A Busy Week (not in a good way)

A lot of things happened this week that are pretty hard to believe and I think the combine to offer a pretty hard slap of reality.

First is that Lahaina, Maui has been destroyed by wildfire. They're calling it a wildfire but I know that area very well and it seems little different than that. There's no forest and not a lot of brush down low by the water. It did start on the hillside above town, then things caught on fire and the winds just kept blowing the fire onto the next structure and so on. Up country in Kula is more forested and that seems more like a wildfire but either way, complete devastation. Enough was destroyed to say the town is gone. We've been to Maui many times, been to Lahaina on just about every trip. This picture is from our last trip in 2022. That house is at the far south end of Front Street, we've loved that house since we first saw it in 1994. It was build in the 1920's and is right on the water.

Ecuador has long been a bastion for expats. We've explored Ecuador in that context many times here. The economics make sense, the medical care is by all accounts good and certain towns, notably Cuenca, have a fair number of Americans living there. A year or year and half ago, there were several days of civil unrest and protests in Quito, the capital. Fast-forward to this week and Presidential candidate Fernando Villavicencio was assassinated and a 60 day state of emergency was declared. Apparently, drug-related organized crime has a bigger presence in the country these days and Villavicencio was loudly critical. I don't have a great sense of how serious this is or whether the Ecuadorian expat dream is ending but it seems like the right question. Something like this happening is why I say that if you plan to live in another country, keep your house here and rent it out. If leaving Ecuador turns out to be the smart thing, it's be nice to have some place to go. 

Far less dramatically and of much less importance, the Pac 10 Pac12 is also essentially destroyed as all of big time college sports is realigning for football/financial reasons. I think the fallout will be bad for the athletes and the other sports but who doesn't have great memories from the long time football rivalry between Washington and Rutgers? (stolen joke alert) The picture is from the Pac 12 Basketball Tournament in Las Vegas a while back.

A nano disruption this week came when I updated my laptop from Windows 10 to Windows 11. I've been avoiding it since Windows 11 first came out (has it been a couple of years?). I expect such things to be very buggy so I wait. Well I waited and it was still buggy. When we moved to Dynamic, they did all sorts of tech stuff to our hardware. When I boot up, I see a profile with my name and another one called remote support which appeared after Dynamic did its thing. My first attempt to log on, the screen only knew the remote support user, there was no way to toggle to me. Uh-oh. I rebooted again and the problem solved itself. Windows 11 appears to have slowed down my computer quite a bit in terms of navigation from one thing to another if I have too many tabs open and something that seems like kind of latency issue loading certain web pages. 

I think this laptop goes back to 2018 so maybe it's just time for a new one (yes, I am cheap) but I'd rather push that back if possible (because I'm cheap).

All of that as a preamble to potentially devastating cuts coming to Social Security in 2033/2034, much bigger than previously discussed. That link says the average cut will be $17,400/yr, $10,600 for those with lower incomes and a $23,000 cut for higher earners. That would be much bigger than the 23% haircut previously being kicked around. My FRA (age 67 amount) is supposed to be about $3450/mo or $41,400. The upper end of earners for SS isn't that high so I am assuming the $23,000 hit would apply to me which would obviously be more than a 50% reduction.

As a quick reality check, it is difficult to believe that such devastating cuts would be allowed to happen if for no other reason, politicians own self interest for keeping their jobs but what if they can't figure it out? What happens to you and your financial plan if you take a greater than 50% hit to Social Security? The fallout would be awful for a lot of people. Regardless of whether you expect SS to play a big role or a small role in your life, you've got ten years to figure something out for yourself. 

The Bloomberg article was pretty light on details beyond the scary numbers so if you know more, please leave a comment. 

The calculus on when to take it might change if that big of a reduction is actually coming. My plan has been to take it at 70 so my wife gets a larger payout if I die young. As a matter of fine tuning, taking it as early as 69 is not impossible either. I've never considered 62 for multiple reasons including that I plan to still be working and taking it early, while still working isn't great tax wise. A 50% haircut could easily trump not great tax wise though. A 50% reduction in 203X would take the payout below the age 62 amount so getting $2345 for five or six years before the cut might not be stupid. Unfortunately, there is no way I believe this will be worked out by the time I turn 62 in 2028. 

The takeaways are figure out how you'll get by with a hideous reduction to SS and stay engaged with how the story develops.

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