Means Testing future risk?

[Bimmerbill]

Ok, we talk about inflation, market and asset allocation risks a lot, but what about future "means testing" risk?

I have 14-16 years until I retire. How do I address future possible means testing risk?

I certainly want to keep saving, and means testing isn't a certainty. But it could happen, and could reduce my SS (if its even available) or other benefits.

[ziggy29]

Given what's happened to my 401K lately, I'm not as worried about "means testing" of Social Security as I used to be...

[youbet]

Originally Posted by Bimmerbill

Ok, we talk about inflation, market and asset allocation risks a lot, but what about future "means testing" risk?

I have 14-16 years until I retire. How do I address future possible means testing risk?

I certainly want to keep saving, and means testing isn't a certainty. But it could happen, and could reduce my SS (if its even available) or other benefits.

I don't think we can really do much of a job accessing "means testing" risk since it's adrift in the ever changing political currents of our country.

But, having said that, what is the risk really? You have a relatively higher retirement income than other citizens and therefore receive less SS and pay higher income tax rates. Folks in less lucrative retirement scenarios will envy you!

[TromboneAl]

I wonder whether means testing would just be too complicated to fly. Do you take other pensions into account? Home value?

[Bimmerbill]

I guess the risk would be saving just enough to be hit by means testing, lose some benefits/money, and be worse off due to saving all those years.

[outtarentals]

Medicare premiums have been means tested for the past couple of years so I suppose you could say that means testing of SS is already happening.

Example: my monthly Medicare premium which is automatically deducted from my SS shot up this year from $90/month to over $250/month because of a one time capital gain last year.

It'll be recalculated yearly based on your taxable income the year before, so this isn't permanent - but the rates do graduate higher as your taxable income rises instead of having the same premium for everyone as before.

IMO this is a trend that will continue - I just don't see how it can't.

[Bimmerbill]

Oh yeah, I already pay more for child care due to a "sliding income scale." It's a federally subsidized facility on a military base. Plus, I'll pay more for some medical testing for my daughter scheduled for next month, which is underwritten by a state program. It's all income based.

[TromboneAl]

I see -- means tested by income rather than net worth.

[Marshac]

As far as social security goes, I don't believe that means testing will ever come into play, but I do believe Alan Greenspan when he said to congress "We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power"

If you are concerned with means testing for SS, you might check into some of the strategies used by families to maximize the amount of federal student financial aid they can quality for. They are very different programs, but it's one existing (and well documented) method of government means testing.