SS as a %age of your income

[grumpy]

DW will get her first SS payment in February as she turns 62 in Dec. She will only get about $12K per year. I will not receive any payments from SS because of my federal pension. So our answer is about 12%.

[Coach]

My current plan is to start SS at 70. Based on my budget it will cover 100% of essential expenses and 60% of planned expenditures. But that's almost 12 years out, so who knows what will actually happen.

Coach

[youbet]

Quote:

Originally Posted by grumpy DW will get her first SS payment in February as she turns 62 in Dec. She will only get about $12K per year. I will not receive any payments from SS because of my federal pension. So our answer is about 12%.

Our situation is similar. I recently started SS at 62 and it covers about 13% of DW and my combined budget. She will get minimal (less than $100/mo) SS due to GPO/WEP. I'd estimate that if I were a single person, my SS would cover about 25% of my budget.

Point is, it needs to be noted whether a SS check represents a percentage of a single person's budget or a percentage of a couple's budget (with only one person of the couple collecting).

[JustNtime]

I was thinking about our relatively low expenses and those of many on the board. We own our home and have NO mortgage, but do pay prop tax, hoa fee, utilities, etc. In reality the house we own is paying most of our 'RENT'(except prop tax). If we rented instead of owned, I'm sure our expenses would increase by 50-100%. Ditto, if we had a mortgage for the full value (or just 80/90%) of our home's worth. So, do I add back in the amount my expenses are reduced by being debt free before calculating the percentage SS might cover? For me two vastly different answers result. Obviously whether I choose to take SS at 62/66/70 will also effect the answer too.

[Gumby]

Quote:

Originally Posted by LARS Gee, I hate to be the negative guy on this thread, but I am assuming in the next ten years or so Congress will get around to means testing SS recipients.

The prediction I just got from the SSA says I should get slightly over $28k per year, but I don't believe a word of it. For the last 20 years, my retirement plans have assumed that I will get zero from Social Security.

[LARS]

Quote:

Originally Posted by Gumby The prediction I just got from the SSA says I should get slightly over $28k per year, but I don't believe a word of it. For the last 20 years, my retirement plans have assumed that I will get zero from Social Security.

My approach as well. Assume nothing from SS and hopefully be pleasantly surprised.

[Katsmeow]

Quote:

Originally Posted by LARS Gee, I hate to be the negative guy on this thread, but I am assuming in the next ten years or so Congress will get around to means testing SS recipients. My best guess is that SS will be phased out for anyone with over $100,000 income. Perhaps offset will be you can withdraw from IRSs/401ks tax-free to make up for "stealing" earlier contributions.

Do you mean $100,000 income from other sources during retirement or do you mean the person earned more than $100,000 a year while working?

If the former, how do you determine the $100,000? Is that based upon AGI the prior year? What if the person has a single year of $100,000 income...does that person never get SS again?

If you mean the latter, it seems sort of unfair for people at or near retirement age who built their retirement plans around SS. Also what if the person worked 35 years and made over $100,000 only 1 year. Does that mean no SS?

[LARS]

Quote:

Originally Posted by Katsmeow Do you mean $100,000 income from other sources during retirement or do you mean the person earned more than $100,000 a year while working? If the former, how do you determine the $100,000? Is that based upon AGI the prior year? What if the person has a single year of $100,000 income...does that person never get SS again? If you mean the former, it seems sort of unfair for people at or near retirement age who built their retirement plans around SS. Also what if the person worked 35 years and made over $100,000 only 1 year. Does that mean no SS?

I am assuming "current" income. How that will be determined, I haven't the foggiest. You raise a good point on up and down income levels in retirement. Also, what if you put all your capital in stocks and manage your "income"? Presumably, some Congressional staffer too smart by half will come up with some rediculous formula.

Still, I'm just fairly confident something has to be done on the SS front, and going after citizens with money is usually somewhere in the answer.

[JonnyM]

We have never looked at SS as any kind of percentage of potential percentage of expenses. An interesting way to look at things, but hardly relevant to most that ER, since by definition, that makes SS very far in the future. I've been ER for 3 1/2 years now, and still 8 more before the earliest that I could draw at 62. Our most logical tentative plan would be for me to draw early and DW to draw late based on the actuary tables. She should likely outlive me by a decade or more, but obviously that's a crapshoot. We may when we get there both decide to draw early just to get something after all those years of paying in and waiting for the return. As pointed out above, changes in the laws may help us decide on the approach we take as well.

We have always looked at SS (since if was going to occur at least 12 years after our ER) as a nice bonus if and when we get it for travel and other fun stuff, never as one of the legs of funding our FIRE. We have and will have long since got used to living within our means without taking it into consideration. It's pure gravy when we get old enough to qualify. COOL!

[nun]

Quote:

Originally Posted by LARS My approach as well. Assume nothing from SS and hopefully be pleasantly surprised.

That's like saying assume nothing from your 401k, IRAs etc. While SS will definitely change before I reach 62 (I'm 48 now) I believe it to be at least as good a bet as my retirement accounts, so I always include it in my projections. Doing that brings my ER date closer by reducing the net worth I'll need to comfortably ER. I look at it like this, if you don't have some faith in the US Government to honor its obligations you'd better sell all those TIPS and I-Bonds too. I'd love to hear where the idea that SS should not be included in retirement projections came from.......

[Alan]

Quote:

Originally Posted by nun That's like saying assume nothing from your 401k, IRAs etc. While SS will definitely change before I reach 62 (I'm 48 now) I believe it to be at least as good a bet as my retirement accounts, so I always include it in my projections. Doing that brings my ER date closer by reducing the net worth I'll need to comfortably ER. I look at it like this, if you don't have some faith in the US Government to honor its obligations you'd better sell all those TIPS and I-Bonds too. I'd love to hear where the idea that SS should not be included in retirement projections came from.......

I agree and have always put SS projections into my ER plan. I would not be surprised if SS payments became taxable for high income individuals but I don't see the government defaulting on the payments. If I had taxable income of $100K /year at age 67 then paying tax on SS income is not not going to destroy my lifestyle.

[W2R]

SS has always been part of my plans. Knowing that I won't need it for basic subsistence is even better, because it has allowed me considerable peace of mind. I have no mortgage so hopefully my retirement income will not trigger future possible high-income taxes on my SS.

[nun]

Quote:

Originally Posted by Alan I agree and have always put SS projections into my ER plan. I would not be surprised if SS payments became taxable for high income individuals but I don't see the government defaulting on the payments. If I had taxable income of $100K /year at age 67 then paying tax on SS income is not not going to destroy my lifestyle.

SS is taxable if your modified gross income is above a certain level. In 2008 for a single person if half your SS income added to all your other income is less than $25k your SS is not taxed.

[TromboneAl]

Is our combined projected annual SS total of $38,688 close to what others are seeing?

[W2R]

Quote:

Originally Posted by TromboneAl Is our combined projected annual SS total of $38,688 close to what others are seeing?

Nationwide, the median annual social security benefit was $12,799 a few years ago and probably is not much more by now.

Income of the Population 55 or Older, 2004 (Expanded Edition) - Income from Social Security

I can confirm to you that you are expecting well above the median.

[nun]

Quote:

Originally Posted by TromboneAl Is our combined projected annual SS total of $38,688 close to what others are seeing?

I'm single and my projection is $14k from SS at 62 (I've worked in Government service for a while so I won't get as much SS as many). I look at this as having an extra $250k in my retirement account.

[REWahoo]

Al, is your total based on both you and Lena taking SS at 66?

[ejman]

I agree with JonnyM's approach. ER'd at 52 in 2002 with the expectation of collecting SS at 62. I'm actually looking forward to SS as a nice annual bonus. I also agree with several posters that SS will be there, albeit with possible changes in taxation levels. I seriously doubt that there could be a scenario where the Guvimmint defaults on SS payments but continues to pay on treasuries, TIPS etc. ( I may change my mind on Dec 21, 2012 but then it won't matter anywhoo )

[JustNtime]

The max amount for 2009 for a person retiring at full retirement age (66) is $2,323. So a couple's max is $4646 at full retirement age. At 62, 75% of that(3484) and at 70 132%?(6133). Wow!

[Bandit]

I have given some thought about SS being reduced for those with other income as well. Given that SS will become more and more strained in years to come I think the Govment will consider several options.

1. Reduce the normal SS benefit based on the amount of other income. For example, if you have $100,000 of "non earned" income during retirement your benefit may be reduced by 20%, with more of a reduction if the income is higher (pro rated).

2. Currently SS taxes are paid on "earned" income. They could start collecting SS taxes on all income regardles of source and age.

3. Remove the current ceiling on the amount of earned income that subject to the SS tax.

I really think that all three of these options, in come combination and to some degree, will be implemented withing the next 10 years or so.

I have no basis in fact for the above narritive, just my feeble mind doing "what ifs".

I think that SS, in its present form, should provide 25% or less of my retirement income at 62. I'm currently 55 and expect to ER prior to 57....maybe....might be 58...