Delaying Social Security: is the wisdom still relevant

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#Cruncher
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Re: Delaying Social Security: is the wisdom still relevant

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flyingaway wrote: Fri Jul 10, 2020 11:15 amIf you are not yet retired, working for an additional month will probably (dependent upon your salary) give you more money than the differences between claiming at any different ages.
Not likely unless you have haven't worked much more than the 10 years [1] necessary to qualify for Social Security benefits. For example, assuming you've worked 30 years with average indexed monthly earnings (AIME) [2] of $3000, $4349, $6000, or $8000; the following shows that working an additional month would increase your SS between 0.1% and 0.2%. This is much less than the 0.5% to 0.7% increased benefit resulting from claiming benefits one month later. [3]

Code: Select all

   Years worked          30
 1st bend point         960
 2nd bend point       5,785
  Original AIME       3,000      4,349      6,000      8,000
One month's pay       3,500      5,074      7,000      9,333  =8000*35/30
       New AIME    3,008.33   4,361.08   6,016.67   8,022.22  =8000+9333.33/420
Original result    1,516.80   1,948.48   2,440.25   2,740.25  =90%*960+32%*(5785-960)+15%*(8000   -5785)
     New result    1,519.47   1,952.35   2,442.75   2,743.58  =90%*960+32%*(5785-960)+15%*(8022.22-5785)
       Increase       0.18%      0.20%      0.10%      0.12%
  1. Here are four examples where one has worked only 10 years. In these cases working one more month would increase the benefit between 0.3% and 0.5%.

    Code: Select all

       Years worked          10
     1st bend point         960
     2nd bend point       5,785
      Original AIME       1,000      1,500      2,000      2,500
    One month's pay       3,500      5,250      7,000      8,750  =2500*35/10
           New AIME    1,008.33   1,512.50   2,016.67   2,520.83  =2500+8750.00/420
    Original result      876.80   1,036.80   1,196.80   1,356.80  =90%*960+32%*(2500   -960)
         New result      879.47   1,040.80   1,202.13   1,363.47  =90%*960+32%*(2520.83-960)
           Increase       0.30%      0.39%      0.45%      0.49%
  2. See Benefit Calculation Examples for Workers Retiring in 2020 page 1 and page 2 for more. I chose $4,349 as one example of AIME since it is the figure for Case A.
  3. For someone with a Normal Retirement Age of 67, the monthly benefit is 80% of the Primary Insurance Amount if SS is claimed at age 64. (See this SSA webpage.) At age 63+11 months it is 79.583% (80% - 5/1200) and at age 64 + 1 month it is 80.556% (80% + 5/900). Thus delaying one month until age 64 increases the benefit only 0.52% (80 / 79.583 - 1), but delaying one month after age 64 increases it 0.69% (80.556 / 80 - 1). All other one month delays from age 62 to 70 fall within this range.
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Re: Delaying Social Security: is the wisdom still relevant

Post by celia »

Delaying SS, in general, is more important than ever as tax-deferred savers build up larger and larger IRAs and 401Ks. The larger your balance in tax-deferred, the more likely you should be doing Roth conversions before you HAVE TO start taking Required Minimum Distributions, which are 100% taxable. Deferring SS benefits gives you more space in your tax brackets to do Roth conversions instead.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
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Re: Delaying Social Security: is the wisdom still relevant

Post by LadyGeek »

celia is making a very good point. As a recent retiree, I'm just starting to look at this in detail. The idea is to minimize taxes over the long term.

The wiki has a spreadsheet that will cover all of the above. See: Retiree Portfolio Model

I just downloaded the spreadsheet and will start beating it into shape for my situation.

(The spreadsheet also covers IRMAA (Income Related Monthly Adjustment Amounts) for determining Medicare costs.)
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Re: Delaying SSi: is the wisdom still relevant

Post by grok87 »

Alaric wrote: Fri Jul 10, 2020 10:58 am
grok87 wrote: Wed Jul 08, 2020 10:46 am my base case is that the law as it exists now will remain the same- i.e. no legislative changes to social security are made. the forecast of the 24% is done by the Social Security actuaries and is the base case. if i remember correctly there is a high and low scenario as well.
I too noticed that when I was going through The 2020 OASDI Trustees Report. On page 67, Table IV.B4.—Trust Fund Ratios shows that in the Intermediate cost projection, the OASI trust fund reserves become depleted in 2034, after which benefits would be payable at only 76% of scheduled benefits. That ratio would almost be sustainable, although it would gradually fall to 71% by 2094. This all assumes no changes in the law by 2034 or even 2094, which may seem unlikely but is the way the SSA is required to do their projections and the way that is legit to discuss here.

The Intermediate projection is the one that makes it into the report's Overview section and the one that news stories on the OASI trust fund always focus on. And it may be the most likely scenario. But the table also includes Low-cost and High-cost scenarios. In the Low-cost scenario, the OASI trust fund maintains a positive reserve until 2043, at which point payable benefits would only have to be cut to 90% of scheduled benefits, and that ratio would slowly improve, reaching 98% by 2094.

In the High-cost scenario, the OASI reserve becomes depleted in 2031, at which point payable benefits would have to be cut to 69% of scheduled benefits, and that ratio would continue to deteriorate, reaching 50% by 2094.

The 2020 report also advises that:
The projections and analysis in this report do not reflect the potential effects of the COVID-19 pandemic on the Social Security and Medicare programs. Given the uncertainty associated with these impacts, the Trustees believe that it is not possible to adjust their estimates accurately at this time.
I will await the 2021 report with considerable interest.
thanks- that's very helpful detail.
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Re: Delaying Social Security: is the wisdom still relevant

Post by willthrill81 »

Tejfyy wrote: Tue Jul 07, 2020 8:46 pm If I had to bet--and I'm not a gambler--on which "support system" would more likely work in my favor over the next 30 years, I'd bet on the market.
Historically speaking, the odds of you being correct are fairly high. But don't forget that the market went backwards between 2000-2009. The same could happen again. In fact, I'll guarantee you that it will eventually.

SS is by far the best longevity insurance available today. Taking it earlier than necessary seems a bit like killing the goose that laid the golden egg.
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Re: Delaying Social Security: is the wisdom still relevant

Post by Tejfyy »

celia wrote: Fri Jul 10, 2020 4:56 pm Delaying SS, in general, is more important than ever as tax-deferred savers build up larger and larger IRAs and 401Ks. The larger your balance in tax-deferred, the more likely you should be doing Roth conversions before you HAVE TO start taking Required Minimum Distributions, which are 100% taxable. Deferring SS benefits gives you more space in your tax brackets to do Roth conversions instead.
LadyGeek wrote: Fri Jul 10, 2020 6:15 pm celia is making a very good point. As a recent retiree, I'm just starting to look at this in detail. The idea is to minimize taxes over the long term.

The wiki has a spreadsheet that will cover all of the above. See: Retiree Portfolio Model

I just downloaded the spreadsheet and will start beating it into shape for my situation.

(The spreadsheet also covers IRMAA (Income Related Monthly Adjustment Amounts) for determining Medicare costs.)
This is exactly what I'm finding out myself. It all started with this Bogleheads page Taxation of Social Security benefits. 65% of my portfolio is in tax-deferred accounts. So doing Roth conversions as strategically as possible, holding off on SS and thinking in terms minimizing taxes seem to make sense (for my long term).
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Re: Delaying Social Security: is the wisdom still relevant

Post by wrongfunds »

Are the social security checks drawn from "Trust Fund" or from the general treasury? I am under impression that there is NO different bucket of money set aside in a special government account from which social security office cuts the check for the recipients.
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Re: Delaying Social Security: is the wisdom still relevant

Post by vineviz »

wrongfunds wrote: Sat Jul 11, 2020 12:35 pm Are the social security checks drawn from "Trust Fund" or from the general treasury? I am under impression that there is NO different bucket of money set aside in a special government account from which social security office cuts the check for the recipients.
Social Security checks are paid like any other obligation of the US government. The "trust fund" is an accounting convention, not actually a separate reserve of funds.
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Re: Delaying Social Security: is the wisdom still relevant

Post by sycamore »

Tejfyy wrote: Sat Jul 11, 2020 12:05 pm ...
This is exactly what I'm finding out myself. It all started with this Bogleheads page Taxation of Social Security benefits. 65% of my portfolio is in tax-deferred accounts. So doing Roth conversions as strategically as possible, holding off on SS and thinking in terms minimizing taxes seem to make sense (for my long term).
Note: the url tag in the quoted post above is missing the actual URL, which is https://www.bogleheads.org/wiki/Taxatio ... y_benefits
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Re: Delaying Social Security: is the wisdom still relevant

Post by JoeRetire »

wrongfunds wrote: Sat Jul 11, 2020 12:35 pm Are the social security checks drawn from "Trust Fund" or from the general treasury? I am under impression that there is NO different bucket of money set aside in a special government account from which social security office cuts the check for the recipients.
Why would it matter?
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Re: Delaying Social Security: is the wisdom still relevant

Post by L82GAME »

JoeRetire wrote: Sat Jul 11, 2020 1:31 pm
wrongfunds wrote: Sat Jul 11, 2020 12:35 pm Are the social security checks drawn from "Trust Fund" or from the general treasury? I am under impression that there is NO different bucket of money set aside in a special government account from which social security office cuts the check for the recipients.
Why would it matter?
RE: theoretical "trust fund" insolvency...
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Re: Delaying Social Security: is the wisdom still relevant

Post by sycamore »

vineviz wrote: Sat Jul 11, 2020 12:52 pm
wrongfunds wrote: Sat Jul 11, 2020 12:35 pm Are the social security checks drawn from "Trust Fund" or from the general treasury? I am under impression that there is NO different bucket of money set aside in a special government account from which social security office cuts the check for the recipients.
Social Security checks are paid like any other obligation of the US government. The "trust fund" is an accounting convention, not actually a separate reserve of funds.
Side track...

A simple/common reading of the SS own web site doesn't seem to jibe with it being an accounting convention.
From https://www.ssa.gov/news/press/factshee ... eTrust.htm
The Social Security trust funds are financial accounts in the U.S. Treasury. There are two separate Social Security trust funds, the Old-Age and Survivors Insurance (OASI) Trust Fund pays retirement and survivors benefits, and the Disability Insurance (DI) Trust Fund pays disability benefits.

Social Security taxes and other income are deposited in these accounts, and Social Security benefits are paid from them. The only purposes for which these trust funds can be used are to pay benefits and program administrative costs.

The Social Security trust funds hold money not needed in the current year to pay benefits and administrative costs and, by law, invest it in special Treasury bonds that are guaranteed by the U.S. Government. A market rate of interest is paid to the trust funds on the bonds they hold, and when those bonds reach maturity or are needed to pay benefits, the Treasury redeems them.
Not saying they aren't accounting conventions, but "...benefits are paid from them" could be read to mean that's where the benefit checks are coming from. If I could suggest to SSA how to improve their explanations, I would :)
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Re: Delaying Social Security: is the wisdom still relevant

Post by wrongfunds »

I am many years down the road until I will see my first social security check (I think I will have it direct deposited anyway!) but I always assumed it would be signed by "US Treasury"; just like when I send my quarterly estimated payments to Internal Revenue Services, I make that check payable to "US Treasury" and NOT to "IRS".

Hypothetically, would my SSA check in 2034 bounce (if nothing changed) ? The answer is "obviously NOT" because the check is NOT made on the "Trust Fund".

There is a huge difference in terms of personal finance accounting and government finance accounting. Why people think they are the same? Governmental deficits and personal deficits do not follow the same rulebook.

I understand the math involved behind the study about the 2034 Social Security Armageddon but I treat it very similarly to the study which says that if nothing changes, and if the health care costs kept on increasing at exponential rate, total health care for US will be 120% of the US Budget (Yes, I am exaggerating just a little bit!)
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Re: Delaying Social Security: is the wisdom still relevant

Post by celia »

JoeRetire wrote: Sat Jul 11, 2020 1:31 pm
wrongfunds wrote: Sat Jul 11, 2020 12:35 pm Are the social security checks drawn from "Trust Fund" or from the general treasury? I am under impression that there is NO different bucket of money set aside in a special government account from which social security office cuts the check for the recipients.
Why would it matter?
I read many years ago that federal agencies that collect money for future benefits have severe restrictions on how that money can be "invested". The amounts can be huge and be "lent" (on paper) to other agencies, but they apparently can't invest it or have it even earn interest. So the $$$ I paid years ago isn't the same money I'm collecting from when I start collecting. It really was spent on something else soon after it was received, while "my account" showed how much I paid each year.
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Re: Delaying Social Security: is the wisdom still relevant

Post by JoeRetire »

celia wrote: Sat Jul 11, 2020 2:47 pm
JoeRetire wrote: Sat Jul 11, 2020 1:31 pm
wrongfunds wrote: Sat Jul 11, 2020 12:35 pm Are the social security checks drawn from "Trust Fund" or from the general treasury? I am under impression that there is NO different bucket of money set aside in a special government account from which social security office cuts the check for the recipients.
Why would it matter?
I read many years ago that federal agencies that collect money for future benefits have severe restrictions on how that money can be "invested".
The Social Security funds are indeed restricted as to how they can be invested.
The amounts can be huge and be "lent" (on paper) to other agencies, but they apparently can't invest it or have it even earn interest.
That is incorrect. The funds do indeed earn interest.
So the $$$ I paid years ago isn't the same money I'm collecting from when I start collecting. It really was spent on something else soon after it was received, while "my account" showed how much I paid each year.
This is confusing. What does "isn't the same money" mean to you?

Certainly you don't think someone took your money, right?
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Re: Delaying Social Security: is the wisdom still relevant

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wrongfunds wrote: Sat Jul 11, 2020 2:19 pm I am many years down the road until I will see my first social security check (I think I will have it direct deposited anyway!) but I always assumed it would be signed by "US Treasury"; just like when I send my quarterly estimated payments to Internal Revenue Services, I make that check payable to "US Treasury" and NOT to "IRS".

Hypothetically, would my SSA check in 2034 bounce (if nothing changed) ? The answer is "obviously NOT" because the check is NOT made on the "Trust Fund".
Your benefits will be directly deposited.

There cannot be any "bounce". When the Trust Fund is completely depleted, the outgoing benefits will be reduced to exactly match whatever is being taken in at that time, per the current regulations.
I understand the math involved behind the study about the 2034 Social Security Armageddon but I treat it very similarly to the study which says that if nothing changes, and if the health care costs kept on increasing at exponential rate, total health care for US will be 120% of the US Budget (Yes, I am exaggerating just a little bit!)
Okay. I have no idea what "treat it very similarly" means in this context.
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Re: Delaying Social Security: is the wisdom still relevant

Post by JoeRetire »

L82GAME wrote: Sat Jul 11, 2020 1:32 pm
JoeRetire wrote: Sat Jul 11, 2020 1:31 pm
wrongfunds wrote: Sat Jul 11, 2020 12:35 pm Are the social security checks drawn from "Trust Fund" or from the general treasury? I am under impression that there is NO different bucket of money set aside in a special government account from which social security office cuts the check for the recipients.
Why would it matter?
RE: theoretical "trust fund" insolvency...
Where the check comes from and depletion of the Trust Fund are not actually related.
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Re: Delaying Social Security: is the wisdom still relevant

Post by afan »

#Cruncher wrote: Fri Jul 10, 2020 3:26 pm
flyingaway wrote: Fri Jul 10, 2020 11:15 amIf you are not yet retired, working for an additional month will probably (dependent upon your salary) give you more money than the differences between claiming at any different ages.
Not likely unless you have haven't worked much more than the 10 years [1] necessary to qualify for Social Security benefits. For example, assuming you've worked 30 years with average indexed monthly earnings (AIME) [2] of $3000, $4349, $6000, or $8000; the following shows that working an additional month would increase your SS between 0.1% and 0.2%. This is much less than the 0.5% to 0.7% increased benefit resulting from claiming benefits one month later. [3]

Code: Select all

   Years worked          30
 1st bend point         960
 2nd bend point       5,785
  Original AIME       3,000      4,349      6,000      8,000
One month's pay       3,500      5,074      7,000      9,333  =8000*35/30
       New AIME    3,008.33   4,361.08   6,016.67   8,022.22  =8000+9333.33/420
Original result    1,516.80   1,948.48   2,440.25   2,740.25  =90%*960+32%*(5785-960)+15%*(8000   -5785)
     New result    1,519.47   1,952.35   2,442.75   2,743.58  =90%*960+32%*(5785-960)+15%*(8022.22-5785)
       Increase       0.18%      0.20%      0.10%      0.12%
  1. Here are four examples where one has worked only 10 years. In these cases working one more month would increase the benefit between 0.3% and 0.5%.

    Code: Select all

       Years worked          10
     1st bend point         960
     2nd bend point       5,785
      Original AIME       1,000      1,500      2,000      2,500
    One month's pay       3,500      5,250      7,000      8,750  =2500*35/10
           New AIME    1,008.33   1,512.50   2,016.67   2,520.83  =2500+8750.00/420
    Original result      876.80   1,036.80   1,196.80   1,356.80  =90%*960+32%*(2500   -960)
         New result      879.47   1,040.80   1,202.13   1,363.47  =90%*960+32%*(2520.83-960)
           Increase       0.30%      0.39%      0.45%      0.49%
  2. See Benefit Calculation Examples for Workers Retiring in 2020 page 1 and page 2 for more. I chose $4,349 as one example of AIME since it is the figure for Case A.
  3. For someone with a Normal Retirement Age of 67, the monthly benefit is 80% of the Primary Insurance Amount if SS is claimed at age 64. (See this SSA webpage.) At age 63+11 months it is 79.583% (80% - 5/1200) and at age 64 + 1 month it is 80.556% (80% + 5/900). Thus delaying one month until age 64 increases the benefit only 0.52% (80 / 79.583 - 1), but delaying one month after age 64 increases it 0.69% (80.556 / 80 - 1). All other one month delays from age 62 to 70 fall within this range.
I think the point was that the income from an extra month of work would exceed the present value of the increase in SS benefits. This is only weakly related to the increment in SS benefits from that extra month of work. It comes mainly from the money you earn when you work for that month.

In your example, for someone who worked 30 years with an AIME of $8,000, the extra month of work raised the monthly SS benefit by $3.
But that person also earned $8,000 for that month. It would rake 222 years for the increased SS benefit to be worth $8,000.

So the income from the extra month was greater than the effect of increasing SS benefits.

Using Open Social Security, it is remarkable how often the differences in the effects of optimal and suboptimal claiming strategies are in the scale of one or a few months work.

Depending on how long one has worked and how much they have made, they may have maxed out their monthly benefit and delaying to 70 may be the only way to increase it.
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Re: Delaying Social Security: is the wisdom still relevant

Post by JPM »

To some extent delaying SS draw until 70 is a luxury of the well-to-do. If one is healthy, has a family history of longevity, and can afford to delay with little or no lifestyle sacrifice by so doing, delay seems the obviously wise choice for its role as longevity insurance if nothing else. If one is in poor health or has limited income, then early draws seem the obviously wise choice. For those in between, one is betting against longevity when claiming early and betting on longevity when claiming late.

If you are betting for or against longevity, how much are you betting? If you had a long prosperous career as a doctor or attorney and are collecting the monthly max at $3889, you have gained roughly $750 per monthly payment by waiting to 70 instead of claiming at 67 and you break even c age 84 or 85 in terms of total dollars and that is the approximate life expectancy for someone of average health. You have foregone roughly $37,,000 per year for each of the 3 years delay. But if you are a 67 year old prosperous individual, the 3 year wait is not long in terms of life expectancy for an educated person in average health, and so the likelihood of the decision to delay paying off for you is high. It is common for prosperous doctors and attorneys to continue practicing into their 70s nowadays and so not much of a financial burden for those to delay. And on average, educated people live longer than the general average.

Then what is the scale of the wealth you have to draw upon in retirement and how significant is the SS payment to your retirement income? If you have $40,000,000 the SS payment is trivial and it matters little whether you claim at 67 or 70 or ever. Recent survey of retiring physicians reports that avg doctor retires with $3-5MM in his/her retirement plan. The extra $750/month won't make or break the retirement plan, but may come in handy should one live into her 90s and have poor investment results. Then again the extra $37,000/year at ages 67-69 may make it possible to enjoy luxuries not otherwise in the budget. De gustibus...
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Re: Delaying Social Security: is the wisdom still relevant

Post by celia »

JoeRetire wrote: Sat Jul 11, 2020 3:03 pm
celia wrote: Sat Jul 11, 2020 2:47 pm So the $$$ I paid years ago isn't the same money I'm collecting from when I start collecting. It really was spent on something else soon after it was received, while "my account" showed how much I paid each year.
This is confusing. What does "isn't the same money" mean to you?

Certainly you don't think someone took your money, right?
I mean there is no internal "account" with my name on it from which I later withdraw.

Yes, someone took my money... Uncle Sam :wink: but I know I'll get (most of) it back. Maybe even a lot more than I gave him since I plan to live to 100!
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Re: Delaying Social Security: is the wisdom still relevant

Post by afan »

JPM wrote: Sat Jul 11, 2020 3:29 pm

If you had a long prosperous career as a doctor or attorney and are collecting the monthly max at $3889, you have gained roughly $750 per monthly payment by waiting to 70 instead of claiming at 67 and you break even c age 84 or 85 in terms of total dollars and that is the approximate life expectancy for someone of average health. You have foregone roughly $37,,000 per year for each of the 3 years delay. But if you are a 67 year old prosperous individual, the 3 year wait is not long in terms of life expectancy for an educated person in average health, and so the likelihood of the decision to delay paying off for you is high. It is common for prosperous doctors and attorneys to continue practicing into their 70s nowadays and so not much of a financial burden for those to delay. And on average, educated people live longer than the general average.
And such a person would not have low income years during which to do Roth conversions. By working past 70, the only Roth question is whether their tax rate is likely to be lower while working or once finally retired. Many may be in the 35 or 37% brackets without the taxable income from tIRA withdrawals to do the conversion. Many will be paying taxes at the top rate on the converted amounts. For them, the Roth question is gambling whether tax rates will go up in the future by enough to make paying at current top brackets better than paying even higher rates in retirement.

For some, their RMD-based income once retired will still have them below the top rate.
Last edited by afan on Sat Jul 11, 2020 4:14 pm, edited 1 time in total.
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Re: Delaying Social Security: is the wisdom still relevant

Post by abuss368 »

All the more reasons we try to maximize savings and investing and look to increase each year.
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Re: Delaying Social Security: is the wisdom still relevant

Post by willthrill81 »

JPM wrote: Sat Jul 11, 2020 3:29 pm To some extent delaying SS draw until 70 is a luxury of the well-to-do.
That's certainly true. It's also true that having a $250k portfolio (i.e. ignoring home equity) between the ages of 65-69 is enough to put an individual into the top third of those in that age range.

Like it or not, this forum is largely the realm of those who are quite well off financially compared to the typical American.
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Re: Delaying Social Security: is the wisdom still relevant

Post by L82GAME »

JoeRetire wrote: Sat Jul 11, 2020 3:08 pm
L82GAME wrote: Sat Jul 11, 2020 1:32 pm
JoeRetire wrote: Sat Jul 11, 2020 1:31 pm
wrongfunds wrote: Sat Jul 11, 2020 12:35 pm Are the social security checks drawn from "Trust Fund" or from the general treasury? I am under impression that there is NO different bucket of money set aside in a special government account from which social security office cuts the check for the recipients.
Why would it matter?
RE: theoretical "trust fund" insolvency...
Where the check comes from and depletion of the Trust Fund are not actually related.
Hence the use of the term theoretical.
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celia
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Re: Delaying Social Security: is the wisdom still relevant

Post by celia »

JPM wrote: Sat Jul 11, 2020 3:29 pm If you are betting for or against longevity, how much are you betting? If you had a long prosperous career as a doctor or attorney and are collecting the monthly max at $3889, you have gained roughly $750 per monthly payment by waiting to 70 instead of claiming at 67 and you break even c age 84 or 85 in terms of total dollars and that is the approximate life expectancy for someone of average health. You have foregone roughly $37,,000 per year for each of the 3 years delay...
You haven't foregone that $37,000 per year if you live to the break-even age. You just delayed taking it. And you come out ahead if you live even longer than break-even.

Many people here have run their numbers to find their break-even point and they may even look at how much cumulative SS they can collect each year. But do they also consider how much in future taxes they save while waiting each year? If converting an extra $20K or $50K or $100K each year in their 60s (in place of receiving SS), how much in future taxes (when RMDs are taken) can be saved, especially when it pushes them into a higher tax bracket? Is that more than the amount they are foregoing delaying in their SS benefit?
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Re: Delaying Social Security: is the wisdom still relevant

Post by willthrill81 »

There are two very disparate goals involving when to claim SS benefits, assuming that one has the financial freedom to delay if one wishes to do so.

1. Maximize the amount of SS benefits you receive in your lifetime.

2. Maximize the amount of your monthly SS benefits once they begin.

Those with goal #1 tend to place a lot of emphasis on 'break-even ages'.

Those with goal #2 tend to emphasize delaying SS benefits for as long as possible in order to maximize the 'longevity insurance' aspect of the benefits.

As with many aspects of personal finance, there is no definitive right or wrong answer. Much of it hinges on one's goals.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Delaying Social Security: is the wisdom still relevant

Post by smitcat »

willthrill81 wrote: Sat Jul 11, 2020 4:48 pm There are two very disparate goals involving when to claim SS benefits, assuming that one has the financial freedom to delay if one wishes to do so.

1. Maximize the amount of SS benefits you receive in your lifetime.

2. Maximize the amount of your monthly SS benefits once they begin.

Those with goal #1 tend to place a lot of emphasis on 'break-even ages'.

Those with goal #2 tend to emphasize delaying SS benefits for as long as possible in order to maximize the 'longevity insurance' aspect of the benefits.

As with many aspects of personal finance, there is no definitive right or wrong answer. Much of it hinges on one's goals.
Interesting - a few years back after reading this Bogle site for about 6 months our SS goal was combined with our total portfolio goal and did not read exactly like either of those.
It became - Optimize our plan to allow the most 'spendable' dollars (after tax) to be either spent or left to our heirs and/or charities.
In order to do that we needed (and still do) run a variety of potential future outcomes that vary things like: when to take SS, portfolio performance, age of demise, Roth conversions and potential tax consequences.
As a result the choice is quite clear for us ...but it would be different for everyone as their data and goals all vary.
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Re: Delaying Social Security: is the wisdom still relevant

Post by willthrill81 »

smitcat wrote: Sat Jul 11, 2020 5:07 pm
willthrill81 wrote: Sat Jul 11, 2020 4:48 pm There are two very disparate goals involving when to claim SS benefits, assuming that one has the financial freedom to delay if one wishes to do so.

1. Maximize the amount of SS benefits you receive in your lifetime.

2. Maximize the amount of your monthly SS benefits once they begin.

Those with goal #1 tend to place a lot of emphasis on 'break-even ages'.

Those with goal #2 tend to emphasize delaying SS benefits for as long as possible in order to maximize the 'longevity insurance' aspect of the benefits.

As with many aspects of personal finance, there is no definitive right or wrong answer. Much of it hinges on one's goals.
Interesting - a few years back after reading this Bogle site for about 6 months our SS goal was combined with our total portfolio goal and did not read exactly like either of those.
It became - Optimize our plan to allow the most 'spendable' dollars (after tax) to be either spent or left to our heirs and/or charities.
In order to do that we needed (and still do) run a variety of potential future outcomes that vary things like: when to take SS, portfolio performance, age of demise, Roth conversions and potential tax consequences.
As a result the choice is quite clear for us ...but it would be different for everyone as their data and goals all vary.
Yes, other potential goals, such as yours, are possible, though they seem to be very uncommon.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Delaying Social Security: is the wisdom still relevant

Post by smitcat »

willthrill81 wrote: Sat Jul 11, 2020 5:10 pm
smitcat wrote: Sat Jul 11, 2020 5:07 pm
willthrill81 wrote: Sat Jul 11, 2020 4:48 pm There are two very disparate goals involving when to claim SS benefits, assuming that one has the financial freedom to delay if one wishes to do so.

1. Maximize the amount of SS benefits you receive in your lifetime.

2. Maximize the amount of your monthly SS benefits once they begin.

Those with goal #1 tend to place a lot of emphasis on 'break-even ages'.

Those with goal #2 tend to emphasize delaying SS benefits for as long as possible in order to maximize the 'longevity insurance' aspect of the benefits.

As with many aspects of personal finance, there is no definitive right or wrong answer. Much of it hinges on one's goals.
Interesting - a few years back after reading this Bogle site for about 6 months our SS goal was combined with our total portfolio goal and did not read exactly like either of those.
It became - Optimize our plan to allow the most 'spendable' dollars (after tax) to be either spent or left to our heirs and/or charities.
In order to do that we needed (and still do) run a variety of potential future outcomes that vary things like: when to take SS, portfolio performance, age of demise, Roth conversions and potential tax consequences.
As a result the choice is quite clear for us ...but it would be different for everyone as their data and goals all vary.
Yes, other potential goals, such as yours, are possible, though they seem to be very uncommon.
Along the way we spent quite a lot of time attempting to spreadsheet out how to maximize our SS only to learn that maximizing SS alone was not the correct question to answer. But this site was able to supply all kinds of great information on how to not only do all of this but also how to think about all of this. Thanks to this site as well as yourself Will.
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Re: Delaying Social Security: is the wisdom still relevant

Post by willthrill81 »

smitcat wrote: Sat Jul 11, 2020 5:14 pm
willthrill81 wrote: Sat Jul 11, 2020 5:10 pm
smitcat wrote: Sat Jul 11, 2020 5:07 pm
willthrill81 wrote: Sat Jul 11, 2020 4:48 pm There are two very disparate goals involving when to claim SS benefits, assuming that one has the financial freedom to delay if one wishes to do so.

1. Maximize the amount of SS benefits you receive in your lifetime.

2. Maximize the amount of your monthly SS benefits once they begin.

Those with goal #1 tend to place a lot of emphasis on 'break-even ages'.

Those with goal #2 tend to emphasize delaying SS benefits for as long as possible in order to maximize the 'longevity insurance' aspect of the benefits.

As with many aspects of personal finance, there is no definitive right or wrong answer. Much of it hinges on one's goals.
Interesting - a few years back after reading this Bogle site for about 6 months our SS goal was combined with our total portfolio goal and did not read exactly like either of those.
It became - Optimize our plan to allow the most 'spendable' dollars (after tax) to be either spent or left to our heirs and/or charities.
In order to do that we needed (and still do) run a variety of potential future outcomes that vary things like: when to take SS, portfolio performance, age of demise, Roth conversions and potential tax consequences.
As a result the choice is quite clear for us ...but it would be different for everyone as their data and goals all vary.
Yes, other potential goals, such as yours, are possible, though they seem to be very uncommon.
Along the way we spent quite a lot of time attempting to spreadsheet out how to maximize our SS only to learn that maximizing SS alone was not the correct question to answer. But this site was able to supply all kinds of great information on how to not only do all of this but also how to think about all of this. Thanks to this site as well as yourself Will.
You're too kind. :beer

It really is amazing to me at least how much can be done to change both one's own financial situation but also that of those around us by simply managing what we have better.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Delaying Social Security: is the wisdom still relevant

Post by afan »

If you do retire early, have low income years, have large amounts of retirement assets that could be converted to Roth and have to worry about ACA and IRMAA, then it does become much more complicated.

Curious how many people who went through the exercise found the lifetime present value difference between optimal SS claiming strategy and delay to 70 to be >$10,000.
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Re: Delaying SSi: is the wisdom still relevant

Post by littlebird »

dodecahedron wrote: Wed Jul 08, 2020 6:54 am The 1983 SS reforms affected everyone born in 1943 or later. The oldest folks affected were age 40 at the time the change was enacted.

So in 1983, forty year olds were notified that their FRA was going to change from age 65 to 66. Nobody over 40 was affected by the change. Everyone under 40 was affected by the change, to varying extents described in the table below.

https://www.ssa.gov/benefits/retirement ... ction.html
Was there an earlier change, before 1983? I ask because despite what’s shown in the table, I was born in 1942 and my FRA was changed to 65 years, 8 months.
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Re: Delaying SSi: is the wisdom still relevant

Post by FiveK »

littlebird wrote: Sun Jul 12, 2020 12:43 pm Was there an earlier change, before 1983? I ask because despite what’s shown in the table, I was born in 1942 and my FRA was changed to 65 years, 8 months.
See History Of Social Security Full Retirement Age if interested in details.
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Re: Delaying Social Security: is the wisdom still relevant

Post by smitcat »

willthrill81 wrote: Sat Jul 11, 2020 5:19 pm
smitcat wrote: Sat Jul 11, 2020 5:14 pm
willthrill81 wrote: Sat Jul 11, 2020 5:10 pm
smitcat wrote: Sat Jul 11, 2020 5:07 pm
willthrill81 wrote: Sat Jul 11, 2020 4:48 pm There are two very disparate goals involving when to claim SS benefits, assuming that one has the financial freedom to delay if one wishes to do so.

1. Maximize the amount of SS benefits you receive in your lifetime.

2. Maximize the amount of your monthly SS benefits once they begin.

Those with goal #1 tend to place a lot of emphasis on 'break-even ages'.

Those with goal #2 tend to emphasize delaying SS benefits for as long as possible in order to maximize the 'longevity insurance' aspect of the benefits.

As with many aspects of personal finance, there is no definitive right or wrong answer. Much of it hinges on one's goals.
Interesting - a few years back after reading this Bogle site for about 6 months our SS goal was combined with our total portfolio goal and did not read exactly like either of those.
It became - Optimize our plan to allow the most 'spendable' dollars (after tax) to be either spent or left to our heirs and/or charities.
In order to do that we needed (and still do) run a variety of potential future outcomes that vary things like: when to take SS, portfolio performance, age of demise, Roth conversions and potential tax consequences.
As a result the choice is quite clear for us ...but it would be different for everyone as their data and goals all vary.
Yes, other potential goals, such as yours, are possible, though they seem to be very uncommon.
Along the way we spent quite a lot of time attempting to spreadsheet out how to maximize our SS only to learn that maximizing SS alone was not the correct question to answer. But this site was able to supply all kinds of great information on how to not only do all of this but also how to think about all of this. Thanks to this site as well as yourself Will.
You're too kind. :beer

It really is amazing to me at least how much can be done to change both one's own financial situation but also that of those around us by simply managing what we have better.
"You're too kind"
It is a stated fact actually.
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Re: Delaying SSi: is the wisdom still relevant

Post by ram »

RocketShipTech wrote: Tue Jul 07, 2020 8:58 pm If you’ve been wrong for 35 years what makes you think you’re right now?
Possibly time for "reversion to mean" :)
Ram
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Re: Delaying Social Security: is the wisdom still relevant

Post by smitcat »

afan wrote: Sun Jul 12, 2020 12:31 pm If you do retire early, have low income years, have large amounts of retirement assets that could be converted to Roth and have to worry about ACA and IRMAA, then it does become much more complicated.

Curious how many people who went through the exercise found the lifetime present value difference between optimal SS claiming strategy and delay to 70 to be >$10,000.
"Curious how many people who went through the exercise found the lifetime present value difference between optimal SS claiming strategy and delay to 70 to be >$10,000."
We would fit that ...
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Re: Delaying SSi: is the wisdom still relevant

Post by littlebird »

FiveK wrote: Sun Jul 12, 2020 12:46 pm
littlebird wrote: Sun Jul 12, 2020 12:43 pm Was there an earlier change, before 1983? I ask because despite what’s shown in the table, I was born in 1942 and my FRA was changed to 65 years, 8 months.
See History Of Social Security Full Retirement Age if interested in details.
Thank you. So the table posted above is incorrect . The 1983 change in FRA actually affected those born in 1937 and later (including me!) not 1943.
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Re: Delaying SSi: is the wisdom still relevant

Post by tadamsmar »

grok87 wrote: Wed Jul 08, 2020 5:55 am according to the latest trustees report (will try to link later), social security retirement benefits are forecasted, under current law, to be cut 24% starting in 2034. i.e. you will only get 76% of your check. this may be something for some people to factor in.

for example if you are turning 62 in 2026 the math might look like this for a $10k a year "full retirement age benefit"- i.e. the benefit you would collect at age 67. i'll assume the person lives to age 80

claim at 62:
get 8 years at 7,000 then 10 years at $5,320 (=7000*76%) for a total of $109,200 over the 18 years.

claim at 70: get 10 years at $10,000* 124% * 76% = $9,424 = $94,240.

for each additional year of life beyond age 80 the "claim at 70" strategy catches up by $4,104. So the breakevn "age at death" is 83.7- i.e. at that point the "claim at 70' strategy becomes better.

according to latest stats, average life expectancy for a male is now 76.1 and for female 81.1

so generally speaking, factoring in forecasted social security cuts under current law, claiming at age 62 would be better for the average person turning 62 in 2026.

cheers,
grok
Looks like you are using average life expectancy at birth. But a 62-year-old has a higher average life expectancy that is about 82 for males and 84 for females:

https://www.ssa.gov/oact/STATS/table4c6.html

But, as others point out, one should take their health status and that of their spouse into account.

Also, you can revisit the decision each month (and even retroactively for a few months in the past), using updated life expectancy data.
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Re: Delaying SSi: is the wisdom still relevant

Post by dodecahedron »

littlebird wrote: Sun Jul 12, 2020 12:55 pm
FiveK wrote: Sun Jul 12, 2020 12:46 pm
littlebird wrote: Sun Jul 12, 2020 12:43 pm Was there an earlier change, before 1983? I ask because despite what’s shown in the table, I was born in 1942 and my FRA was changed to 65 years, 8 months.
See History Of Social Security Full Retirement Age if interested in details.
Thank you. So the table posted above is incorrect . The 1983 change in FRA actually affected those born in 1937 and later (including me!) not 1943.
Technically the SSA FRA table posted in my link was correct but incomplete. It did not list the FRA for years before 1943. I have edited my original post and your observation actually strengthens the point I was trying to make.
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Re: Delaying Social Security: is the wisdom still relevant

Post by reln »

Tejfyy wrote: Tue Jul 07, 2020 8:46 pm It's generally considered the most economically sound approach: delaying SS as long as you can. 35 years ago I was convinced SSI wouldn't be around "when I get old" and there it is and I'm coming up on old (60). The world is more screwed up and predictably more unpredictable.

If I had to bet--and I'm not a gambler--on which "support system" would more likely work in my favor over the next 30 years, I'd bet on the market. Take SSI as soon as possible, i.e., get into that system now before [fill in the blank] and keep more of your chickens in the market.

It's not panic or doomsday thinking given "everything," I just think it's useful to revisit topics, though I know this one has been hashed out.

That the market is booming while everyday lives of everyday people are unraveling and that I believe we're entering a new era, I'm curious if anyone else is rethinking this.
You should reconsider things periodically, agreed.

Since PE is the most predictive measure of future stock returns (it's not a good predictor, it's just the most predictive), current "high" PE would suggest we expect lower than historical average stock returns (similar to those of late 60s and 70s). So stocks are unlikely to beat, on a risk adjusted basis, the return of SS deferral.

Bond yields (which are highly predictive of future bond returns) are very low which of course predicts low bond returns.

Cash returns? Lololololol.

Gold? Corn? Etc? Random and unreliable.

Unless the SS rules change, bond yields skyrocket, earnings soar relative to stock prices, your health deteriorates, your spouse's SS benefit is much higher than yours, or you need the money now, it's optimal to delay SS.
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Re: Delaying Social Security: is the wisdom still relevant

Post by dodecahedron »

smitcat wrote: Sun Jul 12, 2020 12:51 pm
afan wrote: Sun Jul 12, 2020 12:31 pm If you do retire early, have low income years, have large amounts of retirement assets that could be converted to Roth and have to worry about ACA and IRMAA, then it does become much more complicated.

Curious how many people who went through the exercise found the lifetime present value difference between optimal SS claiming strategy and delay to 70 to be >$10,000.
"Curious how many people who went through the exercise found the lifetime present value difference between optimal SS claiming strategy and delay to 70 to be >$10,000."
We would fit that ...
As a widow prior to age 60, I can most definitely say that the lifetime present value of the difference between my optimal SS claiming strategy and delay to 70 was definitely way more than $10,000. (I claimed my own benefit at 62, and my undiminished maximized surviving spouse benefit at FRA. Waiting until 70 for either benefit was clearly a dominated strategy. Survivor benefits do not grow after FRA and my own record benefit with claiming delayed to age 70 would have been less than my survivor benefit.)
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Re: Delaying SSi: is the wisdom still relevant

Post by grok87 »

tadamsmar wrote: Sun Jul 12, 2020 1:04 pm
grok87 wrote: Wed Jul 08, 2020 5:55 am according to the latest trustees report (will try to link later), social security retirement benefits are forecasted, under current law, to be cut 24% starting in 2034. i.e. you will only get 76% of your check. this may be something for some people to factor in.

for example if you are turning 62 in 2026 the math might look like this for a $10k a year "full retirement age benefit"- i.e. the benefit you would collect at age 67. i'll assume the person lives to age 80

claim at 62:
get 8 years at 7,000 then 10 years at $5,320 (=7000*76%) for a total of $109,200 over the 18 years.

claim at 70: get 10 years at $10,000* 124% * 76% = $9,424 = $94,240.

for each additional year of life beyond age 80 the "claim at 70" strategy catches up by $4,104. So the breakevn "age at death" is 83.7- i.e. at that point the "claim at 70' strategy becomes better.

according to latest stats, average life expectancy for a male is now 76.1 and for female 81.1

so generally speaking, factoring in forecasted social security cuts under current law, claiming at age 62 would be better for the average person turning 62 in 2026.

cheers,
grok
Looks like you are using average life expectancy at birth. But a 62-year-old has a higher average life expectancy that is about 82 for males and 84 for females:

https://www.ssa.gov/oact/STATS/table4c6.html

But, as others point out, one should take their health status and that of their spouse into account.

Also, you can revisit the decision each month (and even retroactively for a few months in the past), using updated life expectancy data.
good point
RIP Mr. Bogle.
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Re: Delaying Social Security: is the wisdom still relevant

Post by basspond »

If SS will be less then 40% of income in retirement then it doesn’t matter. If more then wait.
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Re: Delaying Social Security: is the wisdom still relevant

Post by JoeRetire »

celia wrote: Sat Jul 11, 2020 3:32 pm
JoeRetire wrote: Sat Jul 11, 2020 3:03 pm
celia wrote: Sat Jul 11, 2020 2:47 pm So the $$$ I paid years ago isn't the same money I'm collecting from when I start collecting. It really was spent on something else soon after it was received, while "my account" showed how much I paid each year.
This is confusing. What does "isn't the same money" mean to you?

Certainly you don't think someone took your money, right?
I mean there is no internal "account" with my name on it from which I later withdraw.

Yes, someone took my money... Uncle Sam :wink: but I know I'll get (most of) it back. Maybe even a lot more than I gave him since I plan to live to 100!
Social Security isn't a savings account.

Unless you die young, you'll get more than you paid in. Your spouse may too.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
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Re: Delaying Social Security: is the wisdom still relevant

Post by JoeRetire »

L82GAME wrote: Sat Jul 11, 2020 4:03 pm
JoeRetire wrote: Sat Jul 11, 2020 3:08 pm
L82GAME wrote: Sat Jul 11, 2020 1:32 pm
JoeRetire wrote: Sat Jul 11, 2020 1:31 pm
wrongfunds wrote: Sat Jul 11, 2020 12:35 pm Are the social security checks drawn from "Trust Fund" or from the general treasury? I am under impression that there is NO different bucket of money set aside in a special government account from which social security office cuts the check for the recipients.
Why would it matter?
RE: theoretical "trust fund" insolvency...
Where the check comes from and depletion of the Trust Fund are not actually related.
Hence the use of the term theoretical.
You lost me. Whatever.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
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Re: Delaying Social Security: is the wisdom still relevant

Post by tadamsmar »

wrongfunds wrote: Sat Jul 11, 2020 12:35 pm Are the social security checks drawn from "Trust Fund" or from the general treasury?
Both
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Re: Delaying Social Security: is the wisdom still relevant

Post by wrongfunds »

The original question that I was asking had to do with the legality of "2034" or "24% haircut". I see nothing about those numbers being codified in a specific bill, passed by both houses and signed by President to make it in to "law of the land".

Both of these numbers are just estimates. They can fluctuate for better or for worse. The number of assumptions which are built in that study to derive those numbers are staggering. The actual payments are *not* adjusted in real time. There is no feedback loop in the SS system that I know of. This is unlike yours or mine or my employer's way of handling annual budgets where they are continuously being tweaked and never projected out to 15 years or 60 years like that study does.

But we are supposed to believe that payments will be made to the recipients until the "magic" date and then suddenly the day after the payments will be cut.

I need to see actual law of the land to believe that assertion even though many of you have accepted that as a reality.

Would anybody disagree with the statement:-

"If nothing changes in the existing law, trust fund *could* deplete in 2030 if next decade turns out to be *different* than the previous few decades"
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Re: Delaying Social Security: is the wisdom still relevant

Post by sycamore »

wrongfunds wrote: Mon Jul 13, 2020 3:25 pm The original question that I was asking had to do with the legality of "2034" or "24% haircut". I see nothing about those numbers being codified in a specific bill, passed by both houses and signed by President to make it in to "law of the land".

Both of these numbers are just estimates. They can fluctuate for better or for worse. The number of assumptions which are built in that study to derive those numbers are staggering. The actual payments are *not* adjusted in real time. There is no feedback loop in the SS system that I know of. This is unlike yours or mine or my employer's way of handling annual budgets where they are continuously being tweaked and never projected out to 15 years or 60 years like that study does.

But we are supposed to believe that payments will be made to the recipients until the "magic" date and then suddenly the day after the payments will be cut.

I need to see actual law of the land to believe that assertion even though many of you have accepted that as a reality.

Would anybody disagree with the statement:-

"If nothing changes in the existing law, trust fund *could* deplete in 2030 if next decade turns out to be *different* than the previous few decades"
I wouldn't disagree with that statement. It's good to note there's uncertainty in exactly how things will play out -- maybe much less FICA taxes will be collected due to the pandemic, maybe the birth drops even more, etc.

But the Trustees have to make various assumptions to project the financial status of the Trust Funds. Those assumptions may turn out to be wrong in hindsight. Personally I have some trust and confidence that the people making the projections are using the best models they can and using the best data available. I don't expect the projections to be perfect.

Based on what they're projecting now, I find it reasonable to assume a 10-25% cut in benefits by the time I claim. And, yes, it may very well turn out that people will get 100% payments until that "magic" date. From what I've read, there's much dispute about that aspect of payment cuts. I don't have a reference for the law, though. I'd be happy to learn if anyone here has one.

EDIT: from the ssa.gov web page The Future Financial Status of the Social Security Program:
Solvency of the Social Security Program

When individuals look at the financial status of the Social Security program, they often ask, "Will I get my benefits?" Assuming no future change in the law, this question can be answered directly by focusing on the "solvency" of the Social Security trust funds. Solvency for the Social Security program is defined as the ability of the trust funds at any point in time to pay the full scheduled benefits in the law on a timely basis.

The two Social Security trust funds, those for Old-Age and Survivors Insurance (OASI) benefits and for Disability Insurance (DI) benefits, are special. Along with the Hospital Insurance (HI) Trust Fund of the Medicare program, the OASI and DI Trust Funds have the important feature that benefits can only be paid to the extent that the trust funds actually have assets to draw on to pay the benefits. Unlike the rest of federal government operations, these three trust fund programs do not have the ability to borrow in order to continue paying benefits when the dedicated taxes and trust fund reserves are not sufficient. [3]...
Footnote [3] says "A very limited amount of short-term borrowing from the General Fund of the Treasury is permitted in the law. Expected tax receipts for a month can be made available at the beginning of the month when this would be needed to allow timely payment of benefits. This advance tax transfer requires repayment to the General fund with interest by the end of the month. Thus, solvency is not effectively extended to any substantial degree by this provision."

The above is not a reference to the law, but if you assume the SSA is not just making it up, it explains how the OASI fund would pay out 100% benefits until the "magic" date when the trust have enough assets.
wrongfunds
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Re: Delaying Social Security: is the wisdom still relevant

Post by wrongfunds »

I am just looking for the law which says (in a pseudo computer language)

Code: Select all

TrustFund += (YearlyIncomingMoney - YearlyOutgoingMoney);
if( TrustFund > 0 ){
        pay everybody 100%;
} else {
       pay everybody (YearlyIncomingMoney)/(YearlyOutgoingMoney money) %;
}
I have trouble believing that there is a law which covers both side of that "if" statement. But that is the popular belief.
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ObliviousInvestor
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Re: Delaying Social Security: is the wisdom still relevant

Post by ObliviousInvestor »

wrongfunds wrote: Mon Jul 13, 2020 4:33 pm I am just looking for the law which says (in a pseudo computer language)

Code: Select all

TrustFund += (YearlyIncomingMoney - YearlyOutgoingMoney);
if( TrustFund > 0 ){
        pay everybody 100%;
} else {
       pay everybody (YearlyIncomingMoney)/(YearlyOutgoingMoney money) %;
}
I have trouble believing that there is a law which covers both side of that "if" statement. But that is the popular belief.
I am not aware of any provision stating what is supposed to happen in the event that there is insufficient money in the applicable fund to pay the benefits required for a given period.

There is, however, a provision in the Social Security Act which says that benefit payments are only supposed to come from the trust funds. See subsection (h) here:
https://www.ssa.gov/OP_Home/ssact/title02/0201.htm
Mike Piper | Roth is a name, not an acronym.
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