This article is dedicated to C. Kane, who fielded the topic-question
ReadyNutrition Readers, I received an excellent question last week that was important enough to do an article on it. The information pertains to all of us, especially those who are getting ready to draw on Social Security benefits in the short-term future. The question, specifically, was what could be done about Social Security (withdrawing it), and how would this be affected when they eliminate cash. This is a huge question, but I’m going to answer it and attempt brevity as best as possible. Then we’re going to “game” it a bit with some suggestions. Let’s do it!
Some of this information comes from an article entitled, “How to Get Social Security in a Lump Sum” by Phil Moeller written June 17, 2014 and posted on Money.com. The article is important because it gives information on how to pull out your Social Security in a lump sum payment. According to the article, the maximum lump-sum payment is six month’s-worth of Social Security, and then with a cap of four months. Confusing? There’s more. This comes with several “caveats,” however, because your withdrawal will affect the way any survivors or family members may collect your benefits.
The term we must focus upon here is Full Retirement Age (FRA). This term is not a completely set concept. FRA is 66 for people born between 1943 and 1954. The change has it “rising” in two-month increments to 67 for people with birthdates of 1960 and after. A section you need to see from the article includes the caveats, as such:
“…there are three downsides to keep in mind.
- If you ask for a lump-sum payment, you lose all the delayed retirement credits you’ve accrued. That’s because Social Security calculates your benefits from age 66 and will give you a lump sum based on that monthly rate (plus any cost-of-living increases). Your monthly benefit thereafter will be based on a start date of age 66. If your FRA benefit was, say, $1,000 a month, it would have risen to $1,320 in real terms by age 70. You will have forfeited that extra $320 each month.
- If you ask Social Security to file and suspend your benefit, it will prohibit you from ever being able to collect spousal benefits while deferring your own retirement benefit. To enable such spousal benefits, you must file what’s called a “restricted application.” Unfortunately, you can’t do both.
- If you wave good-bye to that maximum $1,320 monthly benefit, so will your survivors. Their benefits are tied to yours, so when you do anything to reduce your benefit, it can have a life-long impact on your family.
For this reason, filing and suspending benefits is only a guaranteed slam-dunk for single people with no spouses or children—they don’t need to care about benefits for surviving family members. For married persons and single persons with former spouses and children, a file-and-suspend strategy to preserve access to a lump-sum payment is a tricky decision. Consider talking to a financial adviser before making this move.”
Now all of this is discussing removal of Social Security benefits when able, but does not address the second part of the question: what do we do when they clamp down on the cash and the cash itself is unavailable?
I have pondered this point for many days, although the subject is one that has been on the front burner for some time. There are all kinds of measures, such as “bitcoins,” and barter, and other things that people are gearing up with. For the meantime, we still have to deal in cash. The problem overlaps into other areas besides Social Security, such as IRA’s and mutual funds; these areas will be in great danger, along with our standard “savings” accounts and pension funds.
My advice is to take out as much as possible as soon as you’re able, and after you have figured what is to be allocated (in the form of cash) for bills and other necessities, then split the remainder into thirds. One third stays in the form of cash. When cash is worthless, your cash will be worthless: it is inevitable that you’re going to lose some of the fiat currency when cash and the federal reserve note become defunct. One third you should place into hard, physical assets that are portable: gold, silver, platinum, diamonds and gems, and such.
The last third toward supplies that are both durable and nondurable that can both be bartered. Durable would include oil, tools, ammunition, medical supplies (bandages, splints, instruments), and so forth. Nondurable would be foodstuffs (canned, perishable, freeze-dried, etc.) medicines, water supplies, and water purification equipment/related items (some of these items have shelf/functioning life).
Your 1/3 cash is to take care of things requiring cash. Your 1/3 in valuable portable assets gives you a supply of things that can be used in the manner of money without being a fiat Federal Reserve Note…that always hold intrinsic value and don’t physically deteriorate. Your 1/3 in nondurables will either sustain you or (with a surplus) enable you to barter for other things you need.
The tricky part is to leave yourself with enough to pay for your expenses before the remainder is broken into thirds. Remember, we have to live in the “real” world for now, and this means to take care of obligations with cash, check, or the forms of exchange that are currently in use.
We are all going to lose a large portion of our wealth/savings when the SHTF.
I also highly recommend talking to a financial planner that you can trust to find out all of the legal jargon and potential pitfalls that may surface depending on your current financial situation and the state where you reside. Some states “nab” you for a death tax and grab up a large portion of what your family member leaves to you, while others do not. It varies from state to state. JJ’s advice: with the Social Security, take out as much as you can, sequester the lion’s share to cover your expenses, and the remainder bust into thirds and allocate those thirds in the aforementioned manner.
Joe Biden once said the Social Security was going to be “locked in a strongbox.” Well and good, but if only the government has the key and they are already spending it? Then all that will be in there is an IOU, and maybe not even that. Maybe just a puddle of water, as they “wrote it on ice” instead of paper. Much of this will be out of our control, but take any of these steps outlined, and you should be able to salvage some of it before the SHTF. You keep fighting that good fight! JJ out!