6 Replies Latest reply on Jul 21, 2012 11:30 AM by jocee

    Distributions vs. Contributions

      I retired on Jan. 1, 2012. As a newcomer and 65 yrs. old, I attended several meetings on applying for SS benefits. I was shocked and disgusted when an ex-employee of SSA with 21 yrs experience told the audience how SEVERAL CLAIMS can be made on ONE CONTRIBUTION. He mentioned about how spouses, ex- or current, meeting the minimum requirements (like 10 yrs of marriage) can choose a HIGHER benefit AT THE SAME TIME after 62, including the beneficiery. This is like ADDING a drop of water into a bucket with SEVERAL HOLES???? How can we expect SS system to survive under these conditions? There should be ONE DISTRIBUTION for ONE CONTRIBUTION at any time. The contributor should nominate a BENEFICIERY to receive the benefit after his/her death (like any other distribution of his/her wealth). I am surprised why the SSA , any other Government agencies, and AARP did not look at this so far. May be, it is NOT too late to fix this problem.  I like to see your comments on this topic.  Thanks.
        • Re: Distributions vs. Contributions
          Are you certain you understood this issue correctly? I was under the impression that there are different alternatives for filing, but that no one can collect more than one claim.
          For example, I can collect under my own SocSec record OR under my spouse's if I meet eligibility conditions (which I do). I can opt for whichever payment is larger, BUT I can only collect one check, not both.
            • Re: Distributions vs. Contributions
              You misread my info. Let me put it in another way. Let us say that John distributed into his ss. He is 66 and his current wife, Mary, is 62. He is eligible for full ss benefit from his contribution and his wife for a reduced benefit. If she waits until 66, she will also get full benefit allowed from his contributions. This is, if Mary did not contribute any to her own ss. If she had, she will receive the higher amount of hers vs. his.
              Let us also assume that John married, at least twice before and the marriage lasted for 10 yrs. minimum in each case. Those wives will also be eligible to collect on HIS contributions. Again, the higher amount. Just imagine that ALL WIVES are eligible $1000/month from theirs vs. $3000 from his. There is a $2000 hole per month per wife???
              Let us assume another scenario. John died. The current wife receives the survivor's benefit (same amount as his) and the others still get the higher of the two contributions, theirs vs. the dead husband.
              Hope that I understood this correctly. Imagine what would it be if he had married more than twice and left his wives with young (less than 18 yrs. old) children who rec'd benefits from ssa until they reached 18.
              Hope that I have explained it better now. I understand that the system works the same way if the HIGHER earning spouse is a woman and the same scenario applies.Like to get comments on this. Also, if you are a member of AARP, pl. ask your regional rep to consider this as a topic for discussion. Thanks. 
                • Re: Distributions vs. Contributions
                  First of all, let me say that I only have the most cursory interest in this, so I have not paid a great deal of attention to this aspect of SS. My DH is barred from receiving more than 40% of any SS claim under the WEP provision of the Windfall Profits Tax Act, so we have always assumed he will get little more than enough to pay for the Medicare premium, LOL.
                  One thing that strikes me is that you seem to believe that contributions to SS should equal distributions. They don't, and never have - no one has a SS account assigned specifically to them that totals their contributions. SS started off in the hole, because it paid benefits to an entire generation that never contributed at all, pre-WWII.
                  It has always been a 'pay as you go' system. This is why a declining birthrate combined with allowing very high wage earners (whose percentage of payroll and real assets has gained enormously in real terms whereas the middle-class has suffered a serious decline over the last 20 yrs) to escape paying SS taxes on more than $120K/yr, has put SS in a deficit position due to longer lifespans.
                  We can certainly say yes, it's unfair for someone who's had three or four spouses to let them claim on the breadwinner's SS. But since the fastest growing poverty segment in the US is single women, what is your solution? Let them starve with their kids? Poverty and crime go hand in hand - I grew up in the ghetto, and can assure you of that.
                  SS is not now, nor was ever intended to be, a 'living wage'. It was designed and intended to be no more than 1/3 of what is needed in retirement. The very sad statistic in America is that more and more seniors and Boomers forced into retirement because they can't find jobs, are relying almost solely on SS to live on.
                  I remember in the 1970's, columnist Howard Ruff went to Hong Kong and then wrote ecstatic columns on how "here's where capitalism really works, unfettered by government!" He went on and on about how exciting and vibrant the city was, etc.
                  My DH was born and raised in HK. I showed him Ruff's column and asked him what he thought of it. His reply was, "Obviously they didn't want to take him into the back alleys where they pick up the dead bodies of poor people that died in the streets overnight."
                  Capitalism is an economic system, not a political one. It has always worked to the advantage of the wealthy, who use it to intertwine their interests into the political system. Ironically, its success depends upon a stable middle-class, but you should never believe that the aims of capitalism are aligned with anything but their own self-interest.
                  Larry Ellison, CEO of Oracle, gets to draw SS when he's 65, too. Do you think he needs it? He certainly didn't need anybody else's money to buy an entire Hawaiian island, to add to all his other global RE assets. Did you know it's not possible to refuse SS? Now that, I think, IS wrong.
                    • Re: Distributions vs. Contributions
                      Jkom, just to clarify, a divorced woman old enough to collect SS is unlikely to have kids to raise unless they are grandkids of their irresponsible  kids that she has accepted responsibility for. The ability for having ex-spouses get benefits offends me also, especially if there are several. Not to pick on a wife that gets dropped after years of marriage, but the couple should have to face some penalty for their personal choices and I certainly don't mean primarily taking it out of the wife's hide.
                      I definitely question some of the "welfare" aspects of SS. I think that we need to address these matters and how they have snuck into SS. We also have to address how the assumptions originally made to fund SS have been violated. The last SS "fix" assumed a certain percentage of the nation's wages would be subjected to the SS tax. By freezing the upper limit this assumption is no longer true. We need to go back to the original assumptions and tweak SS for new developments like longer life spans whether that be by changing the retirement full benefit age or raising the tax or whatever we can agree on. SS is too important to just scrap it or gut it.
                      SS is yet another example of how politicians lie to us by setting fixed parameters that really change over time, by not building in inflation adjustments and by failing to face up to issues independently by piggy-backing existing programs with obligations that should require separate and often politically difficult legislation (i.e. excessive welfare being pushed onto SS - my spouse and I were an old percentage of the much larger and younger group when we visited the SS office - how does that happen????).
                        • Re: Distributions vs. Contributions
                          Well said! Our SS System is a runaway train. Personally, I want to be responsible for my own funds. I do not need anyone to oversee or balance my money. I want the option to either take it and use any way that I see fit to do.
                          This is my money and it belongs to me. Too many people are being placed on disability and they have not contributed one red cent to this fund. I do understand that the State no longer wants to be respondsible for these individuals. So, someone has to pay the bill.
                          I am approaching my senior years and I have worked, raised my children. Also, I do not want to be penalized for working in this system.
                          This run away train has crashed a long time ago.
                      • Re: Distributions vs. Contributions
                        I think there is a little confusion about the spousal distributions. 
                        First of all, if John's wife begins drawing at age 62, she can NEVER get a higher rate when she turns 66 AND HE is alive.  She can receive COLA increases but she can not jump to the amount she would have gotten if she waited until 66.  (yes, I know there is a way around this by paying back ALL the monies she collected during the 4 years but how many people can do that?)  She would only draw on her own contributions (there is a small bump up for a wife but it is NOT the same as the spouse's amount) or whatever a wife would get at 62 if they had not worked themselves (I think it might be half of his but not sure).
                        If she starts drawing at 62 THEN John DIES - she has the option of keeping with her own distribution OR taking his - whichever is higher but she will NOT draw both distributions. With more women working, there are more women who would be drawing more than their husband and NOT choose his distribution.
                        Ex-spouses can draw on former spouses SS BUT NOT if they have remarried.  Then they get nothing against the former spouse while they have a current spouse.  Again, if they are unmarried, they would NOT get the same distribution as the former living ex-spouse.
                        Unless the law has changed lately, children only draw until they are 16.