Check Your Social Security Right Now

The Social Security Administration wants us to know how much we should be receiving when our time comes. We say that all the time here and they just changed things around, for the better IMO, to try to help us better understand the program. When you login on now, your information is provided via a PDF so you can have it on your computer without having to either screen shot the info, log in again or just remember. 

The layout of the PDF makes the dollars involved much easier to understand too. Before, the site had a slider you would move to 65 or 68 or whatever and it would show you the dollar amount for what you slid to. Now it shows the amount for each age that you could start to take it. 

The red dollar amounts I put in are the spousal benefit numbers. The lower earning spouse as the choice of taking their own payout based on their earnings or the spousal benefit which is half of what the higher earning spouse gets. If the lower earning spouse's max payout on their earnings would be $1150 then based on the graphic above, they'd be better off taking the spousal benefit regardless of age. If the spousal benefit is the better choice, it does not grow past age 67 for the spouse, so the graphic above, $1801 is the most the spouse could get unless their own benefit was higher. If the higher earning spouse takes it at 65, $3094 in the above graphic then the spouse taking the spousal benefit would max out at $1547.

What are your highest monthly expenses? Mortgage, car payment, health insurance? What others, food probably? If you're shelling out a lot for prescriptions, learn about cutting carbs to potentially reverse the medical need for those prescriptions. 

Our fixed monthly expenses for 2024 look like they'll be $4500 (including groceries). Our three biggest expenses are the mortgage on our rental which I include even though the rental is cash flow positive, health insurance and groceries. The rental is on a 15 year mortgage that will be paid off when I am 66. When I go on Medicare, my insurance cost should drop to $175 in today's dollars, I don't think IRMAA will apply, for Part B and then assume $200 if I get expensive Part G. For my wife before she is eligible for Medicare, if our income drops her insurance will be cheaper than it is now and if my income stays the same then maybe it costs $575 for her. Mapping it out can be that simple. Things might change but for now, knowing what we know, that's what it looks like.

We need to budget another $900-$1000/mo for annual/semi-annual stuff like homeowners insurance, car insurance and so on. Regardless of whether $12000 in this context seems like a lot of money or not, don't ignore these items in your planning. 

Then have a little introspection on how lucky/unlucky you are with unexpected one-off, unbudgetable expenses. We've been lucky in most years including 2023 but we had two or three unlucky years recently where we had a couple of high, four-figure problems with the rental, multiple car issues that were more than $1000. This point is about how to incorporate an emergency fund into your finances. 

Unless you're getting a government pension, you should have Social Security as one income steam. Go get your SS numbers like the ones above. How do your planned expenses, the ones you know about now, stack up to what you'll get from Social Security? All SS boilerplate says it is not intended to cover all expenses but how far does it go for you? If you'd like it to cover more, is there a way to cut expenses? That's a way to solve at least part of the problem if there is a problem.

For my planning, I am assuming that there will be a 23% haircut and going against consensus, I am assuming that my age cohort, currently mid-late 50's, will be included in the reduction. The net effect would be pretty close to losing our spousal benefit for as long as I'm alive. 

If I can hold out until 70, then we'd get $4500 (both payouts, reduced by 23%) then less $400 for my Medicare (B and assuming G for now), then later less another $400 for my wife, leaves us at $3700 in today's dollars versus what I think will be $4000 in expenses (monthly plus annualized). All the better if we don't have our payout reduced. Reiterating, it isn't likely from what I read that people born in the 60's will have a reduction but I am being conservative. 

We haven't talked about discretionary spending. We take a couple of trips/yr that we'd like to still be able to do. As some point we will need to replace our cars. That will probably happen before we start SS but even if it does, buying cars would likely come up again later. Some sort of inventory on this front is pretty important. 

Beyond SS, what income sources can you cultivate or, repeated for emphasis, what expenses can you cut? Since this is an investment related blog, most readers would naturally assume their accounts (IRA and the rest) would be their first income stream after SS. My preference is to think of it as our last income stream, meaning can we create an income stream or two that might last for at least a few years?

Last night, my wife and I talked about how much longer we'd want to continue with our rental. We do all the work, she does much more, and at some point we may not want to do that. If it is paid off when I am 66 and we stick with it until I am 70 (64 for her), that is four years of either accumulating more money or living off of that income if somehow I am not working. That would push back our potential reliance on tax deferred accounts or put differently it would relieve some of the burden from our portfolio. 

In past posts, I've talked plenty about other income opportunities I'm working on. Incident management team work seems like it probably will happen (might be news on that front in January), I've been a research volunteer for a foundation for a little over two years that could become a paid gig but I have no feel whatsoever if that will happen and while I obviously love writing, it's not clear to me whether I will ever be able to monetize it again but the underlying takeaway from this paragraph is to do stuff, to be active, to put everything into it so that you get the most out of it regardless of whether that involves ever making any money. I walk the walk on this big time and I am telling you it opens up opportunities and makes life more interesting. 

If none of that pans out for whatever reason, then something's gonna have to give and it may be very difficult. Downsize your house if it makes economic sense. Keep working one way or another when it isn't what you want to do. Give up nice cars if you're a car guy. Give up a second car. Give up regular luxuries like golf (I'm not a golfer). Give up bigger trips. Give up smaller trips. 

The above paragraph could continue but you get the idea. No one wants to give up everything they enjoy and no one wants to stay in a job they hate or take on a job later in life that they don't want to do. Do your future self a favor and start trying to figure this out now and be able to adapt in case not every detail works out the way you want.  

The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.