Larry should change the language he uses to describe situations. I'll give him a break and assume he doesn't have a child who has taken his life with a gunshot to the head... otherwise he would not be so flip with his "Before Shooting Yourself In the Financial Head' comment. C'mon Larry, use YOUR head and be careful what you say. A lot of people in the world are in pain and reading wiseguy comments like you made only rubs salt in a wound that never heals.
Your nice math cannot account for 'quality of life.' My experience of 'aging' has been that I was at a certain level of energy, mobility and even memory and then I had a health episode. Upon 'complete recovery' I found that I had significantly less energy, mobility, etc.
One issue I would like to see addressed is the scenario where Congress cuts benefits for the most highly paid people. Or cap the benefits at a certain amount so that significant numbers of people do not get as much as currently predicted. In that case, it probably does pay to take benefits early if you think you’re going to be one of those people. Because it is in fact, the case that if benefits are cut by the same percentage across-the-board you still get more if you wait to age 70. But that might not be the solution that ultimately is enacted.
Curious as to why you feel that they should cap the benefits for the highest paid people , as your benefits are strictly based upon your 35 year work history ? Thereby if you pay in the max amount for 35 years shouldn’t you receive the max benefit amount when you claim?
I wasn't suggesting it was fair or unfair. rather that it would be politically easier for Congress to reduce benefits at the high end than to cut them across the board. In fact, I would be very surprised if Congress made an across the board cut. Poor and lower income people depend on Social Security to live. Those people simply will not see the same percentage cuts as people who have higher incomes and don't literally need Social Security to live.
“Should You Collect Social Security Early Given Social Security’s Insolvency?” - Wall Street’s answer to the question you pose most assuredly is NOT “YES.” It is now and always has been “It depends.”
Yes, removing the cap on taxable income would solve the solvency problem. When social security was being set up, it was originally proposed to have no cap, it got shot down by congress. If the cap was eliminated we would probably see the rate go down. Good luck trying to get it passed today. Again, the rich don't want to pay their fair share in taxes by percentages.
Thanks for clarifying that whatever might end up being the solution or not to solve the social security funding issue, waiting to collect social security is the most prudent decision to take for most people.
I will bring-in a different calculation about maximizing SS (specific, but rather common case).
Here is a somebody from my family, named “Joanne” who is 62 in 2025. At 62 her SS = $2500.
I ran an Excel Spreadsheet with the following assumptions (comparison of taking SS @ 66 vs 70): SS growth @ 8% till age of 70, COLA=2.5% .
The scenario of SS @ 66 in the first 4 years (till 70 or 2033) accumulated $214k, while at 2033 the scenario @ 70 had the first annual payment = 55,500. From there on, the payouts will be decreased by (23%), and both will grow 2.5% annually via COLA.
The outcome ( I cannot attach the chart):
- Breakeven (BE) point between two scenarios is at year 2049 (age of 86). If the SS cut is larger, say 30%, the BE point shifts further out. If CPI (Inflation) is larger, say 3%+, then BE point shifts out as well.
So, my recommendation to the Joanne is: take SS at 66, especially that she will need cash flow after 2029.
Reasoning: a/ First 20 yrs of retirement are much more important (life style) that the later ones.
b/ The further we go into the future (like past BE point in 2049) , the less predictable the health and financial environment.
PS. I do not have “MaximizeMySS”, but I do have MaxFi S/W.
And one last important point: Looks like we are heading into 3% CPI environment from now on. If that's the case, then Scenario @ 66 carries even larger value than the one @70, due to erosion of purchasing power quite rapidly.
Thanks for your clear-eyed analysis, which I appreciate amidst the chaos of DOGE and Project 2025 and speculation they will privatize SS to feed Wall Street. I wonder if you could write about whether privatizing SS is realistic using your pragmatic analysis. That would help me assess the Trump administration moves. TY
What about removing the cap on taxable salary? Seems like that would help …
Good question court. Also, what about delaying the eligibility age a bit?
Delaying eligibility = increase in tax to that person.
I agree with Court.
If not remove, at least raise it.
Larry should change the language he uses to describe situations. I'll give him a break and assume he doesn't have a child who has taken his life with a gunshot to the head... otherwise he would not be so flip with his "Before Shooting Yourself In the Financial Head' comment. C'mon Larry, use YOUR head and be careful what you say. A lot of people in the world are in pain and reading wiseguy comments like you made only rubs salt in a wound that never heals.
Your nice math cannot account for 'quality of life.' My experience of 'aging' has been that I was at a certain level of energy, mobility and even memory and then I had a health episode. Upon 'complete recovery' I found that I had significantly less energy, mobility, etc.
One issue I would like to see addressed is the scenario where Congress cuts benefits for the most highly paid people. Or cap the benefits at a certain amount so that significant numbers of people do not get as much as currently predicted. In that case, it probably does pay to take benefits early if you think you’re going to be one of those people. Because it is in fact, the case that if benefits are cut by the same percentage across-the-board you still get more if you wait to age 70. But that might not be the solution that ultimately is enacted.
Curious as to why you feel that they should cap the benefits for the highest paid people , as your benefits are strictly based upon your 35 year work history ? Thereby if you pay in the max amount for 35 years shouldn’t you receive the max benefit amount when you claim?
I wasn't suggesting it was fair or unfair. rather that it would be politically easier for Congress to reduce benefits at the high end than to cut them across the board. In fact, I would be very surprised if Congress made an across the board cut. Poor and lower income people depend on Social Security to live. Those people simply will not see the same percentage cuts as people who have higher incomes and don't literally need Social Security to live.
They made the change to charge higher income people more for Medicare, so what makes you think they won't with Social Security?
“Should You Collect Social Security Early Given Social Security’s Insolvency?” - Wall Street’s answer to the question you pose most assuredly is NOT “YES.” It is now and always has been “It depends.”
Yes, removing the cap on taxable income would solve the solvency problem. When social security was being set up, it was originally proposed to have no cap, it got shot down by congress. If the cap was eliminated we would probably see the rate go down. Good luck trying to get it passed today. Again, the rich don't want to pay their fair share in taxes by percentages.
Thanks for clarifying that whatever might end up being the solution or not to solve the social security funding issue, waiting to collect social security is the most prudent decision to take for most people.
I will bring-in a different calculation about maximizing SS (specific, but rather common case).
Here is a somebody from my family, named “Joanne” who is 62 in 2025. At 62 her SS = $2500.
I ran an Excel Spreadsheet with the following assumptions (comparison of taking SS @ 66 vs 70): SS growth @ 8% till age of 70, COLA=2.5% .
The scenario of SS @ 66 in the first 4 years (till 70 or 2033) accumulated $214k, while at 2033 the scenario @ 70 had the first annual payment = 55,500. From there on, the payouts will be decreased by (23%), and both will grow 2.5% annually via COLA.
The outcome ( I cannot attach the chart):
- Breakeven (BE) point between two scenarios is at year 2049 (age of 86). If the SS cut is larger, say 30%, the BE point shifts further out. If CPI (Inflation) is larger, say 3%+, then BE point shifts out as well.
So, my recommendation to the Joanne is: take SS at 66, especially that she will need cash flow after 2029.
Reasoning: a/ First 20 yrs of retirement are much more important (life style) that the later ones.
b/ The further we go into the future (like past BE point in 2049) , the less predictable the health and financial environment.
PS. I do not have “MaximizeMySS”, but I do have MaxFi S/W.
And one last important point: Looks like we are heading into 3% CPI environment from now on. If that's the case, then Scenario @ 66 carries even larger value than the one @70, due to erosion of purchasing power quite rapidly.
Thanks for your clear-eyed analysis, which I appreciate amidst the chaos of DOGE and Project 2025 and speculation they will privatize SS to feed Wall Street. I wonder if you could write about whether privatizing SS is realistic using your pragmatic analysis. That would help me assess the Trump administration moves. TY
What a lovely time to be retirement age.
They made the change to charge higher income people more for Medicare, so what makes you think they won't with Social Security?