Tuesday, November 10, 2015


There are times when it is difficult to applaud efficiency in government, especially when it comes at someone else’s expense.  Social Security, the historic “third rail” of politics, is currently under scrutiny and recent benefit-cutting measures have been enacted that will impact tens of millions of current and near-retirement age beneficiaries.  This is an appropriate action but under scrupulous political circumstance.

Under the recently passed Bipartisan Budget Act of 2015, Congress implemented a significant change to what had become a very promising retirement planning strategy for maximizing benefits.   Effective November 2, 2015 and extended for a period of 180 days after enactment, what some considered an “unintended loophole”—termed File and Suspend—ended preventing eligible beneficiaries from “double dipping,” or getting the advantage—if married or divorced—of taking one’s own benefits and qualifying for half of your spouse’s benefits (once at their Full Retirement Age) even if they choose to suspend their benefits until attaining age 70.

Who Is Affected?  

“This amendment grandfathers in anyone who is already using the claim-and-suspend filing option as well as those who request it between now and the next six months,” said Web Phillips, senior legislative counsel at the National Committee to Preserve Social Security and Medicare.

In addition, anyone who is 62 or older by the end of 2015 will retain the right to collect just spousal benefits starting at their full retirement age of 66, assuming their spouse has already claimed retirement benefits or had requested to file and suspend their benefits within six months after enactment of the law.

Future retirees who are younger than 62—those born in 1954 or later—are out of luck. The rules regarding “file and suspend” will change beginning six months after legislation is enacted. After that, anyone who files and suspends will no longer be able to trigger benefits for a spouse or dependent child, nor would they be able to request a lump sum of suspended benefits. No one will be able to collect benefits on his or her Social Security record until the primary beneficiary actually begins receiving.

Who Actually Benefits Most?

The amendment to close “unintended loopholes” in the Social Security Act is part of a larger budget deal to keep the federal government running for the next two years. The inclusion of new limits on two key filing strategies — file and suspend and filing a restricted claim for spousal benefits — was the result of secret backroom budget negotiations between congressional leaders and the Obama administration, said Mary Beth Franklin with Investment News.

Other reports indicate that as much as $57,000 in potential file-and-suspend and spousal-[bonus] benefits may not be realized by retirees.   Given how many Americans rely extensively on SSA benefits to live during their retirement years, this is an enormous loss to eligible retirees equivalent, according to Congress, in returning (or not distributing) about $20 billion over the next two years.  And, if the trend to make government more efficient remains at the center of these reductions, then this is just a shot over the bow for Social Security, Medicare and Medicaid, and possibly any other federal—and consequently State—directed programs.

So, What Is The Alternative?

Saving for one’s retirement has been a central theme for over a generation now.  The Silent Generation benefited from company-sponsored Defined Benefit Plans or, basically, lifetime annuity contracts.  Some Baby-Boomers will also benefit from such plans based on their employer and time in service, but most were introduced to Defined Contribution Plans, or 401k, 403b and Individual Retirement Accounts.  In effect, the major shift towards self-reliance emerged very strong during the 80”s, such that today’s X-Gen’s to Millennials are expected to sock away all they can and not depend on government or even an employer for their retirement future.

So, where does that leave us?  Are any of the programs and periods mentioned really good for us as a people of faith?  Is it reasonable to expect that conventional worldly-systems would ever provide for our well-being, or have the legislative changes underway shaken each of us enough to realize that only we and our loved ones can truly fare for ourselves?  Hopefully they have.

Life-Planning, a term I coined back in the 1997, is the only comprehensive planning strategy that factors in what you and your family can and should do for your own posterity—a posterity that runs for multiple generations.  Planning for retirement as an isolated event is and has always been foolish as so few people ever really retire, per se.  Sure, there are some who truly stop all activity that generates income and rests on their financial security.   But given the difficulties so many Americans have faced these past few decades to grow their personal worth through savings, investments and buying and selling real estate, is it any wonder that a majority of so-called retirees today still perform some type of revenue generating activity? 

Said another way, reality can be mean.  Financial circumstances will always influence how one lives and chooses to work in this present life.   More importantly, measures can always be taken to insure that you and your family experience an ever improving quality of life if you are willing to set this as a goal. 

Taking Personal Initiative

Privatizing Social Security and offering what former President George W. Bush termed Personal Investment Accounts has always been the right solution when you combine individual responsibility with social responsibility.  This was first considered in the mid-60’s by Congress.  If your income tax dollars are withheld for your future retirement, then you should be afforded some say in how they are secured and invested.   And since our government and legislators have failed to see the sensibility in this strategy, why not take your own measures.  From all financial calculations, an investment earning 8% annually will double every nine years, and 40 working years divided by nine says your investment will double at least 4 times. 

Accordingly, $1,000 invested annually for 40 years earning 8% per year will generate a retirement nest egg of $279,781; and, at 10% the same $1,000 annual savings would reach $486,862.  So, what if a family committed to this concept and set $1,000 aside each year for its family members until they were of the age to assume this responsibility.  This personal investment retirement strategy would generate a respectable supplement to any other retirement plans that are in place through career employment, self-employment or possibly Social Security.   The annual set aside is equivalent to merely 2.74 cents per day, less than the average person spends buying a daily newspaper, a cup of coffee or breakfast sandwich.  

What this tells us is that it is not about whether Social Security remains solvent or continues to provide “unintended loopholes,” but that we as concerned Americans can take steps to secure our financial future using strategies that will not break the bank.   Even attaining higher yields or investing at higher rates is within our direct and immediate control, and we should not think otherwise.    Fulfilling the biblical mandate to leave an inheritance to our children’s children (Pr. 13:22) requires personal and intentional imitative coupled with sound investment management.   We have the means and the solutions.  Now all we need is the will to take matters into our own hands… 


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