Social Security COLA 8.7% for 2023

[KennyG]

No SS tax is collected when earned income is over $147K this year. Next year the paid-up point will be $160K.

Remove the cap and SS will be solvent for a long time.

But it's not quite that simple. SS benefits are based on amount paid in. Increasing the cap will result in increasing the benefits for high earners unless the law is changed.

 

[Torvy]

When I started teaching 5 years ago, I stopped paying into SS and pay into TRS instead.

The whole system makes no sense. You pay in 6.2%. Your employer matches another 6.2%. If self-employed, you pay both halves. If you were able to invest that money rather than give it to the government, you would have millions at the end of a 50 year career, even if you make relatively low wages. The interest on your millions would exceed your maximum payout from SS.

 

[Gale Hawkins]

When I started teaching 5 years ago, I stopped paying into SS and pay into TRS instead.

The whole system makes no sense. You pay in 6.2%. Your employer matches another 6.2%. If self-employed, you pay both halves. If you were able to invest that money rather than give it to the government, you would have millions at the end of a 50 year career, even if you make relatively low wages. The interest on your millions would exceed your maximum payout from SS.

You're forgetting social security was set up for people that may have never even paid into social security in 1938 there's the story of the one guy that work for just a few months in 38 and went up drawing for like many many years.

On a whole people will not provide for their retirement funds.

A guaranteed income with inflation protection included is about as good as it's going to get for the masses.

 

[KennyG]

When I started teaching 5 years ago, I stopped paying into SS and pay into TRS instead.

The whole system makes no sense. You pay in 6.2%. Your employer matches another 6.2%. If self-employed, you pay both halves. If you were able to invest that money rather than give it to the government, you would have millions at the end of a 50 year career, even if you make relatively low wages. The interest on your millions would exceed your maximum payout from SS.

Again, I think your TRS is a pension plan and not an insurance plan. If you had died, would TRS have provided full benefits to your survivors, independent of how much you had paid in? Would TRS support a disabled dependent? I'm not saying it's great insurance, but insurance is a lot different than a pension plan.

 

[Torvy]

Again, I think your TRS is a pension plan and not an insurance plan. If you had died, would TRS have provided full benefits to your survivors, independent of how much you had paid in? Would TRS support a disabled dependent? I'm not saying it's great insurance, but insurance is a lot different than a pension plan.

Nope. TRS has both an insurance and a pension plan. (2 different things). I also have a 403b (like a 401k). Since I am fully vested into SS, I will get little or nothing from TRS.

 

[Torvy]

You're forgetting social security was set up for people that may have never even paid into social security in 1938 there's the story of the one guy that work for just a few months in 38 and went up drawing for like many many years.

On a whole people will not provide for their retirement funds.

A guaranteed income with inflation protection included is about as good as it's going to get for the masses.

I'm not forgetting. Social Security was set up to make people dependent upon the government to secure votes for the politicians. The sales pitch was as a safety net. The system was designed on the German system with a retirement age of 65 because it was the average life expectancy at the time. The plan was always that half of the recipients would die before they could collect.

Also, your spouse does not get your payout. They only get the difference if the spouse who made more dies first.

This plan is horrible for the masses. The government could have made a small tax on the retirement of the 'masses' to fund retirement for the less fortunate. Instead, they could have required a 10% investment like a 401k for everyone. Now we have to give 12.4% to the government AND put 15% aside for ourselves.

 

[Gale Hawkins]

I'm not forgetting. Social Security was set up to make people dependent upon the government to secure votes for the politicians. The sales pitch was as a safety net. The system was designed on the German system with a retirement age of 65 because it was the average life expectancy at the time. The plan was always that half of the recipients would die before they could collwct.

Also, your spouse does not get your payout. They only get the difference if the spouse who made more dies first.

This plan is horrible for the masses. The government could have made a small tax on the retirement of the 'masses' to fund retirement for the less fortunate. Instead, they could have required a 10% investment like a 401k for everyone. Now we have to give 12.4% to the government AND put 15% aside for ourselves.

Your imagination about SS you can keep because the real SS numbers at our house are greater than expected and the Cola $$$ is up sized due to retiring at 70.

 

[Torvy]

I'm not a math expert, but those that I know have confirmed retiring at 70 with SS is a sucker's bet.

The numbers are only bigger because you let them keep your money for 8 extra years. Had you taken that money and invested it, you would have even more. COLA is less than inflation, so you are still losing money over time.

More than expected just means you had low expectations.

 

[KennyG]

I'm not a math expert, but those that I know have confirmed retiring at 70 with SS is a sucker's bet.

The numbers are only bigger because you let them keep your money for 8 extra years. Had you taken that money and invested it, you would have even more. COLA is less than inflation, so you are still losing money over time.

More than expected just means you had low expectations.

I'll be the exception, I guess. I worked until I was 68 because I enjoyed it, waited until 70 to take SS so I got the extra 32%. I also delayed taking my pension annuity payments until then and also delayed 401K and IRA withdrawals as long as possible, because I had enough other savings at retirement for my needs. With my family history and current health, I expect to live into my 90s, so I think it's a good strategy.

 

[bigtiller]

But it's not quite that simple. SS benefits are based on amount paid in. Increasing the cap will result in increasing the benefits for high earners unless the law is changed.

Well that's a silly way to run things. By all means, change that law.

 

[Gale Hawkins]

I'm not a math expert, but those that I know have confirmed retiring at 70 with SS is a sucker's bet.

The numbers are only bigger because you let them keep your money for 8 extra years. Had you taken that money and invested it, you would have even more. COLA is less than inflation, so you are still losing money over time.

More than expected just means you had low expectations.

Be careful getting your advice from suckers.

 

[Torvy]

I'll be the exception, I guess. I worked until I was 68 because I enjoyed it, waited until 70 to take SS so I got the extra 32%.

There is no extra. It is effectively like comparing eating a pie sliced into 4 pieces versus one sliced into 8 pieces. Just because your family history indicates longer life does not mean you will not meet an untimely demise. Accidents happen, God forbid. As long as you enjoyed the work, I'm glad it worked for you.

The difference is that you can make more money on the proceeds while you wait. This scam reminds me of people who are excited when they get a big tax refund. All it means is that they overpaid in the first place. Smh

 

[RoyJackson]

I'm 72 and still working full time. Age is catching up to me and I plan on retiring Q1 2023. I expect to do some contract work (source inspection, auditing, etc.) after I retire as long as I'm physically capable

 

[Gale Hawkins]

Our CPA advised waiting to 70 for financial reasons but i already knew to pass on uninformed unsolicited personal tax advice from internet strangers. The wife hopes to be able to work to 72 fulltime and help with the kids college expenses and save us from signing up for Medicare part B premiums for a few more years. Since she is 30 months younger she did start drawing SS off of my SS account when I started drawing at age 70 so as not to harm her 32% SS bonus for her remaining life. Paying income tax on 85% of SS is not fun but it is better to owe it than not owe it in a financial sense. The 16% COLA increase for 22-23 on just our 32% SS bonuses lowers our break even point by a bit. Add in 4 years of lower income taxes and the breakeven point decreases even more.

 

[Snobdds]

Again, nobody should be viewing SS on a how do I manage taxes or peripheral cost basis. People should be viewing SS on when will I die basis. Everything is solved if you level with yourself on your health around age 61. Then look no further than your parents and when did they die.

The math is not hard on this...I laid out the actuarial math and the math never fails when you have the law of large numbers.

 

[not2old]

I know it's different in Canada but I haven't seen anyone consider how much extra you have to contribute when you take it later. In my case, being self-employed, I took it at 62 to be able to keep about $10,000 for the next year alone, because there was no employer to pay half the payment. The next years, that much again. If I have any regret, it's only that I didn't buy more rental properties sooner and closer to where I live.

 

[FERLING]

I disagree to a point. You paid into it with no choice so that makes it a forced 'savings account' for those that pay into it.

Bottom line however is, SS is a Ponzi Scheme relying on less and less people paying into it but more and more people withdrawing from it. If the politicians had kept their grubby mitts out of it, it would stay solvent long into the future but as it stands now, it's not.

Ponzi schemes never work but then the government in general is a Ponzi scheme.

Research: The Future Financial Status of the Social Security Program

Social Security Administration Research, Statistics, and Policy Analysis

www.ssa.gov

 

[FERLING]

When I started teaching 5 years ago, I stopped paying into SS and pay into TRS instead.

The whole system makes no sense. You pay in 6.2%. Your employer matches another 6.2%. If self-employed, you pay both halves. If you were able to invest that money rather than give it to the government, you would have millions at the end of a 50 year career, even if you make relatively low wages. The interest on your millions would exceed your maximum payout from SS.

How much will I have if I invest 100 a month for 30 years?


For simplicity's sake, assume compounding takes place once per year in January. After a 30-year period, thanks to compound returns and a small monthly contribution, his portfolio will grow to $186,253.14 (as compared to $50,313.28 without the monthly contributions).

Investopedia: Sharper insight, better investing. › inv...

Investing $100 a Month in Stocks for 30 Years - Investopedia​

Retire at 67. Receive $2,000 a month for 10 years (die at 77). Receive $240,000 from SS. You don't have to worry about up / down stock market. Die at 47 with wife and under 18 year old age children. Wife and children get a check from SS Plus any savings in your 401K.

 

[FERLING]

I'm 72 and still working full time. Age is catching up to me and I plan on retiring Q1 2023. I expect to do some contract work (source inspection, auditing, etc.) after I retire as long as I'm physically capable

If you love it then it's not work!

 

[Gale Hawkins]

I know it's different in Canada but I haven't seen anyone consider how much extra you have to contribute when you take it later. In my case, being self-employed, I took it at 62 to be able to keep about $10,000 for the next year alone, because there was no employer to pay half the payment. The next years, that much again. If I have any regret, it's only that I didn't buy more rental properties sooner and closer to where I live.

I think there's room for regrets for most people when they retire.

In the USA the is no one size fits all when it comes to SS decisions. When SS ran my benefits at 62 it was so low that I knew I was going to work till 70 if possible. From 62 to 70 I was able to bump my bottom line up by another $18,000 annually. The 2023 cost of living will bump that that bonus another $1,500 annually so by retiring at 70 my annual social security is about $20,000 more than it would have been at 62. As in all things your mileage May vary.