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Old 06-18-2016, 01:54 PM   #21
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It still a long way off (I'm 40), but my guess is SS will cover around 86% (guessing I will get around $2k per month) of my living expenses (I spend 28k per year). I'll also have a government pension which will cover over 100% of my living expenses (should get over $30k)...

I live off less than half of my w-2 income ($60k). My brokerage account investments could cover around 75% ($21k) of my current living expenses.
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Old 06-18-2016, 01:59 PM   #22
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Originally Posted by Ready View Post
But ignoring all of the what ifs, it would seem like our social security should cover all of our run rate expenses.

Is this unusual?
In at least three countries I am a bit familiar with, the SS equivalent covers about 50% of typical household expenses.

Belgium: 13k roughly. Netherlands: 12k or so. NZ superannuation about 10k.
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Old 06-18-2016, 03:54 PM   #23
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To calculate the benefit in future dollars wouldn't it have to be able to predict what inflation will be for the next 20 years?
Yes, I just went to the SS on-line calculator and did a screen shot of where it asks you and how it says it computes future inflation.
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Old 06-18-2016, 04:14 PM   #24
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I'm still about 20 years off from claiming Social Security. DH is 14 years away. Both of our monthly estimates if we claim at 70 are about $3,500 per month. So combined that gives us $84,000 annually. Our annual expenses excluding non-recurring costs like new cars and major home repairs is right around $80,000.

I've always heard that Social Security only tends to cover about 30-40% of your total expenses. I've been wondering if I'm overlooking something. It seems too good to be true. Granted I could worry about whether the funding will be there in 20 years to cover it, whether means testing will come in to play, and on and on. But ignoring all of the what ifs, it would seem like our social security should cover all of our run rate expenses.

Is this unusual? We both were high earners, so we typically earned in excess of the cap each year. And we both have over 35 years of income history. I've run the analysis if I were to stop working today, and it only drops each of our payments by $300, so not that significant.

Am I missing anything or just very fortunate?
My wife retired at 50, and I stopped work at 55. If we both wait till 70 to claim SS, it will cover about 80% of our current expenses. It is likely we will not spend as much at that age, and it can cover 100%. I maxed out contribution most years while working, so that helps. It is true that quitting early will not hurt one's SS benefit much.

However, there may be cut back in the future, as there is a shortfall. On top of that, if I croak before my wife, she will get mine but lose hers. So, we still need some personal savings to supplement SS.
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Old 06-18-2016, 04:25 PM   #25
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I thought the online SS calculator allowed you to choose whether to see the expected benefit in current or future dollars. So it depends what OP selected when using the calculator. I am still not 100% convinced whether OP's numbers are in current dollars or future.
Thanks. Shows me that I should have checked instead of recalling what it did back when I was using it.
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Old 06-18-2016, 04:29 PM   #26
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Thanks. Shows me that I should have checked instead of recalling what it did back when I was using it.
So I may be wrong about being wrong?

Back to the initial question, the OP needs to be sure he's dealing in present or future dollars when estimating both benefits and expenses.
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Old 06-18-2016, 04:47 PM   #27
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I downloaded the program anypia32.exe and run it instead of using the Web calculator. I had to enter in our lifetime income data. I did that because SS.gov said that this program was more accurate than the Web calculator (why?).

I looked at the results, and verified that my income table showed 0 from the time I quit work till 70. I also verified that CPI estimates were 0 for future years. This ensured that the computed benefits were in today's dollars, not extrapolated with any inflation projection to the future.
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Old 06-18-2016, 05:51 PM   #28
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Originally Posted by Earl E Retyre View Post
I thought the online SS calculator allowed you to choose whether to see the expected benefit in current or future dollars. So it depends what OP selected when using the calculator. I am still not 100% convinced whether OP's numbers are in current dollars or future.
For the monthly figures I'm just going off the statement they mail out to me, which is also accessible online:

You have earned enough credits to qualify for benefits. At your current earnings rate, if you continue working until...
your full retirement age (67 years), your payment would be about............................................. ........ $
2,836 a month
age 70, your payment would be about............................................. .................................................. .. $
3,525 a month
age 62, your payment would be about............................................. .................................................. .. $
1,985 a month


Are these numbers in today's dollars or future dollars?

The only reason I've used the online calculator is to estimate how much the numbers would drop if I stopped working today, and as I said, it only reduces the age 70 figure by about $300.
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Old 06-18-2016, 05:59 PM   #29
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From SS Web site:
If you retire at full retirement age in 2016, your maximum benefit would be $2,639. However, if you retire at age 62 in 2016, your maximum benefit would be $2,102. If you retire at age 70 in 2016, your maximum benefit would be $3,576.
The above FRA benefit works out to be $31,668/yr for a 66-year old now, and for a 70-year-old it is $42,912/yr. That is for a worker who maxed out SS contributions for 35+ years.

Based on that, I believe your quoted future benefit is in terms of today's dollar, but only if you keep on working many more years.

By the way, SS benefits are based on your highest 35 annual indexed incomes. Hence, working one more year only helps if it allows an earlier lower-pay year to drop out of the computations.
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Old 06-18-2016, 06:27 PM   #30
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Here's the gist: https://www.ssa.gov/pubs/EN-05-10070.pdf.

Some people have their own spreadsheet to implement this formula. Or perhaps there's one on the Web to download. I use SS's program anypia32.exe.

PS. The above is only an estimate. They say that the real thing is here: https://www.ssa.gov/policy/docs/statcomps/supplement/. And they say that even their downloadable program anypia32.exe may give slightly different results from their official program.

Darn! The gummint can and does make everything more complicated than it needs to be.
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Old 06-18-2016, 07:53 PM   #31
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Our household budget is $84k/year gross. (That includes taxes, health insurance, travel, everything...) It will possibly go down when the two ravenous teenage boys move out... at least the grocery bill will go down. LOL. But additional travel may consume any savings we get when the kids are launched.

DH is already on SS, started at age 62. He was lower income than me - he gets a little more than $15k/year. It's 18% of our budget.

I don't know yet when I'll collect. It will either be 23% of the budget (age 62) up to 42% of the budget (age 70). That's the using the figures from the retirement estimator - and $0 income between now and collecting. I'm 54yo.

So - if I wait till age 70 AND our budget doesn't change - we're looking at 60% of our household budget covered by SS. Add in my teeny tiny pension (6-7% of the budget) and our rental income 17% of the budget and we're now at 83% of our budget covered by income streams rather than investments.... at age 70.

I suspect I'll be taking SS before age 70. My family does not have longevity going for it and DH is 10 years older than me - so spousal coverage is less of an issue. (But my benefit is bigger than his, so he gets a bump if I die first.)
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Old 06-19-2016, 08:43 AM   #32
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It covers all of our 'expenses' but is less than half of our income
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Old 06-19-2016, 10:06 AM   #33
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I'm retiring at 57 and will not claim SS until 70 so 0%. At the future point it would be 1/4 or so. By then I may not get anything or it may be reduced.
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Old 06-19-2016, 10:27 AM   #34
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Rough calculations: SS probably covers 60 to 70% of our current non-discretionary expenses but less than 20% if I add in discretionary spending.
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Old 06-19-2016, 10:56 AM   #35
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My father and his wife do not even spend their entire monthly SS checks. Living in small town midwest. Everything they own is paid for though. Obviously this is just normal monthly budget and not any huge capital expenditures if needed. Since he would rather donate a kidney than go on vacation that part of the budget does not need to be factored in.


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Old 06-19-2016, 11:10 AM   #36
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Retiring this year at 56. If I decide to collect at 62, it would represent 10% of our retirement expenses. Not sure if this data helps you because the factors in arriving at the percentage differ so much from family to family (i.e. other income, expenses, age, etc....). Never really paid much attention to SS until this past year because I always thought (hoped) the federal government would substantially modify the program but there you have it.
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Old 06-19-2016, 11:14 AM   #37
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My estimated SS benefit at FRA (age 67) hasn't changed much after I ERed in 2008 and ended my earnings subject to the SS benefit calculation (i.e. a lot of fixed zeroes to fill in the missing years). Adjusting that future SS benefit to today's dollars means that it would cover about 80% of my expenses.


SS is one of my "reinforcements" I can begin tapping into starting at age ~60 such as my frozen company pension and unfettered access to my IRA. And that's in addition to the taxable accounts whose monthly dividend income more than covers my expenses.
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Old 06-19-2016, 12:25 PM   #38
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Looks like the answer for me depends on what my expenses will be and when I start benefits, when I stop working matters much less. Assuming no change to expenses from today (except for income taxes), starting benefits at 62 would cover about 80% if my earnings after 2016 are zero. Delaying benefits to 70 it rises to about 140%. Staying at work and maxing it out from now until I collect adds only about 10%.

I guess like the OP I too am surprised by how much SS is projecting to pay out. Although the real eye opener is how close I am to being able to start collecting (less than a decade). Time has really flown.
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Old 06-19-2016, 01:18 PM   #39
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SS covers about 10% of our annual sustaining budget (not including any "special" expenses such as vacation or newer car). But to be expected since I'm subject to the WEP provisions.
My govt pension pretty much covers 80% of the sustaining budget, leaving savings/investment covering the last 10% of the sustaining budget.
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Old 06-20-2016, 04:24 AM   #40
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I plan to take SS in 10 years at age 70. I should get about
$3,000/month which will just cover my basic expenses (i.e. w/o travel, home repairs, medical emergencies ...). This assumes that the cola's applied over the next decade actually match the real inflation rate I experience in my basic expenses. I have also ignored FI taxes.
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