SS Sustainability without reduction now at 2029

[Sunset]

+100 on lifting the cap. It only makes sense in the environment/situation. I would LOVE to see revision of "uses" of the benefit as well, but don't see that happening. Best case is to not EXPAND it any more!

As we are seeing today with all of the ACA fretting, once something is GIVEN, taking it back is nearly impossible.

I was hoping my dog would get on it as she is pretty old now, and they have been so genererous in expanding it, I have to ask why not ?

Pets Unite for SS.

 

[W2R]

For those who retired already and planned on no SS. How many extra years did you have to work for that assumption?

Zero. I had to wait for two years after FI to qualify for retiree medical since the ACA didn't exist back then. Planning on not having SS in retirement affected my planned spending amount and how hard I worked to save, not the amount of time to get there.

 

[Chuckanut]

Seriously, when I ran Firecalc before retiring I put in my SS income as 75% of what the SS Admin said I could expect to get. In that way the 'haircut' is already factored in to my plans.

 

[Fedup]

I didn't know how to run FIRECALC correctly before I retire, but it doesn't matter. I have NOT exceeded my budget, if anything I'm underspent. Fortunately or unfortunately, it depends on how you view it, I'm not that frugal, so that's not the reason.

 

[Pilot2013]

Seriously, when I ran Firecalc before retiring I put in my SS income as 75% of what the SS Admin said I could expect to get. In that way the 'haircut' is already factored in to my plans.

That is exactly the right way to plan. Should also run it with expected HI costs, assuming no subsidy for playing the system, and THAT is what is needed for FIRE.

 

[Tadpole]

The list at the bottom are estimates extracted from past OASDI report and are the OASDI Combined Depletion Dates for the report issued in "Year". (These are from the official SSA reports and not the CBO estimates.) These are the reported numbers for whatever the assumptions were and algorithms used the year of issue.

Observe that the status of the future revenue flow has been pretty well known/predicted for many years. I found the 1997 summary which included the following statement:

During the first three decades of this period, the estimates indicate that the income rate will generally exceed the cost rate, resulting in substantial positive actuarial balances each year. Beginning about 2015, the reverse is true, with the cost rate exceeding the income rate, thus resulting in substantial deficits.​

Well, yes, some changes in the program have occurred since then but it is amusing to see close that 2015 guess (prediction) turned out to be even if it is a bit due to coincidence.

Year Depletion date
1989 2046
1990 2043
1991 2041
1992 2036
1993 2036
1994 2029
1995 2030
1996 2029
1997 2029
1998 2029
1999 2034
2000 2037
2001 2038
2002 2041
2003 2042
2004 2042
2005 2041
2006 2040
2007 2041
2008 2041
2009 2037
2010 2037
2011 2036
2012 2033
2013 2033
2014 2033
2015 2034
2016 2034

 

[Fermion]

Getting a bit off the topic but when trying to get your Firecalc numbers to 99.99% or whatever you think is possible, consider the odds that you even live until age 75.

There should be a formula that calculates retired years against financial risk and also mortality risk.

Maybe call it FireDeathCalc.

Odds of achieving at least a happy 25 year retirement if you retire at age 50 = xx%

Odds of achieving at least a happy 25 year retirement if you retire at age 65 = xx%

Unless you are just trying to achieve a big estate to leave the kids or something...

 

[Shanky]

Getting a bit off the topic but when trying to get your Firecalc numbers to 99.99% or whatever you think is possible, consider the odds that you even live until age 75.

There should be a formula that calculates retired years against financial risk and also mortality risk.

Maybe call it FireDeathCalc.

Odds of achieving at least a happy 25 year retirement if you retire at age 50 = xx%

Odds of achieving at least a happy 25 year retirement if you retire at age 65 = xx%

Unless you are just trying to achieve a big estate to leave the kids or something...

Brilliant answer to the "one more year" syndrome. The belt and suspenders approach can erode the number of years of happy retirement. OMY is OMY closer to death.

 

[foxfirev5]

For those who retired already and planned on no SS. How many extra years did you have to work for that assumption?

Good point. One can get too conservative and plan for too many negative consequences. I fear my plan A. B, C etc approach may cause me to spend less than I could. However my needs are pretty basic. To answer the question - I didn't delay ER but may have reduced expenses more than necessary.

 

[euro]

Brilliant answer to the "one more year" syndrome. The belt and suspenders approach can erode the number of years of happy retirement. OMY is OMY closer to death.

So,so true - obviously- but bears repeating!

 

[gerntz]

Not that I'm worried much, but I wonder if even with a haircut %, might they not include a hold harmless provision for those already on SS. I hope I live to see what happens.

 

[panacea]

Maybe I'm just being optimistic, but we are planning on receiving Social Security benefits. In our retirement plan we reduce the benefit by 25% to acknowledge the solvency issues but something will be there. There are too many Americans who just don't save anything significant and I don't see a bunch of politicians wanting to lose these votes. Something will have to happen but there are several options that would make it work... increase FICA taxes, increase FRA for future generations, some form of means testing, etc.

 

[Fedup]

For those who retired already and planned on no SS. How many extra years did you have to work for that assumption?

Zero year. I didn't count it at all.

 

[mamadogmamacat]

I remember the last reform quite differently. Perhaps there were scare tactics which are often later regarded as facts, but, from the original report that started this thread: "These shortfalls are much larger than the shortfall closed in the 1983 Social Security reforms". In any event, I agree that SS in some form will be there for a long time to come, even for the three millennials whom I helped to teach parts of my job to shortly before retiring. In my 30s and 40s I used a 40% reduction in projected benefits. Became more confident once hitting 50, and went with a 30% haircut. It will not be sold with such a term of course......the powers that be will I think either eliminate or dramatically raise the cap, and probably also do another gradual raise of the FRA, all the while calling it a "benefit enhancement" or some such euphemism.

 

[jdmorton]

According to the 2016 SSA Trustees Summary Report, the Projection is Still 2034

Tadpole's post lists the historical projected year benefit reduction should occur from that report, including 2016's projection. What I found interesting was the write-up in the 2016 SSA Trustees Summary Report to get to their date:

"The OASI and DI trust funds are by law separate entities. However, to summarize overall Social Security finances, the Trustees have traditionally emphasized the financial status of the hypothetical combined trust funds for OASI and DI. The combined funds satisfy the Trustees’ test of short-range (ten-year) close actuarial balance. The Trustees project that the combined fund asset reserves at the beginning of each year will exceed that year’s projected cost through 2028."

If this is all one would read it does appear that 2029 is the "reduction in benefit" year. The report goes on to state the following:

"The Trustees project that the combined trust funds will be depleted in 2034, the same year projected in last year’s report."

This next longer cite seems to explain why the projection for benefit reduction is 2034 and not 2029:

"Social Security’s total income is projected to exceed its total cost through 2019, as it has since 1982. The 2015 surplus of total income relative to
cost was $23billion. However, when interest income is excluded, Social Security’s cost is projected to exceed its non-interest income throughout the projection period, as it has since 2010. The Trustees project that this annual non-interest deficit will average about $69billion between 2016 and 2019. It will then rise steeply as income growth slows to its sustainable trend rate as the economic recovery is complete while the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. After 2019, interest income and redemption of trust fund asset reserves from the General Fund of the Treasury will provide the resources needed to offset Social Security’s annual deficits until 2034, when the reserves will be depleted. Thereafter, scheduled tax income is projected to be sufficient to pay about three-quarters of scheduled benefits through the end of the projection period in 2090. The ratio of reserves to one year’s projected cost (the combined trust fund ratio) peaked in 2008, declined through 2015, and is expected to decline steadily until the trust funds are depleted in 2034."

Here's a link to the SSA Trustees 2016 Summary Report: https://www.ssa.gov/OACT/TRSUM/

So, which year to use for planning purposes for those counting on social security as a (significant) part of their retirement funding - CBO's 2029 or SSA Trustees' 2034?

 

[mamadogmamacat]

Depends upon what we each mean by "significant". Based on this: "Thereafter, scheduled tax income is projected to be sufficient to pay about three-quarters of scheduled benefits through the end of the projection period in 2090",
It seems many here could simply assume they can safely receive at least 75% of their projected benefit through at least 2090. If their calculations indicate that is sufficient, based on other income sources.

 

[Independent]

"Hope for the best and plan for the worst" is a good guideline, I think.

I'd manage without SS, but am certainly looking forward to having that extra allowance as the cherry on top of my later years.

+1

We could get along without SS. But, life will be much more comfortable if we get it. I'll be 82 in 2029. There's a good chance I won't be alive then. If I am, I'm guessing congress will be kinder to the very old folk.

 

[youbet]

I'd like to see them take the welfare-like aspects of SS out of the program and focus the remaining funds on the retirement benefit aspects.

The welfare-like benefits of SS should have been separate programs from the get-go and they are very expensive to SS. Blending pensions and welfare is not smart IMHO.

 

[braumeister]

Seriously, when I ran Firecalc before retiring I put in my SS income as 75% of what the SS Admin said I could expect to get. In that way the 'haircut' is already factored in to my plans.

Exactly what I did. I also used 80% of my portfolio.
I am such a wimp.
But I've always slept well at night.

 

[meierlde]

I'd like to see them take the welfare-like aspects of SS out of the program and focus the remaining funds on the retirement benefit aspects.

The welfare-like benefits of SS should have been separate programs from the get-go and they are very expensive to SS. Blending pensions and welfare is not smart IMHO.

Oh you mean like the spousal benefit for those who did not work? Or the benefit if one has kids under 18 when you start social security?

 

[Hyperborea]

A resurgence in domestic manufacturing with accompanying higher paying jobs as compared to service sector jobs and S.S payroll takes would fix this I.M.O. The rising tide lifts most boats, along with the S.S, payroll tax boat.

Not likely to happen. I have no worries for myself, but big worries for those following behind me.

The robots doing the majority of the work in that domestic factory wouldn't be paying social security. There's no other way that manufacturing jobs are coming back unless US workers are willing to lower their wage requirements a lot.

 

[Just_Steve]

Or the benefit if one has kids under 18 when you start social security?

This one would be a good start, why should the taxpayer support these kids because the parent does not want to work?

 

[youbet]

Oh you mean like the spousal benefit for those who did not work? Or the benefit if one has kids under 18 when you start social security?

Those would be a start. Disability SSI also comes to mind. If folks, like kids, the disabled or never-worked spouses need financial help to not be in poverty, fine. But make those cases welfare, not SS, programs. Those entitlements were added to SS with little thought as to how to fund them.

 

[marko]

To me this reinforces the "age 62 take the money and run" strategy.

 

[growing_older]

Color me more pessimistic. Lifting the cap and possibly adding another bend point to further reduce benefits for people paying the top FICA would shore up the program, but there doesn't seem to be any political will to make that happen. I'm already trapped working for health insurance and paying FICA that will have zero impact on my ultimate SS benefits.

While the projections say that the program could pay 75% of benefits if no reforms are made, it is unlikely that the 75% rate will be evenly distributed. I anticipate sliding scale cuts so that lower benefit levels are little affected and those near the top brackets, especially those with any retirement savings will take bigger cuts. Probably much bigger, so that the overall 75% rate can be maintained in aggregate.