lazysundays
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Post by lazysundays on Jul 2, 2014 18:51:42 GMT -5
I'm going to assume we will be income phased out like we currently are with many things and I may get 25% at most.
As for what does my family get for ss? Nothing. All in Poland, and mom started working in USA in late 30s so she won't get as much as some people. She is expecting Polish retirement funds that she paid into and 401k to also help her out.
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tskeeter
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Post by tskeeter on Jul 2, 2014 18:56:21 GMT -5
Agreed. But, with most other types of insurance (until recently), I can choose to self insure. Not so with SS. Basically SS is a plan for high income earners to subsidize the retirement living expenses of lower income earners.
And it's not supposed to be. It's supposed to be a supplemental retirement/old age anti-poverty plan. And the people who paid into it are supposed to benefit from it - especially since it is mandatory/statutory. The indexing/means-testing and other ways of fiddling with the program are just work-arounds for all the political gaming and bad management. I could have done much better keeping and investing that money for retirement myself - and in the process pretty much could have assured that I will never be a "burden on the system." But instead I will pay for YEARS and probably see very little to nothing. Chaps my hide (sorry). ![](http://images.proboards.com/new/angry.png)
Yup. According to the SS website, an average income earner will get SS benefits that are about 40% of their pre-retirement income. People who earned above average incomes will get less. By my estimates, we'll get about 30%. And below average income earners will get more. I'm guessing that it would be close to 50%, and maybe more, of a low earner's pre-retirement income. Since we all paid in the same percentage of our earnings while we worked, it's pretty obvious that there is some income redistribution going on through the SS system. And that's before I pay federal income taxes on 85% of my SS benefits, while the person receiving close to 50% of their pre-retirement earnings in SS benefits pays no Federal income tax on their benefits. By the time you get done considering the income tax impact, I end up with disposable income from SS benefits that are probably less than 25% of the pre-retirement earnings that my SS benefits are based on, while others get benefits that are about twice as high in relation to the withholdings they contributed. You know what? I'm starting to feel a little taken advantage of. I could live with a 10% or 15% premium to help people who didn't earn as much, but a 100% premium just seems too steep.
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Deleted
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Post by Deleted on Jul 2, 2014 18:58:10 GMT -5
Well, it's not currently guaranteed you paid in the same %, as it's currently capped.
It's still capped, right?
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tskeeter
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Post by tskeeter on Jul 2, 2014 19:06:50 GMT -5
Well, it's not currently guaranteed you paid in the same %, as it's currently capped. It's still capped, right? Good point. SS withholdings are still capped. I remember that I reached the cap one year. Decades ago. About the 20th of December. I suspect that the SS withholding cap hasn't affected many of the folks here. So, for practical purposes, I think we all paid the same %.
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Deleted
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Post by Deleted on Jul 2, 2014 19:08:23 GMT -5
But did the 'above average earners' in your excerpt do so?
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Deleted
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Post by Deleted on Jul 2, 2014 19:09:45 GMT -5
for 2014 the cap has increased to $117,000 from $113,700.
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Plain Old Petunia
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Post by Plain Old Petunia on Jul 2, 2014 19:14:53 GMT -5
It was designed to be insurance against poverty. I'd rather not be in poverty, personally. Agreed. But, with most other types of insurance (until recently), I can choose to self insure. Not so with SS. Basically SS is a plan for high income earners to subsidize the retirement living expenses of lower income earners. True. But if we didn't have SS, we'd have some other tax paying for some other benefit so that everyone would have some level of income with which to survive. Or, retired people with no assets would just be eligible for traditional welfare and income tax rates would be higher to pay for it. Either way, we are going to pay. We aren't going to have hordes of citizens in their 70s and beyond, destitute in the streets, with no social program(s) whatsoever to provide relief. Since the truly poor pay no income taxes, I'm in favor of a payroll tax requiring every working person to contribute at least something.
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lazysundays
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Post by lazysundays on Jul 2, 2014 19:15:49 GMT -5
I capped out twice, but now that the cap is rising 3k/yr, I don't get to keep some of my $.
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Deleted
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Post by Deleted on Jul 2, 2014 19:17:03 GMT -5
High earners get a lesser percentage because of the cap. You are comparing apples to oranges.
Actually, appreciate the cap. You can redirect the money you get above the cap however you like! ![](http://images.proboards.com/new/smiley.png)
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thyme4change
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Post by thyme4change on Jul 2, 2014 19:19:55 GMT -5
I'm saving like I won't get it. I think I might be a little short anyway, and if I'm not, and I end up getting it, I will surely find a way to spend it. Maybe I will have grandkids, or time to travel for months at a time, or get that second house in a place that doesn't rival the surface of the sun 5 months per year. Or, I can donate it, or buy my kids a house. Whatever. I'd rather have too much later than not enough. And since I have everything I need right now, it isn't hard to decide to save the max.
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DVM gone riding
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Post by DVM gone riding on Jul 2, 2014 19:21:48 GMT -5
2.5 mill is my number any time after age 55. BUT I don't have it figured at needing to invest 22500/yr to get there. I am doing about 13k right now and with that tacked to income increases at 5% of income +3% match +Roth cont and at 8% returns I get there about age 63 (30 yrs from now) on my spread sheets. with an 11% return at about age 59 or less so I don't know the time frame you are looking at but with a roughly 30 yr window you would get there I think with less investment.
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lazysundays
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Post by lazysundays on Jul 2, 2014 19:42:54 GMT -5
DMV- you must have started early (have more now) AND you expect raises. I have been here 7 years and only got 1% raise one year, even with excellent reviews.
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DVM gone riding
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Post by DVM gone riding on Jul 2, 2014 22:43:02 GMT -5
yeah lazy the formula assumes 2% raises
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dancinmama
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Post by dancinmama on Jul 2, 2014 23:08:32 GMT -5
We're already retired, but not eligible to receive SS yet.
In our early 30s (late 1980s), we decided not to count SS when planning for retirement. Now we're within (5) years of being able to take it early so we'll probably get something. Whenever we take it, we'll use it to help offset the high cost of health insurance and health care that we did not anticipate.
DH capped out almost every year in the last (7) years of his career. We saved the extra money for our retirement.
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Deleted
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Post by Deleted on Jul 2, 2014 23:47:46 GMT -5
I'm figuring I need 1.2 Million, AND around 10K/year of SS to have 40K/year. I only have about 20 years to go too. That seems like a lot of money to save. ![](http://syonidv.hodginsmedia.com/vsmileys/yeahright.png)
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Baby Fawkes
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Post by Baby Fawkes on Jul 3, 2014 0:33:25 GMT -5
I suspect there are quite a few people who cap out SS on this board. I've capped out every year that I've worked in the US and I don't earn as much as others on here.
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Deleted
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Post by Deleted on Jul 3, 2014 1:06:37 GMT -5
I'm 10 years out and I do not count on SS for my retirement plan. There will be an asset based phase out penalty or medical costs will be so high that the part of Medicaid you pay will use up the SS benefit. JMHO. Sometimes when my monte-carlo scenarios only show 92% success I plug in the SS for fun just so I can see a 100% success rate ![](http://images.proboards.com/new/tongue.png)
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cronewitch
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Post by cronewitch on Jul 3, 2014 1:27:24 GMT -5
I get 780 SS now. I don't need $100K a year to live comfortably. When most of us get retirement age we don't have so many bills. When I am 70 my SS will be higher since I will collect on my record not my ex. If I get 2,500 I could probably live on that so 30K a year from SS and a million invested I will have more than I can spend without being wasteful. My investments are up 70K so far this year and I am not to a million yet. If I take out 40K and get SS of 30K I would need to spend a lot more money. No car payments, small mortgage, no other debt I would need to spend about 1K a week on stuff. I am spending $80 a day about 2-3 days a week on a handy man and did buy a boat and furnace this year. I will spend another couple of thousand on the house but then run out of things to buy. I am starting to gift money to people because I have too much, still need to sell mom's house this summer then I will have my first million. Since I don't have kids or grand kids or consumer debt my cost of living isn't near what a young person has with daycare and car payments.
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Ombud
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Post by Ombud on Jul 3, 2014 2:16:37 GMT -5
One sister will not get SSA and my folks got it but didn't rely on it. I don't include it in my retirement plan. I do have 1 sister who will rely on it. Unfortunately
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movingforward
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Post by movingforward on Jul 3, 2014 9:01:31 GMT -5
There are people who aren't necessarily living in poverty that still need SS to supplement their income. I have several family members that have saved around 500K - 600K. They aren't living in poverty but they do need the SS to help supplement what they currently have in order to make it last 25 yrs.
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Rocky Mtn Saver
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Post by Rocky Mtn Saver on Jul 3, 2014 9:14:06 GMT -5
There are people who aren't necessarily living in poverty that still need SS to supplement their income. I have several family members that have saved around 500K - 600K. They aren't living in poverty but they do need the SS to help supplement what they currently have in order to make it last 25 yrs. Thanks for mentioning this. There's a lot of talk about SS going to those who 'fail to prepare' or 'don't save', but SS is an unavoidable part of the plan for a lot of people who do save and prepare but don't have the ability to accumulate so much that they don't need what SS puts in. Not everyone can save up 2.4 million dollars, but they're still working hard to put away what they can.
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midjd
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Post by midjd on Jul 3, 2014 9:20:34 GMT -5
My mom will be fully dependent on SS. She has about $30K in her retirement account at age 55. She may receive a small inheritance when my grandpa passes away, but likely less than 6 figures. Plus he is in eerily good health for an 88yo, he may end up outliving her! She has not been great at managing her own money, but she went above and beyond to see that all three of her kids went to college and went on to become productive citizens. So one person "draining" the system + three contributing seems OK to me. I give her a pass.
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midjd
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Post by midjd on Jul 3, 2014 9:26:28 GMT -5
To answer the OP, my number is closer to $3M - I will probably revise it downward in 2020 when I've vested in the state pension, though.
I really like Firecalc as a tool for running different retirement scenarios. I'm far enough out from retirement that my goal number is very, very fuzzy, but it's good to be able to see what will likely happen if I keep saving X amount, if I get Y pension, if spending goes up to Z, etc.
If I save too much, then DD will get a nice inheritance when we die. I'm fine with that - it would feel like a tremendous accomplishment, since both DH's family and mine came from very humble backgrounds.
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Deleted
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Post by Deleted on Jul 3, 2014 9:38:54 GMT -5
My number is $5M to maintain the same lifestyle. Knowing us (my wife and I) we will want our kids to start enjoying their inheritance before we are dead if we can afford it: -> help with college -> help with buying first house -> help with 529 -> pay for vacations/meals if they tag along etc.
I do wish our kids will appreciate all we will do for them (sacrifices and all) and not turn out little spoil brats!
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Phoenix84
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Post by Phoenix84 on Jul 3, 2014 10:15:23 GMT -5
I pretty much just save what I can and it will have to be enough. I save 8% into my TSP and another $5500 per year in my IRA. I should also get a federal pension, which should help.
I don't really "count" on SS. I think it will be around in some form, but probably means tested, or paying a percentage of promised benefits, or dramatically increased age, something like that. I thought the federal pension went away many years ago? I have a friend who just had her 30 years in as a civil servant and she said she was the first year that didn't get a pension. No, it's still in place.
Back in 1986, Federal Employee retirement changed from the "CSRS" or civil service retirement system to the "FERS" or Federal Employee retirement system. Basically, the pension was significantly reduced, federal employees had to start paying into (and receive) SS, and they enacted the thrift savings plan (which is basically a 401k). The pension is still there, just reduced from what it once was. Back under CSRS, the pension was the only retirement you got (you didn't even get SS), but you'd get about 60-80% of your high three (highest three years of earning). Under the current system, you get 1% of your high three per year of service (with 1.1% if you retire after age 62). So if I retire at age 63 or so, I'll get about 44% of my high three as a pension.
But yeah, basically, under FERS you get a pension, just pay more and get less. But you also get SS (in theory) and get the TSP. It was modeled after the classic "three legged" retirement stool talked about in the 80's. Unfortunately, most employers (but not the feds) cut the pension and now the three legged stool is a two legged stool.
Everyone hired before they made the change in 1986 is under CSRS, everyone after is under FERS.
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Phoenix84
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Post by Phoenix84 on Jul 3, 2014 10:28:53 GMT -5
Do your parents and grandparents rely on SS as a major part of their livelihood ? All of my grandparents are dead. Most have been for some time.
I know my paternal grandfather had a pension from the city for being a firefighter for his career. My paternal grandmother died in her early 50's, she never really retired.
I'm not sure about my maternal grandparents. I know they were self employed, and presumably saved money. Probably got SS, but I'm not sure, they died relatively young, in their mid 60's when I was 9 or so.
My parents will rely on my Dad's pension (he's under CSRS), which should replace a fair portion of his income, and my mom is already getting SS. I know they having savings and investments in IRA's and the stock market.
So no, SS will not be their primary source of income, my Dad won't even get it.
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Phoenix84
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Post by Phoenix84 on Jul 3, 2014 10:31:15 GMT -5
Maybe she's referring to the switch from CSRS to FERS, it didn't go away but it decreased significantly and happened in 1986. I'm under one of the newer systems and put a little under 4% in (I think) and get 1% of my high 3 for every yr worked (1.1% if I stay on longer than 30 yrs). CSRS put in less than 1% and can get up to 80% of their high 3, so she might be in the first wave of retirees under FERS.. she told me she only gets TSP - I'll have to ask her tomorrow - and she isn't retiring now, she'll be working many more years to pay for catholic school and college tuition. I don't know, that's simply not true. It may only be true if she started later in life with the government and is only working a few years.
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Plain Old Petunia
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Post by Plain Old Petunia on Jul 3, 2014 10:33:46 GMT -5
There are people who aren't necessarily living in poverty that still need SS to supplement their income. I have several family members that have saved around 500K - 600K. They aren't living in poverty but they do need the SS to help supplement what they currently have in order to make it last 25 yrs. That's more or less where I expect to be. I'm shooting for 750k and a paid for condo, but I don't know that I will hit the mark.
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tskeeter
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Post by tskeeter on Jul 3, 2014 10:41:19 GMT -5
My number is $5M to maintain the same lifestyle. Knowing us (my wife and I) we will want our kids to start enjoying their inheritance before we are dead if we can afford it: -> help with college -> help with buying first house -> help with 529 -> pay for vacations/meals if they tag along etc. I do wish our kids will appreciate all we will do for them (sacrifices and all) and not turn out little spoil brats! I think that's pretty much up to you and your DW. Over quite a few decades, my observation is the kids who turn out to be spoiled brats are kids who had lots of things handed to them. Toys, expensive clothes, the latest electronics, cars, college educations, house down payments, etc. With little, if any, expectations placed on them by their parents. Because these kids never had to work for anything they wanted, they often don't appreciate the effort it takes for others to provide for them. And, because everything they wanted has been handed to them, they expect their every desire to be provided for by someone other than themselves. And there is no limit to their expectations of others. One has only to watch a couple of episodes of a young people hunting for a first house or that over spending reality show to realize how self absorbed, self indulgent, and demanding some young folks can be. One the other hand, there are a lot of really great kids out there. Kids that grew up doing chores like mowing lawns, babysitting, doing dishes or laundry, etc. Kids who got summer or after school jobs to earn pocket money and to help fund college educations.
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Formerly SK
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Post by Formerly SK on Jul 3, 2014 12:27:49 GMT -5
My number is $5M to maintain the same lifestyle. Knowing us (my wife and I) we will want our kids to start enjoying their inheritance before we are dead if we can afford it: -> help with college -> help with buying first house -> help with 529 -> pay for vacations/meals if they tag along etc. I do wish our kids will appreciate all we will do for them (sacrifices and all) and not turn out little spoil brats! I'm curious about your number. I know you save for retirement, but you guys enjoy a pretty high end lifestyle and live in a HCOL. You also have the SL to pay off. And I don't get the idea your DW will ever make a ton of money - maybe 75K/yr? And your career tops at maybe 125K? So how do you plan to save 5M as W2 earners when you enjoy such an expensive lifestyle AND you want to give your kids so much (I assume you won't be frugal with them as children since you plan to be so generous with them as adults). Are you going to inherit money? Saving 5M is such a hard thing to do, so I'm curious. Feel free to ignore my prying. ![](http://images.proboards.com/new/smiley.png)
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