The Hidden Social Security Math Nobody Shows Retirees

[AR67GTX]

I had my wife start taking SS as soon as she was eligible, thinking at the time that the system was quickly going broke. But by the time I started contemplating retirement I was less concerned about its immediate future. So I decided to wait to start mine until I quit working. As an old Civil Service Fed retiree I wasn’t going to get a full draw anyway. by the time I gave up working at 69 I decided I might as well wait a bit longer until it maxed out at 70. Part of this decision to delay mine was due to my Grandfathers both living to 98 and my Dad is knocking on the door of 101. My Mothers side isn’t quite as good but all you can do is roll the dice. It’s a complex decision to make and a lot of unknowns in the equation.

 

[BSB67]

Bullet 3 high earner. Not sure what $$$ considered high,…..

It’s not “high earner”. It’s “higher earner”. It’s a relative statement.

 

[Hemirunner]

Are any of you investing in your spiritual future? Between Klaus Schwab wanting to take all you own and Bill Gates trying to depopulate the world, your chances of a long, peaceful life of retirement are slim. Just food for thought. Carry on!

 

[Unkle Krusty]

We all have minute particles of radiation, plastics and lots of other stuff in our systems. Health is likely the biggest issue for most folks. I have a ticking sound in the mighty 318 that needs attention. The average life span for a guy is 78 to 80, depending on location. I am there. I also get to sleep with a cute blonde, and ride an SV1000. Can I quote Alfred E Newman?

 

[j-c-c-62]

Surprised in 5? pages there is no mention of the expected 25%? SS reduced benefits in 2033? as the contribution stream falls way short.
Of course, many here at time will only be a memory.
I personally starting collecting 2 years after FRA, right about when COVID shut my industry completely down.
My investment portfolio divorced me.

 

[j-c-c-62]

I know that is the common thinking.
But no, it was never "My money".
It was only a campaign promise, IE worth little, and your contributions paid your parents benefits, your kids or somebody's kids are paying yours, and if you read closely the personal annual benefit information sheet mailed out, it clearly states benefits are at the whim of the current congress, what others have "promised" means little.
Or a classic Ponzi scheme that it has been since day one.

 

[YY1]

Surprised in 5? pages there is no mention of the expected 25%? SS reduced benefits in 2033? as the contribution stream falls way short.
Of course, many here at time will only be a memory.
I personally starting collecting 2 years after FRA, right about when COVID shut my industry completely down.
My investment portfolio divorced me.

That's even more incentive to take it as early as you can get it, if you can get it before that happens.

 

[Hemirunner]

That's even more incentive to take it as early as you can get it, if you can get it before that happens.

I’m 57 and I’m expecting to have donated all these years for nothing… I would have been better off not participating at all.

 

[YY1]

I'll be 62 in 2030.
If those cuts do go into effect, that will throw off all those break even calculators.
I just did a cursory one without actual benefit numbers, but...
Almost every scenario involving taking it early by any number of years versus taking it at 67 (my FRA) shows a 15 year span, give or take a few months, before I break even.
It also shows, should you live to be 99 and six months, that you'd get about 30% more in total at that age by taking it at FRA.

 

[68BabyBlue]

I'll be 62 in 2030.
If those cuts do go into effect, that will throw off all those break even calculators.
I just did a cursory one without actual benefit numbers, but...
Almost every scenario involving taking it early by any number of years versus taking it at 67 (my FRA) shows a 15 year span, give or take a few months, before I break even.
It also shows, should you live to be 99 and six months, that you'd get about 30% more in total at that age by taking it at FRA.

In post #49, I cited the bailout of the Central States Pension Plan, administered by the Teamsters. As an executive, I spent a decade pitching the precarious finances of that pension as a reason not unionize, and instead invest in the company 40l(k), rather than paying union dues. I turned out to be wrong. Although the pension promised benefits it wasn't financially able to fund, it ended up paying them with taxpayer money. Social Security is similar, on a far larger scale.

If Social Security were to reduce benefits for existing retirees, the backlash would be a tsunami compared to any ruckus raised by beneficiaries of a private sector pension. Based on historical precedents, it's likely the can would be kicked further down the road, to the disadvantage of younger folks who don't expect to get it anyway. The loophole I took advantage of to draw double benefits was phased out by age, so as not to affect existing retirees.

The lawyers I know who specialize in this area are all in agreement that younger people will take the hit.

 

[YY1]

I already took the two hits-

FRA 67 (the max hit) vs 65...

and

...the 30% (max) reduction in benefits for taking early at 62.

That's been the story of my life- watching those who go before me reap the rewards, while mine are reduced or eliminated.

My FL state pension took a hit in 2013, when they eliminated the COLA.
Those that retired that year or earlier got 3% per year for life.
Those hired then or later got nothing.
Those in the system but not yet retired (me) got a formulaic reduction.
I'm at 1.6%, but I'll take it* (see below).
My 30 years is already in but-
*I got a pretty good raise this year, and the math says it's better for me to work out the fiscal year and take the year as one of my top five, even if I lose .1% of my COLA.

The only win I ever got was being grandfathered in to OH's raising the drinking age.
They bumped it twice, from 18 to 19, and then to 21.
There were a LOT of new voting age kids really vocally pissed.
Those within six months of turning 19, got grandfathered in with that group.
I bet it was REAL fun carding people and doing the math for those few years.

 

[j-c-c-62]

I'll be 62 in 2030.
If those cuts do go into effect, that will throw off all those break even calculators.
I just did a cursory one without actual benefit numbers, but...
Almost every scenario involving taking it early by any number of years versus taking it at 67 (my FRA) shows a 15 year span, give or take a few months, before I break even.
It also shows, should you live to be 99 and six months, that you'd get about 30% more in total at that age by taking it at FRA.

The odds are however your FRA will be increased a bit I suspect as one of the changes to keep SS fully funded.
And as others have touched on, very few at 99 can "enjoy" their wealth vs their "younger" years.
I hope to live life much like endurance racers do, they only have to finish the race with the steering wheel left to be a success, in that I hope to give everything away, run every tank to empty and spend every dollar till the last day. My legacy I hope will not be found on a balance sheet.

 

[YY1]

That would be the "me" curse.

Wait my whole life for something and have it ripped away right before I qualify.

 

[j-c-c-62]

If Social Security were to reduce benefits for existing retirees, the backlash would be a tsunami compared to any ruckus raised by beneficiaries of a private sector pension.

However, that appears is the underlying ultimate goal, and if the current "free press" is further kneecapped by 2033, it will only be like a tree falling in the forest, nobody will hear it, as the "tsunami" will be intentionally under reported, and nothing will change.
There are recent examples I am unallowed here to mention to back up this observation.

 

[BSB67]

The banter of SS demise is not new. Nobody is going to mess with SS in the short term. No politician will support pissing off the nations largest voting block.

When and if they do pare it back it won’t be some simple % reduction. It'll be 100 pages regulations with of some sort of means-testing to see who gets what. Like everything government, there will be both winners, and losers.

Ive yet to see a calculation that even comes close to addressing the know variables regarding when to claim SS let alone one that allows adjusting the variables.

If someone has one, please share it.

 

[YY1]

The banter of SS demise is not new. Nobody is going to mess with SS in the short term. No politician will support pissing off the nations largest voting block.

When and if they do pare it back it won’t be some simple % reduction. It'll be 100 pages regulations with of some sort of means-testing to see who gets what. Like everything government, there will be both winners, and losers.

Ive yet to see a calculation that even comes close to addressing the know variables regarding when to claim SS let alone one that allows adjusting the variables.

If someone has one, please share it.

What are you looking for.

I found on the first page of hits from my search for "social security break even calculator" that they were all vastly different.

Some were very simple- put in three numbers and get one number.

The one I used let me put in two sets of ages in years and months, and output a graph as well as an age in years and months.

 

[Nxcoupe]

I was going to start collecting at 63, but I foolishly let my accountant talk me out of it. Looking looking back, I shouldn't have listened to her. I'll be 66 & 10 in January, so I might just wait the extra 3 months. My wife, who is 3 years younger than me is going to start collecting at the same time. My investment guy, who I saw earlier this week is advising all his clients to start collecting SS no later than their full retirement age.

Ok, I have to comment on this thread, with the completely opposite point of view. Sorry Mark, didn't mean to single you out.
I understand I have lived my life much differently than the majority of people on this board and have very, very few regrets. I was on one of my road trips with my close friend Bill, he is a doctor, and he has 2 military retirements, as well as 401k and property investments, and we were discussing SS retirement and when to collect. He is younger than me and he was adament that I would lose money if I waited to collect my SS until 70. Well, here is my not so unique circumstance, every year my SS goes up about 400 to 600 dollars, depending on my raises and salary. Why? Because I had little shown income when running a business, for obvious reasons, and I worked for the state for about 17 years at different positions and took the payout when I left each job, like a moron. But anyway, when I started my current position, 9 years ago, my monthly amount was barely 1k. If I wait til 70 and my pay does not change(which hopefully it keeps increasing), I will get 3k a month, much more manageable with my shop income source supplementing it. I had to finally share figures with him to drop the topic. He then saw my reasoning, and couple that with the fact I want to continue to work til I'm 75, all the while collecting SS and not being penalized for working, he saw the light. Not everyone worked a good paying job and stuck everything they could into retirement their entire lives. I am NOT complaining, I wouldn't trade my life with pretty much anyone's. But this is my reality and I own it.
/off soapbox.

 

[MarPar]

 

[68BabyBlue]

Ok, I have to comment on this thread, with the completely opposite point of view. Sorry Mark, didn't mean to single you out.
I understand I have lived my life much differently than the majority of people on this board and have very, very few regrets. I was on one of my road trips with my close friend Bill, he is a doctor, and he has 2 military retirements, as well as 401k and property investments, and we were discussing SS retirement and when to collect. He is younger than me and he was adament that I would lose money if I waited to collect my SD until 70. Well, here is my not so unique circumstance,every year my SS goes up about 400 to 600 dollars, depending on my raises and salary. Why? Because I had little shown income when running a business, for obvious reasons, and I worked for the state for about 17 years at different positions and took the payout when I left each job, like a moron. But anyway, when I started my current position, 9 years ago, my monthly amount was barely 1k. If I wait til 70 and my pay does not change(which hopefully it keeps increasing), I will get 3k a month, much more manageable with my shop income source supplementing it. I had to finally share figures with him to drop the topic. He then saw my reasoning, and couple that with the fact I want to continue to work til I'm 75, all the while collecting SS and not being penalized for working, he saw tge lught. Not everyone worked a good paying job and stuck everything they could into retirement their entire lives. I am NOT complaining, I wouldn't trade my life with pretty much anyone's. But this is my reality and I own it.
/off soapbox.

This post is consistent with the points from the legal seminars I posted earlier. The "rich guy" lawyer said that a really well off person, like your doctor friend, might as well take it early, and get more cash if he lived a normal life expectancy. The folks on the low end of the totem pole needed the money as soon as possible for living expenses. Guys like us, in the upper middle, are at risk of outliving their money if not careful.

Neither my wife nor I have defined benefit pensions. She took early retirement at 64 with a buyout. She does have an excellent hybrid retirement account, with an option for conversion to a lifetime income stream. Much like Social Security, the payout goes up at 8% per year that we don't draw on it. This is like a life insurance policy in reverse, the holder is betting we are going to die, rather than live, and the odds tilt that way with each passing year. If we pull the trigger, we have a secure lifetime cash flow, but will leave no estate. Our relatively high Social Security benefits enable us to leave that stash alone at this point. The money I earned in my first 25 years really juiced the 35 year measuring period for Social Security.

My career was bifurcated. I made really good money for the first 25 years, and invested it well. But that ended abruptly, and I worked blue collar for the last 20, self employed. I still made enough income to get decent Social Security credits, but the double fica payments limited my investing at that point. My investment returns were flat during the decade after I lost the corporate job, adding insult to injury. I needed the income stream of the 70 year Social Security benefit to carry the load for the upscale old folks home my wife and I signed up for. When I retired at 69, I felt I was still short of where I would feel financially comfortable, but I was physically done. My lawyer assured me I'd be okay. The options I took were tailor made for my situation, and wouldn't fit for most people. I offer the information here just to illustrate that there are no simple answers, and good legal advice from a specialist is better than relying on a calculator.

 

[j-c-c-62]

The banter of SS demise is not new. Nobody is going to mess with SS in the short term. No politician will support pissing off the nations largest voting block.
If someone has one, please share it.

And that is in some camps is intentional and the point, death by neglect. Because it will effectively collapse and cause major outrage by the majority if no one "messes with it", and everyone can say "don't blame me, I didn't mess with it".

The solution is not with the majority, it's with the top 10%?, so follow the money applies to find the motivations here.