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Old 03-13-2017, 09:04 AM   #61
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I remember reading that one reason that SS was getting strained was the retirement of all the Baby Boomers, since their generation was larger than any before. However, Gen-X is much smaller than the Boomers, while the Millenials are supposedly bigger than even the Boomers.

So, once the Boomers start dying off, is is possible that the problem might simply correct itself? Or, at least, kick the can further down the road?
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Old 03-13-2017, 09:11 AM   #62
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IMHO: If you plan to retire >10 years before your SS FRA you should not include SS in your ER plan. They will probably "grandfather" people within a certain window that are close to FRA, so their benefits would not be impacted too much if at all. People >10 years from FRA will most likely be effected the most. The thinking will be that people can adjust their RE plan with a 10 year heads-up. What changes will happen is anyone's guess. My guess is they will not implement a solution to "permanently" fix SS or Medicare because it would just be too painful across the spectrum and cost them votes for reelection. They will just kick the can down the road by increasing FRA, increase FICA/Med tax and remove cap limit or reduce benefits. Probably a combination of all of these. I retired at 49 so I assumed no SS or Medicare in my ER plan. At our current expenses we are 100% success rate in FIRECalc w/o SS. If I plug in 75% of SS benefits at FRA we could spend 13% more right now and 22% more if I plug in no reduction in SS benefits. Boy that would be nice ... I'm 53 and DW is 51 so it is just to risky to assume SS in our ER plan (IMHO). I do believe we will receive something when we hit FRA, but not knowing what that will be was just too risky when making the decision to ER and determining how much we can spend each year. When we get within the 7-10 year window to FRA we will most likely increase our spending based on the "new" SS guidelines. It is very frustrating because we would enjoy spending the money now while we are younger and healthier, but just too risky with no "viable" plan in place to fix SS or Medicare. Plan for the worst and hope for the best.....
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Old 03-13-2017, 10:02 AM   #63
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I've been hearing about SS changing radically since the 60s when I first started working. " it wont exist by the time you retire!!"
Like acid rain and the energy shortage I've learned not to spend too much time worrying about these things.
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Old 03-13-2017, 10:08 AM   #64
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I hope it lasts till 2020 as I will need it to pay for healthcare for DW who has ages to Medicare.
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Old 03-13-2017, 10:10 AM   #65
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That would be about the worst thing IMO. Much of it is already automated. The SS program is not simple when you get into specific benefits for an individual, older "Customers" dealing with the system. It's easy to get estimated benefits online, but when you need absolute info and help, you need humans.

Even the private pension systems who mostly outsource the function use humans for most tasks due to these factors. Humans always check the automated actuary calculations for "issues" before assigning a benefit payment.
Honestly, the people we met at SSA were a bit confused and kept asking other people questions. I think they can reduce the number of people working there, supplement with robots. I saw this recently with blood test place. No more people in front desk for sign in. They have tablets for sign in. An occasional confused people who were unable to sign in were either helped by the customers or the people doing the blood test.
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Old 03-13-2017, 10:20 AM   #66
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There was no disability component to SS when it was founded in 1935. There is an informative article about the history of SS right on the SS site. The "D" in OASDI was added during the Eisenhower administration.
That's correct; although attempted, disability & medical care were excluded from the original SS Act. However, the SS program always intended to include & always did include "welfare" aspects; Title 1 benefits & AFDC, for example.


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I stand with my opinion. I'd like to see the pension and welfare aspacts of SS managed and funded separately. IMHO it's a mistake to lump them together.
Understood, and I know that many share your opinion; I'm not one of them. IMHO, "welfare" features should be included and, any Social Security program without them does not live up to it's name & purpose.

In relation to the OP, my hope is that the next 'adjustment' to SS will be structured in a way that continues to provide the full spectrum of Social Security in a fiscally sound way.
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Old 03-13-2017, 11:44 AM   #67
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Color me more pessimistic. Lifting the cap and possibly adding another bend point to further reduce benefits for people paying the top FICA would shore up the program...
I have not heard that it would require reducing the top FICA contributors benefit to shore up SS. In fact, if there were a COMPLETE lift of the cap, my understanding is it would grow significantly positive. IOW, there could be a raising of the cap, not a complete removal, no change to payments, and all would be good.
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Old 03-13-2017, 12:00 PM   #68
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[QUOTE=Andre1969

Anyway, my projected SS is around $15,500 annually if I leave the workforce at 50, and ~$19000 if I wait until 51. If I assume no SS whatsoever, then my success rate of living off of $60K per year drops to 79.6% if I retire at 50, $83.9% if I retire at 51. But, if I hold out just a bit longer, it goes up to 93.5% at 52, and 97.8% at 53.

Andre, not certain I'm interpreting your post correctly. I don't believe your projected S.S. benefit will increase from$15.5k to $19k (+19%) by spending just one additional year in the workforce. If in both cases you draw at age 62, you probably won't see an annual increase of more than a few hundred dollars by sticking it out one more year, regardless how much you W-2 that extra year. If you could see that type of return for hanging on one extra year, you'd probably see a lot more ER's trading their freedom for the hefty gain in S.S. Again, I may be misinterpreting your calculation
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Old 03-13-2017, 12:20 PM   #69
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Oh you mean like the spousal benefit for those who did not work? Or the benefit if one has kids under 18 when you start social security?
Two of my three favorite features along with the survivor benefit for our young overseas wives! Feel free to cut the survivor benefit to my ex-wife though.
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Old 03-13-2017, 01:30 PM   #70
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I have not heard that it would require reducing the top FICA contributors benefit to shore up SS. In fact, if there were a COMPLETE lift of the cap, my understanding is it would grow significantly positive. IOW, there could be a raising of the cap, not a complete removal, no change to payments, and all would be good.
In my work days I was always 'done' paying FICA very early in the year.

With all the hand-wringing, number crunching and 'let the rich pay more', I never understood why totally eliminating the cap has never been seriously considered as an option. I surely wouldn't have minded.

Unless of course, the "SS is running out of money" is just one of those nice things to talk about but isn't quite as real as claimed. As noted, it's been "going bankrupt" as long as I can remember.
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Old 03-13-2017, 07:15 PM   #71
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In my work days I was always 'done' paying FICA very early in the year.

With all the hand-wringing, number crunching and 'let the rich pay more', I never understood why totally eliminating the cap has never been seriously considered as an option. I surely wouldn't have minded.

Unless of course, the "SS is running out of money" is just one of those nice things to talk about but isn't quite as real as claimed. As noted, it's been "going bankrupt" as long as I can remember.
I agree. I just assume that there's not a conspiracy about the situation... I also surpass the cap (although apparently not as quickly as you did), but have no problem raising that cap, or even eliminating. Based on all of my other posts on here (that have apparently gotten them closed), I am sure this is surprising to some.
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Old 03-13-2017, 11:48 PM   #72
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In fact, if there were a COMPLETE lift of the cap, my understanding is it would grow significantly positive. IOW, there could be a raising of the cap, not a complete removal, no change to payments, and all would be good.
I also like the idea of raising or eliminating the cap. However the benefit calculation is based on the highest 35 AIME, which for people contributing above the current cap could result in PIA above the current maximum. The current "largest possible" benefit is under $4000/month, but very high earners would have much higher benefits and I (pessimistically) anticipate that this will cause people complaining about income inequality to lobby for additional breakpoints to reduce these higher payouts. Yes, I know they are already so low compared to the taxes that were collected that there is no "payback" period, but this seems to me to be a likely candidate for manipulation. Enough so, that I am discounting it in my plans so I don't risk depending on a benefit that politicians are likely to tinker with. I am not as confident in SS being as sacrosanct as some people claim.
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Old 03-14-2017, 09:39 AM   #73
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I agree. I just assume that there's not a conspiracy about the situation... I also surpass the cap (although apparently not as quickly as you did), but have no problem raising that cap, or even eliminating. Based on all of my other posts on here (that have apparently gotten them closed), I am sure this is surprising to some.
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I also like the idea of raising or eliminating the cap. However the benefit calculation is based on the highest 35 AIME, which for people contributing above the current cap could result in PIA above the current maximum. The current "largest possible" benefit is under $4000/month, but very high earners would have much higher benefits and I (pessimistically) anticipate that this will cause people complaining about income inequality to lobby for additional breakpoints to reduce these higher payouts. Yes, I know they are already so low compared to the taxes that were collected that there is no "payback" period, but this seems to me to be a likely candidate for manipulation. Enough so, that I am discounting it in my plans so I don't risk depending on a benefit that politicians are likely to tinker with. I am not as confident in SS being as sacrosanct as some people claim.
+1

Especially now that I'm FIREd.

Seriously though, I maxed out SS most of my career and was (am) supportive of a raised/eliminated cap. I would also support gradual raising of the FRA as another adjustment.

I'd like to see some discussion on this thread of what few 'adjustments' to SS that members support to actuarially stablize the program.
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Old 03-14-2017, 09:42 AM   #74
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I also like the idea of raising or eliminating the cap. However the benefit calculation is based on the highest 35 AIME, which for people contributing above the current cap could result in PIA above the current maximum. The current "largest possible" benefit is under $4000/month, but very high earners would have much higher benefits and I (pessimistically) anticipate that this will cause people complaining about income inequality to lobby for additional breakpoints to reduce these higher payouts.Yes, I know they are already so low compared to the taxes that were collected that there is no "payback" period, but this seems to me to be a likely candidate for manipulation. Enough so, that I am discounting it in my plans so I don't risk depending on a benefit that politicians are likely to tinker with. I am not as confident in SS being as sacrosanct as some people claim.
This is what I've read too, SS has to pay out more. It's not that easy. But I'm against raising more tax in general.
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Old 03-14-2017, 09:47 AM   #75
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+1

Especially now that I'm FIREd.

Seriously though, I maxed out SS most of my career and was (am) supportive of a raised/eliminated cap. I would also support gradual raising of the FRA as another adjustment.

I'd like to see some discussion on this thread of what few 'adjustments' to SS that members support to actuarially stablize the program.
I would prefer to receive the payout decrease to 75% across the board or whatever SS can payout, keeping everything the same. Everybody suffers equally . Why favor one group over another.
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Old 03-14-2017, 10:34 AM   #76
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However the benefit calculation is based on the highest 35 AIME, which for people contributing above the current cap could result in PIA above the current maximum. The current "largest possible" benefit is under $4000/month, but very high earners would have much higher benefits...
But we are talking about CHANGING the current situation, so we can change both... eliminating or changing the cap, so I would say you also change the max payout by some amount (let's say that the Top Contributors would get only 25% (as an example) of the increased revenue. ie, the improvement to the plan would get 75% of the additional tax (or as some on here like to say, Gov't income ), while the folks that are asked to provide that increase get a modest increase.

Yes, this is part of the blasphemous redistribution I rail against, but this is the one area that I feel it should be part of our planning, and promise to the elderly.
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Old 03-14-2017, 10:41 AM   #77
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+1

I'd like to see some discussion on this thread of what few 'adjustments' to SS that members support to actuarially stablize the program.
Some argue for a higher CPI for COLAs. I would argue for using a lower CPI.

I would like to see some additional delay to FRA for those who are very young. Not much. Maybe a month or two.

I have not embraced an unlimited wage base but would like it to be more than 2017's $127,200.

These are all small changes so they can be done without too much political nonsense. If the above were enacted now, it would put off that magic day a number of years. No, I do not have the actuarial figures to prove it.

Now, the tough ones:
If OASDI is an insurance product, then it should be means tested. Here is my flawed logic: If I insure my house and it doesn't burn, I don't get a check. If OASDI is insurance, I don't get a check if my income is above $xxxx.

If OASDI is a retirement product, then I am getting a terrible rate of return on all of the money I and my employers have put aside for me. Let me cash out with a lump sum representing my pay-ins and some small portion of what my employer put in. I know many are against this concept but please don't hate me because I want my freedom.
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Old 03-14-2017, 10:48 AM   #78
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Now, the tough ones:
If OASDI is an insurance product, then it should be means tested. Here is my flawed logic: If I insure my house and it doesn't burn, I don't get a check. If OASDI is insurance, I don't get a check if my income is above $xxxx.

If OASDI is a retirement product, then I am getting a terrible rate of return on all of the money I and my employers have put aside for me. Let me cash out with a lump sum representing my pay-ins and some small portion of what my employer put in. I know many are against this concept but please don't hate me because I want my freedom.
No hate!

I think I consider SS more of a lousy retirement product. I was just talking to a co-worker and as I told him, I consider SS as a crappy annuity in my AA review for retirement. I don't like to think of it as insurance that would be means tested and taken away because the "house did not burn". Just because it was not originally planned that way. If it had been, then retirement planning COULD have been approached differently/with that in mind.
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Old 03-14-2017, 10:55 AM   #79
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I would prefer to receive the payout decrease to 75% across the board or whatever SS can payout, keeping everything the same. Everybody suffers equality. Why favor one group over another.
Our whole tax system is designed so that the higher income folks pay more taxes to support the country including social welfare systems. When taxes get to be too much for the "rich", the economy as a whole goes down. The problem is we don't exactly know where that point is.

If I am not mistaken, there really is no money set aside for SS payments. The SS taxes collected has long since been spent and the SS taxes collected today are supplemented by the general taxes and deficit spending. The time when SS runs out of money is the time that the "IOUs" are depleted. There won't really be a major difference in costs to the Government at that point. This, in my opinion, is just a good political reason to implement the hair cut which can help balance the expenses and income, but as currently written will be as hard on the poorer folks as on the better off. The costs of SS will continue to increase. More will need to be done through the political process to correct that. Whether the politicians will do something more than letting the currently defined hair cut happen as a politically expedient approach is anybody's guess. This thread is about making those guesses. I don't think I would base my retirement security on those guesses, including my own.
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Old 03-14-2017, 10:56 AM   #80
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............Like acid rain and the energy shortage I've learned not to spend too much time worrying about these things.
I'm not sure why you dragged in these comparisons, but the reason acid rain and energy shortages are not a problem is because we took intelligent actions to mitigate them, not because calling attention to them was a Chicken Little response.
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