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Old 10-29-2015, 07:16 PM   #141
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Probably will not be a big deal for us. I figure about $20k total ... the difference between 50% of my benefit and DW's benefit based on her work record for a little less than 4 years.
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Old 10-29-2015, 07:26 PM   #142
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Gah ...this caught me by surprise ...hadn't even thought about my circumstances.

I'm 61 now, as is spouse ...I have full earnings history and she has very limited. I turn 62 3 Mar 2016 ...she turns 62 27 May 2016 ...

First Question ....are we the usual sort of couple that benefits from F and S?

Second Question ...if so, will we make it under the wire?

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First question: If her earnings history is very limited she probably would be taking spousal benefit (larger) rather than her own earnings record anyway... so this does not effect you.

Second Question: no, you do not make it under the wire. There isn't a final version of the bill (needs to pass the Senate and go through reconciliation) - but the draft I read stated specifically 2015 as the magic "last year" to turn 62 and avoid the new rules. I will admit - I didn't see if this changed in the version of the bill that passed the house... figuring why not wait till the final bill passes.
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Old 10-29-2015, 07:36 PM   #143
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For my wife and I at age 70 SS projections indicate over $50,000 per year in income, what is the amount of this Tooth Fairy fund that I should reasonably be able to count on? This is not a minor amount of money and worth about 1.3 million dollars in retirement savings at age 70 in today's dollars, how much should I have reserved in my own savings to offset?

To place Social Security in the same category as the Tooth Fairy or Uncle Joe's coin collection as investment advice at age 59 implies to me I should either cut my spending plans early in my retirement or else go back to work and earn another 1.3 million by age 70.

An alternative plan would be to just count on the 30K we could have at age 62 and therefore the 320K I was planning to use as bridge spending to get me to age 70 will now be available as 12.8K of withdrawals and use $42,800 as my new income from the "Social Security Funding" portion of my retirement plan, forgoing 7.2K per year or else go back to work until my retirement portfolio grows by another 180K.

Somehow in my investment plans, I must come to grips with the 320K I have for bridging to SS age 70 and how much I can even count on SS with that number being somewhere between 320K and 1 million dollars.
Assuming that the low earning partner has a career average pay of over 35,170 or so the spousal benefit will now be lower than the individuals benefit.
Also not that the strategy would have paid off less well with folks born in 1955 and later as full retirement age starts going back up, leaving fewer years for the boost to apply.
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Old 10-29-2015, 07:38 PM   #144
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from the SSA website: https://www.ssa.gov/planners/maxtax.html

How much anguish could be avoided if there were no upper limit on SS taxes? Many times in my career I have made more than the upper limit, as have my colleagues and our managers. Personally, I would have been/will be happy to pay SS/Medicare taxes on every dollar I made or might make in the future. At the higher income levels, I can well afford it. It is such a simple thing that would have great general benefit as distinct from actions intended to reduce benefits. Has this issue been covered before somewhere? I am baffled. Thanks.
The logic of penalizing success and rewarding bad behavior has always escaped me. That is truly baffling.
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Old 10-29-2015, 08:17 PM   #145
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The logic of penalizing success and rewarding bad behavior has always escaped me. That is truly baffling.
Most people do not want to work too hard unless they really have to. One needs to distinguish between helping the less fortunate and encouraging people to take the easy way out. I submit to you that people who have raised children successfully know a thing or two about how to do this.
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Old 10-29-2015, 08:18 PM   #146
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Originally Posted by Ed_The_Gypsy View Post
from the SSA website: https://www.ssa.gov/planners/maxtax.html

How much anguish could be avoided if there were no upper limit on SS taxes? Many times in my career I have made more than the upper limit, as have my colleagues and our managers. Personally, I would have been/will be happy to pay SS/Medicare taxes on every dollar I made or might make in the future. At the higher income levels, I can well afford it. It is such a simple thing that would have great general benefit as distinct from actions intended to reduce benefits. Has this issue been covered before somewhere? I am baffled. Thanks.
+1 IIRC taking away the limit goes a long way toward solving the problem especially if they don't increase benefits to reflect the increase in tax. When i was working I exceeded the limit and if my SS taxes had continued it would not have bothered me.
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Old 10-29-2015, 08:23 PM   #147
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+1 IIRC taking away the limit goes a long way toward solving the problem especially if they don't increase benefits to reflect the increase in tax...
The above is a stipulation that will be difficult to keep. We can observe how many pension funds run into trouble. How many state governments can run a surplus without thinking of a way to spend it?
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Old 10-29-2015, 08:24 PM   #148
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Originally Posted by Ed_The_Gypsy View Post
from the SSA website: https://www.ssa.gov/planners/maxtax.html

How much anguish could be avoided if there were no upper limit on SS taxes? Many times in my career I have made more than the upper limit, as have my colleagues and our managers. Personally, I would have been/will be happy to pay SS/Medicare taxes on every dollar I made or might make in the future. At the higher income levels, I can well afford it. It is such a simple thing that would have great general benefit as distinct from actions intended to reduce benefits. Has this issue been covered before somewhere? I am baffled. Thanks.
I take it that if you think a 12.4% increase on taxes for those making over the current max wages income limit is a good thing - to avoid anguish, that you think a tax increase on all income is a good thing too - to avoid even more anguish of course. I mean, why just increase income tax on wages? Most rich make way more on non-wage income than on wages. So why not go after that income to? Seems way fairer to me. Net, you appear to have no qualms on government taking whatever whenever.

BTW, SS was initially conceived as a forced pension plan, not as a welfare system - as I think your proposal makes it.
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Old 10-29-2015, 08:26 PM   #149
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+1 IIRC taking away the limit goes a long way toward solving the problem especially if they don't increase benefits to reflect the increase in tax. When i was working I exceeded the limit and if my SS taxes had continued it would not have bothered me.
I flat don't get this bias to taxing folks earning wages more and letting those with higher non-wage income skate on this.
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Old 10-29-2015, 08:27 PM   #150
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The above is a stipulation that will be difficult to keep. We can observe how many pension funds run into trouble. ...
I don't understand your point.
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Old 10-29-2015, 08:31 PM   #151
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I flat don't get this bias to taxing folks earning wages more and letting those with higher non-wage income skate on this.
It depends on what you are referring to as non-wage income. Self-employment income would be subject to it. While I'm not sure if SE tax phases out like SS does, it would seem equitable to eliminate any phase out. If you're referring to interest, dividends, capital gains, etc. I wouldn't agree with you.
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Old 10-29-2015, 08:58 PM   #152
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The logic of penalizing success and rewarding bad behavior has always escaped me. That is truly baffling.
Tax and spend. It's all about buying votes.

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Old 10-29-2015, 08:58 PM   #153
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I don't understand your point.
When a budget shows a surplus, there will be pressure to spend it. In the case of SS, how can we be sure that the spigot will not get turned looser? We have seen how entitlement programs keep getting a larger and larger portion of the Federal budget. Should we set a limit to its increase, and what is the mechanism to keep our lawmakers to this limit?
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Old 10-29-2015, 09:04 PM   #154
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I flat don't get this bias to taxing folks earning wages more and letting those with higher non-wage income skate on this.
I remember that in some countries their SS-equivalent program is funded from general income tax. So, passive incomes or investment gains all help pay for the social program. It depends on how the social program was "sold" to the voters from the beginning.

Also, in some countries, their SS is more like welfare and means-tested. To make up for that, people get their own privatized SS, which I understand is like a portable 401k or 403b. You take that with you when you move from job to job. But same as with SS, the contribution is mandatory, not optional as with 401k. The money is yours, and you draw it as you see fit. At 62 or 70, it's your choice.

I like the above system better than ours, because it promotes personal responsibility. If you divorce, the spousal benefit for your ex comes from your pocket. If you like to raise kids in geezerdom, you pay for that, and the state will help only if you are truly broke, etc...
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Old 10-29-2015, 09:12 PM   #155
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It depends on what you are referring to as non-wage income. Self-employment income would be subject to it. While I'm not sure if SE tax phases out like SS does, it would seem equitable to eliminate any phase out. If you're referring to interest, dividends, capital gains, etc. I wouldn't agree with you.
What is equitable about having only high wage earners/self-employed pay for the problem? The program has been mismanaged - promising more benefits than covered by predicted future tax receipts - since its beginning yet everyone but this group is exempt from fixing it by your proposal. Why? We're supposedly in our problems as a country together but trust babies & Bill Gates aren't required to help fix it by you. Did current high wage earners only create the problem?
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Old 10-29-2015, 09:55 PM   #156
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How many times have you had your head handed to you since making that statement? You know, by people like stay at home mothers whose efforts allowed their husband to be the high earner.

No offense meant. Just curious.

+1
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Old 10-29-2015, 10:10 PM   #157
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And then there's this viewpoint, which I happen to agree with.

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In the case of SAHM's married to high wage earners, that couple should send in additional FICA dollars to fund a 50% of hubby's SS benefit for her. It's giving the SAHM, who's making the spouse's high wages possible, SS benefits without corresponding contributions that's the problem......
Would you like to share your 401k, 403b, or your military pension with a coworker whose wife is a SAHM? To his ex? Man, that's 50%+50% = double benefit!

We will always run into trouble when deciding how to cut a common pie. Better for each to have his/her own pie, i.e. privatized SS, and have a true safety net for unfortunate people.
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Old 10-29-2015, 10:30 PM   #158
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What is equitable about having only high wage earners/self-employed pay for the problem? The program has been mismanaged - promising more benefits than covered by predicted future tax receipts - since its beginning yet everyone but this group is exempt from fixing it by your proposal. Why? We're supposedly in our problems as a country together but trust babies & Bill Gates aren't required to help fix it by you. Did current high wage earners only create the problem?
SS contributions have always been a function of wages or self-employment income... forever... all lifting the cap is doing is tweaking the rate to bring in more income to help cover the projected deficit in benefits. The idea is that those who benefit contribute to the program and get something out of it... if you're a high earner you get less out of it than lower earners, but still, those who contribute benefit.

Why should investors who receive interest, dividends and capital gains contribute to fixing SS when they don't get any benefits from SS? That makes NO sense at all IMO.

If you're too cheap to be part of the solution, why not just say so.
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Old 10-29-2015, 10:35 PM   #159
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When a budget shows a surplus, there will be pressure to spend it. In the case of SS, how can we be sure that the spigot will not get turned looser? We have seen how entitlement programs keep getting a larger and larger portion of the Federal budget. Should we set a limit to its increase, and what is the mechanism to keep our lawmakers to this limit?
For general fund I would totally agree. At least in theory, SS benefits are set by law... based on your circumstances you qualify or not.
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Old 10-29-2015, 10:43 PM   #160
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+1 IIRC taking away the limit goes a long way toward solving the problem especially if they don't increase benefits to reflect the increase in tax. When i was working I exceeded the limit and if my SS taxes had continued it would not have bothered me.
Actually given the structure of the benefit formula what about a 3rd bend point where the amount goes to 5% of the average wage at where the old limit would be.
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