Retirement questions

Crashnburn said:
Maybe the system was upside down from day one, but if it only was to pay out supplemental income, instead of all the other things it pays for but isn't related to retirement, we wouldn't be in this fix. And no, I don't have the list, but I've seen it, and it's extensive.
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The system wasn't always upside down. In fact there were decades when the baby boomers went through their working life when it collected far in excess of the payouts.
The first thing to roll back would be SSI-DI. This was intended as a safety net for those who are permanently disabled, it has expanded far beyond that.
 
mandm said:
Student loans are a pretty safe debt...
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All very good points regarding student loans compared to other forms of debt. I'm of the school debt in general is bad and should be limited to just mortgages. Apparently this has rubbed off on my children. I would be in a much better place financially had I maintained leverage over the years instead of, when I came across some money, splitting it between investments and debt repayment. Even though I know my net worth would be more on paper, there's a peace of mind that comes with, for example, owning your home free and clear. Back to student loans, apparently servicing these loans is hit or miss. My kids are also taking into consideration recent news reports of lost payments and inaccurate balances resulting in students taking a big credit score hit and having prolonged fights to clear their names.
 
Matthew said:
She probably thought it was a good deal...
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Generalizations are pretty terrible, but that said, society at the time was loath of gov't handouts. The gov't had a hard time getting people to cash early SS checks and even had to re-brand the program in an attempt to make it less offensive to a generation that valued hard work etc. Contrast that with the contemporary, rampant abuse of the pandemic relief programs. The world is different now.
 
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Matthew said:
Day one, literally:

Ida May Fuller paid in $24.75 into it, then retired and became the first person to get a SS check - for $22.54. She lived another 35 years and collected a total of $22,888.92.

https://www.ssa.gov/history/idapayroll.html

She probably thought it was a good deal.
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It is disingenuous to look at a corner case of someone who became eligible at the startup of the program. If you want to make this argument, look at someone who started his working life when the program was underway , let's say the 1950s to the 1980s or the 70s to now. The program has a redistribution component where someone who was at the low end of the income range throughout gets more than they paid in. For someone who throughout their career has the 'average' income, the program is already upside down. Even disregarding interest and compound interest, that 'average income' retiree surviving according to the actuary table never gets back what he paid in. It gets worse for someone who hits the income ceiling.
 
Crashnburn said:
Maybe the system was upside down from day one, but if it only was to pay out supplemental income, instead of all the other things it pays for but isn't related to retirement, we wouldn't be in this fix. And no, I don't have the list, but I've seen it, and it's extensive.
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The abuse is shocking and unsustainable. https://apps.npr.org/unfit-for-work/
 
It's a Ponzi scheme. Ponzi schemes are illegal. But good luck with the lawsuit.
 
Pugs said:
The abuse is shocking and unsustainable. https://apps.npr.org/unfit-for-work/
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Just Wow, although I'm not surprised because I know at least one person who is part of this, the whole nine yards, including the kid. Here's one sentence that really struck me: "Americans want to be generous. But Americans don't want to be chumps." Where you fall on the generous-to-chumps spectrum is at heart where you fall politically.

I was also struck by the observation that whether you are on disability is dependent on your education level. I never really thought of the contract--that you will always have a steady income but you will also always be poor. There are those who say no one wants to be poor. Apparently that isn't true.
 
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judypilot said:
It's a Ponzi scheme. Ponzi schemes are illegal. But good luck with the lawsuit.
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It’s actually worse. Ponzi schemes can’t force people to join. Mostly, Ponzis rob money from the mathemically impaired and I don’t have much objection to that.

I favor creating a national lottery to fund SS. That way, it would be completely voluntary and, like a true Ponzi, it would rob idiots.
 
weilke said:
It is disingenuous to look at a corner case of someone who became eligible at the startup of the program. If you want to make this argument, look at someone who started his working life when the program was underway , let's say the 1950s to the 1980s or the 70s to now. The program has a redistribution component where someone who was at the low end of the income range throughout gets more than they paid in. For someone who throughout their career has the 'average' income, the program is already upside down. Even disregarding interest and compound interest, that 'average income' retiree surviving according to the actuary table never gets back what he paid in. It gets worse for someone who hits the income ceiling.
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Yes, it really isn't a fair look by picking case #1 - that's someone who's most likely to get way more than they put in. Then there are those who are more likely to get way less than they either put in or could have invested on their own. That leaves most in the middle. One of the stumbling blocks with SS is the length of retirements. Used to be you worked, you retired, and you died. Or you worked until you called in dead. Now we have 80 year olds living with their parents and retirements can be 20 years long, easily.

It was interesting working where I did for 25+ years before I retired. There were a few of us who were doing pretty well, able to live beneath our means, able to make those 401(k) contributions, plus max our HSA contributions, plus have a little left over for other savings. Then there were the rest of the employees that were usually making very close to minimum wage. It's easy to tell someone, "Put in the 401(k) amount that will result in the max company match." It's hard to take out 6% or whatever, when you have rent, utilities, groceries, car insurance, and $3/gal gas. Many of those guys were also approaching retirement or were within sight of it and were trying to figure out how to do it. All of them were relying on SS to be pretty much their main source of income, plus whatever else they could make by still working somewhere, and they had to wait until 65 in order to get Medicare. I don't know what SS was meant to be, or how people back when it started really felt about it. Since then, companies have gotten out of the pension business for the most part, and employees are expected to pay their own way with a 401(k) or IRA or combination and then supplement it with SS.
 
I'd be in favor of a system much more like Australia/NewZealand have done where when you start working your money, and your employer's match, go into a more market based solution that is very similar to the https://www.tsp.gov that government employees (including my wife) and the military use in the US.

Where Australia and New Zealand go horrible wrong is needs testing at the end. You can contribute to this your entire life and get nothing. That's simply a tax.

Of course the other challenge with SS here is even if we came up with a better system getting from the old system to the new system is a mystery since those of us working are paying for those drawing SS. I think it would take a vision that would require accepting the new system would apply once the children of today start working. Still doesn't get us over the transition but gives us time to figure it out.

Alas, I've never seen a politician think past their next election so it's likely we're stuck with what we have.
 
Half Fast said:
It’s actually worse. Ponzi schemes can’t force people to join. Mostly, Ponzis rob money from the mathemically impaired and I don’t have much objection to that.

I favor creating a national lottery to fund SS. That way, it would be completely voluntary and, like a true Ponzi, it would rob idiots.
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I consider lotteries a stupidity tax. I'm all for them.
 
Pugs said:
Of course the other challenge with SS here is even if we came up with a better system getting from the old system to the new system is a mystery since those of us working are paying for those drawing SS. I think it would take a vision that would require accepting the new system would apply once the children of today start working. Still doesn't get us over the transition but gives us time to figure it out.
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I think you have to pick a point (call it people over 50, for the sake of the discussion) where if you are that age or older, you're grandfathered into the current payout structure. But if you're 49, your ultimate benefits will be reduced by 1%, and if you're 48, they will be reduced by 2%, etc. down to the point where the system should be self sustaining over the long term.

Ultimately, it is a business model that has to self sustain.
 
All of these proposed solutions, whether they work or not, requires leadership. We have none. As I discuss local politics locally I like to say I wouldn't trust them to run my popsicle stand. From the local level all the way to the top, they are all syncophant self serving morons, left and right, red and blue. I guess that is political but since I claim both sides are morons I should be OK????
 
FastEddieB said:
We’ve managed a very comfortable retirement. But IRMAA (I was aware of the concept but had to look up the abbreviation) doesn’t presently kick in until $182,000 in income for joint filers, and we’re a long way from that amount.
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If you've socked away the majority of your retirement savings in tax-deferred accounts, and are now trying to be "tax-efficient" by doing Roth conversion, you can get your MAGI up over $182k several years in a row pretty quick. Makes tax planning a little tricky when RMDs are just 7 years away and Uncle Sammy's outlook is swinging to the left. Especially in light of an aging bull market, flat interest rates and this "inflation" scare.
 
wilkersk said:
If you've socked away the majority of your retirement savings in tax-deferred accounts, and are now trying to be "tax-efficient" by doing Roth conversion, you can get your MAGI up over $182k several years in a row pretty quick. Makes tax planning a little tricky when RMDs are just 7 years away and Uncle Sammy's outlook is swinging to the left. Especially in light of an aging bull market, flat interest rates and this "inflation" scare.
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Do what you want, but doing Roth conversions during bull markets is counter productive.
 
Pugs said:
The abuse is shocking and unsustainable. https://apps.npr.org/unfit-for-work/
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A relative of mine used to do contract work as disability examiner for one of those southern states. The welfare office loved him, the local disability shysters hated him. The article matches the war stories he told me about the process and clientele.

There is a 'lever' effect to the SSI-DI scam. The beneficiaries also become eligible for medicare. So every 45 year old with a BMI of 48 who can't work due to 'knee pain' (no **** lady, your knees weren't built for this) and diabetic complications also racks up 10s of thousands every year in medicare/medicaid expenses. Neither SSI nor MC were designed for this so before we anyone claims that the system is not sustainable, I suggest we fix it first and then decide how to pay for what has to be paid for.

SSI-DI enrollment numbers are actually decreasing since 2014 or so. But that is mostly on account of beneficiaries hitting federal retirement age and transitioning to SSI retirement from SSI-DI. There has been some tightening of the review process around that time, but the bulk of the decrease is simply people aging out.
 
weilke said:
A relative of mine used to do contract work as disability examiner for one of those southern states. The welfare office loved him, the local disability shysters hated him. The article matches the war stories he told me about the process and clientele.

There is a 'lever' effect to the SSI-DI scam. The beneficiaries also become eligible for medicare. So every 45 year old with a BMI of 48 who can't work due to 'knee pain' (no **** lady, your knees weren't built for this) and diabetic complications also racks up 10s of thousands every year in medicare/medicaid expenses. Neither SSI nor MC were designed for this so before we anyone claims that the system is not sustainable, I suggest we fix it first and then decide how to pay for what has to be paid for.

SSI-DI enrollment numbers are actually decreasing since 2014 or so. But that is mostly on account of beneficiaries hitting federal retirement age and transitioning to SSI retirement from SSI-DI. There has been some tightening of the review process around that time, but the bulk of the decrease is simply people aging out.
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When you apply an action to an initial condition with the assumption that the initial condition remains fixed, you aren’t taking into consideration that your very act of interference causes that initial condition to change.

Let’s assume x number of people are disabled. Let’s help them by providing benefits. That creates an incentive to become disabled and now x has a multiplier. This is never foreseen by the people coming up with these schemes.

x will grow even if all other factors remain the same but they didn’t. The obesity rate has skyrocketed causing x to grow legitimately in addition to the meddling factor. That wasn’t foreseen either.

The obese person with the knee problem and complications of diabetes might be legitimately disabled. We have an overarching problem as a species. We are hard wired by evolution to overeat and store fat when food is plentiful because in a million years of evolution that’s how we survived when it wasn’t. Now, technology has solved the food scarcity problem but our DNA hasn’t caught up.

Medical technology has advanced to where we can keep these sick people and their sick beneficiaries alive for decades after they should have died by normal biological standards.

Add the population bubble to this and you really have a big problem. Draining a shrinking pool of productive workers of more and more of their money to support a growing population of sick people that just won’t die is not only unsustainable, it’s slavery, taking a large portion of a working person’s time. Time is all we really have in life. Raise the taxes to cover the ever growing beneficiaries. What’s the alternative to that? Just print money to keep the checks coming. That’s inflation but hey, not our problem. It’s our children and grandchildren’s problem, if we even have any.

Young people are losing interest in marriage and large families with good reason. What’s the incentive? Women would rather have a career than lots of babies and men now have to support kids through college; children are no longer an economic asset but a huge liability. Thank goodness for birth control technology. Except it’s given us a population time bomb - too few young people, rather than too many like we mistakenly thought was the problem.

China has realized this disastrous misstep too late and are now furiously back peddling their population control policies. Whoops. Okay you can have two kids now. No wait, make that three. And guess what? The women don’t want them now. LOL!
 
judypilot said:
The reason I think SS and Medicare should be means tested is people are living a LOT longer than they used to. The system as set up now is unsustainable, especially Medicare. Don't kid yourself. You didn't pay into the systems to support yourself in your old age. You paid in to support your parents! I suspect most of us are either Baby Boomers or whatever the BB kids' generation is. Baby Boomers supported our parents. Fortunately, there were a LOT of us, so the cost was spread around. I dislike that kind of generational cost-shifting, but it's already happened. Succeeding generations have been quite a bit smaller, meaning either us older folks who have done well are going to have to kick in by giving up some of our benefits or we're going to have to tax the heck out of the people who are still working. Or, more likely, both. Do you really want your kids' and grandkids' taxes to be a lot higher to support you in your old age?

Having said that, if I'd been able to take all the money I paid into SS and Medicare while working and invested it, I'd have approximately 3-4 times as much money as I have now and wouldn't need Medicare (I already don't "need" my SS payments to live on, but I'm sure not going to stop taking them, either).

By the way, one line I've been hearing from some politicians is that SS was intended as insurance, not as a retirement fund. That is a lie. My father was old enough to remember when SS was established and he said that it was definitely established as a federal retirement fund, NOT insurance.

So I don't buy the line "I paid in so I should get money out". Yeah, the government has screwed up, but that doesn't fix the situation. I'd rather have my benefits cut than taken away entirely, especially Medicare.

As far as loan forgiveness is concerned, I could not agree more. We know a young couple who worked their BUTTS off to pay off their student loans. To say they're ****ed that they could have dallied and have it all forgiven would be the understatement of the year. Forgive for teachers and nurses, maybe, but everyone else? No way!
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My wife is a teacher. Masters degree educated with certifications out the whohaa. 23 years in we finally have all her school paid off. I think it’s ok for other teachers to pay their loans as well. Nurses too.
 
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MooneyDriver78 said:
We’ll see if it gets challenged in SCOTUS, presidents aren’t supposed to be able to spend $.
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unless appropriated and authorized by Congress. "appropriated and authorized" or whatever the correct terms are.
 
MooneyDriver78 said:
...SCOTUS...
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Agreed. Thanks for the opportunity to name drop. I was in the same HS class as Gorsuch and was two years behind Kavanaugh. I'll let them know how they should rule :)
 
You're getting a lot of advice here, much of it contradictory. Find a good CPA or CFA and work with him/her. Everyone is different, from life expectancy to expenses to availability of Medicare plans (we are eligible for an awesome plan that isn't available to my brother, for example, because of where we live) to how much money you'll need in retirement (i.e., what do you want to do) to your risk tolerance to whether you have kids and want to leave them money etc. etc. etc. etc. ad nauseam. A pilot forum isn't the best place to work this out.
 
Clip4 said:
If you do not take Part B (no one in their right mind doesn’t take B and Social Security automatically enrolls you) when first eligible) and want it later, there is a substantial penalty.
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Not if you are still working and getting health insurance through your employer.. Once off the employer plan, you can enroll with no penalty.
 
Ventucky Red said:
Not if you are still working and getting health insurance through your employer.. Once off the employer plan, you can enroll with no penalty.
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True, but if you are on an employer plan you probably aren’t retired and the thread title is “Retirement Questions”.
 
Clip4 said:
True, but if you are on an employer plan you probably aren’t retired and the thread title is “Retirement Questions”.
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Many employers, including mine and the federal gov't, will continue to pay their portion of your health care costs after retirement for a period of time on the same plans you had when employed and you continue to pay the other portion. I'm retiring at 59 in 4 months and we will use that to bridge to Tri-Care at 60 from my USNR retirement.
 
But there are some benefits to getting Part B even with the Fed health plan after retirement. I was just reading a site on that.
 
Pinecone said:
But there are some benefits to getting Part B even with the Fed health plan after retirement. I was just reading a site on that.
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So what are these benefits of which you speak? They will cost you $170 per month (for each insured) at present; probably more in the future.

Dave
 
cessna182b said:
So what are these benefits of which you speak? They will cost you $170 per month (for each insured) at present; probably more in the future.

Dave
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If your employer plan has high coinsurance , part B will pick that up (after $154 deductible). Can be worth the 2k premium if you have expensive issues.
 
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