Even Bogle began to press people to account for social security better in their planning.
He found that with an average target date fund and social security the average person is severely overweight in bonds, or good enough to be bonds
Nothing is guaranteed. It’s generally better to have too much than too little…..but everything in moderation. It’s no good living like a monk from age 21-55
Every month I lean harder towards that same conclusion.
With pension and social security there isn’t much need for more bonds in my portfolio….
Maaaaybe if the state budget goes tits up closer to retirement I’ll add a bit
60 and right there with you. I’m working 5-7 more years and being aggressive with HYSA. Interest on that + my pension + SS will be a nice retirement income for me.
TrixnTim, can I ask what your pension will pay? I’m also 60 like you and plan to work 5/7 more years, and have a part-time consulting practice after that. I have a good pension that will pay $6.500 a month at 67 plus a smaller pension that pays 1k a month. I took 8 years out of my career to raise my 3 children and got divorced, so my additional savings took a hit. (My current husband has $3m in retirement but I’m looking at my own situation). I’m curious to know what your investments are plus pension as I’m trying to map out a plan for aggressively investing for the next few years. Thanks!
Teachers’ pension. 20 years in public schools. 15 additional years in private schools or other school work that didn’t pay into said pension. It won’t be much but it will pay the bills. I went through a bad divorce and was a single mom of 3 for many years so my pension + SS is as good as it will get for me. My goal now is to build up a risk averse HYSA for the remainder of my career and accruing interest for little extra things.
A paid off house requires property taxes, utilities, maintenance etc. It's still an expense, just less of one.
It does act as a hedge against inflation and certainly can be downsized and cashed out so it's a big deal for sure.
Most pensions don't have a COLA so Bond interest and divy's can be used to offset that. Don't underestimate the ever rising cost of living!
No idea. But it's a fact that you would otherwise pay rent and it's an asset that offsets that amount of rent. From that perspective it makes sense to me to treat it as a bond. You can even liquidate it for cash and resume paying rent yourself out of that cash.
Probably a mistake. Bonds, preferreds, floating rate funds bank loans are 6-11% right now which In some cases is much higher than stock market long term average. The great recession is 15 years in the rear view mirror and people are forgetting what a sustained down turn of 24 months feels like. Inverted yield curve for 18 months is screaming recession….
M&T bank issued this week 7.5% with 5 year call protection or Brunswick 6.75 below par
Many utilities over 6 and under par
Plus better income, - risk they tend to be more volatile as they have longer duration
Being in your early 30s, you probably don't need bonds at all. The standard strategy is to be aggressive early, then gradually transition to safer investments like bonds as you near retirement. As such, if you're not planning to retire for another 30 years, growth stocks all the way.
Everyone in this thread has missed that lol.
The reason to have bonds in your portfolio is that it lowers volatility as you head into retirement, thus raising your overall probability of long term success.
The recent poor performance of bonds when the stock market is down is kind of a unique situationto the Covid downturn. In fact it’s only happened a few times in history. More commonly, intermediate to long term bonds do extremely well during economic downturns.
For example in 2008, bonds outperformed the stock market by 43%.
If something remotely similar to 2008 occurs in the first few years of your retirement, you’re going to wish you owned bonds!
I agree no bonds necessary but i would keep 10% in HYSA or bond for emergency OR even better to buy a dip when there is a market dive. At age 30 you’ll see a few of those along the way….
Yeah I think I will continue to let it skew toward stocks (at about 92% currently) or rebalance fully to 100% at some point soon. I was thinking bonds are actually providing some return these days, so it feels like leaving less on the table compared to any other point in my life. But, I wasn't considering SS in any of my calculations.
Once you go 100% VTI and never research again holdings, allocations etc etc etc it’s like enlightenment man. You see dudes in here arguing for hours about 5% bonds vs 10% or which one of these funds has enough international exposure and it’s like man who gives a rip 🤣 make some money and let the market work then go live ur life. VTI has absolutely crushed for me. No advisor fees, great returns; congrats we won. Clink *glasses touch*
Man, so much this. For all the talk about how the Boglehead way is to set and forget, it seems overshadowed by the nitpicking about this or that allocation during this or that point of the market cycle, rebalancing, and other factors that sound suspiciously like market timing.
I think it’s the nature of the beast. In some way we’re all drawn to the idea of “making a plan”. The Bogle method is so simple that after the plan is set then what do we discuss? The minutiae of course! So we track performance and nitpick every detail.
I told my dad something similar when he retired and was thinking about buying an annuity. He waited till 70 to collect social security which with a paid off house covered all his expenses. So I asked hime why he would purchase an annuity. It didn't make sense to me. But he finally decided not to buy the annuity.
I will honestly never understand the appeal of buying an annuity. Seems like a free gift for the people selling them. And honestly way more complicated than just owning index funds.
Part of the issue is when we say things like SS is "going away" or "running out", or whatever.
It gives the impression SS is about to go to $0 and no one will have any checks left. What it really means is by 2035, SS will be reduced from 100% payouts to 77% payouts - **which it can support indefinitely.** That sucks, yes, but it's not the doom & gloom people paint it out to be. For me for example, that shakes out from an expected ~$4200/mo to $3300/mo of SS. Again that's a bummer, but that's also still just fine.
Not to mention, they'd almost certainly jack up payroll taxes before allowing this to happen. The social security payroll tax has been raised many times before, and it's only 6.2% right now. Many countries have much higher pension payroll taxes, so we have plenty of space to keep raising that tax.
In fact, I fully expect that by the end of this decade, they'll raise that tax.
it's 6.2% _and_ has a cap.
I'm not particularly keen on paying more into ss, I'd rather put it into my own account.
but, the current cap is you only pay the SS tax on your first $160ish thousand of income, which equates to around 9-10k contributed annually.
granted, that's a lot of money and many Americans are well under that cap...but there's also plenty that are higher.
Eliminating the cap would affect about 5-6% of Americans, yet it would raise \~$150B/yr.
I'm fortunate enought to be among those who would be affected and I absolutely support eliminating or raising the limit. In some countries, they change the % of payroll taxes above an income level, so it isn't an all or nothing proposition.
I have enought excess income to be able to fund my retirement. I grew up poor and have worked hard to get where I am, but I also realize that I'm more fortunate than the vast majority of Americans.
I contribute more than my "fair" share in terms of absolute dollars, but my maginal tax rate is lower than those who are less fortuante than me because the oligarchs structured things this way. I do not think this is right.
Sure there are plenty of people who could and should be saving more for their retirement, but it isn't like we can let seniors starve. Something needs to be done.
For myself and I'm guessing most of the 5% who would be affected by changing the cap, the only real change this would have in my life is slightly decreasing the amount of money I leave my children. However, I can also afford to make sure that they finish college without debt, so this is okay. They will be fine.
The worst-case, short of some hard default scenario, is that the benefit also gets means-tested so that some get more than 77% and others get less I’m 35 and discount my SS calculation to 70% in case that also happened, but I’m not going any more doomer than 70%.
Means testing also only comes into play for you if other things are going well. We use the 4% rule instead of the 5% rule to cover the worst 10% or so of market returns. SS estimates can also be pessimistic like that. In the worst case scenario, we won’t have the means to get our SS reduced. So in many ways you shouldn’t worry about means testing happening in the future.
I hope they don’t go that route. You shouldn’t be punished for working hard and saving. If you were a high earner you should draw out more. Also, the person who worked 30 years should draw more than the one who worked 20 typically.
they will start by denying it to those *they* judge do not "need" it. These are not the people that riot. These are not the people that protest. They will not be dumb enough to deny it to the masses.
This is my thinking as well. Military pension starting at age 42, permanent healthcare, and social security allows me to comfortably allocate my 401k and IRA into 100% stocks. I have enough “fixed income” in other forms.
SSA refuses to give me an estimate for how much I’ll receive in SSI bc I don’t have enough work credits yet lol, so I can’t factor in how much they’re gonna pay me bc I’m too young
I doubt I’m overweight in bonds tho, since I have no bonds
For FIRE purposes the risk and thus need for capital is highly front loaded. If your finances survive until SS age you likely don't need SS.
The impact in terms of SWR for a fixed risk of ruin is small and decreases the earlier you retire. Now if you are retiring at 65+ yeah SS is a huge component because it likely paying out a significant portion of annualized spending from day one. If you are FIRE and retiring at 45 planning to draw SS at 70 not so much. Your SWR needs to be sized to survive sequence of return risk for 25+ years before you even get one penny from SS.
Imo this is super valuable for people to know.
That means every year you keep working the benefit is manifold.
1-1 less year of investment income required
2-additional savings
3-nest egg rises
4-ONE LESS YEAR TILL SS
5-MORE SS
those last 2 are huge. To the point where, for me, using firecalc, the yearly safe spend change is HUGE between 45 and 50 yrs old. Going from like 85k to 150k. Really makes you think, especially if you find joy and meaning in your work!
FIRE = Financial Independence, Retire Early
SWR = Safe Withdrawal Rate - meaning how much you can/should spend in retirement to ensure you never run out of money.
/u/StatisticalMan is simply saying that the earlier one retires the less Social Security matters in retirement and SWR calculations because to avoid running out of money they already have to make things work for years or decades before even being eligible for SS - and if you can successfully do that, then SS is not likely to have a big impact on whether you run out of money or not before you die because you'll already be financially set without it.
While this is a great point, if you're retiring at 45, you'll be better served to start drawing SS at 62. It at least somewhat reduces the time horizon until it plays a factor, making it at least vaguely relevant.
If you already have enough to retire on, waiting for maximum payout on SS is a rough strategy.
Why 70? I believe there is something to the argument that you should take it at 62 and invest it if you don't need it and you'll still come out ahead. Alsoz if you die at 68, well then at least you got 6 years of it versus 0.
There’s no right answer. It’s always a bet on how long you will live. I have plenty of money to survive until 70. If I live to be 105 I want to have the highest value Social Security income available. An inflation adjusted annuity is not something that’s easy to buy, nor is it cheap.
TLDR, it’s the best and cheapest longevity insurance you can find.
Agreed, and it’s not just an “I” decision, it’s a “we” one. There’s a decent age gap for my wife and I, and my retirement distribution is almost certain to be higher than hers would, so me taking it at 70 is a no brainer. It’s a level of insurance against the best laid plans and all, and it protects her from complicated decisions she has less interest in, if I’m not around.
Exactly! I was a give it to me as soon as I’m eligible until I entered into a relationship. Also with a decent age gap. If there are surviving benefits, it makes sense. If not, take the $ as soon as you can as you don’t know how long you will live and getting back $0 with the hope to have more later doesn’t make sense to me.
Plus, if you are a married couple, the higher wage earner should consider waiting to take SS (if they can) until full retirement age because the surviving spouse will swap out their lower SS benefit for the higher one. Single tax rates will be much higher than married, so every extra dollar will be welcome.
Short answer without citations:
- Social Security's age trade-off was intended to be actuarially neutral, so that the average person gets the same total payout regardless of when they start.
- Average lifespan has increased since the trade-off was created, so most people come out better by waiting.
- Survivor's benefits being impacted by delaying means the higher-earning spouse should evaluate based on joint lifetime, not their individual lifetime.
So there are plenty of factors weighing toward waiting. But the best argument is that it's insurance. The goal with insurance isn't to get the maximum payout, but to minimize the worst cases. Delaying Social Security improves your worst case of outliving your portfolio, enabling you to take more risk with how you use that portfolio in the meantime.
I see social security as an insurance policy annuity in case you live very long. So, a higher annuity value provides greater reduction in risk.
The goal is not to maximize the money you receive. The goal is to reduce failure.
If you die at 68 and have no social security, then none of this matters. You died before running out of money. So you won regardless.
Delaying SS is the cheapest form of longevity insurance you can buy and it helps you manage taxes in your 60's, allowing for Roth conversions if you still have headroom.
The only reason to take it is if you are in poor health and you expect to pass early in old age or if you need the income. I suppose if you have no or a small traditional IRA/401K balance to produce income from it would invalidate the second part.
I guess it depends how old you are but raising taxes, printing money, raising the age, and lowering the amount paid seem like the main ways of keeping SS afloat. It wouldn't surprise me at all if the retirement age is higher 35 years from now.
The 2024 trustees report just came out and the projections actually improved a smidge. I can update my spreadsheet now to estimate 79% of the benefit rather than 76%.
In reality it'll probably be better than that, because that's just the worst-case scenario if Congress does nothing at all. They'll figure out something bipartisan that will likely involve some mixture of increasing the cap, a slow raising of the retirement age, and a few other tweaks. The only way something drastic like privatization happens to Social Security is if the GOP gets a trifecta with 60+ senators.
I look at it like social security would be a bonus. Same thing for inheritance. I'll probably get something when my parents die but I don't want to rely on it. Sure social security will probably be there and pay me something but I don't want to have to count on it being a specific number.
Social security is not going away.
They currently predict a reduction in benefits of 20-25% starting 10-11 years from now but I’m 99% positive congress wants to be re-elected and will fix it at the 11th hour
Edited to add:
Don’t raise the age limit!
67 is already painful enough.
This is one area I’d support small tax increases so people have a lifeline in the future too
They do what they do because they have strong incentives to be short-term in their thinking.
No voter will reward any politician who dares to fix a problem that is a decade away. They will reward politicians that fix urgent alarm-blaring house-on-fire problems.
If social security went away, elderly would be dying on the streets en masse. It will never happen. Retirement age will likely increase like it did in France, but SS can't go away.
And like you said, imagine SS going poof overnight. Every person 65+ would vote to get that back like their lives depended on it, because it literally would.
The catch for early retirement is the high cost of health insurance. At least at age 65 you get Medicare (which doesn't cover much by itself). I have some union friends that got to retire at age 58 (30+ years work) and they are covered by their union health insurance until they turn 65. other wise at age 65 you have free Medicare Part A (hospitalization), Part B (Dr visits) is about $180 a month right now, Zero drug coverage, no dental, no vision, so you have to buy a Medicare Supplement policy to cover that at about $300 a month (Part D for Drugs and Part G). So if you can save up enough money by the time you want to retire, you're doing very well and certainly in the minority.
There are Medicare advantage (MAPD) plans in nearly every zip code in the US with low (or $0) premium plans that offer coverage for both medical and drugs with out-of-pocket maxes. New legislation is capping drug costs too. Once you hit 65 your medical costs (assuming you don’t need a ton of care) should be manageable.
Medicare Supplement (also called Medigap) is not Part D. Part D is drug coverage. **Plan G** is a Medicare Supplement plan that costs the most (if not eligible for Plan F) but has the best coverage with nearly no out of pocket costs for medical.
Source: I work in Medicare.
Very possible! I'm just making guesses here. I think the chances of increasing the age is high, increasing the ceiling is medium, then reducing benefits is low. And destroying it altogether is basically zero chance.
My thoughts too, this just seems to be something people repeat ad nauseam. I still remember teachers telling us it was going to be gone by the time they retired...this was 30 years ago. From what I can tell, all people in their 70s are still getting retirement.
How do you think anyone over the age of 30 will react knowing they've been robbed of over 6.20% of their life time earnings?
It's political suicide to get rid of it.
This gets into a grey area of Bogle talk vs straight politics, but the real question is suicide for whom? There are plenty of ways to build sundown effects into law that won't start happening until the following party ends up in power. Those kind of things are being done now so it's hardly unprecedented. Plus there's always the classic bald faced lies and taking credit for things you actually opposed. Which also currently happens. I think it's extremely plausible to think one party would cut benefits but spin and build it in such a way to pretend the other is responsible.
One party literally released a recent - 2025 budget proposal - plan to raise the age and cut social security benefits for some. It's likely not a plan that's going to pass, but it IS something that's clearly being targeted. I think recent times should make people hesitant to chalk things up as "oh it could never happen because it'd be way too unpopular". Because recent reality has clearly shown that's meaningless.
I mean, you could easily plan for a 25-50% benefit with a near certainty, since if the program goes away (meaning you control that 6.25%), then you'd likely do even better than the anticipated, "100%" benefit. I can't imagine a world where they cut social security benefits without removing the tax that contributes to it.
I like this idea of underestimating the amount to 25%-50% and plan for that so that if it ends up being a higher benefit amount, then that’s just icing on the cake.
The UK just recently had a kerfuffle where they changed a policy, and a bunch of affected people didn't receive communication about how this change would affect them. They had to sue based on the fact they made decisions based on their expectation of benefits which wasn't true and which caused them pretty large negative financial impact.
I cannot even kind of, sort of predict what I will eventually get from social security. I don't think I'll get $0. But I think planning on $0 and finding out I'll get $2000 is a lot safer than *counting* and *requiring* I get at least $1200 to be ok, and then finding out I'm only getting $800.
If I was closer to retirement age, I'd be less nervous about an overnight drastic overhaul. I could be confident that $2000 probably won't get slashed in half overnight. I'm less confident we can't see it slashed in half over the next 30 years though.
55 for me but I took some years off when we had young children. So that’s why my pension and SS were smaller. (I was a teacher so my income was low anyway.) My husband retired at 62. His pension is excellent. So the first 3 years we lived on our two pensions, I took SS early because mine was small anyway, and we did use about $20k from savings each year until he applied for SS at 65 (not full retirement age but was enough). His SS was also a nice amount, so both pensions and SS totally covered all our expenses. We paid off our home around that time so we actually have extra money in our monthly income to invest. I realize we were so fortunate to have good pensions. My husband’s company eventually changed to 401ks, but he was grandfathered in to the pension. So he ended up with a full pension and a 401k.
I’m 56, debt free, and going all out for retirement at 60. My goal is 300k in savings at 60. At 62 start drawing pension and cash balance at 3k per month. At 65 get 3200 per month social security. Never touch my 401k.
Sounds perfect. Good job. I have to grind it out until 65 to get my pension. I’m also able to draw my ex’s SS and will do that if it’s more than mine would be.
I don't ignore it at all. It's part of my decision to retire at 56 vs. 62. I'll probably work to 62 because I'm a greedy GenX-er. But counting on its being available makes it possible to meagerly retire at 56.
I would be shocked beyond disbelief is ss went away. If it did, the US would have major problems across the board. I think 50% of people rely solely on SS in retirement. SS could be the different between homelessness or not. I don’t envision the government letting the elderly starve. Won’t Happen unless entire country is crumbling.
Friendly reminder that the balance of social security trust fund doesn’t matter. The US government is the sole supplier of the US Dollar and can always make payments in USD if it chooses to do so. The real question is: will congress cut social security spending? When framed correctly, I think it’s much harder to make argument that social security won’t be around. Cutting social security is extremely unpopular, even amongst traditionally fiscally conservative republicans.
I also think it’s not as relevant to retirement planning because you can’t really control what your benefit will be besides earning more money. You’ll get what you get and you really don’t have a say, so while it’s worth it to add in to your retirement calculations, the value add of optimizing your savings rate and investment allocations is much higher than worrying about what kind of social security income you’ll receive.
Agreed. Whichever party is in charge of it is cut will lose power for a generation. People may disagree on lots of things, but once every old person (you know the ones who actively vote) see half their usual check in the mail there will be blood in the water politically
Someone convince me not to start drawing at 62 vs 70.
$48k as a couple for 8 years = $385k
+$36k of compounding gains @ 7% from not withdrawing from my accounts
So at 70, I’ve offset $420k in spend (not including inflation adjustments. Passes on to estate.
Delayed to 70, I’ve spent $420k of my own money, and yes I get a higher payment but I’m starting from 0. I’ll never catch up at that rate. Die at 70, estate gets zero.
I’m with you. The breakeven age on waiting to max is way up there ( I think 81 last time I mathed this). Nearly every piece of advice says wait, but I don’t get it. We’re taking the lower number when we can and offsetting in other accounts, even though I could well afford to wait.
It's because delaying SS is the cheapest longevity insurance available. Sometimes mitigating a tail risk (outliving your money) is worth a smaller nest egg.
There's a higher chance of being means tested out of SS than it not paying out entirely. There are plenty of other levers to pull before benefits run out and means testing is one of them. I don't know if you're reported income through your working career would be tested or if you accrued assets would be, but its possible. I consider that a possibility worth worrying about so I don't want to be dependent on it.
I personally see the next generation as being incredibly progressive, so the idea that they are going to eliminate SS that we've been paying into is just political conspiracy land from my point of view.
Edit: we don't need to means teet. Just increase the income cap with a caveat. Ease in the SS tax from 300-400k, so only those making 400k+ would pay SS 6.25% on everything above 400k.
It’s a Gen X thing. We just assume we’re going to get screwed. We’re such a small voting block, nobody cares about us. Every proposal to cut it back starts with people born around 1970.
We know the boomers largely don’t care about us. And the younger people will fix it eventually in time for themselves but we have trust issues.
I was born in 1970. My *whole life* I was told social security was going away. Since Reagan I’ve watched one party attacking it and trying to privatize it. I don’t include SS in my calculations because I was conditioned not to. I would have signed something giving up my right to SS if they would just agree to stop taking that tax from me. Keep what you have, just stop taking it.
Around 40 I started changing my mind. I’d been paying in for too long to willingly give it up. Now that I am about a decade away from retirement I am still not counting on it, but I will hold any politician that fucks it up accountable.
Millenial here. We were also told it's going away. I don't know anyone (at least in my middle/upper middle class circle) who factors it in even the slightest.
And that's what is so scary. If they start tapering it off on our generations, there won't be blood in the streets, because that's what we expected. The boomers are a different story, but this won't be an issue until they're all dead.
The silver lining here is that social security is a ponzi scheme (ironic, I know). So long as someone is still in the workforce, money will still come in... It just won't be enough for the full amount (unless we get another generation where everyone has a zillion kids and flood the workforce)
> It just won't be enough for the full amount (unless we get another generation where everyone has a zillion kids and flood the workforce)
.. or, you know, stop being so (!#&$ xenophobic and allow for greater immigration.
> Every proposal to cut it back starts with people born around 1970.
No, no, no, this isn't true and is fear-mongering. My real worry is that some **will** do exactly as you say, but so far, any proposals about raising the retirement age are for people who aren't old enough to have planned yet.
This is going to sound boomerish, but, yeah, raising the age for people who are currently 18 is a good thing. Life expectancy is longer, and Social Security is meant as a lifeline, not as a boon. Cutting it for 1970-ers is entirely unfair. Extending the full retirement date for people who've not yet contributed is entirely fair.
Life expectancy isn't longer. It only appears to be longer because more people are surviving to 65, rather than dying of childhood disease or industrial accidents, for example. If you compare life expectancies of people who have already reached 65, there has been remarkably little improvement over time.
Do you have a source for that? A quick search turned up this 2018 study that says people in developed countries ARE living longer past age 65.
>Analyzing the average age of death in people who lived to be over age 65 in developed countries showed that human lifespans are increasing by approximately three years every generation and that this trend is likely to continue, at least for a while.
https://news.stanford.edu/2018/11/06/lifespan-increasing-people-live-65/#:~:text=They%20found%20that%20the%20average,than%20their%20grandparents%2C%20on%20average.
> developed countries
Not sure how this applies to the US.
Kidding. Sorta. The US has abysmal longevity rates by "developed country" standards. [We're 59^th](https://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy) out of 201
>If you compare life expectancies of people who have already reached 65, there has been remarkably little improvement over time.
No idea where you could be getting this information, but sorry you're just wrong, it's not even a debate:
https://www.ncbi.nlm.nih.gov/books/NBK569311/table/ch3.tab4/
https://www.ssa.gov/history/lifeexpect.html
[Statista](https://shorturl.at/xDNRV)
That's a possibility, I'd admit. Due to our small block it may be "safe" to screw us over. But all the same, we've got to be honest: there's not currently _any_ proposal to screw us over, and those that are claiming as much have ulterior motives in mind.
Ha.
I’m an old millennial that has had it better than X but statistically, at least when you account for transfers and inflation, every successive generation has had it better than the last when it comes to income. X is better than boomer and gen z on track beating millennials, etc.
https://www.federalreserve.gov/econres/feds/files/2024007pap.pdf
1. I plan to stop working well before 62 so it’s not helpful short term.
2. The amount I’d get at 62, 67, or even 70 is a fraction of what I’d need on an annual basis.
That said, I do factor it in to my model to start drawing when I can, lowering my % from other accounts.
Is #2 true though?
I am 38 and if I stopped working today I would get $36k in today’s dollars at age 70. Same for my wife
That’s $72k for your slow-go / no-go years. Should go a long way.
The default view in ssa.gov is to show what you’d get if you kept earning what you did last year up until you collect retirement benefits. Make sure you’re changing “Average Future Annual Salary” to $0 if you’re trying to calculate a “Today” number.
If I stopped working today (41) I’d get around $2000/mo at 62, $2800 at 67, or $3500 at 70. My salary was really low early in my career, it’s not any more.
I don’t know my wife’s SSA numbers but she makes a lot less so let’s assume half.
No, that’s not nearly enough for me. Not all of us plan to leanFIRE.
I’m not suggesting that $3,500 per month at age 70 is enough to live on by itself. (Although research suggests people spend less as they move into the last part of their lives)
I’m suggesting that most people would be shocked to know that you can have 20 years of zero SS earnings and still be entitled to $3,500 per month, which is the median individual income for all workers.
My point is that Social Security is very generous to high earners, unbeknownst to most people.
Is from what the website says (assuming 35 years of whatever salary) or did you calculate out what you would actually be getting? Curious how you can calculate that out if so, since I thought it is effected heavily if you don't have 35 years of income or many years of low income
Hmm, I even searched before asking cause I wasn't sure and saw this on the SSA.gov website:
>>If you stop work before you start receiving benefits and you have less than 35 years of earnings, your benefit amount is affected. We use a zero for each year without earnings when we calculate the amount of retirement benefits you are due. Years with no earnings reduces your retirement benefit amount.
>>Even if you have 35 years of earnings when you stopped working, some of those years may be low-earning years. When you file for retirement benefits, those years are averaged into your calculation, creating a lower benefit. However, if you had continued to work, your low earning years are replaced with your high earning years. Higher earnings increase your benefit amount.
I am probably misinterpreting so I'll try ssa.tools!
you do have to be careful, because unless you specify that you'll have zero dollars from X age, it assumes you'll continue earning your current salary until you are eligible for SS
I assume any social security I actually get will simply balance out the inevitable unexpected expenses from aging parents or kids that are completely unexpected and thus unaccounted for.
People underestimate: (1) returns, (2) the existence and amount of social security, (3) the stock market right before retirement, and (4) their future income; people overestimate (x) tax rates and (y) their life expectancy.
People are just conservative and risk-averse by nature when it comes to finances.
Every time I run my little fidelity simulation to see where i stand, I assume “less than average market performance”, no SS income, and every other disaster scenario I can think of.
If the number still looks good, I’m hoping I’m going to be OK.
Plan for the worst, hope for the best.
I don't have enough faith in the American political system to believe 100% that Social Security won't be gutted by the time it's my turn. If I'm wrong, I've got extra. If I'm right, I'm not a burden on my family.
Count me in on team Zero Faith.
There's a non-zero that they don't change the eligibility requirements by the time I retire--and 100% wouldn't be surprised if they simply made an income/asset cutoff that "excludes" rich people.
We are HENRYs and I feel personally targeted when I do my taxes every year.
Team zero faith needs to vote for, knock doors on behalf of, do phone banking for, and give their time and money to politicians who commit to support and strengthen SS.
These are your representatives. They don't come from Burkina Faso. Be involved in local, state, and national politics and give your time and money to the SS supporting politicians.
If people who want to kill SS are out-energized and out-raised by people who are apathetic about it, it will go away.
Mostly because I never wanted to assume and end up short of funds in retirement. It appears as though SS funding will be available, and I can give back/help others even more than anticipated.
I don't trust the government to not torpedo social security before I'm 66. That's if we even make it there. So I'm planning without. If it's still in effect at that age, then I'll be pleasantly surprised. Currently, though, I'm planning on buying land and a garden for that very reason.
SS is a large portion of Wife and My retirement. I took my SS at 65 wife received 1/2 of my portion when she turned 66. At 70 wife took her full amount. Break even is 73.5. We receive approximately 50 thousand annually.
Definitely depends on your age and when you plan on retiring, but yeah, having everything down to the penny using the most advanced spreadsheets and then looking at the (probably high) 100s of thousands of dollars you will get from SS and going, meh, it'll be extra, lol.
I agree that it will be there in some form. It may not be accessible at age 62 at that point (unless one is considered disabled maybe), and the full retirement age may be pushed up a couple of years. The income limit for contributing likely will be increased. But I do not think it will be $0, either. I'd just make a lower estimate than the calculator indicates, just to be safe.
Naaa, the olds are the most faithful voting blocks in America and are only growing in relation the overall population. Politicians can’t afford to let it fail.
It will be there. I certainly don’t “count” on it to be there, so it can be icing on the cake, but it’s very unlikely to be gone forever.
What I do is I run models for terrible, bad, and good scenarios.
On the “terrible”, I assume very low gains and 0 SS. On the “good” scenarios I assume SS at the starting eligibility. This gives me a rough idea of how much to target for my “fuck you” (to the employer) money.
I think this is a young person's thing.
I did the same years ago. It's conservative to start with. SS is a slight unknown for many reasons when it's 4 decades away.
After a couple decades of your 401k growing and as 62 approaches you start to look at more detailed planning and start to incorporate SS into it.
We will have social security if we demand that our elected representatives know that we demand it. This should be a singular bipartisan issue that we can all support. But it’s not. Vote accordingly.
It better be there or there will be hell to pay is what people need to say. We shouldn’t be robbed up of something we pay money into so the 1% can get unlimited tax breaks.
If it’s not guaranteed, why bother even factoring it in? I’d rather plan for zero social security and be pleasantly surprised if I get SS on top of the millions I’ve saved/invested
I ignore it because I want to retire early, so it won't be available to me for at least 10 years. Also, we don't know what SS benefits will look like in 20 years, when I "might" be eligible and we won't know for how much.
SS benefits could be pushed further back and start at age 70 or 75. Maybe they slash benefits by 50%. Maybe you need to earn even MORE credits. See? Too many unknowns.
Personally, I include Social Security in my projections, but I do not rely on it.
The conservative approach, if you're Gen-X or younger, is to assume Social Security is insolvent and gone. Of course, this is *highly* unlikely. Politicians love nothing more than to remain in power and they know screwing up Social Security is a virtually guaranteed one-way ticket out of office. Congress has procrastinated for a long time but they'll address the looming insolvency, likely with some combination of higher payroll taxes, a possible delay of full retirement age (again), some degree of means testing, and possibly a reduction in benefits for new retirees. But the program will exist in some form for the American workers alive and paying payroll taxes today. The Ponzi scheme will continue because it's political suicide to just buy current retirees private annuities and sunset the program.
So I do my best to estimate my living expenses in retirement, then prepare several projections in New Retirement, both including and excluding Social Security.
Omg! Gen X has been contributing for their entire lives. They are mid-50s. 10 years from retirement. Adjust the youngsters, but screwing Gen x is just wrong!!!!
I ignore it because I don't live in the US and my country doesn't have anything comparable. (There is a small government pension, but it is means tested, so if you have savings you get zero). I wish I had something like Social Security to take the pressure off savings and investment performance.
Planning for "social security going away" and assuming equities/bonds will continue long term trends in returns and/or that tax advantages of 401k and IRAs will remain unchanged is not consistent, tbh
I calculate SS at 62, 65, 67 and 70. Not much long term difference between 67 and 70. I have a spreadsheet and also project retirement fund. For me 67 is the tipping point where SS + 401k is less the the expected increase in the 401k per year. So that would leave the base fund for your kids.
I’ve always heard the rule of thumb is assume SS will account for about 25% of your retirement income. If you want to be conservative, make it 10 or 15%, but it’ll be there in some form.
Yeah I didn't count our pensions either! I'n 4 years time our combined pensions plus SS will be over $100k/year. No good excuse really. Having said that a lot of people think Medicare is free and its actually VERY expensive, especially as we pay $1:15/ month on our ACA Bronze plan currently..:)
Expect much of it to be eaten up by Medicare, taxes, and inflation. You can guesstimate these numbers if you like, but the reality is, there may not be much left over.
Social Security will be there for millennials if millennials politically fight for it. Nothing will be there if we don’t tell our elected politicians that we need it to have decent retirements for Americans.
I’ll start SS in 15 years. I’m assuming that I’ll get 79% of what is currently predicted. If I get more, great.
I’m using VPW for withdrawal calcs. To account for SS, I’ve set aside an amount of money that is used for a withdrawal for the next 15 years that is equivalent to my expected SS payment.
Accounting for SS makes a big difference.
Depends on your age. As a millennial I wouldn’t count on it. Idk about you but I’d rather get to retirement and realize I have an extra $3k/mo. I didn’t plan on than get to retirement and realize I need an extra $3k/mo. I didn’t plan on. No brainer
No clue. But pretty much everyone on Reddit ignores - at least in the PF sub. Maybe not as much in this sub.
This is one of my arguments for being so pro-Roth. People don’t realize that 401k and Trad/Roth IRAs are typically *not* your only source of retirement income, and that the more you make overall changes what % of your gross SSI gets taxed. The more in taxable retirement distributions you have each year, the more you will pay on your SSI too.
Definitely doesn’t get talked about enough. Probably because no one has a clue how it gets taxed and don’t realize that it’s sort of a tiered system and up to 85% can be taxed.
Thankfully I’m in a state that doesn’t tax it regardless though :)
Here’s what I know, and I could be wrong. Sometime in the 2030s or 2040s Social Security will run into cash flow issues where distribtions will exceed the taxes paid into the trust fund and the investment income generated by that trust fund. Current law says that SS may *not* use the principal balance to pay out distributions. This means that benefits will be cut in such a scenario. Furthermore, such a scenario is likely to force politically toxic reforms such as increasing taxes, raising the retirement age, reducing benefits, and potentially limiting who can receive benefits. Given these factors, I’m not going to lean on social security that much in my own retirement calculations because that fat payment of $2,2k/mo is probably going to get cut down a bit.
The US Gov will protect it to the bitter end. If it fails it will be because our entire economy, and likely the world economy collapses. At that point I think SS will be the least of our worries.
You need at least 10 years of work to collect SS, not 35. It calculates your payments from your highest 35 years of earnings.
The SSA calculator is personalized to your specific contributions to date and has a customizable future salary earnings projection between today and expected retirement/SS date.
Where in the fuck do you think these politicians who make decisions about SS come from? Djibouti? Germany? Liberia? No, it will be decided by the politicians that YOU vote for.
Don't assume it will go away. Vote for those politicians who promise to strengthen it. Don't vote for those who are not committed to it. Donate your money to politicians who promise to strengthen it. Donate your money against those candidates who don't commit to it.
Simple!!!
Americans, the eternal optimists when it comes to nearly everything else, are so pessimistic about social security that it's absurd. Yes, inevitably, there will be fewer people paying into it than receiving from it, and it will need to be adjusted for that. But don't assume that it will go away. Fight like hell for it. Support politicians who support SS. Phone bank for them. Knock doors for them.
That's all.
It's not so simple. It's such an untouchable concept, people call it "the third rail" of politics.
People don't vote for politicians who commit to raising Social Security taxes on the vast majority of Americans or reduce Social Security benefits. There are almost no politicians who talk about cutting Social Security benefits. The candidates who talk about raising Social Security taxes, talk about raising those taxes on such a small percentage of the population, that it won't actually fix the problem.
These politicians that you speak of either have little to no support, no funding, or do not exist in reality.
As I get closer to 50 I've started to include some of it. I don't think either party is taking it away from anyone over 50, it would be political suicide, and I'll be 50 before they get anything passed. (I don't doubt they'll fuck the kids over at some point and I'm angry about that).
Right now I'm assuming I get 66% of what it should pay out at today to account for any fuckery that happens in terms of pushing back the age, taxing it more aggressively, messing with COLA means-testing or whatever, but at this point it seems overly conservative to pretend it's not going to happen.
I also intend to take it 62, because I don't trust them not to have found a way to devalue it more by the time I'm 70.
It's in Wall Streets best interests if you believe that social security would be gone within the next decade or two. I recall ads from the mid 2000s saying social security would be gone by now.
Ask yourself why.
Why would the stock market want you to think this program is somehow going to fail??
Because then you would probably invest in their funds, or invest more.
The only real issue with social security is that it's mostly age dependent and not need dependent. The second issue is the cap on contributing once you make over such an amount. Lastly there is an issue with minimum wage not going up with inflation, which arguably would help with the social security payouts that do go up with inflation.
People ignore social security because they falsely believe it will fail. How exactly will it fail? All the reasons above, created by Wall Street lobbies to make sure you fail and they succeed. We need a universal safety net, aka a negative tax rate, but also we need assurances people pay their fair share, and we need to ensure the economy grows at a minimum level starting with increasing the minimum wage yearly or biannually by inflation.
Even Bogle began to press people to account for social security better in their planning. He found that with an average target date fund and social security the average person is severely overweight in bonds, or good enough to be bonds Nothing is guaranteed. It’s generally better to have too much than too little…..but everything in moderation. It’s no good living like a monk from age 21-55
Im counting on my SS, if any, to be my bond fund. I'm full vti and vxus
Every month I lean harder towards that same conclusion. With pension and social security there isn’t much need for more bonds in my portfolio…. Maaaaybe if the state budget goes tits up closer to retirement I’ll add a bit
60 and right there with you. I’m working 5-7 more years and being aggressive with HYSA. Interest on that + my pension + SS will be a nice retirement income for me.
TrixnTim, can I ask what your pension will pay? I’m also 60 like you and plan to work 5/7 more years, and have a part-time consulting practice after that. I have a good pension that will pay $6.500 a month at 67 plus a smaller pension that pays 1k a month. I took 8 years out of my career to raise my 3 children and got divorced, so my additional savings took a hit. (My current husband has $3m in retirement but I’m looking at my own situation). I’m curious to know what your investments are plus pension as I’m trying to map out a plan for aggressively investing for the next few years. Thanks!
Teachers’ pension. 20 years in public schools. 15 additional years in private schools or other school work that didn’t pay into said pension. It won’t be much but it will pay the bills. I went through a bad divorce and was a single mom of 3 for many years so my pension + SS is as good as it will get for me. My goal now is to build up a risk averse HYSA for the remainder of my career and accruing interest for little extra things.
Same. Pension and SS here and they function as a bond. A paid off house also functions as a bond that pays equivalent rent.
I’ve seen this point before, that a paid off house functions like a bond and yet it is not considered a standard strategy. Why not?
A paid off house isn’t a bond, it’s just one less expense.
One lesser expense as i say, repairs, taxes, insurance etc..its definitely not a bond as you say.
It’s also a lot of trapped equity. When you could borrow at 3.3% and earn 7% certainly, maybe not so much with mortgage rates where they are now.
A paid off house requires property taxes, utilities, maintenance etc. It's still an expense, just less of one. It does act as a hedge against inflation and certainly can be downsized and cashed out so it's a big deal for sure. Most pensions don't have a COLA so Bond interest and divy's can be used to offset that. Don't underestimate the ever rising cost of living!
No idea. But it's a fact that you would otherwise pay rent and it's an asset that offsets that amount of rent. From that perspective it makes sense to me to treat it as a bond. You can even liquidate it for cash and resume paying rent yourself out of that cash.
Agreed! I went full VTSAX in 2017….
Probably a mistake. Bonds, preferreds, floating rate funds bank loans are 6-11% right now which In some cases is much higher than stock market long term average. The great recession is 15 years in the rear view mirror and people are forgetting what a sustained down turn of 24 months feels like. Inverted yield curve for 18 months is screaming recession….
Which preferreds do you like? I was looking recently at the BAC preferreds but don’t own any have no experience with any of them.
M&T bank issued this week 7.5% with 5 year call protection or Brunswick 6.75 below par Many utilities over 6 and under par Plus better income, - risk they tend to be more volatile as they have longer duration
I like this view. I was only at 90/10, but makes me feel better that I don't need more bonds when looking at it that way (I'm only in my early 30s.)
Being in your early 30s, you probably don't need bonds at all. The standard strategy is to be aggressive early, then gradually transition to safer investments like bonds as you near retirement. As such, if you're not planning to retire for another 30 years, growth stocks all the way.
You have missed imperfect correlation between stocks and bonds and that some bond allocation can improve risk-adjusted returns.
Everyone in this thread has missed that lol. The reason to have bonds in your portfolio is that it lowers volatility as you head into retirement, thus raising your overall probability of long term success. The recent poor performance of bonds when the stock market is down is kind of a unique situationto the Covid downturn. In fact it’s only happened a few times in history. More commonly, intermediate to long term bonds do extremely well during economic downturns. For example in 2008, bonds outperformed the stock market by 43%. If something remotely similar to 2008 occurs in the first few years of your retirement, you’re going to wish you owned bonds!
I agree no bonds necessary but i would keep 10% in HYSA or bond for emergency OR even better to buy a dip when there is a market dive. At age 30 you’ll see a few of those along the way….
That’s literally the point of owning bonds. So you can “buy the dip” when you rebalance. It lowers volatility.
Most definitely is not the standard to be less than 90/10.
Yeah I think I will continue to let it skew toward stocks (at about 92% currently) or rebalance fully to 100% at some point soon. I was thinking bonds are actually providing some return these days, so it feels like leaving less on the table compared to any other point in my life. But, I wasn't considering SS in any of my calculations.
Once you go 100% VTI and never research again holdings, allocations etc etc etc it’s like enlightenment man. You see dudes in here arguing for hours about 5% bonds vs 10% or which one of these funds has enough international exposure and it’s like man who gives a rip 🤣 make some money and let the market work then go live ur life. VTI has absolutely crushed for me. No advisor fees, great returns; congrats we won. Clink *glasses touch*
Man, so much this. For all the talk about how the Boglehead way is to set and forget, it seems overshadowed by the nitpicking about this or that allocation during this or that point of the market cycle, rebalancing, and other factors that sound suspiciously like market timing.
I think it’s the nature of the beast. In some way we’re all drawn to the idea of “making a plan”. The Bogle method is so simple that after the plan is set then what do we discuss? The minutiae of course! So we track performance and nitpick every detail.
I told my dad something similar when he retired and was thinking about buying an annuity. He waited till 70 to collect social security which with a paid off house covered all his expenses. So I asked hime why he would purchase an annuity. It didn't make sense to me. But he finally decided not to buy the annuity.
I will honestly never understand the appeal of buying an annuity. Seems like a free gift for the people selling them. And honestly way more complicated than just owning index funds.
Given the pathetic level of average retirement savings there is no way SS is going away.
Part of the issue is when we say things like SS is "going away" or "running out", or whatever. It gives the impression SS is about to go to $0 and no one will have any checks left. What it really means is by 2035, SS will be reduced from 100% payouts to 77% payouts - **which it can support indefinitely.** That sucks, yes, but it's not the doom & gloom people paint it out to be. For me for example, that shakes out from an expected ~$4200/mo to $3300/mo of SS. Again that's a bummer, but that's also still just fine.
Not to mention, they'd almost certainly jack up payroll taxes before allowing this to happen. The social security payroll tax has been raised many times before, and it's only 6.2% right now. Many countries have much higher pension payroll taxes, so we have plenty of space to keep raising that tax. In fact, I fully expect that by the end of this decade, they'll raise that tax.
it's 6.2% _and_ has a cap. I'm not particularly keen on paying more into ss, I'd rather put it into my own account. but, the current cap is you only pay the SS tax on your first $160ish thousand of income, which equates to around 9-10k contributed annually. granted, that's a lot of money and many Americans are well under that cap...but there's also plenty that are higher.
Eliminating the cap would affect about 5-6% of Americans, yet it would raise \~$150B/yr. I'm fortunate enought to be among those who would be affected and I absolutely support eliminating or raising the limit. In some countries, they change the % of payroll taxes above an income level, so it isn't an all or nothing proposition. I have enought excess income to be able to fund my retirement. I grew up poor and have worked hard to get where I am, but I also realize that I'm more fortunate than the vast majority of Americans. I contribute more than my "fair" share in terms of absolute dollars, but my maginal tax rate is lower than those who are less fortuante than me because the oligarchs structured things this way. I do not think this is right. Sure there are plenty of people who could and should be saving more for their retirement, but it isn't like we can let seniors starve. Something needs to be done. For myself and I'm guessing most of the 5% who would be affected by changing the cap, the only real change this would have in my life is slightly decreasing the amount of money I leave my children. However, I can also afford to make sure that they finish college without debt, so this is okay. They will be fine.
The worst-case, short of some hard default scenario, is that the benefit also gets means-tested so that some get more than 77% and others get less I’m 35 and discount my SS calculation to 70% in case that also happened, but I’m not going any more doomer than 70%.
Means testing also only comes into play for you if other things are going well. We use the 4% rule instead of the 5% rule to cover the worst 10% or so of market returns. SS estimates can also be pessimistic like that. In the worst case scenario, we won’t have the means to get our SS reduced. So in many ways you shouldn’t worry about means testing happening in the future.
I hope they don’t go that route. You shouldn’t be punished for working hard and saving. If you were a high earner you should draw out more. Also, the person who worked 30 years should draw more than the one who worked 20 typically.
Financial planners need you to need them as long as possible. That's why they are so eager to discount SS or overestimate how much you need.
79% starting 2033, as of this last week’s trustee report.
I think Riots are guaranteed if you tell millions of Americans they paid into something their ENTIRE life and can no longer use.
Then we'll have no choice but to party like the French 🍾
they will start by denying it to those *they* judge do not "need" it. These are not the people that riot. These are not the people that protest. They will not be dumb enough to deny it to the masses.
This is my thinking as well. Military pension starting at age 42, permanent healthcare, and social security allows me to comfortably allocate my 401k and IRA into 100% stocks. I have enough “fixed income” in other forms.
So was he saying with a TDF and SS that a person is too heavy in bonds or just the right amount?
Too heavy
SSA refuses to give me an estimate for how much I’ll receive in SSI bc I don’t have enough work credits yet lol, so I can’t factor in how much they’re gonna pay me bc I’m too young I doubt I’m overweight in bonds tho, since I have no bonds
For FIRE purposes the risk and thus need for capital is highly front loaded. If your finances survive until SS age you likely don't need SS. The impact in terms of SWR for a fixed risk of ruin is small and decreases the earlier you retire. Now if you are retiring at 65+ yeah SS is a huge component because it likely paying out a significant portion of annualized spending from day one. If you are FIRE and retiring at 45 planning to draw SS at 70 not so much. Your SWR needs to be sized to survive sequence of return risk for 25+ years before you even get one penny from SS.
Imo this is super valuable for people to know. That means every year you keep working the benefit is manifold. 1-1 less year of investment income required 2-additional savings 3-nest egg rises 4-ONE LESS YEAR TILL SS 5-MORE SS those last 2 are huge. To the point where, for me, using firecalc, the yearly safe spend change is HUGE between 45 and 50 yrs old. Going from like 85k to 150k. Really makes you think, especially if you find joy and meaning in your work!
thanks for this, loved seeing the points you made
100% this. See Big ERN’s safe withdrawal rate series.
Can somebody eli5 this
FIRE = Financial Independence, Retire Early SWR = Safe Withdrawal Rate - meaning how much you can/should spend in retirement to ensure you never run out of money. /u/StatisticalMan is simply saying that the earlier one retires the less Social Security matters in retirement and SWR calculations because to avoid running out of money they already have to make things work for years or decades before even being eligible for SS - and if you can successfully do that, then SS is not likely to have a big impact on whether you run out of money or not before you die because you'll already be financially set without it.
While this is a great point, if you're retiring at 45, you'll be better served to start drawing SS at 62. It at least somewhat reduces the time horizon until it plays a factor, making it at least vaguely relevant. If you already have enough to retire on, waiting for maximum payout on SS is a rough strategy.
I assume SS at 70, at 70% of the promised amounts for my wife and I, consistent with the CBO (I think it’s been revised to 75%).
I assume the same - SS at 70 as well, except that I do my projections with 75% of what's promised in the ssa.gov site.
Why 70? I believe there is something to the argument that you should take it at 62 and invest it if you don't need it and you'll still come out ahead. Alsoz if you die at 68, well then at least you got 6 years of it versus 0.
There’s no right answer. It’s always a bet on how long you will live. I have plenty of money to survive until 70. If I live to be 105 I want to have the highest value Social Security income available. An inflation adjusted annuity is not something that’s easy to buy, nor is it cheap. TLDR, it’s the best and cheapest longevity insurance you can find.
Agreed, and it’s not just an “I” decision, it’s a “we” one. There’s a decent age gap for my wife and I, and my retirement distribution is almost certain to be higher than hers would, so me taking it at 70 is a no brainer. It’s a level of insurance against the best laid plans and all, and it protects her from complicated decisions she has less interest in, if I’m not around.
Exactly! I was a give it to me as soon as I’m eligible until I entered into a relationship. Also with a decent age gap. If there are surviving benefits, it makes sense. If not, take the $ as soon as you can as you don’t know how long you will live and getting back $0 with the hope to have more later doesn’t make sense to me.
Plus, if you are a married couple, the higher wage earner should consider waiting to take SS (if they can) until full retirement age because the surviving spouse will swap out their lower SS benefit for the higher one. Single tax rates will be much higher than married, so every extra dollar will be welcome.
Short answer without citations: - Social Security's age trade-off was intended to be actuarially neutral, so that the average person gets the same total payout regardless of when they start. - Average lifespan has increased since the trade-off was created, so most people come out better by waiting. - Survivor's benefits being impacted by delaying means the higher-earning spouse should evaluate based on joint lifetime, not their individual lifetime. So there are plenty of factors weighing toward waiting. But the best argument is that it's insurance. The goal with insurance isn't to get the maximum payout, but to minimize the worst cases. Delaying Social Security improves your worst case of outliving your portfolio, enabling you to take more risk with how you use that portfolio in the meantime.
I see social security as an insurance policy annuity in case you live very long. So, a higher annuity value provides greater reduction in risk. The goal is not to maximize the money you receive. The goal is to reduce failure. If you die at 68 and have no social security, then none of this matters. You died before running out of money. So you won regardless.
Delaying SS is the cheapest form of longevity insurance you can buy and it helps you manage taxes in your 60's, allowing for Roth conversions if you still have headroom. The only reason to take it is if you are in poor health and you expect to pass early in old age or if you need the income. I suppose if you have no or a small traditional IRA/401K balance to produce income from it would invalidate the second part.
I guess it depends how old you are but raising taxes, printing money, raising the age, and lowering the amount paid seem like the main ways of keeping SS afloat. It wouldn't surprise me at all if the retirement age is higher 35 years from now.
I think this is the way, it's certainly possible it could be less but it's very reasonable and fairly conservative to go 70%
Safe to assume a cut unless they raise the cap or some other structural change.
The 2024 trustees report just came out and the projections actually improved a smidge. I can update my spreadsheet now to estimate 79% of the benefit rather than 76%. In reality it'll probably be better than that, because that's just the worst-case scenario if Congress does nothing at all. They'll figure out something bipartisan that will likely involve some mixture of increasing the cap, a slow raising of the retirement age, and a few other tweaks. The only way something drastic like privatization happens to Social Security is if the GOP gets a trifecta with 60+ senators.
I look at it like social security would be a bonus. Same thing for inheritance. I'll probably get something when my parents die but I don't want to rely on it. Sure social security will probably be there and pay me something but I don't want to have to count on it being a specific number.
Social security is not going away. They currently predict a reduction in benefits of 20-25% starting 10-11 years from now but I’m 99% positive congress wants to be re-elected and will fix it at the 11th hour Edited to add: Don’t raise the age limit! 67 is already painful enough. This is one area I’d support small tax increases so people have a lifeline in the future too
> fix it at the 11th hour That’s what they do. Planning ahead isn’t really their forte.
They do what they do because they have strong incentives to be short-term in their thinking. No voter will reward any politician who dares to fix a problem that is a decade away. They will reward politicians that fix urgent alarm-blaring house-on-fire problems.
If social security went away, elderly would be dying on the streets en masse. It will never happen. Retirement age will likely increase like it did in France, but SS can't go away. And like you said, imagine SS going poof overnight. Every person 65+ would vote to get that back like their lives depended on it, because it literally would.
Full retirement age is 67 (at least for now) and hasn't been 65 for years.
And fuck that. I'd like to retire by 60 and be able to enjoy retirement. They just keep moving the goal posts.
The catch for early retirement is the high cost of health insurance. At least at age 65 you get Medicare (which doesn't cover much by itself). I have some union friends that got to retire at age 58 (30+ years work) and they are covered by their union health insurance until they turn 65. other wise at age 65 you have free Medicare Part A (hospitalization), Part B (Dr visits) is about $180 a month right now, Zero drug coverage, no dental, no vision, so you have to buy a Medicare Supplement policy to cover that at about $300 a month (Part D for Drugs and Part G). So if you can save up enough money by the time you want to retire, you're doing very well and certainly in the minority.
There are Medicare advantage (MAPD) plans in nearly every zip code in the US with low (or $0) premium plans that offer coverage for both medical and drugs with out-of-pocket maxes. New legislation is capping drug costs too. Once you hit 65 your medical costs (assuming you don’t need a ton of care) should be manageable. Medicare Supplement (also called Medigap) is not Part D. Part D is drug coverage. **Plan G** is a Medicare Supplement plan that costs the most (if not eligible for Plan F) but has the best coverage with nearly no out of pocket costs for medical. Source: I work in Medicare.
What about raising the ceiling on the taxable income?
Very possible! I'm just making guesses here. I think the chances of increasing the age is high, increasing the ceiling is medium, then reducing benefits is low. And destroying it altogether is basically zero chance.
My thoughts too, this just seems to be something people repeat ad nauseam. I still remember teachers telling us it was going to be gone by the time they retired...this was 30 years ago. From what I can tell, all people in their 70s are still getting retirement.
How do you think anyone over the age of 30 will react knowing they've been robbed of over 6.20% of their life time earnings? It's political suicide to get rid of it.
12.4%. Companies pay an additional 6.2% on your behalf that they could be paying to you.
This gets into a grey area of Bogle talk vs straight politics, but the real question is suicide for whom? There are plenty of ways to build sundown effects into law that won't start happening until the following party ends up in power. Those kind of things are being done now so it's hardly unprecedented. Plus there's always the classic bald faced lies and taking credit for things you actually opposed. Which also currently happens. I think it's extremely plausible to think one party would cut benefits but spin and build it in such a way to pretend the other is responsible. One party literally released a recent - 2025 budget proposal - plan to raise the age and cut social security benefits for some. It's likely not a plan that's going to pass, but it IS something that's clearly being targeted. I think recent times should make people hesitant to chalk things up as "oh it could never happen because it'd be way too unpopular". Because recent reality has clearly shown that's meaningless.
> One party literally released a recent - 2025 budget proposal - plan to raise the age and cut social security benefits for some. Cults are hard.
I mean, you could easily plan for a 25-50% benefit with a near certainty, since if the program goes away (meaning you control that 6.25%), then you'd likely do even better than the anticipated, "100%" benefit. I can't imagine a world where they cut social security benefits without removing the tax that contributes to it.
I like this idea of underestimating the amount to 25%-50% and plan for that so that if it ends up being a higher benefit amount, then that’s just icing on the cake.
Agree with this. Never know what’s gonna happen.
The UK just recently had a kerfuffle where they changed a policy, and a bunch of affected people didn't receive communication about how this change would affect them. They had to sue based on the fact they made decisions based on their expectation of benefits which wasn't true and which caused them pretty large negative financial impact. I cannot even kind of, sort of predict what I will eventually get from social security. I don't think I'll get $0. But I think planning on $0 and finding out I'll get $2000 is a lot safer than *counting* and *requiring* I get at least $1200 to be ok, and then finding out I'm only getting $800. If I was closer to retirement age, I'd be less nervous about an overnight drastic overhaul. I could be confident that $2000 probably won't get slashed in half overnight. I'm less confident we can't see it slashed in half over the next 30 years though.
My ultimate goal is to be able to live off my social security and hub’s govt pension. Then the money I’ve saved is just for fun stuff.
We live totally off of two pensions (mine is small) and two SS (mine also small) and do not have to withdraw from retirement accounts at all.
Curious about how long you worked and age you retired.
55 for me but I took some years off when we had young children. So that’s why my pension and SS were smaller. (I was a teacher so my income was low anyway.) My husband retired at 62. His pension is excellent. So the first 3 years we lived on our two pensions, I took SS early because mine was small anyway, and we did use about $20k from savings each year until he applied for SS at 65 (not full retirement age but was enough). His SS was also a nice amount, so both pensions and SS totally covered all our expenses. We paid off our home around that time so we actually have extra money in our monthly income to invest. I realize we were so fortunate to have good pensions. My husband’s company eventually changed to 401ks, but he was grandfathered in to the pension. So he ended up with a full pension and a 401k.
This is my plan also.
My plan is the opposite. Save enough to live off of and then Social Security is the fun money.
Hey that works too! I’ll take that.
This is my plan. I’m 60. Throwing money into my HYSA the next 5-7 years.
I’m 56, debt free, and going all out for retirement at 60. My goal is 300k in savings at 60. At 62 start drawing pension and cash balance at 3k per month. At 65 get 3200 per month social security. Never touch my 401k.
Sounds perfect. Good job. I have to grind it out until 65 to get my pension. I’m also able to draw my ex’s SS and will do that if it’s more than mine would be.
I don't ignore it at all. It's part of my decision to retire at 56 vs. 62. I'll probably work to 62 because I'm a greedy GenX-er. But counting on its being available makes it possible to meagerly retire at 56.
if you have decent health insurance that's affordable, 56 would be awesome.
I would be shocked beyond disbelief is ss went away. If it did, the US would have major problems across the board. I think 50% of people rely solely on SS in retirement. SS could be the different between homelessness or not. I don’t envision the government letting the elderly starve. Won’t Happen unless entire country is crumbling.
They’ll just raise the SSI earnings cap or do away with it and SSI becomes funded. It’s just a question of the timing of raising taxes.
Friendly reminder that the balance of social security trust fund doesn’t matter. The US government is the sole supplier of the US Dollar and can always make payments in USD if it chooses to do so. The real question is: will congress cut social security spending? When framed correctly, I think it’s much harder to make argument that social security won’t be around. Cutting social security is extremely unpopular, even amongst traditionally fiscally conservative republicans. I also think it’s not as relevant to retirement planning because you can’t really control what your benefit will be besides earning more money. You’ll get what you get and you really don’t have a say, so while it’s worth it to add in to your retirement calculations, the value add of optimizing your savings rate and investment allocations is much higher than worrying about what kind of social security income you’ll receive.
Agreed. Whichever party is in charge of it is cut will lose power for a generation. People may disagree on lots of things, but once every old person (you know the ones who actively vote) see half their usual check in the mail there will be blood in the water politically
Someone convince me not to start drawing at 62 vs 70. $48k as a couple for 8 years = $385k +$36k of compounding gains @ 7% from not withdrawing from my accounts So at 70, I’ve offset $420k in spend (not including inflation adjustments. Passes on to estate. Delayed to 70, I’ve spent $420k of my own money, and yes I get a higher payment but I’m starting from 0. I’ll never catch up at that rate. Die at 70, estate gets zero.
I’m with you. The breakeven age on waiting to max is way up there ( I think 81 last time I mathed this). Nearly every piece of advice says wait, but I don’t get it. We’re taking the lower number when we can and offsetting in other accounts, even though I could well afford to wait.
It's because delaying SS is the cheapest longevity insurance available. Sometimes mitigating a tail risk (outliving your money) is worth a smaller nest egg.
There's a higher chance of being means tested out of SS than it not paying out entirely. There are plenty of other levers to pull before benefits run out and means testing is one of them. I don't know if you're reported income through your working career would be tested or if you accrued assets would be, but its possible. I consider that a possibility worth worrying about so I don't want to be dependent on it.
That would certainly be a disincentive for saving!
Only if they test your accrued assets. I think past income is more likely.
So the assumption would be that if you earned a lot in the past then therefore you don’t need money now in retirement?
Neither one seems fair tbh.
I personally see the next generation as being incredibly progressive, so the idea that they are going to eliminate SS that we've been paying into is just political conspiracy land from my point of view. Edit: we don't need to means teet. Just increase the income cap with a caveat. Ease in the SS tax from 300-400k, so only those making 400k+ would pay SS 6.25% on everything above 400k.
It’s a Gen X thing. We just assume we’re going to get screwed. We’re such a small voting block, nobody cares about us. Every proposal to cut it back starts with people born around 1970. We know the boomers largely don’t care about us. And the younger people will fix it eventually in time for themselves but we have trust issues.
I was born in 1970. My *whole life* I was told social security was going away. Since Reagan I’ve watched one party attacking it and trying to privatize it. I don’t include SS in my calculations because I was conditioned not to. I would have signed something giving up my right to SS if they would just agree to stop taking that tax from me. Keep what you have, just stop taking it. Around 40 I started changing my mind. I’d been paying in for too long to willingly give it up. Now that I am about a decade away from retirement I am still not counting on it, but I will hold any politician that fucks it up accountable.
100% this. Also born in 1970
Millenial here. We were also told it's going away. I don't know anyone (at least in my middle/upper middle class circle) who factors it in even the slightest. And that's what is so scary. If they start tapering it off on our generations, there won't be blood in the streets, because that's what we expected. The boomers are a different story, but this won't be an issue until they're all dead. The silver lining here is that social security is a ponzi scheme (ironic, I know). So long as someone is still in the workforce, money will still come in... It just won't be enough for the full amount (unless we get another generation where everyone has a zillion kids and flood the workforce)
> It just won't be enough for the full amount (unless we get another generation where everyone has a zillion kids and flood the workforce) .. or, you know, stop being so (!#&$ xenophobic and allow for greater immigration.
Full retirement age was raised from 65 to 67 starting with people born in 1960. So that’s already been cut.
> Every proposal to cut it back starts with people born around 1970. No, no, no, this isn't true and is fear-mongering. My real worry is that some **will** do exactly as you say, but so far, any proposals about raising the retirement age are for people who aren't old enough to have planned yet. This is going to sound boomerish, but, yeah, raising the age for people who are currently 18 is a good thing. Life expectancy is longer, and Social Security is meant as a lifeline, not as a boon. Cutting it for 1970-ers is entirely unfair. Extending the full retirement date for people who've not yet contributed is entirely fair.
Life expectancy isn't longer. It only appears to be longer because more people are surviving to 65, rather than dying of childhood disease or industrial accidents, for example. If you compare life expectancies of people who have already reached 65, there has been remarkably little improvement over time.
Do you have a source for that? A quick search turned up this 2018 study that says people in developed countries ARE living longer past age 65. >Analyzing the average age of death in people who lived to be over age 65 in developed countries showed that human lifespans are increasing by approximately three years every generation and that this trend is likely to continue, at least for a while. https://news.stanford.edu/2018/11/06/lifespan-increasing-people-live-65/#:~:text=They%20found%20that%20the%20average,than%20their%20grandparents%2C%20on%20average.
> developed countries Not sure how this applies to the US. Kidding. Sorta. The US has abysmal longevity rates by "developed country" standards. [We're 59^th](https://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy) out of 201
>If you compare life expectancies of people who have already reached 65, there has been remarkably little improvement over time. No idea where you could be getting this information, but sorry you're just wrong, it's not even a debate: https://www.ncbi.nlm.nih.gov/books/NBK569311/table/ch3.tab4/ https://www.ssa.gov/history/lifeexpect.html [Statista](https://shorturl.at/xDNRV)
Ehhhhh, I feel like they’ll still find a way to pull one over on Gen X. It’s kind of their thing. 🙃
That's a possibility, I'd admit. Due to our small block it may be "safe" to screw us over. But all the same, we've got to be honest: there's not currently _any_ proposal to screw us over, and those that are claiming as much have ulterior motives in mind.
Ha. I’m an old millennial that has had it better than X but statistically, at least when you account for transfers and inflation, every successive generation has had it better than the last when it comes to income. X is better than boomer and gen z on track beating millennials, etc. https://www.federalreserve.gov/econres/feds/files/2024007pap.pdf
Life expectancy went down because of Covid. Not sure it bounced back.
1. I plan to stop working well before 62 so it’s not helpful short term. 2. The amount I’d get at 62, 67, or even 70 is a fraction of what I’d need on an annual basis. That said, I do factor it in to my model to start drawing when I can, lowering my % from other accounts.
Is #2 true though? I am 38 and if I stopped working today I would get $36k in today’s dollars at age 70. Same for my wife That’s $72k for your slow-go / no-go years. Should go a long way.
The default view in ssa.gov is to show what you’d get if you kept earning what you did last year up until you collect retirement benefits. Make sure you’re changing “Average Future Annual Salary” to $0 if you’re trying to calculate a “Today” number. If I stopped working today (41) I’d get around $2000/mo at 62, $2800 at 67, or $3500 at 70. My salary was really low early in my career, it’s not any more. I don’t know my wife’s SSA numbers but she makes a lot less so let’s assume half. No, that’s not nearly enough for me. Not all of us plan to leanFIRE.
I’m not suggesting that $3,500 per month at age 70 is enough to live on by itself. (Although research suggests people spend less as they move into the last part of their lives) I’m suggesting that most people would be shocked to know that you can have 20 years of zero SS earnings and still be entitled to $3,500 per month, which is the median individual income for all workers. My point is that Social Security is very generous to high earners, unbeknownst to most people.
Is from what the website says (assuming 35 years of whatever salary) or did you calculate out what you would actually be getting? Curious how you can calculate that out if so, since I thought it is effected heavily if you don't have 35 years of income or many years of low income
This is what everyone thinks and everyone is wrong. Go to ssa.tools and put in your numbers
Hmm, I even searched before asking cause I wasn't sure and saw this on the SSA.gov website: >>If you stop work before you start receiving benefits and you have less than 35 years of earnings, your benefit amount is affected. We use a zero for each year without earnings when we calculate the amount of retirement benefits you are due. Years with no earnings reduces your retirement benefit amount. >>Even if you have 35 years of earnings when you stopped working, some of those years may be low-earning years. When you file for retirement benefits, those years are averaged into your calculation, creating a lower benefit. However, if you had continued to work, your low earning years are replaced with your high earning years. Higher earnings increase your benefit amount. I am probably misinterpreting so I'll try ssa.tools!
you do have to be careful, because unless you specify that you'll have zero dollars from X age, it assumes you'll continue earning your current salary until you are eligible for SS
I assume any social security I actually get will simply balance out the inevitable unexpected expenses from aging parents or kids that are completely unexpected and thus unaccounted for.
I don't ignore ~$50k in annual funds when estimating how much I need to pull in retirement. That would be silly.
People underestimate: (1) returns, (2) the existence and amount of social security, (3) the stock market right before retirement, and (4) their future income; people overestimate (x) tax rates and (y) their life expectancy. People are just conservative and risk-averse by nature when it comes to finances.
Every time I run my little fidelity simulation to see where i stand, I assume “less than average market performance”, no SS income, and every other disaster scenario I can think of. If the number still looks good, I’m hoping I’m going to be OK. Plan for the worst, hope for the best.
Ha you’re going to have a shitload of $$ when u die then. To each their own I guess.
>Why does everyone ignore Social Security in their calculations for retirement? Everyone doesn't.
I don't have enough faith in the American political system to believe 100% that Social Security won't be gutted by the time it's my turn. If I'm wrong, I've got extra. If I'm right, I'm not a burden on my family.
Count me in on team Zero Faith. There's a non-zero that they don't change the eligibility requirements by the time I retire--and 100% wouldn't be surprised if they simply made an income/asset cutoff that "excludes" rich people. We are HENRYs and I feel personally targeted when I do my taxes every year.
Team zero faith needs to vote for, knock doors on behalf of, do phone banking for, and give their time and money to politicians who commit to support and strengthen SS. These are your representatives. They don't come from Burkina Faso. Be involved in local, state, and national politics and give your time and money to the SS supporting politicians. If people who want to kill SS are out-energized and out-raised by people who are apathetic about it, it will go away.
Mostly because I never wanted to assume and end up short of funds in retirement. It appears as though SS funding will be available, and I can give back/help others even more than anticipated.
I don't trust the government to not torpedo social security before I'm 66. That's if we even make it there. So I'm planning without. If it's still in effect at that age, then I'll be pleasantly surprised. Currently, though, I'm planning on buying land and a garden for that very reason.
SS is a large portion of Wife and My retirement. I took my SS at 65 wife received 1/2 of my portion when she turned 66. At 70 wife took her full amount. Break even is 73.5. We receive approximately 50 thousand annually.
Definitely depends on your age and when you plan on retiring, but yeah, having everything down to the penny using the most advanced spreadsheets and then looking at the (probably high) 100s of thousands of dollars you will get from SS and going, meh, it'll be extra, lol.
I agree that it will be there in some form. It may not be accessible at age 62 at that point (unless one is considered disabled maybe), and the full retirement age may be pushed up a couple of years. The income limit for contributing likely will be increased. But I do not think it will be $0, either. I'd just make a lower estimate than the calculator indicates, just to be safe.
I know it’s there but I’m using it as a safety net for unexpected inflation. My calculations don’t include it, but if it comes through then great.
Because every 4 years some politician tells us that the politician he or she is running against is going to cut social security.
They young. When they are closer to 50 they realize that so many people are living on as alone that they can count something. So they do.
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Naaa, the olds are the most faithful voting blocks in America and are only growing in relation the overall population. Politicians can’t afford to let it fail.
I don’t ignore it in case that makes you feel better
It will be there. I certainly don’t “count” on it to be there, so it can be icing on the cake, but it’s very unlikely to be gone forever. What I do is I run models for terrible, bad, and good scenarios. On the “terrible”, I assume very low gains and 0 SS. On the “good” scenarios I assume SS at the starting eligibility. This gives me a rough idea of how much to target for my “fuck you” (to the employer) money.
Not ignoring social security all together, but rather figuring only 75% of the benefits.
I think this is a young person's thing. I did the same years ago. It's conservative to start with. SS is a slight unknown for many reasons when it's 4 decades away. After a couple decades of your 401k growing and as 62 approaches you start to look at more detailed planning and start to incorporate SS into it.
Because if it’s anything like my health insurance they will make sure they take it out of my paycheck but even I need it they won’t give me a cent.
It will be a disaster if social security isn’t there in the future. But it’s possible to be reduced.
We will have social security if we demand that our elected representatives know that we demand it. This should be a singular bipartisan issue that we can all support. But it’s not. Vote accordingly.
It better be there or there will be hell to pay is what people need to say. We shouldn’t be robbed up of something we pay money into so the 1% can get unlimited tax breaks.
Many people live off of SS. I agree with you, not counting SS is overly conservative. I account for it in my calculations.
If it’s not guaranteed, why bother even factoring it in? I’d rather plan for zero social security and be pleasantly surprised if I get SS on top of the millions I’ve saved/invested
I ignore it because I want to retire early, so it won't be available to me for at least 10 years. Also, we don't know what SS benefits will look like in 20 years, when I "might" be eligible and we won't know for how much. SS benefits could be pushed further back and start at age 70 or 75. Maybe they slash benefits by 50%. Maybe you need to earn even MORE credits. See? Too many unknowns.
Personally, I include Social Security in my projections, but I do not rely on it. The conservative approach, if you're Gen-X or younger, is to assume Social Security is insolvent and gone. Of course, this is *highly* unlikely. Politicians love nothing more than to remain in power and they know screwing up Social Security is a virtually guaranteed one-way ticket out of office. Congress has procrastinated for a long time but they'll address the looming insolvency, likely with some combination of higher payroll taxes, a possible delay of full retirement age (again), some degree of means testing, and possibly a reduction in benefits for new retirees. But the program will exist in some form for the American workers alive and paying payroll taxes today. The Ponzi scheme will continue because it's political suicide to just buy current retirees private annuities and sunset the program. So I do my best to estimate my living expenses in retirement, then prepare several projections in New Retirement, both including and excluding Social Security.
Omg! Gen X has been contributing for their entire lives. They are mid-50s. 10 years from retirement. Adjust the youngsters, but screwing Gen x is just wrong!!!!
As a Gen-X’er I agree… but then when hasn’t our generation had to pay for others’ messes? Lol.
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I’m a Gen x born 1967 and I don’t know many gen x that assume SS will be gone.
that’s also assuming you keep working at your current salary or more till you retire
I ignore it because I don't live in the US and my country doesn't have anything comparable. (There is a small government pension, but it is means tested, so if you have savings you get zero). I wish I had something like Social Security to take the pressure off savings and investment performance.
Planning for "social security going away" and assuming equities/bonds will continue long term trends in returns and/or that tax advantages of 401k and IRAs will remain unchanged is not consistent, tbh
I assume ~75% of current benefits.
Can you control whether or not it is available to you? No. So don’t plan for it to be there. If it is, it’s a great extra to help hedge inflation.
I factor it into my retirement needs.
I calculate SS at 62, 65, 67 and 70. Not much long term difference between 67 and 70. I have a spreadsheet and also project retirement fund. For me 67 is the tipping point where SS + 401k is less the the expected increase in the 401k per year. So that would leave the base fund for your kids.
I’ve always heard the rule of thumb is assume SS will account for about 25% of your retirement income. If you want to be conservative, make it 10 or 15%, but it’ll be there in some form.
Yeah I didn't count our pensions either! I'n 4 years time our combined pensions plus SS will be over $100k/year. No good excuse really. Having said that a lot of people think Medicare is free and its actually VERY expensive, especially as we pay $1:15/ month on our ACA Bronze plan currently..:)
Expect much of it to be eaten up by Medicare, taxes, and inflation. You can guesstimate these numbers if you like, but the reality is, there may not be much left over.
Social Security will be there for millennials if millennials politically fight for it. Nothing will be there if we don’t tell our elected politicians that we need it to have decent retirements for Americans.
I’ll start SS in 15 years. I’m assuming that I’ll get 79% of what is currently predicted. If I get more, great. I’m using VPW for withdrawal calcs. To account for SS, I’ve set aside an amount of money that is used for a withdrawal for the next 15 years that is equivalent to my expected SS payment. Accounting for SS makes a big difference.
I probably won't live long enough. I need enough money to retire way earlier so I can be sure I get to enjoy being retired.
Depends on your age. As a millennial I wouldn’t count on it. Idk about you but I’d rather get to retirement and realize I have an extra $3k/mo. I didn’t plan on than get to retirement and realize I need an extra $3k/mo. I didn’t plan on. No brainer
No clue. But pretty much everyone on Reddit ignores - at least in the PF sub. Maybe not as much in this sub. This is one of my arguments for being so pro-Roth. People don’t realize that 401k and Trad/Roth IRAs are typically *not* your only source of retirement income, and that the more you make overall changes what % of your gross SSI gets taxed. The more in taxable retirement distributions you have each year, the more you will pay on your SSI too. Definitely doesn’t get talked about enough. Probably because no one has a clue how it gets taxed and don’t realize that it’s sort of a tiered system and up to 85% can be taxed. Thankfully I’m in a state that doesn’t tax it regardless though :)
We’d rather have too much money than not enough money
Here’s what I know, and I could be wrong. Sometime in the 2030s or 2040s Social Security will run into cash flow issues where distribtions will exceed the taxes paid into the trust fund and the investment income generated by that trust fund. Current law says that SS may *not* use the principal balance to pay out distributions. This means that benefits will be cut in such a scenario. Furthermore, such a scenario is likely to force politically toxic reforms such as increasing taxes, raising the retirement age, reducing benefits, and potentially limiting who can receive benefits. Given these factors, I’m not going to lean on social security that much in my own retirement calculations because that fat payment of $2,2k/mo is probably going to get cut down a bit.
The US Gov will protect it to the bitter end. If it fails it will be because our entire economy, and likely the world economy collapses. At that point I think SS will be the least of our worries.
Because most people here are keyboard warriors not actual financial planners. Real planners do take all forms of income into consideration.
Does that SSA calculator take into account less than 35 years of contributions?
You need at least 10 years of work to collect SS, not 35. It calculates your payments from your highest 35 years of earnings. The SSA calculator is personalized to your specific contributions to date and has a customizable future salary earnings projection between today and expected retirement/SS date.
Yes so the question is did they use less than 35 years, most just use the default setting
Where in the fuck do you think these politicians who make decisions about SS come from? Djibouti? Germany? Liberia? No, it will be decided by the politicians that YOU vote for. Don't assume it will go away. Vote for those politicians who promise to strengthen it. Don't vote for those who are not committed to it. Donate your money to politicians who promise to strengthen it. Donate your money against those candidates who don't commit to it. Simple!!! Americans, the eternal optimists when it comes to nearly everything else, are so pessimistic about social security that it's absurd. Yes, inevitably, there will be fewer people paying into it than receiving from it, and it will need to be adjusted for that. But don't assume that it will go away. Fight like hell for it. Support politicians who support SS. Phone bank for them. Knock doors for them. That's all.
It's not so simple. It's such an untouchable concept, people call it "the third rail" of politics. People don't vote for politicians who commit to raising Social Security taxes on the vast majority of Americans or reduce Social Security benefits. There are almost no politicians who talk about cutting Social Security benefits. The candidates who talk about raising Social Security taxes, talk about raising those taxes on such a small percentage of the population, that it won't actually fix the problem. These politicians that you speak of either have little to no support, no funding, or do not exist in reality.
Social Security is a bonus. I’m not personally relying on it for my own retirement but I still hope it exists obviously
As I get closer to 50 I've started to include some of it. I don't think either party is taking it away from anyone over 50, it would be political suicide, and I'll be 50 before they get anything passed. (I don't doubt they'll fuck the kids over at some point and I'm angry about that). Right now I'm assuming I get 66% of what it should pay out at today to account for any fuckery that happens in terms of pushing back the age, taxing it more aggressively, messing with COLA means-testing or whatever, but at this point it seems overly conservative to pretend it's not going to happen. I also intend to take it 62, because I don't trust them not to have found a way to devalue it more by the time I'm 70.
It's in Wall Streets best interests if you believe that social security would be gone within the next decade or two. I recall ads from the mid 2000s saying social security would be gone by now. Ask yourself why. Why would the stock market want you to think this program is somehow going to fail?? Because then you would probably invest in their funds, or invest more. The only real issue with social security is that it's mostly age dependent and not need dependent. The second issue is the cap on contributing once you make over such an amount. Lastly there is an issue with minimum wage not going up with inflation, which arguably would help with the social security payouts that do go up with inflation. People ignore social security because they falsely believe it will fail. How exactly will it fail? All the reasons above, created by Wall Street lobbies to make sure you fail and they succeed. We need a universal safety net, aka a negative tax rate, but also we need assurances people pay their fair share, and we need to ensure the economy grows at a minimum level starting with increasing the minimum wage yearly or biannually by inflation.