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Old 02-06-2011, 08:28 AM   #81
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I try to not let the gyrations of the government prevent me from doing smart things.

I'm not saying SS is government aide, but I've know people who rely on government aide rather than work and save for a living. They do not thrive. For example - have you ever heard of someone receiving unemployment benefits not getting a job yet because their benefits haven't run out? They may be "milking" the system for money - but it's not a technique that's going to cause them to thrive.

Not that I won't try to max out on the "financial" games the government plays - I take taxes into consideration in everything I do. But I refuse to count on the government for anything.

My game plan for minimizing future taxes has been to put as much as I can into Roth accounts. If this causes me to be means tested out of SS, I may not like it, but I'm not going to stop accumulating wealth so that I can get SS.

The first half of your statement sure sounds like you think SS is welfare.

Many of us paid into a govt pension program (known as SS). It is legally due to the participants in the system. It is not milking the govt. Of course, they might change the rules because they have not been good stewards of our money... yes our money!


While it will not work exactly like this... here is the notion.

If I continue to work and earn $ only to give those earned $ (via a double tax... income tax and FICA only to relinquish SS in the future... a tax) to the govt to support someone else... why would I continue to work? Why not FIRE (early) and spend my money and engineer my bottom line income later in life (assuming an acceptable bottom line can be attained).


In other words, if the govt changes the rules, people's behavior will change... but in this case it will only happen to those that can afford to do it!


People will do that which is in their best interest... and with a vengeance if they are getting the shaft!
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Old 02-06-2011, 08:48 AM   #82
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Yes... Trust Fund is the ruse. And it is fair to call it out!

Thanks for the description ... Are you for real?? Are you really that naive?
Nice bit of name-calling, chinaco - but I guess that's your style.

If by naive do you mean that I think the Government will not default on its obligation to the Trust Fund. No, I don't think it will. Do you think it will?
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Old 02-06-2011, 09:01 AM   #83
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I do think that SS is an entitlement program and should be given to the people that invested in it. But I don't have any control over it - so I'm not going to count on it.

It is a forced investment into a government system. A system that the government seems to be free to change at anytime. And as such, I'm not going to count on them to keep their word. If I had the choice, I would opt out of SS. But I don't have a choice.

I'm in the 25% federal tax bracket. I'm not going to set out to earn less money so that I can avoid paying less tax. I may play with putting money in sheltered accounts in order to pay less tax, but I'm not going to forgo making money to avoid taxes - I still get to keep 75% of it (OK maybe 65% minus the other taxes).

I feel much better having my own assets to get me through retirement. If having those assets causes me to lose my SS - I guess I'll live. I may feel "cheated", but I really do think I'll be be better off not including this program in my financial planning.
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Old 02-06-2011, 09:12 AM   #84
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Nice bit of name-calling, chinaco - but I guess that's your style.

If by naive do you mean that I think the Government will not default on its obligation to the Trust Fund. No, I don't think it will. Do you think it will?

No name was called...

Did I ridicule your statement? Absolutely! I don't buy it! It is a bunch of hogwash.

I have read published descriptions of the so call Trust Fund and how it works. It was and is BS!


We are getting scr3wed.
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Old 02-06-2011, 10:36 AM   #85
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It is beyond my control, so I am not worrying about it. I plan to get SS survivor's benefits in 3.5 years at age 60. It will supplement my pension nicely (don't know the SS amount as I have never looked into it), but if it is not available, I will just have to dig into savings as I plan to hold off as long as I can tapping tax-advantaged accounts.
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Old 02-06-2011, 10:45 AM   #86
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I'm not going to set out to earn less money so that I can avoid paying less tax.
I can only speak for myself, but that's not how I mean it. I want to earn as much as I can while I am working, always have.

Where the question comes in is do I want to work longer and accumulate a bigger nest egg to generate more income only to have more of it taxed/means-tested away? Once one reaches "enough" plus your personal safety factor - IMHO it's a legitimate question.

To put arbitrary numbers on it just to illustrate. Is it worth continuing to work to reach $3M at age 65 if you honestly believe you have enough with $2M at age 60? Or put another way, if you're at 3% WR at age 60, is it worth continuing to get to a 2% WR at age 65 IF you believe you're going to lose a substantial amount of the additional nest egg to taxes in some form? To me, that's the question...

Reminder - the numbers are just to illustrate.
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Old 02-06-2011, 11:01 AM   #87
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I think that when you have enough in investments that you can draw the earnings from them and live on them, not just survive, and not use the principal, you are financially independent. no matter what age that happens to be. I would not figure in ss because they will either cut benefits, raise the age, or tax more of it. when you are tired of the work that you do and want to quit it is time to retire, if like some people your job is your fun. then stay working. that matter is all personal.
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Old 02-06-2011, 11:23 AM   #88
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I think I have enough, but I have this nagging suspicion that when I have too much time on hand, I may morph from a frugal type to a spendthrift with new toys and leisure activities.

Has that happened to anybody who wants to 'fess up?
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Old 02-06-2011, 11:45 AM   #89
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I think I have enough, but I have this nagging suspicion that when I have too much time on hand, I may morph from a frugal type to a spendthrift with new toys and leisure activities.

Has that happened to anybody who wants to 'fess up?
It's been the opposite for me. Now that I am happy and have what I want (free time, no job, etc), there is less need to spend a lot of money in attempts to find happiness.
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Old 02-06-2011, 11:49 AM   #90
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I think that when you have enough in investments that you can draw the earnings from them and live on them, not just survive, and not use the principal, you are financially independent. no matter what age that happens to be.
Don't forget to allow for inflation. Folks who think that as long as they're "not touching the principal" often get nailed years down the road when their earnings no longer come close to supporting the inflated prices for the items in their budget. I think today this is going to be especially true in the areas of energy and food.
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Old 02-06-2011, 11:53 AM   #91
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Well, I agree with many of the earlier posts. The latter ones got sidetracked.

Here is how I have viewed this for a long time. Remember these "won't affect people over 55" proposals have been out there for a long, long time even if they never made it to the floor of the Congress.

I was under 55 by a few years when I first started watching this. Year to year I approached 55 and one day I was in the 55 and over group. It's 2011 and people born in 1956 or thereabouts are approaching the "over 55". Boomers = 1946-1964. This differs depending on where you get it. But it looks like almost 10 years of boomers are already in the sweet "over 55" spot.

One Congress critter in the privatization group introduced the same legislation several years in a row and then watched as people passed 55. The last year I looked at his proposal he had tied the exemption to birth year as a constant so his exemption that year went from 55 the previous year to 56.

So one factor is the number of people over 55 which will only grow over time. Also, if we are near the 10 year mark, we are probably near the peak of the boomer years. That puts a lot of people in the age 50-55 group.
Does Tadpole have a point? Yes, if "above 55" were real, this is beginning to be about people in younger generations who probably think it is about the boomers.

Also, I imagine that promises made to people 55 and above are worth the same as the trust fund "IOUs". In short, worth only what the people are willing to fight for.

Additionally, and based on the above, I have never wavered from the conclusion that, to the maximum extent possible, retiree money will be placed in a single pot and redistributed to cover as much of the retiree needs as possible. So, yes, if your neighbor earned twice the income in his working life but didn't save or invest, you will be contributing to his poverty income after retirement.

Finally, if the COLA formula is changed to a lesser amount, expect the amount of your share to increase more each year to keep the lower end out of the poverty statistics.
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Old 02-06-2011, 11:56 AM   #92
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I think I have enough, but I have this nagging suspicion that when I have too much time on hand, I may morph from a frugal type to a spendthrift with new toys and leisure activities.

Has that happened to anybody who wants to 'fess up?
DW and I are pretty frugal (our son thinks we are very, very frugal ), but we have found ourselves with some new toys we hadn't necessarily planned on when we started retirement a few years ago. We like outdoor activities and as we get into our 60's, we can tell that our bodies aren't going to be comfortable doing some of the things we like to do much longer. So, here come the toys now while we can still use them. And, of course, using them involves spending money too. It's not just a one time expenditure.

I'm not worried, we're doing OK. But this concept that as geezers we'd just want to set in front of our B and W TV watching free OTA programs and drinking ice water because it's free isn't true. We definitely don't feel deprived, but there's no doubt we'd spend more on travel and leisure if we felt comfortable doing so.
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Old 02-06-2011, 12:01 PM   #93
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I have never wavered from the conclusion that, to the maximum extent possible, retiree money will be placed in a single pot and redistributed to cover as much of the retiree needs as possible. So, yes, if your neighbor earned twice the income in his working life but didn't save or invest, you will be contributing to his poverty income after retirement.

Finally, if the COLA formula is changed to a lesser amount, expect the amount of your share to increase more each year to keep the lower end out of the poverty statistics.
Sadly, I concur with your conclusion.
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Old 02-06-2011, 12:10 PM   #94
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OK, let me get back on track with this thread.

I understand that if we need to keep SS solvent, and some of the problem is due to higher longevity, demographic changes and all that, some reduction may be necessary. And let's face it, SS is always a form of assistance to low-wage earners, who did not make that much to have a chance to save for retirement while working. So, the reduction may need to be for people at the higher range.

However, the reduction in the form of means testing penalizes the savers and that makes me upset. Again, if you think of two persons making identical incomes in their working life and contributing the same amount to the SS fund, why should their benefit be different now, because one saved and the other one did not? Any policy that has the side effect of promoting the wrong behavior should be avoided.
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Old 02-06-2011, 12:34 PM   #95
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NW-Bound, It's about getting the money for entitlements without losing campaign contributions or votes not about rewards and punishments for behavior. It is also about completing the transition of employer benefits to "you are on your own".

Let's just assume the panic news is true. "The boomers have not saved for retirement." and "The boomers and current retirees hold most of the 'wealth'". This paints a picture of haves and have-nots irrespective of each individual sacrifice.

If "most boomers" don't have savings and they believe "a few" are unfairly "rich", then the majority of retirees will support anything that assures their income, fair or unfair.
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Old 02-06-2011, 12:50 PM   #96
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Call me one of the hopelessly romantic who like to believe our elected officials want to do the right things for the nation, but are just sometimes misguided. Sigh...
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Old 02-06-2011, 01:27 PM   #97
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Call me one of the hopelessly romantic who like to believe our elected officials want to do the right things for the nation, but are just sometimes misguided. Sigh...
Yes, we can only hope.
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Old 02-06-2011, 02:50 PM   #98
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Of course it would incentivize people to save even less.

Consider two persons who make exactly the same salary. Both contributed identical amounts to SS. One spends all the rest. The other saves some money in his 401k, or IRA, or in an after-tax account. When the time comes for retirement, one has "too much" while the other is "empty handed". The gummint says that one now deserves more, and the other deserves less.
In order not to discourage savings, a means tested benefit has to be low enough no one wants to rely solely on it. SS benefits are too high for this purpose.
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Old 02-06-2011, 04:36 PM   #99
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I think I have enough, but I have this nagging suspicion that when I have too much time on hand, I may morph from a frugal type to a spendthrift with new toys and leisure activities.

Has that happened to anybody who wants to 'fess up?
Yes, since I semi-FIREd at age 31, I have been doing a lot more traveling, for skiing and regular travel. Of course, I have been very frugal about it.
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Old 02-06-2011, 07:26 PM   #100
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Of course, they might change the rules because they have not been good stewards of our money... yes our money!
Of course, in a democracy, "They" is "Us".
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