Reran my numbers, running out of $$??

[marko]

SS actually says a 25% haircut without reform.

https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html

I haven't done the math (and would probably get the wrong answer even if I did) but the possibility of this haircut makes our long-standing "when to take SS" debate sort of moot, doesn't it?

Haircut, no haircut, means testing, retroactive, not retroactive....too many unknowns. My personal bet is 'nothing changes'.

 

[COcheesehead]

I haven't done the math (and would probably get the wrong answer even if I did) but the possibility of this haircut makes our long-standing "when to take SS" debate sort of moot, doesn't it?

Haircut, no haircut, means testing, retroactive, not retroactive....too many unknowns. My personal bet is 'nothing changes'.

But folks will make a Roth conversion under a similar set of unknowns - future taxation

I think any haircut will be for those not yet taking SS. So should you speed it up? Or should you wait 3 more years and get the 8% increase which makes up for the haircut?

 

[PatrickA5]

My guess is no SS haircut for old people. I have 100% SS in my plan. I guess my Plan B would be to cut spending, but I don't plan on doing that either.

I'm already taking SS. DW is (hopefully) waiting for 70 (another 5 years).

 

[G-Man]

I know this has been discussed many times here on this site, but you have to imagine SS will be tinkered with between now and 2034/35. It would be political suicide to cut Grandma's SS to 77% cold turkey in 2034.

For those of us who were initially thinking about taking SS at 70 when it occurs at year 2034+, it makes you wonder if a strategy of taking it sooner (when you get 100%) will be more advantageous as its harder to take away a benefit once you got it? Just spit-balling here. None the less, I am underwriting a haircut to 75% at age 70 as I expect some kind of means test by then.

I was planning to take SS benefits at age 70 which is 2036. I may reconsider and take it at age 67 which is 2033.

 

[SecondCor521]

While obviously not a perfect guide, I look to history to make my personal guess as to what happens with SS.

Have SS benefits ever been cut?

How many times have taxes been raised to pay SS benefits (either FICA or income taxation of SS benefits)?

How many times have benefits been expanded during SS reforms?

My plan is based on a reduction to 80% in 2035 based on https://www.ssa.gov/news/press/rele..._medium=email&utm_source=govdelivery#6-2022-1

I still plan to defer to age 70, mostly to get more Roth conversions in and because I don't particularly need it. OpenSS shows not much difference over the claiming range for my particular inputs.

 

[Koolau]

While obviously not a perfect guide, I look to history to make my personal guess as to what happens with SS.

Have SS benefits ever been cut?

How many times have taxes been raised to pay SS benefits (either FICA or income taxation of SS benefits)?

How many times have benefits been expanded during SS reforms?

My plan is based on a reduction to 80% in 2035 based on https://www.ssa.gov/news/press/rele..._medium=email&utm_source=govdelivery#6-2022-1

I still plan to defer to age 70, mostly to get more Roth conversions in and because I don't particularly need it. OpenSS shows not much difference over the claiming range for my particular inputs.

I think these are good questions.

Every time I read the SS statement (you know, where they warn that we might only get 3/4 or whatever) I read it as "Contact your representatives in the legislature if you don't want this to happen."

So far, that sound you hear is the sound of a can being kicked down the road though YMMV.

 

[Hermit]

With the deficit spending our Federal Government seems to be so enamored with lately, my crystal ball is so foggy I feel like I am driving into a major fog bank on the Interstate doing about 75 mph. I'm not sure the rear view mirror is going to help me in this instance.

 

[Koolau]

With the deficit spending our Federal Government seems to be so enamored with lately, my crystal ball is so foggy I feel like I am driving into a major fog bank on the Interstate doing about 75 mph. I'm not sure the rear view mirror is going to help me in this instance.

Yeah, watch out for the jack-knifed truck just ahead. I think it's got our name on it.

 

[marko]

With the deficit spending our Federal Government seems to be so enamored with lately, my crystal ball is so foggy I feel like I am driving into a major fog bank on the Interstate doing about 75 mph. I'm not sure the rear view mirror is going to help me in this instance.

Yeah, watch out for the jack-knifed truck just ahead. I think it's got our name on it.

But don't slam on the brakes either!

 

[marko]

I feel like I am driving into a major fog bank on the Interstate doing about 75 mph. I'm not sure the rear view mirror is going to help me in this instance.

Yeah, watch out for the jack-knifed truck just ahead. I think it's got our name on it.

But don't slam on the brakes either!

 

[Hermit]

If I find any jack-knifed trucks in my crystal ball, I'm doomed!

 

[foxfirev5]

While obviously not a perfect guide, I look to history to make my personal guess as to what happens with SS.

Have SS benefits ever been cut?

Yes they have. Go back to the early '80's when taxation of SS was implemented. That's a cut no matter how you rationalize it.

 

[ncbill]

Previous SS changes have protected lower income earners at the expense of higher income ones.

I would expect any future changes to be in the same vein.

 

[foxfirev5]

Yes. Tell me the rules and I'll play the game. Income and assets are not the same. So far.

 

[youbet]

Previous SS changes have protected lower income earners at the expense of higher income ones.

I would expect any future changes to be in the same vein.

Yep. I agree that the precedent has been set and will carry on. SS means testing will (IMHO) work in a similar way that IRMAA works for Medicare. Some other changes including qualification age, tax rate and COL calculation may come into play too, but "only the 'wealthy' will be impacted" will be the word to the masses.

 

[braumeister]

It's pretty simple actually.

No changes for persons born before [insert your birthdate here].
For those born on or after that date, the following restrictions and reductions will apply.

 

[Samsung4321]

Out of $ - or out of capital?

USA resident citizen aged 65+ can not run out of income, but can run out of capital, due to Supplemental Security Income (SSI) of $10,969 / y single or $16,452 / y couple, to qualify, countable resources should not exceed $2,000 for an individual and $3,000 for a couple, not include home.

https://www.aarp.org/retirement/social-security/questions-answers/ssi-eligible.html

Those renting home would find bought food expensive or unaffordable while those owning an unencumbered low maintenance home would have spare cash for health insurance and likely a car.

Where in USA could they at least survive?


For Aus comparable welfare is Age Pension $A26,689 / y single, $A40,238 / y couple and $A280,000, $A419,000 assessable assets excluding home.

https://www.servicesaustralia.gov.au/how-much-age-pension-you-can-get?context=22526

Tight for renters even after rental assistance, comfortable for home owners with spare cash for modest entertainments.


No owned home, no capital is 'challenging' in both jurisdictions.

 

[daylatedollarshort]

USA resident citizen aged 65+ can not run out of income, but can run out of capital, due to Supplemental Security Income (SSI) of $10,969 / y single or $16,452 / y couple, to qualify, countable resources should not exceed $2,000 for an individual and $3,000 for a couple, not include home.

https://www.aarp.org/retirement/social-security/questions-answers/ssi-eligible.html

Those renting home would find bought food expensive or unaffordable while those owning an unencumbered low maintenance home would have spare cash for health insurance and likely a car.

Where in USA could they at least survive?

I'm not sure where they would best survive, but it might not be the lowest cost area. HCOL areas might have more social programs due to larger tax base besides the basic SSI, Medicaid and SNAP benefits. I know in our area between local and state programs for seniors and low income households, there are quite a few programs, including subsidized housing, free lunches for seniors, almost free senior bus service, utility help and much more. Renting a room would cost at least $800 for those not getting housing help, but after that many of other of life's necessities could be free or low cost between the various state and local programs. Plus with so many wealthy households around, there are nice offering on groups like Freecycle and Buy Nothing, plus many upscale thrift shops. There are also a lot of free community supported entertainment activities through the senior centers, libraries, parks, etc. Property tax increases are capped here for existing home owners. Libraries have free streaming services, music, museum and event passes, magazine subscriptions, movie streaming, Great Courses and classes.

 

[Samsung4321]

I'm not sure where they would best survive, but it might not be the lowest cost area.

A LCOL area well suited to the reclusive?

https://goo.gl/maps/VbwQNbwsuaxe6kpw8

 

[Hermit]

A LCOL area well suited to the reclusive?

https://goo.gl/maps/VbwQNbwsuaxe6kpw8

Reclusive? Who would want to be reclusive?

 

[COcheesehead]

A LCOL area well suited to the reclusive?

https://goo.gl/maps/VbwQNbwsuaxe6kpw8

I’ve been there. It’s actually pretty close to some nice areas in Taos. I can send you to some pretty remote areas in the SW US where internet is a rumor and wildlife are lizards. LOL.

 

[Koolau]

USA resident citizen aged 65+ can not run out of income, but can run out of capital, due to Supplemental Security Income (SSI) of $10,969 / y single or $16,452 / y couple, to qualify, countable resources should not exceed $2,000 for an individual and $3,000 for a couple, not include home.

https://www.aarp.org/retirement/social-security/questions-answers/ssi-eligible.html

Those renting home would find bought food expensive or unaffordable while those owning an unencumbered low maintenance home would have spare cash for health insurance and likely a car.

Where in USA could they at least survive?


For Aus comparable welfare is Age Pension $A26,689 / y single, $A40,238 / y couple and $A280,000, $A419,000 assessable assets excluding home.

https://www.servicesaustralia.gov.au/how-much-age-pension-you-can-get?context=22526

Tight for renters even after rental assistance, comfortable for home owners with spare cash for modest entertainments.


No owned home, no capital is 'challenging' in both jurisdictions.

This site gives some indication that Mississippi might fit the bill as housing is relatively inexpensive (as are other things - but especially housing.) YMMV

https://worldpopulationreview.com/state-rankings/cost-of-living-index-by-state

 

[Time2]

Can you cite any proposed legislation to support that view or any SSA materials or is it just your personal speculation?

Personal speculation. However, now that I have looked, I do see this:
https://defazio.house.gov/media-cen...e-legislation-to-expand-and-strengthen-social


"The Social Security Expansion Act" would:

• Extend the solvency of the Social Security trust fund 75 years, through 2096, by requiring the wealthiest Americans to pay their fair share into the fund, just like everyone else. This legislation would lift the income tax cap and subject all income above $250,000 to the Social Security Payroll tax. Under this bill, more than 93 percent of households would not see their taxes go up by one penny."

"This bill would require the wealthy pay the same 12.4 percent on their investments and business income by increasing the net investment income tax by 12.4 percent and applying it to certain business income not already covered by payroll taxes"



That is about as close to means testing as you can get without calling it means testing. I don't know that this is going anywhere, but at this time it has 20 cosponsors.



I also see Social Security 2100, but is mostly about expanding benefits, this is paid for by making those with very high incomes pay the FICA tax. There must be more, but I don't see it on this page. They are proud of the expanded benefits. 202 cosponsors.

https://larson.house.gov/issues/social-security-2100-sacred-trust


Increases Benefits

• Benefit bump for current and new Social Security beneficiaries – Provides an increase for all beneficiaries (receiving retirement, disability or dependent benefits) equivalent to an average of 2% of benefits to make up for inadequate Cost-of-Living Adjustments (COLA) since 1983. The US faces a retirement crisis and a modest boost in benefits strengthens the one leg of the retirement system that is universal and the most reliable: Social Security.
• Protection against inflation – Improves the annual Cost-of-Living Adjustment (COLA) formula to better reflect the costs incurred by seniors through adopting what's called a "CPI-E formula." This provision will help seniors who spend a greater portion of their income on health care and other necessities. Improved inflation protection will especially help older retirees, people of color, and widows who are more likely to rely on Social Security benefits as they age.
• Protects low-income workers – Five million seniors currently live in poverty. No one who paid into the system over a lifetime should retire into poverty. The new minimum benefit will be set at 25% above the poverty line and would be tied to wage levels to ensure that the minimum benefit does not fall behind.
• Provides a tax cut for 23 million lower- and middle-income Americans reducing their taxes on their Social Security benefits.
• Improves Social Security benefits for widows and widowers in two income households so they are not penalized for having two incomes.

• Repeals the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) that currently reduces Social Security benefits for many public servants, including teachers, police and firefighters.
• Ends the 5-month waiting period to receive disability benefits, so those with severe disabilities no longer have to wait.
• Provides caregiver credits toward Social Security wages to ensure caregivers are not penalized in retirement for taking time out of the workforce to care for children or other dependents.
• Extends Social Security dependent benefits for students to age 26 and for part-time students so they can continue their education.
• Increases access to Social Security dependent benefits for children who live with grandparents or other relatives.

• Requires SSA to mail annual statements to all workers showing the FICA contributions workers make and projections for their benefits in the future. This will help workers prepare for retirement, disability or in the event of an untimely death. Currently, SSA makes this information available only on its website mySSA.com for those under 60.
• Prevents unwarranted closures of SSA field offices – The bill will improve customer service by making it more difficult to close field offices, which are used by many seniors to file claims and discuss questions about their benefits.
• Improves access to legal representation for people seeking long term disability benefits.
  

It's no wonder the people are out of the loop, try reading this bill HR 8005,


“Social Security Expansion Act”


Here are some interesting things that may come from the "Social Security 2100"

#1: Low-Income Workers’ Payroll Tax Burdens Would Rise 19 Percent

#3: Total Social Security Payroll Tax Burdens Would Rise by over 40 Percent

#4: Retirement Benefits for the Lowest-Income Quintile of Workers Would Exceed 95 Percent of Their Prior Earnings

#5: Social Security Payroll Tax Burdens for High-Income Workers Would Be Multiplied 2.4 Times

More> https://fee.org/articles/8-revealing-numbers-from-the-social-security-2100-act/


Not a fun dive for me.

 

[dixonge]

I'm being very conversative and using 4.5% rate of return for stocks in the NewRetirement Planner+ tool. Using 3% for inflation. For SS COLA, I'm only using 1.25%. Probably should bump that up to 2.4%.

However, currently in the NewRetirement Planner+ tool, I have modeled 100% SS benefits for me and my wife. Wife taking SS at 62 and me at 70. Wife is 3 years older.

I just started using the NewRetirement Planner+ options. I keep adding known or planned expenses. I'm up to $10k for annual travel. Still keeps telling me 99% success under both 'standard' and of course 'optimistic' assumptions. Inflation assumption might be a bit low, but investment rate is kinda low as well so I feel like the Monte Carlo results are fairly comprehensive.

This tool has *really* helped my confidence levels about current and future spending. I'm starting to think like RobbieB about blowing that dough, but it's making my eye twitch!

 

[G-Man]

I just started using the NewRetirement Planner+ options. I keep adding known or planned expenses. I'm up to $10k for annual travel. Still keeps telling me 99% success under both 'standard' and of course 'optimistic' assumptions. Inflation assumption might be a bit low, but investment rate is kinda low as well so I feel like the Monte Carlo results are fairly comprehensive.

This tool has *really* helped my confidence levels about current and future spending. I'm starting to think like RobbieB about blowing that dough, but it's making my eye twitch!

I have been using NewRetirement Planner + tool since last year. I like the tool.

Just curious on the Assumptions your are using and the rate of return on your various retirement investments.

Also don't forget to create a separate Excess Income Account if you are saving your excess income (Money Flows section in the tool). I have a rate of return of 3.5% on this account. Very conversative.

Let me know if you have any questions on the NewRetirement Planner + tool.