The coming Social Security fight could be 1983 all over again

[DrQ]

Are any of you considering taking the money early before the automatic reductions kick in?

Warning over 'big myth' that causes Americans to miss out out on crucial retirement income​

• Economist Emerson Sprick warned retirees not to take the benefit too early
• Sprick said too many Americans are worried Social Security funds will run out
• But he cautioned claiming the benefit too soon triggered lifetime penalties

Expert says 'myth' around Social Security is costing reitrees income

Too many retirees in America are buying into a 'myth' around Social Security funds. It can cost then dearly in retirment income, an expert warns.

www.dailymail.co.uk

 

[rapmarks]

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.

Totally disagree
my husband and I decided to leave our iras to our children. The money from their dad’s ira is making a huge difference to them and it makes me feel good too. I resent people that don’t save for retirement and then apply for Medicaid. My pension will go to zero when I die , that I expect. Definitely don’t expect my iras to be taken.

 

[WinniWoman]

So? You are good with your family or heirs getting screwed out of the balance remaining when you die?

Your family doesn’t inherit SS! Lol!

 

[WinniWoman]

My husband just got his first SS check this month at age 70. I have 2 more years until I get mine at age 70. I am not worried about it. To fix SS they will probably grandfather in older people and will change the program for the younger workers.

 

[Ralph Sir Edward]

This is such an overlooked idea because most people are employees that can't control their income. Being the master of ones own destiny isn't that easy either but it does force a participant to plan for results.

Bill

Easyrider, it is more of an attitude than a matter of control. What sort of attitude? A viewpoint of substituting capital for cash flow (income). For example, buying and owning a modest car (and paying cash up front) over leasing a nicer one, and keeping the one you buy for a long as possible, My car is a Hundai Elantra, almost 13 years old, costing 23K up front. So far, it has cost me $150 a month, and the price keeps dropping as my car gets older.

With that attitude in life, my cash flow needs have dropped over the years. Paid for house? No tax deduction, but no need for the income (taxed) to be earned for the same standard of living. And on and on. Miser? No, just a careful planner. (another example: A couple of years ago, I upgraded my computers with 5 year old, dirt cheap, used computers. Quality HP corporate used computers. Why so cheap? They couldn't be upgraded to Windows 11. Shrug. I run Linux for my home computers (with virtual XP and Windows 7 machines under Linux). Solid computers for less than $100 each, plus another $200 to upgrade to big SSDs, put in new batteries, and bump up the memory. I expect to run them for another 10 years. Equivalent Win 11 machines would cost over $1,000 each new.)

The tax system can't tax you on income you never earned, yet I don't feel i have a lesser standard of living.

I guess this sums up my worldview.

 

[Ralph Sir Edward]

Warning over 'big myth' that causes Americans to miss out out on crucial retirement income​

• Economist Emerson Sprick warned retirees not to take the benefit too early
• Sprick said too many Americans are worried Social Security funds will run out
• But he cautioned claiming the benefit too soon triggered lifetime penalties

Expert says 'myth' around Social Security is costing reitrees income

Too many retirees in America are buying into a 'myth' around Social Security funds. It can cost then dearly in retirment income, an expert warns.

www.dailymail.co.uk

It left out one thing - Medicare. If you deduct Medicare from SS directly, it puts a cap on the rising of Medicare premiums to the max of a SS adjustment. You don't get that by waiting. The question is - do you think Medicare premiums are going to go up faster than the rate of SS inflation increases? I didn't take that bet, so I started at 65. (I retired at 63 and 3 months, with the COVID panic (March 27 2020). I had hoped to make it to 64, but. . . )

 

[WinniWoman]

It left out one thing - Medicare. If you deduct Medicare from SS directly, it puts a cap on the rising of Medicare premiums to the max of a SS adjustment. You don't get that by waiting. The question is - do you think Medicare premiums are going to go up faster than the rate of SS inflation increases? I didn't take that bet, so I started at 65. (I retired at 63 and 3 months, with the COVID panic (March 27 2020). I had hoped to make it to 64, but. . . )

What Medicare premiums? Part A is free. Only Part B comes out of SS automatically and it increases the same for everyone. Unless you have an extremely high income.

The supplement doesn’t come out of SS.

 

[Kozman]

Your family doesn’t inherit SS! Lol!

So? You've never heard of leaving your IRA and 401's to a beneficiary? LOL! I don't recall mentioning SS. But since you brought the subject up have you ever heard of survivor benefits? https://www.aarp.org/retirement/social-security/questions-answers/social-security-spouse-dies.html

 

[WinniWoman]

So? You've never heard of leaving your IRA and 401's to a beneficiary? LOL! I don't recall mentioning SS.

Oh well I misunderstood you. I thought you were talking about SS.

 

[Ralph Sir Edward]

What Medicare premiums? Part A is free. Only Part B comes out of SS automatically and it increases the same for everyone. Unless you have an extremely high income.

The supplement doesn’t come out of SS.

WinniWoman, Part B is only taken out of your SS if you have SS being paid. Otherwise, you pay for it separately. And the SS price cap for Plan B does not apply if you are paying for it separately before you get SS. So you could end up paying more for Plan B by waiting that by takeing SS at age 65. It's a Bet. . .

 

[Kozman]

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.

I wasn't really talking about pensions. I specifically said IRAs and 401s which don't go to zero when you die assuming you designate a beneficiary.

 

[DrQ]

... So you could end up paying more for Plan B by waiting that by takeing SS at age 65. It's a Bet. . .

If I remember correctly, this is the penalty for:

• People not signing up for Part B when they turn 65 IF they are not covered by a qualified employer health plan.
• People who wait too long to sign up for Part B after losing coverage from an employer after turning 65.

The penalty is permanent. Some people get caught when they leave a job after 65 and get another job with insurance coverage, but there are very specific rules to make sure the clock gets reset. If they are out of work for 5 months and have to wait a month for coverage to start, the window has expired and even though they now have coverage, when they do retire, they get a nasty surprise with a permanent Part B surcharge.

 

[ScoopKona]

What Medicare premiums? Part A is free. Only Part B comes out of SS automatically and it increases the same for everyone. Unless you have an extremely high income.

The supplement doesn’t come out of SS.

The Medicare trust fund is depleting in five-ish years. And then cuts are looking to be in the 10% range. We're well past the point of being able to do anything about it.

Expect finger-pointing in five-ish years. This really is a "both-sides are responsible" issue. If I was assigning blame, I'd go 75% for the people who kneecapped the system; and 25% to the other side for not ever doing anything about it.

So it's likely that nothing will be "free," and that higher percentages will be paid from OASDI benefits for all Medicare plans. That will be the "one" of the coming one-two punch.

 

[Ralph Sir Edward]

If I remember correctly, this is the penalty for:

• People not signing up for Part B when they turn 65 IF they are not covered by a qualified employer health plan.
• People who wait too long to sign up for Part B after losing coverage from an employer after turning 65.

The penalty is permanent. Some people get caught when they leave a job after 65 and get another job with insurance coverage, but there are very specific rules to make sure the clock gets reset. If they are out of work for 5 months and have to wait a month for coverage to start, the window has expired and even though they now have coverage, when they do retire, they get a nasty surprise with a permanent Part B surcharge.

Correct but not what I was talking about. Once you start taking SS and have Medicare Part B deducted, The annual increase for Part B will be capped to the maximum of what the SS increase is for that year.

I'm 65 and I start Medicare Part B. Say it cost $100 a month. (These are just examples with no correlation with reality.)

Next year I'm 66. Part B goes up to $120.

If I started SS at age 65, and the inflation increase is 0. I would still pay $100 for Part B for age 66.
If I didn't start SS at age 65, I would pay $120 for Medicare Part B.

and so on for each year until I started SS and had the Part B deducted from SS.

The bet is - will the Medicare rates go up more than the SS annual inflation adjustment.

Of course you could say the increase of SS by waiting will dwarf any Part B rise. OTOH, you will have to bridge the SS amount you forgo with either more work or other savings until you take SS. Remember, time is your most important asset. How much do you want to give to someone else, instead of using it for yourself?

 

[TolmiePeak]

Totally disagree
my husband and I decided to leave our iras to our children. The money from their dad’s ira is making a huge difference to them and it makes me feel good too. I resent people that don’t save for retirement and then apply for Medicaid. My pension will go to zero when I die , that I expect. Definitely don’t expect my iras to be taken.

It is your money. Why wouldn't you spend it? You are not doing them any favors by passing it on.

 

[joestein]

It is your money. Why wouldn't you spend it? You are not doing them any favors by passing it on.

Not doing them any favors by passing it on? Of course it helps. I would love to have a few million coming my way - I would retire earlier than planned - late 50s rather than early 60s.

I will be passing on money to my kids - I don't believe I will spend all my earnings each year - thus my savings growing.

 

[Elan]

Correct but not what I was talking about. Once you start taking SS and have Medicare Part B deducted, The annual increase for Part B will be capped to the maximum of what the SS increase is for that year.

I'm 65 and I start Medicare Part B. Say it cost $100 a month. (These are just examples with no correlation with reality.)

Next year I'm 66. Part B goes up to $120.

If I started SS at age 65, and the inflation increase is 0. I would still pay $100 for Part B for age 66.
If I didn't start SS at age 65, I would pay $120 for Medicare Part B.

and so on for each year until I started SS and had the Part B deducted from SS.

The bet is - will the Medicare rates go up more than the SS annual inflation adjustment.

Of course you could say the increase of SS by waiting will dwarf any Part B rise. OTOH, you will have to bridge the SS amount you forgo with either more work or other savings until you take SS. Remember, time is your most important asset. How much do you want to give to someone else, instead of using it for yourself?

A thousand times this! As of now, I plan on taking SS as soon as I turn 62 (still need to talk to my CPA). The crossover age is around 79-80 depending on how long one waits, and although family history indicates I likely will live a long life, I want the money while I'm young enough to enjoy it. I'd argue that for most approaching FRA, time is more valuable than money.

 

[WinniWoman]

WinniWoman, Part B is only taken out of your SS if you have SS being paid. Otherwise, you pay for it separately. And the SS price cap for Plan B does not apply if you are paying for it separately before you get SS. So you could end up paying more for Plan B by waiting that by takeing SS at age 65. It's a Bet. . .

We have been paying it separately since 2019 and it’s the same premium as everyone else. I don’t think this is a real concern. I mean everything is a risk- even getting out of bed in the morning.

 

[bizaro86]

It is your money. Why wouldn't you spend it? You are not doing them any favors by passing it on.

If you feel like extra money is an issue feel free to forward yours to me. I promise to put it to good use.

 

[GetawaysRus]

It's interesting to read the variety of opinions about Social Security. I know that in the "take it now" versus "delay as long as possible" debate, there are good arguments on both sides. So here's another spin to consider.

I am fortunate to have some savings as well as a pension, so I view Social Security primarily as longevity insurance. The gamble is how long you and/or your spouse will live, and God doesn't tell us. Once you retire, you may need to start using your savings, so that pot of retirement money can start to slowly decline. Your enemy is inflation, which will deplete your savings at an ever increasing rate. My pension doesn't rise over time - there's no adjustment for inflation. By delaying starting your Social Security benefit, you are hedging your bet in 2 ways.
1. I'm not the smartest investor in the world. Getting a guaranteed 8% annual increase in my Social Security benefit without taking any stock market risk looks pretty good to me.
2. If at least one spouse in a marriage lives into their 90s, the larger benefit from delaying may be very helpful then. Statistically, it's reasonably likely that at least one spouse lives a long time.

What did my wife and I decide? I was the higher earner. She was forced to retire in her early 60s due to back problems and back surgery. So we took her benefit shortly after 62 but decided to try to delay the larger one (mine) to let it grow.

We applied for her benefit in person at a local Social Security office, and here's why I would encourage you to do the same. The SS rep understood that she was being forced to retire because of her back issues. And even though we had never even considered it, the rep encouraged her to apply for Social Security Disability. That's a long process. But after several years and jumping through a bunch of hoops, she was approved for SSDI. So in the end, she received the benefit that she would have gotten at her FRA, but payments began at age 62. Had we not applied in person, we probably would never have applied for SSDI.

I wish good luck to you all in making your own best decision. It's a complicated decision.

 

[WinniWoman]

For us, SS is an annuity. In our case we aren’t hurting by not taking it earlier. ( actually my husband just got his first check. A nice size since he waited. I have 2 more years. The check will be similar to his. We should be able to live off them without using our savings by then. God willing we are both still here.We both are retired more than several years each now)

If we died and never got a penny out of it so what? We lived a nice life and we would be dead anyway so couldn’t regret anything.

We don’t have a desire to buy useless or very expensive stuff or toys, eat out or travel more than we do. We live pretty simply. Hopefully we will be able to leave some money to our son or at least our house ( that’s a big one for me), but we don’t know what the rest of our lives will bring so we’re not worrying about it.

 

[easyrider]

The Medicare trust fund is depleting in five-ish years. And then cuts are looking to be in the 10% range. We're well past the point of being able to do anything about it.

Expect finger-pointing in five-ish years. This really is a "both-sides are responsible" issue. If I was assigning blame, I'd go 75% for the people who kneecapped the system; and 25% to the other side for not ever doing anything about it.

So it's likely that nothing will be "free," and that higher percentages will be paid from OASDI benefits for all Medicare plans. That will be the "one" of the coming one-two punch.

I really doubt that the above scenario will occur. I am sure that the politicians and hacks will attempt to make every one believe this is an issue when the fact is the Fed uses debt to create money supply.

Bill

 

[Elan]

Definitely a complex issue. A factor for me is that I saved fairly heavily to hopefully retire early and enjoy it. I am nearly 1 year into retirement now and find myself still fighting the "thrifty" mindset. Even though I don't need the money, my thought is that if drawing SS at 62 allows me to begin to detach from that mindset earlier, such that I can better enjoy what I worked hard for, it's well worth it. As one who has generated endless Monte Carlo's and spreadsheets covering nearly infinite retirement scenarios, my conclusion is that no amount of numerical analysis will address many of the psychological aspects of one's personal finances.

 

[TolmiePeak]

If you feel like extra money is an issue feel free to forward yours to me. I promise to put it to good use.

I have some property for sale in the Glengarry Highlands Phase 2 development you might be interested in.... I'll send my salesman Shelley "The Machine" Levene over to discuss it with you.

 

[Talent312]

If you feel like extra money is an issue feel free to forward yours to me. I promise to put it to good use.

I'd accept a donation via PayPal.

I've told our kids that, depending on when we report to assisted living, there may not be much left afterward.