Life of Social Security Fund ??

[rkser]

Does Life of Social Security Trust Fund question when to claim yours ??

I am 66 & am planning to claim SS at age 70, although I can claim full retirement benefit now.

Reading reports about Social Security Trust Fund getting depleted in 2033, leaves me unsettled about my plan of waiting to claim.

Reading in the press about means testing to decrease % in the benefit etc goes against the fact that it is our money which we contributed .

Although they say the lawmakers who spearhead to decrease the SS benefit of seniors may see chances of not being favored in the elections.

On a personal level, I do not know waiting to claim will have the desired result of a higher benefit for me & the survivor benefit for DW.

Thoughts ?

 

[OldShooter]

Well, consider Clint Eastwood/Dirty Harry's famous line "...you've got to ask yourself one question: 'Do I feel lucky?' Well, do you, punk?"

SS has been referred to as the "third rail" of US politics. The politicians will protect it to the maximum extent possible, especially for current recipients. IMO, the pain will be visited on people who are not yet SS age, on the assumption that they will protest less. So for DW and me, we are not concerned.

 

[Sunset]

The SS fund "depletion" will result in SS only paying $~73% of the normal amounts.
This will be if lawmakers do nothing.

This will mean people getting smaller amounts will get 73% of their smaller amount, people getting the max will get 73% of the max.

I will vote against any lawmaker that damages SS payments to me via action or inaction, hopefully lots of others will as well, even if it goes against their entrenched party line.

I'm still waiting for age 70 claim as I'd rather have 73% of that than 73% of a lesser amount.

 

[pb4uski]

Does Life of Social Security Trust Fund question when to claim yours ??

I am 66 & am planning to claim SS at age 70, although I can claim full retirement benefit now.

Reading reports about Social Security Trust Fund getting depleted in 2033, leaves me unsettled about my plan of waiting to claim.

Reading in the press about means testing to decrease % in the benefit etc goes against the fact that it is our money which we contributed .

Although they say the lawmakers who spearhead to decrease the SS benefit of seniors may see chances of not being favored in the elections.

On a personal level, I do not know waiting to claim will have the desired result of a higher benefit for me & the survivor benefit for DW.

Thoughts ?

We are in a similiar situation... I am 67 and waiting until 70.

Keep in mind that "depleted" to use your words, doesn't mean that no social security benefits will be paid.... once the fund surplus is depleted in 2033, then SS taxes coming in would be sufficient to pay 77% of scheduled benefits.

If you use opensocialsecurity.com to assess alternative claiming strategies there is an option to assume that benefits will decrease by x% beginning in a year of your choosing.

 

[Jerry1]

I'm still waiting for age 70 claim as I'd rather have 73% of that than 73% of a lesser amount.

I didn’t wait until 70 because I went on disability but I would think that the above bolded statement would apply. It may shift the break even point out a little further (not sure, didn’t do the math) but either way you’d have more coming in monthly after the cut if you wait until 70 versus what you’d have had if you claimed earlier.

 

[Texas Proud]

Well, consider Clint Eastwood/Dirty Harry's famous line "...you've got to ask yourself one question: 'Do I feel lucky?' Well, do you, punk?"

SS has been referred to as the "third rail" of US politics. The politicians will protect it to the maximum extent possible, especially for current recipients. IMO, the pain will be visited on people who are not yet SS age, on the assumption that they will protest less. So for DW and me, we are not concerned.

+1 on this.... even when the fund is 'depleted' I cannot see that the politicians will not fund it some other way, even general funds... I would bet the vast majority of people who let it go 'bust' will be voted out of office on the next election after they do so...


And even if they do nothing and it drops to a lower level it will not affect me that much as I have enough already... so again would not claim before 70 even it was more likely than not it would reduce benefits...

 

[RunningBum]

The SS fund "depletion" will result in SS only paying $~73% of the normal amounts.
This will be if lawmakers do nothing.

This will mean people getting smaller amounts will get 73% of their smaller amount, people getting the max will get 73% of the max.

...

I'm still waiting for age 70 claim as I'd rather have 73% of that than 73% of a lesser amount.

I turn 62 later this year. My hesitation with the above logic is that I would get 100% of the smaller amount now, which pushes the breakeven way out if they cut all to 73% around the time I hit 70 or so.

For now I'll be holding off because taking SS at 62 would end any ACA subsidy. After 65, I am undecided. I'd like to think they won't touch benefits of those already eligible to collect, but the longer the shortfall is ignored, the more drastic the action will have to be.

 

[38Chevy454]

I think the root of the question being asked is how much of a haircut will potentially be made? What method of applying it? By means testing? By modifying eligibility ages? By across the board % reduction of payout? By increasing taxes paid on benefits? Or whatever the politicians come up with.

One thing is true, there will be a point where the amount of SS payments going out is more than the amount coming in to SS, if the current rules stay the same. That is the SS trust fund running out. It will happen, so many are planning on some sort of haircut coming. Politicians will need to address this, wait and see how it is resolved. As stated previously, any politicians that cause a serious reduction in SS payments will likely not stay elected. So how do they implement a reduction that can be acceptable to the public? Especially for active recipients or near future recipients? Or will there be no reductions and they determine a way to fund it at 100% of current levels? No matter what, it won't have any changes in the next couple years.

Lot of questions, no real answers. For OP rkser, I say if you don't need the SS now, stay on your plan for claiming at 70 while keeping aware of what politicians say.

 

[Midpack]

Glad I am 13 months from 70 yo, though DW is almost 3.5 years away.

When Congress does act (at the last minute), I hope they balance the pain between those still paying (without SS benefits) and SS beneficiaries. IMO it would not be fair to let one or the other bear all the pain, IOW it would not be fair to continue with 100% of current benefits for all. However, allowances will have to be made for those already on SS, mores for those who've been on SS for the longest.

Those looking for a painless solution are being unreasonable IMO. Those who claim 'but I'm entitled to 100% because of what I paid in' are willfully ignorant, we have known (or should) that the system is reaching a tipping point for decades. YMMV

 

[Car-Guy]

Well, consider Clint Eastwood/Dirty Harry's famous line "...you've got to ask yourself one question: 'Do I feel lucky?' Well, do you, punk?"

SS has been referred to as the "third rail" of US politics. The politicians will protect it to the maximum extent possible, especially for current recipients. IMO, the pain will be visited on people who are not yet SS age, on the assumption that they will protest less. So for DW and me, we are not concerned.

Far be it for me to challenge Dirty Harry and his model 29-2, but when talking about when to take SS, I prefer the adage, "A bird in the hand is worth two in the bush." Doesn't sounds as manly but what the heck.


Both the DW and I took ours at 62 and have never regretted it.

 

[DrRoy]

I read a story about this. Statistically, if you expect to be of average or better longevity, you will still be better off if you wait.

 

[braumeister]

IIRC, when the 1983 changes were enacted the system was extremely close to the point where full benefits were not guaranteed. So the track record would seem to indicate that Congress will take its time again. The 1983 revision phased changes to the FRA over many years, so I think they will do so again.

 

[copyright1997reloaded]

Being the cynic I am, I am in the camp that politicians will always take the easiest way out.

Given the above and given the treasury has a virtually unlimited amount of paper, the "easiest" solution will be a combination of:
1. "Tax the rich" = additional means testing and loss of some of their social security by high income folks.
2. Run (even higher) deficits to support the program for the low income folks.
Perhaps similar to what is done for Medicare.
3. Change the inflation adjustment calculation to lessen the impact of 2) over time, i.e. they can still keep their promise of not "reducing" social security but pay it out in less valuable dollars.

 

[Jerry1]

It’s a double edge (triple edge) sword. I don’t see any appetite to elect someone who has a plan to handle SS. If they handle SS while in office, they won’t get re-elected. And, if they don’t handle it, they won’t get re-elected. Who’s going to jump first? Unfortunately, as an electorate, we get what we vote for. We’ve been told for at least a decade (I think maybe two decades) and no one seems to be ready, willing or able to step up. That’s on us, the voter. Accordingly, I don’t see a resolution until the last minute. Maybe the last hour if we get our stuff together.

 

[jollystomper]

Between now and 2033 there will be 3 presidential elections and 5 congressional elections. No way can I predict what things will look like at the end. All I can do is plan for the worst case. In all likelihood it will not be as bad as the current worst case. I did the same planning for medical premiums before medicare, and it worked out, so I am hoping for the best again .

P.S. My current plan is to wait to 70 (I am currently 65) to maximize survivor benefits for DW.

 

[Car-Guy]

Being the cynic I am, I am in the camp that politicians will always take the easiest way out.

Given the above and given the treasury has a virtually unlimited amount of paper, the "easiest" solution will be a combination of:
1. "Tax the rich" = additional means testing and loss of some of their social security by high income folks.
2. Run (even higher) deficits to support the program for the low income folks.
Perhaps similar to what is done for Medicare.
3. Change the inflation adjustment calculation to lessen the impact of 2) over time, i.e. they can still keep their promise of not "reducing" social security but pay it out in less valuable dollars.

If we are voting , I opt for #1 and suggest they use the same income criteria that's used in assessing IRMAA surcharges for the rich. (I think I can say under those limits these days) That would work for me but that may be to simple for Congress. YMMV

 

[Montecfo]

IIRC, when the 1983 changes were enacted the system was extremely close to the point where full benefits were not guaranteed. So the track record would seem to indicate that Congress will take its time again. The 1983 revision phased changes to the FRA over many years, so I think they will do so again.

Yes. I would expect it to mirror the 1983 reforms. Extended retirement age for people over 45. Payroll tax increased. Full taxation of benefits. Maybe a change to the cola.

That is, a balanced approach.

And yes we are some way from disaster and no consensus has emerged.

But if we voters elect people who share our concerns there can be action sooner. There at least is discussion now though too much is along the lines of increasing benefits.

 

[MichaelB]

I suspect the use of chained CPI will figure in any proposed solution, simply because it is both effective and difficult parse.

 

[jazz4cash]

.

One thing is true, there will be a point where the amount of SS payments going out is more than the amount coming in to SS, if the current rules stay the same.

To be clear, we are well past this point already. Many headlines seem to imply that when the trust fund is depleted the benefits will be zero rather than 73% of the promised amount. The trust fund is the excess of collections plus interest over payments accumulated through approx 2019.

I think it is very easy to solve for the shortfall but very hard to reach an agreement on how to do it.

 

[Winemaker]

When I receive my projected benefits, I get an projected $4500/month amount in 5 years. While I was handsomely paid while I w*rked, I did not max out for most of my years. Probably 5. However, when I started w*rking in high school and college, I did earn over $12,000 in three of those years, 1977-79. I suspect those years are inflation adjusted now, and have really jacked up my projected benefit. While I played by the rules, busted my butt, I suspect I will have a large bulls-eye on my back.

 

[Jerry1]

Yes. I would expect it to mirror the 1983 reforms. Extended retirement age for people over 45. . . .

I have a problem with extending the retirement age. I worked in an office and probably could have worked to 70. My brother worked in construction and he barely made it to 62. We need to recognize that all jobs are not created equal when it comes to how long someone can work.

 

[mebden]

I have a problem with extending the retirement age. I worked in an office and probably could have worked to 70. My brother worked in construction and he barely made it to 62. We need to recognize that all jobs are not created equal when it comes to how long someone can work.

I agree 100% with you Jerry1. I've worked in the Trades for over 40 years and my age is 57 and sometimes I feel like I'm 90 lol

 

[Montecfo]

I have a problem with extending the retirement age. I worked in an office and probably could have worked to 70. My brother worked in construction and he barely made it to 62. We need to recognize that all jobs are not created equal when it comes to how long someone can work.

I hear you. I would not expect the 62 age to change. But the driver for an increase in full retirement age is average life expectancy which has risen about 5 years even since 1983. Obviously funding ever expanding retirements while at the same time using fewer workers per retiree is increasingly difficult and I think unlikely to continue.

And there is a limit to what folks will accept in new taxes, which is the alternative.

 

[timbervest]

All this means is that the SS Trust fund will have obligations to pay out more than it takes in (the trust fund monies are already being "borrowed' by the Federal government so what is in the trust fund is actually special government bonds that will be paid for out of then current tax revenue). I suspect that when the "Insolvency" occurs the government will either 1) cut benefits for future recipients (unlikely since Gen Xers and Millennials vote) or 2) they will raise taxes and borrow even more money to make up the gap.

They may raise the retirement age for FRA for future recipients or raise the cap on earnings (both "third rail" issues) but the likelihood that anyone receiving benefits at the time or for that matter most of the people on this forum would see amounts reduced is probably remote.

My opinion only - YMMV and please no flame.

**EDITED**

 

[jazz4cash]

Michelle Singletary from the Washington Post

https://www.washingtonpost.com/business/2023/04/07/social-security-shortfall-impact/