The post earlier this week about a possible 50% cut to Social Security starting in ten years? Yeah that was based on an incomplete, sensationalized article that I tried to convey skepticism over. Barron's cleared things up. The average $17,400 cut is for two earner couples not across the board and so the $10,600 number for lower incomes and the $23,000 number for higher earners was not as it was originally portrayed.
The study cited by both articles as it turns out is calling for the same 23% reduction the whole world has been talking about for several years.
We can use my current numbers to try to walk through this. If Plan A works that I hold out until 70 then I am looking at $4323 in today's dollars, less 23% would be $3329. If we take my wife's benefit (half my age 67 amount) when she is 65, I figure it would be $1416 and then take another 23%, that gets it down to $1090. When I am 71, we'd be at $4419.
If I take it at 62, $2345 plus half for my wife when she is 62 and I am 68 would be $3517. We get $900 more by waiting but there's a few more moving parts. We'd only be getting $2345 at 62 for six years, less really because I would still be working. I'll definitely be working at 62 and certainly plan to at 68.
My primary objective in wanting to wait until 70 is so that my wife has a bigger survivor benefit if I die young. In that light, locking $2345 plus COLAs seems to be opposite of that primary objective. If I like what I am doing and can make a living at it then it seems better to defer and have the higher earned income.
Another point I made the other day is that I am certain that when I am 62, the issue won't be resolved versus 2033 or 2034 when I am 67/68. Taking it at 62 only to have them then figure out a way to save it with a much smaller cut to benefits or maybe no cut would be a catastrophic mistake.
A final point circles back to something I read many months ago that theorized that cuts won't actually impact Gen-X. I don't know if the theory holds water but basically, it is too close to when Gen-X will start taking it to impose a cut. Politicians saving votes might also be a contributing factor for that theory too.
I would still suggest bracing for a bad outcome. You'll be prepared if they do screw it up and you'll be better off if they don't screw it up.
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