SS Sustainability without reduction now at 2029

[Huston55]

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.

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.

What about survivor benefits? Would you also cut those?

 

[Huston55]

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?

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.

Not to divert us into a political discussion but, for clarity of this thread...The "SS" in this thread title "SS (Social Security) Sustainability..." stands for "Old Age, Survivors & Disability Insurance" (OASDI); the official name of the program.

Each aspect of "OASDI" was part of the original program & enacting legislation and, while there were certainly differing opinions on the program when it was originally enacted, there was clearly a lot of thought put into what to provide and how to fund it; including those aspects described as "welfare" above. It was always intended to include features for "Old Age" (pension), "Survivors" (spouses, working & non-working + kids), and "Disability" (those disabled & unable to work).

 

[youbet]

Not to divert us into a political discussion but, for clarity of this thread...The "SS" in this thread title "SS (Social Security) Sustainability..." stands for "Old Age, Survivors & Disability Insurance" (OASDI); the official name of the program.

Each aspect of "OASDI" was part of the original program & enacting legislation and, while there were certainly differing opinions on the program when it was originally enacted, there was clearly a lot of thought put into what to provide and how to fund it; including those aspects described as "welfare" above. It was always intended to include features for "Old Age" (pension), "Survivors" (spouses, working & non-working + kids), and "Disability" (those disabled & unable to work).

There was no disability component to SS when it was founded in 1935. There is an informative article about the history of SS right on the SS site. The "D" in OASDI was added during the Eisenhower administration.

I stand with my opinion. I'd like to see the pension and welfare aspacts of SS managed and funded separately. IMHO it's a mistake to lump them together.

 

[Fedup]

I once supported the proposal to privatize SS. But after the Great Recession, no more talk of that.

 

[Winemaker]

Oh you mean like the spousal benefit for those who did not work?

My mother almost had a stroke when she found out she had a benefit coming. She quit working 3 months before I was born, and never since. When DF and her went to get up to leave SS office when they signed up for DF's benefit, the clerk told them to sit back down and signed mom up. She put up a fight, she thought she was going to get caught up in a fraud. She saved the checks in a separate account for a while as she thought she would have to return the money.

 

[Z3Dreamer]

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

+1

 

[iloveyoga]

My husband is all signed up to get his at age 62, first check comes in August. It was an easy decision.

 

[Andre1969]

I've always run two sets of numbers for early retirement...one assuming I got full SS and pension, and one assuming I'd get nothing. A couple years ago, I took the pension out of the equation by taking a buyout. It would have been a small pension...$349 per month starting at age 65, in 2035, but not adjusted for inflation. $349 wasn't much when I was working for that company, is even less now, and might buy a case of cheap beer by the time 2035 rolls around. Anyway, the buyout was around $14K.

This morning, I just re-ran the numbers. Right now, assuming full SS funding, and taking it early at 62, I have a 94.6% chance of success of retiring at 50, and a 100% chance of success if I hold off until age 51. This is assuming I max out my 401k until I retire, and a budget of $60K per year when I retire, which is more than I live off of now.

Anyway, my projected SS is around $15,500 annually if I leave the workforce at 50, and ~$19000 if I wait until 51. If I assume no SS whatsoever, then my success rate of living off of $60K per year drops to 79.6% if I retire at 50, $83.9% if I retire at 51. But, if I hold out just a bit longer, it goes up to 93.5% at 52, and 97.8% at 53.

So, taking SS out of the equation completely only pushes my retirement back around 2 years, if I still want that lifestyle. On the flip side, if I want to take a financial haircut instead of pushing my retirement date back, if I drop to $55K per year, my success rate is 87.1% at 50, 97.8% at 51.

Chances are, they won't take SS away completely, but instead mess with it by either raising the contribution rate, reducing the benefit somewhat, changing the way they calculate inflation, or some combination thereof. So, I'm not *too* worried about it affecting my retirement plans. I'll be annoyed, since I paid into it all those years, but it won't be the end of the world for me.

 

[FmrLurker]

Has anyone ever heard of a proposal to reduce the size of the SSA workforce? Seems like with all the automation available today, we ought to push for that.

 

[Lakewood90712]

Has anyone ever heard of a proposal to reduce the size of the SSA workforce? Seems like with all the automation available today, we ought to push for that.

That would be about the worst thing IMO. Much of it is already automated. The SS program is not simple when you get into specific benefits for an individual, older "Customers" dealing with the system. It's easy to get estimated benefits online, but when you need absolute info and help, you need humans.

Even the private pension systems who mostly outsource the function use humans for most tasks due to these factors. Humans always check the automated actuary calculations for "issues" before assigning a benefit payment.

 

[Andre1969]

I remember reading that one reason that SS was getting strained was the retirement of all the Baby Boomers, since their generation was larger than any before. However, Gen-X is much smaller than the Boomers, while the Millenials are supposedly bigger than even the Boomers.

So, once the Boomers start dying off, is is possible that the problem might simply correct itself? Or, at least, kick the can further down the road?

 

[bradaz2488]

IMHO: If you plan to retire >10 years before your SS FRA you should not include SS in your ER plan. They will probably "grandfather" people within a certain window that are close to FRA, so their benefits would not be impacted too much if at all. People >10 years from FRA will most likely be effected the most. The thinking will be that people can adjust their RE plan with a 10 year heads-up. What changes will happen is anyone's guess. My guess is they will not implement a solution to "permanently" fix SS or Medicare because it would just be too painful across the spectrum and cost them votes for reelection. They will just kick the can down the road by increasing FRA, increase FICA/Med tax and remove cap limit or reduce benefits. Probably a combination of all of these. I retired at 49 so I assumed no SS or Medicare in my ER plan. At our current expenses we are 100% success rate in FIRECalc w/o SS. If I plug in 75% of SS benefits at FRA we could spend 13% more right now and 22% more if I plug in no reduction in SS benefits. Boy that would be nice ... I'm 53 and DW is 51 so it is just to risky to assume SS in our ER plan (IMHO). I do believe we will receive something when we hit FRA, but not knowing what that will be was just too risky when making the decision to ER and determining how much we can spend each year. When we get within the 7-10 year window to FRA we will most likely increase our spending based on the "new" SS guidelines. It is very frustrating because we would enjoy spending the money now while we are younger and healthier, but just too risky with no "viable" plan in place to fix SS or Medicare. Plan for the worst and hope for the best.....

 

[marko]

I've been hearing about SS changing radically since the 60s when I first started working. " it wont exist by the time you retire!!"
Like acid rain and the energy shortage I've learned not to spend too much time worrying about these things.

 

[ShokWaveRider]

I hope it lasts till 2020 as I will need it to pay for healthcare for DW who has ages to Medicare.

 

[Fedup]

That would be about the worst thing IMO. Much of it is already automated. The SS program is not simple when you get into specific benefits for an individual, older "Customers" dealing with the system. It's easy to get estimated benefits online, but when you need absolute info and help, you need humans.

Even the private pension systems who mostly outsource the function use humans for most tasks due to these factors. Humans always check the automated actuary calculations for "issues" before assigning a benefit payment.

Honestly, the people we met at SSA were a bit confused and kept asking other people questions. I think they can reduce the number of people working there, supplement with robots. I saw this recently with blood test place. No more people in front desk for sign in. They have tablets for sign in. An occasional confused people who were unable to sign in were either helped by the customers or the people doing the blood test.

 

[Huston55]

There was no disability component to SS when it was founded in 1935. There is an informative article about the history of SS right on the SS site. The "D" in OASDI was added during the Eisenhower administration.

That's correct; although attempted, disability & medical care were excluded from the original SS Act. However, the SS program always intended to include & always did include "welfare" aspects; Title 1 benefits & AFDC, for example.

I stand with my opinion. I'd like to see the pension and welfare aspacts of SS managed and funded separately. IMHO it's a mistake to lump them together.

Understood, and I know that many share your opinion; I'm not one of them. IMHO, "welfare" features should be included and, any Social Security program without them does not live up to it's name & purpose.

In relation to the OP, my hope is that the next 'adjustment' to SS will be structured in a way that continues to provide the full spectrum of Social Security in a fiscally sound way.

 

[Pilot2013]

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...

I have not heard that it would require reducing the top FICA contributors benefit to shore up SS. In fact, if there were a COMPLETE lift of the cap, my understanding is it would grow significantly positive. IOW, there could be a raising of the cap, not a complete removal, no change to payments, and all would be good.

 

[syd03]

[QUOTE=Andre1969

Anyway, my projected SS is around $15,500 annually if I leave the workforce at 50, and ~$19000 if I wait until 51. If I assume no SS whatsoever, then my success rate of living off of $60K per year drops to 79.6% if I retire at 50, $83.9% if I retire at 51. But, if I hold out just a bit longer, it goes up to 93.5% at 52, and 97.8% at 53.

Andre, not certain I'm interpreting your post correctly. I don't believe your projected S.S. benefit will increase from$15.5k to $19k (+19%) by spending just one additional year in the workforce. If in both cases you draw at age 62, you probably won't see an annual increase of more than a few hundred dollars by sticking it out one more year, regardless how much you W-2 that extra year. If you could see that type of return for hanging on one extra year, you'd probably see a lot more ER's trading their freedom for the hefty gain in S.S. Again, I may be misinterpreting your calculation

 

[NYEXPAT]

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?

Two of my three favorite features along with the survivor benefit for our young overseas wives! Feel free to cut the survivor benefit to my ex-wife though.

 

[marko]

I have not heard that it would require reducing the top FICA contributors benefit to shore up SS. In fact, if there were a COMPLETE lift of the cap, my understanding is it would grow significantly positive. IOW, there could be a raising of the cap, not a complete removal, no change to payments, and all would be good.

In my work days I was always 'done' paying FICA very early in the year.

With all the hand-wringing, number crunching and 'let the rich pay more', I never understood why totally eliminating the cap has never been seriously considered as an option. I surely wouldn't have minded.

Unless of course, the "SS is running out of money" is just one of those nice things to talk about but isn't quite as real as claimed. As noted, it's been "going bankrupt" as long as I can remember.

 

[Pilot2013]

In my work days I was always 'done' paying FICA very early in the year.

With all the hand-wringing, number crunching and 'let the rich pay more', I never understood why totally eliminating the cap has never been seriously considered as an option. I surely wouldn't have minded.

Unless of course, the "SS is running out of money" is just one of those nice things to talk about but isn't quite as real as claimed. As noted, it's been "going bankrupt" as long as I can remember.

I agree. I just assume that there's not a conspiracy about the situation... I also surpass the cap (although apparently not as quickly as you did), but have no problem raising that cap, or even eliminating. Based on all of my other posts on here (that have apparently gotten them closed), I am sure this is surprising to some.

 

[growing_older]

In fact, if there were a COMPLETE lift of the cap, my understanding is it would grow significantly positive. IOW, there could be a raising of the cap, not a complete removal, no change to payments, and all would be good.

I also like the idea of raising or eliminating the cap. However the benefit calculation is based on the highest 35 AIME, which for people contributing above the current cap could result in PIA above the current maximum. The current "largest possible" benefit is under $4000/month, but very high earners would have much higher benefits and I (pessimistically) anticipate that this will cause people complaining about income inequality to lobby for additional breakpoints to reduce these higher payouts. Yes, I know they are already so low compared to the taxes that were collected that there is no "payback" period, but this seems to me to be a likely candidate for manipulation. Enough so, that I am discounting it in my plans so I don't risk depending on a benefit that politicians are likely to tinker with. I am not as confident in SS being as sacrosanct as some people claim.

 

[Huston55]

I agree. I just assume that there's not a conspiracy about the situation... I also surpass the cap (although apparently not as quickly as you did), but have no problem raising that cap, or even eliminating. Based on all of my other posts on here (that have apparently gotten them closed), I am sure this is surprising to some.

I also like the idea of raising or eliminating the cap. However the benefit calculation is based on the highest 35 AIME, which for people contributing above the current cap could result in PIA above the current maximum. The current "largest possible" benefit is under $4000/month, but very high earners would have much higher benefits and I (pessimistically) anticipate that this will cause people complaining about income inequality to lobby for additional breakpoints to reduce these higher payouts. Yes, I know they are already so low compared to the taxes that were collected that there is no "payback" period, but this seems to me to be a likely candidate for manipulation. Enough so, that I am discounting it in my plans so I don't risk depending on a benefit that politicians are likely to tinker with. I am not as confident in SS being as sacrosanct as some people claim.

+1

Especially now that I'm FIREd.

Seriously though, I maxed out SS most of my career and was (am) supportive of a raised/eliminated cap. I would also support gradual raising of the FRA as another adjustment.

I'd like to see some discussion on this thread of what few 'adjustments' to SS that members support to actuarially stablize the program.

 

[Fedup]

I also like the idea of raising or eliminating the cap. However the benefit calculation is based on the highest 35 AIME, which for people contributing above the current cap could result in PIA above the current maximum. The current "largest possible" benefit is under $4000/month, but very high earners would have much higher benefits and I (pessimistically) anticipate that this will cause people complaining about income inequality to lobby for additional breakpoints to reduce these higher payouts.Yes, I know they are already so low compared to the taxes that were collected that there is no "payback" period, but this seems to me to be a likely candidate for manipulation. Enough so, that I am discounting it in my plans so I don't risk depending on a benefit that politicians are likely to tinker with. I am not as confident in SS being as sacrosanct as some people claim.

This is what I've read too, SS has to pay out more. It's not that easy. But I'm against raising more tax in general.

 

[Fedup]

+1

Especially now that I'm FIREd.

Seriously though, I maxed out SS most of my career and was (am) supportive of a raised/eliminated cap. I would also support gradual raising of the FRA as another adjustment.

I'd like to see some discussion on this thread of what few 'adjustments' to SS that members support to actuarially stablize the program.

I would prefer to receive the payout decrease to 75% across the board or whatever SS can payout, keeping everything the same. Everybody suffers equally . Why favor one group over another.