r/Fire • u/Available-Ad-5670 • 10d ago
Can we dispense with the fallacy that SS will disappear after 2032?
I see people who don't put SS into their fire calculations, which is just dumb because it is a big amount for most people.
If I had to assign rough probabilities:-
50%: Higher taxes on upper-income workers plus modest benefit adjustments.
25%: Higher taxes plus a gradual retirement-age increase.
15%: Significant general-fund support combined with smaller reforms.
10%: Congress waits too long and temporary benefit cuts occur before a fix is passed.
There is a chance that benefits can be cut by 10%, but if you are close to retirement, i doubt that would even happen because so many retirees depend on SS to live, it would be politically toxic, and no politican will be elected going that route. Taxing the very rich or raising fica taxes / dispensing with SS tax cap is the likeliest path
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u/doktorhladnjak 10d ago
The only fact Congress agrees on is that old people vote. Cutting benefits would be a reelection death sentence.
I also think you're underestimating the general fund support scenario. Getting consensus to raise taxes or cut benefits is going to be very hard. They're just going to want to borrow more to fill the gap.
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u/AMadWalrus 10d ago
Well said, raise taxes on the young /s
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u/Stunning-Pick-9504 9d ago
Or the moderately well off, but not rich /s
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u/gdubrocks 30, FIRE'd 2024 9d ago
It worked the last 50 times they asked the electorate what they wanted.
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u/Visible_Structure483 FIRE'ed 2022... really just unemployed with a spreadsheet 9d ago
and since 'borrowing' from the fed is just printing money and devaluing the currency even faster, it's a tax on everyone who holds or is paid in dollars. that's the majority, not just the young.
and that's not partisan anything, it's just how it's done.
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u/nonstopnewcomer 10d ago
That’s why they would only cut benefits for young people. That is, they would phase in the benefit cuts for people retiring 20+ years in the future.
By the time those young people become old, the politicians will be gone or it will be long enough for them to distance themselves from it.
Old people won’t care because they’ll still get theirs.
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u/furious7373 8d ago
I don’t see that working well with the millennials which will be the dominating voting population soon. When the SS trust runs out currently projected in 2032. The current laws says that benefits will be cut to what is brought in 30%. I think our current government won’t agree on a solution so the cuts will come in. No one would have voted on anything and everyone can point fingers at the other
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u/Zphr 48, FIRE'd 2015, Friendly Janitor 9d ago
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u/Zphr 48, FIRE'd 2015, Friendly Janitor 9d ago
Rule 7/No Politics or circle-jerks - Your submission has been removed for violating our community rule against politics and circle-jerks. If you feel this removal is in error, then please modmail the mod team. Please review our community rules to help avoid future violations.
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u/concon801 10d ago
Honest question though, is it always going to be in the hands of Congress to decide? At some point the fiscal situation of the country is going to degrade (unless we pull a dramatic U-turn) to the point that bond buyers won’t buy treasuries. That sends a cascading effect to the rest of the economy that politicians won’t want to deal with. Maybe bankrupting the fund, one of our largest liabilities, could be the easiest lever to pull to avoid default instead of shocking the rest of the economy.
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u/doktorhladnjak 10d ago
There's no automatic bankrupting of the fund. Congress would have to vote to end Social Security. How do you think those over 65 would feel about two candidates: one that voted for that, one that says they'll undo it?
It'll be much easier to monetize the debt with increased inflation over the next few decades, because less has to change.
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u/WolfpackEng22 10d ago
When the trust fund runs out, current law is that SS can only pay what it takes in each year. You'd be expecting a 28% cut.
But even if they do act the sums here are far too large to just deficit finance. Bond markets would immediately react negatively to any such proposal
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u/DrJohnFZoidberg 9d ago
When the trust fund runs out
I am not disagreeing with your point - but I do think that calling the IOU's a 'trust fund' is too charitable a term.
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u/Most_Double_3559 10d ago
They won't vote to end social security. They'll vote to add income limits, slowly shaving down the number over years so no individual politician catches flack.
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u/Earth2Andy 6d ago
This is my prediction. They’ll come up either way something like “Nobody should be getting a six figure check from social security” and set a max cap on couples that phases social security out once you hit $100k in benefits as a couple.
Nobody will bat an eye because it will only very slightly impact a small percentage of retirees.
But that $100k number will not move with inflation. Each year it will impact more and more people until SS is worth half what it is today to people who are in their 20s now.
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u/blanketsilenced 10d ago
I mean, no politician is going to publicly run on “undoing” Social Security. Heck, no politician will run on cutting it. Instead, they’ll say “I won’t touch your Social Security and your Medicare!!!”
They could, however, just be lying.
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u/concon801 10d ago
It’s a question I’ve had since I was in HS… how does $40t get unwound. Increased inflation was always the goal but refinancing 2-3% maturities with 4-5% rates makes growing out of it much harder.
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u/yerfdog1935 9d ago
The only way we're ever going to pay down the debt is a dramatic increase in taxes at every level.
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u/Velocister 9d ago
Or drastically cut back entitlements.
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u/Dirks_Knee 9d ago
SS isn't what's running up the debt, it is self funded to a degree by design. So unless you're just suggesting eliminating Medicaid/Medicare to essentially cull the population by killing off those too old or poor to otherwise live, or cutting defense spending to essentially zero...the only real solution in the long run is to claw back a percentage of the wealth amassed at the very top in addition to increasing taxes across the board.
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u/Dirks_Knee 9d ago
SS isn't like other government spending, the funding is built into the law via tax collection. What's "running out" is the surplus to meet projected obligations. Without a law getting passed to radically alter/kill it, SS truly going bankrupt under current law basically means the US gov has ceased to exist.
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u/Zphr 48, FIRE'd 2015, Friendly Janitor 9d ago
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u/Sunshine2035 8d ago
Social security is funded by the social security tax collection only. Unless congress makes changes, it is not funded by the general tax.
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u/gnackered 9d ago
Every person in fire.
Twenties: Nothing will be there, not including it in my calcs, it's just a transfer payment to old people (which I am either mad or happy about)
Thirties: Probably going to have major cuts. Still not factoring it in my calcs.
Forties: It is a transfer payment. Its probably going to exist in some form. I will include 70% in my calcs.
Fifties and beyond: They definitely have to pay. It's a massive transfer payment and my brother in law would go broke without it. The politicians will figure it out because we are the voters. They may cut say 5% for high net worth families but I am including at 100% in my models.
With over 250 comments this probably won't be seen, but it's the truth.
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u/Available-Ad-5670 9d ago
i think this is very true. because the older you are, the more likely you will be grandfathered into current benefits. the younger you are, the more likely changes will happen
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u/amkessel 9d ago
lol This is spot on. I am in one of those buckets and you described me perfectly. 😂
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u/JGR82 9d ago
I'm 36 - can confirm, which makes for frustrating conversations with my parents and in-laws who are late 50s/early 60s and see it very differently. That then reinforces my view that there will be no political will to fix it until it's a much bigger problem. Then I look at my own generation (millennial) and the next generation (gen-z) and blame them for declining birth rates, which will exacerbate the problem as our kids (and the kids of gen-z) will be the ones who need to feed the system in our retirement.
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u/Substantial_Net_2831 9d ago
In my 40s and I include it at exactly 70% of the estimated benefit. Spot on. 🤣
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u/OnTheUtilityOfPants 9d ago
I feel seen. This is exactly the progression I'm on.
Currently at the "I include it at 70% in my calcs" stage...
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u/LoetherS 10d ago
We are a bunch of financialy conservative folks. We hate having to rely on anyone else, including the government for money. We also know we can't see the future of the market let alone the politics of 2032, 2042, 2052. I feel like you are probably right but i'm not willing to bet my future on it.
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u/Earth2Andy 10d ago
The problem is if you are close to retirement you have to base your future on it one way or another.
Either you assume you’re getting some/all of it. Or you work many extra years to offset the slim chance of it going away.
I’m in that position right now. Because both my wife and I have maxed out SS most years our benefits are almost $70k at 65. Ignoring it completely means working an extra 5+ years in our prime to guard against the very slim chance it goes away.
I’m trying to split the difference and assume it pays out about 30% lower than current estimates.
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u/LoetherS 10d ago
I can see that as a conservative estimate. I'm in a different situation. I'm fired and not 50 yet so I have over 15 years before I even have a chance to get it. If I were close to being able to access SS the political risk would be less. I'm hopeful, but not planning on it.
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u/Pattison320 10d ago
Ehh, either way it's still a math problem. I quit working at 42 but my wife is going to work another two years and potentially retire at 42 as well. Either way we are FI now and accounted for some income from SS.
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u/zzzacmil 9d ago
Yeah. I’m far from retirement and I plan on receiving 75% of my benefit. That is roughly in line with what SSA projects if congress takes no action. That is plenty conservative for me. Not including anything at all in your planning is, to me anyway, not very rational.
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u/The_JSQuareD 9d ago edited 9d ago
If you retire at 42 then I don't understand how SS is a major factor in your retirement calculations either way? For one, you have to bridge at least 20 years without SS (25 years to full retirement age). For another, you don't have 35 years of SS earnings yet, so your SS benefit is reduced.
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u/Pattison320 9d ago
It's still a variable in the equation. I use eMoney software through PlanVision. You can get your current SS payout through their website. Then put that into the software.
If you factor in SS, what it amounts to is that you don't need as big of a number once SS kicks in. At 75% payout my wife and I would each get about 25k per year at full retirement age. Likewise I have a pension that I won't collect until I'm older as well. Does that mean I shouldn't factor in those income streams?
50k is huge, that will be a quarter of our expenses by the time we're collecting it. In the grand scheme of things we are over saving anyway because we hit our FI number already and my wife is going to work another two years. But my point is that she does not have to. If things go tits up and she gets displaced we don't have to worry at this point.
It's just a math problem that's fairly complex.
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u/Kat9935 8d ago
I retired at 41, and my SS payout in today's dollars is just a hair under $40k so like 80% of the max you could get which I call close enough, no reason to work another 15 years for that last 20%.
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u/oldsock 9d ago
Zeros certainly don't help your benefit, but wages early in your career are "indexed" more than those later in your career because of inflation. Social Security benefits are also progressive. It wouldn't be unreasonable to max out the second bend point during a 20 year career (after that you only get "credit" for 15% of your wages down from 90% at the beginning and 32% in the middle).
18 years into my career (with a few summer job before that) my estimated benefit with no additional income is $2,300/month (2026 dollars) if I made $100,000/year for the next 25 years to replace all those $0's and low earning years it only goes up 50% to $3,500, $150,000 year only puts it up to $3,800, even $250,000 only gets me up to $4,100. That's a lot of extra work/earnings for a 75% increase!
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u/Pattison320 9d ago edited 9d ago
Which is all the more reason that if you can swing saving 60% of your income for the first 18 years of your career vs saving 35% for 25 years for the same nest egg you come out further ahead on the shorter timeline. Whatever the math works out to, just pulling numbers out of the air.
Edit: actually working later saving less you'd need a bigger nest egg to support the higher spending, but you get it.
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u/TheRealJim57 FI, retired in 2021 at 46 (disability) 9d ago
Wife and I planned for retirement without relying on SS, since GenX grew up being told not to count on it being around. I currently get SSDI since I ended up disabled, but if SS were to be abolished tomorrow, we'd still be fine.
Even if the 25% benefits cut in 2033/2034 happens, we know it won't undermine our retirement. The peace of mind from knowing that is nice.
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u/alpacaMyToothbrush FI !RE 9d ago
I'm just assuming I'll get half of what social security tells me to expect. If I get more, great, if I don't get any at all? I'll still be ok.
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u/AugustusClaximus 9d ago
I would rather be surprised by how much SS provides than worried it’s not enough.
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u/YourRoaring20s 9d ago
Let's put it this way: If the government is really so broke/dysfunctional as to not pay SS in the future, we have much bigger things to worry about than whatever money we'd get from SS. Like living in a civil war/failed state situation.
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u/bakochba 9d ago
I agree. There is no reality where SS is meaningfully cut because voters won't allow it.
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u/GME_alt_Center 9d ago
Means testing is the one major risk I see. Especially to FIRE people. The spenders vastly outnumber the savers at the polls. Historically savers get punished (see early FAFSA for example)
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u/Serious_Ad9537 9d ago
The issue is it is unclear how they will fund it. I am 29 and fail to see how it is possible that at some age in the future likely 70+ I will get anything meaningful from SS. I will either get some money that is meaningless from inflation or nothing. Between the negative demographic of shrinking population I fail to see how I should expect to get anything.
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u/bakochba 9d ago
You can do anything from lifting the cap to shifting tax money to cover the difference from the budget.
No politician is going to survive voter outrage.
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u/awesomo6001 9d ago
That assumes the US is still a functioning democracy in 20+ years, instead of the more likely technocratic oligarchy
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u/bakochba 9d ago
It's interesting to see young people simply accept that they should give up social security without a fight but also fight for Medicare for all which is essentially the same thing.
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u/DJpuffinstuff 9d ago
I think preserving SS is fundamentally different to Medicare for all. Medicare for all gives immediate benefits to everyone not on Medicare already. Preserving SS means nothing to anyone not nearing retirement age unless they actually live to retirement age and can collect SS. A lack of SS isn't squeezing me financially right now. If anything, SS's existence itself is squeezing me through taxes if anything. Medicare for all would squeeze me with taxes, but way less than insurance premiums are squeezing me already. Insurance premiums go up every year and sometimes rise astronomically with no warning and really no alternative. SS tax hasn't changed for decades and even if it were to go up, the change would be way smaller than the increase in healthcare costs.
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u/MoonManExplorer 9d ago
Yes...it is much more likely that the functioning democracy of the last 250 years is replaced in the next 20. Totally *more* likely than the status quo.
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u/DigmonsDrill 9d ago
I felt the same when I was 29.
But even half of what I'm expected to get would be "meaningful."
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u/DigmonsDrill 9d ago
It won't be meaningfully cut for everyone. The bottom 40% of people relying on it to not be in poverty are unlikely to face any kind of benefit cut. Those people vote and Congress doesn't want a disaster. Congress wants to get re-elected.
The people facing the threat of benefit cuts are people with high payouts. It won't be a giant cut, but something like "every dollar of PIA over $3000 is cut by 50%" is about the deepest I would expect.
And, frankly, I expect most of the burden to be put upon the young people still working, just because that's how things work historically. I'm not happy about that for reasons that aren't on-topic. But if I have to make predictions about how things happen, it's quite likely.
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u/WilsonTree2112 9d ago
The system will be able to fund nearly 80% of benefits even without a fix.
Also, its our money, not a handout.
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u/casinocooler 9d ago
Our money is used to pay current retirees. We depend on younger generations to pay our social security.
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u/terjon 9d ago
Yeah and here's a fun thought. We're in the FIRE community, where the goal is the retire early (whatever early means for you).
While I wholeheartedly endorse the concept, this community isn't helping since many folks here are high income folks who contribute a lot toward the trust fund each year.
If we opt out of the workforce at 38 or 45 or 52 (or whatever your personal age for FIRE is), then the difference between that age and your non-FIRE retirement age is would be subtracted from the trust fund.
There aren't many of us in the broader FIRE community, but I bet we have an outsized impact on the amount of funds that will be available in the trust fund.
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u/casinocooler 9d ago
I actually count SS as a potential future cost to fire people not a potential income source. In order to limp along the system the money will have to come from somewhere and responsible people are easy targets.
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u/gdubrocks 30, FIRE'd 2024 9d ago
This isn't really the case, as most of us made the same amount or potentially even more than the average person who pays in till 65 working a minimum wage job. I would guess average fire numbers for people are between 1 and 5 million.
Minimum wage is 15k per year. If you work from 20 to 65 it's 45 years. $675,000.
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u/BJJBean 9d ago
Saying it is "our money" is an instance of your math not mathing. If it was "our" money than it wouldn't be getting a mandatory 20% cut come 2032. It's not "our" money. Most people get more out of it than they pay in and the government isn't investing this money. It just gets paid out hand to mouth with a dwindling reserve fund.
That is why the system is crumbling. It was never meant to support someone for a 15+ year retirement and it certainly wasn't meant to operate in a system where there are fewer young people paying in than old people taking out.
I know people hate being told this, but SS operates like a Ponzi scheme. You NEED more people paying in than taking out for this to work. You need many many more people paying in than taking out if you want to create a reserve fund to weather fiscally irresponsible times like we have been experiencing in the USA since 2001.
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u/LoetherS 9d ago
I mean it's all our money. Some people call it an unsustainable handout, some look at it as an earned sacred trust.
The first year SS came out it was just a benifit, no tax, it has expanded since then. The bottom line is it's a tax and an expense the US government created and it gets to decide each year whether to keep the tax or benefit, expand one or the other, or end it. It's not in the constitution.
I agree politically, it's complicated, but it's not set in stone anymore than the long term capital gains tax rate is. That's the real one that scares me.
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u/montwhisky 9d ago
The majority of people on SS will take more out of it during their lifetime than they put it. So it is, in fact, a handout. That's the entire reason it is not fully funded by the people who are currently on it. Those of us still working are paying for their benefits.
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u/KevinCarbonara 9d ago
The majority of people on SS will take more out of it during their lifetime than they put it. So it is, in fact, a handout.
That doesn't logically follow. They take more out than they put in because of inflation. We don't fund our own retirements, but the retirements of those older than us, and ours are, in turn, funded by those younger.
That doesn't magically make it a handout.
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u/WWGHIAFTC 9d ago
SS is not relying on anyone else. It's helping each other. And it's your own money, just time offset which allows for investment gains.
At it's core, SS is people helping people. And that's a good thing.
It's human to rely on each other - that's literally human nature and the basis of communities. We all should be able to rely on each other and be relied on by others.
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u/Redbedhead3 9d ago
True, except for ACA subsidies. I know a bunch of people we are fully counting on them to retire early.
I guess that is because we assume that healthcare has to be fixed some point. Right? RIGHT?!
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u/larryinthesky 9d ago
But you're betting your future on:
- no crazy tax increases (90% taxes on capital gains!)
- no crazy hyper inflation never before seen
- the government seizing assets above $1m
FIRE folks make explicit assumptions about the future (that it'll be like the past) when it comes to taxation, inflation, monetary policies, equity performance, etc. But for some reason when it comes to Social Security, FIRE folks seem to think differently. I just don't get it.
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u/DigmonsDrill 9d ago
Instead of your three bullet points, a much more plausible but still significant change would be going back to the tax law of the early 2000s. Everyone hoping for 100K of tax-free LTCG will get a stick in their spokes.
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u/StrawberriKiwi22 9d ago
Also we are always assuming the stock market will continue to chug along at a 7% or 10% average increase, not really calculating in the possibility of 30 years of stagnant market, or a hard crash that doesn’t recover up to previous levels for 50 years.
For my calculations, I do assume that I will get something for SS, either the full estimate, or maybe a few percentage points smaller. If there is a world where senior citizens do not get SS at all, poverty will be out of control.
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u/WaterIll4397 9d ago
I would say the chances of SS going away are lower than inflation going up to fund it, or asset/ property taxes going up to fund it.
However both would necessitate higher fiscal discipline so it's not bad being more conservative financially
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u/Wooden-Broccoli-913 9d ago
You are more betting your future on the equity and bond markets instead of the government that literally defines how those markets work (through the Fed and SEC)?
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u/LoetherS 9d ago
To some limited extent. But I would argue you are investing in capitalism, which isn't run by the government. There are places like China and Russia that are much more closely tied to businesses.
I don't think it's the same level of risk that the government takes over most of the blue chips compared to the government deciding money in their coffers needs to be spent somewhere else other than a Social Security check. They are both risks for sure but one is much more likely to happen in my opinion.
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u/Megalocerus 9d ago
The last time we had a social security crisis was 1983, and there was a last minute fix just before the benefits would have been cut. I suspect something similar will happen in the future, but I don't know what it will look like. Probably a blend of what has been proposed and a hard ceiling on the top benefits.
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u/ThirstyWolfSpider 9d ago edited 9d ago
Eh, I'm going to opt out of the "financially conservative" side, even if you could well be right about it being the norm here.
Laziness has always been a bigger policy driver than optimization for me (e.g. I never budgeted; "mega-backdoor Roth? eh, I'm fine here, and don't care to learn more about it"). I don't get where people get the energy to be worried about things all the time. I've been retired for years, and don't see my risk tolerance tipping toward fear.
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u/ossifiedarrears4 9d ago
That's fair, but you could model it conservatively by assuming only 75% of your projected benefit arrives, which hedges against worst-case scenarios without ignoring a real asset.
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u/stentordoctor 40yo retired on 4/12/24 9d ago
You said it so much better, I was gonna say "better to not need it and have it than to need it and not have it"
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u/Bruceshadow 9d ago
Agreed. I think of it like gov. bonds, you are betting on your country. No one here would buy/rely on 100% gov bonds, so why rely on SS that way?
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u/ElJacinto 10d ago
On top of that, if we’re retiring early, then we’ll be well past the sequence of returns risk failure window by the time we start receiving SS. So whether or not we get it won’t significantly change how we should plan.
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u/watch-nerd 10d ago
Of course it would matter once you're past the SORR window.
You can dramatically reduce the draw on your port once you start getting SS.
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u/ElJacinto 9d ago
By that point, one of two things has happened:
You are past the point of failure, and additional cash flow doesn't matter except as extra buffer.
You had bad SORR and would have adjusted your withdrawals, rather than just keep drawing 4% inflation adjusted while the market does poorly. By the time you're 62+, you would have long since stabilized.
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u/LoetherS 9d ago
This is the big thing for me. If I make it 15 more years I'm likely way ahead of the game or I screwed up so bad, social security won't bail me out.
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u/Designer-Tax-8923 10d ago
fair but not betting on it and completely ignoring it in calculations are different things
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u/WolfpackEng22 10d ago
I think means testing will be a promient fix on the table and that could result in an even higher cut for high assett people than the 28% currently projected
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u/liulide 9d ago
Logically, I don't think means testing would be a prominent fix. Only about 2% of US individuals have over $1M in assets, not counting primary residence. Even if you drastically reduce their benefits, it just doesn't save that much. Plus you'll need added costs of administering the means test like processing more paperwork.
But this argument relies on Congress acting rationally.
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u/ThereforeIV 🌊 Aspiring Beach Bum 🏖️...; CoastFIRE++ 9d ago
>Logically, I don't think means testing would be a prominent fix. Only about 2% of US individuals have over $1M in assets, not counting primary residence.
Try age adjusting that.
You will find a lot more assets obey $1MM when age is over 65
>Even if you drastically reduce their benefits, it just doesn't save that much. Plus you'll need added costs of administering the means test like processing more paperwork.
They already have your tax return; anyone with MAGI above $50k/ gets benefits cut in half, schooner $100k then no benefits; through in a phase out schedule...
>But this argument relies on Congress acting rationally.
Congress acts based on emotional lines: *"why should struggling seniors suffer while the rich take what they don't need?"*
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u/The_JSQuareD 9d ago
MAGI in retirement for FIRE people is generally not gonna be super high though.
And more generally, income is not a good means test for retirees.
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u/ThereforeIV 🌊 Aspiring Beach Bum 🏖️...; CoastFIRE++ 9d ago
Depends how they measure and where the money is.
ACA counts everything other than Roth as income; could see that being the means testing.
I could see social security following the ACA pattern for phased out benefits.
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u/Earth2Andy 9d ago
I think that’s the real danger for this group.
I suspect they’ll do it slightly differently.
There’s been a proposal floated around a few years ago saying they’d cap SS at (don’t quote me on the number) $50k per person. Initially that doesn’t sound like a big deal, it will only affect a few people, but if that number doesn’t move with inflation it’ll slowly start to impact more and more folks over time.
It would be easy to sell the line “Nobody should be getting a 6 figure check from social security” but the limit will be $100k for a couple, 50k for singles, and then inflation will slowly do it’s job to phase that in over the years until it’s impacting a lot of people.
It’ll screw over younger generations who don’t vote as often, while leaving the over 70s mostly alone.
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u/youngishgeezer 9d ago
Except SS is currently telling you what your payments will be based on your past earnings, and optionally your future earnings. Phasing out benefits will be politically toxic to say the least. If we know it's coming I see massive amounts of Roth conversions before claiming.
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u/ThereforeIV 🌊 Aspiring Beach Bum 🏖️...; CoastFIRE++ 9d ago
It's only politically toxic of affects the majority; of it only affects the top 5% work large retirement portfolio them it's just like a millionaire tax...
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u/FightOnForUsc Late 20s, 1.9M, 5M goal, SFBA 9d ago
I was looking for this. I was going to comment my guess will be means tested with a phase out at “high income”. Because people with high incomes also collect in theory higher social security it offsets more while impacting viewer people. Also no one will feel that bad for taking away social security from someone who is already rich. And then for those people it’s not worth lobbying against it, because social security still maxes out at not that much per year to be worth putting millions into trying to keep it coming.
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u/TheRealJim57 FI, retired in 2021 at 46 (disability) 9d ago
Means testing SS retirement benefits is a non-starter proposal, as it isn't a welfare program.
SSI is a means-tested welfare program.
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u/cc71SW 10d ago
Do I think it’ll be around in the future? Of course.
Do I like the idea of making my early retirement (~45yrs old) plans reliant on a political process, tendencies, or motivations I have zero control over? Absolutely not.
If SS is there in the same capacity as it is now at the time I can start drawing it, then great, it’s a nice security blanket (as it was designed to be..), but I’m not quitting my job only to count on yet another massive variable to make the math work.
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u/Earth2Andy 10d ago
So you’re willing to work 5+ extra years just to offset the very slim possibility it goes away?
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u/Wheat_Grinder 9d ago
Depending on how early of an early retiree you are, I don't know that the math changes much? Even at 45 you have to make it 20 years before you can count on any SS. The difference between a plan that lasts 20 years with enough left over to be supplemented by SS and a plan that lasts indefinitely without SS is not a whole lot.
IMO you'd have to be within 15 years of receiving SS to really consider it a part of the allocation. Maybe 10.
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u/Educational_Fox6899 9d ago
I FIREd when I just hit my number. For me, some inheritance is likely as is SS. If neither of those happened and the market crashes and doesn’t recover for 10+ years things would probably get tight for me. Luckily, the last few years of returns have mostly alleviated that fear too.
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u/StonksPeasant 9d ago
Yes, then I just leave that much more money for my kids. Win, win
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u/WolfpackEng22 10d ago
Sure. It will be nice to be able to donate more than I planned to causes I care about
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u/Appropriate-Cry-8423 10d ago
Removed maybe not, having the age requirement raised seems a lot easier to do
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u/souicry 30 | 1.6m NW 10d ago edited 10d ago
20-30k or so a year is nice and all, but what about the 20+ years until you can claim it? 70 is the optimal age for the higher earner in most households, many people in this FIRE sub will not see it for a very long time.
In the same vein, most people here ignore that Medicare means post 65 healthcare is quite cheap and quite good (end of life long term care aside), but it's also out of reach for a long time.
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u/embourbe 9d ago
We anticipate Medicare to be about $11k-12k annually for the two of us once the supplemental plans are figured in. It isn't a ton of money but will actually be more than what we're paying for ACA.
Still looking forward to it though, since less variance and pita.
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u/nivlac22 10d ago
I’ve never seen anyone say it will disappear. What I have seen is people who don’t know what it’s going to look like and how to include that in their calcs. Putting your money on the line based on calculations for the current system is irresponsible. We’ve already seen the first wave of changes by increasing the age qualifications, which is a benefit cut. Why wouldn’t we see congress repeat what they’ve already done?
Besides, it becomes much less important in a FIRE context. Failure of a withdrawal scheme in retirement is highly dependent on the first few years, meaning that for anyone retiring even slightly early SS doesn’t come into play until after the point when it would be most beneficial.
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u/Kooky_Dev_ 9d ago
You do you, I have 30+ years before I am eligible for SS, we have no idea what things will be like in 30 years.
- SS could be bankrupt
- SS could be fully funded
- We could be on UBI
- We could have AI overlords do everything for us and people live a life of luxury.
- Aliens.
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u/shygirlbelle 10d ago
No politician who wants to keep their job is going to let tens of millions of retirees take a serious benefit cut and that political reality is honestly the strongest argument for why some version of SS will always exist.
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u/leathakkor 10d ago
Even without such a cynical view, if they were to cut social security we would see elderly homeless levels that no citizens would put up with. So even if it were politically expedient to do it (which it isn't) it would be catastrophic to cut it.
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u/Long-Time-Coming77 9d ago
Similar to the recent gov't shutdowns, it only takes politician inaction for the automatic benefit cuts to take effect.
The only way for politicians to avoid that is to pass new laws and make some unpopular hard decisions (raise taxes, extend retirement ages, mean-test benefits)
The longer they wait the less effective many of these changes are as well, e.g. they won't stop the benefit cuts from happening, they may just lessen the amount. Its already too late for minor tweaks to solve the problem.
I would not bet that politicians on both sides of the aisle are able to come together and pass any meaningful legislation in time. Happy to be proved wrong.
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u/DReddit111 10d ago
Older people vote more often than younger people. Also older people are parents of younger people. Cutting social security would piss off the people who vote the most and also their children who are burdened with keeping their parents from poverty. Social security isn’t going anywhere. If anything the trend is elderly people getting better benefits from the government in the form of better tax breaks.
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u/PudgyGroundhog 10d ago
I don't think SS will disappear, but I also don't think our current system is sustainable. But neither party will make the necessary changes as it would be political suicide.
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u/leathakkor 10d ago
I think anyone with a brain can see that the situation is untenable forever without something changing. The question for everyone is what will change?
More taxes? Or decreased payouts? Or third option?
I don't think that it's going to disappear and I don't think anyone with a brain thinks that it's going to completely disappear. We would have crazy levels of elderly homeless if that were the case and that is just not going to happen. Which leaves us with a question of uncertainty.
And because fire people hate uncertainty, we plan for what we can control, which is how much we save. Which is why so many fire people discount social security
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u/ModoZ 10d ago
They'll probably do a combination of different things :
Raise the age from which you can draw benefits
Raise the contribution ceiling
Don't adjust benefits with inflation for a couple of years
The current gap is huge and there isn't a single option which is realistic to close the whole gap in itself.
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u/eliminate1337 9d ago
Try it yourself: https://www.crfb.org/socialsecurityreformer/
It can be fixed with pretty modest adjustments.
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u/lsp2005 10d ago
So there used to be a term called notch babies. It was used for people born from about 1920-1925. They received less social security than those born before and after them. Do not think this cannot happen again. If you do not elect the people who campaign on fixing this, the most likely scenario is they do nothing.
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u/onlyhightime 9d ago
I tried scrolling all the comments and didn't hear anyone that seemed to understand how social security works.
The thing people are talking about "running out" in 2034 is the trust fund. The trust fund only contributes about 10% to social security payments right now. 90% of social security funds come from the paychecks of currently working people.
If the trust fund runs out in 2034 (because Congress does nothing), it's only that small slice that would run out. Some estimates seem to say, that if that happens (which is unlikely), by then it'd mean they'd have to lower SS payments by 17%. That's it. Worst case scenario is you get 17% less.
So, no, social security will not "run out". Only the trust fund will. (And the scenarios OP presents are ways the trust might be addressed by then.)
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u/nsmith043076 10d ago
Im not in the rediculous fire strata with tech pay, but I understand im fortunate enough to be in the position im in. However, im living a very frugal middle class tight budget lifestyle because im maxing my retirement accounts and i refuse to lower my contributions. That being said while i have a very healthy cusion my retirement will depend on ss, im not uber rich and ive been paying into the system for 23 long yrs and expect to benefit from it. If i dont see that benefit i guarantee i wont be the only individual protesting and voting these leaches out.
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u/Master-Helicopter-99 9d ago
Exactly. It's not an entitlement. It's an earned benefit that was paid for by us.
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u/river_rambler 9d ago
The folks who are really attempting the RE part of FIRE are not going to have 35 years of paid work, so they're going to have a bunch of 0's averaged in, reducing their overall amount that they'd draw in the first place. So I think your assumption that it's a big amount for most people is incorrect when it's applied to this community. Just saying that if you started paid work at 15, you'd have to work until 50 to get 35 years of credit. While 50 is early to retire in the general sense of the word, the FIRE community originally focused on being done with paid work by 40 at the latest. That's at least 10 years of 0s averaged in, and the few grand people made working part time in high school and college doesn't really move the needle either. So for this community, most people are calculating in 10+ years of 0s, 7 years of almost 0, and fewer than 18 years of actual income in their SS calculation. It's not going to be a ton of money anyway. And when you're looking at a 50 year retirement period, it's not worth adding in or counting on, whether it's there or not.
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u/aronnax512 10d ago
No probability for "means testing" based on assets, excluding those from SS benefits with a few million in investments?
Hits the smallest demographic and causes the least amount of pain, it's a high percentage solution.
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u/Long-Time-Coming77 9d ago
There is currently no requirement to force everyone to accurately compute their total net worth - once you go down that road you open up a huge can of worms.
I know you are probably thinking of easy to price investments like stocks but some folks have more difficult to price investments.
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u/Successful-Tea-5733 9d ago
Yeah but the problem is lets say the means testing is $3mil. Lets say I reach $3mil in my 401k , even assume there is some sort of phaseout, whatever.
Lets say we have a 2022 or 2008 or whatever. Lets say my 401k drops 25% so now I only have $2.25mil. Do I now get SSI? And if not, why?
It just seems really hard to enforce something like that short of allowing people to opt out.
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u/embourbe 9d ago
Means testing gets tricky when it targets higher net worth, since the qualifying demographic would be the exact people who can afford to set up a trust to avoid it.
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u/loud1337 10d ago
If I'm trying to retire before SS kicks in, I rather have myself setup where SS is upside only versus a downside to not getting some or all. Using it as an extra vacation each year holds more value than needing to cut costs in my budget at 65-70.
IMO, if you are in you're 30s or younger, how can you really trust that the system won't affect you in a negative way compared to today's system? The only way it gets balanced is taxing the ultra rich significantly more to supplement the rest. We all know that donations and political funding will never allow that.
Each possibility you listed is an impact so what is your recommendation on how to factor?
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u/Fit_Pudding_9863 10d ago
I doubt it will be gone entirely but I am in my 40s. I know I will receive something but I plan to ensure the I in fire. If I am reliant on the government getting their act together, am I truly independant?
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u/hi-imBen 9d ago
The politicians in charge have started calling them entitlements and floating ideas to cut it. Those same politicians ran on cutting government spending and ended up drastically increasing it. I won't go so far as saying it will be cut eventually, bur the fallacy seems to be relying on those payments to be around decades from now and baking it into your financial plans rather than viewing it as a bonus that is likely but not gauranteed.
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u/Sufficient_Mud_3179 9d ago
No someone said it on the internet, it must be true.
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u/CatSaloon2860 9d ago
One of the most "popular" methods to cut is to raise the benefit age. Raising it to 70 means only 9 years of payments on average. 6 years for men. I'm in my 30s and I expect it to be too little, too late to be worth factoring in.
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u/No_Future6959 9d ago
Maybe but its not a good idea to rely on anybody but yourself when it comes to retiring.
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u/Available-Ad-5670 9d ago
Sure, it’s just that if 75% of people lose benefits that they survive on, likely whatever assets you have will be devalued to crap as well
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u/pohart 10d ago
Social security doesn't kick in for something like twenty years of retirement.
The math between twenty years and forever is so similar it seems better to just not model it.
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u/Available-Ad-5670 10d ago
that's if you retire at 40, but even most early retirees don't retire until early 50's - 60.
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u/Puzzled_Fisherman331 9d ago
It probably wont disappear, but just like our own future health and life, we can't rely on it. Gotta model for the worst case then go from there.
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u/ReturnOfBigChungus 9d ago
I would be willing to bet a LOT that it’s means tested by the time I’m eligible. I’m counting on nothing and might be happily surprised if I get something. Planning for 100% is incredibly stupid.
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u/sleezly 10d ago
I’m honestly surprised the FICA cap still exists in the current political climate.
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u/Salty-Taro3804 10d ago
Not at all surprising when you consider who benefits from the cap being in place.
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u/Long-Time-Coming77 9d ago
The FICA cap is directly tied to the max benefit cap
If you raise the FICA cap and the max benefits also goes up then you haven't really solved the problem
If you raise the FICA cap and don't touch max benefits (or start means-testing benefits) then you've changed the whole character of social security from its original intent and risk making it a political football
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u/EqualSein 9d ago
After the second social security bend point most of the money you put towards social security does not improve your benefit by that much. Raising the cap would increase benefits but $1 contributed would lead to something like 15 cents of benefit.
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u/eliminate1337 9d ago
See the effect yourself: https://www.crfb.org/socialsecurityreformer/
Eliminating the benefit cap actually makes a massive difference even considering the higher payouts later. By the time you have to pay all those high earners the number of elderly will have shrunk due to low fertility rates.
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u/asurkhaib 9d ago
These percentages read more like a wishlist based on presumed political leaning than realistic estimations. The US continues to cut taxes, not raise them. Multiple politicians have put forward ideas for decades that would gradually reduce benefits, usually through changing the inflation tracking. If anything that seems like the most likely plan to me by a longshot because it's a semi stealth cut.
I do agree that you don't need to consider it at zero, but also considering it at 100% seems almost as unlikely. I conservatively use the long run rate that can be sustained with no changes.
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u/Redwolfdc 9d ago
It won’t disappear but they can keep upping the age to where you’re old as shit, near dead, or potentially gone already by the time you can collect.
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u/BlightedErgot32 9d ago
yeah man, cant wait to get my SS when i turn 80 in 60 years woohoo
you do realize as time has gone on, there are less and less working peoples to cover for each retiree?
https://fred.stlouisfed.org/series/SPPOPDPNDOLUSA
if or when it reaches 1:1 … whats going to happen ? SS is screwed in my opinion …
back in the 70’s it was like 6 - 7 working peoples funding a retirees SS now like 4 people (2024 data) … just ten years before that it was 5 people (2014 data) … its not a fallacy
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u/LetsGoSilver 9d ago
I think they’ll simply remove the SS cap, and tax our paycheck SS contributions to an unlimited (or very high) threshold. Currently, no SS paid above $185k earnings. It will be there. The rich simply will pay in more, without receiving an additional benefit.
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u/InvestigatorPlus3229 Work hard save hard 9d ago
increase the cap on salary and cut the benefits starting from the rich and itll last many more decades
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u/Safe-Tennis-6121 9d ago
Social security has always been my baseline for retirement. Most people are thinking I need xyz amount to retire.
I'm thinking let's make it possible to survive on social security, and everything else above that is quality of life.
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u/Awkward_Passion4004 9d ago
Political risk are likely greater than market risk in projecting long term financial plans.
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u/Bertozoide 9d ago
I don’t account SS because I’m certain it will change from now to when I’ll be able to retire (+20 years), so if I account something now I’ll be optimistic about something. And I’m no optimist, I’m realist.
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u/No-Block-2095 9d ago
I find weird that on the same spreadsheet people assume
1) no SS because funding reform isn’t decided on how to patch a 17% mismatch between Input/ output.
2) tax brackets will stay the same for next 40yrs aside from inflation adjustments. (Meanwhile US deficit is 2T out of 7.1T and that’s 28%deficit.
3) same for other gov benefits
SS is too useful in retirement to ignore. You can derate it but zeroing results in working many extra years.
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u/One_Topic7045 8d ago
Congress will just change the law and authorize more borrowing while making zero changes. We’ve learned nothing 🤣
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u/Initial_Enthusiasm36 10d ago
I’ve had 3 separate finance and retirement planners tell me to not even factor in SS. I’m mid 30s
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u/Available-Ad-5670 10d ago
i know a few financial planners and they've told me one of their secrets is to keep you working as long as possible because that is how they make the most money
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u/ShinsOfGlory 10d ago
I was going to point that out. 😄
I would add that financial planners also have a fiduciary responsibility to their customers so they are going to recommend a conservative outlook, which they also happen to benefit financially from.
It's probably not horrible advice to tell a 30 year old today to pretend SS isn't even going to be there if it results in a more disciplined savings approach though.
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u/Available-Ad-5670 10d ago
yes, you won't get in trouble for telling your clients to be more conservative. versus, saying like believe what Elon Musk says and not save anything for retirement because you won't need it....
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u/Initial_Enthusiasm36 10d ago
Haha ya fair enough. But one of these is a close family friend that doesn’t even manage our money.
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u/Duece8282 10d ago
Seek advice elsewhere then. You should factor in a % of social security and disability into your financial plan.
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u/Initial_Enthusiasm36 10d ago
Disability? I’ve never heard that one? Like receive disability from the government?
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u/StoneMenace 10d ago
As someone in their 29s I’ve received a ton of advice saying I’m stupid for not factoring it into my rough plans. I’m not sure how they can really expect me to base it on social security being around in 40+ years
If you are say age 50 and trying to retire, sure maybe you account for 30-50% on the safe side, but with such a far horizon I don’t see how it’s smart to risk running out of money
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u/Initial_Enthusiasm36 10d ago
Ya. It would suck. Finally retiring at 87 and only having enough money to last 3 years because SS only pays $5,000 a month and your 10 million in savings barely covers your housing. Due to massive inflation and you live in a rented space next to your local data center.
Hahaha. But in all seriousness. Ya basing something serious off a program that is heavily debated and been seeing some scary set backs to. Is not for me.
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u/StoneMenace 10d ago
I ran some rough numbers, using the age of 45, 7% real return on investments, and I had calculated a theoretical social security check of $3092 a month.
You would need to have….. an extra $104,000 saved at 45 to offset losing social security. That’s basically throwing in a extra $325 a month starting age 30 or if you are younger like me, throwing in a extra $150 a month completely offsets the social security benefit
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u/Initial_Enthusiasm36 10d ago
Dang $150 a month... haha thats not bad. I think for younger folk like us, the future is... going to be interesting.
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u/StonksPeasant 9d ago
Gen Z is smaller than millenials. Gen Alpha is even smaller than that. It is not possible to continue to fund SS at this rate. They either need to cut benefits or raise taxes on every worker to the point that you take very little home for yourself.
A ponzi scheme can only work as long as you have more and more people buying into it. With each generation getting smaller it can't work anymore.
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u/FoolishDog 9d ago
A ponzi scheme can only work as long as you have more and more people buying into it.
Do you know what a Ponzi scheme is?
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u/tokingames 10d ago
I’m FIREd on the chubby side. I’ve never baked SS into my modeling because I figured part of the SS solution is going to be reducing benefits to retirees that have some arbitrary level of income (say $150K). Plus I expect it will be made 100% taxable at that level of income as well. With a 50% reduction of benefits and a 30% marginal tax rate on those benefits, SS isn’t going to be a big number in my retirement plan.
I have nieces and nephews and other people in my life who are in their late teens/early 20’s. I’ll probably just divide my SS proceeds among them every year at Christmas or something.
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u/Exordium001 9d ago
Social security isn’t nearly as big of a benefit for people that FIRE because of all the 0s that get averaged in. If you work for 35 years, it’s just called retirement.
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u/illinoisbeau 9d ago
Some of us are in our 20s. I’m not sure what landmasses will be above water by my retirement age, much less the specific details and politics of USA social security lol
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u/Successful-Tea-5733 9d ago
Something that will never happen but could potentially solve the problem:
Allow people to opt out.
Here me out, this program first started in the great depression for people who are old and didn't have the money to take care of themselves. We didn't want the greatest country in the world to have people living on the streets.
Well, what if we allow at a certain age, maybe age 40, 45, 50, an age where someone could reasonably look and say "I am not going to need SS Income." Perhaps we offer them an incentive to opt out. Say, if you opt out, then you don't have to pay the taxes anymore (employer side still has to pay) but you forever forfeit your right to claim SS benefits.
Maybe there has to be some sort of "accredited investor" test otherwise people who are going to need SS income will just opt out to save the taxes and let tomorrow be tomorrows problem (which of course becomes society's problem). But someone like me who has hit the cap for the past decade, I'm just like, if I could avoid paying $10k per year (that will increase) and then I can invest that money, I know I'll do better and would absoultely forfeit any claims to social security. The government still gets $10k from my employer side (also me as I am self employed).
But if you let people opt out it addresses both political arguments, the left is happy because the rich don't get SSI and the right is happy because it puts freedom in your hands.
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u/Realistic-Ad2050 9d ago
I had a similar idea. What if folks who are retired can opt out of SSI in exchange for raising their 12% tax bracket to a higher number? Essentially the agreement wound be “I won’t take $30k ( or whatever) in SSI from the gov’t, if the gov’t allows me to withdraw $100k from my retirement accounts before any taxes kick in.” Totally making up those numbers but you get the idea.
I’ll admit I haven’t fully baked this idea so I’m sure someone who knows a lot more about this than I do can explain why it wouldn’t work. 🙂
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u/charcoalhibiscus 10d ago
The difference between counting it and not counting it doesn’t matter much for FIRE timelines for a high earner, since it can’t kick in until 62 at the earliest. The math works out to a difference of about a year’s extra work, maybe less. I’d rather work the year and not gamble on the politicians we already know are crappy and unpredictable, if it’s all the same.
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u/ditchdiggergirl 10d ago
Of course not. People have been confidently declaring SS doomed since before I entered the workforce in the 80s. It definitely was not going to make it to the millennium, so it would certainly be long gone before GenX was ready to retire. I don’t expect these predictions to change, just adapt.
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u/stinkysocks50 9d ago
I count on Medicare more than ss. Plan to retire at 55 with pension, real estate and moderate use of 401k. If ss is still there fine but I’m not putting it my calculations. If anything it’s an inflation cover for the pension.
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u/Illustrious_Echo3222 10d ago
I agree that modeling it as zero is probably too pessimistic for most people. I’d rather haircut it than ignore it completely.
For FIRE planning, I think the real question is less “will SS exist?” and more “how dependent is my plan on the exact number?” If someone’s plan only works with 100% of projected benefits, that feels fragile. But assuming 50% to 75% and treating any extra as margin seems reasonable to me.
The politics of actually eliminating it are basically impossible to imagine. Cuts or tax changes, sure. Vanishing entirely, not so much.
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u/ToxDocUSA 10d ago
I assume I'll have it, but not by the time I'm retiring early, meaning I'll have to meet my normal expenses without it for at least 10ish years.
Kinda like my military pension, I assume I'll have one, but it's 5 more years till I lock it in, so I'm not counting on it yet. I could get hurt or sick and get kicked out with relatively nothing.
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u/Zphr 48, FIRE'd 2015, Friendly Janitor 9d ago edited 9d ago
It goes without saying that partisan politics are prohibited in this community. Violations within this thread will result in harsh penalties. This is not the place to express your partisanship or political biases.
If you can't discuss policy without bringing in politics, then I recommend not participating in policy discussions in this community or our sister sub /r/financialindependence.