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Old 08-26-2021, 07:08 PM   #61
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I don't understand the concept of running the scenario where there is NO SS. I, so far, have not seen any government official or economist say they believe there will be no SS, only that it *may* have a (I think) 24% reduction in payments. Seems to me that that should be the worse case scenario to plan with. Am I wrong?
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Old 08-26-2021, 07:21 PM   #62
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Originally Posted by daylatedollarshort View Post
Michael Kitces says that, "a maximum Social Security benefit of $2,642/month (for those who maxxed out the Social Security wage base for 35 years), the value of Social Security amounts to about $572,000 for men and $683,000 for women". Good for all the posters who aren't counting on SS in their retirement calculations, but we sure don't have the kind of savings to ignore SS amounts worth seven figures in our planning.


Nor do we. We aim to take it at ages 67-70 and it will be real money to us.

Using Kitchesí maximum number above, for example, two people drawing $2,642/month is $5,284/month or $63,408/year. Thatís equivalent to a $1,585,200 nest egg, using the 4% guideline.
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Old 08-26-2021, 07:31 PM   #63
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Exactly my point. How can people ignore a $1,500,000 nest egg (SS for a couple). Itís almost like having an IRA / pension but planning scenarios pretending that the balance may be $0 for whatever reason.
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Old 08-26-2021, 10:31 PM   #64
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Stash / 25-30 = SS No Worries.
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Did you mean, "Stash / 25-30 + SS No Worries?
I'm thinking that ShokWaveRider meant to say:

Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness.

Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Old 08-28-2021, 03:20 PM   #65
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....Using Kitchesí maximum number above, for example, two people drawing $2,642/month is $5,284/month or $63,408/year. Thatís equivalent to a $1,585,200 nest egg, using the 4% guideline.
Yes, but I wouldn't consider the $63K a figure to depend on for life, due to several factors:

1) Not everyone gets such a large SS check. My spouse falls under the WEP Act, for example. His SS check will be reduced by 60% due to his state pension income. If he ends up with $400/mo we'll be surprised. Needless to say, we're having him wait until age 70 to claim, LOL.

2) $63K for a couple sounds great until you remember that (a) life expectancy has dropped; and (b) the chances of a couple dying at the exact same time aren't very good, meaning the survivor now has 50% of what they had before - minus, of course, the amount that SSA claws back; e.g., the monthly benefit of the deceased's date of death.

3) If you're 5 yrs or more from retirement when the budget shortfall hits, it would not be surprising to see benefits trimmed. Maybe not by much, but between income taxes and a 5-10% reduction, it can be the difference for a retiree between having a small but comfortable cushion vs an uncomfortable "umm....we need to cut back a bit, dear."

4) Inflation is inevitable. Like it or not, historically it averages 3%/yr. We have all been very, very lucky to have such a long period of almost no inflation yet no deflationary effects. This will not last - change is natural. I agree with Powell/Fed Reserve that the current inflation rate is a blip, but we should count ourselves lucky if it steadies at a 'mere' 2.5%/annually. For a retiree, this means buying power may get halved within their lifetime.

So I'm in the camp that figures, 'hey, great if I get it, but we can survive without it." But in our situation that was 50% luck and 50% financial planning. We could easily have ended up in that "gotta cut back somewhere - AGAIN" group.
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Old 08-28-2021, 11:51 PM   #66
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^^^^^ All fine points about SS. Personally, I like a diversified portfolio of assets and revenue streams, including SS, because if I want to, I can conjure up similar dark clouds for stocks and bonds, too.
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Old 08-29-2021, 01:18 AM   #67
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For those of us between min & max retirement age, we want to calculate if we should claim prior to any legislated reduction in benefits for "future" retirees, or continue to wait until a later age.

We know the % (& thus $$) lifetime loss for each year prior to age 70.
The big question is how large any cut might be.
Even with a higher loss for claiming early, we may still want to claim "later."

If claiming "now" under current rules would cost me say 15% of my lifetime $$ vs age 70, that amount might be less than waiting to age 70 under "new" rules, because I still gain some % each year.

And as usual your choice for age of death is a huge factor; but you can plug in several.
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Old 08-29-2021, 04:51 AM   #68
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I agree there is zero chance that SS will just get cut/pay out nothing. Not viable politically or economically.

I do think a slow motion crisis may be building in a way that it hasn't in the last several decades due to that old monster -- inflation.

I'm of the opinion (note the word choice) that we are starting to see something like structural inflation brought on by money printing & changes in the labor market, both of which are going to be very hard to contain.

In that circumstance, something has to give. Either government largesse gets cut (in absolute terms or via un-indexed inflation) or dog-chases-tail printing money to maintains immediate benefits that just spurs new inflation.

Un-capping SS taxes will clearly happen. Biden has proposed it already in some form. But its not enough to "fix" the problem. I think the politicians (read citizens) are unlikely to step up to overt benefit cuts to existing or near-retirement people. Overt tax increases on the younger workers will also be tough to get through in an era where younger workers are stressed by multiple economic shocks & college debt.

My guess is that they will hit it in the background via inflation modifiers that the typical person will be hard-pressed to understand.

Net result will be erosion of benefits...likely substantial as this compounds.
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Old 08-29-2021, 05:02 AM   #69
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^^^^^ All fine points about SS. Personally, I like a diversified portfolio of assets and revenue streams, including SS, because if I want to, I can conjure up similar dark clouds for stocks and bonds, too.
Agree. I think substantial losses in stock and bonds are much more likely than SS
reductions, at least in the next 10-20 years.
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Old 08-29-2021, 07:17 AM   #70
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Yes, but I wouldn't consider the $63K a figure to depend on for life, due to several factors:

1) Not everyone gets such a large SS check. My spouse falls under the WEP Act, for example. His SS check will be reduced by 60% due to his state pension income. If he ends up with $400/mo we'll be surprised. Needless to say, we're having him wait until age 70 to claim, LOL.

2) $63K for a couple sounds great until you remember that (a) life expectancy has dropped; and (b) the chances of a couple dying at the exact same time aren't very good, meaning the survivor now has 50% of what they had before - minus, of course, the amount that SSA claws back; e.g., the monthly benefit of the deceased's date of death.
A couple of thoughts about your points 1) and 2):

My spouse will also have a WEP-reduced SS benefit. Have you modeled your family SS situation in opensocialsecurity.com or some similar modeling tool? Do/will you receive SS? How does the WEP-reduced spousal benefit compare to the your spouse's own benefit? Depending on what your payment is and what your ages are and who claims first (and when), when to take a WEP-reduced benefit can be a complicated puzzle.

On your point 2) above, I am not sure what you are saying about life expectancy. I am also not sure how it would be relevant to your family's decision. Also, it is unlikely that the death of spouse when both are receiving some SS benefit will result in a 50% reduction of the total family benefit.
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Old 08-29-2021, 07:21 AM   #71
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Did you mean, "Stash / 25-30 + SS No Worries?
Nope, SS is extra. If one has enough in one's stash (Not House, Cars or any other material goods) and the result of the equation is enough to live comfortably, one does not need SS as it is one's SS. So the original equation holds.
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Old 08-29-2021, 07:53 AM   #72
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Nope, SS is extra. If one has enough in one's stash (Not House, Cars or any other material goods) and the result of the equation is enough to live comfortably, one does not need SS as it is one's SS. So the original equation holds.


^^^^^^ Or you can use a different formula that allows you to meet your goals on your timetable using whatever assets and income streams you have or that may come your way in life.
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Old 08-29-2021, 07:56 AM   #73
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^^^^^^ Or you can use a different formula that allows you to meet your goals on your timetable using whatever assets and income streams you have or that may come your way in life.
The point I was trying to make was if one has a decent stash, the SS becomes insignificant.
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Old 08-29-2021, 07:57 AM   #74
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The point I was trying to make was if one has a decent stash, the SS becomes insignificant.
Between DH and I we will be getting around $60,000 a year in SS. I don't think that is insignificant no matter how large my stash is.
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Old 08-29-2021, 08:02 AM   #75
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Agree that SS is significant for many of us no matter how large the stash is. Our SS total is $65K, husband claimed at 70 and me will be at 62 in 3 years' time (on my own earnings record).
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Old 08-29-2021, 08:03 AM   #76
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SS Could Be Insolvent in 8 Years

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Originally Posted by ShokWaveRider View Post
The point I was trying to make was if one has a decent stash, the SS becomes insignificant.


Fair enough and I canít disagree. I wanted to comment for those who may read this education forum and get the impression that they canít rely on any SS in their projections, and will have to plan on working many years longer than necessary.

Personally, someday, I hope to have a simple life as a renter again, bringing substantial home equity into the mix when I get tired of snow, grass and stairs and sell the house. Until then, I keep a low interest mortgage. Using home equity is also heretical to some here but itís another legitimate asset to use.
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Old 08-29-2021, 08:05 AM   #77
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Agree that SS is significant for many of us no matter how large the stash is. Our SS total is $65K, husband claimed at 70 and me will be at 62 in 3 years' time (on my own earnings record).
We would be lucky if ours was ~$40k combined. We do not take it yet.
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Old 08-29-2021, 08:17 AM   #78
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We would be lucky if ours was ~$40k combined. We do not take it yet.
My husband's contribution into SS was closed to maximum for most of the 35 years. I only contributed 18 years because I was working overseas and was later transferred to the US by the company which I was working for, and almost all of those 18 years were contributed at the maximum level. I do get a haircut because I only had 18 years of earnings.
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Old 08-29-2021, 11:02 AM   #79
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The point I was trying to make was if one has a decent stash, the SS becomes insignificant.
I think I'd have to have well over $20M to think of SS as "insignificant", even though we save more than our SS checks now each year. That savings is a nice security blanket to leave to our kids, help them buy houses, pay for our LTC or some financial surprise life might throw at us in the coming years.

We do plan for the possibility of future SS cuts, but I still can't see planning for zero, especially for those with a net present value of SS in the 7 figures.
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Old 08-29-2021, 11:17 AM   #80
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I think I'd have to have well over $20M to think of SS as "insignificant" ...

We do plan for the possibility of future SS cuts, but I still can't see planning for zero...
Agreed. I discount the future value of SS in case of cuts, but I don't ignore it. I probably won't start it for another 10 years, but it's likely to cover 20-30% of my expenses. Ignoring SS is like buying an annuity, and then not counting it. I guess people treat it as buffer, or an extra. I'd rather know what buffer I'm including in my plan, and I want to adjust my current withdrawals to take more now, knowing SS is coming later.
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