Wednesday, March 16, 2016

Much alarm about nothing

One of the current online ads is one about you can get over $4,000 more in Social Security every month.  Sounds like an offer you can’t refuse!

Supposedly Congress has removed a Social Security Benefit and Obama has approved it.  It will be removed on May 16, 2016.

The advertisers make it look like this benefit was removed by a clause snuck in by some anti-Social Security member of Congress.

Actually, it is a loophole that allowed a spouse to defer his or her Social Security while the other collected his or her Social Security.  At some later date the deferrer could have a much higher Social Security benefit.

To get $4,000/month more, the person would have had to have a rather high income.  I can’t imagine the average worker getting such a benefit.

But these are probably just the people the ads target.  Either these “marks” will have to pay an upfront fee or buy a book to find out that they cannot get such a benefit.

I tried checking the Social Security website for “2016 changes”.  I got eight hits, but that’s all I could see.  No text, no further links.  I sent an email, but my guess is that it will be a long time before I get an answer:  too many people are asking the same question and overloading the system.

Fortunately, Vanguard published an article written by Jacklin Youssef that explains the changes.  See

Essentially, by using your spouse’s Social Security benefits and deferring your own until age 70, you can collect 34% more per month.  Let’s see, to get $4,000/month more in Social Security, you would have to have deferred a benefit of $11,764.71/month

So, you retire at 67 but defer your benefit until age 70.  You would pass up $423,529 dollars to get that extra benefit.  It would be over 100 months until you recouped the $423,529 you passed up.  You would be over 78 when you broke even on your delay.  Are you sure you will live to 78?

It’s late and I don’t want to figure out the interest you would have earned if you had saved that $11,764.71 a month.

However, how many people do you know that receive $11,764.71/month in Social Security?  These are not the people who are going to respond to these ads.  They probably already have financial smarts or advisors to get the best deal for themselves.

P.S. If you see an ad about this change, I had nothing to do with selecting the ad.  It's done automagically based on the content of an entry.