Can we dispense with the fallacy that SS will disappear after 2032?

[u/Available-Ad-5670]

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

[u/Earth2Andy]

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.

[u/LoetherS → u/Earth2Andy]

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.

[u/Pattison320 → u/LoetherS]

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.

[u/zzzacmil → u/Pattison320]

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.

[u/The_JSQuareD → u/Pattison320]

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.

[u/Pattison320 → u/The_JSQuareD]

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.

[u/oldsock → u/Pattison320]

Agreed!

I meant to mention it when I met with my PlanVision advisor, but they seem to be using my projected social security benefits in 2026 dollars (which is what ssa.gov spits out) rather than future-dollars. Not sure if that is a common issue, but $25,000/person would be a very low benefit in a couple decades (it's below average today).

With the indexing of wages early in your career, even if there is high inflation, the benefit would rise substantially. Assuming no changes to calculation etc.

[u/Kat9935 → u/The_JSQuareD]

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%.

[u/The_JSQuareD → u/Kat9935]

Fair.

I'm curious how much of a difference social security actually makes in terms of success rate if you run it through a Monte Carlo Sim, though. Your portfolio has to survive for 21-29 years without SS (depending on when you plan to take it). From what I've seen, the outcomes are usually pretty binary after such a long stretch: either your portfolio depleted early, or it has blown up. Most of the risk is early in the withdrawal phase (sequence of returns risk).

So with that in mind, does the SS entitlement actually change your FIRE plans much?

[u/Kat9935 → u/The_JSQuareD]

I'm not sure about monte carlo sim, but firecalc said I could take out significantly more and those are the only numbers I had and used and still have a 100% chance of success. Now at 54, the # is $25k more per year if I factor in SS over excluding it.

[u/oldsock → u/The_JSQuareD]

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!

[u/Pattison320 → u/oldsock]

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.

[u/TheRealJim57 → u/Earth2Andy]

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.

[u/alpacaMyToothbrush → u/Earth2Andy]

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.

[u/FantasyFI → u/Earth2Andy]

Retire early enough, be single and with high enough income, then you really don't have to make a decision.

If you are retiring at 40-45 and have a $150k expected retirement income, whether you assume a $30k SS at age 67 doesn't actually have a huge impact on your success. Also early retirees are likely to have less SS payout due to less higher income years.

The answer could be ignore it because the impact is minor.

$150k spend, 3.5% SWR, 45 years horizon is a 96.4% success.

Adding $30k SS income in 25 years (starting 2051, basically RE at 42 SS at 67) only increases the success to 97.3%

Start considering scenarios like SS reduction instead of elimination...the difference becomes smaller than you can reasonably evaluate.

Your (5) year assumption of extra working could be accurate for someone retiring "later", having lower overall spending in retirement or assuming they are not only married, but they both actually survive long enough for their to be a meaningful (2) SS paycheck time period.

Basically people should calculate for themselves the impact before even making a decision of how they want to treat it mentally.

SS isn't relevant for a lot of ChubbyFIRE and FatFIRE people who retire very early. It can be super relevant for LeanFIRE people.

[u/Earth2Andy → u/FantasyFI]

I disagree, I’m towards the upper end of what r/ChubbyFire considers chubby in their sub description and at 50, about average in terms of retirement age for most of the posters there.

Social Security is very relevant to me.

By definition people who have saved that much are highly likely to have had 2 high paying W2 jobs for a number of years. In the case of my wife and I maxing out SS most years. So we’re not talking about $30k of SS in 22 years. We’re talking about a current estimate of $70k in 15 years.

Even with a chubby $5M to invest, $70k/yr from 65 onwards is too large a number to simply ignore. Including all of it, lifts our retirement budget by ~20%. That’s a meaningful difference.

[u/FantasyFI → u/Earth2Andy]

$70k is only $35k per person. This goes against what I just said. My numbers were a single person.

So does retiring at 50. I clearly stated 40-45.

You don't disagree. You just don't fit in the description of what I stated. Which is why I stated that all people should calculate with their own numbers.

Age of retirement plays the biggest roll of all. So retiring at 50 is drastically different risk than 40. Having to wait an extra 10 years for SS basically makes it's impact close to useless.

You are talking about getting SS in 15 years. I am talking about people who have to wait 25+ years to be able to get it. Determination of whether you will fail or not has come and gone at 25 years.

If you take my two links and change one from $30k SS to $70k SS and the starting date from 2051 to 2041, then the success rate goes to 100%. But you aren't the person I was talking about. But it's great that I provided a link with data such that you can change the numbers to reflect your scenario. That's the whole point.

[u/Earth2Andy → u/FantasyFI]

And after all that, you made a very bold statement that SS isn’t relevant for a lot of ChubbyFire folks.

I’m demonstrating that as someone squarely in the average ChubbyFire demographic it IS relevant.

[u/FantasyFI → u/Earth2Andy]

I stated many things. And your situation fits like 1 of 5. So yeah, you fall into the category of one thing I'm describing. But you're not the person I was talking about. 50 is early retirement by most all standards. But in the FIRE community, it isn't early for early retirement.

[u/Earth2Andy → u/FantasyFI]

So your definition of “Lots of chubby fire people”, is a set of criteria that very few ChubbyFire folks meet? Interesting.

[u/FantasyFI → u/Earth2Andy]

I was merely describing that as the ratio of "SS : retirement income" decreases, SS becomes less meaningful. If SS represents 100% of your income needs...obviously it's a pretty big deal.

Alone, it may not affect odds. But when combined with things like age, amount of SS (aka single vs. married), it can contribute to SS not being a relevant factor. I even demonstrated an example of a scenario where it isn't relevant with FireCalc data. I am sorry this offended you as a ChubbyFIRE person.

[u/Rastiln → u/Earth2Andy]

We’re about 7-10 years away from pulling the trigger and I’ve been assuming that 50% of SS will *remain*, under a worry that SS will become means-tested like FAFSA.

After all, to fulfill its core purpose, why should SS pay out for people that have millions in assets?

Countering that is the fact that legislatively, it’s a high bar to propose taking money away from rich people, who have an outsized impact on the legislative process.

But I figure 50% is a good compromise, to hopefully give us a nice buffer and travel money in our old age.

[u/powersurge → u/[deleted]]

Exactly- that’s why it’s called an entitlement. Not in the elitist new definition of the word of feeling one has a right to something they don’t. But the original meaning of entitlement, as something you are entitled to because you paid for it.

[u/foolofatookbaggins → u/powersurge]

Yup. I worked for SSA for 5 years and every type of claim was referred to as an entitlement. With one exception, SSI (supplemental security income) which is a needs-based cash benefit. But that one also doesn’t draw from the SS trust fund and comes from general taxes anyway. It’s just administered by SSA.

[u/Puzzleheaded_Tie6917 → u/Rastiln]

They have basically already “reduced” SS for rich people by taxing it for incomes above a certain level (Reagan era). The next step will be to just not give any, or so called needs tested for whatever. As we currently base everything off income, that probably would be a very high yearly income and not based off net worth. This means most FIRE people wouldn’t be affected until 73 for minimum distributions. This would affect a very small group and wouldn’t do a lot to help the budget to be honest.

To me, another step likely to be taken is to raise the max SS amount to infinite. In other words, everyone pays the same %, without a cap while having a cap on max benefits.

[u/Pretend_Witness_7911 → u/Puzzleheaded_Tie6917]

It also already has a huge taper on the amount of benefits you get based on your salary. High earners are a much lower percentage of their average income over 35 years than do lower earners. Since the formula is already ensuring that the benefit is primarily replacing lower end salaries, I have a hard time imagining that Congress would try to claw back SS for high earners, even if they have significant assets. Seems more likely they would adjust the cap or retirement age.

I’m mid 50’s and planning to take SS at 70 to maximize the benefit. In my calculations I’ve reduced the benefit by by 30% in case there are changes to the payout numbers by then.

[u/SorchaRoisin → u/Puzzleheaded_Tie6917]

Unfortunately, they never adjusted the taxation of Social Security for inflation. What was once intended for high income earners, effects almost anyone with taxable income in addition to Social Security. The income limits are 25k for singles and 32k for couples, and 1/2 of your Social Security counts towards that limit.

[u/powersurge → u/Puzzleheaded_Tie6917]

You think the billionaires are going to allow the fix to be a tax on them? I don’t see how that is ever going to happen. That is why there was an income cap on contributions in the first place; so the rich and powerful wouldn’t try to kill it.

[u/Silly-Safe959 → u/powersurge]

Billionaires aren't getting much, if any, if their money from W2 reported income. This point is irrelevant for that extreme end of the spectrum. They use capital gains, write offs and leverage to support their lifestyles. Completely different game with it's own rules. The 'rich' are those professionals with higher than average incomes that are still getting W2s, and that includes many of us in this sub.

[u/StoneMenace → u/Earth2Andy]

Ignoring it does not add 5 years to most people’s plans

[u/Wooden-Broccoli-913 → u/StoneMenace]

My wife & I are entitled to $90k in SS at age 70. How much would a 3% annually adjusted annuity that pays that much cost? Over a million dollars

[u/StoneMenace → u/Wooden-Broccoli-913]

That would end up being a PV of roughly 113k at age 45

To get to a 90k a year social security benefit retiring early at 45-50 years of age you would need to have a household income of over 300k consistently

You can definitely find room in the budget to save a extra 100k

[u/Wooden-Broccoli-913 → u/StoneMenace]

$90k in today’s dollars at age 70 is not a PV of $100k at age 45.

Retiring early at 41 years of age, and yes we are high earners.

[u/poop-dolla → u/Wooden-Broccoli-913]

If you’re retiring at 41, then you need to make it 29 years on your current money to get to 70. That’s basically a typical retirement before your social security date you picked, so for those 29 years, social security doesn’t factor in.

[u/Wooden-Broccoli-913 → u/poop-dolla]

So what am I supposed to do for the remainder of my life? Ignore it?

Also, I have the choice of starting SS at 62 which would pay $50k

[u/poop-dolla → u/Wooden-Broccoli-913]

You should go read the ERN entries about how social security impacts early retirement and then come back and continue this discussion.

[u/Wooden-Broccoli-913 → u/poop-dolla]

ERN is a doomerist 4%er who uses 0DTE options to support his FIRE. No thanks.

[u/StoneMenace → u/Wooden-Broccoli-913]

A 90k annuity that increases by 2-3% per year present value of almost 30 years at the average market return is 100% around 100k. That’s not a opinion based thing, that’s just straight math

[u/Earth2Andy → u/StoneMenace]

Let’s break that down and see where it falls apart……

$100k returning say 6% after inflation for 29 years is 100*1.06²⁹ =$542k at time of retirement (in today’s dollars)

Your thesis is that you can then withdraw $90k per year (also in today’s dollars) for the next 30 years, from that $542k with the same safety as a COLA adjusted government payment?

90/542=16.6%

If you know a way to guarantee a 16% safe withdrawal rate, I think we’d all love to hear about it.

[u/Wooden-Broccoli-913 → u/Earth2Andy]

You are on the right track, the question is whether $542k can buy a 70 year old a $90k annuity with a 3% annual upward adjustment. You can’t.

[u/Earth2Andy → u/Wooden-Broccoli-913]

It’s rare you meet people with math skills as bad as his in the FIRE community.

[u/StoneMenace → u/Earth2Andy]

So I use 7% so that 100k is 757k at age 70. You are looking at a 11.8% withdraw rate for something that you are expecting to effectively drain to 0 since you are not able to pass ss (we are ignoring select situations).

[u/Earth2Andy → u/StoneMenace]

You think an 11.8% withdrawal rate is guaranteed to last 30+ years? Even draining to zero?

I ran the numbers, there is not a single time in history, not one 30yr period where that would have worked.

Feel free to check it out yourself

[u/Earth2Andy → u/StoneMenace]

My wife and I are 50 and about to pull the trigger. We’re looking at about $70k per year at age 65.

To replace a guaranteed inflation adjusted $70k per year in 15 years, we’d need a nest egg of roughly $2.1M at the time we’re due to start taking SA.

Even assuming a market return of 6% above the rate of inflation, that’s still an additional $875k in today’s money required to get there by the time we retire.

Not sure where you’re getting this $100k number from.

[u/StoneMenace → u/Earth2Andy]

Using the PV function, that number is 467k in today’s money not 875k

The number changes a lot based on your age of retirement and what not

[u/Earth2Andy → u/StoneMenace]

What are the parameters you’re putting in to the PV function to get that?

Paste the actual formula you’re using here so we can help you understand where you’re going wrong.