married couples to have their cake and eat it too—they can earn credits for delayed filing and bring in some Social Security income while they wait. The White House has proposed eliminating it on grounds that it’s a loophole mainly benefiting upper-income households. The ability to file-and-suspend was granted under the Senior Citizens’ Freedom to Work Act of 2000. How valuable is it? For a typical couple, lifetime benefits can increase 13 percent or more. But that comes at a cost to the Social Security trust fund—$9.5 billion annually, according to the Center for Retirement Research. The White House proposed ending file-and-suspend in its fiscal 2015 budget plan, calling it an “aggressive” Social Security claiming strategy that allows “upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits.”
F&S is attracting attention because you frequently hear words like "extra" or "maximize" and so forth attached to the scheme. Many who do not directly benefit thus see F&S as a way for a certain demographic to game the system and help themselves to extra portions. Am not saying that is true or false, just how the thing looks to some.
File-and-suspend
File-and-suspend is a variation on the more straightforward strategy of delayed filing to earn a higher monthly benefit down the road. Mainly, it permits married couples to have their cake and eat it too—they can earn credits for delayed filing and bring in some Social Security income while they wait. The White House has proposed eliminating it on grounds that it’s a loophole mainly benefiting upper-income households. The ability to file-and-suspend was granted under the Senior Citizens’ Freedom to Work Act of 2000. How valuable is it? For a typical couple, lifetime benefits can increase 13 percent or more. But that comes at a cost to the Social Security trust fund—$9.5 billion annually, according to the Center for Retirement Research. The White House proposed ending file-and-suspend in its fiscal 2015 budget plan, calling it an “aggressive” Social Security claiming strategy that allows “upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits.”
Yup, sorta like figuring out that if you invest in low fee mutual funds you will increase your annual return and when compounded Bada Bing! Probably the same people. I mean you can give two people the same choices and one will figure it out and the other doesn't and the one who figured it out isn't called smart but called.........
This is what happens when you over legislate and write laws that accountants smarter than the writers apply for their clients. This was all the work of tax advisors in the early 2000's and is just one of a few different ways to take benefits. So are woman who divorce their husbands during year 11 of marriage gaming the system? I mean they stay with them just long enough to be able to get spousal and survivor. Or is that knowing the rules and applying them when another person divorced during year nine.
wives with no work record will be hit hard as well as those divorced .
Before file and suspend was enacted in 2000, a spouse with no work record always had to wait for her spouse to collect in order for her to collect. And as that AARP entry stated, very few people, except the affluent ever took advantage of it after 2000.
What this will effect to a much greater degree are working couple spouses who were using the spousal and file and suspend strategies to get the delayed retirement credits.
But, actually, this whole budget agreement gives me hope. In the past, for decades, Congress has made changes to the SS Act, working with President's from both parties, to preserve and extend SS benefits for the future.
Here are a number of previous changes to the SS Act:
Phasing out student benefits over 4 years for students over age 19 or in post-secondary school.
No longer paying benefits for the month you turn age 62.
No benefits for children in the month you are born, unless you were born on the 1st or 2nd day of of the month.
No COLA's factored in for any year before the year you turn 62 (decoupling), and a new formula for computing benefits which involved indexing earnings. These 2 changes, which began with people becoming eligible after 1978 lowered monthly benefits, on average by hundreds of dollars per month.
Eliminating the minimum benefit for both current and future recipients.
Offsetting Social Security disability benefits by the amount of compensation paid by federal, state, and local governments to disabled persons.
Ending benefit entitlement for the mother or father caring for an entitled child when the child reaches age 16 instead of 18.
Limiting entitlement to the lump-sum death benefit to an eligible spouse or children. Before, distant relatives, funeral homes, etc., could claim the lump sum.
A gradual increase in the age of eligibility for full retirement benefits from age 65 to age 66 in 2009 and age 67 in 2027.
Taxation of benefits: initially-inclusion of up to 50% of Social Security benefits in the taxable income of higher income recipients The income thresholds (adjusted gross income plus one-half of Social Security benefits) were set at $25,000 for single individuals, $32,000 for couples Currently, made up to 85% of Social Security benefits subject to the income tax for recipients whose income plus one-half of their benefits exceed $34,000 (single) and $44,000 (couple).
Eliminated "windfall" Social Security benefits for certain workers who also receive pensions from noncovered employment.
Retroactivity of benefits reduced from 12 months to 6 months in some cases and no retroactivity in other cases.
There are more, but my point is if you think SSA is a vital program for the vast majority of Americans, then changes need to occur to preserve and protect it.
And the fact that the President and the Congress have agreed on a 2 year budget deal is a major accomplishment.
Last edited by ilovemycat; 10-27-2015 at 09:40 PM..
Reason: To highlight that this occurred in the past
They know this bill will draw huge numbers of anti views once people have chance to read and analyze the proposed bill
The idea that it will offer an ameliorated COLA for those who likely will be facing the brunt of Medicare increase won't take the stink out of most of the changes...
I can't see how most of Americans will view this as any kindness...
And it seems to be viciously retroactive to some of those receiving benefits...
I bet it sees major revision now that it is being analyzed...
I know my husband and I will be hurt by it because we have waited and tried to be prudent.
They know this bill will draw huge numbers of anti views once people have chance to read and analyze the proposed bill
The idea that it will offer an ameliorated COLA for those who likely will be facing the brunt of Medicare increase won't take the stink out of most of the changes...
I can't see how most of Americans will view this as any kindness...
And it seems to be viciously retroactive to some of those receiving benefits...
I bet it sees major revision now that it is being analyzed...
I know my husband and I will be hurt by it because we have waited and tried to be prudent.
No time to revise it unless a clean debt bill is passed. Sorta like you can keep your current policy if you like it.
Retroactivity of benefits reduced from 12 months to 6 months in some cases and no retroactivity in other cases.
....
Luv, I've been reading your posts since you started posting, and thank you as always for the light you shed on a very complicated system.
Many of your previous posts demonstrated the value of the retroactive payment for large anticipated expenses. For example - a new roof, a car.
I'm not FRA for another several years. My birthday is in April. I had imagined myself working until the following January (err...assuming that the ol' employment holds up, always a fool's assumption) and then retroactively collecting back to the previous May. Seven months. A double plus good down payment on the ol' RV, with which to take the RV Grand Tour of National Parks!
*sniff*. I'm tellin' ya, I used to operate OK with "just in time" learning - go on a new project, cram in the significant details, and still retain the bulk of what I needed from prior assignments. Anymore, either the projects are getting more complicated or I've changed over to an "in with the new, out with the old" learning model.
Long way to my question: do you know, or can you refer us to where we might find an explanation about the "six months in some cases and no retroactivity in other cases"?
Luv, I've been reading your posts since you started posting, and thank you as always for the light you shed on a very complicated system.
Many of your previous posts demonstrated the value of the retroactive payment for large anticipated expenses. For example - a new roof, a car.
I'm not FRA for another several years. My birthday is in April. I had imagined myself working until the following January (err...assuming that the ol' employment holds up, always a fool's assumption) and then retroactively collecting back to the previous May. Seven months. A double plus good down payment on the ol' RV, with which to take the RV Grand Tour of National Parks!
*sniff*. I'm tellin' ya, I used to operate OK with "just in time" learning - go on a new project, cram in the significant details, and still retain the bulk of what I needed from prior assignments. Anymore, either the projects are getting more complicated or I've changed over to an "in with the new, out with the old" learning model.
Long way to my question: do you know, or can you refer us to where we might find an explanation about the "six months in some cases and no retroactivity in other cases"?
Thank you very much, as always!
Thank you Jane for your comments. In your scenario, not filing until the following January, actually 9 months after your FRA month (unless your year of birth is one where your FRA is 66 + 2, or 4 or 6...) would only yield you retroactive benefits for 6 months.
All retirement benefits filed after FRA are potentially retroactive 6 months, but only back to your FRA month- if it was within the 6 month period. And retirement filed before your FRA month has no retroactivity. It is only disability benefits that still potentially have 12 months retroactivity, but disability no longer applies at FRA. You are switched to retirement.
But, why not consider the post I did about filing in January of the year you reach FRA?
If your FRA is April, then they would only count the earnings you earn January thru March and in those 3 months, it will be at least $41880.00 that they don't care about. Then over that, they only care about $1.00 for every $3.00 you earn. But, if you don't earn $41880.00 in 3 months, you would be due all your checks for the year.
You stick to your plan, work until the following January, but bank all your benefits. Just keep living on your earnings. Then use your SS for the 12 months to help pay for your RV.
As someone who's never married, I never have thought much of this spousal benefits deal. And I'm sure there's much I don't understand about it.
If people are married and work they should get their OWN Soc Sec. And if one spouse doesn't work, then just like the couple lived off one salary before, they can be supplemented by one person's Soc Sec. in retirement.
You stick to your plan, work until the following January, but bank all your benefits. Just keep living on your earnings. Then use your SS for the 12 months to help pay for your RV.
...
Love, thank you again. Very practical and do-able! Best, Jane
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