During the budget negotiations, I searched each day to learn if "file and suspend" was is danger of being eliminated. I took comfort in the fact that every report, including news from Social Security website, said that only minor tweaks would be made to rules affecting disability claims. After the budget was passed, it was reported that "file and suspend" had been ended. It was kept quiet and buried in the 141 page bill. Fortunately, for me, a compromise keeps the benefit in play for those who are receiving it now or who qualify and apply within six months. My wife and I just reached 66 and filed for it. Those who are six months younger are out of luck.
The efforts to reduce social security benefits are hard to understand when one considers how small the average payments are and how important those checks are to our older citizens.
Comments
https://www.kitces.com/blog/congress-ends-file-and-suspend-restricted-application-and-other-voluntary-suspension-social-security-strategies/
The House summary of the bill (15 pages) describes the change (on p. 10) as closing loopholes "to prevent individuals from obtaining large benefits than Congress intended."
Various commentators from Fox news, to Kitces and others suggest that the original intent of file and suspend (in the 2000 Senior Citizens Freedom to Work Act) was simply to make it easier for older people who were already drawing SS to work and coordinate benefits.
There's a good argument to be made that this spousal benefit (drawing SS while the other suspended benefits) was not intended. In any case, this was a relatively recent change to the SS law, and it's only been in the past few years that using the law to take spousal benefits has been widely employed.
Jonathan Clements at the WSJ described the elimination of "aggessive Social Security claiming strategies" including file-and-suspend as a White House proposal targeted at those with higher income and greater wealth.
While some people affected may not be in that group, I'm inclined to think that most people affected are indeed better off. As Kiplinger noted, "the wealthy may have an easier time using that strategy." You need to have money in the first place to defer SS benefits to age 70. Only 3% of people do the full deferral.
The problem with the theory as you state it is that SS is supposed to be actuarially neutral. And in 2000, when the law was passed, that was much closer to reality (with the actuary tables based on 1983 data). So the government had no reason to bias people one way or the other on when they started benefits.
But the government was interested in making it easier for older people to go back to work. It used to be that benefits were (temporarily) reduced if you drew SS and worked, regardless of your age (the "earnings limit" test). The 2000 Act changed this - it stopped reducing benefits once you reached FRA.
Why would the government do that (make it easier/less painful to take benefits before age 70) if it were trying to discourage taking benefits before age 70?
From the legislative report that went along with the bill:
"According to the Congressional Budget Office, 631,000 seniors between the ages of 65 and 69 will have some or all of their benefits reduced in 2000 because of the earnings test. Thousands more will deliberately reduce the amount they work to avoid a benefit reduction. ...
"Withholding benefits from seniors simply because they choose to work beyond the full retirement age is unfair, and it discriminates against seniors who need to work to supplement their income.
"Moreover, the earnings test imposes a risk because many seniors will not live long enough to recover all their lost benefits through the DRC. Lower-income workers and some minorities face the highest risk of losing benefits to which they are entitled because of their shorter life expectancies."
That last part sure sounds like the government is encouraging taking benefits before age 70. (DRC refers to delayed retirement credits, i.e. the boost in benefits by delaying claiming SS.)
One article that explains the purpose of file and suspend is a March 25, 2014 Reuters piece by Mark Miller:
"Too clever by half? Perhaps, but it's completely legal...as part of a broader law called the Senior Citizens' Freedom to Work Act of 2000. The main point of the law was to give people incentives to work longer by allowing them to work and receive full Social Security benefits after they have reached their FRA.
"The law's file and suspend provision allows married couples to start receiving some benefit to meet living expenses while they wait to get more later..."
The first statement ("The main point of the law ...") is what I said, what I cited in the legislative record as Congressional intent. The point of the law is to encourage people to work after reaching FRA. It's a reference to the elimination of the earnings test at FRA, so that (unlike at ages 62 to FRA) you don't get "penalized" for drawing SS while you're working.
The second statement is a description of what the law does, but doesn't say that this is the intent of the law as opposed to an unintended consequence.
You wrote: "The articles I've read said that file and suspend was intended to give an additional to encourage retirees to wait until age 70 ".
Look at the Congressional record, look at the legislation. What one sees there is discussion about how we need to make it easier for people to continue working, as opposed to making it easier for people to retire.
Most of Miller's column is about how file and suspend works. As to whom it benefits, he writes:
"At the same time, delayed claiming strategies - of any sort - should benefit lower-income households most, since they are most reliant on Social Security as a source of replacement income in retirement."
Here we have a statement in direct contradiction to the legislative record. Repeating what I quoted before:
" Lower-income workers and some minorities face the highest risk of losing benefits to which they are entitled because of their shorter life expectancies."
Whom are you going to believe about Congressional intent, Congress or Miller?
FWIW, his was one of the columns I relied on in making the statement that using file-and-suspend for spousal benefits was a recent phenomenon that came years after the law was passed. (AARP also has a column stating this.)
The bottom line is that my beloved president has unfortunately sided with those who want to reduce Social Security payments by characterizing file and suspend as some kind of trick that only benefited the rich. There are plenty of middle class seniors who were looking to this procedure to help them maximize their payments. President Obama was also willing last year to join those who would have "chained" the inflation adjustments in an effort to limit future increases in benefit payments. Very disappointing. Fortunately, aarp helped block that effort.
http://www.cbpp.org/research/chained-cpi-can-be-part-of-a-balanced-deficit-reduction-package-under-certain-conditions
I'm happy to take our exchange off line if you would like. I am one of those middle class people who was looking forward to benefiting from, if you'll pardon the expression, these unintended consequences of the 2000 Act. So I'm collateral damage. Just as I'm collateral damage from my state (not the ACA) terminating my grandmothered policy. That doesn't preclude me from trying to look at the bigger picture. You might be surprised how close we are (or at least I think we are).
There are many dimensions to "intent". As you note, there's the legal dimension. It may be reinterpreted over time as you suggest, or it may be ignored (as the latest suit against the ACA attempted to do, by focusing on a small phrase instead of overarching design and intent).
Then there is the design intent. Take a feature intended for a limited purpose, apply it more generally and the design is stressed. Anyone who has built systems, whether legal (e.g. contractual) or engineered or coded knows that. Sometimes that leads to better ideas and improvements, sometimes it leads to collapse.
The only study (from 2009) currently being quoted estimates potential exposure at $9.5B per year. Usage is accelerating, and that's a lot of stress.
(I thought you might appreciate my linking to another Miller column for the source of that figure. Unfortunately, his reporting still isn't sharp - he reports that figure as actual cost, not potential exposure.)
So I agree with you, that what it is doing is moving around a fixed (and reduced) pie, so that those most in need of protection get more. This was my response to a comment that implied chained CPI is necessarily unacceptable under any circumstance.
(If one wants to knock Obama's negotiating skills, that's another matter, and you won't get argument from this corner.)
That is why high frequency trading companies are very secretive about their algorithms. If their trading methods became widely known, they would be outlawed.
Why am I not surprised to read THAT???