We’re approaching a fork in the road with Social Security, and like it or not, we’ll have to choose from one—or more likely, a combination—of the following:
Lifting the cap on wages subject to payroll taxes
Nudging the payroll tax rate a bit higher
Channeling general revenue into the program
Directing resources toward those who need help the most
Gradually raising the full retirement age
Means-testing benefits so the well-off get less
Introducing a 401(k)-style component alongside the current system
Given the country’s current mood for tearing down the institutions that built the middle class our parents and grandparents relied on, I suspect we’re heading toward a mix of:
Keeping Social Security benefits tax-free (President Trump's promise)
Slowly increasing the full retirement age (Fiscal conservatives will like this)
Reducing benefits for the affluent through means testing (Centrists might support this if it saves the system)
Letting private retirement accounts quietly take a larger role (Financial Services industry payback for contributions to both parties)
We over save for retirement and typically contribute to a non-qualified company deferred compensation plan as a tax deferred savings plan. While the investment choices in NQDC plan are broad, solvency risk is high and there is no 10 year withdraw period if one of us dies prematurely. Is a deferred variable annuity a safer alternative if the fees at Fidelity or Vanguard are reasonable? What about the situation where are educated enough about a TIPS ladder and comfortable managing it?
When we were younger and focused on family and career, we used Fisher Investments. At the time, we simply didn’t have the confidence to handle the emotional ups and downs of investing, especially coming from a modest background and having experienced heavy losses during the Tech Bubble due to overconfidence. For us, the fees were worth it. Our financial advisor helped us stay disciplined during the 2008 financial crisis and other market corrections, and our returns (net of fees) slightly outperformed the S&P 500. Our savings discipline coupled with their services helped us quite a bit. Over the years, Fisher Investments also helped us educate ourselves through books, meetings, newsletters, and other resources. We discovered investors like Paul Merriman, Bill Bernstein, and Larry Swedroe, and gradually developed our own investment framework. More importantly, we matured and shifted our focus toward planning and asset management. Eventually, we reached a point where we separated from Fisher Investments — and to their credit, they handled it professionally and helpfully, despite losing our AUM fees. Today, we manage our own assets investing primarily in low-cost ETFs and TIPS ladders. We use Pralana for our scenario planning. I hope we've done enough to prepare for our retirement.
Each year after paying Intuit for TurboTax Premier plus three state returns, I find myself wondering: why, given that most of my filings are straightforward and largely pro forma, can’t the IRS pre-populate my return based on information they already have? I could simply review, make any necessary edits, and submit—only turning to TurboTax or a CPA in cases involving more complex or exceptional circumstances. It seems increasingly inefficient for taxpayers to bear the burden of data entry for information the government already possesses. I then remind myself, lobbies have rights too! There's my annual taxes rant... I feel better now :)
I am calmer pre-retiree. I discovered Bill Bernstein's "Four Pillars" book and Paul Merriman's website and finally built up a TIPS LMP and a well diversified risk portfolio.over the last year.
Bond returns are generally smoother and less volatile than stocks. Big one-day gains are much rarer, and historical data shows that bond performance isn’t concentrated in just a few days like it is with stocks. So while it’s still smart to stay invested in bonds (to avoid poor timing and benefit from compounding), the “missing the best days” argument doesn’t apply nearly as strongly to bond funds. Their returns tend to accumulate more gradually over time.
I love this rant! Yes, most of my conversations around Social Security, or Medicare, end with one or both of: "You are an elite boomer" or "You have TDS". I finally realized keeping my mouth shut is the best approach.
We opted for a TIPS ladder for our reliable income to supplement delayed social security payments. We built this in 2023 as I started my retirement planning. My spouse wants to work a few more years after I retire. This afforded us a 90-10 equities/bonds risk portfolio where the equities are 70-30 US/foreign and equal weighted across large/small and growth/value. We hope this portfolio to cover our discretionary spending desires. We plan to take a reverse mortgage when eligible for reserves to pay for any LTC and other unanticipated spending shocks.
Comments
We’re approaching a fork in the road with Social Security, and like it or not, we’ll have to choose from one—or more likely, a combination—of the following:
- Lifting the cap on wages subject to payroll taxes
- Nudging the payroll tax rate a bit higher
- Channeling general revenue into the program
- Directing resources toward those who need help the most
- Gradually raising the full retirement age
- Means-testing benefits so the well-off get less
- Introducing a 401(k)-style component alongside the current system
Given the country’s current mood for tearing down the institutions that built the middle class our parents and grandparents relied on, I suspect we’re heading toward a mix of:Post: Very disturbing proposal about the future of Social – radical thinking for sure.
Link to comment from May 5, 2025
Larry Kotlikoff has a proposal worth studying: https://larrykotlikoff.substack.com/p/the-personal-security-system-fundamental
Post: You versus Social Security – Quinn is betting against you.
Link to comment from April 27, 2025
We over save for retirement and typically contribute to a non-qualified company deferred compensation plan as a tax deferred savings plan. While the investment choices in NQDC plan are broad, solvency risk is high and there is no 10 year withdraw period if one of us dies prematurely. Is a deferred variable annuity a safer alternative if the fees at Fidelity or Vanguard are reasonable? What about the situation where are educated enough about a TIPS ladder and comfortable managing it?
Post: RDQ Sorry folks, I still see annuities, including deferred annuities, as a viable option for creating steady retirement income.
Link to comment from April 25, 2025
When we were younger and focused on family and career, we used Fisher Investments. At the time, we simply didn’t have the confidence to handle the emotional ups and downs of investing, especially coming from a modest background and having experienced heavy losses during the Tech Bubble due to overconfidence. For us, the fees were worth it. Our financial advisor helped us stay disciplined during the 2008 financial crisis and other market corrections, and our returns (net of fees) slightly outperformed the S&P 500. Our savings discipline coupled with their services helped us quite a bit. Over the years, Fisher Investments also helped us educate ourselves through books, meetings, newsletters, and other resources. We discovered investors like Paul Merriman, Bill Bernstein, and Larry Swedroe, and gradually developed our own investment framework. More importantly, we matured and shifted our focus toward planning and asset management. Eventually, we reached a point where we separated from Fisher Investments — and to their credit, they handled it professionally and helpfully, despite losing our AUM fees. Today, we manage our own assets investing primarily in low-cost ETFs and TIPS ladders. We use Pralana for our scenario planning. I hope we've done enough to prepare for our retirement.
Post: Fishing for Feedback
Link to comment from April 18, 2025
Each year after paying Intuit for TurboTax Premier plus three state returns, I find myself wondering: why, given that most of my filings are straightforward and largely pro forma, can’t the IRS pre-populate my return based on information they already have? I could simply review, make any necessary edits, and submit—only turning to TurboTax or a CPA in cases involving more complex or exceptional circumstances. It seems increasingly inefficient for taxpayers to bear the burden of data entry for information the government already possesses. I then remind myself, lobbies have rights too! There's my annual taxes rant... I feel better now :)
Post: Now it’s over, taxes are filed, but I have a question. How did prepare your your taxes?
Link to comment from April 17, 2025
I am calmer pre-retiree. I discovered Bill Bernstein's "Four Pillars" book and Paul Merriman's website and finally built up a TIPS LMP and a well diversified risk portfolio.over the last year.
Post: How has your financial thinking changed over the past year?
Link to comment from April 11, 2025
Bond returns are generally smoother and less volatile than stocks. Big one-day gains are much rarer, and historical data shows that bond performance isn’t concentrated in just a few days like it is with stocks. So while it’s still smart to stay invested in bonds (to avoid poor timing and benefit from compounding), the “missing the best days” argument doesn’t apply nearly as strongly to bond funds. Their returns tend to accumulate more gradually over time.
Post: What is the risk level of sitting on the sidelines when it comes to bonds?
Link to comment from April 11, 2025
I love this rant! Yes, most of my conversations around Social Security, or Medicare, end with one or both of: "You are an elite boomer" or "You have TDS". I finally realized keeping my mouth shut is the best approach.
Post: RDQ There is so much to rant about these days. Let’s go for the people who don’t believe facts-perhaps about Social Security
Link to comment from April 9, 2025
We invest the same percentages in index funds across small, large, value, and growth. We rebalance based on a threshold.
Post: Dump the 60/40 and target date funds for 100% stock plus annuity portfolio?
Link to comment from February 16, 2025
We opted for a TIPS ladder for our reliable income to supplement delayed social security payments. We built this in 2023 as I started my retirement planning. My spouse wants to work a few more years after I retire. This afforded us a 90-10 equities/bonds risk portfolio where the equities are 70-30 US/foreign and equal weighted across large/small and growth/value. We hope this portfolio to cover our discretionary spending desires. We plan to take a reverse mortgage when eligible for reserves to pay for any LTC and other unanticipated spending shocks.
Post: Dump the 60/40 and target date funds for 100% stock plus annuity portfolio?
Link to comment from February 15, 2025