Listener Q&A: Social Security Spousal Benefits, Ep #136

<p>There’s a lot of misunderstanding circulating regarding social security claiming strategies with spousal and survivor benefits. Spousal benefits and survivor benefits can be confusing and difficult to understand. So in this episode of Retirement Made Easy, I’m going to tackle this topic. I’ll also cover the FairTax Act of 2023 and why you shouldn’t make changes to your retirement planning based on this act just yet. Don’t miss this informative episode! </p> <h2>You will want to hear this episode if you are interested in...</h2> <ul> <li>[3:16] The basics of the FairTax Act of 2023</li> <li>[10:20] The spousal benefit vs. survivor benefit</li> <li>[14:45] Planning social security around spousal benefits</li> </ul> <h2>The basics of the FairTax Act </h2> <p>The Fair Tax Act is a sales tax bill that was introduced by Republicans to abolish the IRS. It would change the tax code as we know it. I keep getting asked: <em>What’s a good strategy in response to the bill that might become law?</em></p> <p>Let’s backtrack a little first. The act proposes getting rid of the IRS and Federal income taxes across the country. It would institute a 30% sales tax on top of local and state taxes. Why? Because 40.1% of US households didn’t pay Federal income taxes in 2022. These Republicans want to recoup money from these households to help cover Medicare and Social Security. </p> <p>Think of what inflation would be if you had a 30% sales tax. The price of goods and services would go up a lot. It would be offset by the amount you’d be saving on Federal taxes, so your paycheck would go up. But would it offset too much? Would you end up paying far more? </p> <p>I’m not a proponent of this bill. My response to the questions I’m getting is this: <em>We aren’t going to change your retirement plans based on a rumor or possibility</em>. Biden says he’d veto the bill if it got to him. I wouldn’t make any changes until this became law.</p> <h2>The spousal benefit vs. survivor benefit</h2> <p>A listener—who I’m going to call Lisa—was married