Does your retirement planning account for Social Security insolvency?

[HawaiiShrimp]

Does your retirement planning account for Social Security insolvency?

Yes, I plan on it going to zero. By the time when I am qualified, it's fine if it's available. It's also fine if it's not.

 

[Dtail]

I do factor in SS in our calculations. It is not reasonable to expect it to go to zero. Kind of like increasing one's expenses 50% in the calculations just in case.
Besides the DGF is already receiving SS.

 

[FLSUnFIRE]

SS is in my cashflow projection sheet but I should not "need" it under most scenarios but there are a lot of unknowns in the next ~50 years for me (on the expense side and market/economy side).



I don't see politicians cutting SS, maybe reducing cola or some limited means testing (more symbolic than significant to solvency) but people feel they paid in (even though there is no "lockbox") so there would be a lot of political pain. The young population boom that now that expect the gov't pay for their student loans will also expect to be taken care of in their old age... and by then will have paid enough in SS taxes that they too feel entitled to full benefits.

 

[corn18]

It really is a catch 22. If you don't plan for it, you have to work longer to retire AND you can't spend as much in the gogo years. If you do plan for it and it goes away, you may go broke. Roll the dice, take your chances.

 

[aja8888]

Our retirement calcs use SS as the main component as we have no pensions. Right now, SS covers all our routine expenses. We will be dust when SS is unfunded or reduced as we are in our late 70's.

Hopefully, the kids will have a great time with our remaining nest egg and house sale funds.

 

[NW-Bound]

"Does your retirement planning account for Social Security insolvency?"

This was an issue when I started ER when I was 55. Now that I am older, with reduction of expenses à la Bernicke prognostication plus the largesse of the market god, I don't worry about it anymore. That gives me more time to ponder about my health, and how to spend money to "buy or rent" some pleasure.

SS cannot go away completely. That would cause too much bloodshed out in the street. What the government corrective action will be to alleviate the shortfall, I am not sure, but higher taxes in various forms will surely be part of it. I will still get SS but get taxed more elsewhere to compensate for it. That's fine with me if I can maintain my current stash.

 

[FlaMariner]

I entered it at 50% but most importantly, I'm glad that it has no impact on our success....so I've taken out the bump and will consider it "lagniappe".

(I've learned w/experiences thus far in life to never depend on the government for anything)

 

[Koolau]

Does your retirement planning account for Social Security insolvency?

Yes, I plan on it going to zero. By the time when I am qualified, it's fine if it's available. It's also fine if it's not.

THIS was my planning back in the day - that SS would not even be a factor in my Early Retirement. As it has turned out, I waited to 70 to collect and SS is easily 1/3 of my income now. My guess is, most folks "planning" for a SS haircut will be disappointed - in a GOOD way. No hair cuts. Congresspersons want to stay in office. YMMV

 

[ERhoosier]

No. Social Security is still the third rail of American politics (i.e. touch it and see your political career die).. Our Congresscritters will find a way to “save” Social Security just in time for an election. Heck, why don’t they just ask the Fed to create some more money out of thin air and dump it into the trust fund. They seem to be willing to do that for everything else.

That was also the belief back in '83 when the Feds decided to start taxing 50% of it as income. Feds passed that with broad bipartisan support. And increased the percentage of SS benefits subject to income tax to 85% in '93.

IMHO- eventually the Feds will tax all of SS as income, then begin "means testing" the benefits in some fashion similar to reducing benefits for those below 70 with earned income (above a certain level).

 

[Koolau]

That was also the belief back in '83 when the Feds decided to start taxing 50% of it as income. Feds passed that with broad bipartisan support. And increased the percentage of SS benefits subject to income tax to 85% in '93.

IMHO- eventually the Feds will tax all of SS as income, then begin "means testing" the benefits in some fashion similar to reducing benefits for those below 70 with earned income (above a certain level).

Going from taxing 85% to 100% isn't a big deal to most folks that would be affected. Back in '83, taxing SS wasn't much of a big deal to those it actually affected. BUT it was a "stealth" type of provision. It wasn't indexed, so now it affects almost everyone.

And, of course, "everyone" hates "rich people" so everyone will be fine with means testing - until they realize that THEY are The Rich (or will soon become Rich.)

I look for a similar sort of bait and switch when SS is finally "fixed." It will "seem" like a mere pittance and everyone will "hail" it as "fair." They will all realize, too late, that THEY will be affected - maybe significantly in time. I was wrong, once, so YMMV as always.

 

[Gumby]

If taxation is the art of plucking the most feathers from the goose with the least amount of hissing, my predictions for a social security fix include these.

1. Make 100% of benefits taxable with some short phase in.
2. Increase the maximum social security taxed earnings and institute a third "bend point" at the current limit.
3. Increase FRA by one or two years for people currently under 27. Phase the increase in like the last time.
4. Increase the wage tax rate by something like 0.5%

I think enough people don't understand or don't care enough about these particular things that they will be possible.

If they really wanted to be bold, they could pick a date maybe 35 years in the future and declare that anyone turning 62 after that is eligible only for social security on their own work record, thus eliminating spousal and survivor benefits.

 

[Physics Guy]

I ignore SS in calculations. My wife will have some but it is fairly small as we have been a one income family by choice for the past 20 years. I don't have SS since I've been a teacher in a system that doesn't do SS.

 

[ProspectiveBum]

No. DW and I have been max SS earners for most of our careers. DW’s been a stay-at-home mom for the last 5 years, but with her claiming at 62 and me claiming at 70, it figures to be $70k in today’s dollars. If I pretend those funds aren’t going to be available, I’ll end up working much longer than necessary since I think the chances of the program going away are nil. I should be retiring right around the time Congress finally decides to fix it, so will have a better idea of the impacts before I pull the trigger.

 

[RetiriusMinimus]

in my Fidelity Retirement planner i dropped my SS estimate by 25% for life of plan. im 60 and hope to retire March 2024...

using firecalc, and my "pseudo bare bones budget" i just make it past the 100% goal line without SS.

as others have said there is so much political equity wrapped up in SS there would be civil war if they dropped it. so they'll need to reduce payments, play with FRA, etc i would assume. more can kicking.

i tell my kids save. invest. save. they're quite frugal for early 20's so im hopeful they'll be prepared and im hoping i can leave them a little something....

 

[oldtimer]

If taxation is the art of plucking the most feathers from the goose with the least amount of hissing, my predictions for a social security fix include these.

1. Make 100% of benefits taxable with some short phase in.
2. Increase the maximum social security taxed earnings and institute a third "bend point" at the current limit.
3. Increase FRA by one or two years for people currently under 27. Phase the increase in like the last time.
4. Increase the wage tax rate by something like 0.5%

I think enough people don't understand or don't care enough about these particular things that they will be possible.

If they really wanted to be bold, they could pick a date maybe 35 years in the future and declare that anyone turning 62 after that is eligible only for social security on their own work record, thus eliminating spousal and survivor benefits.

Gumby, you & I are thinking along the same lines.
1. Make 100% of benefits above the 1st bend point taxable.
2. Add a 3rd bend point at the current maximum SS benefit, then freeze it until the 2nd bend point inflates over time to the 3rd bend point cap before allowing the cap to inflate with the 2nd bend point . And make 100% of earned income FICA taxable.
3. Increase FRA to 68 for those born in 1980-1999, to 68 for those born in 2000-2019, and 70 for those born 2020+.
4. Increase wage tax from 6.2% to 6.5% for both employee & employer, 13.0% total.

 

[gayl]

To answer the OP: my retirement plan did not take SSA into account. Happy when I finally got it