How important is SS to your retirement plan? New Poll!

[RockMiner]

I thought it might be interesting to see how heavily people are relying on Social Security for their retirement income. This percentage is also meant to reflect your assumptions about future changes in benefits. The intent is a rough estimate, hence the small number of choices. Percentages should be for income (or SWR distributions) before income taxes.

Edit: The poll is only meant to include those eligible for SS. Thanks.

 

[SteveR]

Re: How important is SS to your retirement plan?

I assume this is for a family and not just individuals since only one vote was allowed. Our combined SS will be a small part of our total income but will help with our travel plans and to delay IRA distributions or lower them after SS. Most of our income will be from our IRAs so we will want to regulate them to minimize taxes and optimize income. SS will be a nice way to do that and we will be taking ours at 62.

 

[HFWR]

SWAG = 40%

 

[justin]

I guessed 25%, but I'm planning on ER around 40-45 or so. Which means about 20 years of ineligibility during the first part of retirement. The SS will be a significant portion of income once I get it, but I can't really plan on getting it since I have to produce income from investments for 20 years prior to receiving SS. In other words, the present value of the future stream of income from SS is very low.

 

[Mr._johngalt]

So far, I am the only one at 60%+ Could move down a notch or 2
as we are right on the cusp. Plus this is me only. DW is not all that
far away although she doesn't like to talk about it.

JG

 

[Spanky]

According the social security calculator, our combined income from SS will be $47.5K at age 66. The present value is $29,345. Our current expense is $48K. Thus, income needed will be $60K (tax rate of 20% is assumed). SS will cover about 50% of our need.

 

[yakers]

As "older" employee of the Federal Govt system I neither contribute to nor will recieve anything from SS. Federal employees since the 1980s are under SS.

 

[RockMiner]

I'm a little surprised at how few expect SS to provide more than 25%, and how many fall below 20%...this implies some pretty fat retirement budgets
but I guess we expect that in the land of FIRE. I suspect that the entire population polled in this way might invert the histogram?

 

[justin]

Rok, I think many ER's will live for a number of years without SS, so those payments don't figure prominently in their plans. Add that to the uncertainty of ever receiving full or even reduced SS for the youngsters here (under 50??). In my situation, I don't plan on having a full 30 years of earnings to base my SS on, so SS will be decreased further due to that. Then there is the fact that low income folks get back a much greater proportion of what they put in as compared to middle or high income folks (the latter describes the typical board poster).

 

[Honkie]

You should have included the option of 0% - there are one or two of us who will have no SS/State pension provision whatsoever (Not US SocSec in my case, but no home country state pension/benefit either). Totally dependent upon our own resources and planning.

Honkie

 

[RockMiner]

You should have included the option of 0% - there are one or two of us who will have no SS/State pension provision whatsoever

The original post states that the poll is only for those eligible for SS..less confusing that way.

 

[Honkie]

The original post states that the poll is only for those eligible for SS..less confusing that way. 

Sorry (sound of muttered embarrassment as exits stage left....)

 

[RockMiner]

I think many ER's will live for a number of years without SS, so those payments don't figure prominently in their plans. 

Granted, but my intent was to find out the expected importance of SS pension payments after they actually begin (assuming one has figured that out).  Prior to that point, it's between you and your SWR   

 

[Mountain_Mike]

0% here.... I had the chance to opt out, and I took it!

 

[Nords]

Granted, but my intent was to find out the expected importance of SS pension payments after they actually begin (assuming one has figured that out).  Prior to that point, it's between you and your SWR   

I don't think any ERs try to build up a work history to maximize their SS payments.  It'd be like moving the finish line when you're just a couple feet short of it.

This is not to imply that I won't take the money when I'm eligible... one of my life goals is to withdraw at least as much in SS as I would have made by putting my FICA in a nice 6% before-tax stock index fund.  However at an estimated SS benefit of only $9K/year that may take a few decades.

 

[peteyperson]

I am not counting SS (or state pension here in the UK) for anything.

The gov't. think tank is already suggesting either taxing us further to fund a 20% negligible boost to payout ($175 pw) or putting the start date back to age 67. I figured this kind of thing would begin to happen and here it is. The reasoning will become more and more valid as time passes, so I see no reason why the UK gov't. won't use the same reasoning to keep raising taxes/putting the start date back. This coincides with a change in the law for private pensions, where they now cannot be taken at age 50 as this is being pushed back to age 55+ from a few years time. So even those people who put money into their own pension arrangements are being "controlled" by central gov't. There is a distrust of "pensions" here in the UK as it is, I'm not sure this makes it any more trustworthy.

This news also came out the same day as a "deal" was done with all gov't. workers from MPs to Fire, Ambulance, etc., that they could have a properly funded pension worth $1.5m a piece @ 5% payout ratio) starting age 60. The newspapers here had front page headlines, "They get to quit at 60, we have to work till we drop!"

Anything I get will be considered a bonus!

Petey

 

[peteyperson]

I am not counting SS (or state pension here in the UK) for anything.

The gov't. think tank is already suggesting either taxing us further to fund a 20% negligible boost to payout ($175 pw) or putting the start date back to age 67. I figured this kind of thing would begin to happen and here it is. The reasoning will become more and more valid as time passes, so I see no reason why the UK gov't. won't use the same reasoning to keep raising taxes/putting the start date back. This coincides with a change in the law for private pensions, where they now cannot be taken at age 50 as this is being pushed back to age 55+ from a few years time. So even those people who put money into their own pension arrangements are being "controlled" by central gov't. There is a distrust of "pensions" here in the UK as it is, I'm not sure this makes it any more trustworthy.

This news also came out the same day as a "deal" was done with all gov't. workers from MPs to Fire, Ambulance, etc., that they could have a properly funded pension worth $1.5m a piece @ 5% payout ratio) starting age 60. The newspapers here had front page headlines, "They get to quit at 60, we have to work till we drop!"

Anything I get will be considered a bonus!

Petey

 

[MooreBonds]

I'm a little surprised at how few expect SS to provide more than 25%, and how many fall below 20%...this implies some pretty fat retirement budgets
but I guess we expect that in the land of FIRE. I suspect that the entire population polled in this way might invert the histogram?

I also voted for < 20%, and used the 3 reasons that justin cited (less than a full 30 years of full-time earning years; getting the super shaft from likely extensions in the full retirement age by the time my 29 year old body gets close to calling the SS office; saving like crazy allowing me to save a high percent of my salary for future needs to not depend on the government's manipulation of SS) It would be nice if I have a juicy, fat retirement budget, but I don't anticipate that at the moment (largely up in the air due to an unknown significant other and how many children will enter the picture).

 

[SteveR]

... It would be nice if I have a juicy, fat retirement budget, but I don't anticipate that at the moment (largely up in the air due to an unknown significant other and how many children will enter the picture).

Kids will surely eat away at your income but the wrong SO can kill your ER plans. I am in my third marriage and I can speak from experience that your SO is a major deal in FIRE plans. If I were still married to my first wife, I would be working until I dropped dead at my desk and would have a mountain of debt to leave behind. My second wife was a shopper but a smart one that would kill for a bargin. She was very good at saving and wanting to RE so it helped us a lot. We were married almost 10 years when she died but in that time we managed to increase our net worth many times over while having only mortgage debt. Current wife has had her share of deadbeat husbands and is still adjusting to what it takes to ER. She likes clothes but also looks for deals. I actually spend more than she does on house upgrades but we expect to get most of that back when we sell and downsize (one major reason for wanting the house we are in).

In short, the right attitude in both parties, will make your goal so much easier to attain.

Like the man said...."Choose..............but choose wisely!"

 

[rmark]

I checked 33% , but I discount SS as a fixed pension, since I suspect that medicare B rates will rise faster than inflation, using up the inflation adjustment in SS.

 

[TromboneAl]

How does one have 0% SS? Work out of the country? How did you opt out, Mountain-Mike?

 

[Honkie]

How does one have 0% SS?  Work out of the country?  How did you opt out, Mountain-Mike?

I opted out of my system a couple of years after working overseas and realising I probably wouldn't go back. As peteypeterson says in his post above, the Gov continues to pick away at the accessiblilty to a private pension (limits on age to access your own funds, how much available to commute to a lump sum etc ) and the private providers' restrictions on how much is transferrable to spouse/dependents upon passing are obscene.

Further, I took the view in my early 20's that the State Pension system had to become more restrictive over time with an increase in age for eleigibility, means testing etc,. So once I got out of the system by moving overseas, I stopped paying into it and so any State Pension I have at 65 (or 67 as they intend to increase the eligible age to) will rest solely upon the 10 or so years of contributions made before I expatriated. Will be worth 15% of 3/8ths of bugger all.

I guess peteys case will be much the same.

Cheers,
Honkie

 

[oldcrowcall]

I'm not sure what is meant by a % of income "before income taxes" as taxes are an expense.  Our SS (my wife is a couple of years older than me) is about 40% of our total income including the SWR distributions necessary to equal our expenses (which include income taxes).  I wonder why I am such a higher % than most here.

 

[igsoy]

old crow, I think the reason half the responses are so low is because they are younger people who don't have a whole lot of confidence that they will receive the promised amount 30 or 40 years from now.

I have 30 yrs to go. I look at my SS report and it says if I keep working at the present rate, then I will receive $1000/mo at retirement.

Well, A) I do not wish to keep working till then, so that will lessen it somewhat and, B) I take their assumptions and figure I'd be lucky to get half of that stated amount, so that's $500/mo for me.

There's a reason we're concerned with the FI part of FI/RE, you can't count on anyone but yourself to provide for you that far into the future. A hell of a lot of bad mojo could happen in this country in the next 50+ years before I kick off.

 

[RockMiner]

If our dual, "promised" SS benefits  made up only 20% of of our personal retirement income, we would be living large     So, I assumed that many who selected "Less than 20%" are either loaded, or they are heavily discounting current government numbers.  Seems prudent.  I'm assuming a somewhat arbitrary 25% cut for SWR planning purposes.  This "discount factor" vs age would make another interesting poll.