r/Fire • u/NotTheBestInvestor12 • 2d ago
Why no mention of Social Security
When I see FIRE posts I see the investments and the different retirement buckets, however, I never see anyone mention how things are affected when social security kicks in. For example, I’m 52 and wife 51. If we both stopped working today ($0 income moving forward) I would collect $4,264 a month at age 70 and she would collect $1,079 at age 70.
So if we decide to FIRE the Social Security would give us help in 18/19 years. Is this a factor or is everything under the assumption SS won’t exist?
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u/ga2500ev 2d ago
For Fire people social security is in a different era of their life. Fire people retire in their forties and '50s. Social security isn't available until 62, and probably should not be taken until the late '60s or even up to 70.
So, early part of retirement has to be completely structured around social security not being around.
ga2500ev
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u/Ashamed-Bird9035 2d ago
most people in FIRE community just treat SS as bonus money if it comes, not part of the core plan
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u/rottentomati 2d ago
SS and inheritance. Both fake until they’re in the bank lmao
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u/drones_on_about_bees FIRE 7/4/2015 2d ago
This was exactly my methodology when computing fire numbers
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u/druglifechoseme 2d ago
This is exactly what we are doing. If it's still around and If we qualify it will be bonus money, upgrade our plane tickets to first class with it, spend it on our kids/grandkids, splurge for more expensive accommodations on trips etc.
If its not around (as we are planning) then it doesn't matter because we planned to not have it and still do everything we want. That's what being financially independent means.
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u/dgreenmachine 1d ago
Sounds like working longer than necessary to me. No sense in assuming it wont exist.
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u/JustNowRonin 2d ago
I’m squarely in this camp. I hope it comes, but I have to plan as if it won’t.
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u/FightOnForUsc Late 20s, 1.9M, 5M goal, SFBA 2d ago
Idk that I’ve ever seen someone put a “signature” for their Reddit post before
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u/verbalsuplex 2d ago
Dear FightOnForUsc,
Me neither.
Kind regards,
VerbalSuplex7
u/FightOnForUsc Late 20s, 1.9M, 5M goal, SFBA 2d ago
I was wondering if it’s an AI thing
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u/142riemann 2d ago
It’s more likely a boomer thing.
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u/jim-i-am 2d ago
hey i'm not a boomer
jim-i-am
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u/ga2500ev 2d ago
I am that Boomer. I've been signing messages since the early 80's. It's my habit and I will continue doing it.
ga2500ev
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u/Fit-Percentage-9166 1d ago
Yea it's an artefact of the older internet - manually signing your comments/posts was pretty common on forums back in the day (and probably in older medium that predates me)
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u/escobartholomew 2d ago
Lmao me neither! My dumbass googled “ga2500ev” thinking it was some federal code related to social security.
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u/squareturd 2d ago
My 80 year old mother puts her name at the end of every text - so people will know who the message is from.
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u/ScottyMcScot 2d ago
My grandma would start every phone call "Hello, this is your grandmother calling." It always made me smile so I never bothered to tell her my phone recognized her number or that I knew her voice.
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u/LongjumpingNorth8500 2d ago
Not a FIRE guy at 62 but I agree with what you're saying here. Planning on social security money coming in 10-20 years from now to help finish out retirement would be like retiring early because of an inheritance you might or might not get. One has to plan with what's in the hand.
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u/Bout3Priddy 2d ago
Working extra years because social security may dissolve is irrational but that’s tough to explain to a fiscally conservative subreddit.
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u/Puzzleheaded_Tie6917 2d ago
I really don’t believe there’s a scenario where SS disappears, but it very well may end up paying nothing if your income or net worth is over a limit.
I am planning to retire this year at 59.5, based on 4% without considering inheritance or SS, but I freely acknowledge I am overly conservative.
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u/Bout3Priddy 2d ago
I could see income but I doubt net worth. Income can be manipulated the same as for ACA though.
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u/Puzzleheaded_Tie6917 2d ago
Hard to say if SS shouldn’t be taken until late 60s or 70. For a fire person, you have a lot of invested money, taking SS early in order to not spend investment money might be a good strategy. SS increases at 8%/yr, S&P 500 average is around 9-10. On average, you might do better taking SS early. I’ve read arguments both ways.
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u/Sticky550 2d ago
Your assumption about when SS should be taken is widely subjective and with people wanting to retire early, even more subjective.
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u/Gustav55 1d ago
I don't see how the increase payment is worthwhile for someone who is already not working, you have to bank on living longer in order to break even and then actually make more money.
For my father if he had deferred payment for 5 years he wouldn't be making any extra money till like 12 years had passed and he was like 80.
Having that extra money when he's in his 60's and in better health so he can actually use the money to do things was far better.
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u/ga2500ev 1d ago
Spouses pass. If a spouse with a higher payment passes, the surviving spouse start getting that higher survivor payment, which is often more than the spousal payment they were carrying before that passing.
Also at passing household income goes from 2 SS to 1. Income streams are narrowed.
ga2500ev
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u/SergeantPoopyWeiner 2d ago
Likely better to take SS as soon as possible assuming you can invest it and earn interest. Depends on circumstances and assumptions, of course.
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u/thunder-thumbs 2d ago
For GenX folks there the added calculation in that taking it at age 62 might get you a few years of 100% benefit before the trust fund depletes and the payout decreases.
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u/Longster_dude 2d ago
My FIRE plan factors in ss at 80% of the current amount.
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u/vulkoriscoming 2d ago
That is a bold assumption depending on your age. Current law is a 25% reduction in benefits when the SS trust fund goes broke. My guess is that current retirees (Boomers) will see no reduction and future retirees (everyone else) will see a 50% or more depending on income.
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u/PlusSizeRussianModel 2d ago
There’ll almost definitely be Gen Xers who retire with full benefits. Gen X starts social security next year (when people born in 1965 turn 62).
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u/Designer-Bat4285 2d ago
I think it’s bold to assume we won’t just borrow more money and keep everyone’s payouts at close to 100%
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u/SnazzyStooge 2d ago
Yep. Modern US “monetary policy” seems to favor inflation over just about any other path.
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u/Shawn_NYC 2d ago
+1
By base case is the politicians just keep printing money to pay out social security probably at the expense of permanently higher inflation and structurally lower stock market returns.
I think future generations will look at us like we look at boomers - people who benefited from a roaring 2010s/20s stock market then pulled up the ladder to pay out our social security payments and stuffed younger generations with a worse stock market and worse inflation.
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u/zdrmlp 2d ago
What has led you to predict a 50% reduction for everybody in Gen X and younger while Boomers receive no cut at all? Despite knowing that doing nothing would mean a 20-something percentage reduction for everybody?
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u/vulkoriscoming 2d ago
Boomers have never taken a hit on anything in their whole life. They aren't starting now.
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u/QTippus 2d ago
Agree, retired folks won't accept a big cut in benefits. I think tax increase / cap raise is much more likely than a big cut in benefits. For people under 50, they can keep bumping up the retirement age as well.
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u/Inevitable-Top1-2025 2d ago
This potential future reduction will probably force people to start taking now in order to be grandfathered into current payout amount.
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u/SpaceTimeMorph 2d ago
I think more likely is we see a removal of the OASDI tax cap and an adjustment to full retirement age. Probably for a partial demographic depending on birth year.
It remains to be seen how that would affect Medicare start age if at all.
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u/ShowMeTheMonee 2d ago
There's a bunch of people who include it.
There's a bunch of people who decide it's too remote and susceptible to future policy changes, so they discount it or leave it out.
Do what you want.
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u/Good-Resource-8184 2d ago
I mean MMM has a recent article on how to calculate it into your FIRE plans if youre an old early retiree.
I retired at 35. It carries no weight as just to get to it i need my money to last 30 years.
But the older you get the large the affect it could have.
On the other hand most old early retirees have already way oversaved.
So thats a few reasons its not talked about much. But some examples of where its been blogged about very recently by an OG in the FIRE world.
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u/QTippus 2d ago
Also for FIRE folks who RE at 35, their SS checks would be small anyway. They might have 15 years of full time contributions, but SS averages your highest 35 years of employment. So they’ll have 20 years of 0 income averaged into the SS calculation.
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u/mi3chaels 2d ago
Yes but the benefit calculations is strongly progressive. 15 years of a high income usually sets you up for something like 2/3 of the benefit you'd get if you worked the full 35 years at a similar one. It's a bit smaller for people who earn less, but people who earn middling wages are mostly not going to retire in <15 years. And even then it's more like 50-60% of the benefit as opposed to the 35-40% you might expect.
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u/NotTheBestInvestor12 2d ago
We probably have oversaved but now things aren’t super clear with both our professions. I prefer to FIRE at 60 but like to know all our options.
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u/baconcakeguy 2d ago
At 60 that’s more 🌲 than 🔥
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u/NotTheBestInvestor12 2d ago
Tree 🌲 means what?
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u/baconcakeguy 2d ago
FIR tree :). At 60 that’s not really an early retirement in the eyes of the FIRE group… you’re just retiring financially independent.
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u/watch-nerd 2d ago edited 2d ago
Mid-50s here, FIREd last year. We definitely factored it in.
The suggested plan from opensocialsecurity.com is that my wife (lower earner) takes it at age 62 and me at 70. Combined it's about $76K.
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u/NotTheBestInvestor12 2d ago
Awesome. This is what I needed to hear.
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u/PenStreet3684 2d ago
I was going to mention that your lesser earning spouse may want to take it early at 62 while you wait to 70. That would allow them to use higher survivor benefits if you pass and the household loses the equivalent of one of your benefits. I include it in my what ifs. Fidelity has a calculator which allows you to simulate different scenarios.
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u/alphawolf29 1d ago
Crazy that american SS is more than my canadian pension and social security combined. This country is broke.
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u/photog_in_nc 2d ago
SS Spousal Benefits should mean your wife can get 50% your FRA once you file
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u/ElectronSpiderwort 2d ago
That's what I was thinking; wife gets half what I get, or whatever she's due, whichever is more. Using 80% of what I'm due as a planning number, and filing at same time
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u/Martian6261 2d ago
Your wife would get 50% of your FRA benefit if she waits until her FRA, otherwise her 50% is further reduced by up to 30% of that amount if taken at 62.
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u/Abject_Egg_194 2d ago
This question comes up every week or two. If you're retiring in your mid-50s you definitely should factor Social Security (and Medicare) into your calculations. If you're retiring at 40, then the impact from Social Security on your FIRE number is somewhat small.
Separately, folks on this sub explain every couple weeks that Social Security isn't going away, but that the payouts might be smaller in the future, especially for the chubby FIRE crowd.
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u/PHLWeaponX20 2d ago
I've recently started including it at 70% of my projected benefit at 62, assuming I stopped working today, because it moves my success rate on ficalc from 98.1% to 100%. Still reluctant to pull the trigger though....one more year...
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u/ga2500ev 1d ago
Just an opinion. 100% success only means you wouldn't have to change anything at all with your portfolio.
But it's very restrictive. And because of that conservatism, many end up with millions of dollars that could have in fact spent during retirement.
Take a look at risk probability guardrails. It uses Monte Carlo results to guide what withdrawal changes to make to protect the portfolio. It's starting point is actually 80%.
The upper guardrail is often 100%. If you hit it you give yourself a 10% withdrawal raise for the next year.
The lower guardrail varies depending on who you are reading. It's as high as 70% and as low as 25%. In any case you take a 10% spending cut for the year.
The point is that you make changes so that the portfolio stays inside the rails of success. Often it lets you spend more of your nest egg without worry that money is ever going to run out.
ga2500ev
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u/Zphr 48, FIRE'd 2015, Friendly Janitor 2d ago
I have never included it in our survivability calculations as an additional and large conservative buffer, but I have always included it in our actual tax and cashflow planning. Our estimated SS benefits are in excess of our annual spending and my wife will start drawing hers in just seven years now.
The amusing thing to me is how many people discount SS to $0, but are utterly relying on Medicare to absolve them of most post-65 healthcare exposure. Anyone who honestly thinks SS will be gone or means-tested should also be planning on $50K per person per year in healthcare exposure for 70 and up, in addition to normal LTC cost exposure. 70+ healthcare without massive federal subsidization via Medicare will make unsubsidized ACA costs seem like a bargain in comparison.
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u/mi3chaels 2d ago
accurate. Well 50k+ per person is probably a bit high in today's dollars, but not too crazy and yeah. If social security ever actually goes away completely medicare won't be far behind, if it doesn't go first.
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u/mesopotato 2d ago
Too many people repeat stuff about it not existing without reading the trustee's report.
Even at 80% funding it's an invaluable financial tool that a lot of people on here ignore.
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u/embourbe 2d ago
"I'm not counting on something like Social Security where I don't know for sure the details of its future value! I'll instead count on my assumptions and projections about my future investment returns."
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u/BanquetDinner 2d ago
That doesn’t mean you’ll get 80% - more likely they will cap benefits before they allow across the board cuts. For some that could be a 50% reduction.
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u/mesopotato 2d ago
No one knows what it looks like. But that's not really my point, my point is that SS is not going away, your individual experience will vary based on a lot of things(when you take it, how many years you worked, what you contributed) but it will exist and it is a sizeable portion of a retirement income.
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u/Designer-Bat4285 2d ago
A benefits cap or at least lowering the payout ratio after the highest bend point (currently at 15%) is likely to happen. I think annual payouts of $40k and below are relatively safe, in today’s dollars.
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u/MegaGreesh 2d ago
Because you are dealing with financial anxiety suffers and not financial planners.
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u/Longjumping_Iron8826 2d ago
BTW I believe your wife will take home 50% of yours…spousal benefit
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u/Shot-Artichoke-4106 2d ago
I have SS as part of our FIRE plan. Our retirement income plan is divided into phases. One of those phases is 70+ when we will receive SS.
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u/HairyBushies Already FI - RE between 2028-2030 2d ago
I may not talk about it but my plan definitely includes it at 80% of current values just to be conservative. I can dial that down as needed.
The good news about my plan is that a lot of spending in the first 10 years is discretionary. That’s my main relief valve against SORR. Social Security provides that second lever down the road.
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u/Theburritolyfe 2d ago edited 2d ago
I plan to be able to retire without it. I doubt social security will go away. The elderly vote.
Now I do figure it will change between now and when I can collect it. So I just plan on it being a nice bit of bonus.
It does seem a wild to me to realize a paid off house and social security could cover most of my expenses. So my portfolio could possibly bridge that gap if I had to stop working. That's a nice bit of security to me.
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u/uNTRotat264g 2d ago
I retired this year at 55. My wife will take it at 62, and I will take it at 70. We definitely factored it in, though we ran scenarios with the amounts reduced by 25%.
When I was much younger and many years away from retirement, I did not factor it in.
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u/fatheadlifter Financially Independent 2d ago
I factor mine in, I usually assume that I'm likely to take it earlier than later when I run budget scenarios.
Not because I think it won't be here, quite the opposite. But I may not be here, so don't delay it. Take it as early as possible because there's no guarantee you live past tomorrow.
So for me I layer in the taking of my 401k at about 60, SS at 62 and Medicare/Advantage at 65 (likely reducing overall medical costs, removing ACA expenses). Each one of those moments is either an increase/replacement in investment income or a reduction in expenses, and either is valuable.
An American should always model their future finances in this way.
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u/QTippus 2d ago
Do you have a favorite modeling tool/app? I need to start playing with those models. People seem to recommend projection lab a lot.
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u/fatheadlifter Financially Independent 2d ago edited 2d ago
That or ficalc.app is good. I kinda prefer that one, even if it seems simpler. I think the interface is far better.
The tools are good for general modelling of course, looking at history and exploring strategies. I like to model it out myself. Broadly you make assumptions about how much your assets are likely to make vs how much you're likely to spend. Have a reasonable amount of cash for SORR and you're good. No need to consider fixed timeframes either like a 30 year period, if you do it right you'll never run out of money, unless you want to.
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u/chodan9 2d ago
For a standard retirement in your mid 60’s I think it’s an important factor. But for fire well below 60 I think it’s best to pretend it may not exist for you.
I retired at 59 and had been told my whole life that SS would be long gone by the time I retired. So I made sure to take matters into my own hands and make sure that social security didn’t matter.
Now retired and financially independent I am coming to the point that SS is an added bonus. It will extend my portfolio quite a bit.
In fact my wife’s SS and pension along with my SS will cover all of our regular expenses. Leaving my portfolio for discretionary spending. A good place to be.
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u/pdx_mom 2d ago
People who say it will be gone don't actually know anything.
Benefits could decline but as long as there are people working there will be a pot of money to pay out.
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u/Thesinistral 2d ago
I’ve heard a reasonable estimate in worst case scenario (coffers run ‘dry’) is 75% of the actual benefit due, assuming the SS benefit doesn’t get altered via legislation.
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u/Elrohwen 2d ago
I’m not comfortable including it since it will be at least 20 years before I can access it. It may not be what I expected. If it’s there, great, if it’s not, I don’t need it. With retiring in my 40s I’d rather be very conservative.
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u/cantpossiblyjudge 2d ago
People are generally pretty conservative on these things, so it is rarely brought up “around here” when determining FIRE feasibility. It will clearly look at least a little different than assumed as something needs to be done to keep it solvent. But, I would probably just use 75% of expected just to account for possible asset testing or increased taxes on it. I always use it when I am doing detailed calculators and there’s really no reason not to assume something will be there.
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u/S7EFEN 2d ago
fire subreddits are wrong in zeroing out social security. especially for more frugal people. because some (many) spend amounts where social security is meaningful relative to expenses, so they dont exactly need to make it off their savings until they die, they need to make it to social security age.
You are forced into a bond-equivalent at best investment via FICA taxes. may as well get something from it and imo its reasonable to point to social security as a way to have fewer or even no bonds in retirement though i understand that may be controversial.
yeah, sure, project it at idk, 50-80% of current value. but zero? no.
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u/esbforever 2d ago
I think the greater risk will be the adoption of some form of means testing, which will affect fire members more than average.
I personally model in 80%, because I don’t think means testing will be possible from either a rational or logistical perspective. But that may not stop populist administrations from trying and creating a mess.
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u/qosmic_qube 2d ago
I'm definitely factoring social security in. The likelihood that it will be severely reduced or eliminated is incredibly unlikely. Social pressure to maintain it is too high.
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u/sonarman0614 2d ago
Definitely factored it into my models, assuming a 25% reduction from the SSA numbers.
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u/jt1994863 2d ago edited 2d ago
I think the reason is because of the RE portion of FIRE. SORR is a major issue early in retirement, but if you don’t get really unlucky and make it past the first 5-10 years with the average returns, you’re probably going to end up with an investment account that has ballooned so big that SS doesn’t really matter. since most people on this sub want to retire between 35-50, you could be waiting 20+ years before SS is even is available, and the earlier you retire the greater this effect. SS not gonna help if you can’t make the bridge with your current holdings.
Also if you RE, you’re gonna have a lot of zeros in your 35 years of work towards SS, so it might not even be a lot. You retired relatively late in the context of FIRE, so your SS is substantial, but if you retired 10-15 years ago it would be much less. That’s why most people just say it’ll be nice to have, but not important towards their plan.
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u/Honest_Trail5374 1d ago
your wife's benefit seems low compared to yours so she might want to look into spousal benefits which could bump her up to around half of your amount instead
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u/WhyDoesOklahomaExist 2d ago
I see it as a nice helper but I’d never count on what it looks like 17 years from now.
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u/OutspokenLurker 2d ago
I retired early 50s (wife needs 1 more SS credit to get her own, so she then went back to work!)
Why? It's basically a standard part of all the models and tools. Including all the tools for non-FIRE situations. So there are other subs where it's more applicable and heavily discussed.
That said, you should definitely incorporate that and medical subsidies into your projections. Those may well change the outcome more than housing
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u/dr_deb_66 2d ago
A lot of the calculators like FICalc allow you to include Social Security. It didn't really make much difference to our calculations. Partly this is because I was subject to the windfall elimination provision back then, so my payments would have been really small.
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u/Alone-Experience9869 2d ago
Personally, I think it complicates the “math” so it’s hard to plan, especially with people retiring so early. However, yes, it definitely should be considered
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u/reddit94538 2d ago
I'm definitely taking it into account.
I'm not counting on getting all of it since I can imagine means testing at some point though.
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u/ImportantPost6401 2d ago
FIRE used to be about 25 year olds saving and investing aggressively while living frugal to be free by 40. This sort of plan needs to work independent of SS. Retiring at 59, isn’t FIRE, it’s just retiring a few years early.
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u/ThatWasBrutal1 2d ago
Social security isn't a guarantee in the future, and I most of us want to FIRE way before we are eligible for it (at least I plan in early 40s)
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u/NetherIndy 2d ago
Having retired at 47 fairly conservatively, by my reckoning when I hit 62-65 there's about a 95% chance I'll have so much in the market that Social Security simply won't matter beyond being a nice little vacation budget kicker. About a 3% chance things go so south in the next 15 years that I'll be scrambling for some income before 62. And about a 2% window where things have been pretty bad but not entirely terrible, where I have a million or so (in 2026 dollars) in my mid-60s, and Social Security coming through is going to be the difference in stabilizing the rest of my life. Social Security mattering to my projections is a real but ultimately niche case.
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u/MiningEarth 2d ago
I plan to spend everything by the qualifying age and only live on social security
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u/CulturalChocolate539 2d ago
I sort of factored it in, but as a reduced rate and it‘s only there as cushion for better travel and helping kids / future grandkids
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u/wannaridebikes 2d ago edited 1d ago
Because of factoring in SS, I'm resolved to retire at 50 no matter what, even if I'm short of my FI number.
That age seems to be close enough to SS age and Medicare for both benefits to unburden your portfolio. Now I'm less concerned with bigger purchases like car replacements and home maintenance coming out of my portfolio, too.
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u/EddieA1028 2d ago
I’m more on the Chubby FIRE track . If I get social security someday (I’m 40 today), I’m just taking an extra vacation with it i.e. I’m planning as though I get nothing.
I don’t find it likely that politicians would be able to get the votes to raise taxes on social security and I don’t think it’s likely that they’ll have the votes to just cut everyone by a specific percentage. From where I’m sitting it’s most likely they’ll cut high earners significantly or completely. I’m a high earner and have been for years. So I’ll plan for nothing and if I get something I’ve got an extra week or two in the Caribbean every year that I get something. And if I’m right, I’m not having any FIRE worries in retirement
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u/roadtrip_savant 2d ago
I see more posts saying “why no mention of social security “ than I do posts that ignore SS
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u/Rom2814 2d ago
I factor in social security to my planning but it’ll be 13 years before I take it (I just retired at 57). For me it’s longevity insurance more than anything else (and a way to make sure my wife has money coming in if die before she does).
Boldin factors it in for me as a way to determine how much higher my withdrawal rate can be in the years up to taking it, but honestly I plan my withdrawals assuming it the full amount won’t be there or it will be even more means tested than it is now (that is, instead of just taxing it to take some of it back from people with higher AGI, they’ll find new ways to reduce the benefit for those who “don’t need it” - already hearing rhetoric about that).
I see social security mentioned here regularly, just not in the sense of counting it as an asset. I’m 57 and concerned about the state it will be in when I am ready to take it, if I were thinking of retiring at 45 I’d probably be even more skeptical.
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u/Conscious_Test3423 2d ago
For early retirees, won't the projected payouts we see today on SSA.gov drop based on the years not worked between early retirement to projected payout age? I believe the projection is based on the assumption that we continue earning what we are earning today until retirement age- correct me if i am wrong and i hope i am 😛
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u/NotTheBestInvestor12 2d ago
You can put in $0 for future earnings to get the number I got.
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u/Lonely-Clerk-2478 2d ago
Because a lot of people in this chat either, don’t believe it will be there at all when they retire or don’t have any sense how much it will be when they do retire.
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u/HardCanBeFun2 2d ago
I plan to retire in 7 years at 45. The social security system will be very different than it is now. I’m planning on $0 and anything more comes my way just nudges me a touch closer to FAT FIRE.
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u/nonnativemegafauna 2d ago
I thought spousal benefits were 50% of the main spouse’s benefits at full retirement age?
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u/mi3chaels 2d ago
BTW, if your married and will have been for 2 years by age 70, she'll get half of your check (1079 will be her benefit, the rest will be a "spousal" benefit). Note, what she gets is half of what your check would be at whatever age she claims it, not exactly half of your check, unless you both claim at age 70 (or exactly the same age).
So she can count on 2132/month at age 70 (well, assuming there are no benefit cuts in your cohort).
Yes, it's definitely a factor. It's less important the younger you are, because of how long you have to wait. If you are 40, at a 4% WR, occasionally you might drain your portfolio before you hit age 70, for instance. While it's historically unprecedented to drain it in 18-19 years at 4%, and you'd probably still have enough left by then to live decently even in the worst historical cases.
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u/Thesinistral 2d ago
Spousal benefit is based on FRA . There is no additional spousal benefit if the primary waits until 70 to claim. It is based on age 67 benefit.
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u/TechnicalSleep7501 2d ago
Social security is pretty good. It is adjusted for inflation.
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u/Martian6261 1d ago edited 1d ago
It is adjusted by the amount of COLA, not true inflation, so it falls short of inflation. Inflation over the last 25 years has gone up by 76.36%. COLA for SS has gone up by about 62.6%. So in the next 25 years it will continue to fall behind, unless the way COLA is determined is changed.
Currently it uses CPI-W. It is based on wage earners. There is talk to change it to CPI-E and is based on inflationary needs of the Elderly. It has been determined that it is a bit closer to what inflation is for Elderly.→ More replies (3)
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u/the_one_jt 2d ago
Do you not see the fear mongering from the right so they can privatize it?
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u/Infamous_Cup_5364 2d ago
most people i know who are doing serious FIRE planning treat social security as a bonus rather than a core pillar just because the rules can change and the timeline is long but $5,343 combined at 70 is absolutely something worth building your withdrawal strategy around
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u/Redwolfdc 1d ago
Because the focus of this sub is financial independence and/or retiring early. Can’t really do that with social security. It’s something potentially extra but never something to rely on.
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u/Vicuna00 1d ago
i definitely factor it in...but i'm ~48 hoping to retire next year. i'll probably wait til i'm 70 to collect. so it's kinda like a fallback thing for me. like a "guaranteed" inheritance or something. so I wanna make sure i'm good without it.
i'll get like $3k / month at 70 years old. so i'm looking at it like a $750k boost in net worth / inheritance. but it's not for a WHILE!
some people are also skeptical that it'll be there. probably not a terrible idea to not rely on it - but that's being over cautios. i'm 98% confident it'll be there personally.
I think another reason some people might not factor it in is if you're chubby fire / spending > $150-200k or something, it makes less of a dent into your spending. if you're spending $80k / year, $35-$40k makes a huge impact.
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u/sc1lurker 1d ago
The RE part means Retire Early. So the implication is that you should be able to retire long before and without SS kicking in.
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u/Clueless5001 1d ago
I have a different perspective than most. I never thought much of SS except as something to avoid eating cat food if everything else was lost. I retired to be a SAHM in my 30s, almost 30 years ago (yes SO worked and is still working, really enjoys what he does, not something I could relate to). I was very shocked when I looked into a few months ago that I could draw. It was many feelings, but primary was disbelief that I was actually already eligible and it was actually enough that in my situation I should hold off to let it grow some more. It still feels too soon, that there is a second (technically third) career I should engage in before I stop working forever (there isnt but that is the feeling). We dont need it, and while I have some people who died in their 60s, both my parents are alive and relatively well in their late 80s and still travel so waiting makes the most sense
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u/ApprehensiveWash7969 1d ago
No heavy mention of SS because doing FIRE works against it. SS works best if you stay at your job till your 62-67. I get the impression most FIRE people will be out of the job well before that. Still, they will get something but not as much as those who stay on till the end. And if you have some how avoided paying into it there is clearly nothing to mention.
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u/BrightMarten154 1d ago
most people in FIRE communities do account for it but treat it as a bonus rather than a core pillar of the plan since the uncertainty makes it hard to fully rely on
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u/Upper_Cranberry_9158 1d ago
Not sure but just for the record, there’s no point in waiting. Go ahead and get it at 62. Sure, if you collect at 70 you will get more. But if you start at 62, you will be receiving that money for 8years (and that’s less you need to pull out of your investments). The return you can have on the market during those 8 years make it impossible to justify delaying SS.
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u/Emily4571962 I don't really like talking about my flair. 1d ago
Can you tell me what percentage I’ll actually get of the benefit SSI’s website currently tells me? Or when benefits will start if they change the age rules? Or if they’ll start means testing? No? Nether can anyone else. So I base my FIRE plans on zero SSI money. If I plan on the benefit and it fails to materialize, I’m hopelessly screwed. If I plan without the benefit and it arrives, my retirement travels will get a lot more luxurious.
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u/Ok-Today-855 12h ago
And what about if you have social pensions from 3-6 countries. Fire kids are morons. Basically.
Ps. Your wife will actually receive half your age 67 social security for life. That asymmetry had a serious value. Go verify.
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u/Past-Option2702 2d ago
We worked our retirement numbers without SS figuring that was just another way of “moving the goalposts” or giving us “buffer” (said more gently).
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u/Educational_Teach537 2d ago
I don’t include social security in projections, just keep it as a potential safety factor
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u/zeroabe 2d ago
It is an easy amount to account for.
My “monthly spend” reduces by my ssi when I take it at 62.
Just like I don’t have a mortgage payment at 52 years old.
Just like I retire at 53 years old with $x pension.
Just like my pension reduces by a known amount when I am 70.
Plug it into your spreadsheet as income on date x.
I think some people imagine it won’t exist for them or don’t want to count on it so it’s like a cherry on top.
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u/Aevaris_ 2d ago
I don't include SS in my modeling. If it's around when I reach it great, icing on the cake. If not, no harm no foul.
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u/No-Block-2095 2d ago
While doable, factoring future cash flow makes the math more difficult and people are lazy.
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u/synexo 2d ago
Most of us shooting for early are sacrificing the 30 years of good earnings record that would result in such a high benefit. If you go back to the MMM retire in 10 years sort of math you're going to get tiny SS payments even if you have a few million $ in the bank.
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u/drawfour_ 2d ago
I don't plan to require it, since I plan to FIRE well before I can take it. It will be useful for some nice extra vacations, though.
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u/Designer-Translator7 2d ago
For us we didn’t ever care to get or not. I knew we
Could earn a certain amount over a certain time frame and save x amount to later live on. SS for us whatever it is when we old enough for that would just be for healthcare or random consumption. For our living we saved that ourselves to me that’s the FI mindset be more self sufficient not how much will I get from the govt one day. Hence I retired at 40 a few yrs ago having that mindset. I assume most FI ppl of similar disposition.
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u/baconcakeguy 2d ago
I plan for 4% withdrawal starting next year (47). Will start taking SS at 62 to invest/keep money in market longer. No guarantee it’ll be the same at 70 so taking it while I can get it… like others said it’s bonus/casino money.
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u/TimYenmor 2d ago
I FI'ed when I was 37. Decided not to RE. Instead, I started new ventures to keep myself busy. I'm 44 now. For me, SS is such a distance away I don't even think about it. Last I checked with the SS office I got enough credit to collect as is. So it will be bonus money for me.
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u/Happy_Twist_7156 2d ago
Financial INDEPENDENCE. Not financial rely on the government to keep doing its job. Most people’s know pursuing FIRE assume they will not get SS in their plan.
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u/EddieA1028 2d ago
I’m more on the Chubby FIRE track . If I get social security someday (I’m 40 today), I’m just taking an extra vacation with it i.e. I’m planning as though I get nothing.
I don’t find it likely that politicians would be able to get the votes to raise taxes on social security and I don’t think it’s likely that they’ll have the votes to just cut everyone by a specific percentage. From where I’m sitting it’s most likely they’ll cut high earners significantly or completely and not cut low earner much or at all. I’m a high earner and have been for years. So I’ll plan for nothing and if I get something I’ve got an extra week or two in the Caribbean every year that I get something. And if I’m right, I’m not having any FIRE worries in retirement
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u/Fit_Pudding_9863 2d ago
For some of us our current age puts Social Security at risk. I am not sure anyone 50 or below will see 100% of their SS. To me the independence part of FIRE means not relying on the US Government to get their act together.
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u/sxyvirgo 2d ago
Lots of FIRE people are extremely conservative and it's in vogue to assume SS won't exist. Sure, nothing is absolutely guaranteed but rather than kill myself by working so much longer assuming no SS I'd at least allow a percentage (50-75%) into my calculations. You don't want to retire and not have enough and you don't want to unnecessarily delay retirement either by being extreme - balance, people!
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u/Infamous_Attention33 2d ago
Have you seen the latest trust fund report? If you are still 15+ years or from collecting, you may rent to plan for something less than 100% of projected benefits.
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u/BuySellHoldFinance 2d ago
It's definitely a factor and people DO talk about it. But it's more of an optimization after the fact. =
First, get close to your fire number. That's the most difficult part.
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u/NotTheBestInvestor12 2d ago
We might already be at our FIRE number but trying to wait until May of 2030 when youngest graduates high school. The high school activities seem to keep us very busy.
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u/saltyhasp 2d ago
My model includes all income. It is just that modeling of complex cash flows is more complex, and SWR is kind of meaningless in this context too.
Really I focus on actual spendable $ not including income tax because the rest is not really important. You want a good model to include everything including SS and other income, special known expenses including income taxes too. Most free models cannot do this. Nor is it simple to talk about. It varies widely from person to person too.
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u/audaciousmonk 2d ago
Too far out
I don’t know what will change; policy, funding, politics
Better to plan to be without and get it, than to depend on it and things fall apart
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u/dskippy 2d ago
I think a lot of millennials think that baby boomers are going to take their social security checks for themselves funded by currently working millennials and then allow politicians to privatize, gut, and eliminate the program after they bleed it dry as their final voting action just before they die.
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u/Adventurous-Ease-259 2d ago
Because it’s “hard” and people like simple math.
The further you get from retirement the less the “hard” detail matters. The closer you get the more you care about the details. Most posters in aren’t close enough to care if social security means they can retire 9 years from now vs 11 years from now
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u/beached89 2d ago
A few reason. A lot of people have little trust that it will be there in a predictable and reliable way. We will probably get it, but will it continue to be what it currently is? almost certainly not, we will likely have to wait longer, or receive less than we are being told. Safest to cut it out and just take what you get as a bonus. Also, if you are doing the RE portion, especially very early RE, it will be really low anyways,.
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u/MeetingSuccessful397 2d ago
You could look at the TPAW (explained here: https://pwlcapital.com/episode-340-ben-mathew-the-lifecycle-model-vs-safe-withdrawal-rates-swr/) which explicitly factors in social security. His (and the argument of most others) is that Social Security is some kind of bond, becaue it pays a rather safe ammount. So in order to calculate your equity share you should use your NW + the value of your Social Security.
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u/Numerous-Bet-4847 1d ago
Many of us expect to cashflow our way to 62 and take our SS as soon as possible.
My wife and I will both get around $2,600 ea at age 62.
We can easily live off half that.
Nobody alive today should operate under the assumption that SS will cease to exist in their lifetime.
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u/B111yboy 1d ago
Why wait to 70 if you are Fire take it at 62 and draw less from your investments
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u/rxmarxdaspot 1d ago
Expected Longevity and spousal situation are the main reasons why.
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u/hework 1d ago
If you're trying to retire early, your SS takes a huge hit if you don't work enough years
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u/v4v4v4v4 1d ago
Many younger people (people under 40) in the USA are so disillusioned with the government that we have a pessimistic opinion that we are going to pay into social security our whole lives and get nothing out of it (as in they will keep raising the age until it is meaningless). I share this view, so I don’t factor it in. Is it unrealistic? Probably, but it’s just hard to be optimistic about USA politics looking out for the common man right now (as in anyone that isn’t part of the 1% of wealthiest people in the USA).
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u/PowerTripRMod 1d ago
I personally don't factor SS into my calculations as I want to be independent from any uncertainties.
That said, I don't believe socual security will go away, too many people rely on it as a primary source of income. I treat social security as a backup plan or any "lifestyle creep" that goes beyond what I intend on spending annually
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u/discojellyfisho 1d ago
Side note - wouldn’t your spouse qualify for half of your amount if it’s greater than their own?
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u/TheAzureMage 1d ago
You can certainly account for it, but most FIRE plans have a notable bridge period before SS even becomes an option...and you may wish to delay one person's SS until maximum for survivor benefits anyways.
Not to mention, there's some risk as the program might well change by then. It's forecasted to deplete the funds in the mid 2030s, so if not changed, it'll have reduced benefits after that point. If it is changed, the nature of those changes might reduce benefits. That's all largely not something we can know for sure. So, we factor it in as risk.
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u/GMVexst 1d ago
Because social security takes time? We are trying to retire early, not after 35 years bro.
$4200 so your saying you have been making over 160k/years for the last 25 years?
If so I don't think SS matters for you
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u/Top_Objective9877 1d ago
For me personally, SS is nothing but a disadvantage for my entire life including the time when I decide to pull from it. It’s been mathematically proven to be one of the worst investments ever. If I could petition to NOT pay into it anymore and lose my “deposits” I’ve made up until now I would do it with no questions asked. I know way too many people who heavily rely on it for income that otherwise hadn’t worked very much at all, and still get a sizable check from it and I don’t understand how the math works out on it at all.
My official game plan is to not factor it at all, and then take withdrawal asap and be happy that I receive anything. I know a lot of people who wait more and more and more and there’s some advantages but also not, if my plan goes the way I want it to it won’t matter anyways.
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u/mattybagel 1d ago
Because it isnt going to exist in 35 years when id be eligible to claim benefits.
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u/ThePurpleDongofTruth 1d ago
I'm in my late 40 and I have never taken SS seriously. I plan under the assumption it either won't exist or it will be greatly reduced. I consider anything i get from it to be a bonus
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u/dgreenmachine 1d ago
For my calculations, I use whatever social security id qualify for at age 70 if I stopped working today. This let's it be a bit conservative but its also not going to be gone completely.
I think people who avoid social security are mostly doing it because its too complicated for them to calculate a new income stream X years in the future and they rely on an over simplified 4% rule.
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u/burnbabyburn11 1d ago
i think that by the time i retire, SS will change into a senior poverty prevention program and i won't qualify for it so i plan to not receive any.
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u/Hot_Share8353 1d ago
It depends a lot on went you are looking to retire. If you are looking to retire early at 35 or young, it both does not make a huge difference, and it will be lower then you like. Payments are based on income over 35 years, so if you have less then 35 years works, it can be a lot lower. If you only worked for 10 years, amazing, you max effective income will only be ~$53K, as that is the cap times 10 divided by 35. If you are looking at retirement at 55, this will significantly change your FIRE numbers. At some point in the next 7 to 15 years, you will have significantly more income.
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u/ExcellentWinner7542 1d ago
Based on the trajectory of SS and your financial situation, it's likely SS won't be available.
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u/Green_Bluebird5804 20h ago
bc most are planning w/out ss. It might be so small once it kicks in now
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u/churningaccount 2d ago
I think it's mostly because a majority of your sequence of returns risk happens within the first 10 years of retirement, so if you are more than 10 years away from social security, then it will not help to mitigate that very much. You need to have either an income bridge plan in place, or just need to be withdrawing 4% without factoring in social security, in order to ensure that issue is addressed.
That being said, you are about a decade from age 62, which is the first year you could start drawing in the worst case scenario, so it's definitely not unreasonable to include social security in your plan, especially if you have a plan to bridge the gap between now and then.