Can you count on SS?

[REWahoo]

An interesting interview regarding the future of Social Security on the Vanguard website.

Can You Count on Social Security?

I really liked this advice...not for me of course, but for everyone else : "...keep working—if possible—until you are age 70 or 75. This boosts eventual retirement income because your assets are saved and invested longer."

...and you keep funding my SS check for which I will be very appreciative.

 

[Mysto]

She claims that if SS increases were tied to CPI that it would solve the problem with SS. I have never seen this statement before. Has anyone else seen data to support that claim? If that is the case and congress hasn't done it then they all need to be kicked out. What a simple and not too painful solution.

 

[Cut-Throat]

She claims that if SS increases were tied to CPI that it would solve the problem with SS. I have never seen this statement before. Has anyone else seen data to support that claim? If that is the case and congress hasn't done it then they all need to be kicked out. What a simple and not too painful solution.

Congress has a lot more to do than worry about a program that might be in trouble in 2040! - They need to start being fiscally sound with deficit spending.

 

[Patrick]

She claims that if SS increases were tied to CPI that it would solve the problem with SS. I have never seen this statement before. Has anyone else seen data to support that claim? If that is the case and congress hasn't done it then they all need to be kicked out. What a simple and not too painful solution.

Even with that, they've got to get the additional money to pay for it from somewhere. Who's going to pay? Or will they just print some more money and increase inflation?

 

[MasterBlaster]

Congress has a lot more to do than worry about a program that might be in trouble in 2040! - They need to start being fiscally sound with deficit spending.

CT I'll splain' it to you once again. There is no SS trust fund. That's worth repeating - There is NO trust fund !
The big bills start coming in long before 2040.

As bills for SS, medicare and other programs mount intense pressure mounts to make cuts. This should start in around 10-12 years or so as the boomers begin to retire.

Cuts are inevitable.

 

[Cut-Throat]

CT I'll splain' it to you once again. There is no SS trust fund. That's worth repeating - There is NO trust fund !
The big bills start coming in long before 2040.

As bills for SS, medicare and other programs mount intense pressure mounts to make cuts. This should start in around 10-12 years or so as the boomers begin to retire.

Cuts are inevitable.

Never said there was a trust fund! - The program is running surplus currently. Medicare is the real crisis! Since it all comes out of the same pot, doesn't it make sense to fix the current problem?

Cuts are inevitable for those under age 45!

 

[youbet]

This should start in around 10-12 years or so as the boomers begin to retire.

DW and I are boomers. We are retired. Boomers are retiring NOW.

 

[youbet]

Cuts are inevitable for those under age 45!

Perhaps for older folks too, if they fail the inevitable means testing.

 

[MasterBlaster]

She claims that if SS increases were tied to CPI that it would solve the problem with SS. I have never seen this statement before. Has anyone else seen data to support that claim? If that is the case and congress hasn't done it then they all need to be kicked out. What a simple and not too painful solution.

Social Security benefits are tied to wages. When you retire, for your benefit they take wages that you earned in past years and project forward to the current year by using a multiplier tied to wages. Since wages have outpaced inflation over the years the benefit number that you get is larger than it would be had your past earnings been projected forward using CPI.

The benefit that you then end up with is increased every year based on the CPI value.

Note that if we use CPI rather than the wage index that we are talking about a cut in SS benefits.

I believe what the article that you read refers to is switching from the wage index to the CPI for all "future" wages. That approach would be a gradual phased-in cut that would have a bigger effect on younger workers than those close to SS retirement.

 

[d]

Q: Can you count on SS?
A: no

 

[Gumby]

Perhaps for older folks too, if they fail the inevitable means testing.

I believe that most people on this board will be affected by means testing. In running FIRECALC, it would be wise to assume a healthy discount on your "expected" social security. I assume zero, but that is just because I also assume that if there is a way for the federal government to screw me over, they will. If I'm wrong, I'll be happy.

 

[youbet]

I believe that most people on this board will be affected by means testing. In running FIRECALC, it would be wise to assume a healthy discount on your "expected" social security. I assume zero, but that is just because I also assume that if there is a way for the federal government to screw me over, they will. If I'm wrong, I'll be happy.

There was another thread recently where some excellent quantitative work and interesting discussions took place regarding delaying SS and considering it an annuity. But I didn't see any consideration given to the possibility of future means testing and the impact that would have on delaying SS. For those of us approaching 62 (three years for me), start SS at 62 and collect some before means testing gets started or delay, spend down the portfolio, and have less income to be tested later when you do start SS.

Two many choices........

 

[MasterBlaster]

But I didn't see any consideration given to the possibility of future means testing and the impact that would have on delaying SS.

What you have asked is unknowable at this time. We can only speculate what will happen.

So if you are gaming the rules for some advantage, if the rules change the game may change as well.

 

[Patrick]

I believe that most people on this board will be affected by means testing. In running FIRECALC, it would be wise to assume a healthy discount on your "expected" social security. I assume zero, but that is just because I also assume that if there is a way for the federal government to screw me over, they will. If I'm wrong, I'll be happy.

We already are, by the "Windfall Elimination Provision." Windfall my a$$, I earned my pension!!

 

[youbet]

We already are, by the "Windfall Elimination Provision." Windfall my a$$, I earned my pension!!

I take it you do not have enough years of "substantial contributions" to get around the WEP?

When I calculated DW's SS with and without the WEP, there was a huge percentage difference but small absolute difference. With WEP - $40/mo. Without WEP - $70/mo.

BTW, WEP isn't really means testing. If you have enough years of significant contributions to SS, despite having a government pension, they will give you your full, non-WEP SS. It's sort of reverse means testing......you have to have earned a lot to not have your SS reduced.

 

[youbet]

What you have asked is unknowable at this time. We can only speculate what will happen.

Well damn! This business of not knowing the future is making planning way too hard!

I don't know what the markets will do in the future, I don't know if I'll get all, some or none of my planned SS, I don't know if MegaCorp will keep paying my pension, I don't know how long I will live.......... Boy oh boy, what a deal, huh?

OK. Just thought I'd ask. Thanks anyway.

 

[samclem]

There was another thread recently where some excellent quantitative work and interesting discussions took place regarding delaying SS and considering it an annuity. But I didn't see any consideration given to the possibility of future means testing and the impact that would have on delaying SS. For those of us approaching 62 (three years for me), start SS at 62 and collect some before means testing gets started or delay, spend down the portfolio, and have less income to be tested later when you do start SS.

Two many choices........

That was a good thread. If an individual starts taking SS later and spends down his savings in the meantime, he is, in effect, deliberately reducing his individual wealth in the belief that the government will come through in the future. I agree with the view expressed in that thread that the increased SS check each month is valuable "longevity insurance," but anyone choosing that route should recognize that he is deliberately making himself more dependent on the whims of the government than would otherwise be the case. That doesn't make it a bad idea.

 

[Khan]

My pension decreases when I turn 62.

 

[donheff]

I still think the fears are overblown. The vast majority of voters rely on SS for a substantial portion of their retirement. And as we boomers retire, we will become a very significant portion of the voting population. Congress won't gut SS because we would gut them. Look what is happening over frustrations with Iraq.

So what is the solution? Who knows, all we can do is guess based on past behavior of voters and reps. Probably some legerdemain about future benefits (the CPI/wage issue sounds good). Probably means testing with some partial cutbacks affecting those of us who can afford it. Probably some sort of roll back of the Bush cuts for very high income people (e.g. top 5%). Probably not much affect at all for the lower 85% or so.

 

[New Thinking]

IMO, SS will be there for every reader of this board. The reason is that DB plans are fading fast and many are realizing that SS is the only DB income they will receive and will fight to keep it..If it is tweaked it will be done for those 54 and below. We may see an increase in the full retirement age as the younger generation lives longer. I doubt that we would ever see means-testing on SS (but we will see more on Medicare) as it is a disincentive to save on one's own. The switch from wage-based adjustments to CPI-based adjustments is also possible,

 

[RockMiner]

I still think the fears are overblown. The vast majority of voters rely on SS for a substantial portion of their retirement. And as we boomers retire, we will become a very significant portion of the voting population. Congress won't gut SS because we would gut them.

Exactly. Still, it seems wise to allow for some form of means based benefit cuts for those under 55. I'd rather plan for a 25% cut in my personal SS benefits and a doubling of Medicare costs...then be pleasantly surprised if it doesn't happen.

 

[d]

SS will be there for every reader of this board

but at what $ level?

I doubt that we would ever see means-testing on SS

in essense it is already means-tested by it's treatment in the income tax

it would be wise to assume a healthy discount on your "expected" social security.

ditto

 

[Gone4Good]

Never said there was a trust fund! - The program is running surplus currently. Medicare is the real crisis! Since it all comes out of the same pot, doesn't it make sense to fix the current problem?

Cuts are inevitable for those under age 45!

Because it all comes out of the same pot, and because SS & Medicare are the largest and fastest growing expenditure items, fixing them is necessary to ever hope of balancing the books over the long-term. The idea that the SS trust fund doesn't go "broke" for another 40 odd years won't prevent increased SS spending from busting the budget long before that.

 

[samclem]

Many opinions here about which age groups will be spared cuts: Nobody older than 45 needs to worry. Wait, make that 54. I wonder if the cutoff we imagine for "sanctuary" is in any way related to our own present age. "Okay, I'm on board now--pull up the ladder, let's go. Too bad about those young 'unz"


Likewise with discussions of who will pay higher taxes to shore up SS--somehow the "filthy rich who need to pay more" generally are a few bucks higher on the scale than the person doing the talking.

 

[Eagle43]

Can I count on Social Security. Twice a month, hers and mine. You, OTOH, should work until you're 70 or 75, so I can keep counting on it.