Social security estimate

[RunningBum]

If that's the case, we all should start collecting ASAP, i.e., at age 62.

I ran a spreadsheet with the cutback coming at the worst possible time, at age 70, and it pushed my breakeven point with my assumptions back from 84 to 91 for taking SS at 62 vs 70. Since I turn 70 in 2031, I could be pretty close to that worst case.

Taking SS at 62 would eliminate my ACA subsidy and close my Roth conversion window, so I probably won't start at 62 anyway. 65, maybe. Still a few years to decide and see what happens with everything.

 

[Spanky]

I ran a spreadsheet with the cutback coming at the worst possible time, at age 70, and it pushed my breakeven point with my assumptions back from 84 to 91 for taking SS at 62 vs 70. Since I turn 70 in 2031, I could be pretty close to that worst case.

Taking SS at 62 would eliminate my ACA subsidy and close my Roth conversion window, so I probably won't start at 62 anyway. 65, maybe. Still a few years to decide and see what happens with everything.

Thanks for the analysis. Since my FRA will be in 2019, it is still better to delay SS until 2023 (age 70) despite the projected shortfall in 2034.

 

[pb4uski]

If that's the case, we all should start collecting ASAP, i.e., at age 62.

Not necessarily. On opensocialsecurity.com you can include a benefit reduction scenario under the advanced options, but the optimal solution isn't necessarily to take at age 62.

 

[kimcdougc]

I find this thread very useful. DH can start collecting at 62 this November. We haven't decided what we will do. Me, I have another 4 years to 62. Alas, just keep watching and reading and keeping up with current news about ss.

 

[SecondCor521]

If that's the case, we all should start collecting ASAP, i.e., at age 62.

I'm not saying @Spanky is thinking this way, but I wonder sometimes if people saying this are thinking that maybe the benefit cuts would only be to those who have not yet started collecting and not those who are already recipients.

Based on Social Security's phrasing, I've always thought that the haircut would be applied to all current and future recipients across the board. Yet I also doubt that is what we would end up with, as we seem to tend to preserve benefits for those closer rather than further away.

 

[joeea]

I've always thought that the haircut would be applied to all current and future recipients across the board.

Unless the current rules are changed, that's exactly what will happen.

Yet I also doubt that is what we would end up with, as we seem to tend to preserve benefits for those closer rather than further away.

I agree that the rules will change before that point in time.

 

[Bir48die]

So I read all sorts of comments about the solvency of SS. Well I'm just not in the boat of those that worry about it. Why?

1) Politicians won't let it happen

2) If you immediately take the earnings cap off it will solve most of it.

3) I'd worry more about the solvency of our country. If that goes to h*ll then we don't have to worry about the other stuff

In conclusion I don't see any haircuts on SS unless out elected representatives don't get off their lazy as*ses and fix it. They are coming up with all sorts of new ideas on how to raise taxes but this is the one that I personally would endorse and have even when I was a high earner.

 

[Perryinva]

If you are still only 45, and expect to have taxable income through age 60, then the current estimate, even inflation adjusted will still be low. I have copies of SS statements going back to the 80’s and if I take my age 45 statement, (61 now) and apply inflation increases to that amount it was pretty low. So use it as a rough number only. It is not a lot of use to plan for a retire income only using todays dollars, since no one knows what inflation will do that far in advance.

 

[Crabby Mike]

So I read all sorts of comments about the solvency of SS. Well I'm just not in the boat of those that worry about it. Why?

1) Politicians won't let it happen

You're kidding, right?! Note the inability of the current crop of stubborn egotists (on both sides of the aisle) to even keep the government operating. I have ZERO confidence in the ability of our elected officials to agree on how to deal with something as complicated and controversial as overhauling Social Security, even given 15 more years to do it.

 

[imoldernu]

Thought it might be interesting to see how SS has worked out for an old timer.
Basically, here's how it went for jeanie and me.

1. We are the same age, and took SS the same time in 1999, when we were 62.
2. We retired in 1989 at age 53, and had no more earnings in the 10 year period to 1999, when we took SS @age 62. Spent down our IRA's in between.
3. During the 40 quarters that counted for SS, I maxed the income level. Jeanie, while she worked, never reached more than 1/2 of my earnings, so receives 1/2 of mine.
4. Now at age 82... our current SS total for both of us, is $27,000.

Can't remember what we received from SS back in 1999, but @ current (inflation adjusted)... the total would be 20 X 27000 - $540,000. It has helped.

 

[RunningBum]

Thought it might be interesting to see how SS has worked out for an old timer.
Basically, here's how it went for jeanie and me.

1. We are the same age, and took SS the same time in 1999, when we were 62.
2. We retired in 1989 at age 53, and had no more earnings in the 10 year period to 1999, when we took SS @age 62. Spent down our IRA's in between.
3. During the 40 quarters that counted for SS, I maxed the income level. Jeanie, while she worked, never reached more than 1/2 of my earnings, so receives 1/2 of mine.
4. Now at age 82... our current SS total for both of us, is $27,000.

Can't remember what we received from SS back in 1999, but @ current (inflation adjusted)... the total would be 20 X 27000 - $540,000. It has helped.

So you're at around break even age now, and still kicking. Had you waited until 70 to collect, you'd be at about the same spot financially, and collecting ~$48K instead of $27K. Maybe you didn't have the funds to hold off on SS then, or maybe your returns have done better, or maybe that's not the right strategy for marrieds, but it seems like it'd be nice to have a much larger benefit for the rest of your life. Oh well.

 

[2retireearly]

Great. Thanks, folks. I am still 17 years away from the earliest time I could possibly take it (assuming it is still there), but it is helpful to have a rough number for planning purposes.

It assumes your last year's salary will be your salary each year until age 63,full retirement age or age 70. Then it takes from all those years the highest past 35 salaries, and those are used in the calc. So if your projected incomes are the same as your real incomes, with each year's maximum amount applies, then the estimate will be pretty close..

 

[audreyh1]

So the numbers I see are what I would get it I were the age to claim the benefit today. Payouts will increase at chained CPI, so this is effectively a real number if we believe that chained CPI is an accurate representation of inflation.

That sound correct?

I don’t think SS is using chained CPI at present. Federal Income Tax brackets are.

I treat SS projections by age as real numbers in planning future income and taxes. Like you (I think) I’ve several years of zero earnings, so all future earnings are assumed by the SSA to be zero.

Brewer you’re making me feel old! I’m 11 years out, DH 7.

 

[audreyh1]

It assumes your last year's salary will be your salary each year until age 63,full retirement age or age 70. Then it takes from all those years the highest past 35 salaries, and those are used in the calc. So if your projected incomes are the same as your real incomes, with each year's maximum amount applies, then the estimate will be pretty close..

I think Brewer has been retired for several years? Or did some part time work come your way? Can’t remember.

At some point after a few zero earning years SSA sets future earnings to zero when projecting your SS payments.

 

[imoldernu]

So you're at around break even age now, and still kicking. Had you waited until 70 to collect, you'd be at about the same spot financially, and collecting ~$48K instead of $27K. Maybe you didn't have the funds to hold off on SS then, or maybe your returns have done better, or maybe that's not the right strategy for marrieds, but it seems like it'd be nice to have a much larger benefit for the rest of your life. Oh well.

Well.. maybe... but giving up 17 years of retirement,since age 53, to w*rk for an extra $21K /mo. @ age 83 .. hmmm... I'd have to think about that. Ummm, maybe I could afford that Mercedes.

 

[RunningBum]

Well.. maybe... but giving up 17 years of retirement,since age 53, to w*rk for an extra $21K /mo. @ age 83 .. hmmm... I'd have to think about that. Ummm, maybe I could afford that Mercedes.

Huh? You wouldn't have given up anything. All you would've done is withdraw more from your investments from 62 to 70...then less for the rest of your life because your SS benefit is more.

Nothing you can do about it now. Just commenting that you are probably one of the few here who has probably reached the break even point.

Heck, with the extra you'd be getting you probably could afford that Mercedes.

You wouldn't have had to work one extra day, or spend one dime less. Some of the "take at 62" just can't seem to comprehend that. I'm not going to beat my head on that wall anymore. At least not today.

 

[Myssdragn]

However you are counting on SS benefits staying the same. I would rather collect the SS benefits from 62 and less from investments so when the SS benefit cut comes I will have more in my investments at an age where I probably won’t be spending as much.

 

[brewer12345]

Huh? You wouldn't have given up anything. All you would've done is withdraw more from your investments from 62 to 70...then less for the rest of your life because your SS benefit is more.

Nothing you can do about it now. Just commenting that you are probably one of the few here who has probably reached the break even point.

Heck, with the extra you'd be getting you probably could afford that Mercedes.

You wouldn't have had to work one extra day, or spend one dime less. Some of the "take at 62" just can't seem to comprehend that. I'm not going to beat my head on that wall anymore. At least not today.

I think the implication is that he would not have been able to stay retired without taking ss early.

 

[RunningBum]

I think the implication is that he would not have been able to stay retired without taking ss early.

Could be. I thought I covered that with "Maybe you didn't have the funds to hold off on SS then" but he came back with "giving up 17 years of retirement" which, I don't know what to make of that, so I'll just drop it.

People seem to look to the guy as a model of someone who's been through what a lot of us will be facing, I thought it interesting that he's made it to the breakeven point and wondered how he viewed it.

 

[Rianne]

When I use FIREcalc, I input # of years estimating FI based on how long me/DH might live.

According to SS website, at 62 we'll get 31K (combined) to make it easier and helps me get the big picture. Might be a 25% haircut in SS but we don't know that.
According to SS at 66.5, we'll get 42K per year.
Simple analysis if we live to 90.
31K * 28 years = $868K

42K * 23.5 years = $987K all based on my estimation of lifespan. $119K difference.

Spending in later years is estimated, you may travel less, spend less on daily life, but what about health issues? That extra $119K gets you pretty nice long term care for a year or more.

I don't think of the break even point. Our portfolio has a chance of decline, there are no guarantees with a portfolio, but SS is a guarantee even if they cut it 25%. You're still ahead if you wait. IMHO

 

[Bir48die]

Could be. I thought I covered that with "Maybe you didn't have the funds to hold off on SS then" but he came back with "giving up 17 years of retirement" which, I don't know what to make of that, so I'll just drop it.

+1

 

[BuysToys]

I always used 60% of our SS estimates when I loaded income into Firecalc or any other tool. Right now, we're in better shape than we planned. If we get a haircut, we'll just have to go back to plan d or g or whichever one it was that calculated that.

 

[Perryinva]

+2. The liklihood of a major market turmoil either along the way or because of and in addition to, a massive 25% cut in SS benefits is far far greater than the cut itself.For me, it’s the higher guaranteed income that makes the difference at an age where due to physical or mental issues, investments may be destroyed, stolen, or whatever. If everyone gets a 25 % haircut (which I think is extremely unlikely) I’d much rather still get 75% of $75k than of $50k, which is what the calculated amounts are for us at 77 and 83, in 2035, with existing inflation rates. We will be old enough, if still alive by then, that the time period for a minor reduction in that amount will be inconsequential for the most part. It only cost about $180k over 7 years for me to delay until 70, to buy that cola annuity, so it’s sure not going to make a huge difference to anyones portfolio of $1.5M or more. Maybe if you only have $500k, and plan on needing SS to RE, due to health or family history reasons, then file at 62 makes way more sense. I guarantee if I really think age 83 is not a distinct reality, I will file asap. But so far, DF (80) and grands, (died at 96 & 94) were neither paragons of healthy or smart living by any stretch. DF shows no signs of age related health issues that would take him out in the next 5 years. Interesting to note he filed and DM both filed at 62, (we want it now syndrome) and DM, a chain smoker, died of COPD causes at 69, so 62 was the smart move. DF tells me now he wished he had delayed, but he wouldn’t know what to do with the extra money even if he did. Unless he ends up in CCRC, in which case it would have made a huge difference. So far, no relatives have ever been in one of any kind.

 

[jkern]

You're kidding, right?! Note the inability of the current crop of stubborn egotists (on both sides of the aisle) to even keep the government operating. I have ZERO confidence in the ability of our elected officials to agree on how to deal with something as complicated and controversial as overhauling Social Security, even given 15 more years to do it.

+1

 

[jkern]

When I use FIREcalc, I input # of years estimating FI based on how long me/DH might live.

According to SS website, at 62 we'll get 31K (combined) to make it easier and helps me get the big picture. Might be a 25% haircut in SS but we don't know that.
According to SS at 66.5, we'll get 42K per year.
Simple analysis if we live to 90.
31K * 28 years = $868K

42K * 23.5 years = $987K all based on my estimation of lifespan. $119K difference.

Spending in later years is estimated, you may travel less, spend less on daily life, but what about health issues? That extra $119K gets you pretty nice long term care for a year or more.

I don't think of the break even point. Our portfolio has a chance of decline, there are no guarantees with a portfolio, but SS is a guarantee even if they cut it 25%. You're still ahead if you wait. IMHO

I don't have a written contract stating what my guaranteed payout will be. What happens if some future politician decides to means test SS and determine that I have enough and I'm not getting anymore.