Social security means testing?

[I earned it]

Sorry if I wasn't clear

SS is already means tested if one considers that above a certain level it is taxed more and more. And, IIRC, that level is not indexed for inflation, thus increasing the tax level almost every year.

What I ment was if the monthly benefit that was projected will be reduced, taken away , if you have above a certain amount of income or for that matter asessts.

 

[youbet]

Why wouldn't I apply the risk factor to the variable that I actually think is at risk?

No reason whatsoever. For example, in my circumstances, I don't think my SS is at risk so I don't make any adjustments for it being reduced. However, I do think taxes (an expense) will be increasing and therefore I assume my expenses will be constant or slowly rise as I age as opposed to the theory that expenses decrease as you age. We all pay our money and we all get to take our chances on predicting the future.

I should be getting much more in SS than my pension, and I personally think SS is more at risk than the pension, so why would I adjust my pension assumption rather than SS?

Again, we all get to take a stab in the dark. I'm much less confident in my pension (or DW's State of Illinois pension) than I am in SS.

We're all busy guessing and making adjustments to models. In my case, I've come to my own personal conclusion that there are many factors that are indeed variables, not constants, and that developing a flexible lifestyle able to cope with unpredictable outcomes makes more sense than detailed models built on guesses. Much of it seems like measuring with a micrometer and cutting with an axe to me.

We all do it as we wish.

 

[daylatedollarshort]

What I ment was if the monthly benefit that was projected will be reduced, taken away , if you have above a certain amount of income or for that matter asessts.

I just try to leave a big pad / allow for Murphy's Law in my retirement plan. I used to do that with big project schedules at work and it worked well while most of the optimistically planned projects pretty consistently went down in flames.

I expect to have SS benefits reduced either outright or in some more subtle ways like tax brackets not indexed to inflation or chained CPI. Chained CPI almost passed once. But a SS benefit cut by any other name is still a benefit cut. I do think sooner or later wealth inequality will be addressed more than it currently is.

If we have to reduce assets, maybe we'll speed up donations and gifts to the kids instead of leaving money in our estate.

 

[Car-Guy]

SS is already means tested if one considers that above a certain level it is taxed more and more.

That is absolutely true and most people never talk (or maybe don't know) that. I fully expect (and fear) that the day will come that they will add additional means testing, probably by actual net worth (cash and assets). I've read about all sorts of "proposals" ranging from reducing or eliminating SS benefits for higher net worth individuals. Most of the time it seems to be targeting folks with 3 million or more in total net worth. Some sort of reform is coming. Reform, ha, that's a nice way to describe theft.

I know many here don't share that "perspective"... That's okay, I wish you good luck and I really hope you are right!

 

[youbet]

. As far as reducing my pension numbers I didn't do that at all, I factored it in at 100%. Don't depress me with what if my pension gets cut, you might as well tell me did I factor in that my investments will be nationalized.

Your pension might get cut. Entirely possible.

A political upheaval, war, natural calamity, etc., might cause the nationalization of land and capital and completely eliminate the ownership rights normally attached to passive investing.

Who knows? I'm not planning for either of those. But, WTF? It's possible.

 

[mpeirce]

If figure that if they crank up means testing some day (there is already SOME relating to taxing it)

1. If things go well, I don't need it

2. If things go poorly, means testing affect me

 

[nun]

I included WEP in my calculations, but went with the current rules and I have no idea what will happen in the future.

If I were to guess, means testing won't happen. When you look at what other countries have done to improve the finances of their systems the solution is usually increasing the retirement age and a progressive reduction in the rates used to calculate the benefit so that the poor don't see a reduction in their payments. The UK has taken an extreme approach by slowly increasing the retirement age of both women and men to age 67 and proposing age 68 after 2030 as life spans increase.The UK has also eliminated all earnings related components from social security. Everyone, no matter how much they earn, will get the same payment if they retire on or after 6th April 2016. This is larger than the basic UK state pension I would have qualified for as an expatriate, so I'm happy.

 

[akck]

I've always assumed SS taxed at 100%. During my accumulation phase, I used 0 SS, only factoring it in once I was 10 years away (50% I think), and 100% at 5 years. I figured the speed of government would grandfather me in at that point. I agree with others that once you're collecting, your benefit won't be cut, except for future CPI increases. Congress would be too afraid of the consequences and would most likely go after future generations. If I was starting over, I'd still follow the same plan, except I'd factor in SS into the plan at maybe 7 and 4 years before being able to collect at 62.


Sent from my iPad using Early Retirement Forum

 

[Midpack]

I believe 70% comes from the SS trustees' report.

It appears in many SS.gov documents, just one example of their current stance:

The concepts of solvency, sustainability, and budget impact are common in discussions of Social Security, but are not well understood. Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits. This increase in cost results from population aging, not because we are living longer, but because birth rates dropped from three to two children per woman. Importantly, this shortfall is basically stable after 2035; adjustments to taxes or benefits that offset the effects of the lower birth rate may restore solvency for the Social Security program on a sustainable basis for the foreseeable future. Finally, as Treasury debt securities (trust fund assets) are redeemed in the future, they will just be replaced with public debt. If trust fund assets are exhausted without reform, benefits will necessarily be lowered with no effect on budget deficits.

 

[Senator]

All the means testing scenarios seem to involve people with incomes greater than $250K. It is unlikely to happen as the system was designed for a pension program, not a welfare program.

Secondly, if they did means test, like others have said, it will be unlikely to affect people 55 years of age and older.

Thirdly, it would likely be phased in, and have a limited effect on most people.

Fourthly, the Government doesn't really have a 'trust fund' with money in it. It has the ability to print money. Printing money is the best way out of most financial problems for Governments. The USD is the reserve currency of the World, and will continue to be so for a long time.

I use the full amount of SS in my plans. I do over-estimate the amount of spending I actually need. If it does go away in any fashion, I am not worried about it.

 

[RetireAge50]

Market crashes, take away SS, get sick, whatever else. Not going to focus on or worry about these but will deal with them when they happen.

 

[Independent]

I started a poll on this back in 2011.

As expected, responses varied a lot by age. Older people expected higher percents of the current benefit formula.

The 40-49 group had a modal response of 75%, that was also the median. The mean was a little less.

Note that the poll was about "most likely". Many people intentionally use more conservative assumptions for when-to-retire decisions.

http://www.early-retirement.org/forums/f28/poll-are-you-expecting-social-security-56869.html

 

[CRLLS]

For those very close to the age of 62 and above, in order for you to believe that your SS would be impacted in any way, you would have to believe Congress would do something it has never done before

But isn't that exactly what they are doing with the elimination of F&S and deemed filing? I am 63 next week and my DW is already 63. While we were not "planning" on using that scenario when we file, it was nice to know it was an option. Now it will not be an option. IT does impact us.


So my point is, the cat is now out of the bag. We can no longer assume that benefits to those of SS age, whether collecting or not, will not be affected in the future.

 

[DEC-1982]

Market crashes, take away SS, get sick, whatever else. Not going to focus on or worry about these but will deal with them when they happen.

+1

 

[RetireAge50]

This was only 6.2% of my earnings so it has already been written off as a loss. If it comes back to me then it is a bonus.

 

[bizlady]

We are currently budgeted with a 25% cut, which we just recently added to our plan. I had felt fairly comfortable that once we hit 55 we were unlikely to see much of a cut and that any changes would be grandfathered.

However, the file and suspend change happened very quickly, and unless you are already 62, a married couple can no longer take advantage. So we have rethought our position.

At age 59, our plan is for DH to start 62, and me at 70. If we make it to age 62 I will feel more comfortable we will not be impacted by further changes.

 

[LARS]

However, the file and suspend change happened very quickly, and unless you are already 62, a married couple can no longer take advantage. So we have rethought our position.

I continue to think long lead times will be the norm for any Congressional action on SS as I suspect the F&S change was an anomaly for Congress. It was seen by them as closing a unintended loophole and not a change to SS per se.

 

[eta2020]

That is absolutely true and most people never talk (or maybe don't know) that. I fully expect (and fear) that the day will come that they will add additional means testing, probably by actual net worth (cash and assets). I've read about all sorts of "proposals" ranging from reducing or eliminating SS benefits for higher net worth individuals. Most of the time it seems to be targeting folks with 3 million or more in total net worth. Some sort of reform is coming. Reform, ha, that's a nice way to describe theft.

I know many here don't share that "perspective"... That's okay, I wish you good luck and I really hope you are right!

3 million dollars is not that big money compared to SS for high earning couple taking SS at 70.

I have more than that and I would not hesitate for one second to spend it all if they started to means test what we rightfully deserve.

I don't think means testing will save much money unless not giving SS to few very rich people looks like big saving. It will completely discourage everybody from saving in 401ks and IRAs.

Even "socialist" minded European countries are not that stupid as means test retirement benefits. At least I am not aware of it.....

 

[mpeirce]

But isn't that exactly what they are doing with the elimination of F&S and deemed filing?

This approach seems to be the "modern way". That is, rather than a bold stroke, it's tinkering around the edges. Those tinkering do add up though.

It's often the same with taxes. My simple minded engineer's mind says "spending is up 5% this year, so lets raise rates 5% across the board to pay for it." Of course that's now how it's done. There will be a "closing of loop holes" or an extra "fee" on something. Which is why the tax code is so very very huge. (And I know, simple deficit spending).

So I definitely expect lots of tinkering moving forward.

 

[eytonxav]

I didn't retire until I was 63, so didn't feel there would be much impact after I turned 60. Anyway, SS is already means tested, and that could certainly expand in the future, however, I think there will be other ways to secure SS in addition to means testing, including raising the FICA limit on wages and pushing out the retirement age, etc. That said, my analysis indicated I would still be alright if it went away or was diminished, but who knows what the market will dish out in the future or what age and health will bring, so I certainly hope its there for me and others without reduction.

 

[Options]

Quote:
For those very close to the age of 62 and above, in order for you to believe that your SS would be impacted in any way, you would have to believe Congress would do something it has never done before

But isn't that exactly what they are doing with the elimination of F&S and deemed filing? No. I am 63 next week and my DW is already 63. While we were not "planning" on using that scenario when we file, it was nice to know it was an option. Now it will not be an option. IT does impact us. At 63, you are not impacted.


So my point is, the cat is now out of the bag. We can no longer assume that benefits to those of SS age, whether collecting or not, will not be affected in the future.

Just the opposite. The manner in which these latest changes (closing a "loophole") were implemented (not affecting those over 62) reinforces the idea that this past practice will continue . See this:

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=176706&newpost=2684095

Specifically:

Currently, if you are younger than full retirement age, and you file for either a retirement benefit or a spousal benefit, the SSA checks to see whether you are eligible for the other type of benefit also (i.e., retirement or spousal). If you are, you are automatically “deemed” to have filed for that other benefit as well. You have no choice in the matter.

This deemed filing rule is the reason that, when people want to file a restricted application (i.e, an application to collect just spousal benefits while they allow their retirement benefit to continue growing), they must wait until full retirement age in order to do so.

For anybody who will be 62 or older as of 1/1/2016, there will be no changes to this deemed filing rule or to the restricted application strategy.

For anybody who will not yet be age 62 as of 1/1/2016, however, there are two big changes.

First, the deemed filing rule will be applicable regardless of age. That is, even if you have reached full retirement age, if you file for retirement benefits or spousal benefits and you are also eligible for the other type of benefit (spousal or retirement) at that time, you will be deemed to have filed for both types of benefits. This singlehandedly eliminates the restricted application strategy for those who are affected.

Second, deemed filing will now kick in immediately for anybody when they become eligible for either spousal or retirement benefits if they’re already collecting the other type of benefit. (Previously, deemed filing only kicked in when you were actually filing for something.)

Emphasis added

 

[jetpack]

I don't plan on getting any SS. I just hope they stop collecting it from me.

 

[RetireAge50]

I don't plan on getting any SS. I just hope they stop collecting it from me.

Seriously such a waste of money.

 

[I earned it]

I paid in more than 130,000 and my employer paid 130,000 , if I was able I'd like to know over the span of the 30 years what would that 260k have been worth if put into a sp500 fund

 

[Senator]

Seriously such a waste of money.

Actually for many retirees, SS is a key piece of the puzzle. It may seem like a waste of money for someone that is not yet close to retiring. For those that are close, it is maybe a bad investment but not a waste of money.

It certainly would be a shame to turn SS into a welfare program though.