What if Social Security Income, SSI, were reduced.

As a practical matter, without social security we would have a very hard time meeting basic living expenses in retirement. If we were to own an RV it would likely be as a place to live as a necessity, rather than a chosen activity. 

Social Security Insurance (SSI) is not a retirement savings program. As the name implies it is roughly modeled on insurance where current premiums are used to pay current claims. Since the 1980's it has been collecting more than enough and saving it in the Social Security Trust Fund to cover the costs of the baby boom bubble. That money has been "invested" in government bonds, essentially replacing other government borrowing. It is now time to start drawing on that fund which means either raising other taxes to pay off the bonds or borrowing elsewhere at a higher interest rate.

Its doubtful you would be better off financially in retirement if you had saved your social security taxes. This tends to be a popular idea when, like now,  the stock market has been doing well. Then we have a correction where people "lose" half their value and it no longer seems like such a great idea. I think many people would end up dying with more money in the bank, but that would be because they spent a lot less without the security part of Social Security.

"Its doubtful you would be better off financially in retirement if you had saved your social security taxes."

Your opinion is respected, but I will forever disagree with that statement, especially when it is looking more and more like IF I am even allowed to collect SS when the time comes, it will most likely be reduced PLUS, as you say, I'll be paying more in taxes to cover the government's Ponzi scheme.

Hubby is retired and had no pension or employer matched 401k, but he did have some IRA savings (not enough).  So SS is definitely a necessity for him to remain retired.  I get to join him in 5 years.  I will have a pension and 401k.  At that point if SS were reduced for both of us, it would change some plans but we would not be homeless or struggling to meet our necessities.  It would put a crimp in some retirement dreams of extensive travel, etc.  I feel fortunate to have the benefits that I have.

Fender, my comment was in response to a post stating we would do better by investing our money.  Social Security is like an insurance policy.  You can apply the same reasoning to other forms of insurance.  I pay $2,000 a year for my home insurance.  That includes Earthquake and Flood insurance.  If I invested all those dollars since I've owned my first home, I'd have a significant amount of money.  Maybe enough to pay for the home if it burned down today.  Then again, I might have lost half the money if the market went south right before the fire, or quake, or whatever might destroy my home.  Then I'd be in trouble. 

kportra said:

Hubby is retired and had no pension or employer matched 401k, but he did have some IRA savings (not enough).  So SSI is definitely a necessity for him to remain retired.  I get to join him in 5 years.  I will have a pension and 401k.  At that point if SSI were reduced for both of us, it would change some plans but we would not be homeless or struggling to meet our necessities.  It would put a crimp in some retirement dreams of extensive travel, etc.  I feel fortunate to have the benefits that I have.

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) )

garyb1st said:

Fender, my comment was in response to a post stating we would do better by investing our money.  Social Security is like an insurance policy.  You can apply the same reasoning to other forms of insurance.  I pay $2,000 a year for my home insurance.  That includes Earthquake and Flood insurance.  If I invested all those dollars since I've owned my first home, I'd have a significant amount of money.  Maybe enough to pay for the home if it burned down today.  Then again, I might have lost half the money if the market went south right before the fire, or quake, or whatever might destroy my home.  Then I'd be in trouble.

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My bad, Gary.  It was right under mine but we may have been typing at the same time.

FenderP said:

"Its doubtful you would be better off financially in retirement if you had saved your social security taxes."

Your opinion is respected, but I will forever disagree with that statement, especially when it is looking more and more like IF I am even allowed to collect SS when the time comes, it will most likely be reduced PLUS, as you say, I'll be paying more in taxes to cover the government's Ponzi scheme.

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Fender, your point is well taken.  My wife and I have 6 children between us.  The youngest is 34 and I often wonder about who's going to be contributing when he's 67 or 70, or however old he'll need to be to collect or even if there will still be Social Security when he needs it.  It's an important discussion but not likely to be solved in this Forum and more likely to shut down this thread.  So again folks, please keep it on point. 

garyb1st said:

Fender, your point is well taken.  My wife and I have 6 children between us.  The youngest is 34 and I often wonder about who's going to be contributing when he's 67 or 70, or however old he'll need to be to collect or even if there will still be Social Security when he needs it.  It's an important discussion but not likely to be solved in this Forum and more likely to shut down this thread.  So again folks, please keep it on point.

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SS and SSI aren't the same.  SS is for retired folks and SSI is for the folks unable to work and are figured differently. My brother has been on SSI for about 10  years, results of an industrial accident where he lost most of his left hand. He only has the thumb and pinky finger, then soon after he had a stroke resulting from a blood clot from the surgery. That stroke affected the right side of his body, and he uses a walker to get around, he just turned 60. He only receives less than half of what I do being retired, I'm 68.  SS asked me if I wanted to claim my wifes SS after she passed last year, I told them don't think so, as her benefit was some $500.00 less than mine.

Charlie 5320 ~~  Thank You for making that distinction. SS ~ SocialSecurity is the plain old put some in ~ take some out.  SSI Supplemental Security Income is a govt supplement for those who have no other/limited income.  PLEASE DO NOT CONFUSE THE 2.    JM2?  ~~  YMMV



https://www.ssa.gov/ssi/
Supplemental Security Income (SSI) is a Federal income supplement program funded by general tax revenues (not Social Security taxes): It is designed to help aged, blind, and disabled people, who have little or no income; and. It provides cash to meet basic needs for food, clothing, and shelter.
‎SSI Eligibility ? ‎Understanding Supplemental ... ? .....

Thanks for reading

@Charlie

Disability insurance is part of Social Security, but so are survivors insurance and retirement insurance.  They all operate on the same idea, current receipts pay current claims, none of them are based on a savings in, savings out model. Which we should be thankful for since those of us who live a long time benefit from the contributions of those who don't. 

I think the important question here is what happens if social security goes away. I think the answer is that our current vision for retirement goes away for most people. Without social security, very few people would be able to spend a life of leisure traveling around the country. With the suggested 4% rule for retirement savings withdrawal, you would need to save an additional $500,000+ just to replace a $20,000 social security check. And 1 in 10 people/couples who follow that 4% rule will run out of money in 30 years or less if they live that long. 

The politics of its going away are complicated. There is a lot of money to be made from people having to save that extra money to secure their retirement.

My use of SSI was only as an abbreviation for Social Security Income and not as a separate and distinct benefit.  Sorry for the confusion. 

Social Security is my only Income.  I would be hard put to get along without it.  Not eligible for SSI    TOO much stuff :  I'll get off the soap box now.  See Ya

On side NOTE!!  My Social Security went down 1$ this year.  Luckily I haven't missed it yet.  JM2?  ~~  YMMV

Any changes to SS will not affect those that are already receiving benefits. My wife and I receive SS and I also have a military retirement, VA disability and Federal Civil Service Retirement. I guess you could call me a quadruple dipper. My Mom and Dad lived solely on SS. I don?t know how they did it. They sold a house they had on the water for $160,000 and bought another one in a 55+ community and seemed to live quite comfortably.

Someone mentioned welfare. Welfare is about 1-3% of the federal budget.

To be honest every year the cost of living goes up so those of us who get SS the Payout boes up (It is not a "Benefit" it is something we paid for it is an annuity)  But the cost of Medicare goes up often even more so the effect is our budget shrinks.

And .. Well I won't go where I'd like to go cause this is not that kind of forum. 

Suffice there are some "Christians" (Or so they claim) who look at the Trillions of dollars in the Social Security Trust and violate the commandment
Exo 20:17 Thou shalt not covet thy neighbour's house, thou shalt not covet thy neighbour's wife, nor his manservant, nor his maidservant, nor his ox, nor his ass, nor any thing that [is] thy neighbour's.

The problem with estimating your own savings versus Social Security taking it from you, is the fact that your monthly benefit is NOT in proportion to your wages.  Those that earn twice as much do not get anywhere near twice as much Social Security.  Run a few scenarios thru this Social Security calculator.  For example, compare $30,000 to $60,000 annual earnings. https://www.ssa.gov/oact/quickcalc/

If not covered before... SSI does reduce/change to the negative... I took a distribution from a 401K for medical.... the Gov't in their wisdom per Clinton era laws reduced my SSI. Beware!


dcb in VT

Not retired yet, so obviously it isn't an issue. My retirement is set up and planned without taking SS into account, just in case; it just seemed to be a better way to look at it for planning purposes. I will say that I am fortunate enough to be in a situation that allowed me to do that; yes, I worked hard, but I got lucky too.

Whatever we end up getting from SS will (hopefully) be pin and beer money...

signcut said:

Not retired yet, so obviously it isn't an issue. My retirement is set up and planned without taking SS into account, just in case; it just seemed to be a better way to look at it for planning purposes. I will say that I am fortunate enough to be in a situation that allowed me to do that; yes, I worked hard, but I got lucky too.

Whatever we end up getting from SS will (hopefully) be pin and beer money...

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That there is called good old fashioned common sense, SC.  )

FenderP said:

That there is called good old fashioned common sense, SC.  )

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Thank you, sir.

I credit my dad; as hard as I fought it, he did get a little drummed in...