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future of social security? do you plan for it?
Old 08-27-2011, 10:51 AM   #1
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future of social security? do you plan for it?

I'm 37, following all the 'rules' for allowing myself to be an early retiree....

I've heard my whole life that one day there will be more people taking out of SS than putting in.... its unsustainable..... yada yada yada.

for the younger folks here, When you consider FIRE'ing are you still considering SS as part of your income at the particular age you decide to take it?

It's such a part of our lives now, that it would be impossible to eliminate SS in the future. however, i'm sure there will be some changes.

when you add SS to any of the various calculators, sheesh, it really makes a difference. I hope and wonder if I'll be able to collect anything.

a lot can happen in the next 30 years......
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Old 08-27-2011, 11:02 AM   #2
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I'm far from one of 'the younger folks here', but I wouldn't suggest you eliminate SS from your calculations. Although my belief is the reduction will be less, I'd factor in a 50% reduction in benefits to be conservative. Some don't count on getting anything at all, but I believe this is way too pessimistic.
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Old 08-27-2011, 11:10 AM   #3
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I am 37 and I do not include SS in my calculations.
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Old 08-27-2011, 11:12 AM   #4
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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.
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Old 08-27-2011, 11:30 AM   #5
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I'll say again what I've said before: I am 99% sure that SS in some form will continue to exist until the day I die.

That said, I'm not counting on getting everything my benefit statement tells me I will. Whether it's a reform that reduces benefits for younger folks, additional means testing to reduce benefits, or an increase in the FRA that increases the penalty for early application for benefits, I do expect to get less. But I see little to no chance it will be "gone", nor will SS ever be so broke that it can't pay out *any* benefits.

If I had to take a wild guess, I'd bet my benefits will ultimately be between about 60-75% of what is currently estimated for me -- maybe more if I can "engineer" an income stream that includes less income that is included in setting the future means testing I expect to see.
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Old 08-27-2011, 11:41 AM   #6
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I'm 55, and I FIREd 5 years ago. I have never counted on SS. It's not that I don't think I'll get all or most of what I'm supposed to get, it's just that it's not under my control and I am pretty financially conservative. I figured if I could retire without SS, whatever I get from SS will just increase my income level or the amount I leave to DD and DGD. If I don't need any more money and I've successfully transferred most of my IRA money into a Roth before 70 & 1/2, I can do the Ed Slott idea of passing on a tax free fortune to my heirs. And if it turns out my FireCalc assumptions aren't valid (3.5% after inflation withdrawals), the SS will make up any shortfalls. But until I start getting it I don't count on it. Just the way I am.
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Old 08-27-2011, 11:45 AM   #7
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55 and budgeted for 25% reduction from what benefits say. Budgeted for both of us to take at 62, but we will most likely wait til full retirement age for hubby and 70 for me as mine is higher and it will be better for him. I actually think we might sneak under the radar for changes, but feel confident we will get at least 75% of what is projected.
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Old 08-27-2011, 12:06 PM   #8
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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.
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Old 08-27-2011, 12:10 PM   #9
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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.
Plus, since much of the reforms will surely exempt those already collecting, if you reach 62+ when Congress starts seriously talking about means testing and/or benefit reductions, you can immediately apply to make sure you are exempted from the screwing of younger folks details of the reforms.
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Old 08-27-2011, 02:44 PM   #10
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Originally Posted by NYEXPAT View Post
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'll never understand why SS should supply money for someone who wants to make babies in their 50's but hey, it's the rule so good for you.

Are you saying that you will not tell SS that you have more assets offshore if means testing becomes law?
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Old 08-27-2011, 03:32 PM   #11
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I'll never understand why SS should supply money for someone who wants to make babies in their 50's but hey, it's the rule so good for you.

Are you saying that you will not tell SS that you have more assets offshore if means testing becomes law?
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.)
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Old 08-27-2011, 03:42 PM   #12
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I always use 50% even though most people insist it won't be reduced much if at all. I'd rather plan for the worst and be pleasantly surprised if I'm wrong.
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Old 08-27-2011, 03:47 PM   #13
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I'd rather plan for the worst and be pleasantly surprised if I'm wrong.
This is my feeling, too. In pretty much *all* my financial and economic expectations I err on the side of a somewhat worse outcome than I expect. Then, if the numbers work, I'll feel a lot more confident that it won't become a "busted retirement" in the future.
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Old 08-27-2011, 04:15 PM   #14
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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.)
Good to know, I wouldn't want to support any more cheaters.
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Old 08-27-2011, 04:36 PM   #15
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At 40 my crystal ball gets cloudy before 27 days have passed. I'm not basing my retirement on predictions about what may, or may not, happen to SS twenty seven years from now.

I'm pretty confident that some form of SS will be in place. That doesn't mean I'll see a dime of it. Plenty of things could change from the current benefit statements I get. One obvious, and perhaps likely, change is means testing. Depending on how that is implemented, it might mean nothing to me or it might mean my benefit is reduced to nothing. Impossible to tell. Another change that could impact me would be to alter the way eligibility is determined. Considering that I won't likely have contributed to the "Trust Fund" for a couple of decades, they may well thank me for my earlier contributions but turn me away empty handed. Who knows?

Right now I'm planning on zero SS. Anything I actually get will be upside.

BTW, I don't necessarily see this as being excessively conservative. I'm just applying a discount rate to those future potential cash flow streams to account for the uncertainty. At even a 5% discount, those future dollars are only worth $0.27 today. I'm more of a 10% discount kind of guy for this kind of planning, which means those future benefits are only worth $0.09. I'll value them more when I get closer to eligibility age.
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Old 08-27-2011, 05:49 PM   #16
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I figure 25%+ Age for an affluent retiree and 50% + Age for a middle class or lower.

Most of the projection is even when social security runs out of money it can still pay 75% of the needed benefits. I think there will be some form of means testing but I think assuming that it wouldn't be around at all is too pessimistic. On the other hand if you love your job than don't worry about it .
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Old 08-27-2011, 06:09 PM   #17
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Clifp, what do you think they will use as affluent? Would it be the person with 1M in the bank or the person with the 60K pension?
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Old 08-27-2011, 06:38 PM   #18
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Clifp, what do you think they will use as affluent? Would it be the person with 1M in the bank or the person with the 60K pension?
Got me, but it is easier to track income than wealth so that is what I'd guess. The person with 1 million in the bank generating 50K in income plus the 60K in pension I think would be classified as affluent, not either one separately.
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Old 08-27-2011, 06:53 PM   #19
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In event that nothing is done to reform SS; future beneficiaries would be receiving a benefit based on what is received via payroll taxes. Which is roughly 75% of what that has been promised.
AARP: Report shows Social Security is viable for another 25 years

Social Security Benefits: Will They Be There When You Retire? - Free Legal Information - Nolo
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Old 08-27-2011, 07:49 PM   #20
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On the other hand if you love your job than don't worry about it .
Sure, if you are good at it and they aren't sending your job to some country where they can replace you for $20 a day...
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