What kind of job though? In my locale, that may be true, if one wants to be a Walmart greeter or do other minimum wage jobs.
It's laughable that you believe the SSA has anything to do with changing these rules.OK, here are three ways in which SSA policies are modified to the benefit of SSA and not to their recipients. I’d welcome your list of the policy changes that have leaned to the other side of the scale, that is, that benefit the recipients rather than the Admin.
For some of us, its not about milking the last dime. DW, who is older than me, will file at FRA. I will file early. We want to grab that cash and p!ss away a lot of our portfolio in our go-go years. SS, pensions, and great health care will be enough when were at go-slow, no-go, and sliding closer to the 6 foot ditch. We'd like to leave a little of our egg behind, but its not a priority.
+2Sorry, but that is complete nonsense.
OK, here are three ways in which SSA policies are modified to the benefit of SSA and not to their recipients. I’d welcome your list of the policy changes that have leaned to the other side of the scale, that is, that benefit the recipients rather than the Admin.
1. We all have discussed the elimination of the File and Suspend strategies. No need to elaborate more about this one.
2. They changed the benefit deposit schedule. Used to be that all recipients received benefit payment on the 3rd of the month. They have changed that to a scheduled release, such that you receive your deposit on the 2nd, 3rd or 4th Wednesday depending on your birth day if the month. This accrues a great investment benefit it Admin in hanging on to your money, and disadvantages the recipients in receiving it later.
3. They changed the COLA calculation from the more universal CPI-U to the less relevant CPI-W. CPIW is the one for lower wage earners “Urban Hourly and Clerical Workers”. This depresses the more generous COLA we would receive under the more universal index. See below about SSA COLA determination:
“The COLA is calculated using data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Of the CPI groups that the Bureau of Labor Statistics (BLS) measures, the CPI-W covers only 28% of the total U.S. population, and specifically excludes households “with no one in the labor force, such as retirees.”
You read that right.
The index used to determine the COLA of retirees does not measure the spending patterns of retirees, but younger workers instead. Retirees, we all know, spend their money differently than younger people and must spend a far bigger share of their budgets on housing and medical costs — two categories of spending that often rise several times faster than overall inflation.
There are better and more fair choices for indexing the COLA. The BLS also measures the price change experience of All Urban Consumers (CPI-U) which covers about 88% of the U.S. population including retirees as well as younger people, and it even maintains a “senior-specific” experimental CPI, the Consumer Price Index for the Elderly (CPI-E), that our government has quietly tinkered with since 1983, but has never used to calculate the COLA.”
3. They changed the COLA calculation from the more universal CPI-U to the less relevant CPI-W. CPIW is the one for lower wage earners “Urban Hourly and Clerical Workers”. This depresses the more generous COLA we would receive under the more universal index. See below about SSA COLA determination:
“The COLA is calculated using data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Of the CPI groups that the Bureau of Labor Statistics (BLS) measures, the CPI-W covers only 28% of the total U.S. population, and specifically excludes households “with no one in the labor force, such as retirees.”
You read that right.
Could you please provide a source for that COLA information. I would like to review it. Thanks.
Could you please provide a source for that COLA information. I would like to review it. Thanks.
Finally, to the degree they tweak benefits it will naturally be to constrain rather than expand benefits given that they have a well known underfunding problem... you better get used to it.
The discounts and premia from your PIA amounts were designed to be actuarially neutral, which is why the crossover point of age 82 is the same as the average life expectancy for a 65 year old of 82... so you're barking up the wrong tree on that one too.
Finally, there have generally been mortality improvements since the current discounts and premia were put in place so current beneficiaries have a slight advantage.
Otherwise, waiting until FRA seems meaningless. Why not 18 months earlier or five months later? What is magic about FRA?
Any earnings, income? Interest income, CG, dividends?One of the things about FRA that may or not apply: Earnings limits. If you are drawing SS before FRA, any earnings over $17,600 will result in a reduction in SS benefits. So for folks with on-going income, there may be a reason to wait.
Any earnings, income? Interest income, CG, dividends?
Thank you, great link, easy to read and understand. Sorry font won't reduce.This may help....
https://www.ssa.gov/pubs/EN-05-10069.pdf
Also, please be aware that you will receive back any income that was withheld under the earnings limits. You would get it all back after you reach Full Retirement Age. See pages 6-7 in that link above.
They didn't optimize on the right thing. My models indicate that, depending on market returns, many scenarios have me paying MORE tax but being able to spend MORE by taking SS early. They also don't disclose the rates of return they used, calling them "proprietary" (gimme a break!)the model than follows a stepwise
optimization sequence that seeks to minimize lifetime taxes and maximize Social Security
income as a proxy for maximizing wealth (since retirement age and investment allocations are
fixed in this analysis).
It would be fun to see that probability tree.When we use a probability tree type analysis on claiming age, after factoring in the odds of dying before the breakeven point and the very real possibility of future benefit cuts or additional SS taxes, especially on relatively higher income households, 62 wins out for us. Not due to a lack of psychological grit, but math and the very real SS forecast shortfall projections, which are stated pretty clearly on the Social Security web site.
If we were doing project estimates like SS at work in a project evaluation decision, we wouldn't ignore the possibility that future benefits are not 100% guaranteed.
For those just seeking a summary explanation, let's consider the simplest example scenario: an unmarried person, using the calculator prior to age 62. For such a person, the calculator:
If the person is older than 62 when using the calculator, claiming strategies that are no longer possible (i.e., filing in the past) are eliminated from the analysis.
- First assumes they file as early as possible, at 62.
- Calculates the amount of their monthly retirement benefit under such assumption.
- For each year up to age 115, the calculator multiplies the annual retirement benefit by the user's probability of being alive in such year, to arrive at a probability-weighted annual benefit.
- That probability-weighted benefit is then discounted back to age-62 value using the discount rate the user provided as input (i.e., to account for the fact that a dollar today can be invested and is therefore worth more than even an inflation-adjusted dollar in the future).
- All of those probability-weighted, discounted benefit amounts are summed, to arrive at a total "present value" for the assumed claiming strategy (e.g., claiming ASAP at 62).
- The above process is repeated for each possible claiming age (i.e., every month between 62 and 70).
- The claiming age that had the highest present value is then suggested to the user, and the present value associated with such claiming age is provided as well.
For a married couple, it's the same sort of process, but with more going on. Specifically:
https://opensocialsecurity.com/about/
- In addition to retirement benefits, spousal benefits and survivor benefits are included in the analysis.
- Probability weighting the various benefits each period involves separate calculations for "probability only Spouse A is alive", "probability only Spouse B is alive", and "probability both spouses are still alive."
- Each combination of possible claiming ages must be considered, for both spouses, and for both types of benefits (i.e., retirement and spousal).