I I keep reading articles about how to adjust your retirement planning to account for possible/probable SS cuts in 2034. Those articles are aimed at younger people who are still working giving them sound advice. I (F) am 78 and husband is 82.
We have adequate emergency savings. We are able to save half of our monthly income and continue to do so. Our monthly income will continue to increase every year and except for SS at least keeps up with inflation. My question is should we continue to build up cash reserves or pay off our mortgage so that in 2034 we will have no debt at all. Actually, if we divert most of our savings to the mortgage it will be paid off in about 7 years instead of the 11 years it is now.
Give us some stats about your mortgage. What is the rate and term ? Is it adjustable? What % of your overall budget is your mortgage?
2.5%. 11 years left. Pmts are 578 a month but we paid 600 a month for a couple of years and are paying 700 a month now – for about 6 months.
If we are talking 2.5% fixed for the remainder of the loan, I would not make extra payments. You can get 4.5-5.0% interest in savings accounts at the moment. If you are saving 1/2 of your income then I hope you are investing some of it. You can’t take on a lot of risk at your age, but you can take on some. Heck, you can get 30-year Treasuries at almost 5% and those are risk-free.
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Ok, thanks.
@chil1193 I think it’s extremely wise to budget for a future cut. I am doing the same. I retire in December. I don’t trust Congress to fix any of our serious issues. I expect them to just play pointless games, waste our money, and leave us without meaningful governance.
Congress will certainly not fix any of our serious issues. Their objective is to do as little as possible and get re-elected. If the SS Trust Fund will run out in 2034 then you can expect them to address it in 2033, when it will be far more expensive to fix.
Ponzi schemes always run out of money…
SocSec is only a perceived as a Ponzi because the taxation base is outdated. By outdate I mean this:
The last few decades, we have a “K-shaped” economy. The rich get richer, the poor get poorer. The middle struggle, and some go up, some go down. Income inequality, in a word.
Well, the Social Security taxes being what they are, all of that gigantic surge of wealth which has come to the top 1% never got taxed, obviously because the taxation quits about what, $176,000 now?
If it was well-funded and inputs and outputs were more balanced, then no one would think it’s a Ponzi. Of course the 1% would always complain. Their coping mechanism was they just bought American government, because it was for sale.
Divide and conquer is the strategy - get people in the trenches to mistrust each other and fight, the use of the word “Ponzi” implies a level of stealing and cheating. and they won’t notice you making off with basically no SocSec tax burden.
“Ponzi” is a distraction. It’s not what is really happening. The cartoon below sums up what I mean, but the bubble should say, “Careful, that old person is going to gobble up your Social Security retirement cookies before you have a chance to enjoy any, because it’s an unsustainable Ponzi”.
Its perceived as a Ponzi scheme because it meets the criteria:
- Investors are enticed (forced) to participate in the scheme
- Profits are paid to earlier investors using money from more recent investors
- The scheme eventually collapses due to a lack of new investors
The whole system is completely flawed…but its never going to be fixed.