Anyone else worried about SS?

[tmm99]

I feel that even if SS got reduced, it wouldn't be by much. If you are worried, I suggest you work longer, or spend less, as nobody knows for sure what's going to happen, not even the smartest folks here on this forum. So do whatever makes you sleep well at night.

Personally, I only need a very small portion of SS for my budget and the rest is just gravy, so I don't worry about it.

 

[Al18]

I’ll be mad about the cut, but am planning for it - the same way I anticipated a state teacher pension cut. The fix was state politicians took most of the state lottery funds and applied them to the pension fund some years ago, so the pension is now 60% funded, though COLA’s were eliminated 15 years ago. Not the best outcome, but far from the worst.

 

[Jerry1]

OP seems worried. If I was in good health and work was at least tolerable, I’d work a little longer. Life is about choices. If the OP and his wife were fully retired, what would they do with their time? If there’s not some very compelling alternative and the two above conditions (health and tolerable work) exist, that would drive me even further to work a little longer.

Not exactly what you want to hear from an Early Retirement Forum, but one has to get comfortable with their plan and the OP is not yet comfortable.

To get comfortable, I would model losing 100% of SS but could the OP make it if there was a 30% cut? A 50% cut? Getting your head around a smaller than 100% cut might help. I don’t worry about SS, but I’d be okay with handling a 30% cut and could probably absorb something closer to 50% without too much of a cut to my spending. With a 100% cut, I’d probably have to cut most, if not all, of my discretionary spending.

 

[AudiDudi]

I'd vote for redrawing the benefits curve changing the bend points to lower benefits for high income folks. <snip>

I would suggest adding two more bend points @ 8% and 4% along with dropping the income limit.

 

[Sunset]

I would suggest adding two more bend points @ 8% and 4% along with dropping the income limit.

Or just make the 85% taxable into 100% taxable as will hit higher income folks.
And drop the income limit for taxation for SS , BUT keep the upper amount available capped. So if a person pays SS tax on $1M , they still only collect the same as a person currently earning ~$145K approximately.

 

[Koolau]

Unfortunately, we need to factor in SS as part of our income. That is just reality.
I wish we were in a position where we can't but, life had other ideas.

My gut tells me that politicians will somehow "save" SS at the last minute.

BUT if you and DW will come up short if SS is cut, then you probably should begin addressing that now and find a way to increase savings or find a way to bring in more money to cover future expenses. I don't see a lot of options as you won't affect SS on your own (other than voting.)

Good luck.

 

[marko]

My gut tells me that politicians will somehow "save" SS at the last minute.

BUT if you and DW will come up short if SS is cut, then you probably should begin addressing that now and find a way to increase savings or find a way to bring in more money to cover future expenses. I don't see a lot of options as you won't affect SS on your own (other than voting.)

Good luck.

As often discussed, if a SS haircut (or any relatively short money) makes the difference between a good, safe retirement and eating cat food in one's old age, maybe a full re-evaluation of the plan is in order.

 

[albireo13]

Running Firecalc we are ok, even with a SS haircut of 20%. We just have to really manage our spending and stick to budget. If SS gets hit harder, we will need to tighten our belts.
Since my wife is still working and commuting, we haven't yet entered into our retirement spending scenario.

We had great "bucket list" plans for retirement ... travel, buying a camper trailer, etc. These are all discretionary spending and can be reduced if need be.

As for SS changes, I am thinking an income-based adjustment to benefits makes sense, along with others that have been mentioned.

 

[savory]

I'd vote for redrawing the benefits curve changing the bend points to lower benefits for high income folks. Then, have this new schedule apply to everyone including folks already receiving benefits. It seems silly to have some "Joe Toolbox" supporting a family on $40k - $50k a year pay higher contributions so wealthy current recipients, or soon to be recipients, don't have their unneeded benefits shaved a bit.

If comments on this forum regarding the need for full current SS for high income folks are typical ("It's just icing on the cake" or "I don't count on it or need it") are representative, no harm would be done to the high AGI folks and wouldn't put all the burden on the youngsters.

My 30 minutes of research came to a similar conclusion. Perhaps we don’t need the same safety nets for those jumping out of a burning building on the first floor vs the 10th

I also learned the SS financial position was strengthen a tad in 24 vs 23. While it still needs significant adjustment, I thought it was on a steady decline. Summary: Actuarial Status of the Social Security Trust Funds

 

[donheff]

My wife was going to retire next year at 65 but, is now planning to keep working.
She is all done with her job but, is distraught about SS uncertainty.

I agree with others that no one is likely to affirmatively cut the amount of money current SS recipients are receiving. Maybe diet COLAs going forward and changes to future retiree benefits. If the law is structured such that benefits automatically drop when the Trust fund runs out, it is not inconceivable that members would throw their hands up and plead I didn't do it. But I doubt that one too.

If you are trying to convince your wife to calm down and jump in the water with you, ask her how much difference the extra years she might work would make. Is the difference in SS plus extra savings going to make a major difference in your lives? If you both will have to work past 70 to survive (after cuts) why not enjoy a couple of years of retirement and go back to work when you have to?

 

[rembrandt]

I’ll be mad about the cut, but am planning for it - the same way I anticipated a state teacher pension cut. The fix was state politicians took most of the state lottery funds and applied them to the pension fund some years ago, so the pension is now 60% funded, though COLA’s were eliminated 15 years ago. Not the best outcome, but far from the worst.

That is a good idea. They should apply some of the giant Powerball jackpots to SS. Nobody needs a $Billion!

 

[Midpack]

We’re lucky, long before retiring I planned on getting nothing from Soc Sec, even though I assumed a 30% haircut is the worst that could actually happen. I just claimed SS in May, and it’s been surreal to have “income” again after we retired (13 years me/6 years DW) living entirely off our portfolio, DW will claim in 2026 at 70 yo like I did. Out total $ benefit is astonishing.

I’ve said it before, I think workers and retirees need to share the pain when Soc Sec insolvency is finally addressed - though there may need to be some allowances or exceptions for (much) older and/or lower total income retirees.

Anyone who retired in the last 10-15 years who assumed they would get Soc Sec with no reductions for life might get a nasty surprise - should have planned for less than full benefit.

 

[jebmke]

We’re lucky, long before retiring I planned on getting nothing from Soc Sec, even though I assumed a 30% haircut is the worst that could actually happen. I just claimed SS in May, and it’s been surreal to have “income” again 13 years me/6 years DW after we retired living off our portfolio,

I’ve said it before, I think workers and retirees need to share the pain when Soc Sec insolvency is finally addressed - though there may need to be some allowances or exceptions for (much) older and/or lower total income retirees.

Anyone who retired in the last 10-15 years who assumed they would get Soc Sec with no reductions for life might get a nasty surprise - should have planned for less than full benefit.

When I had Vanguard do an analysis for us (2004? -- they used to do a lot of planning stuff for free then)., we somehow left SS out of the picture entirely. I'm sure it was an oversight.

I have no feeling for likely reductions. I do have trouble seeing congress light a match under the Villages people though so I lean toward most of any burden falling on the still employed.

 

[Flieger]

Not worried at all.

Flieger

 

[Aerides]

Nope, you should not be worried if you're already over 60. No way a vote to cut benefits from those already/nearly receiving would fly. At most if would be staggered and grandfathered and impact those younger (which still sucks, since they are the ones paying in still).

If you want to remodel firecalc with a haircut to SS for peace of mind, have at it, but any more than that is throwing away more of your time for something that is extremely unlikely to occur.

 

[Closet_Gamer]

I believe an "all of the above" approach will be required to fix SS ... tax hikes, benefit cuts, inflation calc changes and uncapping the taxable income. There may be some creativity in terms of finding other tax revenue sources.

I do wonder if there will be a seismic shift among younger people on the topic of who takes the cuts and whether that can apply to older folks in/near retirement. While we paid in and earned the income, younger people may think to the themselves "The older generations made themselves trillions of dollars in unfunded entitlement promises and now want me to pay for it. My answer is no." The same thing may happen with government pensions of various types.

The "OK Boomer" and "Karen" memes are part of a real feeling among lots of younger folks. Younger people have lots of good things we didn't when we were their age, but they also have financial challenges in terms of college debt, real estate costs, funding their own retirements, education costs for their kids, a recent inflation burst, and a brutal job online job search environment with lots of fake jobs posted to meet company job posting policies, AI driven resume reviews, and simply getting ghosted by companies after they apply.

You can only get so much blood from a stone.

Far from worrying about whether my SS will get cut, I'm much more concerned about my kids. And they have great educations and are both poised to launch succesfully into adulthood.

 

[Teacher Terry]

I’m really glad that the majority of my retirement income is from my state pension. If they cut 20% off my SS that’s only 94/month for me. I actually think any reduction will come either for future retirees and those at the highest level of collecting benefits.

I’m also glad that I continue to earn between 8-10k a year doing a little testing. I really enjoy doing it and the money of course. I have no fears of it being eliminated as you would have a lot of homeless seniors. The citizens won’t tolerate that.

 

[rembrandt]

I believe an "all of the above" approach will be required to fix SS ... tax hikes, benefit cuts, inflation calc changes and uncapping the taxable income. There may be some creativity in terms of finding other tax revenue sources.

I do wonder if there will be a seismic shift among younger people on the topic of who takes the cuts and whether that can apply to older folks in/near retirement. While we paid in and earned the income, younger people may think to the themselves "The older generations made themselves trillions of dollars in unfunded entitlement promises and now want me to pay for it. My answer is no." The same thing may happen with government pensions of various types.

The "OK Boomer" and "Karen" memes are part of a real feeling among lots of younger folks. Younger people have lots of good things we didn't when we were their age, but they also have financial challenges in terms of college debt, real estate costs, funding their own retirements, education costs for their kids, a recent inflation burst, and a brutal job online job search environment with lots of fake jobs posted to meet company job posting policies, AI driven resume reviews, and simply getting ghosted by companies after they apply.

You can only get so much blood from a stone.

Far from worrying about whether my SS will get cut, I'm much more concerned about my kids. And they have great educations and are both poised to launch succesfully into adulthood.

The job application process is much easier now than when I graduated.

Assistant
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Aug 17
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[Pellice]

It's a significant, but not overly significant, part of my retirement income as well. I just started drawing it this month, at age 69. I can make spending adjustments if necessary, but I don't expect them to be at my age and income. In any event, required minimum withdrawals are looming in a few years, which will boost my income further.

*PS - added edit. One thing I am hoping SS will do for me is to protect my portfolio from volatility in the coming years. It sharply cut my draw on my IRA. My FA has been watching his magic software and ended up saying that now would be better than next year at 70. He didn't think it was a critical difference, but now was his advice.

 

[Badger]

I started planning and investing for retirement 20+ years ago based on not having to rely on SS. I never minded that my paycheck deductions were going to SS for those who were already retired since my parents were in that group. Now after being retired for 13 years my wife and I have been getting SS for most of that time but I planned well enough to be able to take care of us without it. If SS was to go away it would not affect us. However, it may negatively impact any politician that tries to get rid of it.

 

[Chuckanut]

Reforming the SS system before things get bad, requires our elected representatives to work hard, take a position and then vote on the record. Simply allowing the SS cut to take place requires no effort on their part. It happens automatically.

So, I think there is a small chance the people who we vote for and put in office may take the easy way out and do nothing. Probably not. But, it is the easy way out, just don’t plan on running for office after the cut hits.

 

[G-Man]

My 30 minutes of research came to a similar conclusion. Perhaps we don’t need the same safety nets for those jumping out of a burning building on the first floor vs the 10th

I also learned the SS financial position was strengthen a tad in 24 vs 23. While it still needs significant adjustment, I thought it was on a steady decline. Summary: Actuarial Status of the Social Security Trust Funds

So, a 17% haircut based on 2024 numbers as opposed to a 20% haircut based on 2023 numbers.

 

[skipro33]

Have Roth distributions count towards determining the taxability of your Social Security benefit.

 

[Sunset]

I know 2 people who have been living on SS alone. So a cut will hurt them a lot.
I bet there are a lot of other people in the same situation, folks who retired with very little savings, and no pension.

 

[Marc]

I guess I am one of those that counted on SS when I retired; I even added PV of SS (around $1M) to my total assets for calculating the 4% SWR (actually started at 6% of actual financial assets). As I have been retired for over seven years, and not worried about sequence of return risk anymore, I am fine with haircut but hope it to be less than 20%.