Social Security benefit calculation for FIRE

[MasterBlaster]

Quote:
Originally Posted by Want2retire
I think the sentence you are referring to is, "The law governing benefit amounts may change because, by 2040, the payroll taxes collected will be enough to pay only about 74 percent of scheduled benefits."

<"This is why I secretly thank each and everyone who delays or plans to delay collecting SS beyond age 62. By 2040, I would already have collected SS for 20 years.">

The problem with this thinking is that there really is not a social security trust fund to draw down. The big deficits start around 2017 when SS and medicare deficits really start to hit home. Therefore that 2040 (oft quoted) date is not based on anything except the SS accounting scheme. Many people suspect changes to benefits will occur at or around that 2017 timeframe when the deficits go hog wild. The bond markets will force the decision.

Therefore I wouldn't count on your SS or your medicare benefit. To do so is just not prudent. Per my thinking, changes are inevitable because the money is just not there. It remains then to see exactly who bears the burden of the coming changes.

 

[teejayevans]

Therefore I wouldn't count on your SS or your medicare benefit. To do so is just not prudent. Per my thinking, changes are inevitable because the money is just not there. It remains then to see exactly who bears the burden of the coming changes.

I expect it to be there, the pain will be felt by everybody:
SS benefits will be taxed a little more.
SS taxes will rise from ~15% to 20% and cutoff wage limit will
be removed.

No way is any political party going to dump on all those VOTING
baby boomers.

I wonder what the medical insurance would be on a 80 year old
with some pre-existing condition? Without medicare I would guess
it would run 2-5K per month, you would just have
a ton of elderly who go uninsured and end up losing everything

TJ

 

[MasterBlaster]

SS by itself may be manageable with taxes and phantom cuts like you suggest. Medicare though is in for a real cutback. The costs will dictate that changes be made. The 80 year old example you gave will have health care but it won't be what people have now.

I suspect that we will go to some sort of universal care (including Medicare) in the next decade or so. Universal care inevitably means less health care and waiting lists for procedures and limits on what you can and can't get.

Think of universal health care as kind of like a HMO but with more limits and less care. Those people who believe that universal care will allow for anyone to have all the medication and all the procedures that any doctor orders up are living in fantasy-land.

 

[52andout]

Great info here, I've been reading for several months and wanted to add a comment.

say you have two people (hypothetical example and numbers). #1 has the higher income and projected SS benefit at 65 is $1000. #2 either qualifies on their own benefit at $750 or did not work and qualifies on spousal benefit, $500.

If one dies, the survivor collects the highest of the two and loses the other benefit.

Well, if I stayed in my house my taxes and utilities would not be half. Food would be a little less, health care would be a little less. Some expenses might be more due to hiring people to do things or a single person eating out more with friends for example.

I only mention this as I feel it is very dangerous to figure two full social security benefits unless you have a rare situation like a friend of mine whose father died and later that day mother died of a heart attack from the shock.

 

[GLM]

I think age and assets need to be considered in a big way when estimating SS benefits. Most on this board are saving and when - not if - push comes to shove those who have saved will be considered wealthy and be subject to more severe cuts than those who have not planned. The same will be true with Medicare- those with more income already pay more for coverage and I expect it to get a lot worse.

Any figure I come up with is a guess but totally ignoring SS would impact FIRE in a big way. I curently use 60% of stated benefits in planning. We are age 51 & 49. With a soft retirement Date of 2014, we will have to continually recalculate as things evolve.

Bottom line is we do not plan on retiring untill we can affored a basic existance without any SS. Given the hefty health costs I expect seniors to carry as budgets tighten, I feel even a bare bones budget requires slack for escalating costs. Our subsistance budget is almost 1/2 of our planned goal. The reduced socal security benifit for the last remaining spouse is 22% of this goal income. Socal secutiy benefit while we are both around will contribute 11% more . So as we are saving to provide 66% of the loftier planned income I think having 30% over subsistance is a comfortable cushion - as far as current planning goes.

As we do not want to live a bare bones existance we continue to save and monitor the situation.

 

[GLM]

Nice to hear others thoughts on this topic!

 

[cute fuzzy bunny]

No way is any political party going to dump on all those VOTING baby boomers.

Just remember that it wont be a particularly long time before the weight of voting 20-50 year olds outweighs an aged, shrinking volume of baby boomers.


Somewhere along the line, that mass of folks will get tired of paying into a system that may not be around to pay them back.

 

[REWahoo]

Just remember that it wont be a particularly long time before the weight of voting 20-50 year olds outweighs an aged, shrinking volume of baby boomers.

Somewhere along the line, that mass of folks will get tired of paying into a system that may not be around to pay them back.

Yeah, but by that time we'll have lined our pockets with your labor and be too danged old to care!

OK, maybe not YOUR labor...

 

[cute fuzzy bunny]

yeah, you old farts'll be getting no more money from me

You're getting some from my wife though. I'll send her your regards...

 

[Zoocat]

Just remember that it wont be a particularly long time before the weight of voting 20-50 year olds outweighs an aged, shrinking volume of baby boomers.

Somewhere along the line, that mass of folks will get tired of paying into a system that may not be around to pay them back.

I have wondered about this. When younger people (in the near future) see how difficult it is to survive as a retired person on social security and medicare, what will their reaction be? Will they really be pissed off and not want to pay taxes to support their elderly relatives? Or will they want to make the system better so that they themselves will benefit in the future?

Did anyone see the segment on 60 minutes Sunday eve about the impending financial crisis when all of us retire?

 

[MasterBlaster]

When younger people (in the near future) see how difficult it is to survive as a retired person on social security and medicare, what will their reaction be? Will they really be pissed off and not want to pay taxes to support their elderly relatives?

I believe the way to phrase this is... How much MORE are they willing to pay. It just may be that they are may not be willing (or able) to pay enough to keep these benefits (SS and Medicare) going with the present configuration. It is not that younger people don't have compassion for older people, it's just that their compassion will have limits. You would feel and act the same under their circumstances.