future of social security? do you plan for it?

[MichaelB]

Quote:

Originally Posted by NYEXPAT I do not see any change coming in the actual dollar amount (for near retirees) but the purchasing power will be substantially reduced in time. I am 58 and ER'd many years ago, When I hit 62 my 6 year old and newborn will collect my full (66) benefit and I will most likely wait to 70 to start collecting. As all my assets are now overseas, means testing should not present a problem.

I've known many US based people that went to live in different Latin American countries, but very few in Peru - and thought the real estate was a bit pricey compared with other locations. What motivated you to go there?

Did you put your assets into nuevo soles?

[Lancelot]

Quote:

Originally Posted by MichaelB When my children ask that I answer that nobody can predict what's going to happen with SS, it's probably not going to be either as good as some hope or a bad as others fear. Instead or worrying about it they should live beneath their means, save, invest and make every effort to provide for their own retirement. This strategy has worked better than any other for most people across most generations.

^+1

Just imagine the social unrest if SS were eliminated...

Blood in the streets

[chinaco]

You have two choices.

1. Accept it.
2. Voice your concern to your elected official regularly... if they don't support your position (whatever it is).... vote against them!

IMO - whatever your position is... don't assume the politicians know your position. Because they will certainly take silence as approval for whatever political horse trading they do in an ad hoc manner along the way.


You had better believe that are some legislators who will use this debt debacle from all unfunded liabilities and irresponsible financial behavior of the last decade as a wedge to come to the political conclusion SS is part of that and should be dismantled.

You do need to worry about those people... they will want to lump SS in with the other stuff and cannibalize it.... immediately because those $2.1T in Trust Fund IOUs are due now! That is the near term issue. Increase taxes to pay it back or change the program (using smoke and mirrors) to forgive it (at your expense).

[Midpack]

Quote:

Originally Posted by Lancelot ^+1 Just imagine the social unrest if SS were eliminated... Blood in the streets

That's a provocative exaggeration. There may be some, but I'm not aware of any sitting politician who has proposed eliminating SS altogether. Irresponsible to suggest same IMHO, sounds like tea party tactics...

[chinaco]

Quote:

Originally Posted by Midpack That's a provocative exaggeration. There may be some, but I'm not aware of any sitting politician who has proposed eliminating SS altogether. Irresponsible to suggest same IMHO, sounds like tea party tactics...

It is more of a hypothetical situation IMO.

But, if it were ended in a way that threatened a lot of people's well being. It could very easily happen.

Similar events have happened in our past. Similar circumstances... depression, govt owes a debt (legal debt) and refuses to pay up. This one happened during the Herbert Hoover Administration in 1932.

People were desperate... they had lost everything due to the depression. WWI vet endured horrible circumstances during that war. These people were promised compensation in the form of a bonus. They wanted it and began to protest.

Hoover, in effect, called out the army on those WWI vets during the depths of the great depression.

Bonus Army - Wikipedia, the free encyclopedia

It is easy to dismiss the past and chalk it up to "it was just different then". The fact is, the only difference is some technology... the exact same issues are being debated right now!!


I doubt that sort of thing will happen. But it is not impossible.

[Midpack]

It could happen, but putting it out there as remotely likely is akin to proving a point using an exception - a tactic I've learned to recognize as counterintuitive at best. You could die tomorrow, but that doesn't mean you should go blow your nest egg today. Odds are SS will continue even if reduced, so odds are you can plan on it to some extent.

Putting eliminating SS out there is as useful as the 'death panel' nonsense a few years ago IMO. YMMV...

[Beryl]

I ER'd 7 months ago and didn't plan on SS. I do expect to collect it early (62) to help with health insurance because my Megacorp retirement healthcare funds will run out before I am Medicare eligible. My retirement spreadsheets had many scenarios which includes no SS, no pension, and other things that might happen depending on how corporations change things in the US.

Although the OP didn't ask this, I did plan for Medicare. If we lose that, I'm screwed as there was no way I could accurately plan for those costs!

[Sue J]

DH and I are both 56. He's already retired with a pension. He is not eligible for SS. We do just fine on the pension.

So far, I'm expecting SS to be there for me even if it's reduced. At 62 I'll evaluate taking it early. The small amount I'd get is just about equal to my pay from my current part time job and my income is well below the 14K that reduces your benefit.

Looking at a break even point of age 82 or so, taking it early seems to be a safe enough bet.

If things go as well as they have so far, we shouldn't be desperate for the SS income, but you can't count on things always going well........

[chinaco]

Quote:

Originally Posted by Midpack It could happen, but putting it out there as remotely likely is akin to proving a point using an exception - a tactic I've learned to recognize as counterintuitive at best. You could die tomorrow, but that doesn't mean you should go blow your nest egg today. Odds are SS will continue even if reduced, so odds are you can plan on it to some extent. Putting eliminating SS out there is as useful as the 'death panel' nonsense a few years ago IMO. YMMV...

The US is not in dire shape... even in the current situation. So there is absolutely no reason for that type of situation to occur.

I agree there is a lot of creative license taken with scenarios (hypothetical what ifs).

But, if you would have told me say 6 or 8 years back that there would be unrest in Western Europe over trimming back government spending precipitated by a horrible financial crisis that almost took the world financial system down and a nasty boderline depression like recession. I would have said... No Way, completely unrealistic. Because blah, blah, blah....

We are going through one of those rare event right now. You and I have been lucky and are somewhat insulated (from huge impact by changes). Changes will not devastate our situations (at least we hope). So our feelings are shaded by that... IOW you and I have not lost everything, and are not desperate and angry... we are peeved that it has come to this and discuss it (in between our discussion of plans to travel, buy new homes, etc).

There are many people hurting that are frightened and angry out there. All of the politicians and political operatives that are fanning the flames to jockey for position in the next election are not helping the fear factor (IMO).


Let's keep our fingers crossed and hope that in round two of the political debate they begin to cooperate.

[FocusedInfinity]

As a 29 y/o, although I fully expect some form of social security to be there in the future, I'm not currently factoring it into my retirement plans.

At my age, there are far too many ifs. Some are political - will SS be around? Will I be means tested out of it? Some are based on life choices. Do I expect to work at my current job/salary until ER? Do I want to take a couple of years off from work at some point? Etc.

I'll probably continue to discount SS at 0% until I get closer to ER, judge the circumstances at that time, and adjust accordingly. It's just not worth my time to try and figure out some formula to factor in all of the uncertainties. Besides, I'm certain I could come up with a couple of hobbies to dump those checks into should the need arise!

[chinaco]

Quote:

Originally Posted by FocusedInfinity As a 29 y/o, although I fully expect some form of social security to be there in the future, I'm not currently factoring it into my retirement plans. ...

Smart move... LBYM and save as much as you can and invest as if SS is not part of your accumulation plan.

[haha]

Quote:

Originally Posted by Midpack It could happen, but putting it out there as remotely likely is akin to proving a point using an exception - a tactic I've learned to recognize as counterintuitive at best. You could die tomorrow, but that doesn't mean you should go blow your nest egg today. Odds are SS will continue even if reduced, so odds are you can plan on it to some extent. Putting eliminating SS out there is as useful as the 'death panel' nonsense a few years ago IMO. YMMV...

Now we have meta-arguments?

[old woman]

I heard they are considering varying the amount by age. They referred to a group as the old, old and giving them more. This seems like a great idea. A person who wants or must retire at a young age will have more resourses then an old old person. At 70 you might have children still working or even parents and siblings who can help and you might find a way to earn a little to help out. You should still have your life savings and not have serious health issues the would mean you could use less utilities to keep warm or cool and not die of it.

When you get over 90 you can't work, no parents, no siblings, kids are retired and not much help if you have any at all. Medicine is probably more money and you might need household help. Running out of life savings and starting to really suffer if the temperature is too hot or too cold. You might also be widowed so not have someone to help with chores or money.

I would accept less in the years 62-89 to be given more after 90. It would mean retirement planning would have less need to plan for length of retirement.

Some people of course don't live to an old, old age so it would be fewer people and not for many years. Those more frail, lonely elderly are the ones most in need of money for food, heat and medicine.

[Major Tom]

floridanurse - while in the accumulation phase, I hoped for the best and planned for the worst. Basically, that meant that I put away as much as I could (within reason).

There are so many variables, such as the return you will actually get on your investments, what things will really cost in the future, what lifestyle you'll want to follow when you're older, and of course, how much SS you'll get, that it's pretty difficult to know exactly how to plan. I didn't over-think it, and just saved as much as I could without making myself miserable.

Now, in an unplanned early semi-retirement, I'm just getting by, but if my portfolio does better than the worst-case scenario (according to Firecalc) and if I get at least 50% of what the current prediction is for SS, then I'll be doing quite a lot better in the future.

FYI, I'm 47.

[obgyn65]

I am 46 and plan for at least 25% reduction in SS benefits and no annual increase. I hope to be wrong and be pleasantly surprised.

[GregLee]

Quote:

Originally Posted by Midpack That's a provocative exaggeration. There may be some, but I'm not aware of any sitting politician who has proposed eliminating SS altogether. Irresponsible to suggest same IMHO, sounds like tea party tactics...

Lancelot worded his observation using a grammatical construction called the "counterfactual conditional", writing "if SS were eliminated" rather than "if SS is eliminated". "Counterfactual" means "contrary to fact". So his statement does not suggest that SS will be eliminated altogether. If he had said "is" instead of "were", perhaps there would have been such a suggestion.

[freebird5825]

Age 52.9
I never used SS benefits in my FIRE calculations. I have no spousal or widow's benefit to count on, i.e. only my own SS benefit from my own career. It will be a generous benefit, if I can force myself to believe in unicorns and pixie dust.
I have no idea what shape the SS system will be in 9 years. I have already established income generating bond funds to make up for what I truly think will be a much lower benefit than the numbers I saw on my last SS statement.
Time will tell...

[NYEXPAT]

Quote:

Originally Posted by MichaelB I've known many US based people that went to live in different Latin American countries, but very few in Peru - and thought the real estate was a bit pricey compared with other locations. What motivated you to go there? Did you put your assets into nuevo soles?

I was motivated in 2003 by what I saw as the coming housing crisis and ultimate global crisis which still has much further to go (IMHO). I wanted to move to a country that was fiscally conservative (Debt Free) with a strong economy, no capital controls and the ability to easily acquire citizenship.

As you probably know Peru was growing by 9.5% a year back in 2008, The Global financial crisis was barely blip and we were one of the few countries that did not experience recession.

As a result RE has appreciated (in dollars) by 300-500% since 2007, before that I found it quite cheap $100,000 for a 1200 sq ft apt on a bluff 200ft over the Pacific.

Now, that I have "gone Peruvian" it seems quite expensive to me. When I first started buying the Nuevo Sole it was 3.6 to 1 and has appreciated to 2.72 to 1 as the Dollar lost it's value!

The problem now is with one of the worlds fastest growing export economies, they are forced to use their billions in reserves to prop up the dollar in support of exporters.

[SandsofTime]

Social Security will be there but it will probably be turned into a SSI type welfare payment for the low income seniors. I don't see the USA turning into a complete hell-hole even in 50 years. I do see the USA having a lot more gated communities and a lot less class-mobility in the future. I also think slowly but surely labor (especially unskilled labor) will continue to NOT keep pace with inflation, and the result will be a large subsistence level class across America.

Interesting times ahead!

[NYEXPAT]

Quote:

Originally Posted by M Paquette Note that there is already data sharing between the IRS and Social Security. Should asset-based means testing be implemented, I'm pretty sure they'll know about offshore assets. (You have to report these to the IRS already, and foreign banks with US operations have been forced to disclose account information.)

That all depends on what assets you are talking about! A bank account in my name or under my control would have to be reported as would any income I generated. A thousand hectares of land would not have to reported even if there was a large gold deposit underneath. If I have a goose that lays "Golden Eggs" ? Nope, as long as I do not sell them. If I eat the Goose it is my problem ! If my wife is not a citizen of the USA and has no USA derived income Uncle Sam can make no claim on her assets!