|
|
What will happen if Social Security benefits are cut in 2034
11-13-2017, 04:21 PM
|
#1
|
gone traveling
Join Date: Mar 2015
Posts: 3,508
|
What will happen if Social Security benefits are cut in 2034
In replying to a question in a recently closed thread, I stated that I believed that benefits would be cut across the board in 2034 if Congress didn't act (rather than something more complicated, like aged-based cuts, or cuts based on income or wealth). Someone asked for a source for that belief. I'm pretty sure I heard it on a podcast at some point, but I wasn't sure. I hate to make claims without facts behind them.
So I asked Philip Moeller, co-author of Get What's Yours: The Secrets to Maxing Out Your Social Security what would happen if 2034 arrives and benefits must be cut.
He responded as follows:
"Should Congress fail to deal with Social Security's projected shortfall, benefits would be cut across the board. If the cut was 25 percent, for example, someone due $1,000 a month would get only $750."
Now I happen to think that Congress will indeed act before then, but probably at the last minute. I think Social Security will be funded at least for then-current recipients (like me) and their benefits won't be cut.
I'd be curious to hear if others think that benefits will indeed be cut for current recipients and if so, in what manner.
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
11-13-2017, 04:37 PM
|
#2
|
Thinks s/he gets paid by the post
Join Date: Aug 2014
Location: Red Rock Country
Posts: 1,932
|
We don't really know if there will even be a shortfall. What caused the exhaustion date to move up was the near depression we went through in 2009. People who aren't working don't pay SS/Medicare taxes! If the next decade's economy works out well, you'll see the SS projections change. In any event, IMHO a solution will be worked out and implemented before benefits are cut. That's what happened in the early 1980's and things were far more dire then. The baby boomer problem is not permanent and has been known and taken into account for decades. The wealthiest country in the world can certainly afford to take care of its elderly.
|
|
|
11-13-2017, 04:38 PM
|
#3
|
Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,501
|
I have been listening to scare stories like this since the 1970's. Actually they were far worse in 1973 than what I am hearing now, IMO.
In 2034, I'll be 86 years old. An (unlikely) 25% cut in SS wouldn't even be a blip on my radar. We have been experiencing a huge stock market boom for almost an entire decade, and I will be in a far, far better financial situation than I ever expected.
If you are worried about it, design your retirement in such a way that SS is entirely used on discretionary spending and not needed for your bare bones survival expenses. But I wouldn't lose sleep over it.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
|
|
|
11-13-2017, 04:48 PM
|
#4
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Location: No fixed abode
Posts: 8,765
|
Quote:
Originally Posted by joeea
In replying to a question in a recently closed thread, I stated that I believed that benefits would be cut across the board in 2034 if Congress didn't act (rather than something more complicated, like aged-based cuts, or cuts based on income or wealth). Someone asked for a source for that belief. I'm pretty sure I heard it on a podcast at some point, but I wasn't sure. I hate to make claims without facts behind them.
So I asked Philip Moeller, co-author of Get What's Yours: The Secrets to Maxing Out Your Social Security what would happen if 2034 arrives and benefits must be cut.
He responded as follows: "Should Congress fail to deal with Social Security's projected shortfall, benefits would be cut across the board. If the cut was 25 percent, for example, someone due $1,000 a month would get only $750."
Now I happen to think that Congress will indeed act before then, but probably at the last minute. I think Social Security will be funded at least for then-current recipients (like me) and their benefits won't be cut.
I'd be curious to hear if others think that benefits will indeed be cut for current recipients and if so, in what manner.
|
That's still just hearsay information to me. Is there an existing law that would mandate that? If so, does it specify the percentage to be cut? I'm not doubting you, but I would like to see the documentation to back that up. Personally I have great faith that our elected officials won't do anything unless forced by law. Leaving it to their sense of responsibility or initiative will result in disappointment, at best.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
|
|
|
11-13-2017, 04:52 PM
|
#5
|
Thinks s/he gets paid by the post
Join Date: Feb 2007
Posts: 2,526
|
By 2034 I guess I will have collected somewhere around 1/2 a million dollars from SS. I hope they don't ask for it back...
|
|
|
11-14-2017, 06:20 AM
|
#6
|
gone traveling
Join Date: Mar 2015
Posts: 3,508
|
Quote:
Originally Posted by harley
That's still just hearsay information to me.
|
Sure. It's hearsay from one of the guys who "wrote the book" on Social Security.
|
|
|
11-14-2017, 06:41 AM
|
#7
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2013
Location: Texas
Posts: 10,941
|
I never expected SS to be around, or that it would be cut back before I became eligible to collect "my earned" benefits, so I had already written it off. OK, I was wrong, again. My financial planning never counted on SS (still doesn't) so it won't bother me other than to give me the satisfaction that I was right about SS.
However, my guess (note, I haven't be right yet about SS) would be some sort of means testing would be enacted and SS would evolve into more of a welfare program than an entitlement program.
But who knows.... At this point, if I'm around, I can only hope I "understand" what's happening in 2034.
|
|
|
11-14-2017, 06:48 AM
|
#8
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,331
|
Who knows. I expect Congress will make some sort of changes in the interim and I'm not loosing sleep about it. If they fail to act it may be impossible for SSA to cut in a sensible way (e.g. a 25% reduction across the board for the entire year). The obligation to pay might force them to do so until the crisis arrived (like the debt ceiling) and then cut off all payments at once when the money runs out in the third quarter. I would hate to be in Congress when that happens.
__________________
Idleness is fatal only to the mediocre -- Albert Camus
|
|
|
11-14-2017, 06:51 AM
|
#9
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,022
|
Quote:
Originally Posted by donheff
I would hate to be in Congress when that happens.
|
You wouldn't have to worry about being there for the next term.
__________________
Numbers is hard
|
|
|
11-14-2017, 07:05 AM
|
#10
|
Full time employment: Posting here.
Join Date: Aug 2016
Posts: 770
|
IMO...Since SS is the only source of income for so many Americans, a 25% haircut would have such a negative impact on so many citizens that I believe there is no way Congress would allow a haircut to happen to people currently receiving SS. If they did, there better be plenty of funds available for food stamps and other similar public services.
|
|
|
11-14-2017, 07:06 AM
|
#11
|
Moderator Emeritus
Join Date: Aug 2007
Location: Northern Illinois
Posts: 16,603
|
Hopefully there would be enough of us left to vote them out.
|
|
|
11-14-2017, 07:14 AM
|
#12
|
Recycles dryer sheets
Join Date: May 2010
Location: Cincinnati
Posts: 390
|
Money flows to those without. I see a SS cut on a sliding scale of amount of assets. Those with no savings will not have a SS cut. Those who have saved and done the tough work will be cut.
|
|
|
11-14-2017, 07:17 AM
|
#13
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,375
|
The problem with that option is that it would undermine support for the program as a whole.... becoming just a different form of welfare.... so I doubt that it will happen.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
|
|
|
11-14-2017, 07:22 AM
|
#14
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2014
Posts: 7,373
|
Quote:
Originally Posted by pb4uski
The problem with that option is that it would undermine support for the program as a whole.... becoming just a different form of welfare.... so I doubt that it will happen.
|
Well, I asked Bob Myers (an actuary who was one of the original architects of SS) about means-testing SS years ago and he said that it was a bad idea because it would discourage personal savings because too much income form other sources would reduce your SS). They did it anyway, of course, by taxing SS benefits if you have any substantial income from other sources.
My guess is that they'll continue in this vein- easier to base it on income rather than assets- and that the penalty applied to SS if you have other income will continue to increase, but those with no savings will be unaffected.
|
|
|
11-14-2017, 07:23 AM
|
#15
|
Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Syracuse
Posts: 3,502
|
I'm planning on the whole thing being there. Old folks vote.
Also, a 25% cut means over a full percent of GDP would either be pulled out of the economy or moved to a different pocket. A big portion of that is spent on consumables. Whoever is in Walmarts and Amazons shoes in 2034 isn't going to be happy to see their piece of the pie shrink. Even if the politicians stops caring about voters, they're not going to upset their donors.
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
|
|
|
11-14-2017, 07:24 AM
|
#16
|
Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
|
If you wonder "What if SS benefits are cut?", you also have to wonder "what if SS benefits are not cut?".
I do not worry about it. Not at all. Money can be printed.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
|
|
|
11-14-2017, 07:40 AM
|
#17
|
Thinks s/he gets paid by the post
Join Date: Aug 2017
Location: Champaign
Posts: 4,729
|
The Social Security Administration (SSA) announced that the maximum amount of wages in 2017 subject to the 6.2% Social Security tax (old age, survivor, and disability insurance) will rise from $118,500 to $127,200, an increase of more than 7%. By comparison, the 2016 wage base was unchanged from 2015.
__________________
"Do not go where the path may lead, go instead where there is no path and leave a trail."
Ralph Waldo Emerson
|
|
|
11-14-2017, 07:47 AM
|
#18
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2013
Location: Texas
Posts: 10,941
|
Quote:
Originally Posted by Cassius King
Money flows to those without. I see a SS cut on a sliding scale of amount of assets. Those with no savings will not have a SS cut. Those who have saved and done the tough work will be cut.
|
Quote:
Originally Posted by pb4uski
The problem with that option is that it would undermine support for the program as a whole.... becoming just a different form of welfare.... so I doubt that it will happen.
|
Medicare part B is already being means tested, so why not SS!
|
|
|
11-14-2017, 07:47 AM
|
#19
|
Recycles dryer sheets
Join Date: Mar 2015
Posts: 74
|
Quote:
Originally Posted by joeea
In replying to a question in a recently closed thread, I stated that I believed that benefits would be cut across the board in 2034 if Congress didn't act (rather than something more complicated, like aged-based cuts, or cuts based on income or wealth). Someone asked for a source for that belief. I'm pretty sure I heard it on a podcast at some point, but I wasn't sure. I hate to make claims without facts behind them.
|
Here is a link to a presentation made by the Chief Actuary of the Social Security Administration on October 17 of this year:
https://www.soa.org/pd/events/2017/a...ession-136.pdf
|
|
|
11-14-2017, 07:55 AM
|
#20
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: Independence
Posts: 7,299
|
After many years of owning rental property and not contributing to social security due to having mostly "unearned income" I was astounded to get my first SS check, based on military time and some other ill-spent employment time. If still alive seventeen years from now and SS is cut I guess the cat will have to do with dry food.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|