Youth and Social Security

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
ChapMan
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Youth and Social Security

Post by ChapMan » Wed Jan 05, 2011 1:53 pm

Hi All,

I have a question I'd like to pose to some of younger members of this forum (although everyone is of course encouraged to weigh in). For the Generation Y people out there who are saving for retirement, do you factor in social security income at all?

Personally, my financial plan assumes that it'll be completely bankrupt by the time I retire and that anything I get from it will just be a nice windfall. Are any of you planning on getting any social security? If so, how much do you expect?

For the older members -- did your plan factor in social security when you were calculating how much you'd need to live on? When did you start factoring it in?

maxinout
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Post by maxinout » Wed Jan 05, 2011 2:00 pm

I'm not sure I'd expect it to be bankrupt, but I don't even think about it as part of my plan.

Chushingura
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Post by Chushingura » Wed Jan 05, 2011 2:03 pm

Agree with 'maxinout.' I don't even have it listed as a 'potential' income stream on any spreadsheet I'm keeping (age: 27).
Last edited by Chushingura on Wed Jan 05, 2011 3:19 pm, edited 1 time in total.
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caluchko
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Post by caluchko » Wed Jan 05, 2011 2:05 pm

Perhaps it is wise to plan for retirement w/out social security, especially if you are of the school that you can't save too much for retirement. But I plan to fight like hell (voting, political activism) to preserve social security for my generation and future generations. I believe it is important for a weathly society to have a minimal safety net system for retirement and disability. From what I understand, the actual fixes needed to save social security are not that drastic (means-testing benefits, raise retirement age, increase tax rate slightly).

sscritic
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Post by sscritic » Wed Jan 05, 2011 2:39 pm

Let's change the question.

You work for a state agency. You have a pension. Do you include it in your retirement planning knowing the odds that your state and its pension system will go broke before you retire?

Which is more likely: social security will go broke or your state pension system will go broke?
Which is more likely: the federal government will default on its debts or your state government will default on its debts?

If as a state worker you would include your pension in your retirement planning, then it makes sense that you would include social security in your retirement planning.

zaga21
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Post by zaga21 » Wed Jan 05, 2011 2:44 pm

My policy to to plan for the worst and hope for the best. I'm saving enough to not ever need social security, by then I'll probably be "means tested" out of it if that ever comes to pass.
Zaga

callen
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Post by callen » Wed Jan 05, 2011 2:44 pm

I am 30 years old and planning for retirement as if I will receive no SS. If it turns out that I receive SS, I will adjust the draw down of my portfolio accordingly.

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OAG
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Post by OAG » Wed Jan 05, 2011 2:46 pm

When I started thinking about retirement I always "factored" in SS, Pension AND Savings. Now at 70+ years of age I am glad I did since each one of them provides an almost equal amount of funds (think "three legged stool).
OAG=Old Army Guy. Retired CW4 USA (US Army) in 1979.

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simplesimon
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Post by simplesimon » Wed Jan 05, 2011 3:16 pm

I do not factor Social Security income as part of my retirement plan at the moment.

Ron
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Post by Ron » Wed Jan 05, 2011 3:29 pm

I am of SS age (yet not collecting). I have witnessed many changes to the system over the years (increasing wage taxed, increased FRA, increased tax percentage, etc.) to ensure the "product" survives.

I also believe that changes will be made to preserve the system for the current young folks who are just starting out. Also remember, when it is time for you to collect, most of the boomer generation (including me) will be long gone.

What would be interesting is to see how your SS will be supported. As it is now, it's a pay as you go system. I paid for my parents/grandparents (who are no longer alive). You are paying for me (for awhile, at least). Who will be paying for you in the future? Will the economy and birthrates support your needs? I don't think anybody can answer that question with any certainty and for me is the question to be answered for the people living today, but expecting to start collecting in the next 35-45 years (long after I'm dust).

As to the OP's question (pertaining to an older person). Yes, I factor it in, however only from the standpoint of an additional survivor benefit for my wife (that's the main reason I'm delaying till age 70). But that's not part of this discussion, and I don't count on it to supply needed income in the early part of retirement, which I am in now.

- Ron

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femur
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Post by femur » Wed Jan 05, 2011 3:43 pm

I am 28.

I do not take SS into consideration when determining my Asset Allocation.

That being said, I do not think that SS will "go bankrupt" or any such nonsense like that. The most likely scenario that I take into consideration when forecasting my future retirement income is that Congress may change Social Security such that it will be "Means Tested" (i.e. only for the poor).

Rick Ferri (whom I respect deeply) also believes that this is an eventualityas he details in this thread from November.

Rodc
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Post by Rodc » Wed Jan 05, 2011 3:51 pm

We had a rather contentious thread on this recently. Can't find it by searching, might have been deleted. But you might take a minute to see if you can find it.

Frankly "planning" with almost any numbers for someone decades from retirement is wasted effort. You most likely have no idea how your career is going to work out. How much will you be making in 30 years? What expensive hobbies will you develop? How many kids will you have, if any? What is your health going to be like? How will your investments be doing? Will you be forced into early retirement? Will you have a long bout of unemployment? Will your spouse run off with some youngster taking half your money?

So at this stage it does not matter if you include it or not, just save a good chunk of change each paycheck (start with investing enough to get any company match and increase by 1% with every pay raise and you will get to the promised land), and invest it in a well diversified portfolio at lost cost, check in 10 years, repeat two or three times, and then sharpen your pencil. :)

Myself, I figure SS is going to be with us for many decades, but look for it to become more and more means tested (you get less or get taxed more). So since you will be savings and investing wisely, good chance you will retire to an above average income, and thus you will not see all the SS you might otherwise. So plan on 50% to 75% or something if you want a planning number (is my best guess from my cloudy crystal ball).
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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ExcelJunkie
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Re: Youth and Social Security

Post by ExcelJunkie » Wed Jan 05, 2011 4:04 pm

ChapMan wrote: For the Generation Y people out there who are saving for retirement, do you factor in social security income at all?
I am 24 and do not factor Social Security into retirement planning and plan to live off the money that my wife and I will invest. That being said, I do expect Social Security to still be around, but believe it will have a higher retirement age.

In an ideal world SS would be an opt-out program so I could keep more of my money and invest it as I saw fit (Boglehead Style)

SP-diceman
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Post by SP-diceman » Wed Jan 05, 2011 4:11 pm

sscritic wrote: Which is more likely: social security will go broke or your state pension system will go broke?
Which is more likely: the federal government will default on its debts or your state government will default on its debts?
Is there a: All the Above ?


Thanks
SP-diceman

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ObliviousInvestor
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Post by ObliviousInvestor » Wed Jan 05, 2011 4:16 pm

I'm 26. Like many above, I expect Social Security to still be around by the time I'm retirement age, yet I don't include it in my planning whatsoever. As with anything that can be changed via legislation, it's nearly impossible to predict ~40 years in advance what it will look like.
Mike Piper, author/blogger

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dm200
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Post by dm200 » Wed Jan 05, 2011 4:26 pm

sscritic wrote:Let's change the question.

You work for a state agency. You have a pension. Do you include it in your retirement planning knowing the odds that your state and its pension system will go broke before you retire?

Which is more likely: social security will go broke or your state pension system will go broke?
Which is more likely: the federal government will default on its debts or your state government will default on its debts?

If as a state worker you would include your pension in your retirement planning, then it makes sense that you would include social security in your retirement planning.
When it comes to state agency pensions, actually "going broke", in my opinion, is not the biggest risk. Rather, for a younger worker, I believe the bigger risk (or probability) is that the plan will be scaled back or even eliminated over time.

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ryuns
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Post by ryuns » Wed Jan 05, 2011 4:34 pm

Of the rodc school of thought. Squirrel away a good but comfortable amount of money and follow a good AA.

But there's no reason to include or exclude SS altogether, just include or exclude it in different scenarios. Play with different calculators or build a simple one. Maybe the conservative scenario involves, say 2-3% real returns in perpetuity, and no SS. Maybe your optimistic scenario is 6% real and SS as it functions today.

Ryan
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton

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Opponent Process
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Post by Opponent Process » Wed Jan 05, 2011 4:34 pm

it would be impossible for social security to be significantly reduced as we're already too dependent on it. when I was in my 20s I was very idealistic, too, and didn't think it would be around. it even gave me immense pleasure to hold such a brash opinion. when you get older you tend to moderate your opinions and see the world more clearly, and you understand why we have social security in the first place, and what the repercussions of not having it would be.
30/30/20/20 | US/International/Bonds/TIPS | Average Age=37

junior
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Re: Youth and Social Security

Post by junior » Wed Jan 05, 2011 4:50 pm

You have to have a fair amount of spare money to invest to not be counting on social security.

I'm currently assuming that the stock market will only return 3.5% real in our lifetime. (Per the gordon equation) Funding a retirement with a 3.5% return and no social security is not necessarily an easy thing.

In other words, not counting on social security seems like sort of a luxury to me....

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Re: Youth and Social Security

Post by junior » Wed Jan 05, 2011 4:53 pm

ExcelJunkie wrote:
In an ideal world SS would be an opt-out program so I could keep more of my money and invest it as I saw fit (Boglehead Style)
What your expectation for real return on your investments based on boglehead style investing?

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Post by KyleAAA » Wed Jan 05, 2011 5:02 pm

I don't even consider SS. I assume it will be around and that I'll get something, but I'm not sure how much or at what age and so I don't count it. I'm not one of those people who thinks it will be completely gone by the time I retire, but I prefer to plan conservatively.

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ExcelJunkie
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Re: Youth and Social Security

Post by ExcelJunkie » Wed Jan 05, 2011 5:19 pm

junior wrote:
ExcelJunkie wrote:
In an ideal world SS would be an opt-out program so I could keep more of my money and invest it as I saw fit (Boglehead Style)
What your expectation for real return on your investments based on boglehead style investing?
When estimating how much I will need to save per year to get to my 'number' I generally use an estimate of 3.5% real return. This can be kind of demoralizing :)

GammaPoint
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Post by GammaPoint » Wed Jan 05, 2011 5:23 pm

I expect it will be around, but I don't consider it in any planning. I'm 28.

The Wizard
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Post by The Wizard » Wed Jan 05, 2011 5:23 pm

KyleAAA wrote:I don't even consider SS. I assume it will be around and that I'll get something, but I'm not sure how much or at what age and so I don't count it. I'm not one of those people who thinks it will be completely gone by the time I retire, but I prefer to plan conservatively.
This is exactly how I looked at it back in my 20's and 30's.
But now in the end-game, at age 60, I look at it more meaningfully, since the estimated monthly income numbers on my annual report are no longer in Funny Money...

matt
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Post by matt » Wed Jan 05, 2011 5:25 pm

The goods news about Social Security is that it is a much smaller problem than Medicare. So big Medicare cuts will have to come first. Then, since people will die earlier, Social Security will no longer be underfunded. Problem solved.

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Accumulator
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Post by Accumulator » Wed Jan 05, 2011 5:48 pm

Mid-30s, and I'm saving as much as I can. Given that, SS really doesn't factor in to the thought pattern.

However, I did receive a statement recently that said something to the affect of "if nothing is ever done to correct the deficiencies, we'll have enough to pay you 76% of the totals we're displaying here."

I don't know if SS will be corrected in the next few years or not, but I also don't believe that no action will ever be taken. Assuming I'll never get any benefit seems TOO conservative, so if I were planning my saving rate based on SS, I'd probably use a figure like 85% of the currently listed entitlements. That seems like a nice round figure. One can always adjust-fire on a plan.


Edit: Left a word out, corrected.

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3CT_Paddler
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Post by 3CT_Paddler » Wed Jan 05, 2011 6:09 pm

Interesting thread. I am in the younger crowd (28 )... I can't say I am including it in any retirement plan right now (it's a fuzzy concept at 28 ), but I do expect it to be around in some form when I retire.

There are too many other variables to account for as far as knowing how much of that I will need to retire. Career success is a bigger variable than SS for me at this point.

SS may only provide for example 75% of it's current promised benefits when I retire... still a valuable part of my retirement if that was the case.

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3CT_Paddler
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Post by 3CT_Paddler » Wed Jan 05, 2011 6:12 pm

caluchko wrote:But I plan to fight like hell (voting, political activism) to preserve social security for my generation and future generations.
Maybe you should fight like hell to make sure those programs are solvent in 30 years... that way you will still receive Social Security.

johnubc
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Re: Youth and Social Security

Post by johnubc » Wed Jan 05, 2011 6:31 pm

ExcelJunkie wrote:
ChapMan wrote: For the Generation Y people out there who are saving for retirement, do you factor in social security income at all?
I am 24 and do not factor Social Security into retirement planning and plan to live off the money that my wife and I will invest. That being said, I do expect Social Security to still be around, but believe it will have a higher retirement age.

In an ideal world SS would be an opt-out program so I could keep more of my money and invest it as I saw fit (Boglehead Style)
I would advise you to look back in history, and review why SS was created in the first place.

Chuck
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Post by Chuck » Wed Jan 05, 2011 6:34 pm

I'm in my 30s and the margin of error of my projection of my retirement portfolio is in the millions.

To make it not about me, let's say you start out at age 20, and retire at 65 after saving $16,500 each year. Let's guesstimate that you can earn 4% real. Maybe you can, maybe you can't, but whatever.

If it grows at 3.75% real, it will be worth $1.87M. If it grows at 4.25% real it's 2.14M. The difference ($272,000) is close to Jack Bogle's estimate that a SS benefit is worth $300,000.

Can you project your returns within 0.5%?

I can't begin to fathom how I would plan for SS being there, or plan for it not being there, because the range of possible outcomes for my own portfolio is so much huger than the value of SS to begin with.

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Post by supersharpie » Wed Jan 05, 2011 6:37 pm

As things stand my wife and I project to be entitled at age 62 to (in 2010 dollars) about $80,000-$90,000 a year in combined pensions (one private, one from the federal government) and Social Security.

However, that is merely in our mind that is merely "bonus money" which may or may not actually be there by the time we retire. Therefore we are, at age 27, planning on saving like crazy (so far only $38,000 but it's a start!) in our Roth 401ks and IRAs so that we will be able to enjoy six figure annual distributions and not worry about other sources of income. Optimally, the more we receive from SS and our pensions, the more our child(ren) will inherit.

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SSSS
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Post by SSSS » Wed Jan 05, 2011 6:45 pm

sscritic wrote:Which is more likely: social security will go broke or your state pension system will go broke?
Which is more likely: the federal government will default on its debts or your state government will default on its debts?
I'd say it depends what state you're talking about...
johnubc wrote:I would advise you to look back in history, and review why SS was created in the first place.
Maybe there could be a competency test before you could opt out, proving you're successfully managing your own finances and already saving sufficiently?

You can already opt out of automobile liability insurance if you can prove you can self-insure.

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Post by White Coat Investor » Wed Jan 05, 2011 7:05 pm

I include it. If it disappears, then you stop including it. But I have to plan to retire without it, since I play to retire 10-20 years before I start taking it.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

supersharpie
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Post by supersharpie » Wed Jan 05, 2011 7:08 pm

SSSS wrote:
sscritic wrote:Which is more likely: social security will go broke or your state pension system will go broke?
Which is more likely: the federal government will default on its debts or your state government will default on its debts?
I'd say it depends what state you're talking about...
johnubc wrote:I would advise you to look back in history, and review why SS was created in the first place.
Maybe there could be a competency test before you could opt out, proving you're successfully managing your own finances and already saving sufficiently?

You can already opt out of automobile liability insurance if you can prove you can self-insure.
The point is that when you are paying FICA you are paying current beneficiaries' payments, not funding your own. Were workers allowed to opt out SS recipients on a fixed income would suffer tremendously from draconian benefit cuts.

You either phase out Social Security for everyone or you maintain the system of mandatory contributions. I favor the latter because the majority of Americans are fiscally irresponsible to the extreme and would be on welfare in their old age and/or disabled state were it not for the Social Security they draw after being forced to contribute to the system during their working years.

The system works and probably helps the economy more than hurts it. And heck, as things stand now the most you are contributing is about $7000 a year. You could plug that in and say, hey I could probably get a better return with that investment in an index fund.

What you are probably forgetting is that your FICA contributions fund an umbrella of benefits besides the retirement pension everyone envisions when they think of Social Security, namely:

Disability benefits (which are equivalent to your Full Retirement Age benefits)

Survivor benefits for your aged widow(er)

Survivor benefits for the minor or adult disabled children you leave behind

Survivor benefits for your widow(er) with child-in-care.

Auxiliary benefits for your spouse

Auxiliary benefits for minor children

Auxiliary benefits for adult disabled children

The survivors benefits for working and middle-class households with multiple surviving minor and/or disabled children is especially valuable. In those cases the children collectively generally receive 70%-80% of the deceased parent's average gross annual pay.

I am surprised by what a large percentage of the public is ignorant of the "secondary" benefits that their FICA dollars fund.

fantasma
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Post by fantasma » Wed Jan 05, 2011 8:36 pm

I thought I was "special" , I am 31 and I do not factor in ss at all. If I do receive it, it would serve as money I leave to my family/friends/children (if I have any children).

taurabora
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Post by taurabora » Wed Jan 05, 2011 8:54 pm

I'm 26. I don't consider SS or the pension that my company offers when planning for retirement (who's going to work for one company for 30+ years?).

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dm200
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Post by dm200 » Wed Jan 05, 2011 9:18 pm

Opponent Process wrote:it would be impossible for social security to be significantly reduced as we're already too dependent on it. when I was in my 20s I was very idealistic, too, and didn't think it would be around. it even gave me immense pleasure to hold such a brash opinion. when you get older you tend to moderate your opinions and see the world more clearly, and you understand why we have social security in the first place, and what the repercussions of not having it would be.
I guess it depends on the definition of "significantly". sscritic can, I am sure, give us a comparison of what a "typical" wage earner, who paid in to Social Security beginning at, say, age 22 in 1968 would have received at age 65 under the plan, rates, etc. under all the rates, rules, etc. vs what that person, now reaching "retirement" age will actually get vs. what a 22 year old in 2011 will get at age 65 (or whatever age is then retirement). Under some definitions, those changes are "significant". I am not objecting to sych changes, necessarily, but I call the changes "significant".

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Post by dwimagine » Wed Jan 05, 2011 9:46 pm

I assume I am paying my own way. However, I do include SS in one of my 'what if' scenarios. I don't think it will go away, but I would rather have too much in the bank than too little. (Age 33)

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Post by tetramethyldeath » Wed Jan 05, 2011 9:48 pm

I'm 26, I did not take SS into consideration at all. I'm very pessimistic about the benefit I'll receive when I reach retirement age.

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Post by supersharpie » Wed Jan 05, 2011 10:10 pm

Despite my post in this thread I will say I am quite optimistic that anyone in the work force today will be eligible for a decent SS benefit at retirement. While it may seem like a lot of time right now 30 to 35 years is not enough time to pass for any significant changes to be made to the SS system that will effect current voters.

The SS "fix" is very simple:

-raise the full retirement age to 70 for those born after 1990

-double the SS cap

-tax all annual income about $5,000,000 at the regular FICA rates

Those three changes in combination would secure the future of the trust fund by 100+ years.

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Post by The Wizard » Wed Jan 05, 2011 10:35 pm

EmergDoc wrote:I include it. If it disappears, then you stop including it. But I have to plan to retire without it, since I play to retire 10-20 years before I start taking it.
A lot of MDs that I've known work in some professional capacity until they are age 70 or more.
Don't you think it would be a good idea for you to think along similar lines?

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Post by Jacobkg » Thu Jan 06, 2011 1:51 am

My plans include neither taxes nor social security. Hopefully they will approximately cancel eachother out?

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Post by Ron » Thu Jan 06, 2011 9:45 am

taurabora wrote:...(who's going to work for one company for 30+ years?).
Just to answer your question, there are those that do (I was one of them; not 30 years, but 28+).

I started at my former company at the age of 31, and retired at age 59, some 28+ years at the same firm.

In my case, the company was under different ownership four different times during my tenure there, by two U.S. firms, and two foreign owners (two different Euro countries).

I was given the opportunity (and I took it) to not stay in one position (within IT) but to take advantage of different jobs and organizational responsibility (some global in scope) while I was there. I changed jobs seven times over that 28+ year span, each much different in scope and responsibility.

I could have stayed the full 30, but did not need to. By the time I reached the age of 59+, I was lucky to "hit my number" (actually, well exceed it) and made the decision to retire, on my schedule and my terms.

Sometimes, you don't have to change jobs. If you're lucky, as I was, the company will change over time and give you new challenges along the way.

- Ron

caluchko
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Post by caluchko » Thu Jan 06, 2011 10:09 am

3CT_Paddler wrote:
caluchko wrote:But I plan to fight like hell (voting, political activism) to preserve social security for my generation and future generations.
Maybe you should fight like hell to make sure those programs are solvent in 30 years... that way you will still receive Social Security.
Yes, that's exactly what I mean!

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Post by Beantown85 » Thu Jan 06, 2011 10:10 am

Rodc wrote:We had a rather contentious thread on this recently. Can't find it by searching, might have been deleted. But you might take a minute to see if you can find it.
If it is the one I am thinking of, it must have been deleted, I can't find it.

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Post by wacodiver » Thu Jan 06, 2011 11:14 am

supersharpie wrote:Despite my post in this thread I will say I am quite optimistic that anyone in the work force today will be eligible for a decent SS benefit at retirement. While it may seem like a lot of time right now 30 to 35 years is not enough time to pass for any significant changes to be made to the SS system that will effect current voters.

The SS "fix" is very simple:

-raise the full retirement age to 70 for those born after 1990

-double the SS cap

-tax all annual income about $5,000,000 at the regular FICA rates

Those three changes in combination would secure the future of the trust fund by 100+ years.
I would agree with the revenue raising sides of the equation (raising the SS cap) however raising the retirement age would be hugely unfair to blue collar workers. Consider.

Typical working class worker: Starts working in a physically demanding manual labor type of job upon high school graduation at age 18 and works 45 straight years until age 63. By that time his body is probably spent and he definitely deserves a rest. Total years of employment and paying into SS = 45. He would have 52 years of employment if required to work until 70 if his body would even hold out that long.

Typical upper middle class worker: Goes to college after high school and takes a year off to travel. Graduates at age 23, does some internships or Peace Corps or something for a year or two. Starts grad school for MBA, Law School, Med School, or some other academic field at age 26. Lands first real career-track job at age 30. Works in a variety of comfortable white collar settings with frequent vacations and good benefits until age 70. Total years of employment and paying into SS = 40.

The typical blue collar worker has already worked for 12 straight years before many upper middle class kids get around to landing their first real career-track job after all the years of higher education, messing around, finding ones self, travel, etc. Is it really fair to expect them both to retire at the same time? I think not.

A better system would be one in which full retirement benefits are available upon either (A) reaching a minimum retirement age, or (B) x-years of full employment, whichever comes first.

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Post by SamGamgee » Thu Jan 06, 2011 11:19 am

I'll be relieved if they let me keep my 401k.

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rwcox123
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Post by rwcox123 » Thu Jan 06, 2011 11:46 am

The reality is that the kind of people who read and post here are savers/investors. So they'll save. As they get older, they'll be able to factor in how much they've accumulated and what the SS laws look like then, and make a plan that comes into focus.

To say that you're not planning on SS at all is silly bravado. When you're 30, you can't have detailed plans for the next 60 years (OK, you can, but they will be so wrong that if you believe them then you are deranged). Save and invest. When you're 50 or so, you can figure out what the prospects are for retirement income under various scenarios -- by then, you'll have a handle on how much you'll ever accumulate and you'll have a better idea about how SS+Medicare will be doing.

At least, that's how I see it, and how it played out for me (I'm 56). I don't anticipate major changes coming to MY SS, so I can more-or-less count on it in my plans (i.e., delaying to 70 like Ron while drawing down other assets).
Beyond all hope, set free to light.

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monkey_business
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Post by monkey_business » Thu Jan 06, 2011 11:51 am

I don't count it. In my opinion, if you are far from retirement (20+ years), it's best to prepare for the worst case scenario. If your retirement plan excludes SS, and SS will be the same as it is today when you retire, then you will simply have more money in retirement, or will be able to retire earlier altogether. If you include SS, and the state of SS changes before you retire, then your retirement might be adversely affected.

Also, if the US will exist, so will SS. It might be smaller, at a later age, with a bunch of caveats attached, but it will be there to some extent. No SS, sadly, means a good chunk of the elderly starving.

KyleAAA
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Post by KyleAAA » Thu Jan 06, 2011 11:52 am

wacodiver wrote:
supersharpie wrote:Despite my post in this thread I will say I am quite optimistic that anyone in the work force today will be eligible for a decent SS benefit at retirement. While it may seem like a lot of time right now 30 to 35 years is not enough time to pass for any significant changes to be made to the SS system that will effect current voters.

The SS "fix" is very simple:

-raise the full retirement age to 70 for those born after 1990

-double the SS cap

-tax all annual income about $5,000,000 at the regular FICA rates

Those three changes in combination would secure the future of the trust fund by 100+ years.
I would agree with the revenue raising sides of the equation (raising the SS cap) however raising the retirement age would be hugely unfair to blue collar workers. Consider.

Typical working class worker: Starts working in a physically demanding manual labor type of job upon high school graduation at age 18 and works 45 straight years until age 63. By that time his body is probably spent and he definitely deserves a rest. Total years of employment and paying into SS = 45. He would have 52 years of employment if required to work until 70 if his body would even hold out that long.

Typical upper middle class worker: Goes to college after high school and takes a year off to travel. Graduates at age 23, does some internships or Peace Corps or something for a year or two. Starts grad school for MBA, Law School, Med School, or some other academic field at age 26. Lands first real career-track job at age 30. Works in a variety of comfortable white collar settings with frequent vacations and good benefits until age 70. Total years of employment and paying into SS = 40.

The typical blue collar worker has already worked for 12 straight years before many upper middle class kids get around to landing their first real career-track job after all the years of higher education, messing around, finding ones self, travel, etc. Is it really fair to expect them both to retire at the same time? I think not.

A better system would be one in which full retirement benefits are available upon either (A) reaching a minimum retirement age, or (B) x-years of full employment, whichever comes first.
The blue collar worker's body would almost certainly be in better shape at 70 than the white collar worker's body. In fact, plenty of the white collar workers will die of heart-related diseases before 70. Exercise is generally a net gain even if it does take a toll. Sitting at a desk for 8 hours per day is just horribly bad for you and there's no way around that.

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