2016 Changes to Social Security

[Velos]

We are starting to sharpen our pencil for SS calculations and thought this article may be of interest for those planning their full time departure with SS in mind;

 

https://www.55places.com/blog/changes-to-expect-in-social-security-this-year?utm_source=February+10+2016+Mobile-Friendly&utm_campaign=55Places+Newsletter+-+Feb+10+2016&utm_medium=email

[Fulltimer51]

All looks like a good thing to me.

[Smitty77_7]

I had a different feeling about the changes. Not that congress feels they need to start to do something to help SS, but about:

 

1) No time for public input

 

2) Congress is not phasing this in, with those over 55 grandfathered in to existing rules.

 

My main contention is many Pre 65 (or 62:)!) have made their 'Retirement Planning Calculations', based upon the rules that were in place. When those rules change AFTER they've retired, they have few options to adjust.

 

For us, these changes will cost us a little over $60K, and for the DW at age 70, about $340 less per month. (Due the legal strategies available for us at the timer of Retirement Planning. Vs the new regulations restricting two of the primary strategies we would have used.)

 

I believe, and congress has believed this also over the decades, that significant changes to SS regulations should be phased in. So that people have both time to adapt their strategies, and in our case, we may have elected to work a few more years... The 55 grandfathered in approach, has been used multiple times in the past.

 

That's my opinion on this, and sure I let my congress representatives know my feelings...

 

Best to all,

Smitty

[LindaH]

None of these seem to affect us, except the "no COLA."

 

However, I don't understand the last one:

 

"End of Claiming Social Security Twice – Married couples 66 and older who have been claiming Social Security benefits twice will no longer be able to do so in 2016."

 

Could someone please explain what this means? Although we report our SS income on our tax returns each year, we don't "claim" SS benefits, so I have no idea what this is talking about.

[Trucken]

Think this double dipping.

My friend retired at 65 and a did not draw SS until 67 1/2.

His wife 63 and draws SS against him.

He now draws SS on his wife's SS.

When she became 65 he now 67+ draws SS on his own nickel.

Now she will reapply and draw against his SS which is increase.

 

Thought it is not much she got $600 (I think) he got $200?

Now when he drew SS at $2400.

She reapplied and got $800 month.

 

Others may offer different opinions, however I know this happened,

 

Trucken

[sandsys]

"End of Claiming Social Security Twice – Married couples 66 and older who have been claiming Social Security benefits twice will no longer be able to do so in 2016."

 

Could someone please explain what this means? Although we report our SS income on our tax returns each year, we don't "claim" SS benefits, so I have no idea what this is talking about.

If I remember correctly a person could claim a reduced payment against their spouse's SS at 62 while continuing to work so as to build up their own SS. Then at full retirement age or later, they could drop the original claim and refile against their own SS which would now have a bigger payout. I think this ability to file twice is what they have eliminated.

 

Linda Sand

[Trucken]

Linda has made it clearer, my friend continue to work and his good woman claimed SS

While he continued to work. but he got SS on her half.

Then then reversed.

[Jim Gell]

I had a different feeling about the changes. Not that congress feels they need to start to do something to help SS, but about:

 

1) No time for public input

 

2) Congress is not phasing this in, with those over 55 grandfathered in to existing rules.

 

My main contention is many Pre 65 (or 62:)!) have made their 'Retirement Planning Calculations', based upon the rules that were in place. When those rules change AFTER they've retired, they have few options to adjust.

 

For us, these changes will cost us a little over $60K, and for the DW at age 70, about $340 less per month. (Due the legal strategies available for us at the timer of Retirement Planning. Vs the new regulations restricting two of the primary strategies we would have used.)

 

I believe, and congress has believed this also over the decades, that significant changes to SS regulations should be phased in. So that people have both time to adapt their strategies, and in our case, we may have elected to work a few more years... The 55 grandfathered in approach, has been used multiple times in the past.

 

That's my opinion on this, and sure I let my congress representatives know my feelings...

 

Best to all,

Smitty

I agree 100%. We retired thinking we would use the file and suspend strategy and now we won't have that money which we had planned on. They closed the so called loophole that has been a very popular strategy suggested by financial planners for as long as I can remember. I would go on detailing my disgust in the political process and AARP's lack of spine that allowed them to pull the rug out from under us, but it probably violates the forums rules.

[Smitty77_7]

Think this double dipping.

My friend retired at 65 and a did not draw SS until 67 1/2.

His wife 63 and draws SS against him.

He now draws SS on his wife's SS.

When she became 65 he now 67+ draws SS on his own nickel.

Now she will reapply and draw against his SS which is increase.

 

Thought it is not much she got $600 (I think) he got $200?

Now when he drew SS at $2400.

She reapplied and got $800 month.

 

Others may offer different opinions, however I know this happened,

 

Trucken

 

 

While for sure it is different for different couples, especially with a few years between their ages. In our case my wife was going to collect my Spousal, as she let hers grow until age 70. I was going to draw at age 62, suspend at Full Retirement Age, then start up again at age 70.

 

Only one of those options still remains for us now...

 

My Can We Do It Retirement Spread Sheet, how has two major color modifications to 'Our Plan'. One color was for the impact, still ongoing and changing, of ACA. The other color is now for SS changes. In both cases, the numbers get worse, not better! (And if they ever raise the tax on wine, it will be Game Over! Yep, I'll ask the DW to go back to work:)!)

 

But, you adjust where and how you can. Wave your pen/sword towards DC, and grin and move on...

 

Best to all,

Smitty

[LindaH]

Thanks Trucken and Linda! That's why I didn't understand it since it's not something we've done...we each draw our own SS benefits.

[Pieere]

What ever the changes are, can't be to benefit the retirees! And I read them; don't have an effect on me; but will put a strain on many!

[whj469]

I must be missing something? The file and supend would give you a larger SS benefit at age 70 then if you took it at 66. What about the four years

from age 66 to 70. In my case that would be a total of more then $120,000, $2,504 per month times 12 months times 4 years. I started mine at age 66, last July, because I am still employed

and at that age I can get the SS and still make all that I can. My better half started at that time, age 63, and by using my work for her benefit, she gets $1,000 per month. Some say that she could wait for a larger benefit but she wouldn't be getting the $12,000 per year for those years from 63 until she started. I have a pacemaker for A-Fib since 2008 and males my age on average should live until about 80 and the better half a few years longer. In other words, it is later then we think.

Additionally, having taken care of my parents in their later years, at about their mid 80s they didn't spend the money that they had coming in and their bank balance just got larger.

I am very happy to have SS and during my retirement years we will have more money per month then I had during my high income years, which is now. That is because when I put the max that you can into my retirement plan for the last 20 years

and also paying for her health insurance left me with only one half of my gross pay. I can hardly wait until September 1, 2016 to retire.

[Smitty77_7]

So many variables between individuals and couples. For example I have a pension, I elected to not add my wife for spousal benefits so that we would have higher monthly income. (I cover the potential gap of her not having my pension available if something were to happen to me, with a cash accumulation 15 year life insurance policy.) My wife is younger then me, and per the normal statistics, should live a good decade or more after I'm smiling down at her. So for us, we had planned on letting hers simmer until age 70. The combo of my life insurance and her having higher SS benefits, more then offset for loss of my pension.

 

Others have different angles they're trying to cover. We used the Kiplinger SS planning tool as one of our aids in working the numbers on this part of our retirement planning. For us, it was worth the small costs to easily get in and set up different scenarios that we compared. As mentioned, a few of the SS options available to us then, are now not available... So, we'll adjust, again, and move on:)!

 

Lots of What If's? for sure. Best to all,

Smitty

[hitchup]

A couple of years ago, before I turned 62 and hubs turned 63, we inquired about the File and Suspend option at the SS Office. We were told he would have to be 66 before we could do that, so instead I filed on my own work history and have been collecting a small check. But we are taxed on 85% of it, because he still works fulltime.

 

Then as I'm researching for Medicare, before he turns 65, anyone who newly files for Medicare in 2016 will now pay $121.80 plus $3 shortfall, instead of the $104.90 current monthly premium that I've been using for my calculations for the last 3 years. Who knows what it will be in 2017, when I qualify for Medicare.

 

We are trying to hold out until his full retirement at 66, so we won't get hit by the ACA IRS mandated 2.5% Tax for not being covered by insurance. Some days, he calls from work and asks if he can retire yet. Then a day or so later, he thinks he may need to wait until he turns 70 to get the 25% increase in SS payments. And then we say in unison, Nope!!!!

[Velos]

A couple of years ago, before I turned 62 and hubs turned 63, we inquired about the File and Suspend option at the SS Office. We were told he would have to be 66 before we could do that, so instead I filed on my own work history and have been collecting a small check. But we are taxed on 85% of it, because he still works fulltime.

 

Then as I'm researching for Medicare, before he turns 65, anyone who newly files for Medicare in 2016 will now pay $121.80 plus $3 shortfall, instead of the $104.90 current monthly premium that I've been using for my calculations for the last 3 years. Who knows what it will be in 2017, when I qualify for Medicare.

 

We are trying to hold out until his full retirement at 66, so we won't get hit by the ACA IRS mandated 2.5% Tax for not being covered by insurance. Some days, he calls from work and asks if he can retire yet. Then a day or so later, he thinks he may need to wait until he turns 70 to get the 25% increase in SS payments. And then we say in unison, Nope!!!!

 

 

 

Though pricey you may be eligible for COBRA until your Medicare kicks in thus you wouldn't have to pay the ACA tax. According to the link it can be 18 to 36 mo's coverage though I have only heard of 18 mo's.