Social Security,now or later?

[Cactus]

James, be aware that SS does use inflation adjusted values for your earlier salaries so calculating this yourself is not so easy.

In my mom's case she had a lot of partial employment early on because dad was army and we moved a lot. AAFES also had a habit of not hiring mom back right away at the new post because with a long enough break in service you lost vesting for retirement. She did eventually get a small pension from AAFES after dad retired and stayed put, but none of those early years counted toward that. Good thing she has SS.

 

[Bullitt]

The ones telling you to delay are the ones collecting now or soon to collect. They'd rather see you kick the bucket waiting until 70 than you taking money from the limited kitty.

Take the money ASAP and invest it.

 

[evilanne]

When I started with the government, I didn't plan on SS being around when I retired. Just started getting the FERS Supplement but I don't plan on taking SS until 70. If taken at 62 you get a 6% per year or 30% reduction and the difference between FRA of 67 and 70 is 8% per year or 24% more (+any COLAs) for the rest of your life. If you anticipate living a long time, it makes sense to delay for as long as possible. IRS life expectancy tables go up to 115

 

[Bullitt]

Despite my previous comment, I do agree with you on longevity EvilAnne. Longevity risk is probably the most underestimated risk we face in retirement.

The longer you can delay collecting the higher lifetime risk free return you can count on - and the less chance you'll have to rely on children to float you. The stocks thing sounds great but most people only consider the rosiest of scenarios when investing. Realistically, how many years can one make with eight years (62-70) of investing? I'd guess that once you hit 80+, you'll be hoping you waited and got that extra risk free return.

One more thing to consider, by time age 80 hits, chances are you've drawn from savings in at least one real bear market (not this "new normal" correction caused mostly by the China virus). Drawing in a bear market can really decimate funds in a hurry. I'd imagine it was not fun for those pulling from savings accounts from 2007-2010. Those hefty drawdowns have long term implications.

I don't think social security will go away. Simply put, it can't, too many rely on it as a sole means to live. The one worry I do have is who will be paying more and who will be receiving less in the years ahead. If this new Biden stimulus cut off at $160k married is any indication, it doesn't look promising for most of the middle class.

 

[James48843]

If this new Biden stimulus cut off at $160k married is any indication, it doesn't look promising for most of the middle class.

Two points:

#1. The $160k wasn’t the Biden number. That was the compromise agreed to after republicans refused to allow the Biden number. Remember, republicans wanted ZERO stimulus this last time around.

#2. $160k is a huge number for the vast majority of the remaining “middle class” in this county. While some in big cities like NEW YORK and LA don’t find $160k to be wealthy, a lot of America subsists on more like $45-50k a year for a family. To the majority of America, $160k isn’t middle class, it’s downright wealthy.

Social Security will always be here- it’s just a matter if how it is funded, and where the break points are. If ALL income was equally subject to the social security tax, SS would be solvent for another 75 years, with no rate hike, and no benefit cut.


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[DreamboatAnnie]

I highly recommend reading some of the many excellent articles and analysis by Daniel Amerman regarding when to start collecting social security.

Two examples:

Making Optimal Social Security Claiming Decisions by Daniel Amerman

Using Personal Math Instead Of Abstract Theory To Make Better Retirement Decisions (Social Security Debate) by Daniel Amerman

Two points:

#1. The $160k wasn’t the Biden number. That was the compromise agreed to after republicans refused to allow the Biden number. Remember, republicans wanted ZERO stimulus this last time around.

#2. $160k is a huge number for the vast majority of the remaining “middle class” in this county. While some in big cities like NEW YORK and LA don’t find $160k to be wealthy, a lot of America subsists on more like $45-50k a year for a family. To the majority of America, $160k isn’t middle class, it’s downright wealthy.

Social Security will always be here- it’s just a matter if how it is funded, and where the break points are. If ALL income was equally subject to the social security tax, SS would be solvent for another 75 years, with no rate hike, and no benefit cut.


Sent from my iPhone using TSP Talk Forums

We might have Social Security, but I would not trust in it being funded and provided to me at the levels currently represented/calculated. I fully expect that at some point in the next 10 years or so, things will dramatically change...and not for the better. Politicians continually lie to us and cannot be trusted, as they have been building a house of cards fir decades. The articles that Tsunami posted are very good!

I don't believe All income should be subject to Social Security tax. Tax should be on "wage" income (I,e. applied to those who are to receive Social Security). Otherwise your simply taking from one to give to another, but employers are already putting that in for each employee as a fringe benefit for their employees. So what other (non-wage) income do you think should be taxed?

 

[ALRetiree]

I don't believe All income should be subject to Social Security tax. Tax should be on "wage" income (I,e. applied to those who are to receive Social Security). Otherwise your simply taking from one to give to another, but employers are already putting that in for each employee as a fringe benefit for their employees. So what other (non-wage) income do you think should be taxed?

SS has an income tax cutoff right now I think is around 135kish. I think the proposals to raise SS taxes is to raise that limit higher which would still be wage taxes. I think that would be a more palatable tax but there will always be resistance to raising taxes at all for many people.

 

[evilanne]

We might have Social Security, but I would not trust in it being funded and provided to me at the levels currently represented/calculated. I fully expect that at some point in the next 10 years or so, things will dramatically change...and not for the better. Politicians continually lie to us and cannot be trusted, as they have been building a house of cards fir decades. The articles that Tsunami posted are very good!

I don't believe All income should be subject to Social Security tax. Tax should be on "wage" income (I,e. applied to those who are to receive Social Security). Otherwise your simply taking from one to give to another, but employers are already putting that in for each employee as a fringe benefit for their employees. So what other (non-wage) income do you think should be taxed?

SS has an income tax cutoff right now I think is around 135kish. I think the proposals to raise SS taxes is to raise that limit higher which would still be wage taxes. I think that would be a more palatable tax but there will always be resistance to raising taxes at all for many people.

DBA, The current tax system already takes from one to give to others.

I agree that raising the limit or taxing all wages would solve part of the problem. We should raise it at least to the amount that congress critters get paid and get rid of the ones that fall under the old CSRS system as they have been there way too long.