Could you retire without social security?

[DeborahB]

return-on-your-social-security-taxes: Personal Finance News from Yahoo! Finance

There are some interesting statistics on what you pay in vs. what you get from SS in this article. It doesn't address the question of retiring without it, though. See what you think.

 

[Westernskies]

Don't worry, I'm sure at least your spouse finds you funny.

...and then again, maybe she's an 15 year-old Peruvian girl who married me for my lucrative Boomer SS survivor benefits, not my sense of humor.

 

[Independent]

You are correct. You inferred exactly what I was thinking. SS should have at least been funded using the same methodology (ABO,PBO, etc) that our same government requires of private companies.

I was not suggesting that boomers should not get SS, I was pointing out that while the system is still solvent, all participants should make a sacrifice to save it.

Based on what I have seen from some other posters, they are content with letting it break as long as it doesn't affect their benefit. This of course being the same attitude that explains a lot of what goes on with out government.

Thanks. Now we get into the definition of "break".

I'm fine with paygo as a valid way of funding economy wide pension scheme. So preventing SS from "breaking" simply requires adjusting future benefit/tax formulas to result in annual match between the two. That includes reducing benefits to current recipients, if they are alive in the years when we need to make adjustments. I don't think we should "grandfather in" everyone's benefits on the day they turn 62.

 

[DeborahB]

Thanks. Now we get into the definition of "break".

I'm fine with paygo as a valid way of funding economy wide pension scheme. So preventing SS from "breaking" simply requires adjusting future benefit/tax formulas to result in annual match between the two. That includes reducing benefits to current recipients, if they are alive in the years when we need to make adjustments. I don't think we should "grandfather in" everyone's benefits on the day they turn 62.

I don't agree. When you retire, you are given assumptions by the SSA as to how much you will receive. If you change that dramatically, it will be unfair to people who need it.

They already changed it - no cost of living increase for this year and the last (I think?). My cost of living definitely went up - there is inflation in costs of necessities like utilities and food.

 

[Westernskies]

Thanks. Now we get into the definition of "break".

I'm fine with paygo as a valid way of funding economy wide pension scheme. So preventing SS from "breaking" simply requires adjusting future benefit/tax formulas to result in annual match between the two. That includes reducing benefits to current recipients, if they are alive in the years when we need to make adjustments. I don't think we should "grandfather in" everyone's benefits on the day they turn 62.

I believe we should "grandfather" benefits promised to people who qualified for these benefits under the current requirements. They paid for them. Change retirement age brackets, funding requirements (allow self-funded/self-directed "buy-up" options to complement SS minimums) benefits, and reserve requirements going forward.

Some people will have full SS1 benefits, some (like me) will have a pro-rated combination of SS1 and SS2 benefits, people just entering the workforce would be full SS2.

 

[saluki9]

...They paid for them.

I think the point of this disagreement is that THEY DIDN'T pay for them. They paid for the last generation's benefit

 

[Texas Proud]

and at that rate by the time they get to 45 guess what? 95% cut, see not a good idea.

also you kept saying 12.4%, ss is 6.2% unless you are self employed then it is 12.4% and that is an outrageous amount to loose even if you get to collect ss.

But it is 12.4%.... half is taken out of your paycheck... half it paid by your employer....

It does not matter where it comes from, there is 12.4% of your salary (up to the limit) paid into the system...

 

[Independent]

I don't agree. When you retire, you are given assumptions by the SSA as to how much you will receive. If you change that dramatically, it will be unfair to people who need it.

They already changed it - no cost of living increase for this year and the last (I think?). My cost of living definitely went up - there is inflation in costs of necessities like utilities and food.

But the number that the SSA gives you is the number that you as a voter told them to tell you. It's a circular thing. The Trustees' reports have been saying for years that SS taxes are going to fall behind SS benefits. A prudent person would plan for some decrease in benefits after retirement. Thoughtful voters would vote for representatives who will change the benefit/tax formulas earlier so people don't have to guess when and how much their benefits will change.

(On COLA, if your personal cost of living went up, someone else's went down. The SS formula uses the average of all families. There's talk that it should use the average of only retired people. The BLS keeps a separate CPI for elderly, but it hasn't differed dramatically from the CPI for everyone.)

 

[samclem]

SS should have at least been funded using the same methodology (ABO,PBO, etc) that our same government requires of private companies.

In funding their pensions, do private companies normally buy their own bonds to finance 100% of their ABO/PBO?

 

[Texas Proud]

I don't agree. When you retire, you are given assumptions by the SSA as to how much you will receive. If you change that dramatically, it will be unfair to people who need it.

They already changed it - no cost of living increase for this year and the last (I think?). My cost of living definitely went up - there is inflation in costs of necessities like utilities and food.

To me this post is why it is so hard to get something fixed... (I am not trying to rag on you thinker)...

I will address your last comment first because it goes to the heart of some people's complaints... you said "you are given assumptions by the SSA as to how much you will receive" which is true... but then you say "They already changed it - no cost of living increase for this year and the last (I think?). " The second stmt is wrong based on the first one. They did tell you the ways your SS would increase... and the followed those rules... they never said they would increase your payment to keep up with your inflation.. (also, most people forget about that big increase a few years ago due to the short spike of fuel... so your increase for the past two years was three years ago...)


Now, your other stmt that I read alot... "If you change that dramatically, it will be unfair to people who need it." It is not necessary to change it dramatically to fix the problem... It seems like people think that if it is fixed they will not receive a SS check (or more likely a direct deposit)... that just is false... I think if future benefits are cut 15% it would be fixed... so, why not 'share the pain' and cut future benefits 10% and current benefits 5% I bet that would fix it and it is not 'dramatic'....


Also, some people seem to forget when they changed the rules to make SS taxable... this was a change from what was 'promised' (SS is not taxable).... it make a big difference in the amount in your pocket if you make a lot of money... sure, it does not affect you as much since you have supposedly income to live on if you are taxed.... but it was a 'benefit cut' at the end of the day....

Heck, let's just make SS 100% taxable at all income levels... that way we did not cut anybody's benefits, but reduced the cost to gvmt...

 

[Independent]

I believe we should "grandfather" benefits promised to people who qualified for these benefits under the current requirements. They paid for them. Change retirement age brackets, funding requirements (allow self-funded/self-directed "buy-up" options to complement SS minimums) benefits, and reserve requirements going forward.

Some people will have full SS1 benefits, some (like me) will have a pro-rated combination of SS1 and SS2 benefits, people just entering the workforce would be full SS2.

But, the people who "qualified .. under the current requirements" wrote tax rates and benefit formulas. If the taxes are inadequate to fund the benefits, I'm not sure if "we" should feel bound by them.

We already have "self-funded/self-directed buy up options to complement SS minimums". Anybody can choose to save more, we even give tax incentives to people who save with IRAs, 401Ks, etc. What more do you mean?

 

[GregLee]

This discussion of what SS fix would be "fair" is seems pretty weird, to me. Our congresspeople may have some concerns about what appears fair, but mostly they want their own careers to continue, and asking their constituents to make sacrifices is not a way to accomplish that. Would I and other retirees ever in the world vote for a politician who proposed to reduce our monthly checks? You must be kidding.

 

[79protons]

I'm not seeing this in the posts I've been reading. Can you link to these comments so I can see what I've missed?

I guess when you get old you need glasses:

" Would I and other retirees ever in the world vote for a politician who proposed to reduce our monthly checks? You must be kidding. "

and

"Absolutely. Me, too. Because I have already retired, and I do not want my benefits to be cut. "

 

[FinanceDude]

I'll have to, there won't be any left when I am eligible...........

 

[FinanceDude]

Why? Are underfunded pension benefits a creation of nature?

No, they are a tsunami caused by greedy unions and rollover management............

 

[FinanceDude]

"Absolutely. Me, too. Because I have already retired, and I do not want my benefits to be cut. "

So, screw all the people who payed in for almost 30 years, like me? Maybe we can convince half of working Americans not to have kids and stay single, and then euthanize them at age 66 so we don't have to pay them, and we can continue to fund SS that way.............

I for one WOULD take a reduction in my SS payments if it meant the system was solvent for the next 100 years or whatever..........

 

[saluki9]

In funding their pensions, do private companies normally buy their own bonds to finance 100% of their ABO/PBO?

No, but if they did they would get complementary government housing!

 

[GregLee]

I for one WOULD take a reduction in my SS payments if it meant the system was solvent for the next 100 years or whatever..........

That's admirable, and I would agree to reduce your payments.

 

[Independent]

That's admirable, and I would agree to reduce your payments.

I believe that he meant he'd take a cut in his benefits as part of a package that reduces everybody's benefits (and maybe raises taxes as well?). I would, too.

Back to the poll in the OP, I worked until I had enough cushion so I wouldn't be dependent on SS for the basic necessities of life. I'm willing to reduce my SS benefit somewhat to provide a better deal for my kids.

Unlike some people who post here, to me the "better deal" I envision is still in the context of a paygo system.

 

[79protons]

I believe that he meant he'd take a cut in his benefits as part of a package that reduces everybody's benefits (and maybe raises taxes as well?). I would, too.

Back to the poll in the OP, I worked until I had enough cushion so I wouldn't be dependent on SS for the basic necessities of life. I'm willing to reduce my SS benefit somewhat to provide a better deal for my kids.

Unlike some people who post here, to me the "better deal" I envision is still in the context of a paygo system.

It seems there are a lot of us who have paid into the system for quite a few years (19 years for me) but are still far away from SS (age 40) that would be willing to sacrifice a great deal of our future benefits (I would go for up to a 25% cut) if current recipients and those nearing retirement would also take some (less drastic sacrifice). But it looks like the prevailing attitude is "I'm old! where is my money! I paid into this and I expect to get it back...screw the next generation"

 

[saluki9]

"I'm old! where is my money! I paid into this and I expect to get it back...screw the next generation"

 

[Texas Proud]

It seems there are a lot of us who have paid into the system for quite a few years (19 years for me) but are still far away from SS (age 40) that would be willing to sacrifice a great deal of our future benefits (I would go for up to a 25% cut) if current recipients and those nearing retirement would also take some (less drastic sacrifice). But it looks like the prevailing attitude is "I'm old! where is my money! I paid into this and I expect to get it back...screw the next generation"

You got me thinking... how long have I paid into the system

Well, it is 39 years!!! And I am only 53... sure, the first 8 to 10 years are very small amounts... but I have been paying in since I was 14...

I will have to look at my stmt and see how much I have paid into the system...

 

[Westernskies]

But it looks like the prevailing attitude is "I'm old! where is my money! I paid into this and I expect to get it back...let the next generation pay for theirs"

Fixed it for you.

 

[saluki9]

Fixed it for you.

You mean let them pay for theirs and ours

 

[79protons]

"
But it looks like the prevailing attitude is "I'm old! where is my money! I paid into this and I expect to get it back...let the next generation pay for theirs"
"

Fixed it for you.

Well, you *could* put forth the arguement that the current retired generation is the one who elected the government that squandered away the money they paid in and so should bear the brunt of the remedy. I was trying to be a bit more understanding and suggest that the next generation take a much bigger cut as long as the current retired generation who screwed up the system to begin with take some of the responsibility, even if it is a couple % reduction. If that means you only take 2 cruises this year instead of 3, then such is life.