How much does social security factor into your retirement income?

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Bill M
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Re: How much does social security factor into your retirement income?

Post by Bill M » Mon May 18, 2015 8:31 am

Retired two years ago, but delaying SocSec for another ~8 years. No doubt the amount will be a significant percentage of our total income, but there are so many assumptions built into the exact amount of that calculation... For planning purposes, I assume (1) cut 10% off the initial benefit that SocSec says I'll get, (2) COLAs will be mch lower than increases in CPI-W as they have been (assume 70% of CPI-U increases), (3) further significant (~25%) cut in benefits coming in 2033. If I can handle this, I should be able to survive whatever comes.

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dbCooperAir
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Re: How much does social security factor into your retirement income?

Post by dbCooperAir » Mon May 18, 2015 8:55 am

A little less then 20 years before I can collect, run the numbers one time a year to see where I'm at. Being I have no idea what my future working years will look like I plug $0 dollars into the SS calculator and use that number along with the pile I have currently. SS will play a good part in our retirement.
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

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Re: How much does social security factor into your retirement income?

Post by nordlead » Mon May 18, 2015 9:03 am

While I hope to have enough that I wouldn't need SS, I fully expect it to still be there and still paying out near 100% for people like me (i.e. not a high enough earner or high enough net worth to get means tested out). Also, with my expenses and the spousal benefit, I expect SS to cover ~95% of our current expenses (excluding mortgage principal and interest).

So, even a 50% cut isn't a problem, it just means less fun money and possibly not retiring early.

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Re: How much does social security factor into your retirement income?

Post by SQRT » Mon May 18, 2015 9:28 am

I plan on starting the Canadian equivalent to SS when I turn 70. But since it will only represent less than 1% of total retirement income, it is a non material event. The Cdn scheme is less generous than US SS but it is on a sound demografic/actuary footing.

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Re: How much does social security factor into your retirement income?

Post by welldone » Mon May 18, 2015 10:20 am

I use it to pay my income tax and health insurance. However I could pay both without it.

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Re: How much does social security factor into your retirement income?

Post by kmurp » Mon May 18, 2015 10:52 am

I'll be 58 this summer and will take SS at either FRA or age 70. I am planning 25-30% of our spending to come from SS. I do not expect means testing as, from what I have read, using it would not help the system significantly so the solution would need to come from other options.

rgs92
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Re: How much does social security factor into your retirement income?

Post by rgs92 » Mon May 18, 2015 11:06 am

Since a number of these comments mention means testing, wouldn't this significantly distort plans for retirement saving, since the income you take from retirement accounts above a modest level would be effectively erased? This could turn retirement planning on its head. So assuming this has much more profound implications to financial planning (and even Bogle methodology itself).

I mean, it would probably pay to keep retirement savings in a vehicle that could accommodate non-taxable withdrawals, like cash or even gold, or possibly things with capital gains, depending how the rules are defined. It would be such a mess, it almost seems something like a tail risk.

And if they don't do this and simply lower SS benefits for everyone as a large flat percentage reduction, you would see large numbers of seniors out in the streets without enough food. Either way, it just seems unlikely.

If anything, this can will be pushed down the road for decades just like the states are doing with pensions and health care benefits.
Last edited by rgs92 on Mon May 18, 2015 11:19 am, edited 7 times in total.

Johno
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Re: How much does social security factor into your retirement income?

Post by Johno » Mon May 18, 2015 11:06 am

MnD wrote:Doing absolutely nothing till the exhaustion of the SS trust funds and then still doing nothing still yields a system able to pay 70% of benefits.

So 70% is an absolute worst case with I believe has virtually zero chance of occurring given the several proposed "fixes" which spread the pain over a very wide base of workers, future generations, income tax payers and retirees. And the boomer bulge is a self-correcting problem long-term.
SS statements now say 77% of benefits can be paid past 2033 with no change in the law. This isn't to quibble with 70% as an average (different assumptions might yield that) but just as starting point. However I agree the overwhelmingly likely outcome, just from POV of estimating expected returns, not stepping into the political/policy debate itself, is that a 'fix' will spread pain and moreover direct most of it to those with more means and/or taxpayers (rather than current recipients). But that means somebody's SS deal will deteriorate by more than 23%, perhaps more than 30%. However again just from investing/risk management POV a younger person might expect the deterioration (tax/benefit combination), though perhaps significant, to correlate pretty strongly with their success in income/savings otherwise. The social and overall economic aspects of that are beyond the scope here, but just from investing POV I don't think there's a huge amount* to worry about in SS itself for people within a decade say of receiving it.

*I don't believe US govt credit is 'riskless' in the long run, but it's far from junk, and the potential (by no means certain) US credit issue isn't mainly SS but combination of medical programs and potentially stalled growth, IMO.

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Re: How much does social security factor into your retirement income?

Post by sesq » Mon May 18, 2015 3:09 pm

I have done detailed calculations using both my current lifetime earnings and the impact of hitting the wage base max till I am 50 (earliest I could imagine retiring) and earning to FRA. I have computed that as a high earner I am already past the second "bend point" and thus my future benefits will change relatively little.

I take the opposite view of the "its icing on the cake or gravy". Since it has gov't support and inflation protection I view it as the crust of the pizza. One could survive on crust (daily bread) but would not prosper. When I started in my career I assumed my take would be zero. At 43, I look around and see that an elimination of the program would cripple many folks financially and in my view will never happen.

That doesn't mean it won't be tweaked. In my calculations I apply a 20% haircut (assuming means testing or other benefit cuts) and I assume I will draw at 62 (perhaps I got laid off), and I use the estimate based on stopping work at 50. In reality, I expect I will work past 50, and I expect that I won't take benefits till FRA or 70 (or equivalent based on changes in the law). Using my conservative numbers I anticipate that this reduced SS will provide about 45% of my basic needs, and roughly 30% of my planned expenses in retirement. From that perspective it is a material number.

I also model my portfolio and compare my planned expenses and withdrawal rates with and without my reduced SS. In those instances I expect I will be able to meet my basic needs from my portfolio that I have saved so far and no SS at age 60. I guess from that perspective its doesn't matter since I'll be able to retire either way on a pass/fail basis.

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Re: How much does social security factor into your retirement income?

Post by Confused » Tue May 19, 2015 1:57 pm

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Last edited by Confused on Fri Nov 06, 2015 1:30 am, edited 1 time in total.

Jack FFR1846
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Re: How much does social security factor into your retirement income?

Post by Jack FFR1846 » Tue May 19, 2015 2:51 pm

I have my own home grown lifetime spreadsheet that includes all known income sources and all known expenses. I can make changes if something changes like my effective tax rate changing or wife takes a new job. I include ss starting at 100% predicted for when I turn 62 and for 75% in 2033, when I believe the reduction will take place. I have a coming pension coming of about $300 a month. My wife didn't work for 14 years but does have 10 years on record so if anything is left, she might get something.

I guess I should add in a contingency for zero ss as a worst case. Never hurts to be extra prepared
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Almost there
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Re: How much does social security factor into your retirement income?

Post by Almost there » Tue May 19, 2015 4:03 pm

I noticed that quite a number of retired people are saving their monthly SS payments and living off their investments. I am planning on living off my SS payments and keeping my investments where they are.

Am I missing here something? :confused

Almost there

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Re: How much does social security factor into your retirement income?

Post by Grt2bOutdoors » Tue May 19, 2015 4:16 pm

Almost there wrote:I noticed that quite a number of retired people are saving their monthly SS payments and living off their investments. I am planning on living off my SS payments and keeping my investments where they are.

Am I missing here something? :confused

Almost there
Nope, required minimum distributions are what's driving them taking money from their investments. You fail to do it, and the IRS will give you a big fat penalty.
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Re: How much does social security factor into your retirement income?

Post by MathWizard » Tue May 19, 2015 4:19 pm

Confused wrote:
Professor Emeritus wrote:
Confused wrote:None. I make my decisions based on the assumption that we will get zero from Social Security.
Do you do the same for government bonds? And stock dividends? etc
Yes. When the value of my retirement accounts reaches $600,000, I will retire then. Not a moment sooner or later than that. With a paid off mortgage, that gives us at least 30x expenses, despite having zero supplemental income. If there happens to be some, all the better.
If you can live on $20K, congrats.
More power to you.

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Leif
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Re: How much does social security factor into your retirement income?

Post by Leif » Tue May 19, 2015 4:49 pm

I'm guessing SS will be about 25% of my income. As far as simulators I would just go with the full amount at the planned retirement age. I would not discount the amount based on some possible change to benefits payout. I guess you could if you want to be really conservative and SS was a really big part of your retirement income, but I don't think it is necessary. There are many other factors, such as health and longevity family issues, etc., that could be much bigger factors.
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Re: How much does social security factor into your retirement income?

Post by vitaflo » Tue May 19, 2015 6:11 pm

I do not factor it in when I figure out what I need to save in order to retire. I do factor it in (with multiple %'s and ages) when figuring out if I can retire *sooner*.

The "sooner" bit won't come into play until I'm closer to retiring. I can decide then what I think will happen, but I like contingency plans and my plan is to assume I'm not getting it until it becomes obvious I will.

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Re: How much does social security factor into your retirement income?

Post by vested1 » Tue May 19, 2015 6:33 pm

Like many of the younger generation responding here I totally discounted SS until I was about 55, largely because I had been hearing for decades that the sky was falling and we were all doomed because all of that FICA we had paid had fallen into a bottomless pit. Not being political, just amused how the more things change… you know the rest.

I'm 63.5 this year when I retire and my wife will be 62.5, born on the same day, one year apart. When we retire our SS will be zero percent of our income because we are delaying, so that in itself make me feel younger. :D

I will file a restricted application at 66 when my wife files for her own at 65, (2.5 years after retirement) and at that time SS will provide about 45% of our income needed to meet expenses with my wife's 30k pension.

At my age 70 our combined SS and her pension will cover our expenses with about 20k left over (discounting inflation), with SS being about 70% of income from those two sources. RMD's will be used for nicer trips, reinvestment, or gifting to the kids and grandkids.

I plan on consuming fully 25% of our retirement savings during our delay of 6.5 years (gasps are heard from the crowd) and it doesn't bother me in the least. That is assuming zero growth in investments, and the amount needed until initial filing is already isolated and earning a modest 1.5%. The draw down will be about 5.5% for 2.5 years and 3.5% for 4 years from savings, which may be replaced with less than average growth, but is something that I'm not counting on. If our 60/40 investments go far south I still plan on delaying, but will touch base here for a gut-check.

Why so calm about dipping into savings for the delay? SS is taxed less than withdrawals from pre-tax accounts and is protected by COLA. Our ROTHs aren't huge. The survivor benefit is growing as every month passes. The amount spent for the delay if invested in a SPIA would yield about half of what we will realize from the increase in SS benefits, in fact if I wanted to buy a SPIA or even a more comparable COLA protected deferred annuity the amount needed for the initial premium would be much larger in comparison.

I personally think that it's prudent to discount SS when you're decades away because it compels you to save more. However, I'm a realist and the different strategies available make planning for SS a requirement when nearing retirement.

Edited to add. As an incentive for my wife to support our delay I plan on increasing our income from savings to add incrementally more after our initial filing, which will still stay below the 3.5% but will be a type of reward for tightening the belt for the previous 2.5 years. This will add over 10k a year in income, increasing with a floor based on market performance, and will make the delay more palatable for my wife.

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Re: How much does social security factor into your retirement income?

Post by 555 » Wed May 20, 2015 12:26 am

To make up for the pessimists, I will state that I expect to receive one googolplex percent of the amount to which I am entitled from Social Security.

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Re: How much does social security factor into your retirement income?

Post by John3754 » Wed May 20, 2015 1:21 am

MnD wrote:Doing absolutely nothing till the exhaustion of the SS trust funds and then still doing nothing still yields a system able to pay 70% of benefits.

1982 is a good historical reference as to what happens when benefits exceeded payroll income.
Numerous levers were turned to increase contributions, raise wage caps, adjust taxation, trim benefits and raise eligibility age phased in over decades etc. such that the cuts in benefits were much less than what would been required if benefit cuts alone were used to balance inflows and outflows.

So 70% is an absolute worst case with I believe has virtually zero chance of occurring given the several proposed "fixes" which spread the pain over a very wide base of workers, future generations, income tax payers and retirees. And the boomer bulge is a self-correcting problem long-term. The leading edge of the baby-boom are already experiencing significant mortality and that's just going to pick up steam in the years and decades to come. In fact, the millennials age 18-34 in 2015 just overtook the boomers as the largest living generation due to boomer mortality.

I guess one could assume $0 for SS as well as $0 for vested pensions, a Japan-style 75% decline in stocks that doesn't recover and real returns for bonds based on 30-year Treasuries 1950-1980. Have a fun retirement with that.

http://www.pewresearch.org/fact-tank/20 ... y-boomers/

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Why are the millennials increasing in population size until 2036?

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Hawaiishrimp
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Re: How much does social security factor into your retirement income?

Post by Hawaiishrimp » Wed May 20, 2015 1:49 am

Not much. I consider it Extra Credit.
I save and invest my money, so money can make money for me, so I don't have to make money eventually.

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Re: How much does social security factor into your retirement income?

Post by Professor Emeritus » Wed May 20, 2015 6:04 am

Confused wrote:
Professor Emeritus wrote:
Confused wrote:None. I make my decisions based on the assumption that we will get zero from Social Security.
Do you do the same for government bonds? And stock dividends? etc
Yes. When the value of my retirement accounts reaches $600,000, I will retire then. Not a moment sooner or later than that. With a paid off mortgage, that gives us at least 30x expenses, despite having zero supplemental income. If there happens to be some, all the better.
Why do you think stock dividends will be there? etc? I simply point out that there there are uncertainties in all financial situations .

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Re: How much does social security factor into your retirement income?

Post by Professor Emeritus » Wed May 20, 2015 6:11 am

vested1 wrote: Edited to add. As an incentive for my wife to support our delay I plan on increasing our income from savings to add incrementally more after our initial filing, which will still stay below the 3.5% but will be a type of reward for tightening the belt for the previous 2.5 years. This will add over 10k a year in income, increasing with a floor based on market performance, and will make the delay more palatable for my wife.
no problem with the rest of the plan but once you are retired there is no "merit" to tightening the belt" NOW

My perspective is driven by the fact that my wife became disabled at 60. I ma glad we never put anything off. Even disabled we fly to London today. I will spend whatever makes the trips work

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Re: How much does social security factor into your retirement income?

Post by Professor Emeritus » Wed May 20, 2015 6:13 am

John3754 wrote: Why are the millennials increasing in population size until 2036?

Immigration?

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Re: How much does social security factor into your retirement income?

Post by ankonaman » Wed May 20, 2015 6:23 am

I plan on taking SS at age 62 in 4 years. Not concerned with the reduced benefit. Have worked in the health care field for 30+ years now (mostly emergency medicine & now public health). Have watched a tidal wave of people die at an early age, become too ill to enjoy life, etc, etc. Wait to age 70 to collect [OT comment removed by admin LadyGeek]; no thanks. My plan is to retire early at age 62 and enjoy some years before I become to old to do the physically demanding things that I enjoy. Yeah you may get more $$ waiting but it blows my mind how people do not factor in "quality of life" and the ever present fact that longevity is a bad bet.

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Re: How much does social security factor into your retirement income?

Post by KarenC » Wed May 20, 2015 6:24 am

Professor Emeritus wrote:
John3754 wrote: Why are the millennials increasing in population size until 2036?
Immigration?
Yes, that's the reason given in the report.
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Re: How much does social security factor into your retirement income?

Post by mgullo » Wed May 20, 2015 7:01 am

With my current profession I don't pay into SS, so I won't collect.
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Re: How much does social security factor into your retirement income?

Post by joebh » Wed May 20, 2015 7:12 am

ankonaman wrote:the ever present fact that longevity is a bad bet.
What do you mean by "a bad bet" here?

Do you mean that you don't expect to live a long life?
Or that you expect to live a long life but don't care how much money you have in your 80s and beyond?

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Re: How much does social security factor into your retirement income?

Post by vested1 » Wed May 20, 2015 7:18 am

Professor Emeritus wrote:
vested1 wrote: Edited to add. As an incentive for my wife to support our delay I plan on increasing our income from savings to add incrementally more after our initial filing, which will still stay below the 3.5% but will be a type of reward for tightening the belt for the previous 2.5 years. This will add over 10k a year in income, increasing with a floor based on market performance, and will make the delay more palatable for my wife.
no problem with the rest of the plan but once you are retired there is no "merit" to tightening the belt" NOW

My perspective is driven by the fact that my wife became disabled at 60. I ma glad we never put anything off. Even disabled we fly to London today. I will spend whatever makes the trips work
How nice for you to have unlimited funds. I see no "merit" in abandoning a budget in retirement, especially when a relatively short period of minor sacrifice will result in more income than in working years. Shedding the yoke at long last brings home the realization that some things are more important than maintaining a lavish lifestyle.

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Re: How much does social security factor into your retirement income?

Post by Professor Emeritus » Wed May 20, 2015 7:29 am

vested1 wrote:
Professor Emeritus wrote:
vested1 wrote: Edited to add. As an incentive for my wife to support our delay I plan on increasing our income from savings to add incrementally more after our initial filing, which will still stay below the 3.5% but will be a type of reward for tightening the belt for the previous 2.5 years. This will add over 10k a year in income, increasing with a floor based on market performance, and will make the delay more palatable for my wife.
no problem with the rest of the plan but once you are retired there is no "merit" to tightening the belt" NOW

My perspective is driven by the fact that my wife became disabled at 60. I ma glad we never put anything off. Even disabled we fly to London today. I will spend whatever makes the trips work
How nice for you to have unlimited funds. I see no "merit" in abandoning a budget in retirement, especially when a relatively short period of minor sacrifice will result in more income than in working years. Shedding the yoke at long last brings home the realization that some things are more important than maintaining a lavish lifestyle.
You miss my point. Your comment on "lavish lifestyle" is key. You want your wife to financially "do without" now so you will have more later.

My question is WHY

Why not have a level consumption budget? We are front end loaded to be fair to my wife.

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Re: How much does social security factor into your retirement income?

Post by Lazysundays » Wed May 20, 2015 7:36 am

Based on multiple calculators, in order to live off of what feels like $80,000 in 30 years (only 45% of current income) I need to save $3.3 million!!! It's an insane number. Currently 55% of monthly income goes to mortgage with escrow, daycare and SL minimum. I am currently at 9% retirement savings. The calculators say I should be at 17% savings. Once the first 3 bills disappear we can throw money into retirement instead of lifestyle creep, so it is doable. But these numbers stress me out. We can't afford a vacation and other random fun activities and it only works now because of the YNAB budgeting app. So I am changing my answer. I plugged in a mere $3000 a month from ss (a low number for two high earners) and now I only need to save $1.9 million. That means my 9% rate is enough. I will aim for continuous increases in our savings but i know at the current rate, with partial ss, we will have enough. I assumed 6% growth, 3.5% at retirement and 3% inflation. I expect growth to be better and inflation to be lower anyway, but all this number crunching was reassurring in the end.

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Re: How much does social security factor into your retirement income?

Post by vested1 » Wed May 20, 2015 7:45 am

Professor Emeritus wrote:
vested1 wrote:
Professor Emeritus wrote:
vested1 wrote: Edited to add. As an incentive for my wife to support our delay I plan on increasing our income from savings to add incrementally more after our initial filing, which will still stay below the 3.5% but will be a type of reward for tightening the belt for the previous 2.5 years. This will add over 10k a year in income, increasing with a floor based on market performance, and will make the delay more palatable for my wife.
no problem with the rest of the plan but once you are retired there is no "merit" to tightening the belt" NOW

My perspective is driven by the fact that my wife became disabled at 60. I ma glad we never put anything off. Even disabled we fly to London today. I will spend whatever makes the trips work
How nice for you to have unlimited funds. I see no "merit" in abandoning a budget in retirement, especially when a relatively short period of minor sacrifice will result in more income than in working years. Shedding the yoke at long last brings home the realization that some things are more important than maintaining a lavish lifestyle.
You miss my point. Your comment on "lavish lifestyle" is key. You want your wife to financially "do without" now so you will have more later.

My question is WHY

Why not have a level consumption budget? We are front end loaded to be fair to my wife.
I don't believe I missed your point at all. You are comparing your situation to mine, and several others on this thread and stating that your plan is better, making assumptions of another's situation not based in fact. I hardly think that our two weeks in Hawaii this year after retirement qualify as "doing without". I could criticize your plan as well since "front loading" asset withdrawal is often cited as having long term negative affects on sustainability, but I won't because I'm not walking around in your shoes. Strike that, I guess I just did criticize your plan, but only to make a point.

The original question was asking what percentage of income was going to come from SS. Posting quotes implying that anyone who doesn't agree with you is stupid "Let's say I dislike stupidity. Especially when it masquerades as a virtue." promotes a defensive response which is non-productive.

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Re: How much does social security factor into your retirement income?

Post by vectorizer » Wed May 20, 2015 7:55 am

My plan is to self-fund retirement until 70 (for about 10 years, starting 3 years from now) using a bond ladder purchased at retirement, and then take the SS benefit at 70 as well as annuitize a significant portion of my remaining nest egg. The estimated SS payment starting at 70 should be a comfortable basic income, with my remaining resources as icing. So, I am depending on SS income for a vital part of my overall plan. Whether this will turn out to have been wise is another story, but there are lots of political risks to planning for future income whether using IRAs or SS.

Splitting the retirement periods was a revelation for me, as opposed to the steady 30+-year withdrawals from a mixed open-ended portfolio often talked about (esp. WRT SWRs). Buying a safe bond ladder for the first 10 years gives me the confidence of a pre-determined income when I can enjoy it most, and having SS at the end of that period again gives me confidence of having a decent basic income for life. The hardest part will be quickly spending down the nest egg we worked so hard to build up.

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Re: How much does social security factor into your retirement income?

Post by Carl53 » Wed May 20, 2015 8:29 am

Early 60s now. If I was taking SS now it might be one third of our income. Instead we are leveraging it by delaying it until 70 except for a small spousal at 66. At 70 it will be about 50%. Prior to 70 we are drawing down taxable and converting TIRAs.

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Re: How much does social security factor into your retirement income?

Post by kaudrey » Wed May 20, 2015 10:11 am

I use 75% of my projected SS income, assuming I take it at 67. I am 46.

My husband is 41, and will likely take 1/2 of my benefit, because I think it will be larger than his own, so I use his own projections as a conservative proxy, taken at 67 as well.

We'll likely do some kind of file and suspend/spousal benefit combination; but I haven't delved into those weeds yet.

SS will be about 25-30% of our retirement income.

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Re: How much does social security factor into your retirement income?

Post by IlliniDave » Wed May 20, 2015 11:08 am

No bravado here. I arguably won't need it, but it absolutely figures significantly into my age 70+ income. $35K+ per year is good money!! It will almost double my income.
Don't do something. Just stand there!

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Re: How much does social security factor into your retirement income?

Post by ObliviousInvestor » Wed May 20, 2015 11:09 am

ankonaman wrote:I plan on taking SS at age 62 in 4 years. Not concerned with the reduced benefit. Have worked in the health care field for 30+ years now (mostly emergency medicine & now public health). Have watched a tidal wave of people die at an early age, become too ill to enjoy life, etc, etc. Wait to age 70 to collect [OT comment removed by admin LadyGeek]; no thanks. My plan is to retire early at age 62 and enjoy some years before I become to old to do the physically demanding things that I enjoy. Yeah you may get more $$ waiting but it blows my mind how people do not factor in "quality of life" and the ever present fact that longevity is a bad bet.
Regarding quality of life, delaying Social Security doesn't necessarily mean spending less in early retirement. In many cases, the best (safest) way to fund a spend-more-in-early-retirement plan is indeed to delay Social Security (particularly for the higher earner in married couples).
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Re: How much does social security factor into your retirement income?

Post by Professor Emeritus » Wed May 20, 2015 12:15 pm

vested1 wrote:
Professor Emeritus wrote:
vested1 wrote:
Professor Emeritus wrote:
vested1 wrote: Edited to add. As an incentive for my wife to support our delay I plan on increasing our income from savings to add incrementally more after our initial filing, which will still stay below the 3.5% but will be a type of reward for tightening the belt for the previous 2.5 years. This will add over 10k a year in income, increasing with a floor based on market performance, and will make the delay more palatable for my wife.
no problem with the rest of the plan but once you are retired there is no "merit" to tightening the belt" NOW

My perspective is driven by the fact that my wife became disabled at 60. I ma glad we never put anything off. Even disabled we fly to London today. I will spend whatever makes the trips work
How nice for you to have unlimited funds. I see no "merit" in abandoning a budget in retirement, especially when a relatively short period of minor sacrifice will result in more income than in working years. Shedding the yoke at long last brings home the realization that some things are more important than maintaining a lavish lifestyle.
You miss my point. Your comment on "lavish lifestyle" is key. You want your wife to financially "do without" now so you will have more later.

My question is WHY

Why not have a level consumption budget? We are front end loaded to be fair to my wife.
I don't believe I missed your point at all. You are comparing your situation to mine, and several others on this thread and stating that your plan is better, making assumptions of another's situation not based in fact. I hardly think that our two weeks in Hawaii this year after retirement qualify as "doing without". I could criticize your plan as well since "front loading" asset withdrawal is often cited as having long term negative affects on sustainability, but I won't because I'm not walking around in your shoes. Strike that, I guess I just did criticize your plan, but only to make a point.

The original question was asking what percentage of income was going to come from SS. Posting quotes implying that anyone who doesn't agree with you is stupid "Let's say I dislike stupidity. Especially when it masquerades as a virtue." promotes a defensive response which is non-productive.
You still miss my point. all plans are for a goal a plan which matches its goal is a good plan. you are suggesting comparing plans rather than comparing whether plans meet goals. Describing a plan without describing a goal is what the duke was describing.
So what is your goal. I stated my goal. My plan matches my goal. SS is part of the the plan.

If you plan matches your goal it is a good plan. You can't compare plans

YOU stated
At my age 70 our combined SS and her pension will cover our expenses with about 20k left over (discounting inflation), with SS being about 70% of income from those two sources. RMD's will be used for nicer trips, reinvestment, or gifting to the kids and grandkids.

Then you wrote Tightening your belt now

I simply asked WHY RMDS are only a fraction of the assets. What is your goal? how does your plan meet your goal?

NB my apologies if the comment from MOLaM was misunderstood.

We are of course recapitulating the classic distinction between strategy and tactics. Strategy is the decision of where you are going and tactics is the method of getting there. Indexing and asset allocations are tactics. The thread was How much does social security factor into your retirement income? to me retirement income is a goal. e.g. My "goal" is x or y retirement income.

I was simply inquiring into your goal as expressed by your plan. I could not figure it out

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N1CKV
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Re: How much does social security factor into your retirement income?

Post by N1CKV » Wed May 20, 2015 1:35 pm

Not relying on it at all. I only have 36 credits and I plan to retire from my current job on a government pension.
I guess I could go back and earn enough for at least 4 more credits. I should have plenty of time to do that, so I just might. I would be working for the SS benefit more so than the "earned" check, so does that mean I'm still retired?
I have met a lot of people that claim to love money, but they also seem to be the same people that are in the biggest hurry to get rid of it.

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Re: How much does social security factor into your retirement income?

Post by Almost there » Wed May 20, 2015 3:17 pm

I had written:
I noticed that quite a number of retired people are saving their monthly SS payments and living off their investments. I am planning on living off my SS payments and keeping my investments where they are.
Am I missing here something? :confused
Grt2bOutdoors wrote:
Nope, required minimum distributions are what's driving them taking money from their investments. You fail to do it, and the IRS will give you a big fat penalty.
Oh I know Grt2Outdoors about doing the MRD. What I am planning to do just move the funds from my IRA to my cash account (Mr. Taylor mentioned it) and then move funds to my checking on an as needed basis.

Almost there

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Re: How much does social security factor into your retirement income?

Post by halfnine » Wed May 20, 2015 3:19 pm

SS will account for up to 33% of our income stream. Anything above and beyond that is great, but it won't be included as part of the plan. Quite frankly, don't believe anything is riskless and am not counting on anything providing more than 33% of our income.

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Re: How much does social security factor into your retirement income?

Post by jed2009 » Wed May 20, 2015 3:29 pm

Being 24, I have a LONG way to go, and I am planning 0% of my income being from SS. Anything can happen - maybe the benefit will even get better. But I prefer to plan for the worst and assume it won't exist in 40 years.

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Re: How much does social security factor into your retirement income?

Post by LadyGeek » Wed May 20, 2015 4:29 pm

I removed a few off-topic posts. As a reminder, see: Forum Policy
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.
Also, means-testing has a political implication and is off-topic.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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Re: How much does social security factor into your retirement income?

Post by vested1 » Wed May 20, 2015 5:27 pm

Professor Emeritus,

In case I wasn't clear, my goal is like many others who are not yet independently wealthy. BTW, the OP never asked what our goal was. However, since you asked, my goal is to meet expenses and have not only a healthy income above that amount initially, but to increase income yearly in retirement. Our plan will do that. Our initial spendable income will be slightly less than now for 2.5 years then will surpass it in increasing increments according to my estimates.

In going through our expenditures I noted quite a few things that were completely unnecessary, both on my wife's part and my own. We have been in the process of eliminating these frivolous expenditures prior to retirement with great success, and we're both committed to doing so. One of the things I've given up is the regular purchase of lottery tickets. This ridiculous habit, although it provided a chance to dream, was completely unnecessary and would be considered a part of "tightening the belt", which you had such a hard time with. The most important thing to me is that my wife is happy with reducing expenses, and she is. It may mean she will only get her nails done once a month rather than a couple times a week, but she understands that.

I'm not attempting to compare my plan to anyone else's or even trying to dissect anyone else's plan, but I do feel that I am being asked to defend my plan for some unknown reason. If I don't want to withdraw more than RMD's that's my prerogative, and is a strategy shared by many. Of course RMD's are only a fraction of assets, and I'm thankful for that. 100k a year from SS and my wife's pension, not counting RMD's of over 30k sounds sustainable to me considering our lifestyle. Could my plan work out better if I worked past 63.5? Of course it would, but I'm at the end of my rope with my unethical employer, and age discrimination has proven to be a factor when applying to different firms.

I came to my conclusions for our SS filing strategy by reading comments on this board and by reading several books on the subject, and I feel comfortable with my decisions. I considered the posting of my strategy "paying it forward" in hopes that someone in a similar situation might find some value in it, as I did from other generous members. There are certainly many other ways to achieve the same or even greater success, but for me, drawing down our retirement savings while delaying SS increases our future income and leaves us less subject to higher taxes when RMD's begin. Establishing a more realistic budget makes a good plan better.

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Re: How much does social security factor into your retirement income?

Post by ankonaman » Wed May 20, 2015 5:57 pm

ObliviousInvestor wrote:
ankonaman wrote:I plan on taking SS at age 62 in 4 years. Not concerned with the reduced benefit. Have worked in the health care field for 30+ years now (mostly emergency medicine & now public health). Have watched a tidal wave of people die at an early age, become too ill to enjoy life, etc, etc. Wait to age 70 to collect [OT comment removed by admin LadyGeek]; no thanks. My plan is to retire early at age 62 and enjoy some years before I become to old to do the physically demanding things that I enjoy. Yeah you may get more $$ waiting but it blows my mind how people do not factor in "quality of life" and the ever present fact that longevity is a bad bet.
Regarding quality of life, delaying Social Security doesn't necessarily mean spending less in early retirement. In many cases, the best (safest) way to fund a spend-more-in-early-retirement plan is indeed to delay Social Security (particularly for the higher earner in married couples).
Lots of ways to look at this scenario. My feeling is I have been forced to pay into SS by the gov't and I am not leaving them any of my money. The SS scheme has been banking (pun intended) on people dying before being able to get their money back. I agree that it may not be working out that way for them as often as people are generally living longer now. However once you and your spouse die the SS money goes to the government and none to your heirs. I'd rather get back as much of MY MONEY as possible from them and leave the remainder of my investments to my heirs. YMMV :sharebeer

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Re: How much does social security factor into your retirement income?

Post by Confused » Thu May 21, 2015 1:54 pm

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Re: How much does social security factor into your retirement income?

Post by basspond » Thu May 21, 2015 2:02 pm

None, but I do plan to commence payments at 62.

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Re: How much does social security factor into your retirement income?

Post by steadyeddy » Thu May 21, 2015 2:44 pm

I'm 28, so any assumption about SS is just a big, hairy, audacious guess. The same goes for speculation about market returns, career progression, and whether I'll wake up tomorrow. I save 20% of gross, enjoy life, and cross my fingers. I'll let you know how it goes.
:sharebeer

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Re: How much does social security factor into your retirement income?

Post by Rodc » Thu May 21, 2015 2:53 pm

JW Nearly Retired wrote:
Rodc wrote:
SS will be the smallest leg of my three legged stool. Then too my wife has a modest pension and SS coming as well, so really a five legged stool. All in SS is still the lowest amount of SS, pensions and investments, though all are large enough to be meaningful.
Will SS still be the smallest after taxes?

Wife and I tried to maximize our social security for the cola & survivor benefit even before we understood all the tax implications.

Now retired, we are receiving a non-cola DB pension that is around half again larger than our SS income.
However, we view the SS as much nearer equal value because of the fact that it is taxed much more favorably.
Even though we are at 85% of SS fed taxable that is still about one tax bracket lower than on the pension. Also, CA
doesn't tax SS at all so that adds another 9% tax reduction compared to the tax on pension/RMD dollars.

What-ifs with 2014 tax software says we got to keep precisely 70.2% of a marginal SS dollar
versus only 55.7% of a marginal pension/RMD dollar. We realize it might be a good problem to have, but
easy to choose which kind of income to maximize if you can make a tradeoff prior to retirement.
JW
Interesting, thought I replied a couple of days ago.

Very good question.

I had not factored in the differential tax treatment. Depends exactly how long I work. If forced to retire now in late 50s it would not be true. If I retire at 65 clearly true. Some sliding scale in between I'd have to do some more careful analysis. Three things factor in: the longer I work the fewer years I have to bridge to 66.5 from investments to the investments stay larger longer, the larger the pensions become, and the more money gets added to the investments. These factors make a really significant difference. Working another 7 years approximately doubles my retirement income.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: How much does social security factor into your retirement income?

Post by Rodc » Thu May 21, 2015 2:53 pm

steadyeddy wrote:I'm 28, so any assumption about SS is just a big, hairy, audacious guess. The same goes for speculation about market returns, career progression, and whether I'll wake up tomorrow. I save 20% of gross, enjoy life, and cross my fingers. I'll let you know how it goes.
:sharebeer
Wise beyond your years. :)
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: How much does social security factor into your retirement income?

Post by joe8d » Thu May 21, 2015 6:57 pm

Almost there wrote:I noticed that quite a number of retired people are saving their monthly SS payments and living off their investments. I am planning on living off my SS payments and keeping my investments where they are.

Am I missing here something? :confused

Almost there
No, I've been doing that for 11 years.
All the Best, | Joe

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