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Old 10-10-2018, 05:24 AM   #41
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Originally Posted by RunningBum View Post
Depends. Maybe they would grandfather in anyone 62 or over, whether they have started SS or not. Maybe they would even it out, so that if you've been collecting from 62 until the cut, they give you a deeper cut than someone who has been deferring--I doubt this one, even though it seems fair.

I modified my spreadsheet to show an across the board 25% cut at age 70, the worst time possible for someone who defers to 70. Assuming 5% returns on investments on 2% inflation, it moved the breakeven from 84 (no cuts ever) to 90.
That's the issue in that many of us will turn 62 before 2034 and won't be able to make a more informed decision on taking it earlier due to a much later breakeven point. That is if one uses that analysis as part of the decision making process.
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Old 10-10-2018, 07:29 AM   #42
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Originally Posted by NW-Bound View Post
Is the SS outflow limited to its funding, or is it allowed to run a deficit like the general Federal fund?

By the way, this is what the SSA has to say about the short fall. Note that the emphasis is mine. I guess we share in the blame too. We only have 2 children. My parents have 4.
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Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits. This increase in cost results from population aging, not because we are living longer, but because birth rates dropped from three to two children per woman.
Thanks for the quote. I've believed that for a long time, but never saw anything from the SSA.

The WWII generation had about 3 kids per couple, the Boomers had 2. If everything else had been equal, the Boomers would get a 1/3 cut in benefits, or the Boomers' kids would get a 50% increase in taxes.

I think the principal offset to that is that the higher rates of female employment cut the cost of spousal and survivor benefits. But, I'm not sure.
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Old 10-10-2018, 07:33 AM   #43
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Just so we all understand. Are people predicting a Haircut for ALL recipients, even those who already take SS? Or just new recipients who will become eligible in the next say... 5 - 10 years?
My $0,02 is that it will all come to a screeching halt one day.
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Old 10-10-2018, 07:36 AM   #44
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My $0,02 is that it will all come to a screeching halt one day.
The worst case scenario if nothing is done is that benefits will be haircut ~25% beginning in 2034... if by "screeching halt" you mean that NO benefits will be paid then you are ignorant about the facts of the situation.
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Old 10-10-2018, 07:43 AM   #45
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We have made close to or over the SS max earnings since we started working and are used to living on about 45-55k. With that sort of math we donít fret too much about SS longevity, it will inevitably provide above and beyond as long as we prevent lifestyle inflation.
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Old 10-10-2018, 08:14 AM   #46
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Everything that I have read indicates an across-the-board cut.. as tax revenues come in a percentage of benefits scheduled to be paid will be paid. No grandfathering.
pb4uski - I agree that under current law, if nothing is done, the benefits will be scaled back in a uniform fashion.

Do you mean by your comment, that this is also the most likely result even if Congress takes action on this and makes "reforms" to address this situation?

If so, that is encouraging to hear.

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Old 10-10-2018, 11:09 AM   #47
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If Congress does nothing... which seems likely as there will inevitably be winners and losers and I have zero confidence in those bozos ability to get the courage to do something sensible.
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Old 10-10-2018, 02:26 PM   #48
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I've been running Firecalc, and others, using my full SS benefit.
I got to thinking about the Feds trimming that back someday.

What do other folks do?

I've heard that SS should be solvent through 2035.
I was was thinking that at 2035, start using 75% of my SS.
As the next SS crisis approaches, a future administration will address it, and they will tweak it, yet again, to push its collapse off to 2135.

I get messages every year from SS asking me to log-on and to review my policy.

I do not review it every year, but I have reviewed it a couple times.

I have enough cash flow from my military pension such that I am able to support my family. My investments have continued to grow and I am not sure if I will ever 'need' my SS benefit.
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Old 10-10-2018, 02:33 PM   #49
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I count it as we are already retired. But only for future calculations as we have not taken it yet. In a couple of years when DW takes hers and when I plan to take mine, I will include it at whatever face value it is. If it gets depleted or goes away we will adjust accordingly.
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Old 10-10-2018, 03:04 PM   #50
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As the next SS crisis approaches, a future administration will address it, and they will tweak it, yet again, to push its collapse off to 2135.
I think this is the most likely scenario. IIRC last time (1983?) congress didn't act until about three months before they absolutely had to. As for an across-the-board haircut, that would be political suicide for any politician dumb enough to vote for it. Not only would that be throwing Grandma under the bus, but then Grandma's kids and maybe grandkids would not want to have to make up the difference. So then you have two or maybe even three generations of people voting against that dumb politician. Politicians are generally not regarded for high intelligence but I doubt any of them are that stupid.

So I think we'll see something similar to the last adjustment, perhaps raising FRA again, raising the payroll tax, maybe even means testing but if that happens it'll be a pretty high bar so it'll only be affecting those with incomes well into six figures, more for show than having any real effect.

But hey, my crystal ball is just as cloudy as the next guy's.
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Old 10-10-2018, 03:25 PM   #51
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So I think we'll see something similar to the last adjustment, perhaps Ö
Don't forget "overly optimistic assumptions about the future"
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Old 10-16-2018, 04:08 PM   #52
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ALL recipients, including current recipients.... cuts will be a percentage across the board from everything that I can find.
21-25% is the overall shortfall projected. How that get's distributed would be up to Congress. I was assuming it would be across the board, or non-retirees would end up with a more than 25% reductin in benefits.
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Old Yesterday, 10:36 AM   #53
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I'm nowhere near SS age, but I believe it will still be around when I'm older. I do not factor SS into any of my calculations. It will be a nice bonus.

I think it's simple to fix, but no politician wants to change it. Just lower the benefits for people under X age and increase the age to claim benefits. Simple.
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Old Yesterday, 10:59 AM   #54
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Because I retired 10 years ago at age 45, my main priority is to get to age ~60 intact because I am using only the taxable part of my portfolio. Once I get to age ~60, I begin being able to access what I call my "reinforcements" starting with unfettered access to my rollover IRA. After that, I have my frozen company pension and SS. My SS benefit isn't a whole lot because I have only 23 meaningful earnings years in the benefit calculation, the rest being zeroes. So, if it gets reduced it isn't going to be a lot and, because I have those other reinforcements, it won't make any big dent in my long-term planning (as shown in Fido's RIP program).
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Old Yesterday, 11:39 AM   #55
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I think this is the most likely scenario. IIRC last time (1983?) congress didn't act until about three months before they absolutely had to. As for an across-the-board haircut, that would be political suicide for any politician dumb enough to vote for it. Not only would that be throwing Grandma under the bus, but then Grandma's kids and maybe grandkids would not want to have to make up the difference. So then you have two or maybe even three generations of people voting against that dumb politician. Politicians are generally not regarded for high intelligence but I doubt any of them are that stupid.

So I think we'll see something similar to the last adjustment, perhaps raising FRA again, raising the payroll tax, maybe even means testing but if that happens it'll be a pretty high bar so it'll only be affecting those with incomes well into six figures, more for show than having any real effect.

But hey, my crystal ball is just as cloudy as the next guy's.
You nailed it. Very doubtful that those in retirement or near retirement would take anything but a very minimal haircut, if anything. It would be political suicide. Who do you think will win between two politicians: 1)"Grandma, I'm going to cut your SS by 25%" or 2)"I promise not to cut any SS benefits".

I agree, it will be the last minute before they have the guts to do anything (again) and it will be similar to the last time they had to do it. FICA tax rate might go up a little. Maximum income to pay into SS could increase. FRA for those under a certain age will go up. Could increase tax on SS benefits to 100% taxable. COLA might be lowered. Early retirement age might go up a year or two. But, Grandma won't take a cut.

Of course, I could be wrong!

As far as my own situation, we're counting on full SS to fund 40% of our retirement - at current spending levels. We could, if absolutely necessary, get by with zero SS, but it wouldn't be fun.
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Old Yesterday, 12:01 PM   #56
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As for an across-the-board haircut, that would be political suicide for any politician dumb enough to vote for it.
But the real question is: would it be political suicide to just let it happen without voting?

If nothing changes (ie, no votes), there will be an across-the-board haircut. And no member of congress will have voted for it.
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Old Yesterday, 12:15 PM   #57
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But the real question is: would it be political suicide to just let it happen without voting?

If nothing changes (ie, no votes), there will be an across-the-board haircut. And no member of congress will have voted for it.
Can you imagine the pressure these guys would face leading up to the cuts? Several years before it happens there will be a mass media blitz telling seniors they are going to get hit with a cut. Congress will be voted in (or out) based on what they say they will do to prevent grandma from going to the poor house.
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Old Yesterday, 12:33 PM   #58
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I think it's simple to fix, but no politician wants to change it. Just lower the benefits for people under X age and increase the age to claim benefits. Simple.
Yes, that's the simple fix. Just as simple would be to eliminate the cap on income subject to SS withholding, or raising the percentage that is withheld. Both would be unpopular among different folks. But for those who paid regularly into SS with the promise of a certain amount (per annual statements), breaking that promise would also be nearly universally unpopular.

I'm 52 and so far, my employers and myself have paid $243K into SS (as of last year). If I were to wait until 70 to take SS, the amount paid to me by SS would exceed the amount I paid in after only 7 years (not inflation-adjusted). If you count the amount my wife will be eligible for as spousal benefits, the number of years falls to five years. Of course, this doesn't count potential earnings that SS could have made if they had invested my payments into the stock market.

The statement below infers that SS is, and always was, a pyramid scheme. You'll get out more than you put in, on average, assuming you live beyond the IRS's life expectancy age. The reduction in the birth rate is blamed for the program's insolvency, although it's far more complicated than that.

Here's what the SS Chief Actuary says on SSA.gov.

https://www.ssa.gov/policy/docs/ssb/...v70n3p111.html

"Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits. This increase in cost results from population aging, not because we are living longer, but because birth rates dropped from three to two children per woman. Importantly, this shortfall is basically stable after 2035; adjustments to taxes or benefits that offset the effects of the lower birth rate may restore solvency for the Social Security program on a sustainable basis for the foreseeable future. Finally, as Treasury debt securities (trust fund assets) are redeemed in the future, they will just be replaced with public debt. If trust fund assets are exhausted without reform, benefits will necessarily be lowered with no effect on budget deficits."
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Old Yesterday, 12:52 PM   #59
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Here's what the SS Chief Actuary says on SSA.gov.

https://www.ssa.gov/policy/docs/ssb/...v70n3p111.html

"Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits. This increase in cost results from population aging, not because we are living longer, but because birth rates dropped from three to two children per woman. Importantly, this shortfall is basically stable after 2035; adjustments to taxes or benefits that offset the effects of the lower birth rate may restore solvency for the Social Security program on a sustainable basis for the foreseeable future. Finally, as Treasury debt securities (trust fund assets) are redeemed in the future, they will just be replaced with public debt. If trust fund assets are exhausted without reform, benefits will necessarily be lowered with no effect on budget deficits."
Your reference is from 2010. Here is the 2018 summary - https://www.ssa.gov/OACT/TRSUM/index.html.

The math is a little fuzzy because it depends on how you look at various components of the trust funds, but the retirement fund shortfall is 23% in 2034.

Quote:
The OASI Trust Fund, when considered separately, has a projected reserve depletion date of 2034, a year earlier than in last yearís report. At that time, income would be sufficient to pay 77 percent of scheduled OASI benefits.

The combined OASDI trust funds have a projected depletion date of 2034, the same as in last yearís report. After the depletion of reserves, continuing tax income would be sufficient to pay 79 percent of scheduled benefits in 2034 and 74 percent in 2092.
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Old Yesterday, 03:51 PM   #60
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Can you imagine the pressure these guys would face leading up to the cuts? Several years before it happens there will be a mass media blitz telling seniors they are going to get hit with a cut. Congress will be voted in (or out) based on what they say they will do to prevent grandma from going to the poor house.
There are far simpler ways to relieve the pressure sooner, but congress always seems to prefer to kick the can down the road until no time remains.

Some in congress are already grumbling about the sharp increase in the federal deficit this year and mentioning entitlements rather than last year's tax cuts as the cause. I suspect they are sizing up the electorate to see if they can get away cuts to Social Security, Medicare, and Medicaid.

We'll see if voters care or not.
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