High Employment Rate Impact on SSI Pending Shortfall?

[Red Badger]

Sooo, with the US experiencing a few years (and maybe a few more) of very high employment and some recent wage growth, do you think this will fend off the looming SS shortfall, if only for a short period?

This is not at all a rhetorical question, DW and I are both filing this month, and I do want to get my dirty little mitts on every possible penny before we face the potential for mutual haircuts.

Since inquiring minds here might want to know.... I just recently turned 62 and DW hits FRA this month. She was a SAHM, so her spousal benefit will never increase beyond where it is. There is also no "file and suspend' secret sauce. Of course, if I go tits up first, she's left with my reduced benefit (less than FRA, 70, etc), but that's her problem. Just kidding!!!!! My pensions, our portfolio, and generous health insurance will, if needed, see her safely through to the other side. Our almost paid off house is our LTC $$, if needed.

Anyway, I'm hoping the economic uptick keeps us all on the full dole for a little longer.

 

[Marc]

Higher employment helps but I think lower interest rates (on funds social security trust fund loans to rest of government) counteracts; I have no idea which effect is larger.

Marc

 

[Theo]

 

[Mdlerth]

If I delay SS till 70 and then get a haircut, I'll be <expletive deleted>

Since I'm not on staff at the Social Security Administration, I'm not privy to what data go into their calculations. But I can speculate with the best of them!

If I can retrieve the following Total Employment data from the Bureau of Labor Statistics, then surely SSA can as well. I see a predictable slope interrupted by the occasional recessionary dip, and I'd bet it's already baked into their predictions of fund runout.

Of course, the fine folks at SSA also probably are routinely asked to update their predictions so, depending on where we are on the curve, their forecast might change.

I can make one guaranteed prediction. When I FIRE, the total will go down by 1.

 

[joeea]

Sooo, with the US experiencing a few years (and maybe a few more) of very high employment and some recent wage growth, do you think this will fend off the looming SS shortfall, if only for a short period?

No. At best it will be an exceedingly minimal impact.

This is not at all a rhetorical question, DW and I are both filing this month, and I do want to get my dirty little mitts on every possible penny before we face the potential for mutual haircuts.

Don't expect anything at all to change for the foreseeable future.

Since inquiring minds here might want to know.... I just recently turned 62 and DW hits FRA this month. She was a SAHM, so her spousal benefit will never increase beyond where it is. There is also no "file and suspend' secret sauce. Of course, if I go tits up first, she's left with my reduced benefit (less than FRA, 70, etc), but that's her problem. Just kidding!!!!!

Okay. Maybe she should take a look at https://opensocialsecurity.com/ to learn the impact of your decision, so that she can be better prepared for her problem.

My pensions, our portfolio, and generous health insurance will, if needed, see her safely through to the other side. Our almost paid off house is our LTC $$, if needed.

I don't really understand the whole "house is our LTC" thought process, but good luck.

Anyway, I'm hoping the economic uptick keeps us all on the full dole for a little longer.

Don't expect to be able to detect any changes.

 

[Red Badger]

Okay. Maybe she should take a look at https://opensocialsecurity.com/ to learn the impact of your decision, so that she can be better prepared for her problem.

We did. It was our decision. Neither of us see it as a problem. Have a blessed day.

 

[joeea]

Okay. Maybe she should take a look at https://opensocialsecurity.com/ to learn the impact of your decision, so that she can be better prepared for her problem.

We did. It was our decision. Neither of us see it as a problem. Have a blessed day.

As long as people make an informed decision, it's always theirs to make.

Do you remember if you both played with the Advanced Options and selected different ages of death to see how a potential long life might impact the survivor? Do you recall how much difference in lifetime income there was between an optimal plan and yours?

Stay well.

 

[flyingaway]

As long as people make an informed decision, it's always theirs to make.

Do you remember if you both played with the Advanced Options and selected different ages of death to see how a potential long life might impact the survivor? Do you recall how much difference in lifetime income there was between an optimal plan and yours?

Stay well.

If more people pay into SS, I expect more people to claim it.

 

[joeea]

If more people pay into SS, I expect more people to claim it.

Sure. And the more people pay into SS, the more they will get out, in general.

But that has nothing to do with using https://opensocialsecurity.com/ to help optimize claiming strategies.

 

[karen1972]

Doesn't it really depends on who the people are that are working?

I mean if I work now I'm past the 2nd bend point so adding 85 cents for every dollar to the plus side.

However, if you are a person who didn't have enough credits and now works and gets to the minimum, that will likely take out more than add.

I think looking at % employed is not a correct metric as the problem was always more baby boomers than next generation thus its the Total # employed that actually matters, not % of those in the 18-65 range.

 

[Red Badger]

Do you recall how much difference in lifetime income there was between an optimal plan and yours?

Stay well.

We did model different scenarios. What made our decision was this. The monthly difference for my SS at FRA would be approx $600/month. That's not chicken feed, but neither of us saw it a life changing. We are in solid alignment that the aforementioned legs of our stool (pension, portfolio) plus SSI cover our living expenses now, and will do so in the future. If one of us is gone, the single SSI is still sufficient.

Here's what else stood out. In delaying to just FRA we would leave well over $160K on the table. It would take about 22 years (in today's dollars) for the ROI to occur. Assuming we're still drawing breath, she'll be 92 and I'll be 89. We prefer the money now. Again, that's just us. We both have some health issues. Also, neither of us have bloodlines with a history of longevity. All four of our parents were in the ground long before then. As others have stated on this forum, living long enough to regret our choice would be a beautiful problem.

Having been around here for a few years, I know that claiming strategies are as well concluded and consensus driven as paying off the mortgage (or not) prior to retirement. (we ain't doing that either). There are many strong opinions and no one answer is correct. In both of those matters, we've done our due diligence and decided accordingly.

Anyhoo, back to my OP. I actually think that our "bold, courageous, and forward thinking congress" will act to stave off the pending shortfall. If not, that's survivable as well.

 

[Walt34]

Anyhoo, back to my OP. I actually think that our "bold, courageous, and forward thinking congress" will act to stave off the pending shortfall. <snip>

I am quite certain that for as long as the boomers are a considerable voting block that is exactly what will happen.

When they are not, well, I suppose anything could happen....

 

[joeea]

We did model different scenarios. What made our decision was this. The monthly difference for my SS at FRA would be approx $600/month. That's not chicken feed, but neither of us saw it a life changing.

You must be doing well to turn down an extra $7,200/year for the rest of your joint lives. Good for you! Sounds like both of you have similar benefits (and not a higher earner/ lower earner situation)?

Here's what else stood out. In delaying to just FRA we would leave well over $160K on the table. It would take about 22 years (in today's dollars) for the ROI to occur. Assuming we're still drawing breath, she'll be 92 and I'll be 89.

Hmm, that doesn't sound right. I've never seen a "break even" analysis that went beyond early 80s.

We prefer the money now. Again, that's just us.

It's not just you. 62 is the most popular age to begin collecting. Many people seem to prefer less money now rather than more money later and more money overall.

We both have some health issues. Also, neither of us have bloodlines with a history of longevity. All four of our parents were in the ground long before then. As others have stated on this forum, living long enough to regret our choice would be a beautiful problem.

Sorry to hear that. Health issues leading to a very short lifespan is a good reason to claim early.

Anyhoo, back to my OP. I actually think that our "bold, courageous, and forward thinking congress" will act to stave off the pending shortfall. If not, that's survivable as well.

Sounds like it won't matter much either way for your situation.

But I too think that congress will find a way to fund SS benefits before across-the-board cuts take effect.

 

[joeea]

I am quite certain that for as long as the boomers are a considerable voting block that is exactly what will happen.

When they are not, well, I suppose anything could happen....

Because the non-boomers don't want to get their promised benefits, even though 20 percent or more will be the right age?

 

[NW-Bound]

The Youtube poster graciously included the following transcript:

Alan Greenspan: "I wouldn't say the pay-as-you-go benefits are insecure in the sense that there is nothing to prevent the Federal Government from creating as much money as it wants and paying it to somebody. The question is, how do you set up a system which assures that the real assets are created which those benefits are employed to purchase? So it is not a question of security. It is a question of the structure of a financial system which assures that the real resources are created for retirement as distinct from the cash. The cash itself is nice to have, but it has got to be in the context of the real resources being created at the time those benefits are paid and so that you can purchase real resources with the benefits, which of course are cash."

What Greenspan was saying is that retirees could have all the money, but if there were nothing for them to buy, no workers to provide them with services, the cash would not mean anything.

Now, no matter what you think of Greenspan as a Fed chairman, he is still an economist, and what he pointed out above, laymen might not realize or appreciate.

 

[Red Badger]

Hmm, that doesn't sound right. I've never seen a "break even" analysis that went beyond early 80s.

Because DW has only spousal benefit, we have to forego 100% of that until I file. Therein lies the crux of our filing decision.

 

[GenXguy]

We did model different scenarios. What made our decision was this. The monthly difference for my SS at FRA would be approx $600/month. That's not chicken feed, but neither of us saw it a life changing. We are in solid alignment that the aforementioned legs of our stool (pension, portfolio) plus SSI cover our living expenses now, and will do so in the future. If one of us is gone, the single SSI is still sufficient.

Hmmmm. The subject and references here refer to SSI (SUPPLEMENTAL SECURITY INCOME), but others refer to SS. Not sure if you really meant SSI at all.

It's not the same as regular SS benefits.

https://www.ssa.gov/ssi/text-over-ussi.htm

SSI is financed by general funds of the U.S. Treasury--personal income taxes, corporate and other taxes. Social Security taxes collected under the Federal Insurance Contributions Act (FICA) or the Self-Employment Contributions Act (SECA) do not fund the SSI program.

 

[joeea]

Hmm, that doesn't sound right. I've never seen a "break even" analysis that went beyond early 80s.

Because DW has only spousal benefit, we have to forego 100% of that until I file. Therein lies the crux of our filing decision.

I still question the "break even" analysis. Without knowing the PIAs and birth dates, we can't independently analyze your situation.

But I'd be very surprised if it actually took you as long as you expect to reach "break even" by delaying until your FRAs.

And of course survivor benefits operate differently.

 

[joeea]

What Greenspan was saying is that retirees could have all the money, but if there were nothing for them to buy, no workers to provide them with services, the cash would not mean anything.

Right.

If there there is nothing to buy and no workers to provide services, everyone would be screwed - not just retirees.

Call me crazy, but I'm betting there will always be things to buy and people to sell their services.

On the other hand, if I had all the money, I'd make sure you were all taken care of. Count on it.

 

[bolt]

As well as

Theres no QE restraint:

I suggest watching his protegete's face.

 

[bolt]

As well as

Theres no capital restraint:

I suggest watching his protegete's face, that says it all!
.
I studied this money thing in the USA for decades.
What do most people get up in the a.m for?

Yes, to do business to make capital.
Banks actually do "make", fabricate money, via Debt.
Oooo yahhh....

 

[NW-Bound]

Right.

If there there is nothing to buy and no workers to provide services, everyone would be screwed - not just retirees.

Call me crazy, but I'm betting there will always be things to buy and people to sell their services.

On the other hand, if I had all the money, I'd make sure you were all taken care of. Count on it.

Strictly speaking, there will most likely be goods and services to purchase, all the time. However, it does not mean it has to be at prices affordable to the masses.

I read that in Caracas even now, the rich people still party like nothing has happened.

 

[FIREchief]

My 2019 SSA statement shows that the trust fund will be able to pay 79% of benefits in 2034. The 2018 statement indicated 77%. So, yes, it appears that there has been some incremental improvement in the situation. If that 2% improvement continues every year, the fund would become balanced prior to the feared reductions in benefits.

Sorry to stick this silver lining around the dark cloud.