The Hidden Social Security Math Nobody Shows Retirees

[HawkRod]

no eating out for lunch 5 days a week

When my wife and I bought our first house we knew we were really tight with money. So we logged every dime we spent in cash. Making the change to bring my lunch vs. buying it made a big difference. Those "small" expenses can add up fast.

 

[YY1]

When my wife and I bought our first house we knew we were really tight with money. So we logged every dime we spent in cash. Making the change to bring my lunch vs. buying it made a big difference. Those "small" expenses can add up fast.

Back in the late 90's and early 00's I used to track every dollar.
I'd allow myself $100 for the week and another $100 for the weekend to include gas, lunch, and anything else I could afford with what was left over.
I had an excell spreadsheet that tracked everything and predicted what I'd have in savings every month/quarter/year.

Three times I've "stress tested" what it would be like if my income were cut by a certain amount.
I'd set myself a budget based on that, and put the rest into a separate savings account.
I'm currently doing that to simulate what my pension would be minus insurance, to see if I can make it those 4 years or so until I can collect SS.
So far, I'm doing fine, although I did just put an expensive *** metal roof on the house, from that stress test account.
It's a 30-40 year roof, so it could be the last roof I put on.

 

[Richard Cranium]

When my wife and I bought our first house we knew we were really tight with money. So we logged every dime we spent in cash. Making the change to bring my lunch vs. buying it made a big difference. Those "small" expenses can add up fast.

Lot of truth to that. Before work, I'd eat breakfast at home & I'd always bring a lunch. In the rare occasions that I'd eat lunch out, it was fairly cheap. Meanwhile, two of my employees would always stop at Dunkin Donuts and get a breakfast sandwich and a large slurpy every day on their way in to work. At the end of the week that 12-15 bucks per day really adds up to a good amount each month. As much as I tried to explain it to them, they never listened to me.

 

[68BabyBlue]

When my wife and I bought our first house we knew we were really tight with money. So we logged every dime we spent in cash. Making the change to bring my lunch vs. buying it made a big difference. Those "small" expenses can add up fast.

The bagged lunch is a huge tool many young people miss out on. When I got my first job out of college, I made $8500 per year, and was trying to save $1300 for truck driver school. Lunch at the restaurants in the area of my office ran about $2.50, and my fellow writers ate out every day, lower level staffers such copy editors brown bagged it. I allowed myself one lunch out per week. Savings came to over 5% of my gross pay. I made up the rest of the $1300 by not spending money on weekend activities, other than the gym I worked out in. Price back then was $50 for three months. I also splurged on a six pack of Pabst Blue Ribbon beer once a month, for $1.65.

Within three years after starting my trucking career, I was making over triple what I had in my writing job. Although lunch on the road was now easily affordable, I managed at least one extra load a week by not wasting time in the truck stops like most of my fellow drivers. I ate canned sardines or tuna while I was unloading. Many folks thought I had made profits from a meth lab after I sold my first truck, and used my savings to attend law school.

In later years, my wife finally convinced me to stop for hot meals on the road. Old habits die hard, and after the advent of electronic logs, I often ate my canned fish when I had a bad day, and the clock ran short.

 

[Under Pressure]

The system was never designed to carry you to the finish line in a Cadillac. It's a supplement, not meant as a stand alone source of income. I can say this because I came from s**tting in an outhouse to where I'm at today, by myself. I've talked about the round table I shared as a hobby with friends, my take on making money, but the real problem is saving and when to start. Saving money is a pain in the *** for one big reason, you don't reap the rewards for all the sacrifice till the end. Most look at that money and say, what a waste, I could use it now. I have a stand alone investment that I used as an example for the kids and their friends. I was 23 when I put our tax return and a few bucks into an investment and walked away from it, 2,500 dollars. That money today, with 10 dollar added to it every year, is worth around 70 thousand dollars. If I had a 100 dollars, I put away 10 bucks of it. We had some hards times at first and just lived accordly, yes I was doing without at first and my friends always laughed at me for not doing this or that. It's easy to say, well, you only live once, screw it, we'll worry about it tomorrow. I just worked harder, longer and found other ways to make more. Still, the one constant was putting away 10 percent. It became a game, yes a hobby. The earlier, the better, money doubles every 5 to 10 years. A steady income stream or a pile of money, makes no difference if you can't see past today and manage it for tomorrow. How much I have or don't have is not the point to my story, it's the trip to the finish line and how you handle it that measures success. I've had a lot of stuff in my life, so I've lived a very good life. I still live a reasonably simple life and can buy whatever I want, whenever I want. The problem is life has no reverse like a car, do overs don't happen in our world. You get one shot to get it right. Being poor wasn't a deterrent, is was an incentive or challenge. My father always told me to save your pennies and the dollars will take care of themselves. He also told me the definition of wealthy is being able to live off the money your money makes. Not a problem.

So many great points and and advice given here, just want to add a couple that served me well over the years,
1) For the young here, pump as much into a good 401k or qualifying long term investment that you can, later in life your success will be seen when your investments make more in a month than your employer pays you.
2) Don’t take on stupid debt, live below your means at times.
3) keep your eyes wide open, don’t focus on nickels when dollar bills are flying over your head.

For those about to retire and married don’t forget to do the math on spousal benefit, many times up to 50% of your SS is more than your spouses on their own.

 

[YY1]

The issue I ran into for lunch was - it's damn hard to eat for less than $5.
(remember, this was in 2000-ish)

Making a sandwich can easily be close to that, or more, once you factor the bread, meat, any condiments, and heaven forbid, chips and a drink.
Add it up and divide by the number of sandwiches you get sometime.
Plus you potentially have spoilage.

My goto was either-
at Taco Bell- one bean burrito and one crunchy taco plus a small drink that has unlimited refills.
or Subway- a six inch sandwich only- usually the spicy Italian, which has the same amount of meat as most sandwiches costing a dollar more, and a small drink.
I even factored in saving 75 cents by not getting the combo with chips.

BTW- those are about $6.50 today, so not terribly inflated.

 

[YY1]

What kind of sucked was- my job was "county-wide", meaning I worked at all the office locations throughout the county, basically on my own schedule.
I was always between sites at lunch time, and could eat basically anywhere.
It sucked driving past places like Chili's, knowing I'd spend $15-$25 dollars if I ate there.
One place I did indulge was Kenny Roger's Roaster, if I was in that neighborhood.
I also had a favorite BBQ place that had a chopped brisket plate and drink with fries or beans for $8.

Dunkin has some stuff that's cost effective, but you gotta be careful- you can easily spend 8 bucks on a ham and cheese on whitebread.
I get the bacon, egg and cheese bagel (sometimes with extra bacon) That's about $8 today.

 

[68BabyBlue]

What kind of sucked was- my job was "county-wide", meaning I worked at all the office locations throughout the county, basically on my own schedule.
I was always between sites at lunch time, and could eat basically anywhere.
It sucked driving past places like Chili's, knowing I'd spend $15-$25 dollars if I ate there.
One place I did indulge was Kenny Roger's Roaster, if I was in that neighborhood.
I also had a favorite BBQ place that had a chopped brisket plate and drink with fries or beans for $8.

Dunkin has some stuff that's cost effective, but you gotta be careful- you can easily spend 8 bucks on a ham and cheese on whitebread.
I get the bacon, egg and cheese bagel (sometimes with extra bacon) That's about $8 today.

My last few years on the truck I was in a similar situation, limited by availability of truck parking. I had one option on my eastern turn, two on the western, choice determined by whether I returned on the south route. I had a similar deal with a BBQ place with terrific rib plate for under $10, but time often ran out and left me no option but to drive past. The other two options had excellent food, but were $20 out the door with tip. It still made me cringe paying that tab, knowing I could eat the canned fish and water from my jug for $3.

 

[Dennis H]

29 years of free transportation (Train) packed lunch and coffee, clothing allowance including shoes. That really kept the overhead down. Wish I had put it ALL in Roth.

 

[bandit67]

A few tips that served me well for you guys that are somewhat approaching your possible retirement date.
1 Try to have ALL your borrowed debts paid off before you retire. That includes mortgage, new shop, and or retirement truck purchase.
2 Have some idea of where to move your investments. I moved out of higher risk, higher return vehicles to safer, lower risk utility stocks that pay out dividends. Reinvest your dividends if not needed.
3 Pay yourself just as you would pay any other monthly bill. I invested 1/3 of my take home pay, I paid 1/3 monthly in taxes and learned to live on 1/3 of my take-home.
While many of my fellow co workers that retired went out and bought themselves new trucks and boats, I did not. Being mechanically inclined, I drove old clunkers to work during my working years and was able to pay cash for a brand new tractor at retirement time. While I spend my days now restoring cars, trucks, motorcycles, I LOVE not having to work on old, worn out tractors as I did in the past, prepare to splurge when needed.....

 

[Unkle Krusty]

Bob back in post 41 said it. Put $$ aside and it will hurt. Do that until it stops hurting, and then raise the amount.

The US life expectancy dropped during covid. Actual numbers, not hyperbol.

A big issue for all of us, is the increasing debt. Many countries have failed, with debt as a leading cause. Spain and England are a couple. These days some countries are blasting past 100% debt to GDP as if it did not matter. The US cannot afford to give tax breaks to anyone. Tax increases are more likely.

Personal debt should be long gone by the time we retire. How long we will live is something we all must consider. The life insurance industry had a lot of good information on this. Used to be a site “ Live to 100 “ 70 to 80 can be very productive years. I worked on my 727 gearbox when I was 77 I think. With help from another 70 plus year old.

 

[62Dodge_]

Howdy I hope that had a wonderful weekend. All had awesome money saving ideas. Here was my situation just starting my career making $850.00 a month with 3 kids living in California. We went on a sticked budget after running out of pay check. I brought my lunch, made Ice tea at home, drove old cars, and a biggie my wife and I worked opposite shifts no baby sitters. Then after 3 years we left Calif. for Idaho. More money came in still opposite shifts until our youngest was a teenager. I still brought my lunch and homemade Ice tea also I still met the gang for lunch I just didn't eat, started to put money into 401's and pension plans. At 50 me 55 my sweetie we started buying low mileage newer cars. Our drivers are now 2002 300M, 2007 Aspen, 1995 Diesel Ram, 2009 Charger, 2015 Challenger, plus our projects, all paid for and when one dies it goes. Also we did plan trips at least one a year, plus many day drives. As my motto is Plan for Tomorrow but live in the Present.

 

[68 Sport Satellite]

For those about to retire and married don’t forget to do the math on spousal benefit, many times up to 50% of your SS is more than your spouses on their own.

Thanks for pointing this out. Can you provide more details? What are the different spousal benefit scenarios?

 

[BSB67]

For those about to retire and married don’t forget to do the math on spousal benefit, many times up to 50% of your SS is more than your spouses on their own.

With a few exceptions, your spouse gets 100% of your SS if you go first. This is one of the main considerations for waiting until 70 for SS.

My wife is 4 years younger than me. Her family history suggests she could easily live to 95. All of my long term financial retirement decisions/plans are for her going the distance, and not worrying about money.

 

[68BabyBlue]

Thanks for pointing this out. Can you provide more details? What are the different spousal benefit scenarios?

Lower earning spouse can choose between a benefit based on his or her own earnings, or 50% of higher earner, whichever is more. If higher earner predeceases lower earner, the lower earning spouse can then elect a survivor benefit, switching to the amount which had been paid to higher earner prior to death. Depending on ages of spouses and earnings histories, these elections can get complicated. And as stated earlier, these choices would be incredibly simpler if you know how long you are going to live.

I had a close friend who died of cancer in 2012. He joked at the end that the one good thing about it was it made his financial planning incredibly simple. His widow had significant financial assets, and elected to take her survivor benefit at age 60, the earliest option available. Her family tree was not prone to longevity.

 

[Under Pressure]

Thanks for pointing this out. Can you provide more details? What are the different spousal benefit scenarios?

Benefit amount

• • Maximum benefit:
    The most you can receive is 50% of your spouse's or ex-spouse's benefit at their full retirement age.
    
  • Reduced benefit:
    If you start collecting before your full retirement age, your benefit will be permanently reduced. For example, if your full retirement age is 66, you could receive approximately 35% of their benefit at age 62.
    
  • Higher earner:
    You will only receive the spousal benefit if it is higher than your own retirement benefit. Otherwise, Social Security will pay your own, larger benefit.
    
  • No reduction to primary wage earner's benefit:
    Claiming spousal benefits does not reduce the amount your spouse or ex-spouse receives.
    

Other considerations

• • Deemed filing:
    Under current rules, if you apply for spousal benefits at age 62, you are often automatically considered to have applied for your own retirement benefits as well, meaning you may not be able to wait and claim a higher amount later. The Social Security Administration (SSA) website has a calculator to help you determine the effect of early retirement on your benefits.

 

[Dennis H]

Bullet 3 high earner. Not sure what $$$ considered high, but I turned every stone and Linda’s SS is irrelevant. Lower earner and 7 years older. The only number clear to me is that you gain 8% every year you wait.

 

[68 Sport Satellite]

thanks for clarifying these details. It helps my understanding a lot. I know this is all shown in the "code" and rules, but sometimes it's easier to understand in pieces, as presented by someone who's already gone through it.

 

[YY1]

The "problem" is that if you wait until 65 (vs 62), you never get those first three years payments.
That's a LOT more than 8+8+8 or 24%
It's 300%!
That's why there are those break even graphs.

 

[Under Pressure]

thanks for clarifying these details. It helps my understanding a lot. I know this is all shown in the "code" and rules, but sometimes it's easier to understand in pieces, as presented by someone who's already gone through it.

Heres my real life experience, I am 68 and will retire next month.
I started taking my SS at my FRA of 66 1/2 (18 months ago) with all the credits you can have, and I continued to work (no penalty to your SS payment if at FRA when you file)
My wife opted at 65 to file for SS back when I did (18 months ago) SS agent evaluated for us and determined that her taking spousal benefit (roughly 40some % of mine) was larger than hers would have been and gave her the larger amount.
When I go, she will only then get my current amount.
Hope that helps