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I am just relieved to discover that the vast majority of us are not even close to millionaires [ not referring to you Mathjack] and doing fine. I have been feeling alright with our financial situation, but having so much less money than we are "supposed" to have was making me worry that one day soon I would be waking up in the morning and finding myself living under a bridge. Not so paranoid now.
Until they find it is them that lived longer then expected and lack of adequate finances has now left them with no choices in life when things crop up and they stress every bill outside the budget.
Retirement can become awfully expensive if you need services after a certain age. Either that or you do without if bad luck hits.
In poor states like the South, I'd say it's considerably less than that.
There are plenty of we "Yankees" that made our money elsewhere and retired to the poorer southern states. We are doing quite well and might skew the number some.
When I was 50, I had the same concerns that they'd reform Social Security and I'd get screwed. I'll be 58 in May and I think I'm grandfathered out of anything they do now. I can a "reform" where 100% of my Social Security check is taxable but that's not much of a hit. I can see them messing with COLA calculations that erode me some as I age. I project to be in the 25% bracket. Touching the program is the political third rail. I give very low odds that anything will change in the next 5 years.
If you look at the reports from the SSA, Social Security is only underfunded by about 30% assuming the economy stays flat forever. Bumping payroll taxes, hitting rich people a little harder, and bumping the retirement age a bit fixes the problem. I can't predict how much each of those three will change but they're all bound to change. The program isn't going away because the bottom half would starve. Any means testing will be largely symbolic since only a few percent will have the wealth and income where a Social Security check isn't a significant chunk of their cash flow. Top-5% has a house, a million bucks in savings, and might have a pension. You can pay those people zero and it wouldn't impact the 30% gap all that much.
Medicare, on the other hand, kind of has to change. I have $10K/year (individual) penciled in as my guess about what my costs will be for premiums and supplemental coverage. It's kind of inevitable that there will be a 2-tier system where the tier that doesn't pay anything gets Medicaid-level coverage with long queues to get anything major done. The people who can afford the supplemental coverage or outright pay cash will receive a completely different level of care. I'm wondering if $10K will be enough. It could easily be more than that.
I'm about your age. Yes, I'm worried that they will go to a wealth/income means test for SS that will impact wife and I. Probably more likely they will adjust benefits or tax rates instead but who knows, depends on the political winds in the future. It's affected my decision to retire now and starting to burn some of my assets rather than to continue working and building wealth assets.
On Medicare, I think that $10K/person is likely too high as there so many things that can be done to lower the costs that haven't yet been done. So I'm more optimistic about that number.
I'm about your age. Yes, I'm worried that they will go to a wealth/income means test for SS that will impact wife and I. Probably more likely they will adjust benefits or tax rates instead but who knows, depends on the political winds in the future. It's affected my decision to retire now and starting to burn some of my assets rather than to continue working and building wealth assets.
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It has been mentioned that one tweak in the direction of keeping SS solvent would be to increase the federal income taxation from 85% to 100%. In that regard it is interesting to note that the trigger amounts have not been adjusted for inflation since that taxation was passed back in 1983 (I believe it was). Therefore, in effect, more and more revenue has accrued to SS from the income taxation over the years as inflation has pushed up the number of people subject to it.
It is also interesting that the IRS tracks the amounts collected on SS benefits and plows them back into SS instead of keeping them in the general fund.
I haven't read all the posts, but GeoffD, I'm wondering where you get $10,000 per year per individual as the amount you'll need for Medicare premiums and supplemental health insurance?
I pay $79 per month for supplemental health insurance and it is excellent coverage. And Medicare premium is $104 or around that.
Maybe you're saying being in a high income bracket, you figure your Medicare premiums will be quite high?
There are plenty of we "Yankees" that made our money elsewhere and retired to the poorer southern states. We are doing quite well and might skew the number some.
I haven't read all the posts, but GeoffD, I'm wondering where you get $10,000 per year per individual as the amount you'll need for Medicare premiums and supplemental health insurance?
I pay $79 per month for supplemental health insurance and it is excellent coverage. And Medicare premium is $104 or around that.
Maybe you're saying being in a high income bracket, you figure your Medicare premiums will be quite high?
Excellent is in the eye of the beholder and more than just premium needs to be considered. You also need to look at the various levels of out of pocket cost associated with the policy. That can vary considerably.
This makes sense but there is confusion at what age investing in an annuity is a good idea.
I plan to only use it as a last option. In other words, go into retirement with the asset allocation and spending rule of thumb we agree upon. If things go as planned there will never be any need for an annuity. On the other hand, if we get hit with a bad market or some large and unforeseen expenses that jeopardize our plan, the annuity alternative is alway available (up to age 85, I believe).
Excellent is in the eye of the beholder and more than just premium needs to be considered. You also need to look at the various levels of out of pocket cost associated with the policy. That can vary considerably.
As we discussed in other threads ,costs with other options can be very high. See what happens when you need to be treated for cancer at the tail end of the year and those thousands in out of pockets crop right back up as treatment continues.
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Federal taxation of SS benefits
