Life of Social Security Fund ??

[jollystomper]

If our benefits are cut 27%, I expect they will sweeten the deal with free postage for the rest of our lives.

It will more likely be a *credit* for free postage, which one will first have to file IRS form 2119-1619 to claim, but which will be means tested.

 

[pb4uski]

.... It was the idea that when you defer you are buying "longevity insurance" but you do not know what it will cost....

You do know what it costs... sort of... it costs the first 8 years of benefits... the age 62 benefit increased for COLA annually each year for 7 years... you just can't precisely quantify it. [emoji848]

 

[Texas Proud]

I agree with everything you said. And everything I said.

But the issue I thought was interesting was not this. It was the idea that when you defer you are buying "longevity insurance" but you do not know what it will cost.

Which would make the sales pitch for doing so, well, interesting.

I agree with your sales pitch except for the loss of COLA...



But I do think longevity insurance is more individual.... does your family have a history of living long or not... are you in good health or not..



There is also the other thing to consider in that is a spouse... my spouse does not have any SS of her own... she will only get mine.. she is younger than me... so the longevity insurance for me is very cheap... she will probably live a decade longer than my breakeven age.

 

[USGrant1962]

You do know what it costs... sort of... it costs the first 8 years of benefits... the age 62 benefit increased for COLA annually each year for 7 years... you just can't precisely quantify it. [emoji848]

You actually know the cost and benefit in real dollars. Ignoring COLA on both ends leaves you with current dollars.

 

[pb4uski]

You actually know the cost and benefit in real dollars. Ignoring COLA on both ends leaves you with current dollars.

I agree which is why for SS analysis I only deal in real $$$ and ignore COLAs... however if one is trying to factor in the time value of money you need to keep in mind that any investment yield assumption needs to be a real yield and not nominal.

 

[Montecfo]

I agree with your sales pitch except for the loss of COLA...



But I do think longevity insurance is more individual.... does your family have a history of living long or not... are you in good health or not..



There is also the other thing to consider in that is a spouse... my spouse does not have any SS of her own... she will only get mine.. she is younger than me... so the longevity insurance for me is very cheap... she will probably live a decade longer than my breakeven age.

I could send you a DM on the COLA thing. But again, very minor part of the point.

I find the "sales pitch" interesting because it lays out the real stakes. Much of the financial press parrots falsehoods such as deferring gives you a "guaranteed" 6-8% "return" and asks "Where can you get that in the marketplace?"

But the insurance is real. It just may come at a high cost as the sales pitch illustrates. But the cost is mitigated somewhat if you are married given survivor benefits.

My actual view on this is the decision on when to claim should be made based on conditions on the ground e. g., marital status, budget adequacy, financial market performance, personal health and informed life expectancy, insurance strategy, Roth conversion strategy, etc. Many moving parts.

And to this point we are both deferring to FRA. Or until next month...

 

[fishfactory]

I found this article interesting. I will take at 62. A bird in the hand....

Making Optimal Social Security Claiming Decisions - A Four Stage Analysis by Daniel Amerman

 

[Markola]

^^^^^^ Thanks for the article. Despite the elaborate argument, I still like the idea that I can have a lot more guaranteed income for life if I wait until 70. To me it’s not just maximizing every SS dollar but having it as a form of “long life” insurance. If I take my dirt nap early and don’t maximize my SS benefit, well, I am quite sure I won’t care and, besides, it will help others who need the program. YMMV.

 

[NoEZmoney]

Bi-partisan support for fixing SS

From everything I've read or heard, it seems there is growing support to "fix" the SS shortfall that a majority from both sides of the aisle (and party members) can agree on.
This clip is from a 03/24/23 article in the Deseret News.

Last year, the University of Maryland’s Program for Public Consultation did a study that found several changes to Social Security that both Republican and Democratic voters said they could support — changes that could save the program financially.

The top one of these, supported by 79% of Republicans and 88% of Democrats, would be to raise the cap on the payroll tax that supports Social Security. Currently, any income over $147,000 a year isn’t subject to the tax.

The survey found support for raising it to $400,000, people said, making this an easy fix that ought to sail through any Congress. That would eliminate 61% of the shortfall.

Even raising the payroll tax itself, from 6.2% to 6.5%, garnered support from 70% of Republicans and 78% of Democrats. Similar majorities agreed it would be OK to phase out benefits for the top 20% of high-earning retirees — people who would hardly feel the difference. That would erase another 11% of the shortfall.

Smaller majorities favored raising benefits in different ways, proving there is little appetite for cuts to the program.

 

[gman1234]

Excel shows that I will get more money up until age 79 by taking at 62. For me, that's next year so I plan to do it. Also, the 'fund' has no money now - it's just IOU's from the government to the government. All paid by the general fund (which includes SS current contributors). So, who knows when the decide to cut things (if they do). Interesting to note that the interest on the debt (due to rate increases) is now > that our entire military expense so money at the federal level is getting tight.

 

[pb4uski]

^^^ But, if you are currently 62, male and in average health then there is a 50% chance that you will live another 24 years to 86 according to the Society of Actuaries and American Academy of Actuaries Longevity Illustrator tool.

What does Excel show if you live to be 86 which is as likely as not?

And from what I can find, FY22 defense spending is $722 billion and interest is $556 billion, so the last part is not quite right.

When looking out into your future, it’s important to consider the likelihood that you will live for many years. This chart shows the probability of living beyond a certain number of years starting from your retirement age or your current age if you are already retired. The information is intended to provide reasonable estimates; however, you or your spouse/partner’s actual lifetime can differ significantly from these estimates, either above or below.

For instance, you may be comfortable setting your planning horizon to consider the period until there is only a 25% chance that you will live longer than the number of years indicated by the bar. In this case, based on the chart, you would set your planning horizon for 30 years. If you want to be more cautious, you might set your planning horizon such that there is only a 10% chance you will live longer (34 years from the chart).

Note that these probabilities are calculated from your retirement age. If you are not currently retired, the ALI assumes that you will live to your retirement age.

Probability	John Doe
90%	8
75%	16
50%	24
25%	30
10%	34

https://www.longevityillustrator.org/Profile?m=1

 

[Jeb-NY]

Back in my 50s a friend pointed out he was planning on waiting till 70 because he wanted survivor benefits and thought of it as an annuity that grew well between 62 and 70 and had cost of living adjustments. Once I saw his point of view and not how much money can I suck out it became easy to wait till 70.

It helped that I should have good genes, parents and all grandparents lived from late 80s to late 90s.

 

[youbet]

I found this article interesting. I will take at 62. A bird in the hand....

Making Optimal Social Security Claiming Decisions - A Four Stage Analysis by Daniel Amerman

I took mine at 62. I'm now 75, soon to be 76, so I've got the actual results from investing that income flow for the 8 years between 62 and 70. It worked out very well for me. They were fabulous years for DCA'ing into the TSM. Plus, since DW can't collect on my SS and gets none on her own, my decision provided an insurance policy that there will be something for her when I pass first. Everyone needs to evaluate their own circumstances.

When I read the reasons and explanations folks give for waiting until 70, the vast majority make complete sense to me. But not for my circumstances. You're smart to think for yourself.

 

[fishfactory]

I absolutely agree that everyone has variables that will point them to a different conclusion/decision. Genetic longevity is one of many variables. I found the article I posted interesting in that it discussed items I did not find in other articles and that I never would have considered. The more info the better.

 

[youbet]

^^^^^

There are sometimes very valid reason to pick one age over another for starting SS. I certainly had one (although it turned out financially I'm better off long term than had I risked waiting until 70). But, generally, if you collect at 62 and invest the money prudently over the 8 years, the difference between your position and those that waited will be negligible. But it seems to be so much fun to debate........ A debate over very little actually.

 

[pb4uski]

I took mine at 62. I'm now 75, soon to be 76, so I've got the actual results from investing that income flow for the 8 years between 62 and 70. It worked out very well for me. They were fabulous years for DCA'ing into the TSM. Plus, since DW can't collect on my SS and gets none on her own, my decision provided an insurance policy that there will be something for her when I pass first. Everyone needs to evaluate their own circumstances.

When I read the reasons and explanations folks give for waiting until 70, the vast majority make complete sense to me. But not for my circumstances. You're smart to think for yourself.

^^^ That's unusual in my experience and makes a huge difference in the decision.

While it has worked out well for you since equities have had a great run over the last 13 years, you can't count on that... it could have been the lost decade... you never know when you make the decision.

 

[youbet]

^^^ That's unusual in my experience and makes a huge difference in the decision.

You tend towards being an ego-centric person pb4uski so, of course, you see things primarily in the light of your own personal situation. Which is fine for you, but not necessarily for others.

While it has worked out well for you since equities have had a great run over the last 13 years, you can't count on that... it could have been the lost decade... you never know when you make the decision.

We can't count on anything, really. And I agree completely, until the time has past, we'll never be sure how it will work out. I know how it worked out for me and you have your anticipation of how it will work out for you. And I hope very well!

 

[cnocmmz]

You will also have less time to enjoy it as well.

 

[Time2]

I have written this at least 10 times, maybe even in this thread, I'm waiting until 70, to get my beautiful younger wife a bigger check when I'm gone.


Also, we overfunded into our tax deferred accounts, thus our RMDs will push us into higher tax brackets. Without SS income, we can Roth convert more while in a lower tax bracket and reduce the amount of our RMDs at a faster rate, expecting to reduce our taxes in the future, or at least my wife's when she is filing single putting her in a much higher tax bracket.

In the end this just get our kids a larger inheritance. This may be a good thing, but both our kids are doing much better financially than we ever did.
Maybe we should just learn to BTD!

 

[Montecfo]

^^^^^^ Thanks for the article. Despite the elaborate argument, I still like the idea that I can have a lot more guaranteed income for life if I wait until 70. To me it’s not just maximizing every SS dollar but having it as a form of “long life” insurance. If I take my dirt nap early and don’t maximize my SS benefit, well, I am quite sure I won’t care and, besides, it will help others who need the program. YMMV.

Well, except no guarantee you will have more income. I thought we covered that above...

 

[maestro]

I am 66 and 4 months and decided in Feb to start taking my 40 years of hard earned benefits next month in May. I don't really need it, but the way the politicians are handling this and many other situations today, who knows. I'd rather give it away to charity. Peace.

 

[pb4uski]

I took mine at 62. I'm now 75, soon to be 76, so I've got the actual results from investing that income flow for the 8 years between 62 and 70. It worked out very well for me. They were fabulous years for DCA'ing into the TSM. Plus, since DW can't collect on my SS and gets none on her own, my decision provided an insurance policy that there will be something for her when I pass first. Everyone needs to evaluate their own circumstances.

When I read the reasons and explanations folks give for waiting until 70, the vast majority make complete sense to me. But not for my circumstances. You're smart to think for yourself.

^^^ That's unusual in my experience and makes a huge difference in the decision.

While it has worked out well for you since equities have had a great run over the last 13 years, you can't count on that... it could have been the lost decade... you never know when you make the decision.

You tend towards being an ego-centric person pb4uski so, of course, you see things primarily in the light of your own personal situation. Which is fine for you, but not necessarily for others.

We can't count on anything, really. And I agree completely, until the time has past, we'll never be sure how it will work out. I know how it worked out for me and you have your anticipation of how it will work out for you. And I hope very well!

I'll ignore your rudeness... but please educate me how you are eligible for SS retirement benefits but that your DW can't collect on yours. I believe you but I'm just not aware of what situations where tha would occur and have never heard of such a thing.

 

[Accidental Retiree]

I'll ignore your rudeness... but please educate me how you are eligible for SS retirement benefits but that your DW can't collect on yours. I believe you but I'm just not aware of what situations where tha would occur and have never heard of such a thing.

I’m awake, so I’ll take a stab at answering.

If his DW is/was a teacher or public employee and has a pension from that career, she may not have paid into SS and cannot collect.

Further, her pension can keep her from collecting on her husband’s SS account because of the GPO (Government Pension Offset).

Something like 2/3 of the pension would be deducted from the SS amount she might receive. With a high enough pension, that 2/3 could be more than the SS his wife would collect; hence, she could not collect on his SS record.

 

[pc95]

I turn 62 later this year. My hesitation with the above logic is that I would get 100% of the smaller amount now, which pushes the breakeven way out if they cut all to 73% around the time I hit 70 or so.

For now I'll be holding off because taking SS at 62 would end any ACA subsidy. After 65, I am undecided. I'd like to think they won't touch benefits of those already eligible to collect, but the longer the shortfall is ignored, the more drastic the action will have to be.

People who are self-employed and paying more Social Security Tax are getting more screwed. Where's the cut-off line? Several ways to better fund. Its like a political hot potato nobody wants to hold.

 

[Andre1969]

I’m awake, so I’ll take a stab at answering.

If his DW is/was a teacher or public employee and has a pension from that career, she may not have paid into SS and cannot collect.

Further, her pension can keep her from collecting on her husband’s SS account because of the GPO (Government Pension Offset).

Something like 2/3 of the pension would be deducted from the SS amount she might receive. With a high enough pension, that 2/3 could be more than the SS his wife would collect; hence, she could not collect on his SS record.

I had forgotten about that, and I think it might apply to my Mom. She was in the federal government for something like 41 or 42 years, under the old CSRS system. She did pay a little into SS when she was young, but never got enough quarters to qualify in the first place, but I do remember her saying there was something called a "Windfall Exclusion Provision" or something like that, that tends to screw over some gov't employees, even those who had worked in enough other jobs to get the 40+ quarters or whatever you need for SS.

Anyway, my stepdad did pay into SS, and just started collecting when he turned 70 last year. I'd never really thought about it, but if he died first, my Mom most likely wouldn't get a survivor benefit from him?