SS Sustainability without reduction now at 2029

[wmc1000]

Happened to run across the CBO report from 12/21/16 which now says current rules change SS sustainability to end of 2019 with a haircut to 79% starting in 2030. Since my worst case spreadsheets were set at 2034 previously I updated them this morning.

https://www.cbo.gov/publication/52298

While I feel fairly certain changes will come before then to somewhat shore up the system, I like playing with spreadsheets for my own peace of mind. Maybe I have too much time on my hands!

Since my worst case plans on inflation at 4% and SS and investment returns at 2% we have a significant slack in our numbers and still make it to 95 without running out of cash.

 

[DrRoy]

My planning is based on no SS. I will consider whatever I receive to be an inflation adjustment to my overall situation.

 

[Fedup]

I'll be glad to get 79%.

 

[audreyh1]

Hmmm - I guess when I reach 66 and 10 months in 2027 I'll have to see where the chips are falling.

 

[W2R]

My planning is based on no SS. I will consider whatever I receive to be an inflation adjustment to my overall situation.

I'll be glad to get 79%.

Like DrRoy, Fedup and many others, I never really counted on SS when I was planning for retirement. It's nice to have, and I feel like it is mine because I earned it and paid for it, but nevertheless somehow I also regard it as icing on the cake. Even if my SS was eliminated completely tomorrow, there would be some wiggle room in my spending. The same is not true for those in poverty who truly need SS to survive but somehow I doubt many of us here fall in that category.

 

[davismills]

Like many here, I'm somewhat perplexed with the many variables of SS. The overwhelming majority advise applying for SS at 70 because of the 8 percent per year increase of waiting until later.

My break even for taking SS at 70 versus 62 is 81 years of age. Coincidentally, I'll be 81 in 2036 around about the time for the 21 percent haircut.

If I apply for SS at 62, I'll get 13 years with no "haircut".

My math skills are not phenomenal, but I surmise that taking SS at 70 would actually push my break even age way too far out on the "death scale" for me not to consider it at age 62.

For the record, I'm not counting on it, but it eats me up inside when I think of the 250K I've contributed with very little to show for it.

 

[euro]

Like many here, I'm somewhat perplexed with the many variables of SS. The overwhelming majority advise applying for SS at 70 because of the 8 percent per year increase of waiting until later.

My break even for taking SS at 70 versus 62 is 81 years of age. Coincidentally, I'll be 81 in 2036 around about the time for the 21 percent haircut.

If I apply for SS at 62, I'll get 13 years with no "haircut".

My math skills are not phenomenal, but I surmise that taking SS at 70 would actually push my break even age way too far out on the "death scale" for me not to consider it at age 62.

For the record, I'm not counting on it, but it eats me up inside when I think of the 250K I've contributed with very little to show for it.

Obviously, we can't know for sure what the size or date of the "haircut" is but basically, I agree with your approach: I plan on taking SS as soon as I can get my hands on it. Too risky for me, not to do it

 

[Hermit]

According to my spreadsheet, in 2030 my SS will be about 66% of my spending. If that went away, I would by OK, but I might need to cut back somewhat on QCDs. It would definitely cut my taxes a bunch.

 

[NYEXPAT]

A bird in the hand and all that!

 

[Major Tom]

"Hope for the best and plan for the worst" is a good guideline, I think.

I'd manage without SS, but am certainly looking forward to having that extra allowance as the cherry on top of my later years.

 

[joeea]

My break even for taking SS at 70 versus 62 is 81 years of age. Coincidentally, I'll be 81 in 2036

My math skills are not phenomenal, but I surmise that taking SS at 70 would actually push my break even age way too far out on the "death scale" for me not to consider it at age 62.

This is confusing.
What "death scale" are you using such that 81 is too far out?

 

[davismills]

This is confusing.
What "death scale" are you using such that 81 is too far out?

If my CURRENT break-even is 81, then a 21 percent reduction in benefits will extend my break-even further out (opportunity lost). I've not done the calculation, but it will probably be past my life expectancy and therefore not financially prudent.

 

[joeea]

If my CURRENT break-even is 81, then a 21 percent reduction in benefits will extend my break-even further out (opportunity lost). I've not done the calculation, but it will probably be past my life expectancy and therefore not financially prudent.

You said "I'll be 81 in 2036 around about the time for the 21 percent haircut. "

So this "21 percent haircut" can't extend your break-even further out, since it doesn't occur until after break-even.

 

[ejman]

Every rational advisor will subscribe to the take it at 70 camp because that makes the most sense assuming the current rules continue and one lives a nice long life. Which is exactly why I took it at 62 when I was first eligible back in 2012. Never regretted it for one second. Why? I think the chance of the current rules holding unchanged for the next 30 years are about equal to the earth reversing it's rotation direction and the chance of me caring how much SS I get when (IF) I make it to my late 90's are equally so. A bird in hand is equal to two in the bush and all that.

 

[GrayHare]

If one starts at 62 is the SS payment guaranteed to never receive a haircut even if payments are cut for all others age 62 or older?

 

[ejman]

If one starts at 62 is the SS payment guaranteed to never receive a haircut even if payments are cut for all others age 62 or older?

Of course not, don't be silly. But if you have had 10 or 20 years of payments without a haircut, a haircut after that doesn't hurt as much no?

 

[Ian S]

There is absolutely no need for a haircut on social security. It's just more fear mongering by politicians. We dealt with a far more imminent crisis back in the 80's and we survived. The USA is a great country and can well afford not to cheat its seniors out of what's been promised. We seem to have deep pockets when it comes to spending on military systems that go wildly over budget yet struggle to meet claimed performance levels for battle scenarios that may already be obsolete.

 

[mamadogmamacat]

I've been assuming a 30% haircut, so 21% would actually make my numbers look better. Back in 1983, the crisis was actually less imminent and it was dealt with by what amounted to a haircut, albeit as I recall not as severe a one. Most will not feel it assuming it does not affect current recipients, as most still working have little understanding of the formula as it is now, so a change in it will mean little to them.

 

[haha]

For the record, I'm not counting on it, but it eats me up inside when I think of the 250K I've contributed with very little to show for it.

This is actually crazy. As "citizens"of a modern superstate, "they"can make us do whatever they want to. That money could have just been taxed away, with no possible payback or mitigation.

At least with SS, most of us will get something back.

Ha

 

[Ian S]

I've been assuming a 30% haircut, so 21% would actually make my numbers look better. Back in 1983, the crisis was actually less imminent and it was dealt with by what amounted to a haircut, albeit as I recall not as severe a one. Most will not feel it assuming it does not affect current recipients, as most still working have little understanding of the formula as it is now, so a change in it will mean little to them.

Actually projections in 1982 were that the trust fund would be depleted within a year or two so the crisis then actually was more imminent than it is today. There was no significant haircut but there were tax increases that included speeding up of future increases. There was also a gradual increase in the retirement age. Today it would make sense to significantly increase the cap on wages subject to the tax.

 

[Shanky]

For those who retired already and planned on no SS. How many extra years did you have to work for that assumption?

 

[Pilot2013]

Actually projections in 1982 were that the trust fund would be depleted within a year or two so the crisis then actually was more imminent than it is today. There was no significant haircut but there were tax increases that included speeding up of future increases. There was also a gradual increase in the retirement age. Today it would make sense to significantly increase the cap on wages subject to the tax.

+100 on lifting the cap. It only makes sense in the environment/situation. I would LOVE to see revision of "uses" of the benefit as well, but don't see that happening. Best case is to not EXPAND it any more!

As we are seeing today with all of the ACA fretting, once something is GIVEN, taking it back is nearly impossible.

 

[Lakewood90712]

A resurgence in domestic manufacturing with accompanying higher paying jobs as compared to service sector jobs and S.S payroll takes would fix this I.M.O. The rising tide lifts most boats, along with the S.S, payroll tax boat.

Not likely to happen. I have no worries for myself, but big worries for those following behind me.

 

[Fermion]

SS will be there for you if you need it. It will never be cut out completely while the USA is still a whole country.

Yes the person with $100K in RMD plus a $60k a year pension might see a reduction in some way or another (at least the SS amount taxed fully), a person who needs SS to complete 50% or more of their budget is not going to see a significant cut.

 

[Chuckanut]

If one starts at 62 is the SS payment guaranteed to never receive a haircut even if payments are cut for all others age 62 or older?

My guess is they will do something like this:

"You currently receive $1000 a month. With the haircut you should get $800 a month. We won't cut you now but you can forget about any cost of living increase until you have achieved equality with the people who now get reduced benefits."

Or they might simply say " Time for your haircut too! You are no worse off than your peers so stop whining."

But... Most likely the haircut will be in the future using things like a raised retirement age and tax increases on the SS benefits for people like the readers of this forum.

If I could accurately predict the future, I would invite all of you for a great cruise on my yacht to my private island. Or for those of you who did not have time, a flight on my private 787.