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Social Security Stuff
Old 07-31-2014, 01:03 PM   #1
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Social Security Stuff

Probably half of the money threads posted, make some mention of Social Security.
Comments range from "I don't count on it" to "It probably won't be there".
When to take it? Earliest? Age 70?

Just to kick this off, our own situation:
1. While DW worked, the total amount earned for SS was less than 1/2 of my SS earnings, so she gets the same amount, either way... even if she had never worked or paid in.
2.We took SS at age 62, as soon as we were eligible.
3. At today's indexed rate, we will have received well over $400,000 in benefits.
4.$25,500 per year is a major part of our retirement income.

I understand the idea of not counting on this as future income, but as a safety net, or a kind of bonus, but...
If I had it to do all over again, I would definitely include this as income, and if I was really unhappy with my profession, would take a run at retiring early.

We are (each one of us) different in our outlook for the future. Leaving a major inheritance, or living to age 100 is not in the plans that DW and I have made. That social security was there as a "guaranteed" income base, was a major reason for retiring at age 53... especially, with the idea (then).. that if necessary we were young enough to recover if we couldn't quite make it on a fully retired basis.

With a maximum 5 to 10 year horizon, it's easier to look at the future this way. Perhaps looking at 30 or 35 more years would change this outlook, but if I were 25 years younger, using SS as a planning factor, would still be a certainty.

Getting an estimated SS dollar amount should be a "must".

YMMV

I am reminded of one of my Florida neighbors, who, though he was well off financially, waited until he was 65 to retire... Moved in to the home across the street from me, and in his second month of retirement, passed away, leaving a wealthy, (if lonely) widow.
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Old 07-31-2014, 01:18 PM   #2
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Even Bernstein advises young people in his latest e-book that SS will probably be there in one form or another. People like you imoldernu are living proof that it all works out (retirement, that is) despite our greatest fears that the sky has/is/will fallen/falling/fall.
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Old 07-31-2014, 02:05 PM   #3
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I remember back in 1968 being told that "by the time you retire, SS will be long, long gone! They're already broke!!"

I get my first check 19 days from now.
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Old 07-31-2014, 02:16 PM   #4
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Thanks for this. I am 45 and hope to retire at 57 (my DH will be 52) in 2026. In my spreadsheets, I use about 75% of what SS estimates for me, and I use my DH's as estimated for him, although we'll probably use 1/2 of mine because I think that will end up being larger. That way, I am building in a cushion, but not being so overly conservative as to being unrealistic.
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Old 07-31-2014, 02:16 PM   #5
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I get my first check 19 days from now.
You hope!
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Old 07-31-2014, 02:17 PM   #6
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In my retirement plan, I assume that we will receive 80% of the benefit estimate shown on our statement. Hopefully more, but I'm confident there will be benefits for us.
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Old 07-31-2014, 02:21 PM   #7
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Imoldernu,
Thanks again for another post of your retirement experience. I have enjoyed reading them over the last couple of years.

Mike
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Old 07-31-2014, 02:43 PM   #8
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I run two sets of numbers, one with SS and pension factored in, and one without. In most instances, factoring out SS/pension only delays my retirement by 2-3 years. For instance, if I wanted to make it on $40K per year, Firecalc says I could actually go out in 2015, with a 96.6% chance of success, with SS/pension. Without, them, it drops to 80.2%. But if I wait until 2018, I had a 98.8% chance of making it, without SS/pension.

I thought SS would play a much bigger role in me making or breaking it in retirement, but that doesn't seem to be the case.
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Old 07-31-2014, 03:06 PM   #9
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I assume SS comes in as promised. I think that is reasonable for Roth conversion and other financial planning. if SS is reduced, then I'll pay less taxes when RMD's and SS start, and some of my Plan B margin gets used up. I have enough margin to cover the expected SS reduction without reducing normal expenses.
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Old 07-31-2014, 03:07 PM   #10
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For those of you worrying about SS, know that fixing SS beyond 2033 (the current "run out of $" date estimate) is relatively easy. It does not take much tinkering to keep the program running and healthy. With the enormous boomer generation retiring (and voting!), it's difficult to imagine SS not getting patched up as time passes.
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Old 07-31-2014, 03:17 PM   #11
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I remember back in 1968 being told that "by the time you retire, SS will be long, long gone! They're already broke!!"

I get my first check 19 days from now.
You were paying 4.4% on that paycheck.

Today those who w*rk pay 7.65%.

How much more can the system absorb in increases. I don't know, I'm just sayin'
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Old 07-31-2014, 03:24 PM   #12
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I get a wee dab of SS, and SO gets almost double that - we both took at 62, which may have been dumb, given we really have enough income without and could have taken at a higher rate later. maybe. OTOH, I keeled over a year ago and got dragged back to the land of the living by SO. I know me, and am quite sure my penurious spirit would have been wailing into eternity had I not taken advantage of SS prior to that event.

Here in 3 months or so I will start suckling at the Medicare teat and expect my medical expense to go down by about $400/month or so. astounding. Were I better at diverting income into non-taxable sources it would be more like a $500/month reduction in expense.

Really something to be said for getting old. not much, but something.
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Old 07-31-2014, 04:29 PM   #13
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I always believed SS would be paid to DW & myself in full. DW took hers at 62 as did I (DW also got an increase when I took mine - spousal benefit). However we really did not need the money to live on and just saved it. About 2008 I repaid all of my benefits and the spousal benefits (about 6 years worth) and restarted benefits again at age 67.5 (along with new increased spousal benefits for DW). I had learned I could do that on this site (it has been pretty limited in time now) and after seeing the benefits mainly for DW as my benefits would probably pass to her and would be significantly larger. I have been impressed on how the system has worked not only for us but several friends.
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Old 07-31-2014, 04:48 PM   #14
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A few years ago, as I was putting together my ER plan, I went to the SS website and created a spreadsheet based on the SS benefit formula. A few years later, after downloading the AnyPIA program and not able to get it to work, I tried it again (after some prodding from others in this forum) and got it to work. To my glee I was able to match my spreadsheet's monthly benefit to within a dollar.

My earnings by year had not changed, of course, so once I entered them all from 1982-2008 and a bunch of zeroes after that all I need to do to update the spreadsheet is to cut and paste a new set of wage indexing factors.

Just for fun, I added a bunch of earnings years to replace the ~12 zeroes to see how much more my monthly benefit would be. Those earnings years did not have a lot because I was working only 12 hours per week by the time I ERed in 2008. My SS benefit would rise only about $100 a month, mainly because I was barely in the 32% wage replacement bend point.
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Old 07-31-2014, 11:36 PM   #15
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Quote:
Originally Posted by imoldernu View Post
If I had it to do all over again, I would definitely include this as income, and if I was really unhappy with my profession, would take a run at retiring early.
So glad you shared your firsthand experience, especially as I'm just about to take the early-retirement leap! Like you, I'm very confident Social Security -- as popular as it is across the political and generational spectrums -- will endure.

Also, since I turn 55 next year, I expect I'll then be in the zone immune to any political tinkering, unless the chained CPI idea rears its ugly head again.

Despite my confidence, I use 75% of my estimated Social Security payout as a worst-case scenario when I do calculations. But I'm not giving up a single percentage point of that 25% without a fight.
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Old 08-01-2014, 12:22 AM   #16
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Take it early or take it late, the actuaries at SS modeled the payouts to be roughly equal, take it early and receive more payments at a reduced rate. Take it later and receive fewer payments at a higher rate. Of course long lived folks would do better over all by deferment- if they can live with out that income stream for a few years.

If you know when you are going to your great reward, then the decision would be easy. Most of us don't have -or want- that intel
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Old 08-01-2014, 07:07 AM   #17
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I don't get SS (civil service retirement) but it will be there for you young dreamers. Maybe a diet COLA, probably a higher income cap. It isn't going away.
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Old 08-01-2014, 07:35 AM   #18
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I don't get SS (civil service retirement) but it will be there for you young dreamers. Maybe a diet COLA, probably a higher income cap. It isn't going away.
"Diet COLA" - I'm stealing that one.
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Old 08-01-2014, 08:24 AM   #19
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Take it early or take it late, the actuaries at SS modeled the payouts to be roughly equal, take it early and receive more payments at a reduced rate. Take it later and receive fewer payments at a higher rate. Of course long lived folks would do better over all by deferment- if they can live with out that income stream for a few years.

If you know when you are going to your great reward, then the decision would be easy. Most of us don't have -or want- that intel
If you are single, then you are right, the discounts are calculated to be actuarially equivalent. However, if your are married, then joint mortality applies and it is a whole different ballgame unless both people worked, has similar earnings and are of similar age.

For us, I worked and my earnings were above the limit almost every year since I was 30 and DW only worked part-time here and there. I plan to file and suspend at FRA and start benefits when I am 70. If the financial markets go to hell (like in great depression hell) I would start earlier to preserve my nestegg. I believe it will be there, but haircut what SS tells me we will receive by 10% to recognize that some changes will be made to preserve the system.
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Old 08-01-2014, 08:34 AM   #20
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I've always taken it at face value in the calculations, but I'm not sure that's wise, since I'm 55 and don't plan on it until 70. But I've also completely left it out of the calculations, and it didn't make that huge of a difference.

One thing I never did was to spend even one second thinking about how wages would play into the payout amount...when it was time to leave, I left.
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