Social Security Benefits

[arcticbubba]

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I was curious about Social Security Benefitsunder FERS. One of the components of FERS is Social Security Benefits. Since we all know that S.S is doomed for destruction in the years to come and there is little hope for S.S. for the younger generation, I was curious how this affects FERS. As I am in the younger generationI have started to plan for retirement assuming that S.S willnot be abenefit for me.If S.S. crashes, are FERS employees still entitled to a benefit upon retirement?Since I am in the generation of little hope, it sounds like President Bush's social security planis a good idea for me. At least I will have the opportunity to have some money payable to me under S.S. with the private investment accounts. Please shed some light on the subject regarding my thinking. Thanks for yourinput.Bubba

 

[Dave M]

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SS will be there for you, in one form or another.Pay close attention to the FERS benefit that covers the gap between your retirement date, and the date on which you become eligible for benefits under SS:If you retire before you are eligible for SS, they pay you in lieu of that.

But heck, since you are young, just keep doing what you are doing here -- learning how to maximize your TSP. It starts with maximizing your contributions.

Dave

 

[arcticbubba]

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I am not convinced that SS will be here for me when I retire. Especially the current form of SS. I am all about SS reform.

I guess I just would like to know if FERS is protected if SS doesn't pan out in the next 30 years. My current investment strategy will prove that my retirement fund will support me when I retire and wont need to rely on SS. A SS paycheck would just be a bonus at the current outlook.

Does anybody know if your SS benefitsare protected thru FERS??????

 

[Wheels]

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They are not. Social Security is not a benefit under FERS. The Social Security Supplement is abenefit of FERS retirement. I'm not sure which you are asking about but I'll give you my opinion. SS is not protected for FERS employees. IF SS were to go away it would go away for everybody including FERS retirees. My opinion is that the FERS Social Security Supplement would also go away and would not be replaced with anything. However I agree with Dave M that SS will be there in some reduced form and therefore the SS Supplement will also be there for you, also in reduced form. In fact the Supplement would automatically be reduced since the formula is based in part on the formula for figuring your SS. One last note. Be wary of government literature that says the Supplement will "approximate" your SS amount; it does not.

Dave

 

[azanon]

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As I am in the younger generationI have started to plan for retirement assuming that S.S willnot be abenefit for me.

First, i agree with what Wheels said.

Althought I dont get wrapped up into doomsday, the sky is falling, with respect to SS, I do think (like many) it is wise to plan and save for a retirement that doesn't necessarily include SS as a necessary component. I suggest instead of worrying about things you can't control (i.e. SS), just maximize the things that you can. As a federal FERS employee, you'll also have a pension coming if you stay long enough to qualify. Additionally, the TSP will be unaffected by whatever happens to SS.

Save as much as you can, maximize your TSP/IRA options, and then you don't have to necessarily worry whether you'll have SS or not. ButI agree,I think it'll definitely be there,just possibly in a reduced form. However, I will admit if i were older, i'd definitely consider SS in the calculations, and if i could afford it based on and including Social Security, I'd retire.

 

[Wheels]

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Guess he didn't like our answers.

Dave

 

[arcticbubba]

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Had no issues with your responses. All I asked for was some light on the subject.

Here is the link that made me raise some questions. http://www.opm.gov/fers_election/ri_90/f_toc.htm

Just trying to learn a thing or two.

Thanks for your responses.

 

[Wheels]

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I understand. Those brochures can be misleading at times. It alsmost sounds as though SS is somehow different for the FERS employee compared to every other working stiff in the country. They are trying to show the difference between FERS and CSRS.

Dave

 

[pyriel]

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Wheels wrote:

However I agree with Dave M that SS will be there in some reduced form and therefore the SS Supplement will also be there for you, also in reduced form. Dave

Wheels, I hope you are right on this. I am one of those people on the other end of the spectrum that are not banking on SS being here when I turn 65 (or higher). Some of the literatures and booksthat i've read (not government) have also calculated that SS will not be able to support all the baby boomers and future non baby boomers. Their arguments seems plausible. I've been watching the debate in the capitol hill and they all seemed to be in congruent that SS is in trouble. The problem they are encountering is how to proceed on fixing it. This is pretty much the meat of their discussions now and not whether to continue our approach with SS as it stands today. Here are some facts:

1. 60 million baby boomers will be eligible to retire by 2010 or 2012.

2. There are less people putting money into SS. In the future, it will be even less.

3. Before = industrial age where corporations have lots of workers (after WW2 and Vietnam era. Now = information age where we are able to do things with less workers (computer age). A good example is the textile industries and automobile manufacturers.

4. Before = Employers usually take care of their employees by promising them retirement benefit packages. Now = Employees retirement benefit package have gone down. Unlike the US government, others are not required to put up retirement benefit packages such as defined benefit program where employers payy employee retirement benefit until they die. In late 1970s/1980s, the rule has changed and employers are no longer mandated to do so and started offering defined benefit contribution plan such as 401k. Employee has now become in charged of their retirement benefits. This is also the reason why we are seeing more people changes jobs more often.

I really hope you are right that SS will be here when we retire. However, just for precautionary purposes, I will not include SS as part of my retirement plan. If it is still around when I retire, I will take that as a bonus.

 

[Wheels]

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I don't disagree with you. I'll qualify my remarks by saying that I am eligible to retire in 7 years. I believe SS will be there then. But I could easily see it drying up 5-10 years beyond that.

Dave

 

[cowboy]

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I believe that SS is the easiest fix there is. All you have to do is get off the idea that you deserve more than you got coming. Now that is the hard part. First who ever passed the idea to set SS up on a 3 year high income is breaking the system for everyone. But people are greedy so no one wants to take care of it.If you would base it on a life time average like it used to be, than you would realize it would be there for you. This idea it has to support you is foolishness. The politicians want to play politics. Everyone wants it fixed but don't touch my pie!

 

[pyriel]

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cowboy wrote:

The politicians want to play politics. Everyone wants it fixed but don't touch my pie!

With what I watch on those debates, I will have to agree with you. Oppositions seems to be bringing down the arguments of the reformist but they lack good recommendations on how to fix it. Instead, they put the blame on others like the President raiding social security. Well, it doesn't fix what is broken now.

Wheels, you are one of those lucky ones since capitol hill are in agreement that SS for those retiring within your timeframe are exempt or at least will be excluded from the reform. Others like me who has 28 years till I turn age 65 are in the middle of the debate.We can only hope for the best.

 

[Wheels]

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My last post wasn't that clear. I've got 7 years until I am eligible to retire and begin collecting the Social Security Supplement. But I'll only be 49 at that point so tack on another 13 years until I can collect actual SS. I believe I'll get the Supplement and if I am lucky as you say maybe even a few years of SS. I agree that there is good chance that it is going to dry up at some point without big changes.

Sorry for the confusion.

Dave

 

[pyriel]

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Wheels, I think you are in the same boat with us. If you can get the supplementary, take it. As far as SS is concern, I couldn't gauge where capitol hill is going. Right now, they are in some kind of deadlock on how to fix it. Good luck to us. I hope.