The article: SMH. And yet people suggest “privatizing” SS. That article makes me sad, sad for the people who didn’t save, sad for my kids who will have to support those people, sad for the innumerate in our country that believe any convenient crock.
According to the SS Estimator (I don’t know how accurate it is, but it does say that the estimate is more accurate as you approach the retirement age), the difference between what I’d be receiving at age 62 and at full retirement age of 66 and 4 month, is $350 a month.
According to the SSA website, not only do they forecast the reserves to be depleted by 2034 (only 16 years from now) but the possibility also of reduction in the monthly payout before that. The way things are going, I’m not inclined to doubt this forecast. So I’m not talking about the usual SS benefit strategy and the increased longevity (anyone over 55 now and quite healthy can all expect to live to 90-95 on average unless hit by a lightening or a truck).
IF, for the sake of calculation, let’s assume that the SS reserves do get entirely depleted 16 years from now and there isn’t going to be any corrections to mend the situation, and doing the calculation based on that $350 difference a month between the benefit start age at 62 (now) and the full retirement age of 66 and 4 months. Let’s say I’d get $1,000 a month at age 62 and $1,350 at 66 and 4 months. Under this scenario, the calculation at the starting age 62 now would look like this:
$1,000 X 12 X 16 = $192,000
The calculation at the starting age 66 and 4 months would be:
$1,350 X 12 X 11 and 8 months = $189,000
I’d get $3,000 more if, under this scenario, I were to start collecting the SS paycheck now at age 62.
@TiggerDad, if SS goes to ZERO in 16 years, we will all have a lot more to worry about than a $3000 delta.
Much more likely is that means testing will ramp up for retirees and that an even greater slice will be taken from workers.
@IxnayBob - “…if SS goes to ZERO in 16 years, we will all have a lot more to worry about than a $3000 delta.”
Of course, for those who have to rely on SS as a primary source of retirement sustenance… For such, it’s scary to think about the prospect of what’s going to happen to SS funds. The elderly population is ever increasing thanks to longer life expectancy and medical advances and this segment of population could actually even outnumber the typical age spectrum in the labor force soon enough. The upper spectrum is surely going to be made up of older workers as I certainly don’t believe that SS can continue to support at the same rate as it has been. I’m sure the minimum age for collecting SS will go up while the percentage of payout will be lowered all the while, as you put it, "even greater slice will be taken from workers.
My financial education for my kids has always emphasized this one critical thing: the importance of saving and investment without reliance on SS for retirement. While the income from SS is helpful, we’re fortunate to have diligently saved and invested enough from early on for our kids’ colleges and retirement.
@TiggerDad, I think enough people rely on SS or SDI as their sole source of income that there would be blood in the streets if it went to zero. Politicians will just kick the can down the road.
I am also not planning on getting much out of SS. That said, others need it more than I do.
I used to say the same thing regarding your first sentence. We’re not supposed to discuss any politics here on CC, so I don’t intend to start one except just an observation that I’ve seen enough of what the people in the Congress is capable of doing that I don’t hold much faith. Anything is possible – more than ever – and we’d all be wiser to prep for the unexpected and even unthinkable.
Another article in my local paper in the retirement makeover series. A sad one.
I personally don’t think a $250k condo in that area is the solution. That amount will not buy anything remotely decent, and a first massive assessment will hit them hard, and try selling it at that point… good luck. This is the case where moving to a lower cost area makes sense.
These articles are always interesting @BunsenBurner. Thank you for linking them.
But oh my, this couple.
$39k in PLUS loans (5% or more interest rate?) and $50k in the bank earning .05%? Wow. Why didn’t that financial advisor pick up on that?! And beginning to put money away into a 401(k) just before retirement? At what looks like close to the peak of the market? Yikes. Suck it up, pay off the debts, work part time…
It wasn’t mentioned but it seems hard to believe that this couple had no savings until recently. It did talk about a layoff. I wonder if there was money but it was spent in a long layoff. Or a pension that was lost.
I just think that there was a catastrophic event to find them so unprepared for retirement. And still working full time plus drawing SS.
And $39k still in plus loans. That has to be a pretty big number each month.
They still owe too much on the house for it to probably be paid off in their lifetimes, even though they’ve owned it for 30 Years.
I feel like there is much more to this story than was told. But to be 70 and in this position. Oh my.
Sell off the house, pay all the loans, move to low cost area. Makes sense to me. There are a lot lower cost areas.
He is still working and recommended to continue working. May not be easy to move to lower cost area while working. They can after retiring.
Something that House Republicans quietly worked on lately… (NOT meant for any political discussion, just how, if such proposals do (or even a portion of it) get passed, they’d affect the retirees…
“House Republicans released a budget proposal Tuesday that would balance in nine years – but only by making large cuts to entitlement programs, including Medicare and Social Security, that President Donald Trump has vowed not to touch.”
https://www.denverpost.com/2018/06/20/medicare-social-security-cuts-budget/
IMHO, about $543,000 left after sale and loans with savings. Quit work, Invest in Fidelity or like and move to the Midwest with a home cost about $130,000. Hot time to sell in Seattle. May miss their opportunity. Could have $400,000 savings. Live on SS. I know this is doable in some areas of the country. I sold my mother’s livable home for $35,000. The neighbor’s sold for $13,000 about 3 yrs ago.
Wow, $400/month on digital programming is a LOT of money for that WA couple! It’s a big portion of their monthly expenses. If they sell and buy a condo, they will still have to pay association fees and insurance and property taxes. The monthly housing expenses won’t decrease much.
Reverse mortgage was a horrible thought as well, imho. To many expenses taking away from the amount they would need to live on. Why aren’t their kids paying off the ed loans taken out for their educations? These folks needs to be saving so they won’t be a burden to those kids.
I would like to know where that advisor thinks he can find a livable condo in that area for $250000? Maybe he invented a way-back machine…back to 2009?
I agree with @deb922 , there must have been a long period of unemployment. New job training, new job, new 401k. I also agree with @BunsenBurner , why are they putting money into a 401k when they will have to start pulling it out soon? Use that money to pay off those unfortunate PLUS loans. And if the kiddos who benefited from those loans have lucrative careers, I would hope that the parents aren’t hiding how much that decision is still costing them. Maybe they have crippling loans of their own and are barely making ends meet…
So, I took SS this year at 62 because like @TiggerDad, the difference was about $350 a month and I was not willing to wait and see if there was none available in 4+ years. The deciding factor was if I intended to make more money after retirement than the limit. H is on the Medicare part B and pays a boat load because of the past 2 years earnings. This should go down this year hopefully in time for my part B in 3 years.
Medicare is our ‘gating’ item. 3 years away. We will take SS as soon as we stop working, unless we need to wait into the next calendar year due to SS earnings/pay back. H’s brother a year older will work (as a store manager) until he gets full retirement at age 66 yr/y mo and also wait until the April work bonus,
By taking SS earlier when you are not spending other retirement savings, you will have $$ that can be passed on when you pass on.
Not sure how quiet the vote was since the Budget Committee came out with its own report. And cuts to Medicare and SS probably make plenty of economic sense (despite the Prez’s do-not-touch proclamation), as:
“The CBO projects that Social Security and Medicare will be insolvent by 2030 and 2026, respectively.”
https://budget.house.gov/wp-content/uploads/2018/06/FY19_Budget-Blueprint-Final.pdf
Of course, the devil is in the details, and this is just a blueprint.
A good review of SS calculators: