WSJ:Social Security Expected to Dip Into Its Reserves This Year

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nexesn
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WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by nexesn » Tue Jun 05, 2018 2:58 pm

I thought this might be informative to some....

For those who don't subscribe to the WSJ, I copied and pasted the entire article below. For those who have a subscription, I've also included the link.

https://www.wsj.com/articles/social-sec ... 1528223245


Sorry, I removed the copy and paste due to potential copyright issues...
Last edited by nexesn on Tue Jun 05, 2018 3:08 pm, edited 1 time in total.

mptfan
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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by mptfan » Tue Jun 05, 2018 2:59 pm

I think it's a copyright violation to copy and republish the entire article.

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by nexesn » Tue Jun 05, 2018 3:07 pm

mptfan wrote:
Tue Jun 05, 2018 2:59 pm
I think it's a copyright violation to copy and republish the entire article.
Whoops, I'll remove right now... Thanks.

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by visualguy » Tue Jun 05, 2018 3:21 pm

That's not a surprise... SS has been expected to start dipping into reserves this year, and continue doing so until they are depleted around 2034 at which time it will start being able to pay only 75% of obligations unless some changes are made before then.

I don't rely on SS in my retirement planning because of the risk that means testing will be introduced at some point as a solution.

nexesn
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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by nexesn » Tue Jun 05, 2018 3:32 pm

visualguy wrote:
Tue Jun 05, 2018 3:21 pm
That's not a surprise... SS has been expected to start dipping into reserves this year, and continue doing so until they are depleted around 2034 at which time it will start being able to pay only 75% of obligations unless some changes are made before then.

I don't rely on SS in my retirement planning because of the risk that means testing will be introduced at some point as a solution.

This will show my ignorance... but I figured I probably wouldn't even receive SS when I retired. I was actually pleased to see that I might at least get 75% of the obligation :D. Medicare is the one that's a little more concerning.

"...Medicare’s hospital insurance fund would be depleted in 2026, three years earlier than anticipated in last year’s report. Lower-than-expected wages last year and legislative changes reduced anticipated revenue for the program. Spending, on the other hand, rose more than expected last year. The aging population has put pressure on both the Social Security and Medicare programs."

Just more reason to keep investing and listening to the sage advice of Boglehead people!

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by grok87 » Tue Jun 05, 2018 4:17 pm

nexesn wrote:
Tue Jun 05, 2018 3:32 pm
visualguy wrote:
Tue Jun 05, 2018 3:21 pm
That's not a surprise... SS has been expected to start dipping into reserves this year, and continue doing so until they are depleted around 2034 at which time it will start being able to pay only 75% of obligations unless some changes are made before then.

I don't rely on SS in my retirement planning because of the risk that means testing will be introduced at some point as a solution.

This will show my ignorance... but I figured I probably wouldn't even receive SS when I retired. I was actually pleased to see that I might at least get 75% of the obligation :D. Medicare is the one that's a little more concerning.

"...Medicare’s hospital insurance fund would be depleted in 2026, three years earlier than anticipated in last year’s report. Lower-than-expected wages last year and legislative changes reduced anticipated revenue for the program. Spending, on the other hand, rose more than expected last year. The aging population has put pressure on both the Social Security and Medicare programs."

Just more reason to keep investing and listening to the sage advice of Boglehead people!
I think the 75% figure was from last years report. In this years report it says that long term social security OAS under current law, is projected to pay 77% of scheduled benefits
Keep calm and Boglehead on. KCBO.

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by lukestuckenhymer » Tue Jun 05, 2018 4:30 pm

Burying the lead... The Social Security Wage Base isn't rising high enough/fast enough. Too many are maxing out. In order to remain solvent, high earners (and their employers that pay the other half) need to pitch in more. ...Or add a surtax like they do with Medicare wages above $200k. Furthermore, raise the Medicare surtax higher than the paltry .9%.

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by JoMoney » Tue Jun 05, 2018 4:33 pm

Archived version of article: http://archive.is/5rIrG
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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by visualguy » Tue Jun 05, 2018 4:42 pm

lukestuckenhymer wrote:
Tue Jun 05, 2018 4:30 pm
Burying the lead... The Social Security Wage Base isn't rising high enough/fast enough. Too many are maxing out. In order to remain solvent, high earners (and their employers that pay the other half) need to pitch in more. ...Or add a surtax like they do with Medicare wages above $200k. Furthermore, raise the Medicare surtax higher than the paltry .9%.
They'll either have to raise taxes, or reduce benefits (or both). No one can predict how it will go, and it may change from time to time. The only thing we can do is save more to avoid relying on benefits that may be reduced or gone.

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by Pajamas » Tue Jun 05, 2018 4:45 pm

Those tax cuts are starting to bleed, as the article notes.

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by grok87 » Tue Jun 05, 2018 4:56 pm

I’m hoping this thread doesn’t get locked and we can perhaps simply discuss the projected payout of social securiTy under current law.

To restate, for the old age and survivors insurance benefit, ie what most people think of as social securiTy, under current law benefits are projected to be paid in full until 2034 at which point 77 percent of scheduled benefits would be paid.

How you factor that information into your retirement plan is up to you.
Keep calm and Boglehead on. KCBO.

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by Rainmaker41 » Tue Jun 05, 2018 4:58 pm

I plan on receiving the scheduled haircut to 75% of benefits paid for with my payroll taxes, since I will be old enough to claim long after 2034.

“Fixes” to Social Security that give a bigger haircut than that to the middle class seem politically unlikely. My expectation is that there will be a fix which is a better outcome for most people than the cut to 75%, but not as good of an outcome as what is currently officially “promised”. To the extent benefits end up close to what is currently promised, I expect the difference will be made up with a combination of higher payroll taxes and means testing (taxing benefits).

I oppose means testing, because most mechanisms look at assets accumulated (measured as retirement income; i.e. 401k distributions), and not at actual income earned during one’s career. I shouldn’t pay a higher imputed tax on my Social Security benefits than someone who earned more than me but saved less. Instead, the benefit formula itself could be tweaked to ensure lifetime equality of opportunity to two people who earn the same but save differently.
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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by Jablean » Tue Jun 05, 2018 5:13 pm

Your means testing on wages seems to be reasonable and would use information the system already has including tax forms. Means testing on accumulated would be like making everyone fill out the college FAFSA, much more intrusive. So we just need to get that into the Lexicon so when the mega donors write the legislation they'll think it was their idea.

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by randomguy » Tue Jun 05, 2018 6:15 pm

grok87 wrote:
Tue Jun 05, 2018 4:56 pm
I’m hoping this thread doesn’t get locked and we can perhaps simply discuss the projected payout of social securiTy under current law.

To restate, for the old age and survivors insurance benefit, ie what most people think of as social securiTy, under current law benefits are projected to be paid in full until 2034 at which point 77 percent of scheduled benefits would be paid.

How you factor that information into your retirement plan is up to you.

The problem is that nobody expects a 23% across the board cut. Odds are the solution is going to be some combo of higher taxes (higher rate, more wages, heck maybe time to apply SS to investment income), longer working lifespans (i.e. make full retirement 70 for people under 35. They probably aren't voting:)), and potentially benefit cuts (probably top weighted with by means testing or higher taxes. ). But nobody can make a realistic guess of what will happen or when.

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by randomguy » Tue Jun 05, 2018 6:22 pm

Rainmaker41 wrote:
Tue Jun 05, 2018 4:58 pm
I plan on receiving the scheduled haircut to 75% of benefits paid for with my payroll taxes, since I will be old enough to claim long after 2034.

“Fixes” to Social Security that give a bigger haircut than that to the middle class seem politically unlikely. My expectation is that there will be a fix which is a better outcome for most people than the cut to 75%, but not as good of an outcome as what is currently officially “promised”. To the extent benefits end up close to what is currently promised, I expect the difference will be made up with a combination of higher payroll taxes and means testing (taxing benefits).

I oppose means testing, because most mechanisms look at assets accumulated (measured as retirement income; i.e. 401k distributions), and not at actual income earned during one’s career. I shouldn’t pay a higher imputed tax on my Social Security benefits than someone who earned more than me but saved less. Instead, the benefit formula itself could be tweaked to ensure lifetime equality of opportunity to two people who earn the same but save differently.
We should just add in a 1% wealth tax at the same time. Hoarders that haven't contributed to our consumer economy should help carry their own weight.:) See i can save SS and balance the budget at the same time.:) And probably cause some major economic turmoil. It should be pointed out that the shortfall is somewhat temporary. As the boomers die off, the program goes back in the black for a bit until millennials retire en mass.

And finally you should look at previous estimates of when the shortfall occurs. It bounces around a bit depending on the economy. For example in 2008. Medicare was gong insolvenant in 2017.

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by TravelforFun » Tue Jun 05, 2018 6:35 pm

If benefits were reduced to 77% in 2036, us 'delayers' would be taking a hit. Who on this forum would change your withdrawal strategy because of this article?

TravelforFun

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by orlandoman » Tue Jun 05, 2018 6:49 pm

TravelforFun wrote:
Tue Jun 05, 2018 6:35 pm
If benefits were reduced to 77% in 2036, us 'delayers' would be taking a hit. Who on this forum would change your withdrawal strategy because of this article?

TravelforFun
I have 2 versions of my excel income distribution timeline, which includes my SS being collected now & my wife's SS to be collected in the future. Each version contains a line that ends at age 90 for each of us with the total amount of SS collected. One verson is collecting SS with no cut and one version is with SS being reduced in 2034. This helps me analyze when my wife should start collecting SS based on SS totals and total income.

What is known is that based on the current SS Trustee's Report, a benefit reduction timeline has been established & is subject to change ... anything else is pure speculation, IMHO.


Note: Some may be confusing dates, 2026 is for Medicare, 2032 is for SS Disability, 2034 is for SS in the article
Last edited by orlandoman on Tue Jun 05, 2018 6:59 pm, edited 4 times in total.
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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by Jags4186 » Tue Jun 05, 2018 6:54 pm

What is the economic reason why Social Security would need to change/benefits would need to be reduced? Couldn’t the Federal Reserve just create the money and deposit it into recipients accounts?

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by Boglegrappler » Tue Jun 05, 2018 7:08 pm

Too many are maxing out. In order to remain solvent, high earners (and their employers that pay the other half) need to pitch in more
There are lots of articles on the social security site itself about this. Most, I believe, agree that so-called means testing doesn't work well. That's in part because social security already is a rather marginal deal for people who earned above 60k or so on average, because your credits above that point only give you a small part of your earnings. The formula is:

a) 90 percent of the first $895 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $895 and through $5,397, plus
(c) 15 percent of his/her average indexed monthly earnings over $5,397.

So you can see that benefits are already structured to favor lower income earners.

Further, 85% of benefits are taxed to high income earners. That results in my benefit being about the same out of pocket cost to social security as my father's benefit was, despite the fact that I earned many multiples of his wages, and contributed many multiples of his contribution.

Means testing is firmly resisted by many politicians because they fully understand that the test level will have to be set quite low for it to make any difference in the economics.
And finally you should look at previous estimates of when the shortfall occurs. It bounces around a bit depending on the economy. For example in 2008. Medicare was gong insolvenant in 2017.
Well, since 2008 Medicare taxes have been raised several times. Maybe that's got something to do with it. :)

Medicare finances are interesting to examine. The Kaiser Family Foundation has some good reports on it. They show that it costs somewhere around 9,000 per enrollee. The cost of that is covered about 1/8 by enrollee premiums, 3/8 by Medicare payroll and income taxes, and the other half is from general revenue. One can draw their own conclusions as the baby boom cohort ages and enrolls.

https://www.kff.org/medicare/issue-brie ... l-outlook/

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by JoMoney » Tue Jun 05, 2018 7:13 pm

Jags4186 wrote:
Tue Jun 05, 2018 6:54 pm
What is the economic reason why Social Security would need to change/benefits would need to be reduced? Couldn’t the Federal Reserve just create the money and deposit it into recipients accounts?
The Federal Reserve (or any other bank) creates money by loaning it out in response to someone borrowing money with the ability to repay it.
Social Security is an insurance program paid for by participants. There's not enough incoming contributions from workers to cover those currently drawing on it, so they have to draw on reserves from prior years when there was a surplus. Projections suggest this may continue, depleting reserves, and creating an unsustainable system.
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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by Grt2bOutdoors » Tue Jun 05, 2018 7:18 pm

lukestuckenhymer wrote:
Tue Jun 05, 2018 4:30 pm
Burying the lead... The Social Security Wage Base isn't rising high enough/fast enough. Too many are maxing out. In order to remain solvent, high earners (and their employers that pay the other half) need to pitch in more. ...Or add a surtax like they do with Medicare wages above $200k. Furthermore, raise the Medicare surtax higher than the paltry .9%.
OR have those who receive benefits pay MORE of their fair share. Only in a dream world does health insurance cost $159 a month. Touchy subject I know, but everyone should be asked to pay.
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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by visualguy » Tue Jun 05, 2018 7:22 pm

Boglegrappler wrote:
Tue Jun 05, 2018 7:08 pm
Means testing is firmly resisted by many politicians because they fully understand that the test level will have to be set quite low for it to make any difference in the economics.
Not sure how many would be for or against it, but I wouldn't bet against it because a case could be made for it, and they do have such means testing in other countries (such as Australia) for their equivalent of social security. Even the US has means testing for some programs, such as Medicaid and the ACA.

If I end up getting any meaningful SS money, that would certainly be a nice bonus, but I'm not relying on it in my planning.

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Re: WSJ:Social Security Expected to Dip Into Its Reserves This Year

Post by LadyGeek » Tue Jun 05, 2018 7:29 pm

This thread has run its course and is locked (conjecture on the future of Social Security, means testing, discussion not productive). See: Non-actionable (Trolling) Topics
If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:
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An off-topic political post was also removed.
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Social Security crossover point has arrived

Post by Jack FFR1846 » Wed Jun 06, 2018 7:54 am

[Thread merged into here, see below (next page) --admin LadyGeek]

As has been talked about for years, the day has finally arrived where outflows from social security have exceeded inflows. As a result, the "trust fund" will be tapped for now until it is gone. See the piece for dates for disability and insurance, but nothing appears new to me in these regards.

https://www.ssa.gov/oact/trsum/

Social Security’s total cost is projected to exceed its total income (including interest) in 2018 for the first time since 1982, and to remain higher throughout the projection period.

This is a brief report but is clear in its expectations going forward. Their words of conclusion:

Lawmakers have many policy options that would reduce or eliminate the long-term financing shortfalls in Social Security and Medicare. Lawmakers should address these financial challenges as soon as possible. Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.

Medicare: I guess I've paid no attention to medicare myself. Like social security, they're in trouble as well.

The Trustees project that the HI Trust Fund will be depleted in 2026, three years earlier than projected in last year’s report. At that time dedicated revenues will be sufficient to pay 91 percent of HI costs.

For a number of years, the Trustees’ methodology for projecting Medicare finances over the long term has assumed a substantial reduction in per capita health expenditure growth rates relative to historical experience.

So I guess we're on the brink of the hospital insurance (HI) portion of medicare heading to reductions. The second quote above gives me pause. They believe that costs aren't growing as quickly as they used to grow. Not sure why.

With this in mind, to make this actionable, how does this news, even if it's old news to you affect your retirement planning. For me, I have a "life spreadsheet" which maps every year from about 5 years ago with projections going forward until I expect to die. I've assumed from the very beginning that my SS benefits would be cut 25% beginning in 2034. I'm also assuming that I'll be paying the same high insurance prices in my spreadsheet as I will be paying pre-medicare. I'm a big safety net guy (I've already got 50X spending in liquid investments) so being ready for the worst is normal for me.

How are you dealing with this news (even if it's old hat to you)?
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Re: Social Security crossover point has arrived

Post by TheTimeLord » Wed Jun 06, 2018 8:00 am

After reading other posts I assume this thread will soon be locked so removing my post since the thread has gone off the rails.
Last edited by TheTimeLord on Wed Jun 06, 2018 8:31 am, edited 1 time in total.
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Re: Social Security crossover point has arrived

Post by Ron » Wed Jun 06, 2018 8:13 am

"How are you dealing with this news (even if it's old hat to you)?"

Save more, panic less...

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Re: Social Security crossover point has arrived

Post by sport » Wed Jun 06, 2018 8:22 am

Jack FFR1846 wrote:
Wed Jun 06, 2018 7:54 am
For me, I have a "life spreadsheet" which maps every year from about 5 years ago with projections going forward until I expect to die.
Be careful with this. I made one of these 5 years before I retired. The projections turned out to be completely wrong. Some of the errors were positive and some negative. Fortunately, they mostly cancelled out each other.

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Re: Social Security crossover point has arrived

Post by JoeRetire » Wed Jun 06, 2018 8:28 am

Jack FFR1846 wrote:
Wed Jun 06, 2018 7:54 am
Lawmakers have many policy options that would reduce or eliminate the long-term financing shortfalls in Social Security and Medicare. Lawmakers should address these financial challenges as soon as possible. Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.
"“The Administration’s economic agenda – tax cuts, regulatory reform, and improved trade agreements – will generate the long-term growth needed to help secure these programs and lead them to a more stable path.

“Social Security and Medicare are the federal government’s two largest programs, and millions of Americans heavily rely on their benefits. Robust economic growth will help to ensure their lasting stability.”"
- U.S. Treasury Secretary Steven T. Mnuchin
So I guess we're on the brink of the hospital insurance (HI) portion of medicare heading to reductions.
Reductions would be one way. But that's not the only way.
How are you dealing with this news (even if it's old hat to you)?
I plan to vote accordingly.

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Re: Social Security crossover point has arrived

Post by david1082b » Wed Jun 06, 2018 8:34 am

A similar thread to this was locked yesterday, I guess this will have the same fate, some of the posts on the thread are already very politicised. I am prepared for a deluge of media articles being published year after year telling us about this, with a thread every few days about it being locked. In 2034 it will be deafening I imagine. The mods will have to do overtime.

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Re: Social Security crossover point has arrived

Post by smitcat » Wed Jun 06, 2018 8:40 am

Some solutions that other countries in similar positions have executed:
- raise eligability age of SS 1 year
- raise SS tax on both sides a few of tenths of 1%
- raise the upper limit on SS tax collections
- reduce or limited haitus on SS raises

There are many more of these solutions that when used singly or in combination can solve for this with very little pain extracted on any one group or subset of the population.

Separately but related - the average US lifespan has been going down recently.

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Re: Social Security crossover point has arrived

Post by Snowjob » Wed Jun 06, 2018 8:57 am

I believe the question asked was what do YOU plan on doing about this -- I think that is a relevant question and we can discuss w/o talking about government solutions which will get locked.

My plan is currently to use about 65% of social security payments as my planned number. I think this gives plenty of room wiggle room. Because so many retired Americans rely so heavily on this program I am not really factoring in a reduction bigger than this. Ultimately SS, using these assumptions will probably make up about 25% of my total estimated income and about 33% of what I would consider the minimum lifestyle that I would be happy with in retirement. If things begin to look worse I suppose I could make the unenviable choice of working a year longer and saving the extra money. Ultimately that one extra years savings goes a long way (portfolio grows w/o withdrawal and you save money at the same time) That excess savings in the final year I'd probably put into several deferred annuities to help offset any decrease in social security benefits. Not ideal but its a work around that I think makes a lot of sense

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Re: Social Security crossover point has arrived

Post by midareff » Wed Jun 06, 2018 9:18 am

At age 70 I expect to do nothing about it. It seems logical to me that those still paying in to either program will have to pay in more to cover the deficit. It would seemingly be the lesser of evils than cutting benefits to those receiving them.

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Re: Social Security crossover point has arrived

Post by 22twain » Wed Jun 06, 2018 9:21 am

My wife starts collecting SS benefits next year, and I plan to follow five years later. Both at age 70, to maximize the income stream. We're fortunate in that

(a) our combined SS will at that point cover our current basic expenses plus taxes on SS and our RMDs, plus my Medicare premiums (she's already paying them);

(b) even if our SS were to disappear completely, we have enough saved up to cover those expenses at a withdrawal rate of maybe 2.2%.

So if part or all of our SS fails to materialize or disappears, we will simply withdraw more to compensate, or maybe annuitize enough to cover basic expenses.
My investing princiPLEs do not include absolutely preserving princiPAL.

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Re: Social Security crossover point has arrived

Post by jhfenton » Wed Jun 06, 2018 9:31 am

smitcat wrote:
Wed Jun 06, 2018 8:40 am
Separately but related - the average US lifespan has been going down recently.
But I don't believe that life expectancy at retirement age is going down. The life expectancy drop is coming from premature deaths among young and middle-aged adults.

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Re: Social Security crossover point has arrived

Post by jeffyscott » Wed Jun 06, 2018 9:37 am

smitcat wrote:
Wed Jun 06, 2018 8:40 am
Some solutions that other countries in similar positions have executed:
- raise eligability age of SS 1 year
- raise SS tax on both sides a few of tenths of 1%
- raise the upper limit on SS tax collections
- reduce or limited haitus on SS raises
The first and last would affect retirement planning and retirees. I've used an assumption that we will get 75% of current benefits and increases at 75% of inflation, that's probably a worst case, in that it would put all of the burden on beneficiaries.

They could also cut benefits by increasing the taxation of benefits, make them 100% taxable income for some or all. This would have little impact on me as we are already assured of being taxed on 85%. In my planning, I effectively assume taxes will apply to 100% of benefits in that I do not assume any reduction in income taxes based on a portion of income coming from SS.
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Re: Social Security crossover point has arrived

Post by Globalviewer58 » Wed Jun 06, 2018 9:41 am

Both SS and Medicare funding will be solved in short order by implementing Dr. Ezekiel Emmanuel's personal plan to stop medical intervention after age 75. No medical testing, no hospital stays, no prescription medications.

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Re: Social Security crossover point has arrived

Post by smitcat » Wed Jun 06, 2018 9:53 am

jeffyscott wrote:
Wed Jun 06, 2018 9:37 am
smitcat wrote:
Wed Jun 06, 2018 8:40 am
Some solutions that other countries in similar positions have executed:
- raise eligability age of SS 1 year
- raise SS tax on both sides a few of tenths of 1%
- raise the upper limit on SS tax collections
- reduce or limited haitus on SS raises
The first and last would affect retirement planning and retirees. I've used an assumption that we will get 75% of current benefits and increases at 75% of inflation, that's probably a worst case, in that it would put all of the burden on beneficiaries.

They could also cut benefits by increasing the taxation of benefits, make them 100% taxable income for some or all. This would have little impact on me as we are already assured of being taxed on 85%. In my planning, I effectively assume taxes will apply to 100% of benefits in that I do not assume any reduction in income taxes based on a portion of income coming from SS.
"The first and last would affect retirement planning and retirees"
"raise eligability age of SS 1 year"

Phased in one month delay per year with 10 years notice would make a large differnce in planning?

"reduce or limited haitus on SS raises"
Reduce COLA increases by half every other year for 3 cycles?

"They could also cut benefits by increasing the taxation of benefits, make them 100% taxable income for some or all"
IMHO - that is not a significant enough change to warrant the fight.

My only point was there are dozens of ways to correct this with combinations of many with low impact a likely outcome - the 'problem' does not get recuced to a one time one effort solution - that is a least likely scenario that folks will imply.

Bacchus01
Posts: 1819
Joined: Mon Dec 24, 2012 9:35 pm

Re: Social Security crossover point has arrived

Post by Bacchus01 » Wed Jun 06, 2018 9:57 am

Raising the total SS taxable earnings, a lot, is one solution I would actually support despite it impacting me with limited value.

smitcat
Posts: 1776
Joined: Mon Nov 07, 2016 10:51 am

Re: Social Security crossover point has arrived

Post by smitcat » Wed Jun 06, 2018 10:04 am

jhfenton wrote:
Wed Jun 06, 2018 9:31 am
smitcat wrote:
Wed Jun 06, 2018 8:40 am
Separately but related - the average US lifespan has been going down recently.
But I don't believe that life expectancy at retirement age is going down. The life expectancy drop is coming from premature deaths among young and middle-aged adults.
Life expectancy at retirement age is trending to level off last I checked - I forget where the charts were for "US mortalilty trends year by year by age group' was. It was a very recent occurrence like within the past 4-5 years.

smitcat
Posts: 1776
Joined: Mon Nov 07, 2016 10:51 am

Re: Social Security crossover point has arrived

Post by smitcat » Wed Jun 06, 2018 10:09 am

Bacchus01 wrote:
Wed Jun 06, 2018 9:57 am
Raising the total SS taxable earnings, a lot, is one solution I would actually support despite it impacting me with limited value.
Yes - absolutely that is one method that will make an impact. Another is to raise the SS tax 0.02% - 0.3% for both the employee and employer. There are many that are impactful and many ways to combine a couple or more.

Engineer250
Posts: 1043
Joined: Wed Jun 22, 2016 1:41 pm

Re: Social Security crossover point has arrived

Post by Engineer250 » Wed Jun 06, 2018 10:33 am

Ron wrote:
Wed Jun 06, 2018 8:13 am
"How are you dealing with this news (even if it's old hat to you)?"

Save more, panic less...

- Ron
I don't count SS into my future planning. But mostly because it's so far off I feel like making projections would be pointless. I know once someone is closer, you can start thinking about what income you need to replace and plan from there. But for me, it's too far off to know what kind of income I will need let alone all the other factors.

So I just try to save as much as I can for now. I am dubious SS will be the same by the time I turn 67, but since my current plan is "try to max out all retirement accounts" it doesn't really matter to my actions this year.
Where the tides of fortune take us, no man can know.

KlangFool
Posts: 9984
Joined: Sat Oct 11, 2008 12:35 pm

Re: Social Security crossover point has arrived

Post by KlangFool » Wed Jun 06, 2018 10:37 am

Jack FFR1846 wrote:
Wed Jun 06, 2018 7:54 am

So I guess we're on the brink of the hospital insurance (HI) portion of medicare heading to reductions. The second quote above gives me pause. They believe that costs aren't growing as quickly as they used to grow. Not sure why.
Jack FFR1846,

If most folks cannot pay for the increased cost and the government is not paying, how could the cost increases? Supply versus demand.

The medical industry bubble is overdue to be burst.

KlangFool

PlateVoltage
Posts: 6
Joined: Thu Mar 29, 2018 5:01 pm

Re: Social Security crossover point has arrived

Post by PlateVoltage » Wed Jun 06, 2018 10:40 am

Here's a nice summary of the different options:

http://crr.bc.edu/special-projects/book ... x-it-book/

User avatar
Pajamas
Posts: 6015
Joined: Sun Jun 03, 2012 6:32 pm

Re: Social Security crossover point has arrived

Post by Pajamas » Wed Jun 06, 2018 10:42 am

Jack FFR1846 wrote:
Wed Jun 06, 2018 7:54 am
How are you dealing with this news (even if it's old hat to you)?
It's interesting but I don't count on Social Security in my financial planning. If it covers the cost of my health coverage (presumably Medicare) then I'll be happy about it.

I do wonder about the eventual effect on taxes and on our society in general. Many people do survive only on Social Security or else rely on it heavily so there will be wide-scale consequences at some point.

2015
Posts: 1833
Joined: Mon Feb 10, 2014 2:32 pm

Re: Social Security crossover point has arrived

Post by 2015 » Wed Jun 06, 2018 10:44 am

Ron wrote:
Wed Jun 06, 2018 8:13 am
"How are you dealing with this news (even if it's old hat to you)?"

Save more, panic less...

- Ron
+1
I've always used the Buffet/Munger approach of incorporating margin of error/safety into all of my plans.

supersharpie
Posts: 652
Joined: Wed Dec 22, 2010 1:28 pm

Re: Social Security crossover point has arrived

Post by supersharpie » Wed Jun 06, 2018 11:12 am

How should one deal with this news?

Perhaps prepare for the worst case scenario, which is a 21% reduction to your benefits in 2034.

IlliniDave
Posts: 2294
Joined: Fri May 17, 2013 7:09 am

Re: Social Security crossover point has arrived

Post by IlliniDave » Wed Jun 06, 2018 11:59 am

Jack FFR1846 wrote:
Wed Jun 06, 2018 7:54 am

How are you dealing with this news (even if it's old hat to you)?
For several years I've been planning on receiving 75% of the stated benefit. That doesn't cover every contingency, but that's about what I'd heard they'd be able to maintain once the trust fund depletes. Otherwise I chop wood and carry water as always.
Don't do something. Just stand there!

FPS_dapdap
Posts: 52
Joined: Fri Mar 02, 2018 9:58 am

Re: Social Security crossover point has arrived

Post by FPS_dapdap » Wed Jun 06, 2018 12:28 pm

midareff wrote:
Wed Jun 06, 2018 9:18 am
At age 70 I expect to do nothing about it. It seems logical to me that those still paying in to either program will have to pay in more to cover the deficit. It would seemingly be the lesser of evils than cutting benefits to those receiving them.
why would a millennial start paying in more to cover YOUR SS when there wont be any left by the time a millennial reaches 70?

invst65
Posts: 644
Joined: Thu Nov 27, 2014 11:04 am

Re: Social Security crossover point has arrived

Post by invst65 » Wed Jun 06, 2018 12:42 pm

If the 21% reduction in 2034 was a certainty, I wonder how that would affect the calculations used to figure optimal claiming strategies. Nobody ever seems to take it into account, as though it were a certainty not to happen. I, myself, am delaying until 70 (next year) while foregoing 3 years of benefits and tapping into my own savings. I guess time will tell whether that was a good strategy or not.

MrPotatoHead
Posts: 429
Joined: Sat Oct 14, 2017 10:41 pm

Re: Social Security crossover point has arrived

Post by MrPotatoHead » Wed Jun 06, 2018 12:50 pm

My plan assumes no social security benefit at all. I would never trust the Government in any way shape or form and that extends to TIPs. That is why my hopeful expenses multiple is 75x. Though I would settle on 65-70x if need be. The lowest I was willing to go is 1.5% withdraw rate(65X).

As for medical, one contingency plan (made more practical with Skype etc) is to leave the U.S for low cost, affordable health care abroad.

The latter is the long term plan anyways, with the assumption at some point care will be needed so there is a rough, forced, get out of Dodge plan in place that hopefully will be executed before the need hits.

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