Could you retire without social security?

[bbbamI]

Regardless of the age you choose to retire, and regardless of whether you plan receiving on the projected amount of social security, or have budgeted something less for social secuirty (but you are still counting on sonething), could you/can you retire without any social security?

We are retired and would be ok without SS.

We'd have less 'sin' money...but that's ok.

 

[mickeyd]

Been retired since 2002 and have yet to tap my SS so I guess I can retire w/o it. Plan on pulling the cord in about 4 years at age 70 to reap the extended benefits, unless I need the $ before that time to live on.

 

[obgyn65]

I could manage without it, yes.

 

[Rustic23]

Not to get too far a field, but why is SS and entitlement? When I order something from Amazon and pay for it, Amazon owing me a product is not in entitlement. SS is a contract between government and citizen. For me, the un-earned income tax credit is a pure entitlement. Milk, cheese, etc. subsidies are entitlements. But something we paid for is not an entitlement. IMHO.

 

[Nords]

It seems stupid and silly to not count SS in your retirement plans.

I have never counted on receiving social security. Given that it is by no means impossible to fix the problems facing the system, I suspect that I will receive something eventually, but it seems the more conservative planning assumption would be zero. If and when I do get anything, I can use it as "mad money".
While it is not the case for me, the only downside to assuming zero SS would be that it could cause you to delay your retirement.

Not counting SS in your retirement could cause you to delay doing some of the things that are a bit easier when you are young.

The quality of your commentary improved greatly from one post to the next, perhaps with the observation that Gumby is not wont to "stupid" or "silly".

How to Disagree

 

[79protons]

The quality of your commentary improved greatly from one post to the next, perhaps with the observation that Gumby is not wont to "stupid" or "silly".

How to Disagree

I actually did not read Gumby's post before writing mine, but it was quite an obvious conclusion anyway.

I did not really mean to imply that anyone on ER was stupid or silly, but rather the general opinion that social security is a very unreliable source of future income is stupid and silly. I am sorry if it came across that I was calling everyone dumb.

SS isn't going anywhere as long as they keep the handrails and ramps to the voting booths in good repair.

 

[NW-Bound]

If I can trust that future market returns are like those of the past and that FIRECalc can be trusted, then yes, I can live on my savings alone.

Not to get too far a field, but why is SS an entitlement? When I order something from Amazon and pay for it, Amazon owing me a product is not in entitlement. SS is a contract between government and citizen. For me, the un-earned income tax credit is a pure entitlement. Milk, cheese, etc. subsidies are entitlements. But something we paid for is not an entitlement. IMHO.

Sorry to disillusion you, but "The Supreme Court has established that no one has any legal right to Social Security benefits. The Court decided, in Flemming v. Nestor (1960), that "entitlement to Social Security benefits is not a contractual right"."

For more info, see Social Security (United States) - Wikipedia, the free encyclopedia), from which I cited the above excerpt.

Specifically, the Court said that SS is not at all like an annuity contract. It said that "A person covered by the Social Security Act has not such a right in old-age benefit payments as would make every defeasance of "accrued" interests violative of the Due Process Clause of the Fifth Amendment." The government, or actually Congress, "expressly reserved the right to alter, amend or repeal any provision of the (Social Security) Act."

 

[Westernskies]

If I can trust that future market returns are like those of the past and that FIRECalc can be trusted, then yes, I can live on my savings alone.


Sorry to disillusion you, but "The Supreme Court has established that no one has any legal right to Social Security benefits. The Court decided, in Flemming v. Nestor (1960), that "entitlement to Social Security benefits is not a contractual right"."

For more info, see Social Security (United States) - Wikipedia, the free encyclopedia), from which I cited the above excerpt.

Specifically, the Court said that SS is not at all like an annuity contract. It said that "A person covered by the Social Security Act has not such a right in old-age benefit payments as would make every defeasance of "accrued" interests violative of the Due Process Clause of the Fifth Amendment." The government, or actually Congress, "expressly reserved the right to alter, amend or repeal any provision of the (Social Security) Act."

So, it's more of a handshake agreement with fingers crossed behind the back?

 

[growing_older]

I'm still accumulating, so I could just accumulate more before I retire if there was no SS. Likewise, if my company eliminated their pension plan and replaced it with a much less valuable defined contribution plan (happened), or if another company changed the computation of contributions in their favor by a significant amount (happened), or if a lifestyle change like divorce took away most of the assets (happened) or some overly aggressive investing lead to losing half my savings (happened) I could accommodate my plans and still retire. I don't expect the current rules of taxation to change in my favor anytime soon, but I do expect they will likely change against me, not to mention other possible setbacks like health issues. If my retirement plans could not adjust to deal with these, then yes I would end up dependent on SS.

That doesn't mean I will lightly give it up (especially after having sunk so much cost into paying into it) nor would I be happy about any of the other possible things that can go wrong with my plan. When something does go wrong, I will adapt. Once retired, I do not plan to return to work unless something truly awful happens. Loss of SS isn't that.

 

[veremchuka]

I retired by bringing my lunch to work, not getting coffee at Starbucks, eating at home, maxing out all savings plans, and living below my means. I don't see that happening a lot outside this forum.


exactly what i did too. when i decided to retire ss was not really a factor. however, at age 62 my pension is cut by 22% to account for the fact that i COULD start collecting ss! so with ss and the reduction in my pension i will have more income than i do now. if you are 45 or younger i would not count on getting ss, for those of us with a couple of years to go i think we will be ok.

a couple of years ago i looked at my contributions to ss and what they are going to pay me and it is amazing that it won't take more than a few years (4, 5 maybe 6 i forget) to get back every cent i paid into ss. this does not count my employer's contributions.

and as far as delaying it, no way. take it at 62, the break even point for me is almost 18 years.

 

[nphx]

I paid for it and expect it to be there. Any "means test" should consider the hours i put in to earn my contribution privelage.

 

[DeborahB]

Guess what group of people is being set up as the villain for the coming federal budget battles involving entitlements. I sense a semantic disturbance in the language...

+1

 

[DeborahB]

I retired by bringing my lunch to work, not getting coffee at Starbucks, eating at home, maxing out all savings plans, and living below my means. I don't see that happening a lot outside this forum.

That is one of the great things about this forum. Some, though not all, of us got to retirement just like you did and we have that in common.

Yes, and I think we are the exception to the norm. That's why I like this forum so much. Oh, that, and the silly jokes...

 

[79protons]

if you are 45 or younger i would not count on getting ss, for those of us with a couple of years to go i think we will be ok.

This is the kind of scare tactic statement that I hear all the time. If you are in your 30s or early 40s, no way should you count on SS.

Huh? If we are paying for it too, then why should't we also get it? What makes a person who is 60 today special over someone who is 40? Why should the 60 yr old get full SS and the 40 yr old get squat when he is 62?

Oh, but you say "the 40 yr old has time to plan for not getting SS, while the 60 yr old wasted all of his money on hookers and coke because he *knew* he was getting it, so it is not fair to take it away from him".

How does the 40 yr old modify his plans to save more when the government still taxes him 12.4% for this retirement plan he will never get? (well, ok, there is the reduction *this* year...I guess if you invest that 2% extra this year in an account earning around 400% annual yield then you might not need SS at 62).

 

[hakuna matata]

I run my calculations without Social Security. Although I do think it will be there when I go to claim it several years from now. I tend to be more positive about SS I think then most people but I don't count on it.

But it will make things a lot easier if/when it is there. SS will give us the freedom to live beyond my means rather then living below my means for a change.

However I just can't count on it since it is so political in nature. Any number of things can happen and although I do think it will be there, I just can't count on it in my calculations.

 

[Rustic23]

NW, while I did not know this, it does not change my mind that SS is not an entitlement as things like the unearned tax credit, or several other things Congress has decided people are entitled to just because they breath air.

 

[samclem]

This is the kind of scare tactic statement that I hear all the time. If you are in your 30s or early 40s, no way should you count on SS.

Huh? If we are paying for it too, then why should't we also get it? What makes a person who is 60 today special over someone who is 40? Why should the 60 yr old get full SS and the 40 yr old get squat when he is 62?

Oh, but you say "the 40 yr old has time to plan for not getting SS, while the 60 yr old wasted all of his money on hookers and coke because he *knew* he was getting it, so it is not fair to take it away from him".

How does the 40 yr old modify his plans to save more when the government still taxes him 12.4% for this retirement plan he will never get? (well, ok, there is the reduction *this* year...I guess if you invest that 2% extra this year in an account earning around 400% annual yield then you might not need SS at 62).

So, you're saying that you don't like the way things are shaping up and that you don't think it's fair. Okay. But what makes you think that the cuts won't happen, that those who think they will are using "scare tactics"? Whatever happens will be based on hard accounting and politics, fairness and what you or I might want have little to do with it. Right?

 

[73ss454]

This is the kind of scare tactic statement that I hear all the time. If you are in your 30s or early 40s, no way should you count on SS.

Huh? If we are paying for it too, then why should't we also get it? What makes a person who is 60 today special over someone who is 40? Why should the 60 yr old get full SS and the 40 yr old get squat when he is 62?

Oh, but you say "the 40 yr old has time to plan for not getting SS, while the 60 yr old wasted all of his money on hookers and coke because he *knew* he was getting it, so it is not fair to take it away from him".

How does the 40 yr old modify his plans to save more when the government still taxes him 12.4% for this retirement plan he will never get? (well, ok, there is the reduction *this* year...I guess if you invest that 2% extra this year in an account earning around 400% annual yield then you might not need SS at 62).

Wait a second, I didn't spend it all on hookers and coke, I drank Pepsi.
Come April when I turn 62 I'm really going to go nuts. I'm going to surprise DW with a divorce, and go for lunch at Hooters.

 

[haha]

As someone who has paid into SS with the expectation of a benefit in return, the question is moot. It's my money, the feds have just been borrowing it from me every two weeks for nearly 40 years... and it's getting closer to payback time.

Exactly how I see this. Our anchors are being dragged my constant references here and elsewhere about how "social security must be trimmed". I see very little mention of similarly drastic trimming to benfits for current beneficiaries/ members of other federal and state retirement programs that are far more generous than SS.

We might also consider doing away with stupid war-making that anyone with clear vision could see would cost us a fortune and make Americans' security poorer rather than greater. But then Eisenhower warned about that, but how powerful is that compared to the profit opportunies in the cozy relationship between defense contractors, politicians, and active military?

We could also stop the "carried interest" tax break that is a very big payment to the masters of the universe on Wall Street from their benficiaries in Washington.

People say "it's nothing but welfare". Some politicians are promoting this changed perception, but even a cursory examination of the debate around its passage and during subsequent looks at modifications show that lawmakers were very careful to not give this spin, as the program needed broad support from every wage earner, and it was not going to get it if it could be cast as welfare, as America at that time was much less friendly to taking from working Peter and giving to non-working Paul.

Ha

 

[haha]

So, you're saying that you don't like the way things are shaping up and that you don't think it's fair. Okay. But what makes you think that the cuts won't happen, that those who think they will are using "scare tactics? Whatever happens will be based on hard accounting and politics, fairness and what you or I might want have little to do with it. Right?

It actually has alot to do with it. Perception always precedes action.

This may not be much of a democracy, but if voters don't just roll over we still have some power.

Ha

 

[79protons]

Exactly how I see this. Our anchors are being dragged my constant references here and elsewhere about how "social security must be trimmed". I see very little mention of similarly drastic trimming to benfits for current plan payers other federal and state retirement programs that are far more generous than SS.

*this* is exactly what I think will eventually happen if it starts to look like SS is in immediate danger. Broad cuts on federal and state pensions, taxes on private pensions (the 2 or 3 people who have one), an increased tax on 401K benefits and IRA benefits, and a small tax on Roth withdrawals. So probably the real thing to worry about is not if SS will be there when you retire, but worry that it WILL be there when you retire, and if you have saved a lot of money elsewhere, they are going to want some of it to keep SS afloat.

 

[samclem]

It actually has alot to do with it. Perception always precedes action.

Exactly. And you can do your part like I am, by lowering the expectations of these whippersnappers so they get used to the idea of paying more and getting less. That leaves more for those who got to the trough first. Now, scoot over, you're on my hoof!

 

[DeborahB]

If I can trust that future market returns are like those of the past and that FIRECalc can be trusted, then yes, I can live on my savings alone.


Sorry to disillusion you, but "The Supreme Court has established that no one has any legal right to Social Security benefits. The Court decided, in Flemming v. Nestor (1960), that "entitlement to Social Security benefits is not a contractual right"."

For more info, see Social Security (United States) - Wikipedia, the free encyclopedia), from which I cited the above excerpt.

Specifically, the Court said that SS is not at all like an annuity contract. It said that "A person covered by the Social Security Act has not such a right in old-age benefit payments as would make every defeasance of "accrued" interests violative of the Due Process Clause of the Fifth Amendment." The government, or actually Congress, "expressly reserved the right to alter, amend or repeal any provision of the (Social Security) Act."

I attempted to read the entire Wikipedia article and failed - it's very long. But what I found seems to be contradictory. In addition to what is quoted above, it says:

"Social Security payroll taxes are collected under authority of the Federal Insurance Contributions Act (FICA), and are sometimes referred to as "FICA taxes."

"In the original 1935 law the benefit provisions were in Title II of the Act (which is why Social Security is sometimes referred to as the "Title II" program.) The taxing provisions were in a separate title, Title VIII. There is a deep reason for this, having to do with the constitutionality of the law (see discussion of the Constitutionality of the 1935 Act).

"As part of the 1939 Amendments, the Title VIII taxing provisions were taken out of the Social Security Act and placed in the Internal Revenue Code and renamed the "Federal Insurance Contributions Act."

"Confusion, or misrepresentation of the nature of Social Security has often muddied debate over the program. The payroll taxes collected for Social Security are neither simply "taxes" nor do they create "retirement accounts" analogous to investment accounts such as IRAs. Social Security is an insurance program funded through payroll taxes. The FICA taxes constitute insurance premiums protecting workers and covered family members against loss of income from the wage earner's retirement, loss of income from the wage earner's disability, as well as survivor benefits in the event of the wage earners death. Hence it is incorrect to compare the return on Social Security contributions with the return on private investment instruments. It is, however, legitimate to compare the return on the "risk pool of funds" garnered by this government-run insurance program with the return on the "risk pool of funds" garnered by a for-profit commercial insurance company. Like any insurance program, Social Security "spreads risk". For example, a worker who becomes disabled in their thirties or forties could receive a huge return for the relatively small amount they contributed in FICA before becoming disabled, since disability benefits can continue for life. Likewise, the surviving family of a worker who dies in mid-life may receive substantial benefits even though the worker has only contributed for a relatively short time. This is similar to any other insurance program, public or private, whether the risk is against illness, car wrecks, or house fires. Everyone in the particular insurance pool is insured against the same risks, but not everyone will benefit to the same extent."

If it's not a tax but it's insurance, sort of, well it still seems we should be entitled to a benefit for our payments, which were not voluntary. Other types of life insurance are voluntary... Don't want to start a war here!

 

[sn2792]

I said yes, I need it. DH and I are retired and have 10 and 9 years until we begin collecting. We are living on pension and investments, but will need to take very little out of investments once we start collecting SS. If we weren't getting SS, we would have needed to work longer to build investments further.

 

[martyp]

SS is in my planning worksheet. It's hard to say how important it will be 10 yrs out when I start collecting. Whether or not people need it sort of goes to the issue of means testing. I would think that means testing would be a rational strategy to keep SS solvent. However, if there were income limits to receipt of SS then I would also want to remove the income cap for wages subject to SS taxes.