Social Security

[ProduceMan]

1 - Can anyone explain how social security is computed Barney style?

2 - How do SS benefits look in the future?

[JDD4J4J]

The social security formula, although complex is based on 2 main factors, your top 35 years of earnings and which month you decided to be entitled between age 62 and age 70. There are 96 different months, there are 96 different choices. For those born before 1955, at 62 and 0 months, it is about 75% of your benefit, each month you wait it increases approximately .6% per month. At 66 and 0 month, Full Retirement Age(FRA), it is a Full 100% of the amount calculated on your top 35 years of earnings. If you go past that, you earned delayed credits, about 8% per year, maxing at age 70 for approximately 132% of your benefit.
The significance of FRA is not that it is the most you can get, because it's not, it's that its when the Annual Earnings Test(AET), no longer applies. For those that become entitled to retirement benefits before FRA there is an AET of how much earned income they can have before it affects their benefits. Unearned income has no affect. As of 2018, the AET is currently $17,040. If you go over this amount Social Security withholds $1 in benefits for every $2 earned, rounded to the nearest benefit amount. For each month a beneficiary is suspended for earnings, their benefit is increased the .6% per month the year following they obtain FRA. So for those months they get credit just as if they had not filed. After FRA, there is no AET, a person can earn an unlimited earned income amount and it does not affect whether they receive benefits.

[floridabre]

not sure what "Barney style" means to you but here is a link to SS publication that explains how to compute your social security benefit:

read this for Q1 - https://www.ssa.gov/pubs/EN-05-10070.pdf

as far as question 2 - So when i began my government career 31+ years ago i was interested in planning for my eventual retirement - at that time i simply ignored a potential SS benefit - i figured if i ever saw a $1 of SS benefit i would consider myself lucky - now i would really like at least the $ i've paid in...i guess i'll find out just how much when i die.

[Sad Al]

Retired From SS: The benefits are based on your average earnings over 35 years, after accounting for inflation (called indexing). You get 90% of the first band of earnings, basic coverage so that even low earnings people get a minimum standard of living benefit, then from the next range of that average earnings you are credited with 40% for your benefit. If your average earnings exceed that second range (most do), you get 15% of the rest of your average earnings.

For most people the full benefit is around 40% of their current earnings, but if your average earnings are low (like a farmer) you get more than that, and if you are a CEO, it may be less than 40% of your average earnings. Visit SSA.GOV to get an estimate of your benefits, including disability, survivor, and early or delayed retirement benefits. Check your record of earnings for accuracy.

[Sad Al]

Q2: Do you mean will SS be solvent in the future? I've been answering that question since the 90's, but now that I'm retired I can be more blunt. There are significant investments in government securities that come due in the next two decades. The US Government has never defaulted on its debt and securities. It will be a challenge to repay the debts owed by the US Govt to SS, but if they fail to do that, it will be the political death of those congressman and senators who allow it, and the financial ruin of the best economy in the world. I doubt they will fail to fund SS. However, many will try to get you to take your eyes off the ball, call it a budget problem, and try to reduce benefits on the pretext of getting the US debt under control. SS is self funding. It is not part of the US budget. Don't let them steal from you; be vigilant.

[John316]

Can anybody see the day when the SS benefit will be means tested? If you have been diligent and wise and invested well in both 401 K's and IRA's and have amassed a chunk of money I could see where they will cut your benefits. Not saying it's right but they could do that. God bless everyone.

[Tomanyiron]

Social Security Is a Ponzi Scheme, the number of new contributors has to increase geometrically to pay for older ones at retirement. It was kinda OK as long as the population of new workers was increasing. But at some point you have to: 1- increase deductions or 2- reduce benefits. It‘s another form of welfare, disguised as a retirement system.

[cswift01]

Social Security Is a Ponzi Scheme, the number of new contributors has to increase geometrically to pay for older ones at retirement. It was kinda OK as long as the population of new workers was increasing. But at some point you have to: 1- increase deductions or 2- reduce benefits. It‘s another form of welfare, disguised as a retirement system.

I'm not following it being welfare if it's my money...

[spooner4]

CSRS pension with SS, I had enough quarters to qualify for SS. It is greatly reduced, I have not received any increase in SS in three years, but my Medicare increases every year. The SS covers the Medicare, so I am greatful for that.

[mindofmush]

Social Security Is a Ponzi Scheme, the number of new contributors has to increase geometrically to pay for older ones at retirement. It was kinda OK as long as the population of new workers was increasing. But at some point you have to: 1- increase deductions or 2- reduce benefits. It‘s another form of welfare, disguised as a retirement system.

I'm not following it being welfare if it's my money...

It's not your money, you didn't contribute to your retirement; you were TAXED to pay for a wealth redistribution system of which you may or may not be eligible to collect from.

It is a Ponzi scheme that originally could pay for itself because 50% of the male working population died before becoming eligible to collect benefits (according to the Social Security Administration website's history section).

[cswift01]

Social Security Is a Ponzi Scheme, the number of new contributors has to increase geometrically to pay for older ones at retirement. It was kinda OK as long as the population of new workers was increasing. But at some point you have to: 1- increase deductions or 2- reduce benefits. It‘s another form of welfare, disguised as a retirement system.

I'm not following it being welfare if it's my money...

It's not your money, you didn't contribute to your retirement; you were TAXED to pay for a wealth redistribution system of which you may or may not be eligible to collect from.

It is a Ponzi scheme that originally could pay for itself because 50% of the male working population died before becoming eligible to collect benefits (according to the Social Security Administration website's history section).

This should elucidate my opinion a bit better:

https://tinyurl.com/y8vn2ldl

and

http://archive.fortune.com/2009/01/06/n ... 2009010715

I think the point is that although SS relies on an ever increasing population, the eventual intent is to provide retirees with some form of security. I don't see a Ponzi aspect to that as the Ponzi scheme is there to take money from unwitting participants and make the person at the top fabulously wealthy. Sure you could say the government is that person, however, the "gov'mint" is technically only borrowing money and "should" repay what they are borrowing. Let's hope I'm right...

One suggestion to fix the problem is here https://www.bloomberg.com/view/articles ... it-solvent.

Enjoy

Me

[crondanet5]

I agree. Social Security Benefits, alas, have become the prime source of income for non Federal Americans. While TSP Participants dream of becoming millionaires the average American barely survives a world of car payments, mortgages and kids' shoes. The good news is it will be there for you. And the better news is that every stream of income you receive reduces your dependence on your TSP Account balance to pay your end of life medical expenses. I believe we should focus on improving our life expectancy so we suck the SS coffers dry.

[JDD4J4J]

Social Security is NOT a Ponzi Scheme nor welfare. It is an insurance program. Which is based on working and paying into the social security system. It was generally not intended to be someone's sole source of income. It was intended to be in tandem with company pension, savings, and/or part time work.

[aev]

The significance of the new social insurance program was that it sought to address the long-range problem of economic security for the aged through a contributory system in which the workers themselves contributed to their own future retirement benefit by making regular payments into a joint fund. It was thus distinct from the welfare benefits provided under Title I of the Act and from the various state "old-age pensions." As President Roosevelt conceived of the Act, Title I was to be a temporary "relief" program that would eventually disappear as more people were able to obtain retirement income through the contributory system. The new social insurance system was also a very moderate alternative to the radical calls to action that were so common in the America of the 1930s.

History starts here
https://www.ssa.gov/history/35actinx.html

[ProduceMan]

Thanks to all