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How do you factor in SS?
Old 10-09-2018, 04:30 AM   #1
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How do you factor in SS?

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.
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Old 10-09-2018, 05:44 AM   #2
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how long of a time frame are you calculating out, or in other words, how old are you?

Obviously the more decades out you feel you need to calculate, the sketchier your assumptions are likely to be.

I'm 65 now, but when I was 45 I was factoring "zero" into my calculations for SS. I really didn't start to think I'd get anything until I was in my late 50s.
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Old 10-09-2018, 05:52 AM   #3
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Some folks here use a discount. I do not, as I don't believe I will get a cut being 58 yo currently, plus DGF is already receiving benefits.
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Old 10-09-2018, 06:02 AM   #4
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I use a 25% cut. I turn 70, my probably time to start SS, in 2031, so I think a 25% cut is a reasonable worst case. If it doesn't happen I get a bonus. It's possible it'll be worse but I think 25% is reasonable based on projected shortfall by 2034.
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Old 10-09-2018, 06:23 AM   #5
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I am currently in early 50s and discount by 1/3. I have a low WR so this does not really impact my spending.

That being said, I always use the begin draw at age 70 numbers for SS.

I had always assumed 0 for SS for planning. I knew that I was coming up on FI within the a few years. When an ER opportunity presented itself, I finally added in SS. Even with my 1/3 discounting, it put me way over the top.

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Old 10-09-2018, 06:37 AM   #6
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gravy. I expect it, but I often don't use it in my calculations. I leave out some other assets too. Just added buffering since I don't budget or tract spending closely.
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Old 10-09-2018, 07:00 AM   #7
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I look at it as a bonus. I run it with SS and with out. If I can't RE with out SS then I'm not FI. We plan to RE on June 1, 2019 and will have 5/6 years before we can take SS at 62. I look at SS as a way to reduce our withdraw on our investments.

I do not think that politicians will make a change to SS that will affect a large portion of the voting base. They will do what they did last time and screw the younger generation.
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Old 10-09-2018, 07:19 AM   #8
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Quote:
Originally Posted by RunningBum View Post
I use a 25% cut. I turn 70, my probably time to start SS, in 2031, so I think a 25% cut is a reasonable worst case. If it doesn't happen I get a bonus. It's possible it'll be worse but I think 25% is reasonable based on projected shortfall by 2034.
I also use -25%, but keep in mind that is extremely conservative for the following reasons:

1. Congress is unlikely to do nothing. Whatever they do will be late, but it is inconceivable that they will let that many voters take that big a benefit cut.

2. The latest shortfall forecast is 21%, not 25%, and likely to improve further based on the record low unemployment rate and record number of full time workers. https://www.ssa.gov/OACT/TRSUM/index.html

3. SS is not critical to my FIRE calculations - if it is to yours you might want to be more realistic rather than overly conservative.

IMO, reasonable worst case might be a 10% cut IRL.
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Old 10-09-2018, 08:20 AM   #9
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Like others here I'm only using 75% of our SS estimates for our calculations.

Unfortunately, we got a late start with our retirement savings, so SS definitely plays a part in our retirement. We would not be able to retire early based solely on our pension and savings. Still, SS is a small portion of our retirement estimates so as long as we get something we should be fine.
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Old 10-09-2018, 08:23 AM   #10
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I calculated without it. In fact every retirement calculator I used, I obmit one source of after tax savings. And if I get 100%, I know I’m good.
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Old 10-09-2018, 08:40 AM   #11
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Currently age 57. I don't include Social Security in my calculations to determine retirement readiness, even though I expect to collect some Social Security. Any Social Security income I actually receive will be considered as a bonus. This is one method I used to build some additional safety margin into my other planning.
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Old 10-09-2018, 09:41 AM   #12
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I am 62yo now, planning to retire in 2020 at 64. Parents are hitting their 90s and still around so I'm using 30+ yrs for retirement in my modelling.


I generally run two Firecalc cases: SS at 70+ and SS at FRA, and compare results. I've always included SS but, haven't factored in a haircut yet.


I don't think we'd be able to retire with no SS, unless we really change our lifestyle. With SS, we are doing well.


I think I'll run several trials:
1. 25% SS reduction starting in 2035
2. 25% SS reduction across the board
3. no SS
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Old 10-09-2018, 09:51 AM   #13
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People often don't understand how hugely valuable SS is - even my engineer/scientists friends.

I like to use the following simple illustrative example.

Start at age 70.
Receive ~ 30,000/year adjusted for inflation until age 100 (30 years).

NPV close to $1,000,000 in today's dollars! (ie 30 years x 30,000 = 900,000).

This was based on my case of ~ 22 years of post-college earnings (as a member of the technical staff engineering type of role).

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Old 10-09-2018, 10:48 AM   #14
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I would look at how much it'd cost to buy an annuity for $30K/yr, inflation adjusted, starting at age 70. It's a lot less than $1M. I plan beyond 100 just in case, but I wouldn't base such numbers on living to 100.
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Old 10-09-2018, 11:33 AM   #15
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...1. Congress is unlikely to do nothing. Whatever they do will be late, but it is inconceivable that they will let that many voters take that big a benefit cut...
Agreed. My fear is not so much an across-the-board percentage cut. That would be political suicide and would likely result in civil disorder or worse. Highly unlikely IMHO. Rather, my fear is some combination of small changes, which include means-testing that could disproportionately affect people with substantial assets and/or other sources of income. Probably a slightly more politically-palatable solution.

I made the decision to retire at 52 with zero SS assumed. I'm now 57 and SS is starting to look more likely. For DW and myself combined, it is a fairly significant amount. The dilemma is whether to spend more now or wait until the cash is actually hitting our account, probably at FRA or 70. We'd sort-of like to spend more now rather than at 70, or at least help out our kids in their 20s, when they could use the help. I'd hate to guess wrong about that though.

First few years we retired, spending was 35-40% below our FIRECalc 95% number (with SS all-in). Last two years, we've closed about half that gap, which means we're starting to spend some of the future SS money. I don't like the uncertainty, so we'll probably continue to ease our way into the higher spending and re-assess as we go.
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Old 10-09-2018, 12:37 PM   #16
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I have a spreadsheet that includes SS @ 100% and then I can adjust it down to whatever I want. 100% is great, 75% is my planning number, anything less than that is unlikely but I like to look at what the impact would be. As it sits right now, SS will be used with COLA pension to cover all base expenses with 20% of wiggle room.

While a SS reduction of 30% is not desirable, a 30% drop in my portfolio at retirement year would be much worse.
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Old 10-09-2018, 01:37 PM   #17
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I am in the camp of discounting to 75%. Even given that, since I've had a good history of high earnings, it is high enough to cover my basic expenses.
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Old 10-09-2018, 02:18 PM   #18
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I run the model without it, then with it minus 20%. Either way it doesn't make a difference because model doesn't plan for taking early, and by 70 I won't need it anyways. If I outlive the 'break-even' point I have been lucky in one of the few areas that counts in life.
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Old 10-09-2018, 02:24 PM   #19
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Loooooong time from now, I don't count it at all.
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Old 10-09-2018, 02:54 PM   #20
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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?
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