Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 03-20-2016, 08:36 AM   #101
Recycles dryer sheets
 
Join Date: Nov 2013
Posts: 355
Interesting discussion about future changes to Social security and how much we can count on. I am curious whether Social Security or pensions are in better shape in terms of being able to rely on future payments. I know there are many different pension situations, but are people "discounting" their pensions as some are discounting future SS payments? Just curious.


Sent from my iPad using Tapatalk
__________________

__________________
jabbahop is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-20-2016, 05:17 PM   #102
Moderator
Walt34's Avatar
 
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 16,501
Quote:
Originally Posted by jabbahop View Post
Interesting discussion about future changes to Social security and how much we can count on. I am curious whether Social Security or pensions are in better shape in terms of being able to rely on future payments. I know there are many different pension situations, but are people "discounting" their pensions as some are discounting future SS payments? Just curious.
I'm not discounting my pension, but it is almost fully funded. It's also a government so they can raise taxes if necessary. And I wouldn't care if they did that because I don't live there anymore.

I'm "fence-sitting" on whether to discount SS though. Probably not for me but DW may have to deal with it. Even so, the pension and savings/investments will see her through but she won't be taking any round-the-world cruises though.
__________________

__________________
I heard the call to do nothing. So I answered it.
Walt34 is offline   Reply With Quote
Old 03-20-2016, 06:13 PM   #103
Thinks s/he gets paid by the post
Sunset's Avatar
 
Join Date: Jul 2014
Location: Chicago
Posts: 4,712
Quote:
Originally Posted by jabbahop View Post
Interesting discussion about future changes to Social security and how much we can count on. I am curious whether Social Security or pensions are in better shape in terms of being able to rely on future payments. I know there are many different pension situations, but are people "discounting" their pensions as some are discounting future SS payments? Just curious.
Sent from my iPad using Tapatalk
That, and whole life insurance policies that pay an interest rate, those insurance companies are looking hard for the fine print so they can reduce/stop paying the guaranteed rates.

Next stop will be annuities, looking for the fine print too. ... .
__________________
Sunset is offline   Reply With Quote
Old 03-20-2016, 07:52 PM   #104
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,407
Quote:
Originally Posted by Sunset View Post
That, and whole life insurance policies that pay an interest rate, those insurance companies are looking hard for the fine print so they can reduce/stop paying the guaranteed rates. ... .
And other than an obvious dislike for insurance companies what basis do you have for making such a statement Sunset? Where's your proof? I worked in the industry for over 25 years, including serving on numerous industry committees, and I am unaware of any companies doing what you say. While spread compression is a concern and minimum guaranteed rates are lower for new issues, reflecting the lower interest rate environment, to my knowledge their focus is how to deal with and manage the problem rather than how to weasel their way out of it as you seem to be suggesting.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 03-21-2016, 08:49 AM   #105
Thinks s/he gets paid by the post
2017ish's Avatar
 
Join Date: Apr 2012
Posts: 1,842
Quote:
Originally Posted by pb4uski View Post

Quote:
Originally Posted by Sunset View Post
That, and whole life insurance policies that pay an interest rate, those insurance companies are looking hard for the fine print so they can reduce/stop paying the guaranteed rates.

Next stop will be annuities, looking for the fine print too. ... .
And other than an obvious dislike for insurance companies what basis do you have for making such a statement Sunset? Where's your proof? I worked in the industry for over 25 years, including serving on numerous industry committees, and I am unaware of any companies doing what you say. While spread compression is a concern and minimum guaranteed rates are lower for new issues, reflecting the lower interest rate environment, to my knowledge their focus is how to deal with and manage the problem rather than how to weasel their way out of it as you seem to be suggesting.
Don't know if this was the source, but I recognized Sunset's comments as being very similar to an article in yesterday's Wall Street Journal:

Quote:
Life-insurance companies are scouring their policies to identify ways to raise rates and fees and lower the amount of interest they have to pay on savings products as low interest rates cut into their profits.

The bottom line for policyholders is they have to pay up or relinquish benefits.
Low rates are tormenting insurers—and their customers
March 20, 2016 9:09 p.m. ET Low Rates Are Tormenting Insurers—and Their Customers - WSJ (Link should work, fingers crossed!)
__________________
OMY * 3 2ish Done 7.28.17
2017ish is offline   Reply With Quote
Old 03-21-2016, 09:09 AM   #106
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,407
But that has nothing to do with guaranteed rates which is what Sunset wrote about.... it doesn't mention guaranteed rates or whole life, which is a small piece of insurance liabilities today, at all.

The rates and fees that the article is referring to are those where the insurer has discretion to change them under the terms of the contract. The raising of rates and fees and lowering of credited interest are some of the ways that insurers are trying to manage spread compression that I mentioned in my post.... but from my experience guaranteed rates are sacrosanct.

The concept is pretty simple... these policies were priced long ago in a higher interest rate environment so assuming higher interest income.... prolonged low interest rates have reduced investment income and profits and the insurers are using whatever tools they have contractually to try to restore the originally priced for returns for their shareholders much in the same way that retailers seek to increase prices when their costs go up.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 03-21-2016, 09:10 AM   #107
Thinks s/he gets paid by the post
 
Join Date: Oct 2012
Location: Colorado Mountains
Posts: 2,134
Quote:
Originally Posted by 2017ish View Post
Don't know if this was the source, but I recognized Sunset's comments as being very similar to an article in yesterday's Wall Street Journal:



Low rates are tormenting insurers—and their customers
March 20, 2016 9:09 p.m. ET Low Rates Are Tormenting Insurers—and Their Customers - WSJ (Link should work, fingers crossed!)
Couldn't get the link to work from Google search.
__________________
Hermit is offline   Reply With Quote
Old 03-21-2016, 09:46 AM   #108
Thinks s/he gets paid by the post
2017ish's Avatar
 
Join Date: Apr 2012
Posts: 1,842
Quote:
Originally Posted by Hermit View Post
Couldn't get the link to work from Google search.
Did you click on it? It was a shared link, I think? Otherwise, the title to use in google is: "Low Rates Are Tormenting Insurers—and Their Customers" with subtitle of: "Long-term-care policies are among hardest-hit"
__________________
OMY * 3 2ish Done 7.28.17
2017ish is offline   Reply With Quote
Old 03-21-2016, 10:11 AM   #109
Thinks s/he gets paid by the post
 
Join Date: Oct 2012
Location: Colorado Mountains
Posts: 2,134
Quote:
Originally Posted by 2017ish View Post
Did you click on it? It was a shared link, I think? Otherwise, the title to use in google is: "Low Rates Are Tormenting Insurers—and Their Customers" with subtitle of: "Long-term-care policies are among hardest-hit"
I clicked on it and it worked!

I don't think I have had that happen for WSJ before.
__________________
Hermit is offline   Reply With Quote
Old 03-21-2016, 10:17 AM   #110
Recycles dryer sheets
 
Join Date: Apr 2014
Location: Twin Cities
Posts: 50
Quote:
Originally Posted by Cut-Throat View Post
.... So, don't look for any BIG changes (File and Suspend affected a very small minority and not BIG - Fast and Furious maybe, maybe not, but did not affect the majority).
Just as laws apply to everyone and not merely the small number of law breakers, elimination of "File and Suspend" affected every married couple that lost eligibility.
__________________
manerac is offline   Reply With Quote
Old 03-21-2016, 12:01 PM   #111
Recycles dryer sheets
 
Join Date: Apr 2013
Location: Fishers
Posts: 383
For budgeting and projection purposes I discount SS by 25% starting in 2032 - just in case they missed the mark worse than they project. If it doesn't happen good for me! At least I know DW and I are good to go either way!
__________________
wmc1000 is offline   Reply With Quote
Old 03-21-2016, 09:06 PM   #112
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,812
Quote:
Originally Posted by swagjb82 View Post
Oh okay I understand. Pretty interesting idea now that I have wrapped my head around it.

I suppose if you are that worried about what is left to heirs then taking SS at FRA wouldn't be that much different income wise. I ran the numbers and it came out to be $62,257 per year using the same numbers and assuming the FRA was 67. You'd only need to take $139,114 from the $1m to cover the first 5 years between 62 and 67.

social security at 67 $27,822 ($19476/0.7)
$27822 * 5 years stash = $139114
Left $1m - $139114 = $860,886 at 4% = $34,435

TOTAL $34,435 + $27,822 = $62,257

Please correct my math if there is a mistake.
I get the same result. It's not a huge increase, less than $3,000 per year, but it does say that deferring does not mean you can't spend money early on.
__________________

__________________
Independent is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Wade Pfau: The new math of social security bizlady FIRE and Money 62 10-31-2015 04:45 PM
Financial Math Wizards Required nwsteve FIRE and Money 7 02-20-2005 03:53 PM
Help with math Guest Other topics 8 01-04-2005 05:56 PM
Very Interesting...Math Whizzes Only.. Tommy_Dolitte FIRE and Money 2 09-16-2004 07:54 AM
Weapons of Math Instruction BigMoneyJim Other topics 2 03-25-2004 07:03 AM

 

 
All times are GMT -6. The time now is 10:51 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.