About 10 years ago, I tried logging onto SSA.gov to check my Social Security benefits. You would think after decades of paying FICA taxes (6.2% for SS, 1.45% for Medicare), the government might make it easy to see what you’re entitled to. Nope. Instead, the system demanded to physically mail me a PIN. I tried three times over 12 months. Nothing ever arrived, so I gave up.
Then I tried again during COVID. Same thing. Perfect! After 20+ years of working, paying into the system, and saving diligently, I still couldn’t get into my own account. I never counted on Social Security anyway, so I chalked it up to another example of my tax dollars going… somewhere.
Thankfully, the government eventually consolidated login information through Login.gov. I reset my password completely online, uploaded my driver’s license and a selfie, and – miracle of miracles – finally accessed my Social Security dashboard through SSA.gov.
If you haven’t established your login yet, do it. As a personal finance nerd, it feels incredibly satisfying to poke around. Once you understand your Social Security progress, you can better plan for your retirement.
In fact, you may be saving $1 million more or working 5+ years more than you need to!
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My Projected Social Security Benefits
Below are my estimated monthly benefits if I start at 62, wait until full retirement age (67), or delay until 70:
- 62: $2,641
- 67: $3,751
- 70: $4,651
Since I’m feeling relatively healthy today at age 48, the most logical option is to wait until 67, my full retirement age. My goal is to not only reach 67, but stay healthy enough to enjoy the payout for decades after. After all, living longer and enjoying life is the biggest return on investment of all.
All of the projections assume I continue earning $50,000 a year until the year I claim Social Security. But if I drop my annual income to $0 starting this year at age 48, my projected benefits only fall by about $95–$133 per month, which isn’t a meaningful reduction. So please play around with your assumptions as well.
How The Social Security Benefits Are Calculated
Benefits are based on your lifetime earnings. Social Security “indexes” your past wages for inflation, then averages your highest 35 years to determine your monthly benefit amount. For 2025, the 6.2% Social Security tax applies to income up to $176,100 for employees. If you are self-employed, you have to pay double.
To qualify for retirement benefits, you need 40 total work credits. You can earn up to 4 work credits per year, and in 2025, one credit is earned for every $1,730 of income. So if you earn at least $6,920 in a given year, you’ll receive the maximum 4 credits for that year.
These years do not have to be consecutive. Once you’ve earned your 40 credits (takes 10 years), you are considered fully insured for Social Security retirement benefits for life, even if you never work another day.
The more consistently you worked and the more you earned, the higher your benefit will be (within SSA limits). I’ve technically been paying FICA taxes since 1994, when I worked at McDonald’s in high school for two years, so I crossed the 40-credit threshold long ago.
Can I Live Off $3,751 a Month in Retirement?
Surprisingly… I think the answer is yes.
The benefit amounts shown on SSA.gov are expressed in today’s dollars. They don’t include future COLA (inflation) adjustments. But as we saw during COVID, Social Security is willing to keep up with inflation. 2023 saw an impressive 8.3% COLA increase. That was an eye-popping bump and gave me hope the system won’t let retirees fall too far behind.
If we assume ~3% annual inflation, my benefit in nominal terms will roughly be:
- ~$4,000/month at 62
- ~$6,500/month at 67
- ~$8,800/month at 70
Building a Budget to Live Only on Social Security
If I start at 67, I’ll receive $3,751/month, or $45,012/year in today’s dollars. Today, my family of four can’t live on that amount. But in 19 years? It’s highly possible assuming a few key things happen:
1. Both Kids Become Financially Independent
By 2044, when I'm 67, my kids will be 27 and 24. If they’ve launched successfully, they shouldn’t need help from the Bank of Mom & Dad. I estimate a 40% chance of this happening, given how home prices have outpaced wage growth. Young adults face a tough road to independence, especially with higher housing costs.
That said, I’ve intentionally purchased a rental property each time one of my children was born. The plan is to hold these properties through their college years to help cover the cost of raising them. And if they decide they want to live in San Francisco as adults, I’ll rent the homes to them at 30% of their gross income, which feels both fair and financially sustainable. If they don’t end up needing the housing, I’ll simply continue using the rental properties to help fund our retirement.
2. We’re 100% Debt-Free
This is extremely likely. I only have one rental property mortgage left, which I’m on track to pay off by 2030. I could pay it off now with my Treasury bond holdings, but since Treasuries yield ~2% more than my mortgage rate, I’d rather keep the spread and earn free money.
3. We Relocate to Honolulu To Save Money
Even without a mortgage on our San Francisco home, property taxes and maintenance exceed my Social Security benefit. The solution is to move into my parents’ property in Honolulu. The place is paid off, the land has multiple homes, we spent $40,000 updating the in-law unit, and I’d be splitting property taxes and maintenance costs two or three ways. Hawaii’s property tax rate is the lowest in America.
If these three things happen, I’m 90% confident I could live off $3,751 a month gross. Here's a realistic budget per month:
- Core living expenses: $1,500
- Food: $1,000
- Transportation: $300
- Entertainment: $300
- Medical: $500
- Total: $3,600 (vs. $3,751 monthly gross SS benefit)
My Wife Gets Social Security Too
Assuming my wife and I are both still around and together at 67, she’ll have a comparable benefit. Suddenly, we’re not talking about $3,751/month, we’re talking $7,000–$8,900/month, depending on when she starts taking Social Security. If she takes Social Security at 64 when I'm 67, then our combined Social Security benefits will be roughly $7,100/month.
With two people living together, housing and utilities don’t double, so the spending efficiency is huge. After core living expenses, we may have $5,000+ a month left. Plenty for food, travel, and hobbies.
Sure, we might not cruise Europe with a balcony room twice a year, but one nice vacation every year or two? Easily doable.
Hawaii offers so many free or inexpensive activities, such as beach days, tennis, pickleball, and hiking, that a high-rolling retirement isn’t necessary.
Even spending $100/day on food ($3,000/month) still leaves $2,000+ for everything else. Without debt and childcare expenses, life gets much easier to afford. In this scenario, I'm 98% certain we can live off both our Social Security benefits.
Add On Tax-Advantaged Retirement Accounts, Rental Properties, and Brokerage Accounts
Until today, I never seriously considered the idea that Social Security could cover 100% of our retirement expenses. Instead, my entire focus has always been on maxing out my 401(k), building a rental property portfolio, growing our taxable brokerage account, and investing in venture capital to fund our traditional retirement years.
But after running the numbers, it’s obvious I’ve saved way more than necessary. And strangely, even though I retired early at age 34, it might still not have been early enough!
Thanks to a roaring bull market in both stocks and real estate since 2012, when I left finance, my investments have compounded faster than my spending and income. Add in supplemental income from side hustles (e.g., Uber driving) and this site, and I’ve been grinding for no reason.
And now, with Bill Bengen raising the safe withdrawal rate from 4% to 5%, it reinforces the idea that we could all lighten up and relax more. If you are a regular Financial Samurai reader, I'm pretty sure most of you are accumulating more wealth than you need as well.
Social Security Millionaires In The Making
My estimated $45,012 in annual Social Security benefits starting at age 67 (in today’s dollars) is equivalent to having $1,125,300 in capital, assuming a 4% withdrawal rate. I assume many of you will likely have Social Security benefits in this same range.
In other words: we might all be Social Security millionaires. With roughly 65% of Americans owning homes, and the vast majority of homeowners over age 62 being mortgage-free, the narrative of an impending “retirement crisis” may be overstated.
Most Americans also have savings and taxable investment accounts to supplement Social Security. Some even have valuable lifetime pensions too. When taken together, the retirement picture for many people is likely much healthier than the headlines suggest.
If you’re burned out from work and have already run the numbers on your Social Security and retirement savings, consider negotiating a severance and breaking free sooner. I truly believe many of us are working longer than necessary. And if you secure a severance package, you’ll have a comfortable financial runway to support you as you enter the next chapter of your life.
Here are the other benefits of Social Security worth noting.
Understanding Social Security Survivor Benefits
If you pass away, survivor benefits may go to your:
- Spouse
- Minor or disabled children
- Dependent parents
Survivors typically receive 75%–100% of your full benefit depending on their relationship and age.
For single-earner households, this protection is huge. But these benefits alone usually aren’t enough to fully replace earnings, which is why term life insurance remains essential for young families.
What If You’re in a Long-Term Relationship but Not Married?
If you and your partner aren’t legally married, survivor benefits become tricky. The SSA generally will not treat a domestic partner as a spouse unless your state recognizes the relationship and you can prove it with documentation.
Even then, it’s not guaranteed.
If you want your partner to receive survivor benefits, the safest option is to get legally married a year before you think you'll pass. However, given that can be difficult to figure out, perhaps shoot to get married before 62.
My Survivor Benefit Amounts
If I die this year, my family might receive:
- Minor child: $3,024
- Spouse caring for child under 16 or a disabled child: $3,024
- Spouse at full retirement age: $4,033
- Total max family benefit: $7,058
- One-time death benefit: $255
Understanding Social Security Disability Benefits (SSDI)
SSDI is income protection if you become unable to work due to a condition expected to last at least 12 months or result in death.
To qualify, you must:
- Have a severe medical condition that prevents you from doing previous work and any other suitable work.
- Have enough work credits (usually 5 of the last 10 years; younger workers need fewer).
Most SSDI recipients receive $1,000–$2,000/month, though benefits vary.
My SSDI estimate is $4,033/month.
You may want to complement SSDI with private disability insurance if you have dependents.
Social Security Medical Benefits: Medicare
Medicare is the main healthcare safety net for retirees and certain disabled individuals. You qualify by:
- Turning 65, or
- Receiving SSDI for 24 months
Medicare has four parts: A (hospital), B (medical), C (Medicare Advantage), and D (prescriptions). It covers a lot but not everything, especially long-term care, dental, vision, and hearing.
Retirees often supplement with Medigap or Medicare Advantage.
Medical costs can destroy even strong retirement plans, so Medicare provides a crucial baseline.
Social Security Isn’t Amazing, But It’s Far Better Than Nothing
Every personal finance enthusiast has run the math: if you invested your FICA taxes in an S&P 500 index fund over a career, you’d likely retire with multiple times the value of your Social Security benefit.
But here’s the reality: Most people would never consistently save and invest that money on their own.
The forced savings aspect helps prevent elderly poverty. Homeownership works similarly: by forcing people to pay down principal, they accumulate wealth they might not otherwise build.
For most of my career, I treated Social Security as irrelevant in my retirement planning. But now, at 48, actually looking at my dashboard, I’m warming up to the system.
My uncle retired from the federal government this year and began taking Social Security at 70. It makes a huge difference in his lifestyle. He was the one who told me about the new Login.gov system too while I was in Honolulu.
As I get closer to eligibility, I’m more appreciative of what this benefit can do. Taxes are still unpleasant, but at least with FICA, we do get something meaningful in return.
Readers, could you live off your Social Security benefits? If not, what gaps do you need to close before you get there? When was the last time you checked your Social Security dashboard?
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Great article, FS.I look at my SSI yearly to update my plans.
Your point about being able to retire earlier is a good one. I am 2.3 yrs. from receiving full pension and insurance at 55. I very much look forward to a new chapter in life. I could retire now, but the carrot seems too large to pass up.
One final thought- we probably should stop comparing SS to investing. It is insurance, and we all forego investment gains for peace of mind. Moreover, it is insurance you’re paying for your parents and your kids pay for you- so that hopefully you don’t have to move back in with them. So use it as insurance (or bonds) and up one’s risk tolerance in the market.
Hi Sam,
Great article. I have to politely challenge you on 1 item/view you laid out however. That is taking SS at age 67 (if you are married) which I believe you are. In general, the its beneficial for the higher earning spouse to claim at 70 and the lower earning to claim at 62. Everyone’s situation varies however when you factor in 1) health of both spouses, 2) are either spouse working and earning over 23k before full social security benefit age (67).
1) The surviving spouse can claim the LARGER benefit if the higher earning spouses passes away. At age 62 (the earliest one can claim), JOINT life expectancy of at least 1 spouses is about 91. And that is AVERAGE. I do NOT know your personal health, but given your affection for tennis and Asian descent, I would argue your likely to have an above average life span.
2.) Inflation adjusted 8% increase in guaranteed income per year from 67-70 is likely much more than you’ll get from investments. Stocks would most likely return 5-7% after inflation, bonds would be 2% inflation adjusted. A 70/30 portfolio would most likely return 6.7% (if inflation adjusted stocks returned 7%). So a “riskless” 8% with COLA is pretty rad.
3.) IF you had a higher riskless income from a higher SS benefit, in theory, you could afford to take more risk with your investments. Could help live a better lifestyle or leave the kiddos more.
4.) Higher guaranteed income could also give you more flexibility to gift to your kids while you are younger and alive and well.
5.) Would force you to draw down more investments rom 67-70 which can be a good thing as it will help lower RMD’s later.
6.) SS benefits are NOT taxed in most states AND the most the federal government will count as income is 85% of your benefits.
7.) The MOST IMPORTANT benefit of claiming at 70…it is simple for the surviving spouse who is aging. No complex withdrawal strategy, no financial planner to meet with, no decisions. Just a check that comes each month.
There are some times when a higher earning spouse should claim earlier….but it is much less common. Situation include when both spouses have poor health outlooks, both spouses are not able to work and need the money now, or there is a large (30% or more) drop in the stock market lasting over 1 year and you claim early so your stocks have more time to bounce back. Besides those….look into claiming at age 70 for the higher earner
I oversaved for retirement, too, between projected Social Security and qualified accounts. However, I undersaved for the in-between years, so I don’t feel I could retire any earlier, even though I’m pleased with where I stand with Social Security and qualified accounts. Theoretically, I have enough to stop saving for retirement and focus on the next 10-15 years, but I can’t turn off contributions because it just feels so wrong. So I guess I’ll live it up in retirement!
Hi Sam,
This week’s newsletter changed EVERYTHING about my retirement planning strategy.
I have spreadsheets calculating the future value of our investments, our VA disability-compensation benefits (we’re both veterans), and our Social Security retirement benefits.
But, I assumed the Social Security retirement calculator (the one we see when we log into the site) showed the future value of the retirement benefit, not the present value.
Thanks to your email, I learned that the calculator shows the present value, and thus the Social Security retirement benefit would be significantly higher when my wife and retire in 14 years at ages 65 and 68.
This changes everything for us, because we are in our early 50s and woefully behind on retirement planning. So, we have been putting a ton of money (just over $100k annually) into our retirement plans (Roth IRAs, her 403(b), my solo 401(k)) to meet our retirement goals and have a giant nest egg.
But, thanks to this new data, I now realize we could live off our Social Security and VA pay alone (with, of course, the assumption that both are increased annually for inflation and do not become means tested).
This significantly reduces our stress in retirement planning. Will we continue to contribute massively towards our retirement accounts? Yes — but not with the sense of panic we’ve had until now.
And maybe we can divert some of our planned retirement investing to enjoying the present, or even retiring at 62 and 65.
Many thanks, my friend!
Best Regards,
Mark
According to the Social Security Administration, “its Trustees estimate that, based on current law, the Trust Funds will be able to pay benefits in full and on time until 2034. In 2034, Social Security would still be able to pay about $810 for every $1,000 in benefits scheduled.”
Given current monetary and fiscal policy of the federal government and the trajectory of birth and death rates and longevity demographics, above referenced projected ratio may be significantly lower.
1. Social Security is designed to be actuarially neutral (which is how most calculators on break-even points work), but does not take into account your personal discount rate. If you value spending more money before age ~70 when you are healthiest (i.e. a higher personal discount rate), that would suggest taking SS earlier. Obviously, there are other considerations like longevity risk, spousal benefit, etc. But especially for those who don’t need to rely on SS and the fact that people tend to spend more when they have more income from a guaranteed source like SS, taking SS earlier is something that frugal types might consider.
2. An option that I only recently became aware of is that you can claim SS before FRA (e.g., 62) but then suspend your benefit at FRA (67 for most) until as long as age 70 and receive the 8% annual benefit increase. It could be useful if you encounter an early bad sequence of returns or want to spend more during your earlier years of retirement.
Great point on #2. That’s a great option to have. Thanks for sharing.
What an interesting option. Would be great for a single individual who has early sequence of return risk OR an early health scare that later resolves. OR could be useful for the LOWER earning spouse with a married couple in some similar select situations.
Given you forgo benefits from 67-70 to get a payment that is 24% higher….one would have to live about 12.5 years AFTER age 70 to break even, maybe 0.5year less when you factor in the added tax benefits of SS income vs. Traditional 401k/IRA withdrawals. I am going to have to mull this one over.
Thanks for the post, Sam! One thing you will be pleasantly surprised by is when you start getting Medicare, it’s not only way cheaper than your ACA but it’s potentially better coverage! There’s so much research you’ll need to do to determine the best coverage for your personal situation. Also, review your breakeven analysis to determine what age to get Social Security. Generally, you have to expect to live past your late 70’s/early 80’s to make it worth waiting. I started at 64, and because my husband was 68, he was able to “get a raise” by getting half of my FRA amount even though I get a reduced amount for starting early. Don’t forget to factor in IRMAA tax for your medical benefits as you do your calculation. For instance, in 2026, if your AGI is more than $218k, you will have to pay one of 5 levels of IRMAA, which the government very helpfully takes out of your Social Security each month. As you get closer to the age where you can take your IRA money without penalty, another breakeven analysis is in order to determine how much you should withdraw before required RMDs so you can draw down the IRA in order to keep the IRMAA amount as low as possible in those out years. A little bit of extra work, but so grateful to have enough money for this to be a “problem!”
My parents are 76 and 65, both are retired. They “only” had about $400K in their combined retirement accounts. Neither ever made more than $60-80K annually. They still have a mortgage payment.
And yet, even with all of that said, they feel wealthy because social security covers all of their expenses plus an extra $500 or so each month. Their $400K retirement is used strictly for traveling, of which they pull out $10-20K each year. They feel quite well off and live exactly how they want, with trips to Hawaii, cruises to the Caribbean, road trips around the US in their motorhome.
Watching them has given me peace of mind. Their retirement accounts are now at $450K. Obviously there are what if variables at stake (like losing one SS check if one dies), but there’s a very good chance they won’t come close to spending all of their retirement.
I think the crowd around here, including myself, get so focused on personal finance that we overprepare for every possible scenario, when really most of us already have more than enough.
“I think the crowd around here, including myself, get so focused on personal finance that we overprepare for every possible scenario, when really most of us already have more than enough.”
Yes indeed. Ultimately, I think we will work too hard and save too much if we are not careful.
Check out the rules of survivor SS benefits if one were to pass.
Happy T-day Sam! I’ve been keeping up my SS for a couple years via login.gov. I’m 51 with a 35 year work history and of course many of those early years have very low earnings. I do believe my projections assume I will make the same wage as I do now all the way until I start taking the benefit. This is important because if I retire at say 55 (which is my plan) then it looks as though my projected benefit would be adjusted down since I wouldn’t be paying in anymore. The benefit page does have a feature to plug in estimated future earnings which it will then populate new benefit numbers. For example it is showing me a benefit of $3705/mo at age 67 if I continue to earn my current wage. If I early retired today and had no more earned income, that same benefit for me drops to $2799/mo, so a significant difference. Obviously everyone’s situation is different with past earnings but something to be aware of. Thanks for another important article!
Great point Geoff! I need to add that point to the article. Because I’m not certain I can keep making active income until age 67. But I did adjust down the income assumption actually, and the SS benefit was similar. Will play around more.
*****
Social Security’s projections work like this:
For each claiming age they show (62, 67, 70), they assume you continue earning your stated future earnings amount — in your case $80,000/year — every year up to that specific age.
So:
Projected benefit at 62 → assumes you continue earning $80,000/year until age 62
Projected benefit at 67 (your full retirement age) → assumes you continue earning $80,000/year until age 67
Projected benefit at 70 → assumes earnings continue through the year you turn 70
In other words, each projection assumes uninterrupted earnings at the same level all the way until the age associated with that estimate.
If you stop working earlier — say at 55 or 60 — your actual benefits will generally be lower than the projection because you’re not adding those final higher-income years to replace lower-earning years in your 35-year calculation.
unless you started working later in life, the penalty for retiring at 55 should not be so high. It’s 30 years of working from 25, and 5 left blank. But when you look at how SS rewards income, the people who pay the annual FICA max only get about 15% more than those who earned 50% as much. So if you were about that 50%, those 0s only hurt so much. And if you do anything that counts as FICA income in retirement (even just 15k does a lot – first inflection point), you can fill in those zeros.
I intend to retire at 58, which dovetails right into getting that 35th year logged for me, so I’ll be close to the max benefit. Then it’s a question of when to collect – payments in the 60s means not withdrawing from investments that I own and Congress can’t reduce. But since my wife’s mother lived to 95, I have to think about the benefit to her of getting my amount late in life.
Interesting, thanks Jason, I never really knew how the benefits were calculated. I will say even though I have at 35 year work history at age 51, I do have alot of very, very low earning years. This includes teenage work at a car wash, pizza cook, landscaping, concession stand, etc, etc.. I think I only have about 10 years or so in the six figures. Interestingly, I have decent rental property income but that of course isn’t taxed as active income so no SS benefit from that. I should make close to the max SS taxable level for the next few years so that may help keep the benefit up. Now all we gotta do is hope it’s there for use when we go to claim.
Thank you Sam for the great article! I plan to take SS at 62 and invest it and will retire in 3 years. I currently receive 2 pensions and after we pass away, my 401K will go to our son along with our three rentals (2 are paid off and the third will be next year). So with those pensions and SS, we can live comfortably in Florida. We’re able to do this since we’ve been living on a ‘retirement’ budget since 2017 (we save/invest 70% of our income). We live very frugal and since I work overseas, we get the foreign income exclusion and the country we live in doesn’t tax us. Thank you for all the great advice over the years (I’ve been reading since 2015) and have put it into practice. The best advice I can give everyone is to live ‘well’ below your means, have your spouse on the same page as you and think ‘very’ long-term.
Great plan Rob! A 70% saving rate is huge, and so is the foreign income exclusion.
Sounds like you will have to start living at your means or above very soon!
Cheers
My SS benefits are similar to yours at $3288 at age 67 (I’m 59 now). One key detail I didn’t know about until I retired this year is my wife, who left the workforce in 1998 to care for our 1st son (we have 5 kids total) is eligible for spousal benefits equal to 50% of my benefit. I plan to take SS at 67, so her benefit would be $1644 per month for a combine total of $4932. That’s $59,184 per year and we’re setup for $150K per year from our retirement investments. So at age 67, we’ll have an income of almost $210K per year (!!). If I were to pass away before her, she can take my full benefit as survivor, so she’ll be set with about $190K per year. I’m glad we saved like maniacs during our 12 to 15 high income years ($300K to $500K) when we invested at least 35% of our income consistently before I sold my business.
Good stuff Todd. Thanks for sharing. To clarify, your wife will immediately be able to get $1,644/month while living as soon as you start collecting SS at 67? If so, that’s great!
It’s funny, but so many of us DON’T think about Social Security benefits and the nitty gritty until we’re closer to the age. Therefore, I think many of us will be in for a pleasant surprise.
I ran the full scenario with Chip (my ChatGPT guy) and this is what he came up with, which may address a comment from another reader (Geoff)…
1. Your Social Security benefit at 67 is effectively locked in.Short version: Your benefit is NOT going down.
Longer version (but still tight):
You’re 59 now. You almost certainly already have 35+ full years of earnings.
So the $16K per year through your GeoMax guaranteed-payment strategy will NOT displace higher earning years.
Result: Your PIA (Primary Insurance Amount) is effectively baked in.
Only two things will change it:
But it won’t go down because your future wages are low.
2. Spousal benefit rules for your wifeYour projected spousal benefit: $1,644/month (i.e., 50% of your age-67 benefit).
Here’s exactly how hers works:
Important detail:
She cannot receive a full spousal benefit until you file. Once you file at 67, she is eligible — but claiming early reduces her benefit.
Full Spousal Benefit Timing Summary
3. There is no earnings test issue for youYou won’t be earning anywhere near the earnings-test threshold (~$22,320 for under FRA), so no reduction applies before FRA.
When you claim at 67 (your FRA), zero earnings test applies regardless.
4. Bottom line for planningYour benefit at 67 will NOT shrink due to low wages.You’ve already built the 35-year record.
Your wife gets the full spousal benefit only at her FRA (67).At 65, she’d receive a reduced amount (approx. 92–93% of spousal).
Your combined monthly SS income at your age 67 would be:
Chip sounds like a helpful companion!
What about the possibility that they cut SS payouts in the future due to the underfunded status of SS? Especially if they do so by looking at your retirement account balances. How likely and how soon this could happen? Is this a realistic concern?
Worth cutting your expected SS benefits by 20-25%, since that’s how much it’s underfunded, or expect full retirement age to rise to 68 from 67.
In all likelihood, they will just raise the FICA tax rate on current payers, and potentially raise the FICA max (either unlimited, or with a donut method for 400 or 500k +.
Given how many rely on it, it’s very unlikely that Congress would allow the reductions to happen. It’s much harder to reduce benefits without it being obvious (Medicare in this year’s tax bill). I think it’s 90% certain to fall on the next generation.
Have you guesstimated your costs for the various Medicare parts and dental, vision, whatever? It’s definitely cheaper than ACA plans, but my costs just for premiums are over $600/month. Is that included in your essential living costs? You may have to factor in IRMAA, too.
I factored in $500/month for me. So if it’s another $500/month for my wife that’s $1,000. It will be tight, but doable.
With both our SS benefits, it should be no problem. Sounds like I need to factor in $600/month instead. Thx
There is a limit to the maximum total family benefit that your family can receive. In 2026 it is $5920. This paper [https://www.ssa.gov/policy/docs/ssb/v75n3/v75n3p1.html] helps explain the family maximum rule.
Unless one truly needs the higher Social Security benefit, I see no reason to not take the benefit as early as possible. I struggled with the decision and in the end starting collecting Social Security at 63. The break even age is nearly 80 at which point your expenses are very likely to be less; why not enjoy the money when your fitness level and health will definitely be better.
You make a good point.
From an actuarial basis, it supposedly doesn’t matter when you take it. Your end benefit will be about the same. So the question is, whether you can live as long and as healthy a life as possible.
I totally agree that expenses are going down as folks age. I would love for my parents to spend lots of money on a balcony room cruise for four weeks. I’m gonna push for that when I see them again.
It has been super challenging to get my Mom to spend her money. She is a widow now and never paid attention to finances. I’ve sat her down with a financial planner and we both said to her – you can easily spend another $5K a month and not even make a dent in your principle. She honestly doesn’t know how. Her normal expenses are almost 100% covered by social security. She has always been frugal so it is so tough for her. I so want her to enjoy herself more.
Don’t forget. You might want to live closer to your children and grand children later on. That happened to me and my wife.
Sure. I’d like to. Can you explain the financial ramifications for that and Social Security?
My hope is that our children will want to live near us. But that’s not realistic since they should go where the best job opportunities are.
Thank you as always, Sam and happy TG to you and your crew!
I just logged in, for my first time, after reading this, and got to see my little year-by-year financial history in one place as well. Thank you!
My best guess for SS on its current unsustainable path?
Some combination of grandfathered in by a certain age to current plan, the retirement age for the rest of us gets bumped up, plus likely some sorta “cheat” that allows COLAs to actually not truly keep up with inflation. Maybe some also a net wealth test too that either aggressively taxes further (in addition to current income means tests) or simply restricts benefits to us luckier ones…?
Great to hear you finally logged in for the first time. Pretty cool to see your historical earnings and how much and Social Security tax and Medicare tax you’ve paid into the system so far right?
With all this information, it helps us better prepare for our retirement future. And when we feel like there’s more clarity about our financial future, we feel more at peace. Happy Thanksgiving!
Hi Sam
I enjoyed this article very much. Social Security, to me, has always been an after thought. Frankly I’m not sure it will be in tact and so I’ve tried to make moves in anticipation of a reduced or possibly eliminated rate. Like you, I purchased 3 rental homes (and my business office) in my 30s and paid them off by age 50, last year. We still owe on our principal residence at a super low 2.5% fixed rate.
My wife is a teacher and will enjoy a nice pension through her Public Employee Retirement Account (PERA). In addition, I contribute to my Simple IRA and additional funds are allocated to my after tax brokerage account. I haven’t begun to look at a retirement budget yet, as I am focused on seeing my youngest daughter through college over the next 3 years.
I’ve always planned/hoped to create enough passive income from Rental income, PERA, dividends/interest and SS to cover our bills. I’ve never given much thought to the potential inflation adjusted increase of SS. Perhaps social security will provide a greater boost than I’ve given it credit? Anyways, Happy Thanksgiving. I’m thankful for your wisdom and insight.
Jim
Good luck with the next three years for your daughter‘s college!
After running the numbers, I’m pretty thrilled to be able to get Social Security benefits now. It’s worth taking a look at what you’ve got, if you haven’t looked in a while. It almost feels like free money, even though we paid into the system for so many years.
I’m now seeing a lot of videos/blogs that are pointing out that you can retire with “too much” money. The math checks out, but few of them account for medical costs for those without Medicare (under 65) and none of them account for end-of-life care. I think you may get old with lots of money, but that may not mean you die with lots of money.
Perhaps a way around this is to continue to save and invest even while retired. So what is the reasonable percentage of income we should be saving from our various income streams?
It’s what happens in a bull market. After three consecutive years of double digit returns, we are significantly out performing the historical return average. Hence, we’ve got a tremendous amount of overage to spend or reinvest.
Our monthly healthcare premium is going to rise to about $3000 a month in 2026. That is what it cost and that is what we have to pay to be free from work before Medicare kicks in, if at all.
If you can regularly, save some money in retirement and earn some side income, then fantastic. It all depends on how much you have in retirement and your realistic annual expenses.
Social security will be great to have if it’s still paying out when I retire. I’ve built my retirement plan so that I won’t be relying on it for my day to day expenses. So if I actually do get it, it will feel like bonus money that will help provide more padding for any uh-oh situations, a trip to see my adult kids, etc. Medicare is something I need to put on my list to get more familiar with. I know it’s helped my parents a lot. Thanks for noting eligibility starts at age 65 because I was wondering about what triggers that.
…Can’t believe it’s already the end of November. Hope you have a Happy Thanksgiving and thanks for posting regularly for SO many years on such a great range of personal finance topics. You’ve taught me and so many others countless things to help improve our finances. You’re articles have truly been invaluable to me.
Thanks for another great post Sam. I had a similar experience to you where I logged onto the site a couple weeks ago and was pleasantly surprised at the monthly benefit projections. I’m still saving aggressively though as I don’t trust Congress to effectively address Social Security’s looming funding crisis, which would require either tax hikes or benefit cuts or both. It’s a good feeling to have SS be upside instead of the foundation of a retirement projection. How are you thinking about possible cuts/changes to SS in the future? Happy thanksgiving to you and your family!
Thanks Scott. I think the prudent thought process is to mentally cut our SS benefits by 20% – 25%, as that is how much it is underfunded. Alternatively, expect the full retirement age to go up from 67 to 68, and work on eating better and exercising more to make up for the lost year of getting full benefits.
Happy Thanksgiving!
Great post. I look forward to collecting my Soc Sec payments. I’m 60 and will take them when I stop working in 3 years. With my military retirement pension, I won’t be forced to touch my stock investment portfolio….but I will. lol I will enjoy at least half of the multimillions. My daughter isn’t inheriting all of it.
I hope you do enjoy your multi-millions at age 63! Spend it on yourself and your family. Let them feel like they’ve won the lottery as well. It’s such a great feeling.
I feel especially blessed after flying to Honolulu for a surprise visit for my dad’s 80th. I would spend any and all my money to ensure they are taken are of and happier. Hmm… so maybe they will be up for me paying for some gardening and home cleaning when we return in December. Just being able to fix their leaking kitchen ceiling drip/pipe was huge this past summer.
Spending money on our family members can be easier than spending money on ourselves. At least in my case.