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The Employee Benefit Research Institute, surveyed 3,600 retirees in 2024. The survey found younger retirees were much more reliant on Social Security than older ones. The oldest retirees, ages 74 and 75, reported that 52% of their income came from Social Security. The youngest, ages 62 and 63, said they drew 67% of their income from the retirement trust fund.
What is that telling us? Older retirees are more likely to have a pension. Younger retirees are not accumulating sufficient retirement assets? Social Security may be more important than we may think?
Our combined gross SS benefits equal about 20% of total income, including investment income. What is a reasonable percentage, if there is one?
I queried an AI (in this instance, Perplexity) whether person X’s RMD should be included as income along with Social Security retirement benefit, portfolio earnings, and annuity payments. I stated that the calculation is to determine not what the taxable income total is but simply what percentage of income the Social Security benefit represented in the budget. The answer was yes.
When I edited the query to include that X does not need the RMD and donates it as a QCD, the answer was no.
So to this AI, at least, and I’m guessing also to HD readers’ minds, it’s all about definition and context.
So, what if a QCD is not used but same amount is donated to charity post distribution? I suppose using the QCD you never get your hands on the money given it goes directly to charity, but that seems a technicality. In my mind the entire RMD is income just a matter of how it is used.
Yep, that’s my point. You see it one way. Depending on definition and context, someone else might see it another way. That doesn’t mean one way is right and the other way is wrong.
I am delaying SS to 70, my wife to 67. When we get there SS will start off at 62%. At 80, it will be 40%. (I’m including RMDs in income-just like our FA does in our financial plan projections from which I am getting this data-regardless of whether or not we spend any of it.) We have 3 small pensions, I will have some deferred comp 70-80 and then our QLACs kick in. All this is income is non investment sourced, low risk or “guaranteed”, even the RMDs which are in TIPs held to maturity. The deferred comp is in an Annual Interest Rate fund. Our FA excludes market based investment income from these calculations since they are unknowns-if we were to include that the SS percentage would of course be lower. Nevertheless SS is foundational to our retirement plan. Would would be OK with out? Probably? Maybe? But some significant planning changes and perhaps lifestyle adjustments would be required.