Mid 50's or younger... are you counting on Social Security?

[USGrant1962]

I do not think it's wise to consider SS as part of retirement at my age, unless something about what has been going on in Washington leads you to believe our Congress can do anything the protect it. Deficit is growing. Interest on our debt is becoming a larger and larger percentage of the budget every year. Here's a fun calculator that can tell you how much you are likely to get if the current situation continues.

How Old Will You Be When Social Security's Funds Run Out? | Committee for a Responsible Federal Budget

As your link shows, a 20% cut is the WORST case. Yearly SS tax income covers ~80% of benefits.

To OP, a 20% haircut is reasonable for planning, but ignoring SS means you will work longer than necessary. Please do that to fund MY SS check!

 

[rk911]

we weren't, at least not much. that was a contributing factor to our investment strategy and wealth building.

 

[Focus]

We *have* the money to fully fund Social Security, in spades. Don't let anyone convince you otherwise.

Absolutely. People are playing into certain politicians' hands when they publicly announce they're expecting to receive a huge benefit cut or not get any payout at all. It's not as if there aren't any workable solutions out there, like the Social Security 2100 Act: Here’s what Congress may do to fix Social Security (CNBC)

 

[MrLoco]

Social Security will "be there" for the next 50 years.
It would be "political suicide" of any politician suggesting SS will "STOP" abruptly.

Now, there will be gradual changes, some probably to begin within the next 5 years, to keep SS viable in the long term. This is inevitable.

I believe these changes will include the following:

1) Increase the age at which one can BEGIN to collect SS. Increase the age from 62 to 62.5 ; 63 ; 63.5 etc. until finally , perhaps 25 years from now, you CANNOT BEGIN to collect SS until age 65. This will force people to work until at least age 65. Less early retirement.

2) Gradual increases in SS payroll taxes. Self explanatory. Will need to be done.

3) Slowly decrease benefits over time.

A combination of the above three actions, although not popular, if done gradually, could be SOLD by the politicians as "This is what we GOTTA do."

As an aside MEDICARE is a much more immediate concern.

 

[BeachOrCity]

No one knows.

So one should plan on that money being at risk.

Most likely you will get some or most of it. You may be all of it. Very Small chance you will get none if it.

Just like life itself. You can’t count on anything for sure.

 

[Klubbie]

I turn 38 in April and take this approach.

As of today I assume that I will get 50% of whatever my benefit would be. That said, I do not factor it into my planning. As others have said, I think there is too much risk for politicians to "do away" with social security. Strictly from a behavioral point of view it doesn't appear we are anywhere close to actually fixing it in the short to intermediate term. I suspect politicians won't get serious about "fixing it" for another 10 years or so. By that point I'll be almost 50 and part of the group of constituents that Washington does not want to anger. So there is a pretty good chance benefits will be available for me in some capacity.

Without knowing what that looks like, I can't really plan for it. So by assuming 50% benefits at some point, I know there may be found money in my retirment plan. But as I said I treat it as found money and don't account for it in my formal planning today. But I do cross my fingers and hope it's there in 30 years.

 

[NotYourAverageJones]

There are worst plans in the world... just plan on SS as found money. But, at the same time, if you believe it will be there, you effectively could make an argument to "blow the dough" a little more aggressively up until then.

What say you?

We were fortunate enough to have other financial options as a backup, such as Military retirement/Combat disability, that we never factored in SS as something we "depend on to survive." Right off the bat, we set ourselves up to be able to cover all of our fixed living expenses without it. So for us it's treated as additional fun money when/if we get it! I am afraid though that the vast majority does count on SS to substantially supplement their retirement expenses, which I am sure its solvency is a very real concern for them.

With that, I don't think that the gov't will allow for SS to become "insolvent" either. I do think that we are in a pickle and something has to be done soon. Perhaps start by raising both the payroll deduction % for the employee and employer and substantially increase the SS wage base? idk if that's the perfect solution either, but to be honest, I see more of an issue with our Medicare system than with SS. Medicare is by far and away a way bigger problem we have to solve first and quickly.

 

[Andre1969]

When I run my retirement scenarios, I do plan for SS being there. However I also run another set of numbers, assuming no SS whatsoever, just to see how much of an impact there would be.

And surprisingly, not that much. In most instances, it does significantly affect my chances of retiring in any given target year. For instance, according to Firecalc, I could retire this year, with a withdrawal of $80K per year, and have a 93.9% chance of success. Assuming no SS, that would drop to 78.8%. I'm shooting for a 95% chance of success, although 93.9% would get me close enough to be comfortable, if I was truly ready to retire.

If there was no SS at all, I'd have to cut back to $70K per year, if I wanted a 93.9% chance of success. Or, if I wanted to work a bit longer, and really wanted that $80K, then next year, I'd have an 84.8% chance of success, and if I pushed it out another two years, 92.9%.

In most instances, if I want the same $ amount, the No-SS scenario has me working another 2-3 years. Or, if I want to go out the same year, it drops my chance of success around 13-16%.

As for my tolerance threshold, 95% or greater means I'd be comfortable doing it. 80-95%, it would just depend, on my mood at the time, circumstances, the economy, etc. And, how close to 95%, or 80%, I am. However, I wouldn't retire with a less than 80% chance of success, unless really forced to.

However, everybody's circumstances will be different. In my case, SS isn't a huge percentage of my my annual draw, to begin with. For instance, if I was to retire this year...well, I'm 50 now. Won't get SS until 62, and the estimated benefit will only be about $16K per year. So right now, I have a 93.9% chance of making it for 12 years, relying solely on my investments for that $80K, and then at 62, SS is only accounting for about 20% of my annual budget.

For someone more dependent on SS, obviously a cut will hurt them more than me. However, I'm sure it will still be there, in some form, for the foreseeable future. And any alterations they make, won't hurt things as much as my worst-case scenario of it going away entirely!

 

[DrRoy]

I am 60 but RE'd at 57. I have not so far counted any SS, and whatever I may receive (probably at 70) will be frosting on the cake. Worst case should be that benefits are reduced to the level of the pay-in, but I expect that politicians will not let it go completely that far.

 

[mrfeh]

Im 53. I have factored it in to my plans and hope to wait till I'm 70 ( 2036) to start collecting. Nothing is guaranteed, but my sense is at the very least we will get 80% + ( probably 100%) of what SS tells us. I think there is a tendency on this board for people to be over conservative about these topics.

+1 on each sentence above

I don't understand the SS fear mongering.

 

[Gumby]

I say you should keep working, just in case. If everyone retires, it won't be nearly as much fun.

 

[karen1972]

I'm 47, FIRed 5 years ago. I use 75%, I dont see a situation where they would eliminate it. Health care is a bigger issue and more likely to impact my long term finances than anything else.

 

[corn18]

I get the impression that those that do not plan on SS being there wear that as a badge of honor. I'd have to work another 5 years to retire without needing SS. That seems silly. Work 5 more years in case SS isn't there in 15 years? No thanks. I am planning on it, counting on it and retiring in 2 years expecting it to be there.

For those that don't need it, did you ever think about retiring a LOT earlier by including it?

 

[RobLJ]

I figure on it being available, at a 10-25% discount (I'm 61; DW 57); it would be political suicide to cut SS. We allegedly had plenty of money for the taxcut and increases in military spending to add to the deficit; not sure why SS is different, although I suppose the money for SS goes to the hoi polloi rather than corporations.

I get the impression that those that do not plan on SS being there wear that as a badge of honor. I'd have to work another 5 years to retire without needing SS. That seems silly. Work 5 more years in case SS isn't there in 15 years? No thanks. I am planning on it, counting on it and retiring in 2 years expecting it to be there.

For those that don't need it, did you ever think about retiring a LOT earlier by including it?

 

[mountainsoft]

I am 56 and do count on Social Security as part of our retirement plan. There is no way to know what "might" happen, so I make my plans based on the information available now. The SS trust fund is projected to run out in 2034 which would mean a reduction in benefits. So I only plan to receive 75% of the benefits SS estimates.

 

[Rex]

I am 55 and just joined the ER ranks.

My planning never considered social security.

When the FA runs his model, he says he always uses 50% payout.

(I'm more comfortable tracking my future to the ebbs and flows of the market instead of relying on a government handout....if the government decides to grant me a monthly check, that will be lagniappe)

This topic might also make a great poll.

 

[Tiger8693]

57 and yes, SS is in my plan. I am not succumbing to the mas hysteria. If SS goes away, we have WAY bigger problems.... Maybe it will be because of the Zombie Virus.

 

[brett]

My guess is that SS is safe. The country is aging. Over 55’s are one of the most dependable voting blocks.

Savvy politicians are very much aware off this. They will not do anything that would put this block of support at risk. After all...it is all about getting elected, taking care of those who helped you. And getting re-elected. Everything else comes far down the list.

 

[Release The Hounds]

I'm 53 and I fully expect the FRA age to be raised to 69 or 70 for my age cohort, with earliest age to take SS to go up to 64.

 

[T-Minus]

Social Security will "be there" for the next 50 years.
It would be "political suicide" of any politician suggesting SS will "STOP" abruptly.

Now, there will be gradual changes, some probably to begin within the next 5 years, to keep SS viable in the long term. This is inevitable.

I believe these changes will include the following:

1) Increase the age at which one can BEGIN to collect SS. Increase the age from 62 to 62.5 ; 63 ; 63.5 etc. until finally , perhaps 25 years from now, you CANNOT BEGIN to collect SS until age 65. This will force people to work until at least age 65. Less early retirement.

2) Gradual increases in SS payroll taxes. Self explanatory. Will need to be done.

3) Slowly decrease benefits over time.

A combination of the above three actions, although not popular, if done gradually, could be SOLD by the politicians as "This is what we GOTTA do."

As an aside MEDICARE is a much more immediate concern.

+1

I believe the most palatable option for politicians will be to raise the FRA to something above 67 for those born after 1962 (https://www.ssa.gov/planners/survivors/survivorchartred.html) - gradually reaching age 70, combined with an elimination of the max earnings cap, along with making all benefits taxable as regular income. I also believe they will raise the “early claim” age gradually from 62 to 65, and steepen the fall-off amounts (early claimers will get a lower percentage), and that they will eliminate delayed credits.

 

[daylatedollarshort]

I'm counting on Social Security but with a big pad in our calculations to allow for future cuts. Social Security has been either cut or proposed to be cut in the past in sneaky ways - higher taxes, raising the minimum ages, fiddling with COLA adjustments, etc. Plus I think people with other assets / income like many on this board might be more vulnerable to future income or asset testing.

 

[jim584672]

I think they will find a way to make it work, one way or the other. Political suicide to cut Social Security.

 

[BeWealthy]

At 53, I expect SS to be there mostly, if not fully intact. However, I consider FI conservatively without SS. I make two runs through the calculators: First, without SS to get a sense of worst case. Second, with SS to get an estimate of maximum spending allowed. Anywhere in between those two numbers seems like reasonable spending to me. Doh! I've probably worked too long.

 

[pj.mask]

My perspective is that the older generation feel much more entitled to social security. If you as anyone 50 or younger, they all give an answer like 0-75% of projected values. I believe this will become self fulfilling as a vote now to reduce benefits would get people voted out of office. However a vote in 15-20 years will be met with ‘just like I expected’ type response.

Benefits have/will continue to slowly be eroded for future generations with acceptable reasoning (‘well people live longer so it’s fine they increased the retirement age’) I fear it will only get worse.

I think this forum is more poised to benefit financially from benefit cuts (higher income, knowledgeable on investments) and how this impacts society as a whole is a political belief question.

 

[rodi]

58 yo here... Retired 4 years. My plan works without it... but it's more travel if it's there.

I do plan on DH (continuing) to receive SS... since it's part of our monthly income flow.

For the poster who mentioned young children... this was our case. If a parent is collecting SS and has minor children, the children get a dependent benefit till they are 18. This was a nice surprise I learned about here on er.org. It factored into DH taking SS at 62. We lose this benefit this next school year when younger son graduates HS (he turn 18 mid school year so the benefit continues till he graduates.) This wasn't part of our decision - but it's been nice.