Something I've always wondered

[dixonge]

I should have left that comment out - it wasn't my main point.
However, from the IRS 1040 instructions (2018 is the latest I have):
SocSec / Medicare = 41%
Social programs = 22%

Defense = 20%
Interest on the debt = 8%
Comm development = 7%
Law enforcement/general govt = 2%


What are your "other 2"?

I think the main difference is how SS and Medicare are handled. There is a trust fund involved, with the intention of holding funds in escrow on an individual basis. In practice, it lost that structure a long time ago. Still, most of Medicare seems to be financially healthy, with the exception of Part B

https://www.taxpolicycenter.org/briefing-book/what-medicare-trust-fund-and-how-it-financed

SS looking pretty strong too:

https://www.taxpolicycenter.org/briefing-book/what-are-social-security-trust-funds-and-how-are-they-financed

There is a direct in/out nature to these funds. Money is deducted for each *specifically* - unlike the rest of the Government budget coming from general taxes.

 

[OldShooter]

... There is a trust fund involved ... most of Medicare seems to be financially healthy ... SS looking pretty strong too ...

Sorry, and with respect, do you also believe in the Easter Bunny? Those "trust funds" simply hold IOUs from the government. There is no actual money there. Generally, a trust fund is managed by a fiduciary who holds and invests money for the benefit of the beneficiary(s). There is nothing like that here. Every dime drawn from the "trust funds" is simply a government expenditure like any other.

 

[pb4uski]

SS and retirement don't have to go hand-in-hand. Many of us did or will do both - FIRE and SS at 70.

Pardon me.

'FIRE' means Financial Independent / Retire Early.

If you must wait to 70 years old, that is NOT retiring 'early'.

Oops, we got another one.

 

[Dtail]

Oops, we got another one.

Very good. See what a missing comma brings?

 

[pb4uski]

Sorry, and with respect, do you also believe in the Easter Bunny? Those "trust funds" simply hold IOUs from the government. There is no actual money there. Generally, a trust fund is managed by a fiduciary who holds and invests money for the benefit of the beneficiary(s). There is nothing like that here. Every dime drawn from the "trust funds" is simply a government expenditure like any other.

WADR, I think you're clueless as to how the SS Trust Fund is structured and operates.

So in your view, if a private trust run by a board of trustees buys US government bonds then it isn't a trust?

I guess if you think a special purpose US government bond as an IOU then perhaps you're correct....

By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.

In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash.

If there was a surplus rather than a deficit (think Clinton years) then any redemptions from the SS Trust Fund would not require more debt.

 

[beowulf]

There are probably millions of 62-65 year olds who would dispute that.

Absolutely, positively true. If you take SS before you are 65 and eligible for Medicare, there will be an effort by the gov to sign you up for Medicare at 65. By receiving SS, you are automatically signed up for Medicare Part A. You can turn that down, but why would anyone in their right mind do That? But it’s a choice, not a mandate. They will try to scare you with info about a 10% yearly penalty if you don’t sign up. But it’s still your choice. And, if you do sign up, you can stop it at any point - but the 10% penalty kicks in if you ever want it again.

I do know several people who turned down Medicare and stayed with their FEHB insurance. Every one of them regretted that mistake once they hit their mid 70s. And, if you want to take advantage of TRICARE for Lofe, you have no choice but to sign up for Medicare.

 

[beowulf]

I think age 70 might be stretching the 'RE' of FIRE a bit, don't you? LOL

Agree completely. I retired at 64 and my wife retired at 60. I don’t consider either of us RE. I joined the list when I could have been RE, but was not in a financial position to do so. While there is no real definition of RE, it seems that many of the people on this board look at age 50 and below true RE. YMMV. Of course, if you planned to retire at 85 and did so at 70, it would be RE in your mind.

 

[beowulf]

Sorry, and with respect, do you also believe in the Easter Bunny? Those "trust funds" simply hold IOUs from the government. There is no actual money there. Generally, a trust fund is managed by a fiduciary who holds and invests money for the benefit of the beneficiary(s). There is nothing like that here. Every dime drawn from the "trust funds" is simply a government expenditure like any other.

Using your definition, the Series I savings bonds from the early 2000s that we own, and which pay about 5.5% annually at this time are worthless and not backed by anything except the good faith of the US. Since that’s exactly what the SS Trust Fund is backed by, as well as the Medicare surplus, the dollar is worthless and we will never receive any value for what is held by the government. I assume you realize that companies go bankrupt, their stock and bonds they issued become worthless and investors lose everything.

If the US dollar becomes worthless, then so,does everything else that’s dollar denominated - your house, your car, your investments, etc. like in Germany in the early 1920s. Hyperinflation has and does happen. Hopefully it will not in the US.

My suggestion is that you turn all your assets into gold, platinum and weapons and put them under your mattress. A bit lumpy and hard to spend at the corner grocery or gas station, but you’ll be happier. But then again, maybe not, you definitely are not an optimist. More like doom, gloom and the end of the world.

 

[beowulf]

Yes.

How are you doing it if you are years out from both SS and Medicare. The question was “Is that what you are doing?” It wasn’t what are you planning to do, or what are you going to do. I know that I was assuming that you were actually doing what you preach, until someone outed you for the troll you are. Since you don’t have much proverbial skin in the game SS wise since you retired so early and will have a lot of zeros in you benefit calculation, you may not have a lot to lose by not applying. Still doesn’t make sense not to as it’s just a few minutes online. Medicare is yet further out in your future - you can turn it down or take it. I could not care less. But your argument that people should pass it up because it’s too much trouble and you can negotiate better prices is totally specious and ignorant. You do whatever you want. But your advice is terrible.

 

[OldShooter]

WADR, I think you're clueless as to how the SS Trust Fund is structured and operates.

So in your view, if a private trust run by a board of trustees buys US government bonds then it isn't a trust?

I guess if you think a special purpose US government bond as an IOU then perhaps you're correct....

My point is that these so-called "trust funds" are just a paper sham constructed by the government claiming it owes money to itself. The "funds" are really only bookkeeping records of the money that the government has collected under color of the entitlements but immediately spent.

With government bonds held by an outside party, the government has a legal obligation to pay them back. There is no one to whom the government is legally obligated to pay the "trust funds." At some point in the future when the government reduces benefits, try suing and see how far that gets you. Or watch and wait to see if the trustees of the funds sue to get the cash. Watch and wait for a long time, IMO ...

 

[Helen]

John,

You posted this back in 2017:

Toyota Camry 2002. Runs great!
House is 3 bed 2.5 bath, 2 car garage, 1920 sq ft.

All debts paid.

Monthly expenses:
HouseIns+Tax 277.07
MGE 47.65 (nat gas)
KCPL 28.30 (solar on roof)
Water/Sewer 64.90
TV/Net 4.17 (google fiber free plan expires in 4 years)
Food/Gas 156.00 ($129 for food, grow some myself)
CarIns 32.83
HealthIns 100.00 (health care sharing ministry)
DentalIns 22.98
Total 733.90

If anyone has ideas on how to go lower, I'd love to hear them.

That's a pretty slim budget, are you really not planning on taking SS?

Also, would you really walk away from Medicare because it's too much of an effort to enroll? Do you still use a health care sharing ministry in lieu of health insurance?

Just asking because if I were in your shoes I would be jumping at the chance to sign up for both SS and Medicare. I find it difficult to understand your logic.

 

[KrisQuit]

John,

You posted this back in 2017:

That's a pretty slim budget, are you really not planning on taking SS?

Also, would you really walk away from Medicare because it's too much of an effort to enroll? Do you still use a health care sharing ministry in lieu of health insurance?

Just asking because if I were in your shoes I would be jumping at the chance to sign up for both SS and Medicare. I find it difficult to understand your logic.

Where’s my Jiffy Pop?

 

[aja8888]

Where’s my Jiffy Pop?

Right here:

 

[RunningBum]

John,

You posted this back in 2017:



That's a pretty slim budget, are you really not planning on taking SS?

Also, would you really walk away from Medicare because it's too much of an effort to enroll? Do you still use a health care sharing ministry in lieu of health insurance?

Just asking because if I were in your shoes I would be jumping at the chance to sign up for both SS and Medicare. I find it difficult to understand your logic.

He also said

I'm not very good at investing but I'm great at saving

 

[beowulf]

My point is that these so-called "trust funds" are just a paper sham constructed by the government claiming it owes money to itself. The "funds" are really only bookkeeping records of the money that the government has collected under color of the entitlements but immediately spent.

Once we went off the gold standard, everything our government does is paper bookkeeping. That's the price of progress. Since we elect our government, just how likely do you think it is that our politicians will allow severe cuts to social programs like SS and Medicare or to other major programs? Representatives, subject to 2 year election cycles, are especially vulnerable to the election cycles. Senators have more time, but are still subject to voter anger on monetary matters. Few things incense voters as much as being screwed over on benefits they believe they paid for. It may all be a house of cards, but you won't want to be here if it starts collapsing. Think 1918 in Imperial Russia, except here everyone has a gun.

 

[Dtail]

Right here:

Not traveling yet.....

 

[rk911]

At present age, 64, a bronze plan costs me 1250/mo. That's a crappy plan with a 6k deductable. Just extrapolation makes me think that at 65 a Medicare equivalent plan might cost me between 1500 and 2000/mo. Of course that would increase every year for age and inflation. Just a guess if I wanted to buy an annuity to pay that bill till I die it would be in the order of a million too.

Again, you can turn down your million.

don't know the specifics of a 'bronze plan' but my (age 69) medicare part b premium is $202 p/m, my BC/BS Plan F premium. is $210 p/m and my BC/BS Part D premium is $73 p/m. round that to $500 for the IRMA penalty and x2 for my wife who has the same plans but is a year younger. about half p/m if what you estimate.

 

[harllee]

I guarantee you the OP will take Medicare as soon as he can and will take SS at some point. I don't understand why he started this thread.

 

[EastWest Gal]

In my 30+ year career as a pediatrician I only made >$200K once, and half as a bonus, which I largely donated.

My neonatology colleagues cleared at least double that. I heard about a local orthopedic surgeon (with horrible bedside manner) making >$1M/yr. I was disgusted with the idea. My financial experience in the medical world drove me to quitting that entirely.

In 2015 reviewed my deceased aunt’s bills to try to reduce the Medicaid’s look back to reduce her son’s payment to the state.

A hospital charged $3K for use of a room waiting for a procedure. Medicaid paid $30. Both ends of the spectrum disgusted me. Somewhere into the middle is the answer.

Why does it all have to be so complicated?

 

[aja8888]

In my 30+ year career as a pediatrician I only made >$200K once, and half as a bonus, which I largely donated.

My neonatology colleagues cleared at least double that. I heard about a local orthopedic surgeon (with horrible bedside manner) making >$1M/yr. I was disgusted with the idea. My financial experience in the medical world drove me to quitting that entirely.

In 2015 reviewed my deceased aunt’s bills to try to reduce the Medicaid’s look back to reduce her son’s payment to the state.

A hospital charged $3K for use of a room waiting for a procedure. Medicaid paid $30. Both ends of the spectrum disgusted me. Somewhere into the middle is the answer.

Why does it all have to be so complicated?

Bold by me above. It's all about profits and greed. Drug system is worse....DW takes 11 meds and the costs are all over the place.

 

[bmcgonig]

don't know the specifics of a 'bronze plan' but my (age 69) medicare part b premium is $202 p/m, my BC/BS Plan F premium. is $210 p/m and my BC/BS Part D premium is $73 p/m. round that to $500 for the IRMA penalty and x2 for my wife who has the same plans but is a year younger. about half p/m if what you estimate.

You misunderstood the point. I was trying to estimate what a Medicare plan would cost if i had to buy under ACA and Medicare wasn't available.

 

[rk911]

You misunderstood the point. I was trying to estimate what a Medicare plan would cost if i had to buy under ACA and Medicare wasn't available.

ur right, i did. i have no experience with ACA plans (thankfully).

 

[harllee]

As someone who had the ACA and am now on Medicare with a supplement and drug coverage I can tell you from experience that Medicare is much better coverage, less deductibles and costs less than half what my ACA plan cost.

 

[njhowie]

John,

You posted this back in 2017:

HealthIns 100.00 (health care sharing ministry)

That's not health insurance - it is a gamble that they will pay your claims. Lots of unhappy folks out there who thought it was great up until they had a big bill and were denied.

 

[Dtail]

As someone who had the ACA and am now on Medicare with a supplement and drug coverage I can tell you from experience that Medicare is much better coverage, less deductibles and costs less than half what my ACA plan cost.

From my perspective, my ACA plan using Florida Blue is accepted by all doctors near me and minimal costs with of course MAGI management.
Iexpect Medicare coverage with a supplement to be more expensive with probably similar coverage, at least in state.