Depend on Social Security?

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tictock81
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Depend on Social Security?

Post by tictock81 »

I have 20-30 years until retirement. I've been contributing to Social Security for 25 years, but I'm not sure I'll get it in my old age. How do you y'all plan for SS if you have 20+ years until retirement? Do you assume you get none? Do you assume it comes, but is smaller and/or delayed? Do you assume it's "means adjusted"?

My whole life I've heard it won't be there when I retire... but so far it seems to continue. As my college Econ prof told me, "old people vote"!

Your wise advice on how to factor this into my analysis is appreciated.
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Re: Depend on Social Security?

Post by Vanguard Fan 1367 »

I appreciate John Bogle’s advice.

I also appreciate the living below your means that many here advocate.

I don’t like to waste my money so in doing the above things I am in better shape for financial challenges in whatever form they come.
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mptfan
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Re: Depend on Social Security?

Post by mptfan »

Tune out the noise, stop listening to doom and gloom predictions about the demise of social security, it's not gonna happen. Social security will be around for a long time and you will get your benefits. Worst case scenario you may get slightly reduced benefits compared to current law predictions, but you will get them.

To answer your question, I factor in my projected social security benefits into my retirement planning based on the current law with no reductions, although I do round the numbers down ever so slightly just because I like nice round numbers for future planning purposes, it's close enough for me.
Last edited by mptfan on Mon Jun 21, 2021 4:19 pm, edited 2 times in total.
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Re: Depend on Social Security?

Post by 123 »

The Social Security program has seen many cutbacks and adjustments over the years. Things like the elimination of benefits for students and the off-setting of Social Security benefits for some beneficiaries with government pensions. The best approach is to plan to be self-sufficient. Nobody can take care of you better than you can take care of yourself. If you plan on Social Security as a cornerstone of your retirement plan you could come up woefully short.
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Makefile
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Re: Depend on Social Security?

Post by Makefile »

At least according to the trustees' report the worst case scenario for Social Security is that it transitions to a purely pay-as-you-go program in 2034, at that point being able to pay 76% of what is supposed to be paid given annual revenues, declining to 71% by 2094. https://www.ssa.gov/oact/trsum/ To me, that "ain't bad" in contrast to a lot of the rhetoric. Remember that pre-1980s, workers weren't expecting to pay income tax on their Social Security benefits; now anyone upper middle class or higher pays tax on 85% of the value of their benefits, which you could consider to be something like a 0%-31% benefit cut depending on tax situation in retirement (perhaps even more if you get into the weird marginal tax situations as social security transitions to being more taxable with every additional $1 in income).

Now, if you have concerns about Social Security, you can always save more. The bigger issue is actually Medicare, which is on worse financial footing and where efforts to control cost have not worked. That's a much harder program to replace just by saving more, if future legislation cuts back on the benefits.
Admiral
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Re: Depend on Social Security?

Post by Admiral »

Plan for a range of outcomes, from 100% of what's promised (highly likely) to 75% of what's promised (worst-case).

That said If I was 20-25 years from Full Retirement Age I might also factor in my FRA being moved back a year. That would be staggered based on birth date, but since it's happened before it could happen again.

Social Security makes up the bulk of retirement income for the bulk of the population. To ignore it is silly. But to count on it to support your retirement fully is also silly. Save as much as you can.
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MrBobcat
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Re: Depend on Social Security?

Post by MrBobcat »

tictock81 wrote: Mon Jun 21, 2021 4:10 pm I have 20-30 years until retirement. I've been contributing to Social Security for 25 years, but I'm not sure I'll get it in my old age. How do you y'all plan for SS if you have 20+ years until retirement? Do you assume you get none? Do you assume it comes, but is smaller and/or delayed? Do you assume it's "means adjusted"?

My whole life I've heard it won't be there when I retire... but so far it seems to continue. As my college Econ prof told me, "old people vote"!

Your wise advice on how to factor this into my analysis is appreciated.
I used to hear that when I was younger too (still hear it). I'm now convinced it's not going to happen and on the outside chance it does happen everyone is going to be up the creek without a paddle planning or no.
delamer
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Re: Depend on Social Security?

Post by delamer »

Admiral wrote: Mon Jun 21, 2021 4:21 pm Plan for a range of outcomes, from 100% of what's promised (highly likely) to 75% of what's promised (worst-case).

That said If I was 20-25 years from Full Retirement Age I might also factor in my FRA being moved back a year. That would be staggered based on birth date, but since it's happened before it could happen again.

Social Security makes up the bulk of retirement income for the bulk of the population. To ignore it is silly. But to count on it to support your retirement fully is also silly. Save as much as you can.
Excellent response.

Also, OP, your former econ professor was absolutely right.

To give you something else to worry about, Medicare is in much worse financial shape than Social Security.
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Re: Depend on Social Security?

Post by jebmke »

Retired now, but never made an explicit assumption about SS. But should add that we never had “a number” either. We simply had a savings plan, an investment strategy and then focused on enjoying life. Things were a little more lax in those days. No internet in early years so looking at numbers often wasn’t in the cards.
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bberris
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Re: Depend on Social Security?

Post by bberris »

Maybe you understand this already, but you do not contribute, as you say, to Social Security. You pay FICA tax. You have no account there. In fact there is no there there, just a record of your eligible earnings. The distinction is that you do not have any claim to future benefits. However, I think the talk of 30 % haircuts across the board is absurd. On the other hand, means testing, or increased taxes on benefits, are a possibility.
Makefile
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Re: Depend on Social Security?

Post by Makefile »

bberris wrote: Mon Jun 21, 2021 4:34 pm Maybe you understand this already, but you do not contribute, as you say, to Social Security. You pay FICA tax. You have no account there. In fact there is no there there, just a record of your eligible earnings. The distinction is that you do not have any claim to future benefits. However, I think the talk of 30 % haircuts across the board is absurd. On the other hand, means testing, or increased taxes on benefits, are a possibility.
Right. I think most of us focus on the 30% thing because we're being careful to focus on current law and not proposed legislation. And second, as dramatic as it sounds, a 30% across the board cut is actually pretty mild compared to what gets thrown around in the political sphere (SS is bankrupt, etc.). And as I said, through the taxation of social security benefits a 30%+ cut at least for some subset of beneficiaries has already been done before. In addition to the possibilities you mentioned, another is to mess with the cost of living adjustment calculation.
howard71
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Re: Depend on Social Security?

Post by howard71 »

I think having a goal of not having to depend on social security in retirement is an excellent idea.

As for whether it will be there when you retire, that's pretty much up to what the voters want through the politicians they elect isn't it? If you say it's not going to be there when you retire, what do you base that on?
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Re: Depend on Social Security?

Post by Silk McCue »

howard71 wrote: Mon Jun 21, 2021 4:52 pm I think having a goal of not having to depend on social security in retirement is an excellent idea.

As for whether it will be there when you retire, that's pretty much up to what the voters want through the politicians they elect isn't it? If you say it's not going to be there when you retire, what do you base that on?
Asking folks to respond to your closing question will result in the topic getting locked.

Cheers
howard71
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Re: Depend on Social Security?

Post by howard71 »

Silk McCue wrote: Mon Jun 21, 2021 4:58 pm
howard71 wrote: Mon Jun 21, 2021 4:52 pm I think having a goal of not having to depend on social security in retirement is an excellent idea.

As for whether it will be there when you retire, that's pretty much up to what the voters want through the politicians they elect isn't it? If you say it's not going to be there when you retire, what do you base that on?
Asking folks to respond to your closing question will result in the topic getting locked.

Cheers
Not sure how somebody could respond to the question in a way that would get the thread locked. I thought it would be really interesting to know why people think Social Security won't be there for them. They may be right but I would just like to understand the reasoning. If it's because Dems are evil or Repubs are evil then obviously that's not going anywhere but surely people who think that can provide more intelligent answers.
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Re: Depend on Social Security?

Post by Admiral »

howard71 wrote: Mon Jun 21, 2021 5:23 pm
Silk McCue wrote: Mon Jun 21, 2021 4:58 pm
howard71 wrote: Mon Jun 21, 2021 4:52 pm I think having a goal of not having to depend on social security in retirement is an excellent idea.

As for whether it will be there when you retire, that's pretty much up to what the voters want through the politicians they elect isn't it? If you say it's not going to be there when you retire, what do you base that on?
Asking folks to respond to your closing question will result in the topic getting locked.

Cheers
Not sure how somebody could respond to the question in a way that would get the thread locked. I thought it would be really interesting to know why people think Social Security won't be there for them. They may be right but I would just like to understand the reasoning. If it's because Dems are evil or Repubs are evil then obviously that's not going anywhere but surely people who think that can provide more intelligent answers.
Here's you answer:

https://www.cbpp.org/research/social-se ... l-security
Makefile
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Re: Depend on Social Security?

Post by Makefile »

howard71 wrote: Mon Jun 21, 2021 4:52 pm I think having a goal of not having to depend on social security in retirement is an excellent idea.

As for whether it will be there when you retire, that's pretty much up to what the voters want through the politicians they elect isn't it? If you say it's not going to be there when you retire, what do you base that on?
I thought Social Security's challenges were pretty well known. Here's the trustees report which is politically neutral so as long as we focus the discussion on it and not what will or should be done about it, things should be ok: https://www.ssa.gov/oact/trsum/
  • Social Security taxes go into a Social Security trust fund
  • In the 1983 "deal" the FICA tax was increased substantially, to the point where the annual revenue was so much that it could pay all the benefits *and* leave some left over to invest in special US government securities. This was the situation up until 2010
  • Currently, the annual revenue + interest on the special US government securities can fund annual expense
  • According to the report, this year (2021) the trust fund is shifting to having to redeem some of those securities each year with the expectation that in 2034, they will all be gone, and SS will rely on annual revenue only from that point forward
The causes are politically neutral - life expectancy increases while Social Security actuarial calculations don't account for that, smaller worker vs. retiree ratio, and so forth.
howard71
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Re: Depend on Social Security?

Post by howard71 »

Admiral wrote: Mon Jun 21, 2021 5:31 pm
howard71 wrote: Mon Jun 21, 2021 5:23 pm
Silk McCue wrote: Mon Jun 21, 2021 4:58 pm
howard71 wrote: Mon Jun 21, 2021 4:52 pm I think having a goal of not having to depend on social security in retirement is an excellent idea.

As for whether it will be there when you retire, that's pretty much up to what the voters want through the politicians they elect isn't it? If you say it's not going to be there when you retire, what do you base that on?
Asking folks to respond to your closing question will result in the topic getting locked.

Cheers
Not sure how somebody could respond to the question in a way that would get the thread locked. I thought it would be really interesting to know why people think Social Security won't be there for them. They may be right but I would just like to understand the reasoning. If it's because Dems are evil or Repubs are evil then obviously that's not going anywhere but surely people who think that can provide more intelligent answers.
Here's you answer:

https://www.cbpp.org/research/social-se ... l-security
Depleting the trust fund does not mean that social security will no longer be there for future generations. Steps were taken to increase the trust fund by raising the payroll tax in anticipation of the retirement of baby boomers to get us to the point we are at now. Even if the depletion of the trust fund results in lower benefits and nothing is done about that, it doesn't mean "it won't be there" for future generations. That's up to future generations as long as we live in a democracy with elected officials.
Makefile
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Re: Depend on Social Security?

Post by Makefile »

howard71 wrote: Mon Jun 21, 2021 5:39 pm Depleting the trust fund does not mean that social security will no longer be there for future generations. Steps were taken to increase the trust fund by raising the payroll tax in anticipation of the retirement of baby boomers to get us to the point we are at now. Even if the depletion of the trust fund results in lower benefits and nothing is done about that, it doesn't mean "it won't be there" for future generations. That's up to future generations as long as we live in a democracy with elected officials.
You're of course right and that's why several us keep pointing out that the absolute worst "what if we do nothing" situation is a 24% shortfall. You are correct that there is a certain political perspective that benefits from an exaggerated view of the "what if we do nothing" scenario and therefore encourages that view. Such it is with all issues. I can think of several that apply to the other side as well. We shouldn't go any further into politics.
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Re: Depend on Social Security?

Post by lazynovice »

Our social security system is far from extravagant compared to our peer economic nations. I believe it will continue to be funded at a current levels.

Changes will be made to the program or tax rates but nothing as egregious as the 25% reduction many on this forum plan for based on an over interpretation of the trustee report.

I used to plan for no social security but the last two economic crashes have shown me that we are committed to a strong social safety net.
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Re: Depend on Social Security?

Post by LadyGeek »

tictock81 wrote: Mon Jun 21, 2021 4:10 pm I have 20-30 years until retirement. I've been contributing to Social Security for 25 years, but I'm not sure I'll get it in my old age. How do you y'all plan for SS if you have 20+ years until retirement? Do you assume you get none? Do you assume it comes, but is smaller and/or delayed? Do you assume it's "means adjusted"?

My whole life I've heard it won't be there when I retire... but so far it seems to continue. As my college Econ prof told me, "old people vote"!

Your wise advice on how to factor this into my analysis is appreciated.
For the record, Social Security is authorized under US law (legislation). Speculation about future legislation (what "might" happen) is prohibited by forum policy, see: Unacceptable Topics
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Re: Depend on Social Security?

Post by LittleMaggieMae »

At some point in my 40's - I got one of those letters from the SSA that showed how much I might receive at different retirement ages. I say that my Full Retirement age was 67... and I pondered what that meant. After some reading and head scratching... I realized that the numbers on this report assumed that I would be working until the date I collect (say 67) AND that I would be working my high paying job until I was 67. That made me blink.

My Social Security "payment" isn't gonna be anything to write home about if I don't work my high paying job until I'm 67 (alternatively if I earn less or stop working before 67 - but hold off taking SS until I'm 70 my "payment" is better - but how do I afford my lifestyle until I'm 70?? )

I guess that's why I always hear that SS was never intended to be one's sole source of income in retirement and that I shouldn't assume that SS alone will be enough to live on in retirement (ie the "don't count on SS for retirement".) :)

As I have a higher income job, I decided the best course of action was to fund my retirement myself (401K, Roth, HSA, taxable account). I was a little panicked because I wasn't sure I could "save/invest enough" and that I would really have to work until 65 or 67 anyway. But then I started paying attention my employers pension plan. The pension isn't enough to retire on - but in combination with my savings... it's a sweet deal. :) And so I think of SS as the "icing on the cake" OR perhaps as an "annuity" that kicks in when I'm 70 - and if I've underestimated how much to save (or if the pension plan goes south) if I can make it to 70 - perhaps the monthly income from SS will be a relief and helpful. :) And isn't that what SS is suppose to be? A safety net?? That's how I'm planning on using it.

I am totally ok with paying the FICA tax. I (and my mom) benefited from SS when my Dad died (I was 11). I have friends to whom "life happened" and who became disabled in their 40's. Since I'm planning to use SS as "icing on the cake" - if it's reduced or not there when I hit 70 - that's ok. If I have to take SS before I'm 70 (rather than choose to do so) - it means something "bad happened" and I am sure I will be grateful for whatever it pays out.

Also keep in mind that SS is more crucial for those who had median or less than median household incomes during their working career (and who do not have a pension). SS will replace a bigger chunk of of their "pre-retirement" income. For me, SS is the thinnest "leg" on my 3 legged stool - my personal savings will be the thickest, then a pension (that I can take at 65), and then SS. And in reality - without the pension - I would need to work longer (no FIre for me) and SS would play a bigger part of my retirement.
CloseEnough
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Re: Depend on Social Security?

Post by CloseEnough »

OP: no way to know what’s going to happen 2 years from now, and 20 years is even more uncertain. So, as others have said, plan for a range of outcomes. If you’re able to plan your financials so you are not at all depending on social security, good for you, that’s the best, but many won’t have the financials to do that.

Many of the people on this forum see social security as a supplement to retirement income, one income stream in their investment portfolio, and that’s a nice position to be in. Consider that in the US, without social security nearly 40% of retirees would be below the poverty level. Even with social security nearly 10% of retirees are below poverty level. That should tell you something about your questions.
Last edited by CloseEnough on Mon Jun 21, 2021 7:04 pm, edited 1 time in total.
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Re: Depend on Social Security?

Post by RickBoglehead »

We never planned on having pensions or Social Security. Now, as we enter retirement, my wife has a absurdly low pension, and we have Social Security. When I start collecting at age 70, we'll be getting about $60k per year. Nice surprise.
Last edited by RickBoglehead on Mon Jun 21, 2021 6:41 pm, edited 1 time in total.
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Re: Depend on Social Security?

Post by warowits »

I have never heard from a person who was well educated on the subject a reasonable explanation for how the prediction of no social security payout could come to pass. Closest I have seen is means testing that eliminates SS for people who have so much that SS would be a relatively small part of their retirement planning anyway. Telling a middle class person to ignore SS in their retirement planning is, and always was, terrible advice.

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Re: Depend on Social Security?

Post by esteen »

Makefile wrote: Mon Jun 21, 2021 4:19 pm At least according to the trustees' report the worst case scenario for Social Security is that it transitions to a purely pay-as-you-go program in 2034, at that point being able to pay 76% of what is supposed to be paid given annual revenues, declining to 71% by 2094. https://www.ssa.gov/oact/trsum/ To me, that "ain't bad" in contrast to a lot of the rhetoric. Remember that pre-1980s, workers weren't expecting to pay income tax on their Social Security benefits; now anyone upper middle class or higher pays tax on 85% of the value of their benefits, which you could consider to be something like a 0%-31% benefit cut depending on tax situation in retirement (perhaps even more if you get into the weird marginal tax situations as social security transitions to being more taxable with every additional $1 in income).

Now, if you have concerns about Social Security, you can always save more. The bigger issue is actually Medicare, which is on worse financial footing and where efforts to control cost have not worked. That's a much harder program to replace just by saving more, if future legislation cuts back on the benefits.
Personally in my retirement projections (15+ years out), I plan for social security at 75% (close enough), because of the trustee's report Makefile mentioned above. I think that will be worst case, and i like to keep my planning conservative.
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Re: Depend on Social Security?

Post by Fat-Tailed Contagion »

Plan on not receving anything and then if you do get anything you will be happily surprised.

Consider it a sunk cost.
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Re: Depend on Social Security?

Post by Trader Joe »

tictock81 wrote: Mon Jun 21, 2021 4:10 pm I have 20-30 years until retirement. I've been contributing to Social Security for 25 years, but I'm not sure I'll get it in my old age. How do you y'all plan for SS if you have 20+ years until retirement? Do you assume you get none? Do you assume it comes, but is smaller and/or delayed? Do you assume it's "means adjusted"?

My whole life I've heard it won't be there when I retire... but so far it seems to continue. As my college Econ prof told me, "old people vote"!

Your wise advice on how to factor this into my analysis is appreciated.
I have never factored social security into my retirement plan.

If I am still alive, I will take it on the very first day that I am eligible. I owe it to all of my employers that paid into the system.
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Re: Depend on Social Security?

Post by Mr.BB »

We won't start collecting until we are 70. However I do feel there will be some type of cut back. They say there will be a 23% reduction in by 2034 if nothing is done. I am counting on a 12% cut in benefits. Know one knows what it will be, but the less dependent on it you are the better off you will be.
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Re: Depend on Social Security?

Post by KlangFool »

tictock81 wrote: Mon Jun 21, 2021 4:10 pm
I have 20-30 years until retirement. I've been contributing to Social Security for 25 years,
tictock81,

This is not likely to be true.

A) I have 20-30 years until retirement.

B) I've been contributing to Social Security for 25 years

A and B do not go together. So, you should do a more complete deep dive as to when you will actually retire. And, most likely your answer would be you would retire before 62 years old. So, social security would not matter to you at all.

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Re: Depend on Social Security?

Post by MathWizard »

I plan using 75% of estimated benefits.

I don't consider that worst case because the bend points
are not set year to year, and could move downward, but I think from a planning standpoint 75% is prudent.

We do have flexibility.

I would be able to sustain the lifestyle we had in 2020 without SS benefits, but we prefer a higher spending for travel and other luxuries.
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Re: Depend on Social Security?

Post by KlangFool »

warowits wrote: Mon Jun 21, 2021 6:38 pm
Being the most pessimistic person does not make you the smartest person.
warowits,

Or, you are not pessimistic enough. I watched a documentary about homeless people. One of them is a homeless person in his 50s living the bridge. He hoped to survive until 62 years old so that he could collect social security.

A person has to survive until 62 years old before social security comes into play.

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Re: Depend on Social Security?

Post by KlangFool »

OP,

1) Why do you think that you would not be forced to retire way before 62 years old?

2) If you know that you would retire before 62 years old, then, social security would not matter to you.

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Normchad
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Re: Depend on Social Security?

Post by Normchad »

My entire career, I’ve assumed it wouldn’t be there for me. But 30 years later, it is still going.

I’m still not counting on it. But I am aware of what I’m supposed to get, and I do think there is a good chance I’ll get most of that.
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Re: Depend on Social Security?

Post by lazynovice »

Do those with pensions whether private or public plan for those to be cut or drop below PBGC funding levels?

Almost no private pension is fully funded. All of them need the employer to continue to fund them even for current retirees. If the employer turns the plan over, those at the higher end will lose benefits.

I am not aware of all state pensions, but the ones I am aware of are not close to 100% funded.

How conservative are people getting in their planning? Seems like you could convince yourself to never retire if you are conservative enough.
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vinhodoporto
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Re: Depend on Social Security?

Post by vinhodoporto »

I am around OPs age and use 50% of current benefit levels as a planning assumption. I expect to actually receive between 0% (assuming some sort of means test pushes me out) and 100% (assuming some sort of fix to the program financials).
vinhodoporto
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Re: Depend on Social Security?

Post by vinhodoporto »

lazynovice wrote: Mon Jun 21, 2021 7:15 pm Do those with pensions whether private or public plan for those to be cut or drop below PBGC funding levels?

Almost no private pension is fully funded. All of them need the employer to continue to fund them even for current retirees. If the employer turns the plan over, those at the higher end will lose benefits.

I am not aware of all state pensions, but the ones I am aware of are not close to 100% funded.

How conservative are people getting in their planning? Seems like you could convince yourself to never retire if you are conservative enough.
I am vested in a military pension and assume it will be 100% funded. Spouse has a well funded state / local teacher’s pension, in an region that is economically healthy and demographically growing. We assume 100% there as well but objectively it’s less secure than the military pension.
MathWizard
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Re: Depend on Social Security?

Post by MathWizard »

lazynovice wrote: Mon Jun 21, 2021 7:15 pm Do those with pensions whether private or public plan for those to be cut or drop below PBGC funding levels?

Almost no private pension is fully funded. All of them need the employer to continue to fund them even for current retirees. If the employer turns the plan over, those at the higher end will lose benefits.

I am not aware of all state pensions, but the ones I am aware of are not close to 100% funded.

How conservative are people getting in their planning? Seems like you could convince yourself to never retire if you are conservative enough.
I have relatives in S Dak.

S Dak had a 100% funded pension fund as of 2019.
I don't know what 2020 did to it.

But you are right that many states are not in good shape.
lazynovice
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Re: Depend on Social Security?

Post by lazynovice »

MathWizard wrote: Mon Jun 21, 2021 7:48 pm
lazynovice wrote: Mon Jun 21, 2021 7:15 pm Do those with pensions whether private or public plan for those to be cut or drop below PBGC funding levels?

Almost no private pension is fully funded. All of them need the employer to continue to fund them even for current retirees. If the employer turns the plan over, those at the higher end will lose benefits.

I am not aware of all state pensions, but the ones I am aware of are not close to 100% funded.

How conservative are people getting in their planning? Seems like you could convince yourself to never retire if you are conservative enough.
I have relatives in S Dak.

S Dak had a 100% funded pension fund as of 2019.
I don't know what 2020 did to it.

But you are right that many states are not in good shape.
Some are but the nature of pensions is that they are rarely fully funded. They don’t have to be and it ties up resources that could be invested elsewhere in a company/state. Of course, like any other leverage that can bite a sponsor if things go south. Very similar to a mortgage for an individual.

I see a lot of people haircutting their social security estimates but very few haircutting their pension estimates.
“I didn’t want my sailboat to be in the driveway when I died.” Nomadland
Topic Author
tictock81
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Re: Depend on Social Security?

Post by tictock81 »

Admiral wrote: Mon Jun 21, 2021 4:21 pm Plan for a range of outcomes, from 100% of what's promised (highly likely) to 75% of what's promised (worst-case).

That said If I was 20-25 years from Full Retirement Age I might also factor in my FRA being moved back a year. That would be staggered based on birth date, but since it's happened before it could happen again.

Social Security makes up the bulk of retirement income for the bulk of the population. To ignore it is silly. But to count on it to support your retirement fully is also silly. Save as much as you can.
This makes a lot of sense to me; thanks!
Topic Author
tictock81
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Re: Depend on Social Security?

Post by tictock81 »

bberris wrote: Mon Jun 21, 2021 4:34 pm Maybe you understand this already, but you do not contribute, as you say, to Social Security. You pay FICA tax. You have no account there. In fact there is no there there, just a record of your eligible earnings. The distinction is that you do not have any claim to future benefits. However, I think the talk of 30 % haircuts across the board is absurd. On the other hand, means testing, or increased taxes on benefits, are a possibility.
Understood that I don't 'have an account' with SS.
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tictock81
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Re: Depend on Social Security?

Post by tictock81 »

KlangFool wrote: Mon Jun 21, 2021 7:00 pm OP,

1) Why do you think that you would not be forced to retire way before 62 years old?

2) If you know that you would retire before 62 years old, then, social security would not matter to you.

KlangFool
When I said "retire" what I mean is "stop working", not "become eligible for SS benefits". I expect to continue working a relatively high-stress, moderate-income job until my mid-50's and then work at a much lower income level until 60-70, depending on how things go (health, energy, market returns, inflation, SS contribution level, etc.). If I'm in good health and can work a low-stress meaningful job until 70, why not? I have a disabled kid I'll need to support long-term, so perhaps my long-term financial obligations are atypical...
KlangFool
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Re: Depend on Social Security?

Post by KlangFool »

tictock81 wrote: Mon Jun 21, 2021 8:59 pm
KlangFool wrote: Mon Jun 21, 2021 7:00 pm OP,

1) Why do you think that you would not be forced to retire way before 62 years old?

2) If you know that you would retire before 62 years old, then, social security would not matter to you.

KlangFool
When I said "retire" what I mean is "stop working", not "become eligible for SS benefits". I expect to continue working a relatively high-stress, moderate-income job until my mid-50's and then work at a much lower income level until 60-70, depending on how things go (health, energy, market returns, inflation, SS contribution level, etc.). If I'm in good health and can work a low-stress meaningful job until 70, why not? I have a disabled kid I'll need to support long-term, so perhaps my long-term financial obligations are atypical...
tictock81,

<<When I said "retire" what I mean is "stop working",>>

And, that is what I meant too.

<<I expect to continue working a relatively high-stress, moderate-income job until my mid-50's and then work at a much lower income level until 60-70, depending on how things go (health, energy, market returns, inflation, SS contribution level, etc.).>>

What if you are forced to stop working in your 50s?

<<I have a disabled kid I'll need to support long-term, so perhaps my long-term financial obligations are atypical...>>

Have you check out the "Benefits for Children With Disabilities"?

https://www.ssa.gov/pubs/EN-05-10026.pdf

KlangFool
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Topic Author
tictock81
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Re: Depend on Social Security?

Post by tictock81 »

KlangFool,

Involuntary unemployment in mid-50's seems relatively common as performance plateaus and pay-grade maxes in a job.... This is exactly my concern. If I find myself in this situation, I'd have to look for paying work... how much pay? I don't know; that goes back to the other unknown variables, including SS payout levels.

I've use a lawyer specializing in disability and SSI disability info is on my radar for sure. The sad reality is that the gov't regulations essentially require the disabled person to live in poverty (marginal subsistence income only) or they become ineligible. I want to supplement this with 529 Able account, special needs trust, etc. to get every advantage. But the fall-back position is that I work.

I've been encouraged by this discussion... based on the feedback, I'll assume a 50% and a 75% SS benefit payout scenario for my calculations to be conservative.
tj
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Re: Depend on Social Security?

Post by tj »

MathWizard wrote: Mon Jun 21, 2021 6:52 pm I plan using 75% of estimated benefits.

I don't consider that worst case because the bend points
are not set year to year, and could move downward, but I think from a planning standpoint 75% is prudent.

We do have flexibility.

I would be able to sustain the lifestyle we had in 2020 without SS benefits, but we prefer a higher spending for travel and other luxuries.
I don't see how the bend points could move downward.
mrsgoldilocks
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Re: Depend on Social Security?

Post by mrsgoldilocks »

Same as the OP, I'm around 20 - 30 years away from my "official" retirement age. Personally, I do not take social security payment in my retirement planning. Not that I think I will receive $0 payment, but the projected amount on my "statement" assuming that I work at the same level of income (inflation adjusted?) until retirement age. That's highly unlikely, so my benefits will be "reduced" because of that. How much it will be reduced? I'm not so sure yet.
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El Greco
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Re: Depend on Social Security?

Post by El Greco »

There will be no cut in benefits. Would you want to be the political party in power when it's time to make the cuts? I didn't think so. "They" will find the money somewhere.
tj
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Re: Depend on Social Security?

Post by tj »

mrsgoldilocks wrote: Mon Jun 21, 2021 10:23 pm Same as the OP, I'm around 20 - 30 years away from my "official" retirement age. Personally, I do not take social security payment in my retirement planning. Not that I think I will receive $0 payment, but the projected amount on my "statement" assuming that I work at the same level of income (inflation adjusted?) until retirement age. That's highly unlikely, so my benefits will be "reduced" because of that. How much it will be reduced? I'm not so sure yet.

Plug in your numbers to ssa.tools and put 0's starting in the year when you plan to stop working and see what number it spits out. You could reduce that number by 25%. It's unlikely to be less than that. To not take it into account means you will work longer than you need to.
KlangFool
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Re: Depend on Social Security?

Post by KlangFool »

tictock81 wrote: Mon Jun 21, 2021 9:38 pm KlangFool,

Involuntary unemployment in mid-50's seems relatively common as performance plateaus and pay-grade maxes in a job.... This is exactly my concern. If I find myself in this situation, I'd have to look for paying work... how much pay? I don't know; that goes back to the other unknown variables, including SS payout levels.

I've use a lawyer specializing in disability and SSI disability info is on my radar for sure. The sad reality is that the gov't regulations essentially require the disabled person to live in poverty (marginal subsistence income only) or they become ineligible. I want to supplement this with 529 Able account, special needs trust, etc. to get every advantage. But the fall-back position is that I work.

I've been encouraged by this discussion... based on the feedback, I'll assume a 50% and a 75% SS benefit payout scenario for my calculations to be conservative.
tictock81,

I save 1 year of expense every year. I could had retired before 50 if I did not gamble and lost 50% of my portfolio in Telecom Bust. I am Financially Independent in my 50s. Aka, now. Social security is just extra gravy for me.

KlangFool
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MathWizard
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Re: Depend on Social Security?

Post by MathWizard »

tj wrote: Mon Jun 21, 2021 9:44 pm
MathWizard wrote: Mon Jun 21, 2021 6:52 pm I plan using 75% of estimated benefits.

I don't consider that worst case because the bend points
are not set year to year, and could move downward, but I think from a planning standpoint 75% is prudent.

We do have flexibility.

I would be able to sustain the lifestyle we had in 2020 without SS benefits, but we prefer a higher spending for travel and other luxuries.
I don't see how the bend points could move downward.
If the change in AWI is negative,like it was in 2009, the bend points go down,unless you know of a provision where a negative adjustment to the bend points is not allowed.
IMO
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Re: Depend on Social Security?

Post by IMO »

I think it's reasonable to depend on social security. However, it's just like taxes/tax rates, one simply has to speculate on what the future will bring. As such, it is probably best in retirement planning to speculate that social security may be a percentage lower and taxes will be a percentage higher.

Whenever I try to look up the topic of the status of social security I never seem to find exactly how much in terms of dollars the shortfall is actually projected to be in the future?

After seeing how readily the government can inject vast amounts of money into the economy with apparently no real long term issues/concerns, can't the government simply inject vast amounts of money into any Social Security shortfalls as it needs in the future?
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