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Your Tewksbury Today

Counting On Social Security In Retirement? We've Got Bad News for You

Nov 02, 2015 06:02PM ● By Rick Spencer

Your Social Security check may have just got smaller.

If you are one of the 59 million Americans currently collecting a Social Security check, or if you are one of the 9-out-of-10 Americans who will count on Social Security to help fund your retirement someday, I have bad news for you.

Your pocket just got picked.

Yep, the Bipartisan Budget Act of 2015, which got signed into law by President Barack Obama on Monday, had a nasty little surprise tucked inside.

Most people thought the bill was all about raising the debt ceiling and preventing a government shutdown this week, but there were some interesting little tidbits tucked inside its hundreds of pages of hot air and legalese.  And the most interesting of them all – at least in this writer’s eyes – were the changes made to the Social Security system.

Fortunately for Pres. Obama and his buddies from Massachusetts – Congressmen John Tierney and Nikki Tsongas and Senators Edward Markey and Elizabeth Warren all voted in favor of the bill – only a small percentage of the American population ever even knew about the Social Security claiming strategies that were instantly eliminated when Obama signed the bill on Monday, so absolutely no one put up a fight.

The bill, which allows the U.S. Government to go $80 billion deeper into debt over the next two years, was whisked through the House of Representatives and the Senate faster than a grifter can snatch an old woman’s purse. Obama hurriedly signed it on Monday, deflecting the Social Security issue with rhetoric about “investing in America’s priorities,” before slinking off to New Jersey to do some last-minute campaigning for some fellow Democrats.

Essentially, the bill affects Social Security by eliminating some of the claiming strategies that were becoming increasingly popular in recent years. These strategies, known as the “file & suspend” and “spousal benefit” strategies, rewarded folks who decide to work beyond their normal retirement age by increasing their monthly Social Security check by eight percent for each year they put off collecting their checks.

In other words, people who are eligible to start receiving full benefit checks of say, $2500 per month at age 66, can delay the start of their monthly payments until they reach age 70, and get an $800 per month increase in their checks (for a total of $3300 per month) once they hit 70.

It was also possible, until Monday, for these same people who had filed and suspended to claim a spousal benefit, and still collect a smaller monthly check while their own benefits were growing at eight percent per year.

Sound too good to be true? Well, as of Monday, it is.

To be fair, it would be irresponsible of me not to mention that the Social Security system did need to be tweaked a bit. Based on current revenues and forecasted benefit schedules, it was estimated that the Social Security retirement fund was going to run out of money by 2035. So something had to be done.

My question, though, is why did Congress decide to take benefits away from the people with the fewest other choices? I mean, once you are retired, or even closing in on retirement in your mid-50’s or so, you start to run out of options. If your retirement plan has been based on a certain level of income from Social Security, it’s a tough break when the government cuts your benefits a few months (or even years) before you start collecting them.

Once again, Congress couldn’t make the tough decisions and balance the budget but cutting out some of the wasteful overspending. They had to cut benefits instead. Personally, I’m rarely in favor of increasing taxes, but in this case I think it would have made more sense to pass a slight increase in the Social Security withholding tax, which would have solved the problem just as effectively. A small increase in the Social Security tax would hardly have been noticed by America’s younger working population. But instead, older Americans, including many retired Americans, just got a huge dent in their retirement income.

So the bottom line is this – you’ve got to be proactive. Gone are the days when the average American could rely on a company pension and a Social Security check to keep him or herself comfortable in retirement. It is now critical, essential, and should be mandatory for folks to learn about the Social Security system and figure out how to maximize their benefits in retirement.

If you just blindly accept what the government gives you without doing some research and advocating for yourself, then you better prepare yourself for a long, lonely, boring retirement.

The good news is that I am here to offer a solution. On Wednesday, Nov. 18 at 6:00 p.m. we are sponsoring a “Social Security Rescue” workshop at the Tewksbury Senior Center, 175 Chandler Street in Tewksbury.

The workshop is free, and there is no obligation for folks who attend. We’re even giving away a couple of my wife’s famous “Mile High” apple pies as door prizes. We’re going to discuss the new changes to the Social Security system, and give folks a basic education on how Social Security works and what you can do to maximize your benefits in retirement. The strategies we will share could potentially mean tens of thousands of dollars in additional retirement income for folks who attend.

There are a limited number of seats available but you can reserve yours by calling 978-640-3978.

Rick Spencer is an independent financial professional who helps area residents retire comfortably while they are still young enough to enjoy it. Contact Rick at

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