Social Security: Is It Really A 'Surplus' ?

[ownyourfuture]

I'm going to do my absolute best to keep this non-political.
If you reply, please do the same.

Here's a scan from a pamphlet that was included with my quarterly 401(k) statement from Vanguard in 2006. Sorry about the quality.


I agree with what the woman says, that it really isn't a surplus.
Agree/disagree ?

FYI: I'm approximately 7 years away from being able to collect, & as it stands now, even if the absolute worst case scenario took place, & I was never allowed to collect a single penny, I'd probably be OK.

So it's not about me.

 

[misanman]

Why does it matter?

 

[growing_older]

I'm going to do my absolute best to keep this non-political.

Rest of the post is a political rant. For some years more SS tax was collected than was paid in benefits. That's a fact and not particularly political. Arguing about whether a 9 year old brochure should call it a surplus, or that anyone who doesn't agree with you is ignorant, is blatantly political.

Is your purpose only to stir up controversy?

 

[ownyourfuture]

Rest of the post is a political rant. For some years more SS tax was collected than was paid in benefits. That's a fact and not particularly political. Arguing about whether a 9 year old brochure should call it a surplus, or that anyone who doesn't agree with you is ignorant, is blatantly political.

Is your purpose only to stir up controversy?

I edited the post.
I was not trying to stir up controversy.
Is it OK with you now ?

 

[Dash man]

Well, the only political problem is both sides are irresponsible and we continue to vote out anyone who whispers about changing anything. So I just plan on taking at least a 70% haircut at some not too distant future date and am glad we've saved more than we need. No controversy, just fact.

 

[ownyourfuture]

Well, the only political problem is both sides are irresponsible and we continue to vote out anyone who whispers about changing anything. So I just plan on taking at least a 70% haircut at some not too distant future date and am glad we've saved more than we need. No controversy, just fact.

Thanks Dash man. That's the type of reply I was hoping to see.
No ranting, no raving, no politicizing, just a straight up & sensible response.

 

[brucethebroker]

Back in the early 80's, I was learning to sell investment products for a well known financial services/insurance company. Most retirement planning literature I read on the subject at that time promoted the 3 stool (pension, savings, SS) theory of retirement planning. Most also predicted the demise of SS in 20 years or so....
Well, here we are, 35 years later. Very few pensions left, but SS is still chugging along. Call me skeptical, but I'll worry about SS cuts when I see them.

 

[donheff]

Well, the only political problem is both sides are irresponsible and we continue to vote out anyone who whispers about changing anything. So I just plan on taking at least a 70% haircut at some not too distant future date and am glad we've saved more than we need. No controversy, just fact.

I think you have it reversed. Isn't it a 30% haircut leaving you 70% of current benefits if no change is made?

 

[joeea]

I think you have it reversed. Isn't it a 30% haircut leaving you 70% of current benefits if no change is made?

As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.1 At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of scheduled benefits.

see: https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html

 

[donheff]

24% haircut. If we can invade Iraq while cutting taxes we can make up that trifling difference for the good of all.

 

[imoldernu]

Know the details are involved. We left the workforce to make room for others to take our place. Social Security was part of our plan.
Hope to keep SS for another 6 years. After age 86, thinking we'll be ok.

 

[gerntz]

If Congress would just raise benefits we could take a bigger haircut in the future.

 

[Dash man]

I think you have it reversed. Isn't it a 30% haircut leaving you 70% of current benefits if no change is made?

What you are saying is the common belief. I believe further cuts will be in store for those with other means of support...asset testing. I was wondering if anyone would catch that.

 

[athena53]

As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.1 At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of scheduled benefits.

I'm betting that if it comes to a "haircut" (whether direct or via back-door methods such as additional taxation of benefits) the effect won't be the same for everyone and those with low SS benefits and little or no other income sources will see less impact. As usual, high earners and those who saved a lot for retirement will bear most of the impact.

 

[Chuckanut]

I think you have it reversed. Isn't it a 30% haircut leaving you 70% of current benefits if no change is made?

I ran Firecalc assuming a 70% of SS benefits. For some odd reason I survive the cut without giving up any necessities or even some extras.

Of course, I never assumed SS would be all that was needed to retire well. A radical thought, I know.

 

[Ready]

I would have no problem if we raised the cap on SS payments to allow the plan to continue on past 2037 without a shortfall. But I would be very disappointed if my benefit was cut or means tested. I've been paying into the system since I was 14 years old. Cutting the benefit now would make me feel like I was scammed by the government. I hope we figure out a solution.

 

[donheff]

What you are saying is the common belief. I believe further cuts will be in store for those with other means of support...asset testing. I was wondering if anyone would catch that.

common belief? Check out joea's link to the info from the SS actuaries. More like a 24% haircut. Even with some means testing there would be no need to go over 30% for anyone. SS is not in the dumpster.

 

[GTFan]

How are obviously political threads like these ok (speculating about the future of SS), but threads talking about the future of the ACA are not?

 

[donheff]

How are obviously political threads like these ok (speculating about the future of SS), but threads talking about the future of the ACA are not?

i see significant differences. This thread has focused on how deep the SS shortfall is. So far nobody has tossed aspersions on what one party or another proposes to do about it. Once that emerges Porky won't be far behind. The moderators understand that ACA discussions head that way quickly so they keep Porky in ready reserve for those threads.

 

[target2019]

If Congress would just raise benefits we could take a bigger haircut in the future.

In the future many of us won't need a haircut.

 

[AllDone]

The imminent demise of Social Security has been predicted for 80 years. The demise of Germany's 150 year-old similar system has probably been predicted by some for the entire time too.

 

[Dash man]

common belief? Check out joea's link to the info from the SS actuaries. More like a 24% haircut. Even with some means testing there would be no need to go over 30% for anyone. SS is not in the dumpster.

I'm sorry, but I can't believe any estimate or cost projection for any program originating from a government agency. But they will just print more money since no one in government from either party will ever cut entitlement spending. The national debt can just grow exponentially with no repercussions. So why worry?

 

[stepford]

A post doesn't need to explicitly name a particular political party to be overtly partisan.

 

[marko]

SS's collapse has been predicted even before I started working back in '66: "it will be long-gone before you're eligible!!".

Regardless, potential changes --however unlikely-- are just one more reason to take it at 62; "get all you can while you can before the rules change".

So many on this forum have used up miles of Excel sheets figuring out the best SS result. How sad would it be to decide to wait ten more years to age 70 and then get short changed!

 

[mamadogmamacat]

My choice, subject of course to re-evaluation as I get closer, is to take it at 62 for solely longevity expectations based on current health and on my genetics. On the other hand, if one does not have such concerns,I do not think it all that helpful to suggest the rules will change for those already in their sixties. It did not with the last 'reform" in 1983, and I rather firmly believe will not with the next "reform" either whenever it comes. Only those still too young to care or pay attention, aside from the few exceptions such as those in this forum, will be affected. That's the only way it will pass, just like last time. SO, for those who wish, excel away and enjoy.