Featured Columns

Written by Keith Schwanz
From his column It’s Your Money


I purchased the book a few months back, but have not read it yet. Recent action by the United States Congress and the signature of the president have made the book’s contents obsolete. Now what am I going to do?

I am referring to the Bipartisan Budget Act of 2015 in which the federal government closed a couple of loopholes in the Social Security system. These two items were unintentionally created by previous legislation.

The “file and suspend” strategy allowed a person to file for Social Security benefits, then immediately suspend receiving those benefits. Because of the initial filing, a spouse could claim the spousal benefit even though the primary benefit had been suspended. With the recent legislation, however, the ability of a spouse to make such a claim goes away for all those younger than 66 in April 2016.

The “spouse, then worker” strategy allowed a person to receive spousal benefits first while waiting to claim personal Social Security benefits at a later date when the monthly payment would be greater. The action of Congress eliminated this strategy for anyone yet to celebrate the 62nd birthday by the last day of 2015. I turn 62 in January 2016.

Since we will have to make several key decisions in the next few years, I had started exploring options my wife and I are considering for issues like Medicare and Social Security. I used an online calculator that suggested the “spouse, then worker” strategy might work for us. Back to the drawing board, I guess.

State governments sometimes take action that affect personal finance. The state of Kansas, where I live, recently made a significant change to the income tax program. Except for three areas, all deductions were repealed. When I file my income tax return for 2015, I will be allowed to deduct only fifty percent of what I paid for mortgage interest and property tax, and one hundred percent of charitable contributions. All other deductions previously allowed have disappeared.

Back to the Basics

As I reflect on these recent changes, three things have come to mind that warrant additional consideration. Persons can make better financial decisions when they understand how financial programs work. Take Medicare, for example. A person approaching birthday number sixty-five has a seven-month “window” in which to complete the initial enrollment or face penalties. To optimize the financial benefit for such programs, you just have to know things like that. (Editor’s Note: P&B USA sends information and an application to Basic Pension Plan participants approximately 90 days before their 65th birthday.)

As I consider recent governmental action, I also recognize that financial programs seem to evolve over time. Individual Retirement Accounts (IRAs) were first introduced in 1974 and significantly revised in 1981. The Roth IRA was introduced in 1997. The Roth 403(b) came into being in 2006. One good thing led to another and to another. Because financial programs are dynamic, not static, it requires an individual to engage in an ongoing effort to understand how they work, even as they morph into something new.

Finally, and this is the primary insight I gained as I pondered the recent changes, the most basic issues of personal finance need my attention. I have no influence on action taken by federal and state governments, but I can control spending less than I earn, saving for retirement, and living debt-free. Ultimately, building margin into my finances through prudent decisions will contribute to a secure future more than relying on loopholes and complex strategies.

Pundits regularly speculate on the long-term viability of the Social Security system. The recent action by Congress seems to be an appropriate step in securing the solvency of this social program for future generations.

But rather than worrying about these programs, a person would be better served by giving attention to vital financial matters. A life insurance company recently conducted a survey of workers in their 50s and early 60s. Respondents reported they felt they had started too late in life to save for retirement. These folks generally thought 26 was the “magic age” at which to begin investing for the long term. That is the kind of basic step that results in financial security in old age.


Keith Schwanz is a writer, editor, and publisher in Overland Park, Kansas. He previously served as a pastor, church musician, and seminary educator.

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