Are You Planning on a Soc Sec Haircut?

[Midpack]

We were both planning to wait until we turn 70 to claim, but we may claim a little earlier, all hinges on the future of Soc Sec. So I thought I'd do a poll to see what others are thinking as of Nov 2024.

Of course there are limitless options, please choose the one closest to your expectation today. Hopefully we can avoid debating the fine points of option #2, seems to be what we're being told today.

Another way to state it:

• Congress will save Soc Sec as is, no benefit or COL cuts.
• Congress won't take any action and benefits will have be reduced 2034 or thereabouts.
• Congress will act, but there will be benefit cuts and/or tax increases.

Please do not get into political debate - just asking what you're planning on financially TODAY. No requirement to explain your choice.

 

[walkinwood]

With so many older Americans relying heavily on social security to get by, I can't see how a blanket cut will fly. Older Americans are a reliable voting block.

I think there will be shared pain.

 

[TheWizard]

It'll be fine, no cuts in SS benefits.
Fortunately, I've got sufficient retirement income from other sources that a worst case scenario won't impact me too badly...

 

[Mark1]

None of the above.

4) Borrow to pay benefits, until we can't borrow anymore. (Maybe an element of shared pain too, but not nearly enough to cover shortfall).

 

[audreyh1]

Really have no idea. DH will sign up in Jan as he turns 70 in May. I have the higher earning record and still plan to wait until 70 as it might benefit DH. That would be 2029, although I of course always have the option to start earlier.

I am not factoring solvency issues in my decision. Whatever happens happens.

So none of the above, which is missing from the poll.

 

[latexman]

For me, cuts and/or shared pain will not affect me too much. I planned ahead. But it may affect my kids' inheritance greatly!

 

[The Cosmic Avenger]

I am planning on a cut to benefits in order to be prudent, but what I think will happen is that benefits will be shored up by something like reducing or eliminating the tax cap or limiting benefits more to those with high income or even total assets.

 

[flyoverstate]

There is no way one party is going to raise taxes, and there is no way the other party is going to allow cuts, at least to those who get smaller SS payments.

So nothing will be done, and we will be so tired of hearing about Social Security by 2032 that we won't care what happens.

 

[Trailwalker]

I'm not optimistic about a proactive fix. Any plan is going to be hammered from multiple sides. I was originally in the wait until 70 category. Now we are in the probably at 67 category. Solvency is only a part of the equation. Potential health changes for either of us are another consideration.

 

[Chuckanut]

I’ve run FireCalc with a cut of 25% in SS. I’ll do OK, but there will be no more last minute first class flights to Paris for a dinner at Le Xpensive restaurant.

 

[Marc]

I have always been prepared for a 21% cut starting at some time. What scares me, though, is the report last month that they are considering (and possible under current law) to limit to a dollar amount with $2,500 per month being floated. If that happen I will feel real dumb waiting until 70 to claim.

 

[Midpack]

I’ve run FireCalc with a cut of 25% in SS. I’ll do OK, but there will be no more last minute first class flights to Paris for a dinner at Le Xpensive restaurant.

Interesting. I have run opensocialsecurity using longevity of 85 to 95 yo for DW and I, and WHEN to claim does not change that much between benefits continuing as is versus a 23% haircut in benefits starting in 2034. There's obviously a reduced lifetime benefit, but not much change in when to claim.

We're going to be OK no matter what, but I'm still interested in when to claim to optimize - knowing that it's impossible to guess right. OTOH delaying leaves me more room for Roth conversions, so that may drive our decision.

 

[jimbee]

DW claimed her benefits, I'm delaying until 70. My plan should work with or without SS. If I change my mind on my SS benefit, I can start anytime.

 

[5Miler]

I have been on SS for three years now as of this December having taken it at 68.5 years. Pending SS cuts had absolutely no influence on my decision to start SS.

I believe that whichever political party is in power when we get down to decision time on SS measures can afford to be labeled as the reason for SS payment cuts. Their party would pay a heavy price at the ballot box in the next election. I don't believe either of the two main political parties has the intestinal fortitude to deal with that.

 

[flyoverstate]

I have always been prepared for a 21% cut starting at some time. What scares me, though, is the report last month that they are considering (and possible under current law) to limit to a dollar amount with $2,500 per month being floated. If that happen I will feel real dumb waiting until 70 to claim.

That fear is why I have decided to take mine at 65 instead of 70 as I had planned.

 

[Crewer]

I ditto Chuckanut.

 

[mountainsoft]

I plan for a 30% cut in social security benefits. I'm hopeful SS will be shored up before 2034, but with the state of our government I'm not counting on it. Also with some of the ideas I've heard tossed around, I suspect the haircut will come sooner and/or be greater than 21-23%.

 

[Sunset]

I’ve run FireCalc with a cut of 25% in SS. I’ll do OK, but there will be no more last minute first class flights to Paris for a dinner at Le Xpensive restaurant.

You could get a steward job at the airline.
While at the airport, I ran into 3 stewardesses who were doing exactly that, flying to Paris for lunch !!

 

[Sunset]

I have always been prepared for a 21% cut starting at some time. What scares me, though, is the report last month that they are considering (and possible under current law) to limit to a dollar amount with $2,500 per month being floated. If that happen I will feel real dumb waiting until 70 to claim.

I never heard of this, where does one read this ?

As for us, waiting until 70, meanwhile doing Roth Conversions.

IF SS becomes tax free, then I may claim SS immediately, as the tax free aspect would probably bump it up equal to waiting to age 70, and I don't think the tax free aspect would last forever. I'll admit haven't really put a lot of thought into this new wrinkle.

 

[tmm99]

My guess - People with low SS payments will continue to receive the same amount as they most likely rely solely on their SS for their living expenses. People who receive over a certain amount will have more money taken out for taxes, but countless people would go bankrupt if the amount of money they are currently receiving went down in any significant way (20%, 25% etc), so the government would avoid doing that. If you are younger than 62, you will have a lower payout in the future unless your payout is very low to start with (as the government wouldn't want to starve the most vulnerable.)

Most of my SS (which I'm starting next month at 66) will be allocated for discretionary expenses. I consider myself one of the lucky ones.

 

[Joseph]

I plan for a 30% cut in social security benefits. I'm hopeful SS will be shored up before 2034, but with the state of our government I'm not counting on it. Also with some of the ideas I've heard tossed around, I suspect the haircut will come sooner and/or be greater than 21-23%.

I don’t think there is more than a 23% cut. My guess is around 10%
My assumption is they donut hole uncapped wages at around 400k and means test for high earners. Question is will high earners be 250k or 100k. Because 100k income stream in retirement is more like middle class. I remember when it was thrown around investing a portion of SS in the market ( around 20 yrs ago). Could imagine what SS fund would be worth as of now. Missed the ball on that

 

[braumeister]

Any changes would be so far in the future that I doubt there is any serious planning going on in the halls of Congress right now. So it's a complete tossup in my mind.

 

[Alan]

When using FireCalc and other calculators to plan when to retire I used 50% of SS estimated benefits so anything above that is lagniappe.

I really don’t know what to expect.

 

[pacergal]

I do not have it in my "plan", because I don't know what the government will do for sure!
We have pensions, which certainly helps.
If we get a haircut, our budget will get one too. Most likely travel and entertainment will be affected.

 

[Zona]

We have at least a decade before we can claim (2 decades if I wait until 70). A lot can happen in that time, so we planned conservatively. Our plan works without any SS although we have more BTD money if there is some SS when we hit full retirement age and beyond. I voted "cut by 21-23%" as those are the figures I use in Quicken Lifetime Planner. Running the plan with $0 SS, we still get 100% in Firecalc. QLP works with SS = $0 too, but the graph gets a lot closer to zero dollars leftover by age 100.