Author Topic: Social Security - What's In It For You  (Read 7018 times)

RWD

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Social Security - What's In It For You
« on: August 26, 2015, 01:52:16 PM »
My wife got a Social Security update thing in the mail which has a page titled "What's In It For You". Here is an excerpt (she is 29 years old):

Quote
We realize you have a long time to go until retirement. However, if you want to be able to look forward to financial security when the time comes, it is never too early to begin planning. The good news is that Social Security will provide the foundation for your retirement income.

Financial planners generally agree retirees will need about 70-80 percent of preretirement earnings to enjoy a comfortable retirement. For an average worker, Social Security replaces about 40 percent of annual preretirement earnings, so you will need to save and invest to ensure an adequate income during retirement for you and your family.

This is amusing in context of our own finances, as we don't have a long time to go until financial independence and we don't expect to need any Social Security.

I wasn't quite sure where to post this. On one hand this encourages people to start saving on their own and not to rely entirely on Social Security, but on the other it is perpetuating the idea that an average worker can't retire until they are 62+.

nereo

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Re: Social Security - What's In It For You
« Reply #1 on: August 26, 2015, 01:59:10 PM »
given that the target audience for these mailings are all adults who have worked in the US, I don't think it's terrible advice.  It lays out how much income SS replaces for a typical worker, and then gives what will constitute a 'comfortable retirement'.  It doesn't say you can't retire before 62+... rather it leaves that up to the individual to determine. 

That said, good for you and your wife to be to close to FI so early in your lives.  You can safely ignore SS statements if you plan on living off investments for 30+ years before you're even eligible to withdraw from SS; it won't impact your FI number that far into the future, regardless of what happens to SS.

jinga nation

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Re: Social Security - What's In It For You
« Reply #2 on: August 26, 2015, 02:21:06 PM »
I actually like reading the annual mailings. It is amusing if you're a Mustachian, Boglehead, thrifty, savvy, in the line of FIRE, etc. But the reality is that the average worker will work until (and maybe) past their retirement age. The mailings are intended to give the average consumer-mindset audience a brake check and assess their financial situation, present and future. I don't think it is perpetuating anything. It is providing facts and figures and grounding people to reality.

/USD 0.02

nereo

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Re: Social Security - What's In It For You
« Reply #3 on: August 26, 2015, 02:24:12 PM »
/USD 0.02
OT, but I love that signature

/CAD 0.0266

forummm

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Re: Social Security - What's In It For You
« Reply #4 on: August 26, 2015, 04:58:41 PM »


/ZWD 7.238

nereo

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Re: Social Security - What's In It For You
« Reply #5 on: August 26, 2015, 05:57:48 PM »


/ZWD 7.238
oh my!  I should move there... I'd be a millionaire in no time!

forummm

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Re: Social Security - What's In It For You
« Reply #6 on: August 26, 2015, 07:52:17 PM »


/ZWD 7.238
oh my!  I should move there... I'd be a millionaire in no time!

I actually have 100 trillion dollars.

meg_shannon

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Re: Social Security - What's In It For You
« Reply #7 on: August 27, 2015, 12:56:38 AM »
I don't really see anything wrong with the advice for a typical American. MMM subscribers are a rare breed and it wouldn't make sense to include a couple of extra paragraphs for those who are FI. Waste of ink and those who are FI wouldn't learn anything new from a SS mailing.

RWD

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Re: Social Security - What's In It For You
« Reply #8 on: August 27, 2015, 06:42:24 AM »
I don't really see anything wrong with the advice for a typical American. MMM subscribers are a rare breed and it wouldn't make sense to include a couple of extra paragraphs for those who are FI. Waste of ink and those who are FI wouldn't learn anything new from a SS mailing.

I think you're right. I guess it's just indicative of the average American as opposed to actively encouraging the status quo.

meg_shannon

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Re: Social Security - What's In It For You
« Reply #9 on: August 28, 2015, 03:26:18 AM »
I don't really see anything wrong with the advice for a typical American. MMM subscribers are a rare breed and it wouldn't make sense to include a couple of extra paragraphs for those who are FI. Waste of ink and those who are FI wouldn't learn anything new from a SS mailing.

I think you're right. I guess it's just indicative of the average American as opposed to actively encouraging the status quo.

It's OPPOSING the status quo. The status quo is not planning or saving much (if anything) for retirement. The SS mailing is encouraging Americans to plan, save, and invest for retirement. Even if it's a retirement at 65, a fully funded retirement is not typical right now.

jinga nation

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Re: Social Security - What's In It For You
« Reply #10 on: August 28, 2015, 07:25:10 AM »
I don't really see anything wrong with the advice for a typical American. MMM subscribers are a rare breed and it wouldn't make sense to include a couple of extra paragraphs for those who are FI. Waste of ink and those who are FI wouldn't learn anything new from a SS mailing.

I think you're right. I guess it's just indicative of the average American as opposed to actively encouraging the status quo.

It's OPPOSING the status quo. The status quo is not planning or saving much (if anything) for retirement. The SS mailing is encouraging Americans to plan, save, and invest for retirement. Even if it's a retirement at 65, a fully funded retirement is not typical right now.

"How dare Big Brother tell me how to spend my money! It isn't any of their business..."
except when the same people suck on the Govt teat for their Medicare, Social Security, Unemployment, etc. but protest at paying taxes.

We truly fucked as a nation until financial edumacation is mandatory. Proper fucked.

nereo

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Re: Social Security - What's In It For You
« Reply #11 on: August 28, 2015, 07:30:51 AM »

We truly fucked as a nation until financial edumacation is mandatory. Proper fucked.
really??  Don't get me wrong, I'm all for an increased emphasis on financial 'edumacation,' but we've never emphasized it and we seem to have done ok over the last century.  BUmps and brusies that could have been avoided, but somehow... we're still here...

Jack

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Re: Social Security - What's In It For You
« Reply #12 on: August 28, 2015, 08:43:11 AM »

We truly fucked as a nation until financial edumacation is mandatory. Proper fucked.
really??  Don't get me wrong, I'm all for an increased emphasis on financial 'edumacation,' but we've never emphasized it and we seem to have done ok over the last century.  BUmps and brusies that could have been avoided, but somehow... we're still here...

On the contrary: until now, most people had pensions and thus didn't need "edumacation" as much. Once the first '401k generation' starts to retire, we'll really see the shit hit the fan.

wenchsenior

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Re: Social Security - What's In It For You
« Reply #13 on: August 28, 2015, 08:49:47 AM »

We truly fucked as a nation until financial edumacation is mandatory. Proper fucked.
really??  Don't get me wrong, I'm all for an increased emphasis on financial 'edumacation,' but we've never emphasized it and we seem to have done ok over the last century.  BUmps and brusies that could have been avoided, but somehow... we're still here...

More worrisome to me is that the studies of outcomes of financial education classes conducted in high school or undergrad college level DO NOT show any statistical improvement in knowledge. Perhaps we need a bigger sample size, perhaps the increased knowledge will roll around in young peoples' heads to be used properly later in life, perhaps we just need different methods of teaching the concepts, etc. But it isn't encouraging. I think a lot of it is just down to how most human brains are wired. We aren't wired to value future outcomes. People on this forum are outliers.

beltim

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Re: Social Security - What's In It For You
« Reply #14 on: August 28, 2015, 08:51:14 AM »

We truly fucked as a nation until financial edumacation is mandatory. Proper fucked.
really??  Don't get me wrong, I'm all for an increased emphasis on financial 'edumacation,' but we've never emphasized it and we seem to have done ok over the last century.  BUmps and brusies that could have been avoided, but somehow... we're still here...

On the contrary: until now, most people had pensions and thus didn't need "edumacation" as much. Once the first '401k generation' starts to retire, we'll really see the shit hit the fan.

This is mostly false.  Most employees of private companies never actually received a defined benefit pension. People like to remember the "good old days" when people received a pension, but this never really existed.

http://www.dol.gov/ebsa/pdf/historicaltables.pdf

nereo

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Re: Social Security - What's In It For You
« Reply #15 on: August 28, 2015, 09:01:57 AM »
On the contrary: until now, most people had pensions and thus didn't need "edumacation" as much. Once the first '401k generation' starts to retire, we'll really see the shit hit the fan.
Sorry, but that's one of the economic myths that's oft-repeated but is completely wrong. There has *never* been a time when the majority of US workers had a pension plan.  In 1975 only a quarter of retirees had non-SS pension income, and only 15% of total income from these retirees came from pension plans.  That number has actually gradually increased, where in 2010 about 1/3 or retirees had non-SS pension income, and it made up about 20% of their entire retirement income. One reason for the increase is that the size of the federal government relative to the overall labor force has been increasing in recent decades.
Today, somewhere around 20-30% of workers are vested in some sort of public or private pension plan, which is about the same percentage as workers in the 1960s and 1970s.

Second - the first 401(k) plans started rolling out in the early 1980s and became very popular by the end of Reagan's presidency.  That was 3 decades ago.  This "401(k) generation" as you call them have been retiring in massive numbers for more than a decade.  The cohort who retired between 2005-2015 had at least two decades to accumulate savings under 401(k) plans.


zephyr911

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Re: Social Security - What's In It For You
« Reply #16 on: August 28, 2015, 09:11:43 AM »
That number has actually gradually increased, where in 2010 about 1/3 or retirees had non-SS pension income, and it made up about 20% of their entire retirement income. One reason for the increase is that the size of the federal government relative to the overall labor force has been increasing in recent decades.
Thanks a lot, Obama! *shakes fist*
One of my current dilemmas: if I run out of other reasons to be a fed for five whole years (October 2016), do I stick it out till then just to get the partial deferred retirement? Last time I ran the numbers it looked like I'd get a few hundred a month when I'm 65 or whatever. I dunno.

nereo

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Re: Social Security - What's In It For You
« Reply #17 on: August 28, 2015, 09:25:32 AM »
That number has actually gradually increased, where in 2010 about 1/3 or retirees had non-SS pension income, and it made up about 20% of their entire retirement income. One reason for the increase is that the size of the federal government relative to the overall labor force has been increasing in recent decades.
Thanks a lot, Obama! *shakes fist*
One of my current dilemmas: if I run out of other reasons to be a fed for five whole years (October 2016), do I stick it out till then just to get the partial deferred retirement? Last time I ran the numbers it looked like I'd get a few hundred a month when I'm 65 or whatever. I dunno.
If you're going to be fair, you have to start with Reagan. The percentage of government workers during the 1980s increased from ~6.5% to 7.2% under Reagan, then nudged up ever so slightly during BushI + Clinton + Bush II.  Under Obama (term I) the % of federal workers actually decreased, in large part due to the great recession.
Here's an interesting article in Forbes about the trend: http://www.forbes.com/sites/mikepatton/2013/01/24/the-growth-of-the-federal-government-1980-to-2012/

Lizzy B.

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Re: Social Security - What's In It For You
« Reply #18 on: August 28, 2015, 09:28:42 AM »

We truly fucked as a nation until financial edumacation is mandatory. Proper fucked.
really??  Don't get me wrong, I'm all for an increased emphasis on financial 'edumacation,' but we've never emphasized it and we seem to have done ok over the last century.  BUmps and brusies that could have been avoided, but somehow... we're still here...

I agree that we're in trouble and that financial literacy is woefully lacking for most folks. Is this really something that we should expect schools to be responsible for, though? If Wenchsenior is right (and I've seen those data elsewhere) and taking financial literacy classes doesn't result in more sound financial decision making, it seems like we'd be better off spending that classroom time on educational fundamentals. We're not doing so hot in those either...

It seems like this is something better taught at home by parents showing their kids the impact of decisions they make. Of course, given the state of the finances of many parents, they may not be the best teachers, but that's another issue. 

nereo

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Re: Social Security - What's In It For You
« Reply #19 on: August 28, 2015, 11:57:35 AM »

We truly fucked as a nation until financial edumacation is mandatory. Proper fucked.
really??  Don't get me wrong, I'm all for an increased emphasis on financial 'edumacation,' but we've never emphasized it and we seem to have done ok over the last century.  BUmps and brusies that could have been avoided, but somehow... we're still here...

I agree that we're in trouble and that financial literacy is woefully lacking for most folks. Is this really something that we should expect schools to be responsible for, though? If Wenchsenior is right (and I've seen those data elsewhere) and taking financial literacy classes doesn't result in more sound financial decision making, it seems like we'd be better off spending that classroom time on educational fundamentals. We're not doing so hot in those either...

It seems like this is something better taught at home by parents showing their kids the impact of decisions they make. Of course, given the state of the finances of many parents, they may not be the best teachers, but that's another issue.
I think it is something we should expect schools ot be responsible for.  Even if our current financial literacy classes haven't resulted in more sound financial decision making, it doesn't mean we should just give up on it entirely.  It means we need a better approach and more emphasis (certainly not less).

I don't agree that it would be better taught at home by parents.  why?  It's not a subject that is as deeply personal as sexual education or religion (though we teach both of those in the public school system), and it arguably has more immediate benefits on society than most other subjects, particualry the social sciences.  It's not much of a stretch to say that a person who makes good financial decisions will make a better citizen, a better employee, and have less stress overall than someone who is making payday loans and choosing finance options they can't afford.

zephyr911

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Re: Social Security - What's In It For You
« Reply #20 on: August 28, 2015, 12:17:27 PM »
Thanks a lot, Obama! *shakes fist*
If you're going to be fair, you have to start with Reagan....
Totally joking, BTW. I also like to blame Obama for Appalachia losing 95% of its coal jobs before he was president... ;)

I only have one thing to say on the subject of Social Security: the hysteria about this subject to which I was subjected growing up is partly responsible for my early interest in investments, and therefore my current progress toward FIRE. So, thanks to whoever that was.

Lizzy B.

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Re: Social Security - What's In It For You
« Reply #21 on: August 28, 2015, 01:25:07 PM »

I agree that we're in trouble and that financial literacy is woefully lacking for most folks. Is this really something that we should expect schools to be responsible for, though? If Wenchsenior is right (and I've seen those data elsewhere) and taking financial literacy classes doesn't result in more sound financial decision making, it seems like we'd be better off spending that classroom time on educational fundamentals. We're not doing so hot in those either...

It seems like this is something better taught at home by parents showing their kids the impact of decisions they make. Of course, given the state of the finances of many parents, they may not be the best teachers, but that's another issue.
I think it is something we should expect schools ot be responsible for.  Even if our current financial literacy classes haven't resulted in more sound financial decision making, it doesn't mean we should just give up on it entirely.  It means we need a better approach and more emphasis (certainly not less).

I don't agree that it would be better taught at home by parents.  why?  It's not a subject that is as deeply personal as sexual education or religion (though we teach both of those in the public school system), and it arguably has more immediate benefits on society than most other subjects, particualry the social sciences.  It's not much of a stretch to say that a person who makes good financial decisions will make a better citizen, a better employee, and have less stress overall than someone who is making payday loans and choosing finance options they can't afford.

Yeah, I really think you’re onto something when you say that informed financial decision-makers would probably be better citizens.  Teaching more of this stuff may well have prevented people from getting mortgages they couldn’t afford which could have prevented or shrunk the crash in ’08, and I’m sure there are countless other examples we could point to.  If we were smarter about our own budgets, we’d be smarter about how our businesses and governments spent their money too, and we might all be better off.

I’m probably reacting mostly because many of my coworkers seem to think that it’s the schools’ job to teach their children everything.   Including things like how to cook, how to recognize a healthy diet, how to balance a checkbook, how to make friends, how to vegetable garden, how to sew, etc. in addition to the regular academic subjects.  Doing a little of each of those is GREAT, don’t get me wrong, but it shouldn’t come at the expense of the curriculum staples.  They’re all important skills that can easily be incorporated into other lesson plans (budget plans in math, gardening and nutrition in science, etc.)

As a taxpayer and someone who will eventually live in the world run by the kids currently in school, I think you should always push to make schools as good as they can be.  However, I don’t think it’s fair to expect or demand that the school to be a one-stop-shop for imparting all the necessary wisdom.  That mostly seems like a way to move responsibility from the parents to the schools.

Edited to fix quote nesting problems.
« Last Edit: August 28, 2015, 04:37:37 PM by Lizzy B. »

Goldielocks

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Re: Social Security - What's In It For You
« Reply #22 on: August 28, 2015, 02:00:33 PM »
That number has actually gradually increased, where in 2010 about 1/3 or retirees had non-SS pension income, and it made up about 20% of their entire retirement income. One reason for the increase is that the size of the federal government relative to the overall labor force has been increasing in recent decades.
Thanks a lot, Obama! *shakes fist*
One of my current dilemmas: if I run out of other reasons to be a fed for five whole years (October 2016), do I stick it out till then just to get the partial deferred retirement? Last time I ran the numbers it looked like I'd get a few hundred a month when I'm 65 or whatever. I dunno.
It is generally to your advantage to be in a defined benefit plan over 45 yrs of age as the company must put in more money for older (and female) employees, due to the formulas. Each plan is different on withdrawal, but keeping the defined benefit over a payout is best if you are older and closer to normal retirement date.

FLA

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Re: Social Security - What's In It For You
« Reply #23 on: September 06, 2015, 08:20:42 PM »
Did anyone mind when SS stopped sending yearly statements with projected benefits?  I think seeing that those numbers are, for the vast majority, pretty darn low to live off of, would encourage more people to use other retirement vehicles. The info is now on the web but you have to go and get that info, it no longer comes to you. So if you already aren't saving much for retirement, now you are not even getting SS statements that might scare you enough to start planning. I get the whole saving paper business, but that was one important piece of paper IMHO

wenchsenior

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Re: Social Security - What's In It For You
« Reply #24 on: September 07, 2015, 09:23:46 AM »
Did anyone mind when SS stopped sending yearly statements with projected benefits?  I think seeing that those numbers are, for the vast majority, pretty darn low to live off of, would encourage more people to use other retirement vehicles. The info is now on the web but you have to go and get that info, it no longer comes to you. So if you already aren't saving much for retirement, now you are not even getting SS statements that might scare you enough to start planning. I get the whole saving paper business, but that was one important piece of paper IMHO

That always seemed like false economy to me, too. Actually, I read that they are reversing this decision and will be sending out paper statements again every 5 years. I think this is a good compromise.

eyesonthehorizon

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Re: Social Security - What's In It For You
« Reply #25 on: September 16, 2015, 09:35:11 PM »
...
Yeah, I really think you’re onto something when you say that informed financial decision-makers would probably be better citizens.  Teaching more of this stuff may well have prevented people from getting mortgages they couldn’t afford which could have prevented or shrunk the crash in ’08, and I’m sure there are countless other examples we could point to.  If we were smarter about our own budgets, we’d be smarter about how our businesses and governments spent their money too, and we might all be better off.

I’m probably reacting mostly because many of my coworkers seem to think that it’s the schools’ job to teach their children everything.   Including things like how to cook, how to recognize a healthy diet, how to balance a checkbook, how to make friends, how to vegetable garden, how to sew, etc. in addition to the regular academic subjects.  Doing a little of each of those is GREAT, don’t get me wrong, but it shouldn’t come at the expense of the curriculum staples.  They’re all important skills that can easily be incorporated into other lesson plans (budget plans in math, gardening and nutrition in science, etc.)
...

Oh, this. I agree so strongly across the board on this first paragraph here - I think one of the biggest issues for us even just in general interpersonal realms (but especially in the business world) is that everybody is expected/ encouraged to be strapped and desperate all the time, and stressed, deprived-feeling people are not only bad at planning, they're usually jerks.

And where I agree that there seems to be a lot of effort to lay the blame (but not the credit) for childrearing on the public education system, I'd like to point out that it doesn't necessarily actually have to diminish the quality of the education to teach these basics - until a few decades ago, shop and home ec classes managed to be taught alongside biology and algebra and Latin. The trouble isn't that we don't have enough time to teach kids what they need. The trouble is we don't have time to teach them and then test them backwards and forwards and sideways and Sundays. Ask any public educator - teaching has become in a few decades what politics has been for millennia: a pantomime of accomplishment in substitute for the real thing.