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Re: New Scott Burns column on Social Security
Old 01-29-2006, 01:12 PM   #21
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Re: New Scott Burns column on Social Security

Regarding "average", to quote Jerry Reed:

"Well, the average American father and mother, owns one whole car, and half another. And I'll bet that half a car's a trick to drive, don't you?"

Thanks, Whoda, too, for lumping me into the "got it together" group (being 51 and then some), a fact that's been corroborated by an expensive extensive study funded by the Shiner Bock Drinkers and Kona Gold Growers Ass'n. (See, Nords, shoulda bought that house...)

I've done some what-ifs (with crayon, in my case), trying to determine what ye old nestegg will look like, and don't have much faith in their accuracies, so I'll probably wait 10.5 years before actually making the decision. But given my probable life expectancy of around 80 years, my SWAG at this juncture will be to take earlier rather than later, so I can spend it in my hopefully still active and healthy years. If somehow my piggy bank gets fuller than I anticipate, I may decide to wait. Too many variables at this point...

My parents retired comfortably on two pensions - one decent, one small - and two early SS checks. They didn't get to be globetrotters, but did fairly well, all told. My Mom passed away last year, aged 74. Should she have waited? Her life expectancy was probably mid 80s, before the cancer, i.e....
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Re: New Scott Burns column on Social Security
Old 01-29-2006, 02:17 PM   #22
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Re: New Scott Burns column on Social Security

I'll add a couple of thoughts if I may..

- One thing most people miss when figuring the SS comparison calcs between 62 and 70 is that not only do you not get penalized by starting prior to Full Retirement Age & recieve Delayed Retirement Credits, you get credit for the intervening Cost-Of-Living Adjustments...The SS website is not clear on this, so it is often missed..So Whoda, when you say your SS is $18,000 at 62 and $32,500 at 70, I would say it is probably much higher at age 70, more like $39,500 or so if you figure the COLA projections are about 2.8% long term..This depends on your age, so I am just guessing that your Full Retirement Age is 66.

- Therefore, I don't think the FIRECALC forces people to take this into account. If you just plug your age 70 amount in without the 8 years of COLAs, your numbers wouldn't reflect the true value of delaying.

- There is a compounding effect as the higher base amount generates higher COLAs and the rules of compounding interest really apply over a long period.

- One comment was made by JPatrick that he asked current retirees about their decision..I would just warn you that the "early versus late" debate changed drastically only recently as the Full Retirement Age got bumped up to age 66 (and will head to 67) and the Delayed Retirement Credits just increased to 8% for most..It wasn't as "actuarially fair) in the past to wait to take SS.

- I would also point out to any of you who wish to Delay Social Security that their is a very unique quirk in the law that let's you start your spouse's SS early..Let me explain and assume the spouse is female (although SS is gender neutral) ..Generally speaking, a spouse will receive the greater of her own worker benefit or a "spousal benefit" based on the work record of her spouse..The spousal benefit is one half of the husband's worker benefit subject to any early reductions. A spousal benefit does not earn any Delayed Retirement Credits when delayed past the spouse's Full Retirement Age. It USED TO BE, that a spouse couldn't take the spousal benefit until her husband started SS. But changes made in 2000, allow the husband (worker) to file and immediately suspend his benefits. This means he continues to accrue a higher benefit by delaying, but the spouse starts her spousal benefits and doesn't leave any "money on the table".

- One final comment, Alicia Munnell does some great work for retirees and future retirees..This is especially critical in a time of increased risk being born by the individual retiree...She would never be influenced by funding to the Center For Retirement Research..Trust me on this.

Let the discussion continue...
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Re: New Scott Burns column on Social Security
Old 01-29-2006, 04:13 PM   #23
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Re: New Scott Burns column on Social Security

Quote:
Originally Posted by JPatrick
You know, I really hate to bring this discussion down to the really boring level known as real life, but sometimes observations in realtime have some value.
My SS age is still a few years away, but since it has been at least visible on the horizon, I have been giving the "what age to draw" question a fair amount of thought.* Like whoda and the bunny,* I've broken out the Big 5 tablet and number two pencil which has provided me with numeric conclusions, which by the way don't coincide with those expressed earlier on this thread, (think age 63), but I have also used that silly old reseach trick of asking real people who have been there done that,* what they woulda, shoulda done.
I've asked relatives, friends, friends of friends, dude in waiting rooms, and --well you get the idea.* If I throw out the folks that need the bucks to survive along with the workaholics who truly don't need anymore money and concentrate on us everyday folks in the middle, I'd have to say I've never found anyone who regretted their decision.* What was that decision?* A bit like the national averages, however, I've never met anyone who retired before 65 and then elected to wait for the max benefit at 70.
Does that make them all stupid and deprived?* Sure doesn't seem so.
Hardly scientific info, but talking to real people can be valid.* Anyone here know a senior citizen who is beating themselves up for not waiting to collect til 70 or even 65?
Want to hear a real problem?* How about the multitudes who are not maxing out their 401K's and/or using other retirement saving vehicles to fund their own future.
Think you could find someone who regrets the fail to save decision?* Under every rock!
How about devoting some bandwidth to that one.
With complete respect to your opinion, I don't se that we are bandwidth constrained on this forum. Recently we have discussed, at length, such important topics as "How many TVs do you own?" "How many functioning computers do you have", etc. So there should be room for SS.

Some of us feel that SS will be "gravy", thus not particularly important. I disagree, to put it mildly. Just a moderate respect for life's exigencies should put us on notice that an ace in the hole could be really helpful at some point. Granted, this may not apply to some people, including military retirees, some feds, etc, who already have a whole handful of aces.

But if you are depending on the 60/40 mantra, or your own skills, then you could run dry. So social security is at least important enough to be seriously discussed, at length.

Ha
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Re: New Scott Burns column on Social Security
Old 01-29-2006, 04:15 PM   #24
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Re: New Scott Burns column on Social Security

Quote:
Originally Posted by kate
JPatrick, sorry about the loss of Molly.* My condolences.

Kate (once the proud companion of Charlie, the German shepherd)
Thanks Kate.* Losing those pups is tough isn't it.
I had to put her down on New Years Day.* Not the worst day of my life, but it is right up there on the list.* Some day I'll tell that story.

I haven't been able to shake the funk I've been in and people are starting to give me those looks. You know, those looks.
I'm convinced I've got to find Molly's breeder if I am ever to* be happy again.
My craigslist ad is below.* Of course I'm chasing other angles as well.
http://houston.craigslist.org/pet/127380170.html
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Re: New Scott Burns column on Social Security
Old 01-29-2006, 04:27 PM   #25
 
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Re: New Scott Burns column on Social Security

Quote:
Originally Posted by HaHa
With complete respect to your opinion, I don't se that we are bandwidth constrained on this forum. Recently we have discussed, at length, such important topics as "How many TVs do you own?" "How many functioning computers do you have", etc. So there should be room for SS.

Some of us feel that SS will be "gravy", thus not particularly important. I disagree, to put it mildly. Just a moderate respect for life's exigencies should put us on notice that an ace in the hole could be really helpful at some point. Granted, this may not apply to some people, including military retirees, some feds, etc, who already have a whole handful of aces.

But if you are depending on the 60/40 mantra, or your own skills, then you could run dry. So social security is at least important enough to be seriously discussed, at length.

Ha

I agree ! - Last year at this time, the discussion was mainly - 'At what age are you safe that Bush won't eliminate your SS' -

What a difference a year makes. I think even he (Bush) will be too embarrassed to even mention it in his State of the Union address this week.
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Re: New Scott Burns column on Social Security
Old 01-29-2006, 04:40 PM   #26
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Re: New Scott Burns column on Social Security

Quote:
Last year at this time, the discussion was mainly - 'At what age are you safe that Bush won't eliminate your SS' -
Yup, every Ponzi scheme fails for two reasons:

1. the administrator puts his hand in the kitty and
2. not enough new blood to support the pyramid.

SS is no different.
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Re: New Scott Burns column on Social Security
Old 01-29-2006, 04:47 PM   #27
 
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Re: New Scott Burns column on Social Security

Quote:
Originally Posted by tryan
Yup, every Ponzi scheme fails for two reasons:

1. the administrator puts his hand in the kitty and
2. not enough new blood to support the pyramid.

SS is no different.
SS in NOT a Ponzi scheme. It is an insurance program. No one ever gets rich from SS.

SS is a Lot Different!
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Re: New Scott Burns column on Social Security
Old 01-29-2006, 06:19 PM   #28
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Re: New Scott Burns column on Social Security

I went looking for the paper by Alicia Munnell that is referenced in Burns’ column. Couldn't find it on her website, or at the Boston College Finance Website. But I did look at other papers she has written. My impression is that she is a heavyweight, and an honest researcher. She is Peter Drucker Professor of Management Science at Boston College. Management Science is highly fact based- it is a renamed Operations Research, I think intended to get away from the military connotation of early OR.

Here is something I excerpted that deals with a subtle point regarding research and social change. Alicia is writing:

"Let me conclude. In an introduction to Henry Aaron’s 1979 book Politics and Professors
that looked at the expansion and subsequent rollback of Great Society programs, Bruce
MacLaury characterized Henry’s findings as follows:

“…faiths and beliefs, not research, are the real basis for commitment to
social reform. …Research tends to be a conservative force because it
fosters skepticism by shifting attention from moral commitment to
analytical problems that rarely have clear-cut or simple solutions.”

I think that conclusion also applies to research and retirement policy. It was the “faiths
and beliefs” of the people associated with the early years of the Social Security that
provided “the commitment for social reform.” They envisioned and then worked to enact
a social insurance system so that people would have the protection they needed in case of
disability, premature death, retirement, and ill health. They used research as a tool in this
effort, and were in the enviable position of having a monopoly on the relevant
information. Research alone “tends to be a conservative force,” because it shifts
“attention from moral commitment to analytical problems that rarely have clear-cut or
simple solutions.” That conservative force is desirable when dealing with a program as
important and successful as Social Security. We do not want to make a mistake.
"

The italics are mine- Ha
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Re: New Scott Burns column on Social Security
Old 01-29-2006, 06:30 PM   #29
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Re: New Scott Burns column on Social Security

From Wikipedia, the free encyclopedia.
A Ponzi scheme is a fraudulent investment operation that involves paying abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business. In fact, a Ponzi scheme must have abnormally high short-term returns in order to entice new investors. The high returns that a Ponzi scheme advertises (and pays) require an ever-increasing flow of money from investors in order to keep the scheme going. Once the flow of new investment stops, the scheme is doomed to collapse.

Sure sounds like a Ponzi scheme. esp. for the workers in the 80s that had to start paying higher payroll taxes. I am sure it will get raised again eventually.


Quote:
One comment was made by JPatrick that he asked current retirees about their decision..I would just warn you that the "early versus late" debate changed drastically only recently as the Full Retirement Age got bumped up to age 66
Would you explain this further. I thought the "early" out was also raised, also. At 62, you no longer get the 80%, you get 70 something percent?

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Re: New Scott Burns column on Social Security
Old 01-29-2006, 06:44 PM   #30
 
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Re: New Scott Burns column on Social Security

Quote:
Originally Posted by maddythebeagle
From Wikipedia, the free encyclopedia.
A Ponzi scheme is a fraudulent investment operation that involves paying abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business. In fact, a Ponzi scheme must have abnormally high short-term returns in order to entice new investors. The high returns that a Ponzi scheme advertises (and pays) require an ever-increasing flow of money from investors in order to keep the scheme going. Once the flow of new investment stops, the scheme is doomed to collapse.

Sure sounds like a Ponzi scheme. esp. for the workers in the 80s that had to start paying higher payroll taxes. I am sure it will get raised again eventually.


Would you explain this further. I thought the "early" out was also raised, also. At 62, you no longer get the 80%, you get 70 something percent?


So far the SS program is running a a Surplus - Again it is NOT a Ponzi scheme. No one knows what will happen in the future. Future projections show everyone at age 62 all punching out at the same time and collecting SS.
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Re: New Scott Burns column on Social Security
Old 01-29-2006, 09:00 PM   #31
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Re: New Scott Burns column on Social Security

DW and I took ours at 62.* And, hey, we just got a small raise.* Guess we'll use it to buy I-bonds.* It sure makes sense to spend SS and let your investments increase. Haven't touched a penny of the Index Funds since retiring two years ago. It's increased also. ER Life is good.
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Re: New Scott Burns column on Social Security
Old 01-30-2006, 06:29 AM   #32
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Re: New Scott Burns column on Social Security

HaHa - Here is a link to the paper (brief)

http://www.bc.edu/centers/crr/ib_35.shtml
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Re: New Scott Burns column on Social Security
Old 01-30-2006, 01:26 PM   #33
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Re: New Scott Burns column on Social Security

Here's another take on the SS funding controversy
http://bruceweb.blogspot.com/
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Re: New Scott Burns column on Social Security
Old 01-30-2006, 02:32 PM   #34
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Re: New Scott Burns column on Social Security

Great information!

I have reviewed it and will see how things go over the next few years. My concern is a graduated income exclusion for benefits as the Boomers start drawing from the system and the politicians panic again. I may take it early just to lock in the payment even if it would make better financial sense (for my wife anyway) to wait later.

The past is no indication of future performance..........especially with government programs.
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Re: New Scott Burns column on Social Security
Old 01-30-2006, 02:39 PM   #35
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Re: New Scott Burns column on Social Security

Quote:
Originally Posted by New Thinking
HaHa - Here is a link to the paper (brief)

http://www.bc.edu/centers/crr/ib_35.shtml
Thanks New Thinking.

Ha
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Re: New Scott Burns column on Social Security
Old 01-30-2006, 02:41 PM   #36
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Re: New Scott Burns column on Social Security

Quote:
Originally Posted by SteveR
I may take it early just to lock in the payment even if it would make better financial sense (for my wife anyway) to wait later.
I'm three years away from making a decision, but this is one very big factor that makes me lean toward taking SS at 62.

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Re: New Scott Burns column on Social Security
Old 01-30-2006, 04:10 PM   #37
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Re: New Scott Burns column on Social Security

Quote:
I'd have to say I've never found anyone who regretted their decision.* What was that decision?* A bit like the national averages, however, I've never met anyone who retired before 65 and then elected to wait for the max benefit at 70.
My grandparents took SS at 62 almost 30 years ago. We were talking about that a few weeks ago, and they mentioned that, while they are not beating themselves up about it, they would have come out much better had they waited to take their SS. Admittedly, since they are both in their 90's and still in good health, they may be the exception.
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Re: New Scott Burns column on Social Security
Old 01-30-2006, 05:40 PM   #38
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Re: New Scott Burns column on Social Security

Quote:
Originally Posted by SteveR
. . .My concern is a graduated income exclusion for benefits as the Boomers start drawing from the system and the politicians panic again.* . .
That's the biggest factor I see supporting early withdrawal for me. I don't think I'm going to need social security benefits, but it would really tick me off if I waited and ended up collecting less (or nothing) because the politicians cut me off before I could start.

That's one reason I'm thinking the staggered approach might be good. I'll make sure I get something (if it hasn't already been changed by the time DW reaches 62) but if they don't shut ss down, I'll increase my COLA'd annuity benefit by waiting to take my own benefit.
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Re: New Scott Burns column on Social Security
Old 01-30-2006, 05:46 PM   #39
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Re: New Scott Burns column on Social Security

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Originally Posted by bongo2
My grandparents took SS at 62 almost 30 years ago. We were talking about that a few weeks ago, and they mentioned that, while they are not beating themselves up about it, they would have come out much better had they waited to take their SS. Admittedly, since they are both in their 90's and still in good health, they may be the exception.
I rather take it at age 62 based on the following break-even numbers provided by SS:

Break-Even Age
62 vs 66: 76 years and 9 months
62 vs 70: 79 years and 4 months
66 vs 70: 81 years and 4 months
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Re: New Scott Burns column on Social Security
Old 01-30-2006, 07:04 PM   #40
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Re: New Scott Burns column on Social Security

Several people have mentioned the idea of taking SS early, to avoid possible negative changes in the benfit structure.

Unless you are very young, and hence this is really not a near-term concern, I think this is very unlikely. If SS were to become just another welfare program, it would be supported about as well as our other welfare programs are. For this important political reason, ending or gutting SS is less likely than other bad things, for example, another very important terrorist strike on US soil, or a breakaway panademic.

But my opinions don't have much weight. Here is what Prof. Munnell had to say in a public Q&A about a year ago while the privatization debate was still going strong.


Los Angeles, Calif.: As a 30-something, I can only see two possible outcomes for Social Security over the next 20 to 40 years:
a. It won't be around
b. My generation will be taxed to death so that the Baby Boomers can retire and then leave the program bankrupt for later generations

"B" is the likely answer since:
a. Our political and economic system rarely looks beyond next quarter
b. Our political system consists of entirely Baby Boomers, who have never shown themselves to look beyond their own generation's needs

Call me a cynic, but if I get a Social Security check when I retire, great, but I'm not counting on it.

Alicia H. Munnell: Social Scurity will be around and you will not be taxed to death. The Social Security actuaries say that raising the employer and employee tax each by one percentage would provide enough money to cover benefits for the next 75 years. One percentage point is not nothing, but hardly fits the "taxed to death" prediction. The alternative of course is benefit reductions. They would amount to about 20 percent -- holding harmless those 55 and over.


Dayton, Ohio: Ms. Munnell, the current discussions seem to be missing the fundamental question: What is the point of Social Security?

Is it supposed to be a retirement program? Or is it, fundamentally, a welfare program to protect those of the poor who happen to be old.

Rather than tinkering with percentages here and there, I wish we as a nation could have a real, meaningful decision about what we want it to BE, then decided how it should work.

Alicia H. Munnell: Social Security is a social insurance program -- not a welfare progrtam. Its strength rests with the fact that everyone contributes and everyone benefits. Because of its broad-based support and participation, Congress does not make capricious changes to the program and benefits involve no stigma.



There is more at* * http://www.washingtonpost.com/wp-dyn...2005Jan22.html

ha




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