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ben
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Post by ben »

I think Cut-throad points out 1 of the main differences in the US and EU SS systems: In Scandinavia I would get "full" benefits even if I never worked a day in my life and never had paid a dime to the SS-system.
That IS the true socialist system! :D- explaning the world records we hold in income/other taxes.
Normal; to put on clothes bought for work, go to work in car bought to get to work needed to pay for the clothes, the car and the home left empty all day in order to afford to live in it...
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Post by Kramer »

Kenm wrote:

30K per year in the U.S. is not that hard to come by for S.S. - My wife and I each had 6 figure incomes and paid the max into S.S. for over 15 years. We should each get over $15K per year in S.S. Retirement Benefits


This is indeed the case. You can download the benefit calculator from the SS website: http://www.ssa.gov/planners/calculators.htm

This is a handy calculator for early retireees, since the SS statements one gets in the mail assume you work until you retire unless you make a special request. With the calculator, you can enter in your lifetime earnings and play around with the values.

For me, once I have worked almost exactly 15 years maxing out SS wages, the expected benefit is about $1300/mo at standard retirement age (67 for me). Since I'm not reaching age 67 for another 30 years or so, I tend to derate this by 25% for planning purposes. For using this as a bond equivalent in my portfolio, if I decide to that, I would derate my current SS benefit based on wages already paid in by another 2% real per year to do a present value calculation (using all real, no inflation, numbers).

The incremental benefit of working goes down significantly after working for 18 years maxing out SS wages, by about 60% per year or so. In other words, after feeding the system for 18 years, your final check stops going up nearly as much for each incremental year worked. I'm sure this varies a bit depending on when you paid in, how long until you retire, etc.

There are three benefit curves of decreasing steepness related to lifetime earnings (at least this is what my own checking showed). On the first curve, benefits rise very rapidly, then you hit the second curve after just a few years, then the third curve after about 18 years maxing out SS wages. On the second curve, final benefits (retire at 67) increase about $66 per month per extra year worked. On the third curve, after 18 years maxing out SS wages, final benefits increase about $31 per month per extra year worked. So the early retiree gets more benefit per year worked from the SS system.

Kramer
[KenM]
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Post by [KenM] »

These days I don't usually contribute to SWR discussions but I had assumed from what I had seen previuosly (as an ignorant alien :)) that the magical $1m/4% SWR/$40K-a-year figures were all that applied in the US to a potential retiree and SS was minimal .... if stocks went bust then dog food would be on the diet. I wasn't aware that SS in the US could be so high and (although it appears many believe SS may be reduced in future years) the fact that SS of $20K to $30K may be available in a person's late 60's seems to me to reduce the usual risks associated with SWR calculations. As a Brit, I paid in for only a limited period towards a UK state pension (40 years conributions required for full amount of US$10K for a couple) and I'll probably be only due for $3K or so at 65. The $1m/4%SWR scenario doesn't in fact apply to me, but if it did I'd certainly feel more comfortable if I had a potential $20K to $30K SS cushion in later years if things went wrong with stocks.
KenM
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Post by [KenM] »

ben
If you stayed in Thailand having a great time and spending all your money until the Scandinavian retirement age (is it 60?) could you then go back and claim the $15K a year state pension? Do you, in fact, have to be in the country to claim it or could you stay on the beach in Phuket?

Kramer
Can you receive SS while sitting on a beach in Mexico or do you have to continue to live in the US?

As far as I know I'll get my small UK state pension at 65 even if I live overseas but I don't get inflation adjustments (or something like that).
KenM
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ben
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Post by ben »

Sorry to keep babbling about taxes, but think important we differenciate between before and after tax SS income. At least in my home country they tax SS also.

In my Scandinavien home country about $1900/mth in SS before tax but only about $1100 after tax. Still; as Ken points out, that $1100 (infl adjusted) pr. month at 4% w/r corresponds to having $330000 in nest egg if not more due to relative safety and inflation adjustments.
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ataloss
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Post by ataloss »

Hi kenm,

us social security is paid regardless of country of residence. many of us are skeptical that ss payments will be made- especially to those who are deemed "wealthy" (to be defined by politicians at a future date.) I haven't looked at the benefit calculation closely as Kramer and Wanderer have, but there is an option for delaying payment until age 70 with higher benefits (the statement I get in the mail assumes that I continue working from 66.5 to 70 and overstates the expected return of delaying I think)
Have fun.

Ataloss
[KenM]
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Post by [KenM] »

ataloss
many of us are skeptical that ss payments will be made- especially to those who are deemed "wealthy" (to be defined by politicians at a future date.)
....... but I'd still prefer the future possibility of $30k in the US rather than the certainty of my own $3K in the UK :lol:
KenM
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ataloss
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Post by ataloss »

....... but I'd still prefer the future possibility of $30k in the US rather than the certainty of my own $3K in the UK


then there is waiting in line for "free" health care vs. the prospect that none of us (by chips extrapolation) in the us will be able to afford health care :shock:
Have fun.

Ataloss
[KenM]
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Post by [KenM] »

ataloss
the prospect that none of us (by chips extrapolation) in the us will be able to afford health care
Is there an ETF for funeral parlors and casket makers? Sounds as though business and future profits might be good :wink:
KenM
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Post by Cut-Throat »

KenM,
but I'd still prefer the future possibility of $30k in the US rather than the certainty of my own $3K


Understand that not every couple may be eligible for 30K. - Most all of Senior citizens in the U.S. today had only one income earner and may not have paid the max amount into the Social Security system. In these cases the recipient may get around $7K per year and if they did not have a company pension and any savings - Well, hence the dogfood :shock:

All of this varies by individual circumstance.
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BenSolar
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Post by BenSolar »

Cut-Throat wrote: We should each get over $15K per year in S.S. Retirement Benefits.

I will start drawing in about 9 years and my wife about 8 years after that.

The system will have to be 'shored up' in about 2025, but being the political sacred cow that S.S. is I fully expect the government to screw those that have not yet been born. :lol:


Hi Cut-Throat,

Being 20 years younger than you, or so, I am interested in seeing SS reform done proactively and in such a way that I don't get screwed. :D I was wondering what your thoughts would be on a plan that would delay your benefits by a year? Or 6 months. I'm thinking that the most sensible way to address the issue is to raise the retire-with-full-benefits age to reflect that people are quite frequently in good, work capable, health at 68 and later now. And to avoid the crunch in 2025 or so, we need to start soon, before the baby boomers are all comfortably receiving benefits at an ever younger 67.5.

Thoughts? Personal reactions?

Thanks,
"Do not spoil what you have by desiring what you have not; remember that what you now have was once among the things only hoped for." - Epicurus
wanderer
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Post by wanderer »

Is there an ETF for funeral parlors and casket makers? Sounds as though business and future profits might be good


If so, it would undoubtedly be run by the gents proffering S&P indices and knock-offs sporting 5% loads and 1%ers. :wink:
regards,

wanderer

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Cut-Throat
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Post by Cut-Throat »

BenSolar,

This has already been done. The retirement age has been gradually raised according to when you have been born. This in itself will not save 'the system' - It is a pay as you go system and the money that is collected today pays for benefits, as well as the War in Iraq.

20 years ago, when I was your age, this issue was as clear as it is today. Like other issues that are on the scene such as Global Warming, pollution control, people generally will not react positively polititically until the issue is at their doorstep and threating them. The people in California today would gladly pay the liscense plate fees, if they knew that it would save their house from the fires that are raging today.

The trouble is that most people in this country vote their pocketbooks.
I am interested in seeing SS reform done proactively and in such a way that I don't get screwed.
Everyone in the U.S. is thinking this way and you are outnumbered! No one wants to get screwed! What works for you, will not work for me.

Means testing could be done, but in order for it to have real impact, it must hit the middle class. These are the people, that have largely no Pension, No Savings and are depending on Social Security just to barely get by. There is no political will in this country to solve this problem. Look what happened to Clinton, when he proposed reform on Medicare (the really big problem of SS) - The big insurance companies put forth a campaign to squelch any progress here. They convinced the American people that it was another huge social program. Whose interests do you think the insurance companies were concerned with?

I think any plan that is put forth to survive the political storm, will have to change the rules for those that are not alive today. They will not be around to protest. We already know how to Cut Taxes and Increase Spending - It's called Borrowing :shock:
Allan
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Soc Sec

Post by Allan »

The Soc Sec projections that they now mail annually show your projected payout at various ages, I believe age 62, 65 or 66 (full retirement), and 70. However, I believe they are based on the balance of your earning years being equal to your most recent year, so if you retire early or your earnings decrese subsequently their projections may be high. I believe this is correct?
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If something cannot continue indefinitely, it will stop.

Post by therealchips »

ataloss:
the prospect that none of us (by chips extrapolation) in the us will be able to afford health care


Short answer: Hey, don't blame me. I was only showing the absurdity of projecting present trends far, far into the future.

Long answer: My only point was that we cannot continue indefinitely with double-digit increases in medical insurance premiums and only single-digit increases in GNP, not as a matter of politics but of mathematics. That is, it will not be mathematically possible for the medical sector, now around 14% of GNP, ever to exceed 100% of GNP. Either the health care sector must drop to a lower growth rate within a few years (rather than decades) or the total economy must grow much faster than we've seen. I think declining growth rates in the health care sector are more likely. We might even get to the point of having tort reform and border controls to help control medical care costs in the US economy.
He who has lived obscurely and quietly has lived well. [Latin: Bene qui latuit, bene vixit.]

Chips
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