Government Lies
Triple Entendre
Generally, when you see an item entitled "Government Lies," you dismiss it as the crazed writings of a conspiracy theorist, unless you are a conspiracy theorist, in which case it's a "given." But you rarely consider it in a grammatical sense: Does it mean that the government tells lies? Or that you're about to read a batch of "true lies" under that heading. Of course, it usually becomes clear from context as one, the other, or both in the case of especially rabid pieces. But here we have something slightly different. In this case it is I who have been telling lies about the government. I have been set straight by pattern recognition software operating on a cloud-based wetware system.*
The lie, true at the time but no longer operative, was detailed at the end of this blogitem. I said "I was stunned to read this piece in the Journal last August. It says that you can collect your Social Security and then change your mind! Simply by paying back all you've received, you can re-start your benefits at a new, later age." I immediately (when I read the article) envisioned an entire industry built around this anomaly. Interest-free loans from your government were suddenly available to individuals, not just those "too big to fail." Alas no more.
Social Security Seeks to End Free Loans
By JENNIFER SARANOW SCHULTZ
The Social Security Administration published new rules this week that limit the ability of Social Security recipients to essentially receive interest-free loans from the agency. The rules took effect immediately.
Under the old policy, people who decided to take their Social Security benefits early could change their mind at any time and withdraw their application for benefits, as long as they repaid the full amount of the benefits received, with no interest charged on the money. They could then also reapply for benefits later on and receive higher benefits.
While this policy was intended to help those who decided to take an early retirement and then went back to work, it ended up becoming a way to get a free loan from the government. People would apply for Social Security benefits, put that money in investments and earn interest and then withdraw their application, paying the government back just the benefit amount.
Here's the whole article.
Social Security Thought
Strangely believe it, this is a subject that has been much on my mind. I started writing this blog five years ago, when I was 60. Presumably, then, I must be around 65. Since one can begin "collecting" at age 62, I could have started years ago, and I also have the option to wait until about 70. When I discovered the "loophole" alluded to above, that one could "reset" the clock by paying back one's "benefits," I decided that it's a can't-lose proposition, at least for those who aren't earning enough to attenuate or negate the payments. Unfortunately, or fortunately if you're just a taxpayer and not a soon-to-be recipient, that is gone. So what to do?
The whole Social Security system is a gamble in the sense that if you knew how long you were going to live, you could more easily make a good decision. According to the SS Administration, the benefits, which increase each year that you delay collecting them, come to about the same value if you live out your expected lifetime according to their actuarial tables. If you are likely to live longer than the tables suggest, you're better off collecting later. If you expect for whatever reason to die sooner, grab what you can since they won't pay you after you do. How long will you live? Although you don't know, there is a way to make a good guess: Apply for life insurance! You probably know that the insurers have underwriters who look at your habits and health before deciding what to charge you. For example, smokers inevitably pay higher premiums than non-smokers because they are likely to pay premiums for a shorter time before collecting. (You don't have to actually buy life insurance, of course. You can take advantage of their sophisticated models by requesting a quote.) If you get "preferred" rates from the insurance company, you might want to consider waiting before demanding "your" money from the government.
Oversimplification
If you know anything about Social Security, you will already have decided that this blog is a significant oversimplification. That's because this, or even the entire corpus of Social Security regulations, is an oversimplification. Everyone's situation is different, and the rules keep changing. The fact that the rules keep changing might actually be an argument for collecting earlier. They are less likely to take back what you've collected than to reduce benefits in the future. Probably. My little contribution to this important but fundamentally impenetrable and tedious subject is the life-insurance-quote suggestion. Back to moths, atoms, or pastry soon enough.
* As my friend Jeff, who selected this article as being of interest, characterized himself.
