Prepare For A 23% Cut In Your Social Security Benefits

OneEyedDiva

OneEyedDiva

SF VIP
Location
New Jersey
There has been conjecture by financial analysts about this for several years. Then one day after logging in to my SSA page, I saw the "warning" posted right there on the home page. Soon after it was taken down but about a year or so ago, I received a message in my SS message box about the same 23% cut which is supposed to take place in 2033 or 2034 and will affect every recipient. I wish I had taken a screen shot because that went away as well. Now 2033 may seem like a long ways off but not when one has to prepare to make up the difference financially for that shortfall. i'm posting about this because I want seniors to be aware that it's time to tighten the belts, sock away as much as humanly possible and learn to be frugal.

If you're in debt, time to work toward being debt free. Also for whoever has not filed for SS yet and expects to have longevity, consider what your benefit will be after the cut and factor that into whether or not you will take it early or wait. A few years ago, I would have said take it early, no doubt. But 23% is a huge cut and can be a game changer. I took mine early and have no regrets but I invest my entire benefit and will receive income from those investments to cover the shortfall. This is no joke and I'm hoping that our new administration does nothing to speed up that timeline. Not sure they even can, but just in case, I'm preparing for the cut. Here's an article about the cut and why it will be necessary:
http://www.dailykos.com/story/2014/...Million-Americans-This-Should-be-a-Huge-Issue
 
I don't understand why they can't raise the limit on contributions. Why do the rich need a 15% tax break? Aren't their taxes at the lowest ever? Most pay the same taxes as folks making far less than they do.
 
actually no . if your income is high enough you are not on the regular tax system . you go on the AMT tax system which is far more painful . we hit it every once in a while when we sell some investment property .once the phase outs are reached it is just about a flat tax from dollar one .

last time we hit the amt our share of taxes jumped 16k over what the regular system was for the same income . that does not include the jump in state and local taxes either from it .
 
Yes but with deductions it can be different. Didn't Warren Buffet say his secretary paid the same amount of tax he did?
 
wrong , there are no exemptions and almost no deductions allowed on the amt tax system . most folks are not buffet nor have the conditions or the wealth that allow him options .

for high earners it is an easy system , and basically a flat tax .

all software today has to run both tax systems on a return automatically. the amt is tripped at levels that here in nyc are not even considered wealthy . they are just middle to upper middle class .
 
JayBird said:
We are talking federal tax right? Is NYC different in some way?
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yes federal . the federal tax system uses two simultaneous run tax systems . only thing unique about nyc is we have very very high state and city taxes too but that is besides the point .

because the alternative minimum tax system is run automatically today most folks are not aware you pay the higher taxes of the two .

you pay a flat tax at 28% from dollar 1 . no marginal tax rates where up to x amount you pay x , then if you go over you pay y on the difference . nope , it is right from dollar 1 and it is painful .
 
I'll go with One Eye Diva's advice. Those that could live long enough to by affected should prepare for their own well being.

The idea that someone is successful and has made more money than another should be penalized for being successful is the kind of thinking that is dividing America. Personal responsibility for ones own welfare should be the standard thinking.
 
Always best to prepare for the worst. But I believe there will be some tweaks to the system that will push a major cut well down the road. Medicare is the monster that worries me.
 
Knight said:
I'll go with One Eye Diva's advice. Those that could live long enough to by affected should prepare for their own well being.

The idea that someone is successful and has made more money than another should be penalized for being successful is the kind of thinking that is dividing America. Personal responsibility for ones own welfare should be the standard thinking.
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those that really want to succeed will find a way , the rest will just find an excuse
 
It is a LIE, LIE, LIE that Social Security and Medicare contribute to the national debt OR are included in the budget.. They are fully funded by FICA contributions... If the fund hadn't been robbed to pay for unfunded wars, and tax cuts to the wealthy this wouldn't be an issue.. BUT again, seniors will be asked to shoulder the burden of this short-sightedness..
 
the fund was never robbed . the fund can only invest in special treasury dept security's by law with excess funds . the gov't has never defaulted on any of these bonds as far as paying them back with interest .

just like any bonds we buy the reciever is free to do as they please with the borrowed money . it is no more robbing the fund then you can say the gov't is robbing your mutual fund because it owns treasury bonds and the gov't used the money it raised .
 
First off, relax, this cut will not happen.

SS does not need to be self funding. If funds run out then it will become subsidized by the government just as other social programs are.

A task force must be assembled to look into every case and weed out the fraud and stop the benefits still going out to dead people.

Perhaps most importantly the rampant fraud of SS disability must be stopped. In my opinion, disability should not be part of SS but should be a separate program along the likes of welfare and food stamps. I personally know 3 people on disability and 2 should not be. Also 2 are under age of 30. Disability is sucking SS dry.

Stop worrying. There is no way in hell this country is going to cut senior's retirement benefits.
 
boaterboi said:
First off, relax, this cut will not happen.

SS does not need to be self funding. If funds run out then it will become subsidized by the government just as other social programs are.

A task force must be assembled to look into every case and weed out the fraud and stop the benefits still going out to dead people.

Perhaps most importantly the rampant fraud of SS disability must be stopped. In my opinion, disability should not be part of SS but should be a separate program along the likes of welfare and food stamps. I personally know 3 people on disability and 2 should not be. Also 2 are under age of 30. Disability is sucking SS dry.

Stop worrying. There is no way in hell this country is going to cut senior's retirement benefits.
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mathjak107 said:
i agree
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boaterboi said:
First off, relax, this cut will not happen.

SS does not need to be self funding. If funds run out then it will become subsidized by the government just as other social programs are.

[...]

Stop worrying. There is no way in hell this country is going to cut senior's retirement benefits.
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I agree completely.

Also, by 2033 I will be 85 years old. I will have received my full SS for many years by then. I have other sources of income, so I am not too worried.
 
Lon said:
I have been receiving SS Benefits each month since 1996 and you are telling me to look out for a 23% cut? NO WAY Ain't gonna happen.
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I'm just posting about what I actually saw on the SS.gov website, not once but twice. I sure wish I had taken a screen shot of that notice. Now whether they'll fix the problem by then I can't say but financial analysts have also looked ahead and predicted the cut will be necessary because there will be more Boomers retiring, thus loss of that income for the SS fund. That will putting a strain on the system. And if you think they REALLY care about benefits for us seniors, think again. If that were the case, why did we only get the piddling $3, some $4 or maybe $5 a month raise only to have that eaten up by a Medicare increase? The formula they use to compute the COLAs is NOT beneficial to seniors.
 
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