Social Security & FIRE Planning

[Koolau]

Huh? BLS CPI calculator shows $100 in March 2020 has the same buying power as $102.62 in March 2021.

Uhh, I'm no math major but 102.62 is darn near 3%. As always, I'm skeptical when the folks with the most to lose (like the FEDs who borrow money) get to say what inflation is. Being able to say "excluding housing, food and energy" (uhh, how convenient) isn't even stopping the rise in official or for-all-practical-purposes official inflation figures.

More importantly and perhaps more instructively, the most recent 6 mo. I-bond inflation interest was (IIRC) 1.77 (or about 3.54% annualized - see the current thread. https://www.early-retirement.org/forums/f28/i-bond-rate-5-2021-a-109136.html) If the FEDs put their money into it, it must be at least minimally "real." I'd put some money on it going up from here, but I have no crystal ball. I just hear a lot of whining about stuff like house prices doubling in many areas (they have in my old neighborhood) and building materials going up 3X - if they are even attainable. Local restaurant meals are up 35%. Gas is up 30%.

Supposedly one of the FEDs primary responsibilities is to control inflation within certain parameters. At some point, rates will have to rise if inflation continues to rear its ugly rear. I think this could be the beginning of significant inflation and I HOPE I'm wrong, so YMMV.

 

[pb4uski]

Near is not "already exceeding". I suspect we'll get a small spike in inflation that will then subside.

The thing I do know is that it's not already exceeding 3%.

 

[Koolau]

Near is not "exceeding".

True enough for THAT number. If we're gonna pick and choose our inflation indicator, I'm going with the one where they go so far as to back it in cash! (1.77% for 6 months of I bonds) I'd say THAT is exceeding 3% (exceeding 3.5%!), but of course we could argue all day about inflation and whether the FED will do its thing. It will be more clear in the rear view mirror. If I were gonna put a 10 spot down on the rear view I'd say MORE than 3% but YMMV.

 

[Exchme]

There are so many larger uncertainties in planning than to worry about whether politicians that like getting re-elected will cut a very popular program or will just borrow and spend some more money.

Years ago, politicians just talked about privatizing some of SS and there were (very effective) ads against it showing someone pushing granny and her wheelchair off a cliff. Stopped the effort cold.

 

[Koolau]

Near is not "already exceeding". I suspect we'll get a small spike in inflation that will then subside.

The thing I do know is that it's not already exceeding 3%.

Yeah, even with your edited comments, SOMEBODY in the gummint believes it is exceeding 3% and they're backing it in CASH - I bonds with annualized 3.5% inflation payment. Probably no point in arguing - especially since I have a lot less faith in BLS. If you check out their site, they have a CP for just about every occasion. I can assure you MY inflation is much more than 3% and I'm betting a lot of other folks here would agree. Maybe we can agree to pick our own gummint numbers and THEN agree to disagree since YMMV.

 

[pb4uski]

The number that I used is the most widely quoted number... I just saw the same number quoted in a Wall Street journal article that I was reading about an hour ago that made me think of you.

But if you want to pick a number that fits your story by all means go ahead.

 

[Koolau]

The number that I used is the most widely quoted number... I just saw the same number quoted in a Wall Street journal article that I was reading about an hour ago that made me think of you.

But if you want to pick a number that fits your story by all means go ahead.

I'm guessing if we held a poll here, we'd find a goodly number of folks who think the CPI numbers are at best wrong - AKA "low" and more likely, self serving. I doubt we'd find anyone who would vote for them being "high."

SO, since I have a vested interest in MY number ($120K in I-bonds), I think it's reasonable to "pick" that number - especially since we have a whole thread on it and it was, therefore top-of-mind, unlike the CPI. Oh, and again, it's the one that actually costs the gummint money - not saves the gummint money like using the CPI-W for SS increases IIRC.

Maybe I shouldn't have used the term "official" as that implies there is only ONE official number. There are actually quite a few "official" numbers (including many CPI numbers AND the official number used to calculate I-bonds.) So clearly, that was not correct on my part - so on THAT basis, I stand corrected. Enjoy. As always, YMMV.

 

[skyking1]

I figure SS at 100% until after 2034, and by then if it gets a haircut or nor we are OK because using it will reduce our WR for 5 years. That is the haircut that matters IMO. 5 years does not seem like much but when you zero out your WR for 1/6th of a retirement, it alters the outcome considerably.

 

[BlueberryPie]

I still believe that the SS program will be shored up in the end. Perhaps they will raise the tax rates on the various portions.
Not to include SS at all in a retirement calculation appears to be too severe.

I feel the same way. At least for anyone 50+

They will likely muck with some of the details, like the full retrirement age being pushed back (supposedly only to adjust for extended life expectancy) but I also expect any changes to have a time horizon of at least 20 years. you can't piss off current pre-retirees or early retirees too bad in this political climate.
Unless I'm mistaken the slow increase in full retirement age was instituted in the 1980s for example.

Rather than consider SS as "gravy" I'm looking at the extra income from my portfolio as gravy (well, some meat too since I don't want to live on SS alone). I love gravy and intend to bathe in it every day when I'm retired.

 

[Koolau]

I feel the same way. At least for anyone 50+

They will likely muck with some of the details, like the full retrirement age being pushed back (supposedly only to adjust for extended life expectancy) but I also expect any changes to have a time horizon of at least 20 years. you can't piss off current pre-retirees or early retirees too bad in this political climate.
Unless I'm mistaken the slow increase in full retirement age was instituted in the 1980s for example.

Rather than consider SS as "gravy" I'm looking at the extra income from my portfolio as gravy (well, some meat too since I don't want to live on SS alone). I love gravy and intend to bathe in it every day when I'm retired.

Come on in. The "gravy" is fine!