Will Social Security be there?

[CindyBlue]

Ok, I'll be the one to ask...yet again...
I retired last August. I've been living on my savings since then (not my 403b, but savings - I planned it that way for the first year of retirement) plus my pension. I was all set to do fine in retirement. But...
Will Social Security be there when I take it next March (I'm waiting until FRA)? After reading about the president approving tax cuts...and the economy...I'm worried about Social Security. I'm also worried about my (defined benefit) pension still being there.
Sometimes I think all I do is worry...sigh...

 

[aja8888]

SS will be there next March. A lot of us are counting on it. As far as your defined benefit pension, ask your ex employer.

 

[GoBears]

Not if the President is able to eliminate the payroll tax that funds Social Security.

 

[Aerides]

*Let's try to avoid politics to allow this thread to have a chance*

OP I think for you, yes it will be there. The larger haircuts - IF they happen - are more likely to apply down the road, to those retiring later, vs. already on it or about to be.

(IMO)

 

[davebarnes]

Not if the President is able to eliminate the payroll tax that funds Social Security.

Well, he has not proposed that.
He has proposed delaying collection and then recapturing it later.

 

[CindyBlue]

*Let's try to avoid politics to allow this thread to have a chance*

OP I think for you, yes it will be there. The larger haircuts - IF they happen - are more likely to apply down the road, to those retiring later, vs. already on it or about to be.

(IMO)

Does that meant that when I get Social Security next March, it will stay the same (with cost of living increases) for my lifetime? Or will I get a "haircut" later on? Are the decreases in Social Security projected for 2035 only for those who take it in 2035, or across the board for everyone?

 

[Alex The Great]

So far no permanent payroll tax cut: what has been ordered is a payroll tax holiday for those who earn less than $100K annually. Money must be paid back by the end of 2020.
Permanent payroll tax cut has been also mentioned, just in case if current President is re-elected. But executive order alone cannot accomplish that. There is a Congress which must approve it. Which is highly unlikely, no matter who is going to be elected.
I don't think this is a problem. But there is a real problem. The real problem is that currently unemployment is very high, and not many people actually pay payroll tax. Potentially it could be a serious issue, if economy will not recover soon. Money may be cut, or retirement age adjusted. But those who apply for SS within the next few years will be fine.

 

[RobbieB]

Well we're broke. All these social programs will have to end and end soon. Too bad.

 

[Independent]

Does that meant that when I get Social Security next March, it will stay the same (with cost of living increases) for my lifetime? Or will I get a "haircut" later on? Are the decreases in Social Security projected for 2035 only for those who take it in 2035, or across the board for everyone?

The decreases in benefits when the trust fund runs out, about 2035, are for all benefits payable then and later, regardless of when you started.

That's the current law, congress can change it.

The recession caused by the coronavirus will decrease SS revenue this year, and probably for a number of future years. As a result, the trust fund may run out sooner than the last projection.

 

[cathy63]

Does that meant that when I get Social Security next March, it will stay the same (with cost of living increases) for my lifetime? Or will I get a "haircut" later on? Are the decreases in Social Security projected for 2035 only for those who take it in 2035, or across the board for everyone?

Under the current law, a haircut for one is a haircut for all. It does not matter if you've been collecting SS for 20 years or 1 month or are planning to start in the future.

Of course Congress can change the law any time, and many people do think that there will be fixes put in place before it's necessary to cut benefits by 25 to 30 percent.

 

[CindyBlue]

Sigh...I'm hoping that, since there is really nothing I can do about it (except vote!), that I can figure out how to stop worrying. Thank you for letting me worry here, though, everyone!

 

[Beststash]

Well we're broke. All these social programs will have to end and end soon. Too bad.

Funny....define broke!! We have been some version of broke since 1836 and that increases by the second. That being the case the social programs would not seem to be in danger and in fact I would argue that they need to be increased based upon our contemporary needs.

I trust that SS or something equivalent will always be there as long as we are a Democracy.

 

[RobbieB]

Yeah, I was making a hehe. Well broker then ever before and getting worse every day.

How's that? But with negative interest we'll be able to reduce the burden, yes?

 

[ownyourfuture]

For the OP
This pamphlet was included with my Vanguard 401(k) statement back in 2006.
Sorry about the quality, had a really cheap scanner back then.

 

[bobbyr]

I have the same concerns. The payroll tax noise made me consider taking SS early (am 62), but aca and income concerns keeps me from doing that. I think otherwise I'd start it today.

What I read is the 'postponed' taxes would probably be forgiven. (taking current news with grain of salt)

Sure wish we could do a SS lump sum payout and get the money in our own hands.

Planning for retirement is challenging when fixed income isn't fixed.

 

[Dtail]

Under the current law, a haircut for one is a haircut for all. It does not matter if you've been collecting SS for 20 years or 1 month or are planning to start in the future.

Of course Congress can change the law any time, and many people do think that there will be fixes put in place before it's necessary to cut benefits by 25 to 30 percent.

+1
I believe there will be a last minute fix, or a proposal to kick it further down the road.

 

[Dtail]

I have the same concerns. The payroll tax noise made me consider taking SS early (am 62), but aca and income concerns keeps me from doing that. I think otherwise I'd start it today.

What I read is the 'postponed' taxes would probably be forgiven. (taking current news with grain of salt)

Sure wish we could do a SS lump sum payout and get the money in our own hands.

Planning for retirement is challenging when fixed income isn't fixed.

The permanence of the deferral is already being walked back.

 

[Markola]

Of course Congress can change the law any time, and many people do think that there will be fixes put in place before it's necessary to cut benefits by 25 to 30 percent.

+1. Experts who actually understand SS and know what they are talking about, vs. news media alarmists, project worst case cuts at approximately 25% somewhere around or after 2035. Factor that in as a worst case and you are good to go. Or, succumb to overblown fears that SS will disappear and keep working for many, many more years. Your choice.


https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html

 

[ERD50]

Sigh...I'm hoping that, since there is really nothing I can do about it (except vote!), that I can figure out how to stop worrying. Thank you for letting me worry here, though, everyone!

CindyBlue, as Markola points out below, the estimates were for ~ 25% cuts to SS in 2035 if no action is taken. Now, the economic impact of COVID19, plus the effect of this Executive Order could pull that date in some, but it certainly isn't going to pull it in to March!

Rather than worry, plan. So maybe instead of that 25% cut in 2035 (again, assuming no action is taken), maybe plan for a 25% cut in 2034, or 2033 instead? If you plug that into FIRECalc, does that change your success rate significantly? I doubt that a few more years of a 25% cut will have much effect, and if it does, you might be playing things a bit too close anyhow? Regardless, you have 12 years or so to makes some adjustments.

-ERD50

+1. Experts who actually understand SS and know what they are talking about, vs. news media alarmists, project worst case cuts at approximately 25% somewhere around or after 2035. Factor that in as a worst case and you are good to go. Or, succumb to overblown fears that SS will disappear and keep working for many, many more years. Your choice.


https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html

 

[ShokWaveRider]

Well we're broke. All these social programs will have to end and end soon. Too bad.

SS is not free, we have all paid for it throughout our working life. The fact it is called "Social Security" does not mean it is an entitlement, it is more of an insurance policy. BUT, all games are off "IF" the insurance company is forced into bankruptcy.

 

[Markola]

SS is not free, we have all paid for it throughout our working life. The fact it is called "Social Security" does not mean it is an entitlement, it is more of an insurance policy. BUT, all games are off "IF" the insurance company is forced into bankruptcy.

Please. The federal government is a long, long, long way from that.

 

[CindyBlue]

CindyBlue, as Markola points out below, the estimates were for ~ 25% cuts to SS in 2035 if no action is taken. Now, the economic impact of COVID19, plus the effect of this Executive Order could pull that date in some, but it certainly isn't going to pull it in to March!

Rather than worry, plan. So maybe instead of that 25% cut in 2035 (again, assuming no action is taken), maybe plan for a 25% cut in 2034, or 2033 instead? If you plug that into FIRECalc, does that change your success rate significantly? I doubt that a few more years of a 25% cut will have much effect, and if it does, you might be playing things a bit too close anyhow? Regardless, you have 12 years or so to makes some adjustments.

-ERD50

So...I guess that one thing I can do to make myself feel better is figure out how to save/invest (though not sure where to put it, especially with the economy doing what it's doing!) at least 25% of my Social Security income from when I start getting it next March, until 2035, both to practice living on that reduced income and to have more backup savings.

I wasn't playing it too close that I know of when I retired last August, but just right, according to FireCalc. I had to plan with what information I had at the time. The money I have is the money I have. If the pension falls apart and/or Social Security falls apart, I will be in trouble after about ten years.

The good news is that so far, all is working out. I'd planned for a retirement budget since 2016 (with the help of all you kind people here), then practiced for a year in 2017, opening an account and depositing into it and spending from it only what I thought I'd have in retirement, and came in under budget. The spending this first year of retirement (from last August to to the end of this month) matched that practice year (coming in under budget), even with a couple of unexpected expenses.

I have to figure out how to just stop worrying.

Thank you for your advice and information...I am feeling better informed. It's the unknown that is so hard to deal with...sigh...

 

[ShokWaveRider]

Please. The federal government is a long, long, long way from that.

No one said it was.

 

[SunnyOne]

At the risk of sounding obvious - if eliminated, eliminate for those entering the workforce.

What to do about those who have been PRE-PAYING their entire adult lives?

 

[LRDave]

So...I guess that one thing I can do to make myself feel better is figure out how to save/invest (though not sure where to put it, especially with the economy doing what it's doing!) at least 25% of my Social Security income from when I start getting it next March, until 2035, both to practice living on that reduced income and to have more backup savings.

I wasn't playing it too close that I know of when I retired last August, but just right, according to FireCalc. I had to plan with what information I had at the time. The money I have is the money I have. If the pension falls apart and/or Social Security falls apart, I will be in trouble after about ten years.

The good news is that so far, all is working out. I'd planned for a retirement budget since 2016 (with the help of all you kind people here), then practiced for a year in 2017, opening an account and depositing into it and spending from it only what I thought I'd have in retirement, and came in under budget. The spending this first year of retirement (from last August to to the end of this month) matched that practice year (coming in under budget), even with a couple of unexpected expenses.

I have to figure out how to just stop worrying.

Thank you for your advice and information...I am feeling better informed. It's the unknown that is so hard to deal with...sigh...

Based on the fact you budgeted and your spending is tracking your budget so far, you'll be fine.

You've picked a fabulous time to NOT be in workforce right now, IMO.