It’s a good thing we on this thread are saving for retirement as I’m guessing the main hit will ultimately fall on the middle class as much as the upper class. As presented, this seems like a pretty sensible plan. But, it is such a long way off, I guess, so it won’t affect the folks on this thread or voters in general. One question: Why have a retirement cap at 72? Why not give people an incentive to earn and contribute to SS beyond 72?
And more incentive to save to hopefully leave something to our kids who might need it more than us given the proposed changes. What happened to SS and Medicare being untouchable from a political perspective? Everything is topsy turvy these days.
Here is the actual proposal. http://samjohnson.house.gov/uploadedfiles/social_security_reform_act_bill_text.pdf
Edited to fix link.
I’m having trouble understanding the Jan. 1. 2023 date which seems to be a recurring date.
See bottom of page 10
^You don’t have to retire at 72. You just have to claim SS benefits by then and pay taxes on it. If 72 becomes forced retirement age, it may not necessarily a bad thing. It mkaes it easier to clean out dead wood, expecially in Congress since we can’t have term limits.
“If 72 becomes forced retirement age, it may not necessarily a bad thing. It mkaes it easier to clean out dead wood, expecially in Congress since we can’t have term limits.”
who says government officials will be subject to any rules that apply to the rest of us? They always make exemptions for themselves, especially when it comes to pay and benefits.
@NJres your decisions for Medicare, don’t know what choices. The old was how much Medicare coverage, A/B. Now evidently different.
Medicare supplement are very much determined by your current health status, if you have to purchase a MC supplement off the market or if you have an employer or other option where you get really good coverage for a very reasonable price. There is a lot of information on government web sites and I don’t know if AARP or others have info available as well in helping provide general and specific information.
Do not rely on calling in to Medicare or SS and getting correct answers either - those clerks may or may not know - and may not know their job either.
Talk to people in your area. Learn the ins and outs within your state and with your particular health care issues.
I know in our area, some on Medicare have a hard time finding a Primary Care doc w/o being established on other insurance - some is getting solved by hospital owned practices…
We are 5 years away from 65 - so a lot IMHO is going to change between now and then.
We found the best option medicare supplement for my mom with my brother looking at the details on coverage and cost in her geographic area and based on what medications etc she was needing. In-laws have teacher retirement insurance supplement at low cost and great coverage.
Knowledge is power, and can save some $$ for sure.
One of the EASIEST fixes to SS is to RAISE the income cap. There is NO reason someone who earns millions of $$ each year should have the amount taxed for SS capped at amounts that were established decades ago!
The amount taxed does go up every year. Of course, if you change that substantially with out raising the benefit accordingly (which they won’t), you do away with the illusion that SS is some sort of retirement program. I have no objection to that, however, I would want them to call it what it was–welfare, money transfer from the high earners to everybody else. And that would be high earners who are taxed at ordinary income, not the ultra high earners who get paid in different ways. Once again, hitting the “tax donkeys” and not the very wealthy.
They are substantially raising the amount taxed for SS next year - from 118.5K to 127.2K. It will punish CC “middle class”.
However, many of the highest income people get much of their income from non-labor sources (investment income, carried interest, rental income, etc.) that is not taxed for Social Security (and Medicare). Applying a tax only on labor income but not other income tends to make it regressive (beyond the regressive rate structure of taxing labor income from $0 to some limit, then not taxing beyond the limit).
Note that many of the types of non-labor income that the super-wealthy tend to have (dividends, long term capital gains, carried interest) also have favorable income tax treatment. There are also many ways to deduct things against some other types of income like real estate income.
Hmmm…I turn 62 in December 2022. Will have to see when I’m “initially eligible.” I am inclined to take my benefits at 62, given my actuarials. DH is opposed – not sure why, as his benefit will exceed mine (and my spousal benefit from him is probably more than half of my own PIA). After all the years of paying in, I want to get something out of it. It’s going into savings anyway, so if I go first, those funds will still be in the bank for DH.
This is the date when all of these changes start phasing in - the increase in FRA will go up 3 months/year starting at that point, until it reaches 69. The change in the way your benefit is calculated starts to phase in over a ten year period. The change to maximum spousal benefit starts to phase in at that point. Etc.
I do think it’s pretty laughable that things like taxability of benefits is supposed to change starting in 2043 - 26 years from now. Chances of SS going another 26 years without changes? Pretty much zero.
If I read the numbers correctly (which I’m not sure I did), when all these changes are fully phased in, my projected benefit could go down somewhere between 25 and 50%. It’s not going to put me on the street, but I’ll feel it.
I don’t remember the exact number and I can’t quickly find it, but something like 85% of all earned income is already subject to FICA, and completely removing the cap will not make SS completely solvent, it just pushes out the date when the money runs out by a bit.
Ouch! That’s a huge increase. Apparently because there was no COLA adjustment to benefits last year, there couldn’t be an increase in the wage base. So since there is a minuscule COLA adjustment next year (0.3%) we are getting socked with two years’ worth of increase at once.
I don’t think it means you need to claim SS retirement benefits by age 72.
At present, if you delay SS retirement benefits until after your full retirement age, your monthly (and annual) benefit increases by 8% for each year you delay, until you’re 70 when your monthly benefit stops increasing. There’s no requirement that you take SS retirement benefits at 70—but there’s no reason not to take your benefits at that age, because if you don’t, you’re just leaving that money on the table.
Johnson’s bill just raises that age to 72 to create an incentive for some people to delay taking their SS retirement benefits until age 72, presumably because they’re still working, don’t need the SS benefits in the short term, and are willing to take a gamble that they’ll live long enough to recoup a few years of forgone SS retirement benefits through fewer years of higher benefits. SSA says it’s actuarily neutral, but there will be some winners and some losers among those who make that bet.
@notrichenough what i think I understood was that if you turned 67 before jan 1, 2023 these changes do not affect you…? Anybody else read it that way?
I’m still getting used to the loss of our previously assumed annuity life-long pension (which was a given20 years ago, when it still existed). I will not be happy about reduced SS/Medicare - we’ve paid a lot into that over the years.
The phrase they use is “becoming initially eligible in January 2023”, which I assume to mean 62, not 67.
And it sucks for me because I turn 62 in June 2023.
I dug into the numbers a little more last night, I could eventually be facing a 50-60% or so reduction in benefits. And that’s assuming I get the COLA, without it it will be even worse. And my benefit will be going down as I get older. And our kids get screwed even worse. It’s a little tough to interpret the tables, and I don’t really understand the difference between “scheduled benefits” and “payable benefits”, but take a look at tables B1 and B2 in http://samjohnson.house.gov/uploadedfiles/johnson_letter_2016_ss_actuary.pdf .
Basically, if you are middle class or higher, this proposal is a huge cut in benefits. I like some of the ideas but it cuts too deep.
Do Congress and the White House have any analysis explaining why SS is running out of money?
^^Congress stole the key to the “lockbox”. 
They spent some of the money that has been coming in and replaced it with bonds. The problem is the issuer of the bonds is the US government. So it’s equivalent to the following:
You have money saved for your kids’ college. You’re short on money, so you use the money for your monthly expenses. But you don’t tell people that you raided your kids’ accounts. You say that you invested it in bonds. Bonds that are issued by you and purchased by you.
So you basically spend some of your money and say that you owe that money back to yourself with interest. Nice 
Just had to get that off my chest. @coolweather, I think you were asking more about the numbers themselves. I’m sure there’s an analysis out there, but I think the bottom line is that people are living longer. So for each retiree, there are fewer workers paying into the system today than there were in the past.
This article says that the number of workers per retiree was 41.9 in 1945, 2.9 in 2012 when the article was written, and will be 2 in 2030.
https://www.mercatus.org/publication/how-many-workers-support-one-social-security-retiree
I’ve been running the numbers for our retirement lately, and the best case scenario is that we’ll have 12K per month in pre tax dollars (2016 dollars).
This seems like a lot of money, but is it enough for long term care for two?
This assumes that we both stay employed until age 67, and that we can continue to put 6% of my wife’s salary into her 401K to get the maximum match until she’s 67. It also assumes that her company continues to contribute to the cash balance plan they have, and that the traditional pension plan pays out at the level they’re saying it will. Since they capped the traditional plan a few years ago, the age at which she retires from her company won’t affect the payout from that plan. I’m also assuming that we’ll get 75% of the Social Security benefits on our current statements.
One other assumption is that we can make 4% more than inflation on the 401k plan for the next 20 years or so, and that we can withdraw 4% per year once we’re retired.
Two questions:
1)Does that sound way too optimistic?
2)I’m assuming we’ll go to a state with no income tax when we retire, and that federal income tax rates will be what they are today. Given these assumptions, I’m estimating that we’ll keep around 9K - 10K of the 12K gross that we’ll have coming in each month.
This sounds like a lot of money, but I’ve been reading about nursing homes and one article said that they cost 4 - 8K per month. So we might be able to afford a cheap nursing home for each of us, or a nice one for one of us.
Is this something that most people just live with, or are you shooting for having enough money for two average to expensive long term care situations? By the way, how bad are the cheap nursing homes? Anyone know?
Putting nursing homes aside, I think 9 - 10K would be a ton of money coming in, especially in a cheap state. Should I just be happy with that and stop worrying about nursing homes?
What is everyone else shooting for in monthly after tax retirement income?