tag:blogger.com,1999:blog-5621914599310831423.post2178923810060238957..comments2024-03-28T18:17:18.688-07:00Comments on The Retirement Café: Social Security Benefits: the Big PictureDirk Cottonhttp://www.blogger.com/profile/05616143752082768155noreply@blogger.comBlogger20125tag:blogger.com,1999:blog-5621914599310831423.post-92087000532177226022018-09-18T04:26:31.309-07:002018-09-18T04:26:31.309-07:00This comment has been removed by a blog administrator.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-89664921338975843722018-09-16T12:01:37.875-07:002018-09-16T12:01:37.875-07:00This comment has been removed by a blog administrator.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-37415879016425332922017-12-05T07:16:03.748-08:002017-12-05T07:16:03.748-08:00This comment has been removed by a blog administrator.deariemenoreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-52577373026812522622017-12-02T06:46:13.957-08:002017-12-02T06:46:13.957-08:00You can follow @Retirement_Cafe.You can follow @Retirement_Cafe.Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-59447162294909085742017-12-02T06:45:44.169-08:002017-12-02T06:45:44.169-08:00You can follow @Retirement_Cafe.You can follow @Retirement_Cafe.Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-63189539494768031422017-12-02T06:43:49.000-08:002017-12-02T06:43:49.000-08:00CPI is an index, a kind of average, and as such, n...CPI is an index, a kind of average, and as such, none of the inflation indexes will track your own household's experience perfectly. Your mileage will vary, perhaps positively and perhaps negatively. This is another uncertainty (risk) of retirement, but also a risk of pre-retirement planning. I think there are far greater risks in retirement, so I don't spend a lot of time worrying about this one. I do, however, consider it in the general margin of error of my forecasts.<br /><br />Thanks!Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-18422928630473818882017-12-02T06:13:03.030-08:002017-12-02T06:13:03.030-08:00Hi there! Do you use Twitter? I'd like to foll...Hi there! Do you use Twitter? I'd like to follow you if that would be ok.<br />I'm absolutely enjoying your blog and look forward to new posts.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-59790261226812398502017-11-30T15:15:20.207-08:002017-11-30T15:15:20.207-08:00Ron, I think you have it figured out. Congratulati...Ron, I think you have it figured out. Congratulations – that's a start.<br /><br />Thanks for sharing.Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-14376306412978030842017-11-30T14:18:47.182-08:002017-11-30T14:18:47.182-08:00I'm new to thinking about retirement and how I...I'm new to thinking about retirement and how I am going to pay for it. I've concluded that the way we have implemented it here in the US is totally wrong. To the point where we couldn't have designed a stupider system if we tried (like our health care).<br /><br />The problem is that we are on our own for funding our retirement. Pensions are history. SS pension is small, and looks like it will be reduced 25% by 2030 anyhow. So that leaves only your contribution defined retirement accounts (401k, IRA, etc.) as the only real source of income for retirement.<br /><br />With the contribution defined accounts, you have to find that perfect amount between saving too much and dying with untapped funds. Or saving too little and running out money. No one can get this right. The reason is that no one known when they will die.<br /><br />But actuaries know. Not for you of course, but for a large population, they have a pretty good idea. Then entire life insurance industry is built on this skill.<br /><br />So it makes far more sense to use your contribution defined accounts to purchase an annuity at retirement that guarantees a fixed amount for life. If the insurance company behind the annuity has enough accounts, then they will average out.<br /><br />The import thing is that a retiree won't have to stress about it. They save as much as they can while working. Then when they retire, their defined contribution accounts are converted to defined benefit accounts. Save more, you get a bigger annuity amount. People can do that math easier.<br /><br />This works for health insurance, life insurance, and all insurances. There is no reason that if we all were in the same annuity pool that it would work for retirement too.<br /><br />If I'm not mistaken, I think this is what they do in Europe, UK, and Australia. They have self funded retirement accounts like our IRA's. But when you retire, your "pot" has to purchase an annuity. You don't have direct distributions.<br /><br />Ron Larsonhttps://www.blogger.com/profile/16030823782542340978noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-41576405497595404352017-11-30T11:39:03.549-08:002017-11-30T11:39:03.549-08:00Please see John Stanley's comment above.
(See...Please see John Stanley's comment above.<br /><br />(See <a href="www.medicareinteractive.org/get-answers/how-original-medicare-works/original-medicare-cost-overview/increases-in-part-b-premiums-the-hold-harmless-provision" rel="nofollow">Increases in Part B premiums & the hold harmless provision - Medicare Interactive</a> for an explanation of "hold harmless.")<br /><br />"Hold harmless' is unlikely to apply to most Medicare enrollees, but if it does affect you, the impact should be small. It protects you from the amount of the Medicare increase in excess of the Social Security COLA adjustment.<br /><br />This protection is afforded when you eventually claim in any case, so it lasts for 8 years at most (62 to 70). The increase in benefits gained by delaying your claim lasts the rest of your lifetime and also increases the lower-earning spouse's survivors benefits. Like John, I doubt it would be an important factor in the claiming decision.Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-59091622949133993882017-11-30T11:30:24.524-08:002017-11-30T11:30:24.524-08:00Thanks, John. Anonymous indeed confirmed that is h...Thanks, John. Anonymous indeed confirmed that is his question and I agree with your response.<br />Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-57690335171420022812017-11-30T10:31:07.108-08:002017-11-30T10:31:07.108-08:00Great article as always Dirk!
I believe Anonymous...Great article as always Dirk!<br /><br />I believe Anonymous may be referring to the hold harmless provision in Medicare, which states that your Medicare premium cannot increase by more than the increase in your Social Security benefits. In order to be eligible to be "held harmless" you must be receiving your ss benefits and having your part b premium paid from your ss check. <br /><br />The premium adjustments for Medicare impact less than 5% of Medicare enrolless. Also, hold harmless tends to work out over the long term, so i wouldn't personally recommend somone claim ss just to be held harmless. But never hurts to run the numbers. <br />John Shanleynoreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-36780091024816821622017-11-30T07:08:55.627-08:002017-11-30T07:08:55.627-08:00If you recently commented here and have not seen t...If you recently commented here and have not seen that comment posted, my apologies. There are two gremlins at work. First, my blog receives an incredible number of spam comments so I moderate all comments to avoid posting Viagra ads. Second, my email server recently decided to send all comment notifications to a spam folder along with those Viagra ads. I fixed the spam filter and I’m wading through all of those messages to find and respond to your legitimate comments. If you haven’t seen them, please email me at JDCPlanning@gmail.com and I promise to find them. Sorry for the inconvenience, but think of all the Viagra ads you haven’t had to see!Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-62506940367937217932017-11-30T07:06:28.660-08:002017-11-30T07:06:28.660-08:00"since the Gov't can change the "gam...<i>"since the Gov't can change the "game" at any time, the board and the players can become unstable"</i><br /><br />In retirement, <i>all</i> of your finances are unstable. Even if you could "guarantee" the income side by purchasing enough TIPS bonds (an expensive proposition), you cannot accurately predict what you expenses will be.<br /><br />I don't see this as a warning about what will be. The law can be changed to pay smaller benefits or it can be changed to increase payroll taxes, we don't know which will happen or if older Americans will be grandfathered.<br /><br />If people who have already claimed are the only ones grandfathered, then claiming now could be the best decision. None of these things are knowable.<br /><br />You have to consider this as a retirement risk like any other. (It's on my list of risks previously posted.) You need to consider how likely you believe the risks are, how your finances would be impacted (the magnitude of the risk), and, as this post suggests, what the rest of your plan looks like. <br /><br />Many Americans will retire on Social Security benefits alone and the magnitude of the risk for them will be quite high. Others are so wealthy that they don't need Social Security benefits, at all.<br /><br />If you are convinced that benefits will be cut so severely that you wouldn't have an adequate floor, then an immediate annuity might be a prudent way to replace them. If you believe your benefits might be cut late in life, then a DIA might be a prudent replacement.<br /><br />It really depends on the rest of your plan.<br /><br />Thanks for the question!Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-17513947130002210692017-11-29T21:00:08.996-08:002017-11-29T21:00:08.996-08:00Very informative, Dirk, thank you and I am gratefu...Very informative, Dirk, thank you and I am grateful that you are sharing you insights. Anyone nearing retirement should be taking all of this into consideration. The only comment I have is that since the Gov't can change the "game" at any time, the board and the players can become unstable. Such is the case with the posting on all SSI statements which reads..."Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2033, the payroll taxes collected will be enough to pay only about 77 percent of scheduled benefits." This is pretty much them giving us warning about what will be. This is another factor which has driven me to wait until age 70 to collect since there seems to be a good chance that the early, full, or postponed payment will be cut by 23%. Postponing until 70 would equate to just under my full retirement amount. Maybe even more reason for a DIA, thoughts?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-62688288838611329892017-11-29T10:02:31.919-08:002017-11-29T10:02:31.919-08:00For this year, if you receive Medicare and SS the ...For this year, if you receive Medicare and SS the Medicare premium reduces your SS amount by approx $130 per month or whatever the actual amount is. If the Medicare amount goes up and your COLA doesn't, you would still receive the same amount in SS, as the hold harmless provision would take affect. Next year, if there is an increase in your SS due to COLA, your Medicare amount would also go up, thereby negating the amount that would have increased your SS amount. Is there a way where collecting at full retirement age would be better than collecting at age 70 as a result of the hold harmless provision for Medicare? I don't know if Medicare premiums would increase by over 8% each year, but the way things are going it could be a factor and was wondering about your take on this issue.<br /><br />Thanks!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-81907702778014232792017-11-29T09:29:32.678-08:002017-11-29T09:29:32.678-08:00Sorry, I'm not sure I understand the question....Sorry, I'm not sure I understand the question. Your Medicare costs are going to be the same no matter when you claim Social Security retirement benefits.<br /><br />Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-26696244949817277812017-11-28T10:51:13.867-08:002017-11-28T10:51:13.867-08:00great article, as usual. I would like to hear how...great article, as usual. I would like to hear how Medicare affects when to claim social security. From 66 to 70 you get an increase of 8% per year, but while you are waiting, Medicare costs will also increase, and if the cost increases by more than 8% per year, you could actually end up with less money.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-17387648051613977682017-11-28T09:43:37.914-08:002017-11-28T09:43:37.914-08:00Great post, Dirk. It's shocking to me how suc...Great post, Dirk. It's shocking to me how such a large % of retirees elect to take their SS as early as possible. I've always viewed it as a key "Longevity Risk" play, and plan on deferring until Age 70. Your article is a clear explanation of why that makes sense. Well done.Anonymoushttps://www.blogger.com/profile/04274542893693546059noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-26610061013491347982017-11-28T06:34:59.904-08:002017-11-28T06:34:59.904-08:00your analysis [always worth reading imo] accepts a...your analysis [always worth reading imo] accepts at face value the cpi adjustments to social security. but cpi systematically understates the inflation that retirees experience, in particular re healthcare expenses. i don't know of a straightforward way to hedge that problem, but i think it's worth noting, and for individuals with greater resources may shift their choice on when to claim.jeffryhttps://www.blogger.com/profile/09444215127916586232noreply@blogger.com