Thoughts, ideas, suggestions and education from financial adviser Jim Ludwick, Founder of MainStreet Financial Planning, Inc. of Odenton, MD; Washington, DC; New York City, and Santa Barbara, CA

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Saturday, April 27, 2013

Why are Soc. Sec. retirement benefits so confusing?

Why are social security retirement benefits so confusing? Don't say it's so financial advisors, financial journalists, financial educators and former Social Security Administration officials can write and sell books. You could say it's so I can write a blog. There, now we're even.

Now selling books, doing book signings, writing blogs, doing interviews, and giving speeches certainly sets you up as an "expert" in some circles.  Just check out social security retirement benefits on to find out that it appears to be a growing book category probably because all of us baby boomers are staring retirement in the face.

The other day I was reading a question and answer on Fox Business News' website concerning ex-spouse benefits. I'm assuming if you're reading this blog you know about ex-spouse benefits.  I'd venture to say in my practice, more that half of eligible ex-spouses have no clue they might be entitled to this kind of benefit.
I was led to this story by Google Alerts "Social Security", which every couple of days sends me a summary of stories on social security.  It's a great help to someone like me who is busy giving advice and needs help to find all the stuff that's out there on a particular topic.
Anyway, I'm fusing about the answer which first focuses on the confusing rules that say before full retirement age you don't really get any choices when it comes to social security retirement benefits. I can't imagine most readers giving up after about the second paragraph of the response to the question. I would have answered the question differently.

Taking social security benefits whether on your own work record or your ex-spouse's (or even your current spouse's work record) is a bad decision if you plan to continue working at a modest income or higher job which is a fact stated in the question.  I would have started out answering the question by saying you stated you are continuing to work until age 66 your full retirement age.  Then forget about any kind of spousal benefits and figure out how your son can do things on his own. Then I would have laid out the rules and the readers could fall asleep before the got to the end of my response.

I know that sounds harsh and cruel to answer the question this way, but social security is an insurance program to partially support needs in retirement and is structured to accomplish just that. The writer of the question wasn't retiring, she was looking for money as a single parent to support what appears to be an able bodied adult child who is unemployed and is going to college.
My opinion is not going to change how social security is structured. I leave that up to the congress.  Ok, stop laughing, but that's how we got to this point in the first place.  What I can argue for, is more direct answers to these kinds of questions.  Secondly, all of us in this arena of educating and giving advice need to do a better job and drop the ignorance and misunderstanding factor much lower that it currently appears.