FIRE's Social Security ??

[jim555]

I wonder if/how the COVID deaths may of improved the SS Trust fund?  Around a million mainly older people have passed from it in the US.

https://www.statista.com/statistics/1191568/reported-deaths-from-covid-by-age-us/

[zolotiyeruki]

I wonder if/how the COVID deaths may of improved the SS Trust fund?  Around a million mainly older people have passed from it in the US.

It may not be politically correct to talk about it, but it's a reality that must be accounted for.  At the same time, a whole lot of people, of many ages, have left the workforce, meaning fewer people are contributing.  And some of those new retirees are old enough to draw on SS, which would similarly degrade its solvency.

[mistymoney]

there may also be a large group going on disability due to long covid or permanent damage of lungs, hearts, etc.

[Daisy]

Also you can look at Social Security contributions as a large charitable donation for a good cause in case you die before you benefit from them.  Much like money you might save for charity or heirs.  Except you are helping all the elderly and disabled people instead. I think it's rewarding anyways. It's security for yourself and for society.  It's honorable and should perhaps feel proud to contribute.  Either for your own security and/or for every other American who also pays into it.  I think it is a wonderful program.

That's a good idea. If when you reach RMD age your distributions are so high that you are worried about your taxes, then you surely have enough to make more charitable contributions.

I made a big contribution to a Donor Advised Fund my last year of working before FIRE to reduce taxes...up to 50% of my AGI. So I got a tax break after overpaying in withheld taxes that year. Of course, that triggered a letter from the IRS doing an investigation a couple of years later on my huge charitable contribution. I had all of the records necessary and easily proved it was all legit.

As far as working longer to get more Social Security, at one point while I was bored in my cubicle during my working years I did calculate this and as others have said working 5 or 10 more years didn't make a significant difference in the Social Security payment. You can go to their online calculator and plug some numbers in yourself based on your SS#.

After reading some of this thread, as a Gen X'er I'd like to blame every generation but mine for all of the world's problems. ;-)

As far as not expecting Social Security, regardless of which generation you are in, I always like to say that if our government came to the point that they actually STOPPED paying any Social Security payments...that means that a huge financial event has occurred and any financial plan outside of Social Security that you have going on is also going to fail as well, so it's not worth worrying about. Social Security may not keep up with inflation, that is one way they can limit payments, but a complete cessation of any payments means the financial situation of our country is in such dire straits that you will have many other things to worry about in that most unlikely situation.

[EvenSteven]

Snip...

That's a good idea. If when you reach RMD age your distributions are so high that you are worried about your taxes, then you surely have enough to make more charitable contributions.

...Snip

And if you are not in a position to itemize to take advantage of you charitable distributions, those RMDs can be donated as QCDs for some extra tax benefit.

[Daisy]

Snip...

That's a good idea. If when you reach RMD age your distributions are so high that you are worried about your taxes, then you surely have enough to make more charitable contributions.

...Snip

And if you are not in a position to itemize to take advantage of you charitable distributions, those RMDs can be donated as QCDs for some extra tax benefit.

QCD...now that is something new to me...

[EvenSteven]

Snip...

That's a good idea. If when you reach RMD age your distributions are so high that you are worried about your taxes, then you surely have enough to make more charitable contributions.

...Snip

And if you are not in a position to itemize to take advantage of you charitable distributions, those RMDs can be donated as QCDs for some extra tax benefit.

QCD...now that is something new to me...

Instead of taking out your RMD as a taxable distribution, you can donate it to charity through a Qualified Charitable Distribution, and not have to pay taxes on it.

[DaMa]

I'm loving this thread.  It's so nice to see others with the same thoughts.

@Rdy2Fire, once you have a year of no income, the SS statement will assume $0 for all future years.

As far as working longer to get more Social Security, at one point while I was bored in my cubicle during my working years I did calculate this and as others have said working 5 or 10 more years didn't make a significant difference in the Social Security payment.

Same here.  I think it was a $200 difference.  I rarely have the patience to do any serious calculation anymore since I'm not bored in my cubicle.

The number I actually look at is the late (70) payout which would be $38k if I stop working today. Including my spouse it would be about $60k/yr.  I'd admit, on average, I might be better off taking early and investing the payments, but I look at ss as the only decent option as far as longevity insurance goes (those policies where you throw down a chunk of money now to get payouts starting at 80 or whatever are extremely expension and I am more wary of their solvency/insruance backing than SSs).  As far as the state of SS today I think last numbers I saw was that if benefits were cut about 20% it would be fine.  So I assume at 70+ we can get ~$50k/year in todays dollars.  $50k in todays dollars covers our basic living expenses (and with all the kids grown I assume wouldn't be even be that tight).  Of course I don;t know this to be 100% true that SS will be there, but thats the case with every assumption I ever make.

This tells me no matter how horribly my portfolio performs, it only HAS to survive 20 years (50 to 70).  If it fails in 30 (when I'm 80) thats the point at which I'm down to my basic living expenses (SS).

This is exactly how I think of it, too.

As an aside, one of the unintended consequences of the ACA is that insurers actually have a much, MUCH lower incentive to pursue lower costs, due to the cap on profit margins.  In fact, since their profits are limited to 15% of premiums, they are incentivized to pay more for procedures, because it allows them to increase premiums (and profits) accordingly.

I have such a hard time getting people to understand this.  Probably because I don't articulate it as well as you did.  Thanks!

[MDM]

...how do you calculate for all the $0 years.

You always divide the sum of your indexed earnings by 420 (=35*12) to get your Average Indexed Monthly Earnings.  Thus your SS benefit doesn't go down if you stop working, it just doesn't go up.

One can use any of
 - The 'SocialSecurity' tab of the case study spreadsheet
 - The Downloadable Social Security Benefit Estimator
 - The Social Security Calculator
 - various tools on the ssa.gov site
to estimate future benefits

There is a web tool that evaluates SS benefit start dates, particularly useful for a couple:
Open Social Security: Free, Open-Source Social Security Calculator

[Wolfpack Mustachian]

...how do you calculate for all the $0 years.

You always divide the sum of your indexed earnings by 420 (=35*12) to get your Average Indexed Monthly Earnings.  Thus your SS benefit doesn't go down if you stop working, it just doesn't go up.

One can use any of
 - The 'SocialSecurity' tab of the case study spreadsheet
 - The Downloadable Social Security Benefit Estimator
 - The Social Security Calculator
 - various tools on the ssa.gov site
to estimate future benefits

There is a web tool that evaluates SS benefit start dates, particularly useful for a couple:
Open Social Security: Free, Open-Source Social Security Calculator

Thanks for the links! I wasn't able to get the last link to work, and I was curious about it. I did a quick Google search and couldn't find it. If you don't mind, could you post another link to it or let me know where I'm missing it? Thanks!

[MDM]

One can use any of
 - The 'SocialSecurity' tab of the case study spreadsheet
 - The Downloadable Social Security Benefit Estimator
 - The Social Security Calculator
 - various tools on the ssa.gov site
to estimate future benefits

There is a web tool that evaluates SS benefit start dates, particularly useful for a couple:
Open Social Security: Free, Open-Source Social Security Calculator

Thanks for the links! I wasn't able to get the last link to work, and I was curious about it. I did a quick Google search and couldn't find it. If you don't mind, could you post another link to it or let me know where I'm missing it? Thanks!

Appears https://ssa.tools/ is the new URL for "Social Security Calculator".  Answers should be the same from all, so it's in the eye of the beholder which is "easier" to use....

[Shane]

OP, several others have given excellent, detailed instructions on how to figure out for yourself what your future SS payments will be. If you'd rather someone else do the calculations for you, Maximize My Social Security dot com has an excellent (paid) calculator that will allow you to easily create spreadsheets that you can save for future reference, exploring all different retirement scenarios. IMHO, it was worth the 25 bucks I paid for a year's subscription. YMMV.

[PDXTabs]

Appears https://ssa.tools/ is the new URL for "Social Security Calculator".  Answers should be the same from all, so it's in the eye of the beholder which is "easier" to use....

This tool is awesome! I once thought about coding up something like this, now I don't have to.

[Rdy2Fire]

OP, several others have given excellent, detailed instructions on how to figure out for yourself what your future SS payments will be. If you'd rather someone else do the calculations for you, Maximize My Social Security dot com has an excellent (paid) calculator that will allow you to easily create spreadsheets that you can save for future reference, exploring all different retirement scenarios. IMHO, it was worth the 25 bucks I paid for a year's subscription. YMMV.

Yeah that's why I used their instructions and thanked them

[MustacheAndaHalf]

I made a big contribution to a Donor Advised Fund my last year of working before FIRE to reduce taxes...up to 50% of my AGI. So I got a tax break after overpaying in withheld taxes that year. Of course, that triggered a letter from the IRS doing an investigation a couple of years later on my huge charitable contribution. I had all of the records necessary and easily proved it was all legit.

Can you go into more detail about what records the IRS wanted to prove your Donor Advised Fund (DAF) contributions were allowed?

I recall being limited to 30% equities and 20% cash.  I stayed under those limits in my contributions of ETFs and cash from brokerage accounts.  I guess I should save the records of the DAF receiving ETFs & cash, and of my brokerage accounts sending ETFs and cash?

[Wolfpack Mustachian]

One can use any of
 - The 'SocialSecurity' tab of the case study spreadsheet
 - The Downloadable Social Security Benefit Estimator
 - The Social Security Calculator
 - various tools on the ssa.gov site
to estimate future benefits

There is a web tool that evaluates SS benefit start dates, particularly useful for a couple:
Open Social Security: Free, Open-Source Social Security Calculator

Thanks for the links! I wasn't able to get the last link to work, and I was curious about it. I did a quick Google search and couldn't find it. If you don't mind, could you post another link to it or let me know where I'm missing it? Thanks!

Appears https://ssa.tools/ is the new URL for "Social Security Calculator".  Answers should be the same from all, so it's in the eye of the beholder which is "easier" to use....

Thanks so much!

[Reynold]

As an aside, one of the unintended consequences of the ACA is that insurers actually have a much, MUCH lower incentive to pursue lower costs, due to the cap on profit margins.  In fact, since their profits are limited to 15% of premiums, they are incentivized to pay more for procedures, because it allows them to increase premiums (and profits) accordingly.

Though if that were an important factor, I would expect that more than half of the doctors we use in our area would not be out of network for any ACA plan we could get, having checked recently.  I assume they are out of network because they don't like the reimbursement rates from the ACA plans. 

On the general topic of Social Security, I do not expect them to eliminate Social Security, but we are trying not to count on it because there are things they COULD do like means testing it, as they do for programs like Medicaid, in ways where people who have saved a lot of money (i.e. MM followers) could see benefits reduced or eliminated.  While that is arguably a good problem to have, like having a high tax rate because of earning a lot, it is something to at least consider in long term planning. 

[DaMa]

As an aside, one of the unintended consequences of the ACA is that insurers actually have a much, MUCH lower incentive to pursue lower costs, due to the cap on profit margins.  In fact, since their profits are limited to 15% of premiums, they are incentivized to pay more for procedures, because it allows them to increase premiums (and profits) accordingly.

Though if that were an important factor, I would expect that more than half of the doctors we use in our area would not be out of network for any ACA plan we could get, having checked recently.  I assume they are out of network because they don't like the reimbursement rates from the ACA plans. 

I obviously don't know every market, but in my experience it works like this...

1. Large insurance company: Almost all doctors take some of the ACA plans.  The plans they don't take are because the insurance company didn't bring them into the narrower networks.  The narrow networks are designed to be more attractive to younger, healthier patients based on premium price.  So the insurance company gets a provider group to agree to take something like 10% lower reimbursement on those members, but increases their reimbursement on other plans to make up for it.  (This is a very simple explanation -- the various way providers are reimbursed are actually extremely complicated.)

2: Small, local insurance company:  Analysis is done to identify providers with high numbers of young, healthy patients with patterns of low utilization.  Those providers are invited to join narrow network plan.  They might have same reimbursement rate or lower reimbursement rate but with extra payment incentives for reaching targets that indicate good utilization management.

My point is that the insurance company controls who participates in those narrow networks.  It's not the doctors that decide.

[Daisy]

Snip...

That's a good idea. If when you reach RMD age your distributions are so high that you are worried about your taxes, then you surely have enough to make more charitable contributions.

...Snip

And if you are not in a position to itemize to take advantage of you charitable distributions, those RMDs can be donated as QCDs for some extra tax benefit.

QCD...now that is something new to me...

Instead of taking out your RMD as a taxable distribution, you can donate it to charity through a Qualified Charitable Distribution, and not have to pay taxes on it.

Thanks!

Can this distribution be done with any IRA, including an inherited IRA? Do you have to be in RMD age territory to do it, or can anyone with an IRA do it?

[Daisy]

I made a big contribution to a Donor Advised Fund my last year of working before FIRE to reduce taxes...up to 50% of my AGI. So I got a tax break after overpaying in withheld taxes that year. Of course, that triggered a letter from the IRS doing an investigation a couple of years later on my huge charitable contribution. I had all of the records necessary and easily proved it was all legit.

Can you go into more detail about what records the IRS wanted to prove your Donor Advised Fund (DAF) contributions were allowed?

I recall being limited to 30% equities and 20% cash.  I stayed under those limits in my contributions of ETFs and cash from brokerage accounts.  I guess I should save the records of the DAF receiving ETFs & cash, and of my brokerage accounts sending ETFs and cash?

I can't remember 100% now, but I believe all of my contributions were in cash form to the DAF.

I contacted Fidelity, my DAF administrator, for the records of my contributions that year to show to the IRS.

[Dee18]

You cannot do the "direct to charity" withdrawal from an inherited IRA.