Monday, December 28, 2015

THE SQUEEZE HAS STARTED If You Were Born After 1953 and You're Married, Your Social Security Benefits Have Just Been Cut

Rob Horn reports:
Under the maximization strategy known as Restricted Application, you could file for Social Security benefits at or after full retirement age (FRA), but elect to take only your eligible spousal benefits, allowing your individual benefits to grow until they max out at age 70. At that point, with a raise of up to 32 percent under your belt, you would switch to taking your individual benefits.

Restricted Application is being phased out immediately for anyone born after 1953.
Put  more simply, restricted application would in the past take place when someone who is full retirement age (that's 66 or 67 depending on when you were born) applies for spousal benefits only and delays his or her own benefits allowing them to grow at 8 percent a year, explains Jim Blankenship, a financial planner in New Berlin Illinois and author of "A Social Security Owner's Manual."

Via Jean Chatzkyu, here is an example of how it used to work:
Ben and Mary, for example, are both full retirement age of 66. She's eligible for a $700 monthly payment, Ben is eligible for $1,500. Ben can apply for a restricted application and receive $350 a month in spousal benefits immediately while waiting until 70 to apply when he applies for his own benefit. Together they'll receive $1,050 in monthly income while they wait for Ben's higher payout, which will total $1,980 when he reaches 70...
 Restricted application works well if the younger spouse is not the higher earner and wants to file for benefits early. A wife age 62, for example, may file early for her own benefits. Her husband, who is 66, applies for restricted application for spousal benefits on his wife's account leaving his own benefits to grow. When the husband reaches age 70 he converts to his benefits, which have now grown 32 percent. The wife, who is now full retirement age, can now apply for spousal benefits on her husband's account if they are higher than her own.
Social Security has turned cash flow negative. The money just isn't coming in fast enough to keep this Ponzi scheme going. The gap between flow into the Social  Security "fund" and outflow is going to continue to expand.

Now, the government is only monkeying around the edges of benefits, but at some point the cuts are going to get much more severe and will affect all those counting on Social Security retirement money.



  1. Nothing like a greedy gov't stealing hard-earned SS benefits, eh? That's exactly what "cutting" benefits truly is .. it's grand theft larceny - a felony, btw. The SS Fund is only there for retirees, their spouses, disabled individuals, or children under 18 orphaned by the deaths of their parents. It's not for anything else, since the money does NOT belong to the gov't, but to those who paid into the funds through taxes in their working lives. Taking that money is grand larceny - a felony; period.

    1. Sorry Eileen but the courts have ruled that SS money DOES belong to the gov't.

      The following excerpt from : http://www.cato(dot)org/publications/commentary/is-there-right-social-securityFrom

      "Many people believe that Social Security is an “earned right.” That is, they think that because they have paid Social Security taxes, they are entitled to receive Social Security benefits. The government encourages that belief by referring to Social Security taxes as “contributions,” as in the Federal Insurance Contribution Act. However, in the 1960 case of Fleming v. Nestor, the U.S. Supreme Court ruled that workers have no legally binding contractual rights to their Social Security benefits, and that those benefits can be cut or even eliminated at any time."

    2. What Eileen says is true but there is more to the story. Congress has the ability to give "more generously" with regards to the program and its benefits and they (congress) have the ability to reign in spending outlays of the program. Also, what was not mentioned above was that Nestor was "DEPORTED" as an alien due to the Immigration laws and was a member of the Communist party from 1933 to 1939 (I believe)...SO even though he paid into the program for 19 years up through 1955, he was deported in 1956 and the courts deemed he was not able to claim benefits from his having S.S. deducted for all those years.

    3. @Sara - No, what Eileen says is not true, at least according to the courts. Fascinating story about Nestor and interesting semantic wordplay on your part regarding Congress "giving more generously" (how sweet, almost sounds like a loving parent!) or "reigning in spending outlays" (there's that parent again, just with some tough love this time) but nothing you mentioned is germane to the point that the Supreme Court ruled "workers have no legally binding contractual rights to their Social Security benefits, and that those benefits can be cut or even eliminated at any time."

      To quote Johnny Rotten, do you feel cheated?

  2. Very tough situation for the U.S. Government. My personal experienced with individuals from the Social security Administration has been a very good, positive and warm one. Many individuals in the administration are working very hard with concern that the elderly can receive funds from the government. The problem is that the baby boomers getting social security are expanding to unsupportable levels.

  3. It's a Ponzi scheme. Madoff went to jail but these crooks who "borrow" from SS don't. You would go to jail but they won't seems pretty much the definition of hypocrite to me.
    They can, and have, changed the rules already in the middle of the stream, so there is no "contract." You do what they want or else.
    Social Security is not an "earned right" but it's simply hush money. All of these lies from AARP about "protecting Social Security..." you didn't buy into them did you?