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The coming Social Security fight could be 1983 all over again

It will be years before they will try to do anything to address the problem. Probably within the year that there won't be enough money.
 
Are any of you considering taking the money early before the automatic reductions kick in?
 
TolmiePeak said:
Are any of you considering taking the money early before the automatic reductions kick in?
Click to expand...

That's what I did, started at FRA 66 instead of waiting until 70. I expect a 25% cut in 10 years.
 
TolmiePeak said:
Are any of you considering taking the money early before the automatic reductions kick in?
Click to expand...
If I was collecting on mine I would take the money early. I am collecting on my deceased husband and will switch to mine at 70, so taking the gamble.
 
Panina said:
If I was collecting on mine I would take the money early. I am collecting on my deceased husband and will switch to mine at 70, so taking the gamble.
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Yeah the people waiting until 70 to take the money are gambling that the politicians will fix the program. Not good odds on that.
 
TolmiePeak said:
Yeah the people waiting until 70 to take the money are gambling that the politicians will fix the program. Not good odds on that.
Click to expand...
Not necessarily. I was laid off at 62 and could have started collecting Social Security (at a reduced rate). Instead, I was able to find another job, maxed out my 401K contributions and HSA, worked until I was 68 and started collecting Social Security at 69.

The money I put into my 401K and how my Social Security increased yearly to where if there is a cut, there should be some insulation. If I were to have taken the reduced Social Security and then suffered the cut on that amount, I would be screwed.
 
Good article, many people are financially dependent on it for their retirement.
 
I'm not trying to be political, but I do feel that the government makes my financial life and financial decisions much harder. What's going to happen with Social Security? What's going to happen with Medicare, and healthcare in general? What's going to happen with income taxes?

Particularly when considering income taxes, the politicians just can't seem to resist piddling with the rules. It makes planning extremely difficult.

Regarding Social Security, I agree with Panina's first post. There will be a lot of talk and much bluster and beating of chests, but they are too chicken to actually do anything until there's an absolute crisis because they all want to get reelected. Taking a stand on Social Security, and actually trying to accomplish something, is like stepping in a big pile of political poo-poo.

And how will a change to Social Security come about? Look back at history. They will appoint a special commission (probably made up of non-politicians) to study the problem and make recommendations. That way none of the politicians will be to blame for reforms that people don't like.
 
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GetawaysRus said:
I'm not trying to be political, but I do feel that the government makes my financial life and financial decisions much harder. What's going to happen with Social Security? What's going to happen with Medicare, and healthcare in general? What's going to happen with income taxes?

Particularly when considering income taxes, the politicians just can't seem to resist piddling with the rules. It makes planning extremely difficult.

Regarding Social Security, I agree with Panina's first post. There will be a lot of talk and much bluster and beating of chests, but they are too chicken to actually do anything until there's an absolute crisis because they all want to get reelected. Taking a stand on Social Security, and actually trying to accomplish something, is like stepping in a big pile of political poo-poo.

And how will a change to Social Security come about? Look back at history. They will appoint a special commission (probably made up of non-politicians) to study the problem and make recommendations. That way none of the politicians will be to blame for reforms that people don't like.
Click to expand...
No need to appoint a special commission. Everyone knows how to fix the issue. The solution is clear but not easy to swallow.
Yes they will wait until one minute before midnight just like they always have done in the past.

No need to worry about planning. Carry on as usual.
 
billymach4 said:
No need to appoint a special commission.
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I'm normally not a gambler. But I'd be willing to put money on this. Lucky for you, by the time it would be my turn to collect on this bet, I'll be too old to remember that you owe me money.

If you read the article in the original post (look for the section titled "What happened in 1983"), that's what they did back when Reagan was president. I think they will do that again because it takes the responsibility for making difficult and complex decisions off the shoulders of the politicians.
 
One of the ideas floated in the past was to essentially nationalize all IRAs and 401s and pay back an annuity based on the amount confiscated. When you die your payment goes away. How very government of them!
 
billymach4 said:
No need to appoint a special commission. Everyone knows how to fix the issue. The solution is clear but not easy to swallow.
Yes they will wait until one minute before midnight just like they always have done in the past.

No need to worry about planning. Carry on as usual.
Click to expand...
Yes but none of them can even talk about the issue without getting blamed for wanting to kick Grandma out of the street.
 
Kozman said:
One of the ideas floated in the past was to essentially nationalize all IRAs and 401s and pay back an annuity based on the amount confiscated. When you die your payment goes away. How very government of them!
Click to expand...

Well when you die you will have no need for it.
 
DrQ said:
Not necessarily. I was laid off at 62 and could have started collecting Social Security (at a reduced rate). Instead, I was able to find another job, maxed out my 401K contributions and HSA, worked until I was 68 and started collecting Social Security at 69.

The money I put into my 401K and how my Social Security increased yearly to where if there is a cut, there should be some insulation. If I were to have taken the reduced Social Security and then suffered the cut on that amount, I would be screwed.
Click to expand...

Yeah but the more years you can collect without a reduction the better.
 
Kozman said:
One of the ideas floated in the past was to essentially nationalize all IRAs and 401s and pay back an annuity based on the amount confiscated. When you die your payment goes away. How very government of them!
Click to expand...

“The Lord giveth and the Lord taketh away” (Job 1:21).

The government just taketh away.
 
Kozman said:
So? You are good with your family or heirs getting screwed out of the balance remaining when you die?
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That is what happens with the pension I get. It goes to zero when I die. They do let your spouse get a lump sum for any cash balance portion of the account but that is usually pretty small. I don't understand why people are concerned with their heirs? It is your/your spouse's money. Your goal should be to spend it down to zero by the time you check out. Let your children earn their own way in life. Every time my dad mentioned it I told him to spend his money. I didn't care if he went to Las Vegas and put it all on red.
 
Kozman said:
One of the ideas floated in the past was to essentially nationalize all IRAs and 401s and pay back an annuity based on the amount confiscated. When you die your payment goes away. How very government of them!
Click to expand...
Maybe not. People would pull their money out of their account first, if they got any warning. . .
 
GetawaysRus said:
I'm not trying to be political, but I do feel that the government makes my financial life and financial decisions much harder. What's going to happen with Social Security? What's going to happen with Medicare, and healthcare in general? What's going to happen with income taxes?
Click to expand...

I think it's a safe bet that the OASDI fund is going to be allowed to deplete. If the politicians grid-lock this, that's the end result. When that happens, automatic across-the-board cuts kick in. Currently, the cut is predicted to be around 25%. However, the goal posts have been moving every year of the trustees' report. My SWAG is 10 years and a 33% cut. (I wrote my master's thesis on this.)

Make no mistake, Congress doesn't have to do ANYTHING AT ALL for this to happen. This is how the program is set up in the event of a depletion. And every time they raise benefits, that's going to siphon money all that much faster.

Why do I think this is likely? Because Medicare's trust fund is depleting in five short years. And when that happens, it's an across-the-board cut of around 10%. We're well past the point of being able to do anything meaningful about Medicare. Since that was allowed to go bankrupt, it's likely the OASDI will as well.
 
TolmiePeak said:
Yeah but the more years you can collect without a reduction the better.
Click to expand...
Not when you are making six figures a year during that time. It helped push me towards the maximum Social Security benefit available. Get a perspective.

Claiming at 62, you get a 30% reduction in benefits from FRA. Working and waiting until 69 you increase your benefit by 24% from FRA. Add in the fact that I was maxing out my 401K (with employer match of 4%) with catch-up, maximum HSA (me and DW) and contributing to two ROTH IRAs.

You must plan on dying early.
 
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