Social security fund insolvency and planning

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hcs77135
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Social security fund insolvency and planning

Post by hcs77135 »

Hello everyone, I will turn 70 in December 2033 (eleven + years from now). I recently ran an online program to maximize my and my spouse’s social security and the program indicated — based on various inputs and assumptions) that we should both wait until age 70 to claim. It makes sense to me, except for the fact that the social security fund is expected to be insolvent in 2034! and able to pay only 80% of expected benefits based on then-current SS tax revenue. (The reason this is somewhat timely is that my original idea was to claim at 62 because I have a 12 year old child who would also receive benefits for a few years if I started claiming when she was 15. She also has a moderate disability which could extend her benefits based on my benefits, but it’s unclear at this point whether this would preclude her from working - it likely would not preclude her.). Of course, Congress could decide to fix all this. Wondering if anyone has thought about this and how one would discount expected SS income to account for the possibility of SS fund insolvency when deciding when to claim. Thanks very much!
homebuyer6426
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Re: Social security fund insolvency and planning

Post by homebuyer6426 »

The amount of time I would spend thinking about this would depend a lot on what % of my expenses in retirement would be covered by social security. Do you need it in order to maintain a happy standard of living? If not, don't worry about the threat of insolvency. We can't speculate on legislation here or I would give my best guess on it. I'll just say that I don't anticipate a catastrophic problem.
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gavinsiu
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Re: Social security fund insolvency and planning

Post by gavinsiu »

Just to be on the safe side, I factor in the possibility that I will have zero social security. Instead of a hard number, I tried to do a range and make sure that the low range is still survivable. This does mean I save more money than the average person.
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Re: Social security fund insolvency and planning

Post by nisiprius »

There's a pretty simple and objective answer, which you've already found.

Every year the Social Security board of trustees publishes an estimate of when the trust fund's reserves will run out, and what the effect will be. In 2022 they said:
The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, will be able to pay scheduled benefits on a timely basis until 2034, one year later than reported last year. At that time, the fund's reserves will become depleted and continuing tax income will be sufficient to pay 77 percent of scheduled benefits.
They've been publishing this every year for a long time, and the numbers change a bit from year to year but not a lot. If I remember correctly, the message has always been that if Congress does nothing then there will need to be a benefit reduction of around 20-25% in the early-to-mid 2030s.

So I believe a rational planning assumption that makes the fewest guesses would be to plan for a benefit cut of about 20-25% in the early-to-mid 2030s.

I'm going to try to stay clear of forum rules by not speculating farther. I'll stick my neck out far enough to say that the challenges for sustaining Social Security are smaller than the challenges for sustaining Medicare.
Last edited by nisiprius on Thu Aug 11, 2022 10:01 am, edited 3 times in total.
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PicassoSparks
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Re: Social security fund insolvency and planning

Post by PicassoSparks »

This is not the first solvency crisis SS has faced. https://www.princeton.edu/news/2022/05/ ... an-be-done

I think it makes sense to mitigate the risk of inaction by planning for a reduced (real) payout as a possibility, which means saving a bit more. At the risk of bumping up against the rules about politics in a context which can't help but involve politics: You can also slightly mitigate the risk by letting your politicians know that this problem is important to you and you want them to solve it.
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Re: Social security fund insolvency and planning

Post by Big Dog »

If I recall, the math says it doesn't matter (for most* folks). If insolvency occurs without any Congressional action, everyone receiving a SS benefit will have their benefit reduced by ~20% (using today's estimates). So, early claimers will take a 20% haircut of their then-benefit amount and the late claimers will take a 20% haircut of their current benefit.

*But you have a special needs child, which requires some calculations above my knowledge.
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Re: Social security fund insolvency and planning

Post by Tom_T »

PicassoSparks wrote: Thu Aug 11, 2022 9:58 am This is not the first solvency crisis SS has faced. https://www.princeton.edu/news/2022/05/ ... an-be-done

I think it makes sense to mitigate the risk of inaction by planning for a reduced (real) payout as a possibility, which means saving a bit more. At the risk of bumping up against the rules about politics in a context which can't help but involve politics: You can also slightly mitigate the risk by letting your politicians know that this problem is important to you and you want them to solve it.
Based on history, one might also plan for a higher FRA. If I were 40, I don't know that I'd consider 67 to be written in stone. I would definitely try to save more money while I have 20+ years of accumulation ahead of me.

If the lesson is "save more money", that's a good thing regardless of any SS issues.
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Re: Social security fund insolvency and planning

Post by nisiprius »

I think people have gone nuts over trying to optimize claiming strategies.

Because the situation is complicated, people ask questions and the demand for questions creates a supply of answers, and elaborate tools that take into account both members of a couple and how 401(k) and TIRA withdrawals affect the amount of Social Security that is taxable and the difference in longevity of men and women and so forth and so on.

I don't know if these online calculators make any provision for the possibility of "a -23% benefits cut in 2034." That certainly should be an option. It's a bigger variable than some of the things they do try to account for.

But it all depends on having rather precise models of the future to feed into the complicated calculator, and Congress can and does change both tax rules and Social Security rules from time to time. (A giant change was indexing Social Security for inflation in 1972. Not that it wasn't done before, but previously Congress had pass a bill to make each increase).

There is also widespread misunderstanding of the reason why benefits increase when you claim later. Mostly it is just actuarial. You get about the same total amount of money, but the later you retire the fewer years you will be getting it, so the amount per year ought to be higher. It's more complicated than that, and credible experts (bobcat2 in the forum) seem to agree that claiming later is beneficial, but it's nowhere as beneficial or as cut-and-dried as all that.

We opted for a suboptimal claiming strategy because it was a good fit to our actual life circumstances.

True story. A somewhat otherworldly late friend of mine, a college professor, was diagnosed with terminal cancer. He was IIRC 73 when I visited him, and it transpired that he had never filed for Social Security.. I said to him, "What????!!!!! You sit down at your computer right now. I am going to stand behind your chair and you are going to go online at the Social Security website and you will not leave your chair until you have signed up." It took him less than thirty minutes to set it up online. It would have taken much less than that, except he had to consult his wife because he'd forgotten some key pieces of information.

He... or his widow... simply lost two years' benefits. (Social Security did pay him a lump sum retroactive to the beginning of the year in which he filed). Now, that's a suboptimal "strategy" for sure. So get the big things right, like--don't forget to claim.
Last edited by nisiprius on Thu Aug 11, 2022 10:18 am, edited 1 time in total.
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Californiastate
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Re: Social security fund insolvency and planning

Post by Californiastate »

I plan on it being another source of income at 70 years old.
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Re: Social security fund insolvency and planning

Post by swaption »

Yes, the Trust Fund can be depleted, but I don't think there is any notion of an insolvency. The obligations are US sovereign obligations, the Trust Fund is only a construct to reserve funds for this purpose. Ultimately, I believe it to be a matter of US solvency, in addition to the face that the Trust Fund consists of US debt obligations in the first place. Ultimately, I think SS is essentially comprised of some amount of national debt that we have recognized and some amount that we have yet to recognize. Happy to be corrected if I'm wrong here.
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Re: Social security fund insolvency and planning

Post by LongRoad »

If the calculator you used forced you to guess a specific year of death, didn't account for minor children, or couldn't model a potential future reduction in benefits, you might want to take a look at https://www.opensocialsecurity.com

Use the checkbox at the top of the main form to show options allowing you to customize the calculator's assumptions to your personal situation and assumptions.
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Re: Social security fund insolvency and planning

Post by arcticpineapplecorp. »

i think your question is asking whether you should claim it earlier or at 70.

but there are two factors involved:
1. whether SS becomes insolvent
2. whether you want your child to start receiving social security before turning 70. (sometime between 62-70).

these are two separate decisions.

here's how I'd handle it:
1. don't worry about SS insolvency because if it results in cuts, it's not like you won't suffer cuts because you claimed before those cuts arrived. The cuts could be applied to all recipients (current and future). So thinking "well, i'll claim early so i won't experience cuts" may be a fallacy. If so, what does it matter? I'd rather have cuts to SS that's 124% of my full benefit (at FRA) because I claimed at 70, than cuts to <100% of my full benefit (at FRA) because I claimed at 62.

2. Sometimes claiming before 70 if a child receives benefits is the better strategy. But I'm not sure it's wise to take before FRA. You should run the numbers.

Also, another way of thinking about it is if she has a moderate disability, perhaps it would make more sense for her to receive disability if possible on her own benefit rather than yours. I'm not sure receiving SS based on your benefit would matter once she turns 18 that benefit ends. She'd only be eligible for a continued benefit past 18 if she is eligibile on her own due to disability. perhaps you should see an attorney about that to see if she might qualify on her own. If so, then you can wait to claim until 70 and get the highest benefit, but your daughter could get her benefit as well (now and into the future). it's not all or nothing. Finally, when someone's on social security it doesn't keep them from working. They are able to work, but the income would lessen the amount of social security received. if the income is over a certain amount, the social security would end. So there's a range of income, etc. Ideally if she can work and not qualify for social security that's best. But if not, she could get partial SS while working part time (depending upon amount of income earned).
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hcs77135
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Re: Social security fund insolvency and planning

Post by hcs77135 »

homebuyer6426 wrote: Thu Aug 11, 2022 9:30 am The amount of time I would spend thinking about this would depend a lot on what % of my expenses in retirement would be covered by social security. Do you need it in order to maintain a happy standard of living? If not, don't worry about the threat of insolvency. We can't speculate on legislation here or I would give my best guess on it. I'll just say that I don't anticipate a catastrophic problem.
Thank you. I am hoping that social security will be less than 20% of total income in retirement when I am claiming, and my spouse's 4 years later would just be extra. I don't think it will be needed to maintain a happy standard of living, fortunately.
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hcs77135
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Re: Social security fund insolvency and planning

Post by hcs77135 »

nisiprius wrote: Thu Aug 11, 2022 10:16 am
True story. A somewhat otherworldly late friend of mine, a college professor, was diagnosed with terminal cancer. He was IIRC 73 when I visited him, and it transpired that he had never filed for Social Security.. I said to him, "What????!!!!! You sit down at your computer right now. I am going to stand behind your chair and you are going to go online at the Social Security website and you will not leave your chair until you have signed up." It took him less than thirty minutes to set it up online. It would have taken much less than that, except he had to consult his wife because he'd forgotten some key pieces of information.

He... or his widow... simply lost two years' benefits. (Social Security did pay him a lump sum retroactive to the beginning of the year in which he filed). Now, that's a suboptimal "strategy" for sure. So get the big things right, like--don't forget to claim.
Wonderful story, thank you. Sometimes I'm looking for my missing cell phone when it turns out that I'm speaking on it, so it's a point well taken.
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hcs77135
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Re: Social security fund insolvency and planning

Post by hcs77135 »

LongRoad wrote: Thu Aug 11, 2022 10:28 am If the calculator you used forced you to guess a specific year of death, didn't account for minor children, or couldn't model a potential future reduction in benefits, you might want to take a look at https://www.opensocialsecurity.com

Use the checkbox at the top of the main form to show options allowing you to customize the calculator's assumptions to your personal situation and assumptions.
Very helpful, thank you! I will check this out. I was using maximizemysocialsecurity.com, which wasn't bad at all, but I don't believe allowed for modeling a future reduction in benefits, which really is what I was looking for.
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Watty
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Re: Social security fund insolvency and planning

Post by Watty »

hcs77135 wrote: Thu Aug 11, 2022 9:12 am Wondering if anyone has thought about this and how one would discount expected SS income to account for the possibility of SS fund insolvency when deciding when to claim.
In the past Social Security has been tweaked in my stealthy ways when needed and I would expect more subtle cuts if needed instead of an obvious cut like you mentioned. For example they have;

1) Making Social Security taxable.
2) Raising the full retirement age
3) At least talk of changing the inflation adjustment to use a different index

You also need to look at any impact in dollars and not just percentages. If the difference in starting at 62 and 70 is $10,000 a year and there is a 20% reduction then you will just be $2,000 worse off because of when you started it.
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Re: Social security fund insolvency and planning

Post by hcs77135 »

arcticpineapplecorp. wrote: Thu Aug 11, 2022 10:34 am i think your question is asking whether you should claim it earlier or at 70.


1. don't worry about SS insolvency because if it results in cuts, it's not like you won't suffer cuts because you claimed before those cuts arrived. The cuts could be applied to all recipients (current and future). So thinking "well, i'll claim early so i won't experience cuts" may be a fallacy. If so, what does it matter? I'd rather have cuts to SS that's 124% of my full benefit (at FRA) because I claimed at 70, than cuts to <100% of my full benefit (at FRA) because I claimed at 62.
Thank you. I understand that if there were cuts to SS starting in say 2034 they would apply to whatever I was receiving at the time. I was thinking more about the fact that if I claimed earlier than 70 (which for me happens to be 2034), those earlier years would not be impacted by the fund running out of money, and would that change the calculator's conclusion.
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Re: Social security fund insolvency and planning

Post by sc9182 »

hcs77135 wrote: Sat Aug 13, 2022 10:27 am
arcticpineapplecorp. wrote: Thu Aug 11, 2022 10:34 am i think your question is asking whether you should claim it earlier or at 70.


1. don't worry about SS insolvency because if it results in cuts, it's not like you won't suffer cuts because you claimed before those cuts arrived. The cuts could be applied to all recipients (current and future). So thinking "well, i'll claim early so i won't experience cuts" may be a fallacy. If so, what does it matter? I'd rather have cuts to SS that's 124% of my full benefit (at FRA) because I claimed at 70, than cuts to <100% of my full benefit (at FRA) because I claimed at 62.
Thank you. I understand that if there were cuts to SS starting in say 2034 they would apply to whatever I was receiving at the time. I was thinking more about the fact that if I claimed earlier than 70 (which for me happens to be 2034), those earlier years would not be impacted by the fund running out of money, and would that change the calculator's conclusion.
If we are trying to think changing landscape - your understanding makes sense - assuming there won't be any clawback (similar to Medicare clawback - circa MMA 2003 act)
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hcs77135
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Re: Social security fund insolvency and planning

Post by hcs77135 »

arcticpineapplecorp. wrote: Thu Aug 11, 2022 10:34 am
2. Sometimes claiming before 70 if a child receives benefits is the better strategy. But I'm not sure it's wise to take before FRA. You should run the numbers.

Also, another way of thinking about it is if she has a moderate disability, perhaps it would make more sense for her to receive disability if possible on her own benefit rather than yours. I'm not sure receiving SS based on your benefit would matter once she turns 18 that benefit ends. She'd only be eligible for a continued benefit past 18 if she is eligibile on her own due to disability. perhaps you should see an attorney about that to see if she might qualify on her own. If so, then you can wait to claim until 70 and get the highest benefit, but your daughter could get her benefit as well (now and into the future). it's not all or nothing. Finally, when someone's on social security it doesn't keep them from working. They are able to work, but the income would lessen the amount of social security received. if the income is over a certain amount, the social security would end. So there's a range of income, etc. Ideally if she can work and not qualify for social security that's best. But if not, she could get partial SS while working part time (depending upon amount of income earned).
Thank you, this is good advice. I believe that in order to receive SS benefits as a child of mine (rather than on her own) past the age of 18 would require that she not be able to work at all, which fortunately I do not anticipate to be the case. So for me filing at 62 when she is 15 years old really just gives her 3 years (until she's 18) of benefits -- which the calculator I used says is not enough $ to offset the benefit of waiting until 70 (but, the calculator didn't consider the impact of cuts to SS in the year I turn 70, which was the impetus for my original post.) I bet you are right that the more important question - about which I will consult with a special needs lawyer - is what type(s) of benefits she would qualify for on her own after age 18.
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Re: Social security fund insolvency and planning

Post by daleddm »

Watty wrote: Sat Aug 13, 2022 10:23 am
hcs77135 wrote: Thu Aug 11, 2022 9:12 am Wondering if anyone has thought about this and how one would discount expected SS income to account for the possibility of SS fund insolvency when deciding when to claim.
In the past Social Security has been tweaked in my stealthy ways when needed and I would expect more subtle cuts if needed instead of an obvious cut like you mentioned. For example they have;

1) Making Social Security taxable.
2) Raising the full retirement age
3) At least talk of changing the inflation adjustment to use a different index

You also need to look at any impact in dollars and not just percentages. If the difference in starting at 62 and 70 is $10,000 a year and there is a 20% reduction then you will just be $2,000 worse off because of when you started it.


And means testing, perhaps phasing in at some rather extreme level.
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Watty
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Re: Social security fund insolvency and planning

Post by Watty »

daleddm wrote: Sat Aug 13, 2022 10:37 am And means testing, perhaps phasing in at some rather extreme level.
It is already in effect means tested because of the way the bend points work but most people don't realize it.

The calculation is complicate but in calculating the benifit amount low income people get a 90% factor, middle income people get a 32% factor and higher income people get a 15% factor.

https://www.ssa.gov/oact/cola/piaformula.html

For example people with income history of $60K and $90K only get roughly 1.5x and 2x the Social Security of someone who made $30K. Not double or triple. The higher income people also likely have a lot of their Social Security taxed.
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Re: Social security fund insolvency and planning

Post by MJS »

Another reason to delay Social Security is doing Roth conversions between retirement and starting SS.
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Re: Social security fund insolvency and planning

Post by gregable »

I hope this isn't seen as speculation, but the SSA has written a lengthy bulletin describing modelled outcomes as well as what mitigations might work here (https://www.ssa.gov/policy/docs/ssb/v70 ... 3p111.html). It's a bit old (2010), but I suspect relatively little hast changed. I won't comment on it, as that would be speculation, but it may be a useful read.
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Re: Social security fund insolvency and planning

Post by Nutmeg »

The Bogleheads Retirement Portfolio Model provides an entry to take a potential future SS shortfall into account. The default amount is 20 percent.


https://www.bogleheads.org/wiki/Retiree_Portfolio_Model
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Re: Social security fund insolvency and planning

Post by hoops777 »

hcs77135 wrote: Thu Aug 11, 2022 9:12 am Hello everyone, I will turn 70 in December 2033 (eleven + years from now). I recently ran an online program to maximize my and my spouse’s social security and the program indicated — based on various inputs and assumptions) that we should both wait until age 70 to claim. It makes sense to me, except for the fact that the social security fund is expected to be insolvent in 2034! and able to pay only 80% of expected benefits based on then-current SS tax revenue. (The reason this is somewhat timely is that my original idea was to claim at 62 because I have a 12 year old child who would also receive benefits for a few years if I started claiming when she was 15. She also has a moderate disability which could extend her benefits based on my benefits, but it’s unclear at this point whether this would preclude her from working - it likely would not preclude her.). Of course, Congress could decide to fix all this. Wondering if anyone has thought about this and how one would discount expected SS income to account for the possibility of SS fund insolvency when deciding when to claim. Thanks very much!
Ok. Politics is not allowed but I believe it is safe to say politicians will never allow the older voters to be extremely upset with them.
I believe the odds of SS being cut 20 pct are as good as my odds to beat Steph Curry in a 3 point shooting contest.
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Re: Social security fund insolvency and planning

Post by vested1 »

It's pretty simple to me. Imagine receiving a SS benefit of $4,000 because you decided to delay until age 70. The worst happens and in 2034 your benefit is cut by 20% (which I still believe is implausible). That shaves $800 off your benefit making it $3,200, still not bad.

If you had filed at FRA your benefit would be quite a bit smaller (PIA $3,030), now take 20% off of that benefit in 2034 ($2,424). Which amount would you rather have? Which amount would your lower earning spouse prefer to have when you die? What would that 20% reduced amount be if you had filed at age 62?

Our strategy involved getting the most out of monthly SS as possible, not on how much cumulative money we received from SS if we live to certain ages. We won't care about that when we're dead. It's fixed income, and it's preferable, in my opinion, to maximize all forms of that as much as possible in order to allow taking less out of savings in the long term.

That's why I waited until 70 to file. I will be disappointed if my benefit is actually reduced at some point. I would be even more disappointed if an already lower amount were also reduced.

P.S. I don't have any control over the decision to either maintain or reduce SS benefits for all recipients. The only thing I can control is how much of that benefit is paid to me by either delaying or not.
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Re: Social security fund insolvency and planning

Post by balbrec2 »

Remember one thing. Seniors are a very large voting block. Social security will be either fixed
or given a temporary reprieve. Any legislator not willing to do this is committing political suicide.
People vote their wallets.

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Re: Social security fund insolvency and planning

Post by Wrench »

OpenSocialSecurity.com allows one to estimate benefits with a cut in social security in their alternate assumptions category.

How to deal with such a cut should it occur depends on your individual circumstances. We have chosen to mediate the risk from a reduced payout by building a TIPS.iBond ladder from ~2030 until we are age 100, where each rung replaces ~20% or our combined age 70 social security benefit. This was important for us because social security will be a large fraction of our income. Should a reduction occur our lifestyle will thus not be impacted. If it does not occur, we can reinvest the proceeds and/or spend the income as gifts to our children, or as charitable donations. YMMV.

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Re: Social security fund insolvency and planning

Post by Tdubs »

Used Open Social Security and Maximize My Social Security and both told me to wait till 70 even when factoring in a 20 percent cut.
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Re: Social security fund insolvency and planning

Post by leo383 »

I have no concerns at all about SS becoming insolvent.

"Solvency" isn't really a thing when you can create the money that you then pay out.
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Re: Social security fund insolvency and planning

Post by JBTX »

hoops777 wrote: Sat Aug 13, 2022 9:50 pm
hcs77135 wrote: Thu Aug 11, 2022 9:12 am Hello everyone, I will turn 70 in December 2033 (eleven + years from now). I recently ran an online program to maximize my and my spouse’s social security and the program indicated — based on various inputs and assumptions) that we should both wait until age 70 to claim. It makes sense to me, except for the fact that the social security fund is expected to be insolvent in 2034! and able to pay only 80% of expected benefits based on then-current SS tax revenue. (The reason this is somewhat timely is that my original idea was to claim at 62 because I have a 12 year old child who would also receive benefits for a few years if I started claiming when she was 15. She also has a moderate disability which could extend her benefits based on my benefits, but it’s unclear at this point whether this would preclude her from working - it likely would not preclude her.). Of course, Congress could decide to fix all this. Wondering if anyone has thought about this and how one would discount expected SS income to account for the possibility of SS fund insolvency when deciding when to claim. Thanks very much!
Ok. Politics is not allowed but I believe it is safe to say politicians will never allow the older voters to be extremely upset with them.
I believe the odds of SS being cut 20 pct are as good as my odds to beat Steph Curry in a 3 point shooting contest.

Social security as a percent to gdp will be around 6% in 2032. So when the trust funds run out, it would drop to 4.5%. [OT comment (for forum) removed by Moderator Misenplace.]
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Re: Social security fund insolvency and planning

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A post speculating on a possible future law has been removed. Please refrain from positing the text of future laws.

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Re: Social security fund insolvency and planning

Post by jello_nailer »

vested1 wrote: Sun Aug 14, 2022 5:20 am It's pretty simple to me. Imagine receiving a SS benefit of $4,000 because you decided to delay until age 70. The worst happens and in 2034 your benefit is cut by 20% (which I still believe is implausible). That shaves $800 off your benefit making it $3,200, still not bad.

If you had filed at FRA your benefit would be quite a bit smaller (PIA $3,030), now take 20% off of that benefit in 2034 ($2,424). Which amount would you rather have? Which amount would your lower earning spouse prefer to have when you die? What would that 20% reduced amount be if you had filed at age 62?

Our strategy involved getting the most out of monthly SS as possible, not on how much cumulative money we received from SS if we live to certain ages. We won't care about that when we're dead. It's fixed income, and it's preferable, in my opinion, to maximize all forms of that as much as possible in order to allow taking less out of savings in the long term.

That's why I waited until 70 to file. I will be disappointed if my benefit is actually reduced at some point. I would be even more disappointed if an already lower amount were also reduced.

P.S. I don't have any control over the decision to either maintain or reduce SS benefits for all recipients. The only thing I can control is how much of that benefit is paid to me by either delaying or not.
^ This. If a larger amount of a larger amount is good, then a larger smaller amount is good too. It's what? 6.8% IRR for each year your defer, and it's second to die because your spouse gets 1/2 it if you die first. Totally agree - manage what you control.
CFOKevin
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Re: Social security fund insolvency and planning

Post by CFOKevin »

I'm a fellow parent with a special needs child, and believe you should have three income streams available when you file. First, is your benefit, second is your daughter's and third in your wife's. Our daughter with special needs is 30 years old so she will receive a DAC (Disabled Adult Child) benefit equal to half of my PIA as soon as I claim. It will replace her current SSDI benefit. My wife will also qualify for a Child in Care benefit when I file since we provide over half of our daughter's support.

Our strategy is for me to file at 62 and my wife to file for the benefit on her record when she is 70. We use maximizemysocialsecurity.com for our calculations and that strategy produces the highest total benefit for our family. I believe the software allows you to model a benefit reduction if you'd like to (I haven't).

You'll need to research what's available to your minor child and wife given your daughter's age. Aside from possibly collecting on your record, if she's like our daughter (part-time jobs starting at 18), she'll first collect SSI, then switch to SSDI when she's had enough quarters of employment to qualify for benefits on her record.

Good Luck,

Kevin
Last edited by CFOKevin on Mon Aug 15, 2022 11:17 pm, edited 1 time in total.
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Re: Social security fund insolvency and planning

Post by LadyGeek »

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
Politics and Religion

In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
This forum is focused on investing that is directly actionable to personal investors. We don't hold debates on conjecture.

The whole point of the policy is to (1) eliminate contentious disagreements that result from these discussions and (2) keep investors from making bad decisions. Proposed legislation changes many times between the time it's introduced and signed into law.

We do permit discussions which plan for reductions in Social Security, but not about the future of Social Security itself (political conjecture).
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dcabler
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Re: Social security fund insolvency and planning

Post by dcabler »

Tdubs wrote: Sun Aug 14, 2022 6:57 pm Used Open Social Security and Maximize My Social Security and both told me to wait till 70 even when factoring in a 20 percent cut.
Same. In my planning, I use exactly what is known today.
- The ~20% SS cut as reported by the SS board of trustees in the year that they report it would happen.
- Certain tax provisions in the tax code that are set to expire in 2025

If at any time those things change, I change my planning at the point the changes become official. Hopefully I have enough buffer to account for pretty much anything but it's a waste of my time to needlessly speculate otherwise. I'll control what I can control.

Cheers.
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Re: Social security fund insolvency and planning

Post by JBTX »

LadyGeek wrote: Mon Aug 15, 2022 6:31 am 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
Politics and Religion

In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
This forum is focused on investing that is directly actionable to personal investors. We don't hold debates on conjecture.

The whole point of the policy is to (1) eliminate contentious disagreements that result from these discussions and (2) keep investors from making bad decisions. Proposed legislation changes many times between the time it's introduced and signed into law.

We do permit discussions which plan for reductions in Social Security, but not about the future of Social Security itself (political conjecture).

https://crsreports.congress.gov/product/pdf/RL/RL33028

Linked is what could be viewed as a somewhat authoritative source in SS solvency and what happens upon trust fund depletion. Of particular note:

Bottom of page 15:
The trustees project that the asset reserves held by the Social Security trust funds will be depleted in 2035. At that point, the program will continue to operate with incoming receipts to the trust funds. Incoming receipts are projected to be sufficient to pay about three-fourths of scheduled benefits through the end of the projection period in 2096 (under the intermediate assumptions of the 2022 Annual Report).44 Title II of the Social Security Act, which governs the program, does not specify what would happen to the payment of benefits in the event that the trust funds’ asset reserves are depleted and incoming receipts to the trust funds are not sufficient to pay scheduled benefits in full and on time. Two possible scenarios are (1) the payment of full monthly benefits on a delayed basis or (2) the payment of partial monthly benefits on time.
So, technically given there is no mention of what happens, the assumed payout of 75-80% upon completion is conjecture. It seems from this that some sort of intervention will be necessary. One can logically assume with near 100% certainty that there will be an intervention, but as I understand we are not allowed to mention nor discuss the mostly widely assumed and discussed likely interventions. However given the source, hopefully I can safely put this here:

Page 10
When current Social Security revenues are not sufficient to pay benefits, however, the U.S. government must raise the funds necessary to honor the redemption of U.S. government obligations held by the Social Security trust funds as they are needed to pay benefits. If there are no surplus governmental receipts, the U.S. government may raise the necessary funds by increasing taxes or other income, reducing non-Social Security spending, borrowing from the public (i.e., replacing bonds held by the trust funds with bonds held by the public), or a combination of these measures.

This is something else that has happened in the past when the trust fund was running out of money:

With respect to reliance on the General Fund when Social Security is operating with a cash flow deficit, it is important to note that Social Security does not have authority to borrow from the General Fund. Social Security cannot draw upon general revenues to make up for any current funding shortfall. Rather, Social Security relies on revenues that were collected for the program in previous years and used by the federal government at the time for other (non-Social Security) spending needs, plus the interest earned on its trust fund investments. Social Security draws on its own previously collected tax revenues and interest income (accumulated trust fund holdings) when current Social Security tax revenues fall below current program expenditures.
Page 3
In the past, Congress has authorized temporary interfund borrowing and payroll tax reallocations between OASI and DI to address funding imbalances. This CRS report discusses the operations of the OASI and DI trust funds on a combined basis, referring to them collectively as the Social Security trust funds.15 On a combined basis, the trust funds are projected to remain solvent until 2035, at which point continuing income is projected to cover 80% of program costs.
Although Social Security is a pay-as-you-go system, meaning that current revenues are used to pay current costs, changes made to the Social Security program in 1983 began a sustained period of annual cash flow surpluses throughf 2009.21 Since 2010, however, Social Security has had annual cash flow deficits (program costs have exceeded tax revenues)
In 2021, Social Security payroll taxes totaled $980.6 billion and accounted for 90.1% of the program’s total income

As a point of perspective, in 2034 the social security deficit will amount to about 1.5% of GDP. The SS outflows have exceed inflows since around 2010. Nothing magical or different happens in 2034 or 2035, in that SS would have already been operating an annual cash flow deficit since 2010. However the trust fund will be depleted. The trust fund has IOU’s from the general fund, and the general fund has spent that money and has IOUs from the general public and the FED. So in essence in 2034 they can make changes to eliminate the cash flow deficits to stay within the current SS accounting construct, or they could change the accounting construct.
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Re: Social security fund insolvency and planning

Post by Big Dog »

Methinks you are mis-interpreting p.15 of the report, which says that SS has two choices -- one really -- when it runs out of Trust funds: 1) give everyone an immediate haircut. 2) treat it like the government budget shutdown so no one (current federal employees) gets paid until the budget is passed, and then everyone gets full and retro payments. But note, for 2 to happen, Congress would have to change the existing SS law (or be 90% of the way to changing the law), unlike the Govt shutdown payment delay which itself is a budget law. So absent a change in law, SS can only give everyone a ~20% haircut bcos that is all the existing law allows them to do.
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Re: Social security fund insolvency and planning

Post by JBTX »

Big Dog wrote: Mon Aug 15, 2022 5:38 pm Methinks you are mis-interpreting p.15 of the report, which says that SS has two choices -- one really -- when it runs out of Trust funds: 1) give everyone an immediate haircut. 2) treat it like the government budget shutdown so no one (current federal employees) gets paid until the budget is passed, and then everyone gets full and retro payments. But note, for 2 to happen, Congress would have to change the existing SS law (or be 90% of the way to changing the law), unlike the Govt shutdown payment delay which itself is a budget law. So absent a change in law, SS can only give everyone a ~20% haircut bcos that is all the existing law allows them to do.
There is no mention of what scenarios can or can’t happen in the SS laws / regs. So while that seems like a logical outcome, I don’t know that it is any more permissible than taking any other unspecified course of action. It would probably be up to lawyers to figure if such an action could be unilaterally undertaken.

Delaying full payment until sufficient proceeds come in would seem to be permissible. Of course paying in full amounts in arrears would not be allowed as current laws stand.

There are other things that could be done fairly easily to allow for full payments, but discussion of changing laws is not allowed.
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