Agree totally. The present SS setup is manifestly unfair to younger Americans in my view. I believe they are being ripped off, and I question whether the youngest will ever be able to collect SS at all.
I do not personally have the fix. Means testing might be a place to start. But SS generally is so completely wound up in politics I question whether it ever can be put right. Any party or person seeking even to suggest, no less implement, a reasonable solution will be excoriated by opponents in order to garner political advantage. It’s an absolute MESS!!
Of course people will debate the value of SS and it depends on some assumptions and how you look at it. But I think it is fair to say that it isn’t a great deal as far as return on investment, and especially not for higher earners.
I knew it was a bad “investment” if you were well above median wages, but carried the impression that more than half of people were getting a reasonable deal from it.
That said, since it is money that alternatively could have been invested (in a perfect scenario), it wasn’t fair of me to lump it with how Medicare operates.
SS was always part of my retirement dream. Well over half my lifetime ago, long before people of my age back then paid much attention to SS, I studied the plan carefully. There was no internet. I was a library rat anyway and that is where I found what I needed.
Discovered the SS “40 quarters” rule. Was absolutely stunned. AFAIK (not 100% certain) that crazy rule remains in effect even today, all these years later. Determined to take advantage. And I did. It all worked out exactly as planned. Amazing stuff. God bless America. .
That’s quite an understatement considering how progressive SS is once you take into account benefits paid. High earners end up “earning” 0.5% from their contributions while low income earners get 5.4% on their contributions. Most could get a better rate of return than contributing to SS. So for most, it’d be better to be allowed to opt out entirely, especially high middle class earners, but that would bankrupt the system even more than it currently is so it’s not gonna happen soon.
Btw, to connect this to FIRE, from the standpoint of ROI, retiring early (after working 35 years) is a good deal since your benefits are barely going to decrease but you effectively stop contributing to SS and thus stop throwing money at a system that no longer rewards you for it.
That part is where I’m a bit uneasy. On one hand, you claim that you did not exploit any legal loophole to restructure assets so as to take advantage of the system but on the other hand, you feel justified in taking advantage of the SS rules that only require 10 years of work to qualify for an artificially-inflated SS benefit. To me those two behaviors are identical in principle. One is just more straightforward and accessible than the other.
My personal opinion is that, broadly speaking, our laws define what the majority of people have agreed is the fair amount of taxes I owe. Within the limits of these laws, me taking maximum advantage of the law to reduce my taxes is something I’m expected to do. The morality of it is baked into the fact that those laws were agreed upon by the majority as being legitimate and fair. No moral dilemma.
You make a very fair point. Please make allowance, though, for the much higher level of financial sophistication commonplace today, owing largely to internet existence. Gaining 40 quarters of SS credits was important to me way back. Even more important was working the ten years I needed to work in order to vest my company pension. These two things operated more or less in tandem with one another, along of course with other considerations, to define when it would be prudent for me to retire.
Regardless of that, I still recall seeing the opportunity presented to early retiree wannabes by that rather astonishing SS 40 quarter rule. What a gift horse!!
I heard a good working test of whether something is ethical is the converse of what is alluded above " would you still like to live in a world where everyone does it"
These strategies seem different to me. Restructuring seems more grey (to me). By working only 40 quarters, it seems to me one is just following the rules as they are written. JMHO.
It’s all zero sum. If I didn’t structure my assets a certain way I’d be spending more on insurance. Is it more moral to give the insurance company more money and make me a bigger target for a lawsuit?
A lot of people here are into the credit card point/ bonus game. I have news for you- if you’re manufactured spending you’re pulling a profit from somewhere, the money isn’t just appearing. Someone is losing money. Is that moral?
I don’t know the answers to these questions, but one thing I do know is that the amount of work you put into determining a strategy isn’t at all relevant to whether or not it’s moral.
Unless of course, you had a lawyer help you with your plan, and in that case I think we can all agree that you’re almost as immoral as the lawyer.
There are interesting lines that everyone draws, though. My folks certainly qualify for food stamps but refuse to get them (very low HHI from social security, although they have zero debt and healthy retirement accounts), but they would rather join in the distribution at the church parking lot from the food bank, which has the only requirement that being over 65 (no income documentation required). They originally didn’t want to but a friend said to participate so that the food bank could show a greater clientele. Ironically most of the canned food they don’t eat is given to me and just adds on to my emergency supplies, which I will probably re-donate once I get too many of them.
There are several FIRE blogs - Root of Good, Go Curry Cracker, and Independently Financed who talk about this. Root of Good specifically put his kids in the worst school in the school district because he had enough time being retired to compensate for the shortcomings of the school, and to take advantage of No Child Left Behind busing and special support programs. Independently Financed frequently states “welfare fraud is not a crime” because he is advocating for a UBI and recently had a “read between the lines” post indicating the exact amounts needed for a self employed person to make to maximize all benefits. Quite frankly I am pretty fiscally conservative but with all this BS means testing, hoop jumping, and cliff falling a UBI paid for by a higher middle class tax rate looks better and better.
Working for the government, there are some folks who have “retired in place” by doing the minimum amount possible to not get written up or fired. Of course, this gives the rest of us who actually do our work busier than if everyone did the same amount. I do find that less ethical when they could save themselves a lot of time and my colleagues a lot of headache with deadlines by just retiring with their 70 or 80% pension for the rest of their lives, rather than trying to get to 90% or higher. OTOH, I don’t really have much of a problem with Root of Good managing his income so that his three kids could be on Obamacare, even though they are millionaires. They are following the system as written and in reality if they were uninsured, would bankrupting them be better?
Quitting early does rob you of the bulk of potential disability benefits SSDI vs, the much lower SSI if you’re unlucky. 20 of the quarters to qualify have to be within the last 10 years, with an odd exception for disability due to blindness.
It’s sort of an edge case that you’d retire early enough to get caught up in this. Maybe if you worked as a trader or something and never had much earned income to start with,
If the letter and intent of the law clearly allows it then OK. I think Obamacare rules are pretty well defined and clear there, so yeah OK.
But I dont’ think “legal is good enough” works always. if something is simply not illegal then thats not necessarily good enough. For example at least in some places it can be perfectly legal to trap neighborhood cats and haul them to the pound without word or warning to the cat owners. Of course that kind of thing varies by jurisdiction…
Also some people will push their idea of “legal” to apply to anything they can get away with that they havent’ been caught or stopped from doing doing yet and maybe can’t even accomplish without some “white lies” … some cases of manufactured spend might fit that situation.
