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Dan’s recent post about the risk of cuts in Social Security benefits only seven or so years away got me thinking.
This title isn’t serious, but I wonder if my unconventional SS strategy has once again helped me fall on greener grass? Actually I hope not because 60 million people would be harmed.
I took and saved SS at FRA while still working, my benefit wasn’t reduced and our combined benefits were invested in tax free bond funds for several years.
Now if SS is cut, our reduction will be less then had I delayed, we are not dependent on the higher delayed SS benefit and the monthly interest we earn on the invested funds will easily offset the estimated SS cut.
No, this was not a grand plan, and no, I claim no superior knowledge of SS or investing, it’s a bit of convoluted thinking but perhaps an interesting outcome.
Have no fear, personally I still don’t see any cuts actually being implemented.
Those on SS want their COLAs and benefits to continue unchanged. The young are inclined to view it as an unfair tax, and a wealth transfer scheme. The young are correct.
I took SS at FRA and invested the benefit. There were sacrifices made. The investments did very well.
I don’t see it as unfair or a scheme. Where would seniors or our economy be without it? Where were they before SS even when lifespans were much shorter?
It’s hard to appreciate at 18, but quite welcome at 80.
It seems many people see anything that requires taxes or payment but does not provide immediate value for the them as unfair or a scheme.
I wonder how Americans would react to the Australian program😱
I tell people on my blog that if they don’t want to be part of society, they need to find a cave and live totally on their own, not accepting nor contributing.
Like everyone else, my financial planning has been influenced by whatever the rules and laws were at the time, knowing they may change in the future. To prepare for this, along with other unknowns, I have a built-in margin of safety to hopefully enable me to cope.
That’s a very reasonable approach, Jack.
All true, but at least for me, I view Social Security as a form of longevity insurance and not just a number crunching exercise.
Yes, longevity insurance not only for me, but also for my wife.
Agreed – exactly how I view it
Dick, I actually thought about your situation as I wrote my post. You actually used payments from SS to neutralize potential future cuts to SS. People in a situation similar to yours should give your strategy consideration. This illustrates the saying, “there’s more than one way to skin a cat”. So long as the cat gets skinned. (Apologies to my fellow cat lovers).
There may not be cuts, but they will find a way to tax wealthy retirees more. So in effect, there will be cuts for some.
Your point raise key issues.
Given the long delay in fixing SS which benefited many existing retirees now out of the workforce, how will the cost of fixing SS be allocated- 100% by the current workforce via payroll tax adjustments or future benefit reductions or shared by current retirees perhaps by delays or adjustments to future COLAs?
There must be some pain, how it is shared is key. This would not be an issue if incremental necessary changes were made on a regular basis.
I agree with Richard. According to some polls, Gen Z’s think they will not recoup their SS 40 years from now. So they say, “Screw GenX’s.” So there will be cut. By 2030, we will know how much is the cut in SS payment.