Life of Social Security Fund ??

[luckydude]

I plan to claim SS when I hit 62, but I'm not counting on it and don't factor SS into my retirement planning. If it's there when I hit 62, that's great. If not, oh well.

 

[Montecfo]

Same. I think folks are wise to not bank on it. Having said that, it would be really hard for politicians to let it go underfunded because most expect it and have paid in.

Big backlash. People would stop wanting to pay in and it could unravel quickly.

 

[Texas Proud]

I think that I saw this in a post earlier but it is something that might be available...


They can borrow the money... just change the law and allow the fund to borrow just like the general fund and we are fixed...


BTW, just looked at the report and it runs out with the high costs... with medium it still has money for a bit longer... but still going negative...



The 75 year estimate is a negative balance of $20 trillion (as far as I can tell with a couple of minutes looking at the report...).. that is doable... the question then becomes how much is the general fund borrowing..

 

[rmorris50]

Michelle Singletary from the Washington Post

https://www.washingtonpost.com/business/2023/04/07/social-security-shortfall-impact/

Once again another article not suggesting to look at immigration reform to increase the tax base.

 

[Andre1969]

I have a problem with extending the retirement age. I worked in an office and probably could have worked to 70. My brother worked in construction and he barely made it to 62. We need to recognize that all jobs are not created equal when it comes to how long someone can work.

What's that old saying? Something like, people are living longer, but they're not necessarily living longer, healthier?

I have a feeling if the age for full SS benefits is increased, a lot more people may fall under disability, to bridge that gap? While increasing the SS age might save some money, I wonder how much more would be spent, in disability?

To use one example, my uncle got fired from his job as a truck driver for a construction company, in December 2013. He was 61, had kidney problems and other issues, and had to do dialysis 3x per week. I have a feeling that the insurance company was pressuring the employer to find a way to get rid of him. Anyway, he went on disability...in fact, the doctor said he could probably have gone on disability years earlier.

As I recall, the disability check was actually higher than his SS benefit, and when he hit FRA (age 66 I believe?) his check decreased.

 

[marko]

"Take the money and run" has been a phrase that has served me well over my lifetime. Lots of talk recently of haircuts, extended eligibility (and my personal life expectancy) make me glad to have taken it at 62.

 

[Badger]

The SS fund "depletion" will result in SS only paying $~73% of the normal amounts.
This will be if lawmakers do nothing.

This will mean people getting smaller amounts will get 73% of their smaller amount, people getting the max will get 73% of the max.

I will vote against any lawmaker that damages SS payments to me via action or inaction, hopefully lots of others will as well, even if it goes against their entrenched party line.

I'm still waiting for age 70 claim as I'd rather have 73% of that than 73% of a lesser amount.

Has anyone done a comparison of the "break even point" between the program today and the program of 73%? According to some references the difference between taking SS at 62 and 70 gives a break even age at around 80 yrs + or - a year or two. How would a 73% reduction affect the break even age between today and 2033?
Just curious since anything can happen to my sell by date before a potential change in 2033 at it would be a non-issue for me.

Cheers!

Cheers!

 

[racy]

Let your Representative and Senators know you expect them to take care of the looming Social Security problem. Here's a good link to them: https://www.govtrack.us/

 

[MichaelB]

Michelle Singletary from the Washington Post

https://www.washingtonpost.com/business/2023/04/07/social-security-shortfall-impact/

Would you mind giving us at least a highlight of the article?

 

[CRLLS]

I have a problem with extending the retirement age. I worked in an office and probably could have worked to 70. My brother worked in construction and he barely made it to 62. We need to recognize that all jobs are not created equal when it comes to how long someone can work.

No doubt, trade workers certainly have it tough. However, it is not just the trade workers that have problems with reaching full retirement age. It also affects the so-called white-collar workers. Many, many workers in their late 50's are let go for various reasons, business closures, replaced by lower wage workers or computer programs, mergers eliminate redundant workers, etc. They cannot find similar work in their chosen field. I was one of those workers and the replacement "job" took me years to find and was < 50% of my previous salary. IMO, raising the FRA to save SS is not a solution, it is another problem. It would require those workers who cannot work all the way to FRA to tap deeper into their retirement savings before SS kicks in. I certainly hope that my children are not asked to fill in a bigger gap that already exists.

 

[pb4uski]

"Take the money and run" has been a phrase that has served me well over my lifetime. Lots of talk recently of haircuts, extended eligibility (and my personal life expectancy) make me glad to have taken it at 62.

WADR, I think that the "take the money and run" approach is a very ignorant and short-sighted depending on the circumstances... what if one is in great health and has outstanding family longevity?

 

[pb4uski]

Has anyone done a comparison of the "break even point" between the program today and the program of 73%? According to some references the difference between taking SS at 62 and 70 gives a break even age at around 80 yrs + or - a year or two. How would a 73% reduction affect the break even age between today and 2033?
Just curious since anything can happen to my sell by date before a potential change in 2033 at it would be a non-issue for me.

Cheers!

Cheers!

I think it extends the breakeven point by about 3.78 years assuming 73% benefits (not a 73% reduction) beginning in 2034.

So if you are 62 this year and could collect 75 for 10 years and then 54.75 for 14 years that would be a total of 1,516.50 over 24 years to age 86.

OTOH if you are 62 this year and can take 75 for 20.22 years that would be 1,516.50 or 124 for 12.22 years would be 1,515.28.

So B/E with no haircut would be 20.22 years and with a 27% haircut beginning in 2034 would be 24 years... a 3.78 year difference.

Given family longevity, particular on DM's side and also joint mortality since I was a high earner and DW was a SAHM it is likely that one or the other of us will live to our early 90s so me delaying until 70 makes sense either way.

 

[Whisper66]

Does Life of Social Security Trust Fund question when to claim yours ??.......

.

Yes. Wife and I have started taking SS at 62 partly to get what benefits we can before further changes occur. Changes to SS that have negatively impacted our planned benefits already include increased taxation of benefits and increase in my full retirement age by 2 yrs. I see no reason to expect further changes won't negatively impact our benefits as retirees.

As a side note, this forum occasionally has a discussion on how much we've left "on the table" by retiring early. I retired at 55 and that decision left much more "on the table" than when we choose to take SS so this decision isn't too important in our specific situation.

 

[Montecfo]

Not sure the 73% would be static. Would be a declining percentage without reform I would guess.

It is ok as a worst case or a Boogeyman but this is not what will happen in my strong view.

If it does there will be much larger issues afoot.

 

[pb4uski]

Not sure the 73% would be static. Would be a declining percentage without reform I would guess.

It is ok as a worst case or a Boogeyman but this is not what will happen in my strong view.

If it does there will be much larger issues afoot.

It's actually 77% beginning in 2034 grading to 71% by 2097.

https://www.ssa.gov/oact/TRSUM/

	OASI	DI	HI	SMI
Type of benefit paid from the trust fund	Retirement and survivor benefits	Disability benefits	In-patient hospital and post-acute care (Part A)	Physician and out-patient care (Part B); prescription drugs (Part D)
Full scheduled benefits are expected to be payable until	2033	At least through 2097	2031	Indefinitely
Percentage of scheduled benefits payable at time of reserve depletion	a77	—	b89	—
75-year actuarial balance, as a percent of taxable payroll	-3.62	0.01	-0.62	—

a The percent of scheduled benefits payable is projected to decline to 71 percent by 2097.

 

[Major Tom]

Michelle Singletary from the Washington Post

https://www.washingtonpost.com/business/2023/04/07/social-security-shortfall-impact/

From the article,

“Social Security’s total cost is projected to be higher than its total income in 2023 and all later years,” the trustees’ report said.

I think they mean 2033. I often find typos in the synopses of articles of major newspapers posted on their FB pages, but not so often in the body of the article itself. It's just a minor typo, but I wish they'd get it right.

Would you mind giving us at least a highlight of the article?

Yes, I was thinking that too.

 

[misanman]

“Social Security’s total cost is projected to be higher than its total income in 2023 and all later years,” the trustees’ report said.

I think 2023 is correct. Withdrawals from the trust fund will fill the gap until 2033 when it is projected to run out of money.

 

[USGrant1962]

I think 2023 is correct. Withdrawals from the trust fund will fill the gap until 2033 when it is projected to run out of money.

None of the above. The retirement part of outlays exceeded income back in 2010 - the trust fund has been drawing down since then.

 

[marko]

WADR, I think that the "take the money and run" approach is a very ignorant and short-sighted depending on the circumstances... what if one is in great health and has outstanding family longevity?

Why, thank you.

Should I reach my break even at ~83, I'll be thrilled to have been so horribly wrong. As I said, "it has served me well" but I won't know until I reach that point in time.

In hindsight, I'll add "YMMV" to all of my future posts but I'd worry about anyone who'd take advice literally and blindly from SGOTI.

 

[rkser]

I have read that no matter when you claim your SS benefits, the SS system is designed to be economically neutral for you, meaning you do about the same if you claim at 62, 67 or at age 70.

Then I read the benefits will increase by waiting till age 70, apart from the increase in the survivor SS benefits for the survivor.

Please help me in resolving my understanding .

I am 66 & my present plan is to wait till 70 to claim SS.

 

[pb4uski]

From the article,

“Social Security’s total cost is projected to be higher than its total income in 2023 and all later years,” the trustees’ report said.

I think they mean 2033. I often find typos in the synopses of articles of major newspapers posted on their FB pages, but not so often in the body of the article itself. It's just a minor typo, but I wish they'd get it right.


Yes, I was thinking that too.

No, they mean 2023 and 2023 is correct. In the past SS taxes and interest routinely exceeded benefit payments and the annual surplus was invested in special issue US government bonds. The surplus accumulated to about $2.9 trillion.

Recently, due to demographic shifts, the reverse is occurring with annual outlays for benefits exceeding income from taxes starting in 2022 and utilizing some of that built up surplus each year.

Around 2033 the surplus will be all used up so if nothing is done they will have to reduce benefit payouts. By law, SS can't be paid from any sources other than SS taxes, interest on surplus, etc.

 

[pb4uski]

I have read that no matter when you claim your SS benefits, the SS system is designed to be economically neutral for you, meaning you do about the same if you claim at 62, 67 or at age 70.



Then I read the benefits will increase by waiting till age 70, apart from the increase in the survivor SS benefits for the survivor.



Please help me in resolving my understanding .



I am 66 & my present plan is to wait till 70 to claim SS.

In theory, if you start anytime between 62 and 70, your lifetime benefits will be about the same for a single unisex plan participant.

 

[Markola]

Both my parents claimed at 62. Both are 83 and in good health and they wish they’d waited until 70. Waiting is the best “longevity insurance” annuity out there.

I seem to recall the last time that changes to SS were proposed that they would have only affected people age 55 or younger.

 

[rkser]

In theory, if you start anytime between 62 and 70, your lifetime benefits will be about the same for a single unisex plan participant.

So, if that is the case, I am waiting till 70 just for DW's (age 62, lower earner) survivors benefits to be higher if I pass first.

Am I missing anything else ?

Thanks pb4

 

[Montecfo]

Both my parents claimed at 62. Both are 83 and in good health and they wish they’d waited until 70. Waiting is the best “longevity insurance” annuity out there.

I seem to recall the last time that changes to SS were proposed that they would have only affected people age 55 or younger.

It is longevity insurance. You just do not know the premium cost of the insurance, unlike most insurance.

The sales pitch for that would be interesting.

"Customer:hello I would like to buy some longevity insurance.

Salesman: Great. You are making an excellent financial decision.

Customer: I feel good about it. How does it work ?

Salesman: well you are entitled to what did you say, $36k per year from SS? Well, just pay that to me for the next 8 years.

Customer: oh, ok. But how much is the premium?

Salesman: Hard to say. But it won't be more than $288,000.

Customer: hmm that seems like a lot.

Salesman: well it would be that plus your foregone COLAs. But this will "guarantee" you a 6-8% return every year.

Customer: wow, that is so much more than I can get from stocks!

Salesman: yes. Just sign here. By the way: 'Results not typical'. "

Not saying this is bad to do. I think it makes sense in many cases. Just thought it would be interesting to think of it as an actual insurance product.