SS Could Be Insolvent in 8 Years

[camfused]

^^^ Hold, on. I did not say I agreed with the article, I just posted it as a news item of interest for this forum, since the person was taking an "educated" guess at the new haircut date. I suspect we will get the official report from SS pretty soon.

I know that SS will not "run out" of money, and I believe that (at the last possible moment), congress etc will do *something* to make sure that benefits do not get cut (much) for us retired folks.

My apologies for posting this thread. I'll go away for awhile now.

[Markola]

^^^^^^ No worries, though tonight might not be a good time to ask the forum, “Hey, should I pay off my mortgage?” [emoji897]

[Markola]

Quote:

Originally Posted by Love This Community Looks like the general consensus here is that Ss is not going to go away or significantly reduced in the future. However, when we read about individual retirement plans, some forum members are not counting on SS being available. Are they being too conservative? Curious to know.

Yes, some forum members are reflexively and habitually highly financially conservative, aiming for 100% confidence in the success of their projections, though 200 or 300% confident would be even better. YMMV.

[daylatedollarshort]

Quote:

Originally Posted by Markola Yes, some forum members are reflexively and habitually highly financially conservative, aiming for 100% confidence in the success of their projections, though 200 or 300% confident would be even better. YMMV.

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.

[youbet]

Quote:

Originally Posted by timbervest Government will: continue to pay to current payees Government may: raise the income cap slowly raise the retirement age (70)? for the young wage earners adjust the bend points (possibly) raise the payroll tax but most likely only on the employer side Government will not: Cut benefits for recipients in pay status

Government will:

Require current recipients to die and stop collecting when their accumulated received benefits = their lifetime contributions withdrawn at 4% + inflation rate.

[youbet]

Quote:

Originally Posted by daylatedollarshort 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.

Did you mean six figures? Or are you combining two benefits as a couple?

[timbervest]

Quote:

Originally Posted by youbet Government will: Require current recipients to die and stop collecting when their accumulated received benefits = their lifetime contributions withdrawn at 4% + inflation rate.

Don't give them ideas!!!!

[daylatedollarshort]

Quote:

Originally Posted by youbet Did you mean six figures? Or are you combining two benefits as a couple?

Sorry, I should have clarified I meant for a couple.

[teejayevans]

The government will just eliminate the “trust fund “ concept and simply treat SS like Medicare or any other program and make it a regular budget line item.

[Dtail]

Quote:

Originally Posted by daylatedollarshort 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.

Same here. Retirement doesn't work out for us without any SS.

[scrabbler1]

Quote:

Originally Posted by daylatedollarshort That is why they use terms like chained CPI instead of benefit cuts. Benefits have been tweaked, including cuts, in many ways over the years, like raising taxes on benefits and then putting the tax money back into the SS trust fund. The taxable thresholds set up in 1984 aren't indexed to inflation, so that is another subtle way benefits are cut each year for many retirees.

There is a two-tiered system to determine how much federal income tax is paid on SS benefits. First, there are 0/50/85 brackets to determine how much of one's SS is taxable. Those brackets, introduced in 1984 and 1993 have not been indexed. Then, if any SS income is taxable, that income, along with one's remaining income, gets taxed according to the regular tax brackets which are indexed.

I can surely see the currently unindexed 0/50/85 brackets getting adjusted, especially because any taxes derived go back into the SS trust fund. Taken together, these brackets act as a backhanded means test for SS benefits.

[camfused]

^^^ Question: why should they be indexed, if they are going against wages, which are indexed?

[harllee]

I am certainly counting on SS in my planning. I delayed my SS payment until age 70 which is coming up in a few months (I have already applied for the payments to start at age 70). I am definitely counting on that $3000 per month.

[Aerides]

Quote:

Originally Posted by camfused ^^^ Hold, on. I did not say I agreed with the article, I just posted it as a news item of interest for this forum, since the person was taking an "educated" guess at the new haircut date. I suspect we will get the official report from SS pretty soon. I know that SS will not "run out" of money, and I believe that (at the last possible moment), congress etc will do *something* to make sure that benefits do not get cut (much) for us retired folks. My apologies for posting this thread. I'll go away for awhile now.

Ah, so, you missed the opportunity to include your perspective in your opening post, instead just including the points of the article.

It's always helpful, if members create threads based on articles, to say "This is what this is saying, and this is what I think, how about you?" vs. "This is what this is saying" and leaving it at that.

---

Aside from that:

If SS ever gets reduced it will be via pushing out the FRA's again, and/or haircuts to those more than 10 years away from starting SS, probably more like 20 years
It will never reduce (beyond cola stuff) for those already receiving it, or within a handful of years from eligibility
Many of us don't include SS in our planning because it's too complicated, too far out for ER's, and treat it as icing on the cake vs. required for safe ER

[camfused]

^^^ Yeah, silly me trying to just report a reference to an "expert opinion" without putting my own uneducated spin on it. You're right.

[daylatedollarshort]

Quote:

Originally Posted by Aerides It will never reduce (beyond cola stuff) for those already receiving it, or within a handful of years from eligibility

Taxing benefits, then putting those taxes back into the Social Security trust fund, is a way to reduce benefits without saying Congress is reducing benefits. And that was one of the fixes that shored up SS in the Reagan years. Taxes on SS were increased again under Clinton. And then not adjusting the levels for inflation means collecting more and more taxes over the years as inflation increases benefits but the taxable income levels remains the same.

[ShokWaveRider]

Stash / 25-30 = SS No Worries.

[Retch The Grate]

Well, I've always made my plans with the assumption that there would be no SS, and if it did happen, it gets to push me up to RobbieB spending. As I get closer to it being a thing I might actually get (13 more years to 62) I'm raising my expectations of getting some. I tend to do models at 75% and 50% of what they tell me I'll be getting, but I really want to make sure my core critical spending is covered by a 3% WR off my investments and have SS be bonus/safety net.

[Andre1969]

I always ran two sets of scenarios when planning my retirement. One with full SS and one worst case scenario with no SS at all. In just about every scenario, if SS went away entirely, it only kept me in the workforce for another 2-3 years if I wanted the same chance of success.

For instance, I ran my numbers earlier this year. Assuming full SS, if I wanted to make it on $85K per year, I'd have a 96.0% chance of success. Assuming no SS at all, I'd have to hold out another two years to get a 94.1% chance, and three years for a 97.0%

Of course, that mindset only really works as intended if I keep working AND know for a fact that they're going to cut SS, so then I just keep working 2-3 years earlier. It doesn't really help me if I decide to retire, and then SS goes away. I could try to go back to work, but might not have good luck in finding a similar paying job. So I might have to do some financial belt tightening.

If I had retired earlier this year, but knew there would be no SS at all, I'd have an 84.2% chance of success with $85K/yr, 93.1% with $80K, and 96.0% chance with $75K.

So, worst case, if I want the same 96% chance of success, I have to take an 11.8% reduction in withdrawal rate (75/85 = ~88.2). But, since SS won't go away entirely, and will most likely still be good for around 75%, I decided to stop worrying about it.

Now in my case, retiring this year would mean I'm going out at 51, and taking SS at 62. My estimated monthly SS payment here is $1412. So in the overall scheme of things, I'm not depending on SS *that* much. If I was expecting a benefit of, say, $2500 or more, I'm sure I'd be a bit more concerned about it!

[Time2]

Quote:

Originally Posted by ShokWaveRider Stash / 25-30 = SS No Worries.

Did you mean, "Stash / 25-30 + SS No Worries?