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Social Security … Help!
I am coming up on my 66th birthday in January, and because of the clear economic disasters on the horizon, I’m ready to hit it running so I get back at least some of my Social Security “investment.”
When my wife took Social Security several years ago, she found the process too crazy for her brain, and after making her choices, including what Letter Medicare option to choose, she complained after the fact about how she was stuck with things that were not the best for her.
I thought it would be a good idea to schedule time with a Social Security expert in my local, small-town SS office. Like most things here, even the DMV, you don’t have to go through a lot of bother to get an appointment. (Just because I’m 65 doesn’t mean I have learned my lessons.)
So I looked up their office hours and drove there. The doors were locked. In fact, a sign said you have to make an appointment by calling an 800 number. (There was no way to get anyone’s attention in that location.)
So I called the number and it was the main national number and therefore it had an extra long, waste precious time of your later life, messaging system, so I hung up and searched for a local appointment number for my small city, and actually found one, still an 800 number, and called it and maneuvered my way to a point where I could be put on hold for the “next available representative” and I waited through really bad music for the next instance of “your call is important to us, please wait” and then more crap music and then several more iterations of “your call” and music and “your call” and music and “your call” and music and “your call” and music and more than 30 minutes went by when, suddenly there is a different sound like the phone being answered and then silence.
Silence. And like a dummy, I waited more than five minutes to accept the fact that I had been disconnected, because I was too stupid to realize that I had not taken the hint that nobody wanted to be bothered by an actual human being in need of government services since our government servants have changed the rules, and they are getting tired of serfs bothering them in their cocoons of non-accountability waiting for their own generous pensions and retirement, and what incentives are there anyway for them to actually help people?
_________
So, for those of you who have suffered through the transition to getting Social Security and Medicare, what Do’s and Don’ts have you discovered? Any advice for a silly one like me entering his dotage?
Or should I put more energy into writing the Great American Novel, inventing a vastly popular little timesaver to generate massive disposable income for the rest of my life? Or become a flim-flam salesman for placebo life-changing supplements?
I didn’t either. There was some minor question I answered wrong and a very nice and efficient lady from SS called me and got it fixed. In fact I found all the SS employees I dealt with to be pleasant and professional.
As for Medicare I am a USAA member and used their advisors to walk me through and explain the options. Every year I call them to see if I need to change my Part D. I know you can do it at the SS website but it’s just easier to have them do it.
Yep. I want to be able to go to any doc I want and not scrounge around for someone “in network”.
Try to do it online.
Good tip! I did not know that.
Yes. If you go through an experienced Medicare advisor they will explain all the ins and outs of changing after your initial selections.
That’s one area where my wife got shafted.
When I retired I needed proof that I am not eligible for SS so I could keep my insurance instead of going on Medicare. I called the 800 number and waited and waited. Once I finally got through, the guy I reached wanted to chat with me about Boston, his visit here from Chicago, his ideas about the Red Sox, etc. I love to chat, but I thought of all the people waiting and cut it short (for me). In the event, he wasn’t much help.
I finally called my local office in the next town over. Got a great guy right away and he took care of the problem fast. This was way pre-Covid.
It’s all up to Dame Fortune, I guess. Good luck.
The first question is if you should retire at 66 or wait until later. My very quick and simple answer is if you are still working now, and are in good health, put off retiring for now. If you are not working now, and are in poor health, retire now. I split the baby and retired at age 67, given that I have a history of two dances with cancer.
A quick tip. If you have trouble with Medicare and/or Social Security, consider contacting your member of congress. Every member of the House of Representatives has a staff member who deals only with constituent services. I had an issue where Medicare turned me down, and my member of congress straightened it out. It does not matter if your member of congress is from the different party than you; they are eager to help, as they know that the goodwill that they are generating will come back to them ten-fold. Social Security and Medicare respond immediately to “Congressional Inquiries.”
Do I think that it is right that you need a member of congress to help you out? No. But it is what it is.
Good luck.
Do note that signing up for Medicare and beginning to take Social Security payments are two separate events.
There are some type of penalties if you do not at least register with Medicare within a certain number of months of your 65th birthday. But you don’t have to start taking Social Security payments at that time.
I signed up for Medicare at about my 65th birthday, but I do not plan to start taking Social Security payments until at least my “full retirement” age of 66 years and 4 months (still more than a year in the future). I would prefer to wait and take the larger monthly payments, as I have plenty of savings to live off of in the interim. To sign up for Medicare, I did set up an on-line account at http://www.socialsecurity.gov (https://www.ssa.gov/myaccount/)
I chose a Medicare Advantage plan, rather than a Medicare Supplement insurance. I am used to a limited roster of doctors as I had for many years been on an employer medical insurance plan that had a limited roster of “preferred providers.” I currently have very low medical expenses. Assuming that continues even for a few years I can save up a substantial amount (by not paying Medicare Supplement insurance premiums) to pay for quite a bit of deductibles should I develop medical problems later. Medicare sends me a bill for my “Medicare Part B” premium every 3 months. My wife (who handles all things money for both of us) set up with our bank some type of on-line payment system for the premium. If you choose to enroll in Medicare Part B you have to pay the Part B premium regardless of whether you choose a Medicare Advantage plan or a Medicare Supplement insurance plan.
A friend of mine who is the same age as I am (he was born a day after I was born) chose to start taking Social Security payments as soon as he early retired from a corporate job at age 62. The Social Security system automatically enrolled him in Medicare when he turned 65 because he was already in their system. Social Security deducts his Medicare Part B premium from his Social Security payment each month.
Whether you have savings etc or not, is totally irrelevant to the payoff figures. Numbers are numbers. If you take early retirement at 62 and get I think it’s 70% of the full benefit amount for what could be up to 5 years until your full retirement age, that’s X dollars. And it takes Y years past full retirement age, to make up for that. Totally without regard to whether or not you have savings. It would just mean that you use more of your own savings in the meantime.
If you don’t want to get early Social Security because of a feeling of independence or whatever, that’s one thing. But it doesn’t mean you’re “getting more” if you wait. It could take up to 12 or 13 years to “break even” and that doesn’t consider “opportunity costs” such as keeping your savings in interest-bearing accounts without spending any of it, other investments you could make, etc.
Additionally, the SS “trust fund” will run out sometime in the next ~13 years. At that point SS will have to reduce its payouts by ~30% or raise tax revenues (or a combination of both). It is likely they will reduce payments to those with other sources of significant retirement income ( TAX THE RICH!). In 2012 the proposed bills in Congress cut off ALL SS payments to people making ~>$110K a year. So I would not count on getting a higher total amount of SS payments by putting off collecting SS to age >70 if you are in your early 60s and have significant retirement savings. While they have typically had a “grandfather clause” exempting people over ~50 in the bills to alter the SS system, if the Congress delays fixing SS long enough- and the hole gets deep enough, all bets are off.
For the sake of simplicity, let’s figure that you need $2000/month to retire on.
And let’s say that at full retirement you’ll get $1500/month from Social Security, which you’ll supplement with $500/month from your savings.
If you do early retirement at 62, which means 30% reduced payment, that takes off $450 from $1500, leaving $1050/month. So you supplement with $950/month from savings.
That means in the 5 years (roughly) from 62 to 67, you’d take 60 x $950/month from savings, a total of $57,000.
If you stop working/earning at 62 but then live off savings until full retirement at 67, that’s 60 x $2,000/month, or $120,000 taken from savings.
Then at 67 you start getting full retirement, which is $1500/month, it would take almost 12 years to make up the difference between $57,000 and $120,000.
The specific numbers don’t really matter, it’s the proportions, and they don’t change. Basically whatever numbers you use, it ends up taking 12 years to “break even.” And that’s 12 years from 67, not from 62!
You’re also taking a chance on what the savings and interest rate situation might be in 12 years (17 years from 62!) and other “opportunity costs.” As well as the possibility that Social Security may simply not exist any more, or at least pay out a lot less, by the time you get to 67.
Why?
Why couldn’t the USG keep SS taxes and benefits the same?
And just print the money and run up more debt? Sure, what could go wrong?
Mathematics
I didn’t mean print the money or run up more debt. I meant,
Explain to me why could the USG not do that, when the SS trust balance goes to zero?
What effect would it have?
On revenues? None.
On expenditures? None.
On benefits? None.
On debt? None.
On the deficit? None.
Can you find any effect that it would have on anyone?
Could you give me the mathematics that would make it undesirable? How would the math change if revenues, taxes, expenditures, and benefits all remained exactly the same? Wouldn’t the mathematics be exactly the same as the are now?
You don’t understand that current taxes DON’T COVER current benefits? That’s why they’re using the (actually nonexistent) “trust fund” to cover part of the current expenditures/benefits. Because the current taxes DON’T.
Addiction.
Addiction.
The USG doesn’t really exist, but politicians and bureaucrats do, and they have pensions and parties to attend, and that’s somebody else’s decision, not theirs, so it’s not anyone’s fault, you know, except gullible taxpayers who want too much for nothing, so they deserve what they get, and why are you even bothering us with these questions since taxpayers aren’t holding anyone responsible for driving up the debt and spending trillions…
Addiction.
To answer your question: in fact, current USG revenues (which include SS taxes PLUS many other taxes, fees, penalties, sales, etc.) far exceed current SS benefits. But your question, and the answer, are irrelevant.
Current USG expenditures, which include much more that SS benefits, are less than total USG revenues. The difference is made up for in net borrowing.
When the SS trust fund balance drops to zero, it has mathematically ZERO effect on revenues, and ZERO effect on net borrowing, and ZERO effect on USG expenditures.
Is this clear? The “trust fund balance” dropping to zero has no effect on anything or anyone.
You have been told that it does, and you didn’t think about it critically to see if it was true (could even POSSIBLY be true, mathematically.) You simply believed it, because you couldn’t believe that our politicians would say it if it were not true.
But now I am asking you to do the math, and think critically. Could it possibly true that, if no number in a sum changes, that the sum could change?
MMT! I like it.
That’s cutting the mathematical knot.
You could theoretically say that, if you accept that OTHER spending would have to go DOWN for the SS benefits to remain the same after the “trust fund” is exhausted, with no additional taxes etc. Are you aware of any situation in which that has (been allowed to) happen(ed) in the course of US history? Is there any indication that Congress etc could make that happen?
As a matter of law … the 1983 Social Security Amendments if I recall … Social Security is segregated from the rest of the Govt budget. It’s a stand-alone program with its own dedicated revenue stream. So you can’t, under the current legislation – just lump together Soc Sec with the rest of the budget
As of this year, Soc Sec annual expenditures exceed revenues. To make up the difference, the Trustees redeem some of the US Treasuries held by the Trust Fund. That means, that the Govt has to go out to the market (or the printing press) to borrow that money. As the amounts drawn from the Trust Fund get larger and larger each year, the amount needed to be borrowed in the market (or created) goes up pari passu. By the time the Trust Fund is exhausted that’ll be an extra $3 trillion in borrowing on top of what’s already required to fund the abomination that is the federal budget.
Also while “only” about 10% of total federal spending is interest on the debt, 70% of total federal spending is “mandatory.” So debt interest is like 1/3rd or 1/4 of “discretionary” spending. It doesn’t take much of an increase in rates for interest on the debt to exceed ALL “discretionary” spending.
Funny. But for those who might take you seriously, it has no connection whatsoever with MMT. I asked why the Government doesn’t simply continue to fund USG expenditures, including SS benefits the day after the “Trust Fund” goes to zero exactly as it does today. What is it about this “fund” going to zero that requires that we do anything different? It isn’t funding anything, and it isn’t taking in any funds. No assets are in the fund, and no money. No assets or money ever go into or out of the fund anyway. So no one would notice the difference.
As stated before …
As a matter of law … the 1983 Social Security Amendments if I recall … Social Security is segregated from the rest of the Govt budget. It’s a stand-alone program with its own dedicated revenue stream. So you can’t, under the current legislation – just lump together Soc Sec with the rest of the budget
As of this year, Soc Sec annual expenditures exceed revenues. To make up the difference, the Trustees redeem some of the US Treasuries held by the Trust Fund. That means, that the Govt has to go out to the market (or the printing press) to borrow that money. As the amounts drawn from the Trust Fund get larger and larger each year, the amount needed to be borrowed in the market (or created) goes up pari passu. By the time the Trust Fund is exhausted that’ll be an extra $3 trillion in borrowing on top of what’s already required to fund the abomination that is the federal budget.
Incorrect. The trust fund contains US Treasury securities. That is the gold standard of safe assets. If you absolutely, positively cannot risk losing the principal of your investment funds, you buy US Treasuries. That’s what the Soc Sec trustees are required by law to do with surplus funds, and have been since the 1930’s.
My understanding is this.
Congress has never legally segregated Social Security: it did not make SS a legal entity, with the ability, recognized by the courts, to independently own assets, owe liabilities, make expenditures, acquire revenues, or enter into contracts. Congress set up a purely internal accounting scheme for the SSA–a mere organizational subdivision of the USG– to allow it to mimic a legal entity like a pension fund, and to mask the fact that SS taxes have from the beginning been funding current year general Government expenses (including, of course, SS benefits.)
The restriction against the “Trust Fund” balance going below zero is part of this illusion. If SS were an actual pension fund, it would own assets and have expenditures, and if the fund asset balance dropped to zero, it would have to borrow to meet expenses. It would be headed for bankruptcy.
As it is, Congress could easily lift the restriction, and it would have no effect on the Government’s finances nor on SS benefits and taxes. It could maintain the political illusion of a trust fund if it wanted to: I can give a new proposal for