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August 10, 2010


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I do not include SS into my retirement plans, but rather see it as a nice bonus if, in fact, any is there to collect when I retire.

While I do believe there will be some benefits at the end of the line, I see them being significantly cut back, and possibly unreachable until age 70. Therefore, I do all my planning without a thought towards SS.

In many ways, SS has been a huge disincentive to Americans to use money wisely.

I would count it as producing 15 - 20% of your income needs in retirement. Despite all the hoopla it has been more consistent so far than home values or stock portfolios in protecting workers' retirements.

I am only 28 so I do not include it. I don't expect it to be there. Yes it makes me angry and I would like to see the option of priviatization.

This does remind me a bit of the political discussion sorrounding SS reform. I think it is Paul Ryan of WI who has a pretty decent sounding plan that the CBO has reviewed as certifies as a "in the black" option for SS. At least a portion of ones SS contribution would be associated with some ownership rights. I think something along this lines may convince me to include a portion in my net worth calculation.

RIDICULOUS, since you don't own it, can't get the principal nor "trade" it for another annuity option, it is "extra money" or "monthly income", no more, no should only count on it for the exta's in retirement, not LIVING costs since the progrsm must change to continue longterm.

I am 31 years old. I do not count it in my networth and think it would be ridiculous to do so. I have no faith that it will be around when I retire.

Now for someone who is older, say 55 or 60 I still do not know why one would count it as part of their networth. They should include it in their budgets as expected income, but certainly not a theoretical number as part of their networth.

Seems to me "worth" is very different from "income" as I believe FMF has pointed out many times. My wife receives a pension. I will receive SS benefits in 4 years. Neither of these is included in my current "net worth" nor, I think, will they in any later "net worth" calculation. However, I obviously do consider both heavily when forecasting my retire-ability (word?).

I am 33 and per discussion with two CFP's, they both recommended not including SS in retirement cash flows. The consensus was that it will either be diminished for those with a certain level of net assets (e.g. $100K) or the age would be raised substantially to receive the benefit if at all. You either need to have several million in retirement or nothing at all to retire.

I am very angry that our age group is funding current retirees and the general budget rather than the contributions being put into a trust account for my retirement as intended. If this were done in the corporate world, the people responsible for the pillaging of SS would be put in jail for misappropriation of assets. Yet, the government gets a free pass.

I approach the potential Social Security Benefit as icing on the cake that I hope will be there...

But for my retirement calculations, I leave it out of the equation. I do believe that my generation (Gen X) will get something, but perhaps not the full benefit that we should.

The Social Security money is money that we paid in, and I think we should get at least some of it back.

I am 35 and do not include SS in my current retirement plan. I consider retirement planning separately from my net worth calculations. I wouldn't include Social Security in any retirement planning until I'm at the age where I'm getting ready to start drawing down retirement accounts -- IF Soc Sec is still around at that time. As to net worth, when I calculate that I don't include SS or any possible future inheritances or future income, just the assets I have right now.

If you're under 50, and someone asks you to include SS in your plan, he or she must hate you.

I agree with another comment that you cannot count it as an asset because it is not something that you can sell or trade or convert to a lump sum. It can only be paid in monthly amounts. Also a fallacy in the thinking is when it is compared to the return on a larger sum of money that is assuming that none of the principal is drawn out in which case heirs could take at least part of the remaining balance after taxes. In the case of SS only a surviving spouse could get any benefit from the value of your SS. Nothing is available to other surviving heirs.

An interesting question indeed, but as DIYInvestor and MgM noted above, since one doesn't own the assets themselves, just the "contractual rights" to the income stream, it would be a bit of voodoo personal financial economics to extrapolate that income stream into a ball of money to add into ones net worth calculations. Most financial site retirement calculators are set up to account for an estimate of a SS income stream for planning purposes, and I think that makes sense.SS acts a bit more like an annuity that has been set up too much like a pyramid scheme , and I suppose that is a valid reason why some above are less than sanguine when speaking of it. I'm not sure that some of the younger posters above really need to feel as pessimistic as they do about social security's future. Certainly, changes will have to be made to increase its sustainability factor. With the baby boomers beginning to claim their benefits, there will be fewer working people putting into the system. But even this scenario is not doomsday, as long as we have the smarts and political will to make those needed changes.

The government has no legal obligation to continue paying social security. By the time young folk like myself (age 29) retire, the SS retirement age will have to be higher and payouts will be lower. The only prudent thing for me to do is to assume that I will not receive SS benefits.

I don't count any future income or expenses in a net worth calculation. I don't think that makes much sense. Net worth is a snapshot of today. Social security is tomorrow.

It's an excellent question. One I've tried many times to figure out. As a teacher in Illinois, I will lose my spousal benefit if my spouse precedes me in death due to the Government Pension Offset. This is an incredibly huge impact upon retirement planning. I will lose my spouse's $2000 a month and have been advised to buy a $350,000 Universal Life policy to replace that income to the tune of about $6000 per year. Not many teachers I know can fund that. Now, consider that a person married for 10 years is eligible for a spousal benefit even if they divorce. We've been married 34 years; that could qualify 3 non-working spouses!Please support the social security fairness act.To add insult to injury, I work a part-time job to try to save for retirement and have to pay social security that I won't even get! It's an abomination.

There are 2 questions here-whether you believe Social Security will be around or not. If you don't think it will be around then don't include it-period. If that's what you believe fine. Actually Social Security is pretty easy to solve and wouldn't be a problem today if Congress would have put the surplus aside and invested it instead of spending it!

If you believe it will be around then I believe it should be included. It's the same as having a Metropolitan Life annuity that promises to pay you $2,000/month starting at age 62 for as long as you live and adjusted for inflation. You would include that in your net worth. And yes, Met Life might not be around when you are 62.
In fact, people that take a broad view of personal balance sheets include your expected earnings as an asset. You are like an oil well that will produce a stream of income over x number of years.

I recently heard John Bogle (founder of Vanguard) on NPR say that when determining your asset allocation, one should assume a value of $300,000 for Social Security. So for example, if you would like your portfolio to be 50% equities and 50% fixed income, and you have $300,000 to invest, he advised to invest 100% of that $300k in equities.

I think it all depends on your goals, risk tolerance, and whether you are counting on receiving SS...(i.e. this strategy makes more sense for someone in their 50s where SS is right around the corner, less so for someone in their 20s where the available of SS is more up in the air).

I don't count my social security in my net worth and not plan on doing so. It might be there or it might not. We can keep guessing. We cannot control anything about social security at this point. So I just ignore it and treat it like a tax. If I do end up getting SS benefits, excellent! In all probability it will go to charity!

If we can "choose" whether we pay into SS, then it is a different thing. But for now, there are enough things that I can control, that will make my retirement income comfortable. Things that I can't control... I pretend they don't exist...

I will turn 65 in 2038, Social Security will be completely insolvent (currently) in 2037.

(though I'd argue it's insolvent today)

Consider SS your "fluff factor" What ever you get you get.

I guess set your expecatitons low and you will not be disappointed especially when you are dealing with the government.

Another twist on that axiom is

"Set your expectations low so you will acheive them."

The best you can do with the government running the plan.

I agree with Jim and only take it as a snapshot. I am in my 30s too, so it's to theoretical for me. And without the ability to predict time of death I wouldn't know how to begin to put it on a balance sheet.

I can see if you're in your 60s and it's more of a certainty, you can use the cash flow as a planning tool, but I still wouldn't use it in my calculation of net worth. The tipping factor for me is that I view my net worth as what I would have left over if I sold everything and paid off debt with the proceeds (not liquidation value, but sold under normal/current circumstances). I don't know of a way you can "sell" your social security benefits (I admittedly haven't looked into selling it, but I highly doubt there is a way.).

The Social Security trust fund is already a train wreck.... it's just a bunch of IOUs Uncle Sam has written to itself after spending all the money in the program. Anyone 40 or younger should count on receiving 0 from Social Security. Anyone 50 or younger should plan on means testing..... which means if you actually were a good steward of your money you will receive a lower payout than those who were poor stewards. Anyone 60 or older will probably receive the benefits they expect. Welcome to the new reality.

I'd say it depends on your age. If you are ~50 or over, then it probably should be included, because there is a pretty good degree of certainty that you will get something and in many cases, it's pretty clear what you will receive.

At my age (35), no way. Way too much uncertainty about what (if anything) someone my age will receive and when.

All of these doom and gloom comments on social security. The fund is currently solvent through 2045 or so, and a simple change to remove the $108k income limit should make it solvent into 2075 or so. At that point, you really have to ask just how far you have to go out on wild projections of what may or may not happen.

I see lots of wild things about how they never projected increased age, % of society drawing social security, etc - well, they did, the guy who did the numbers was actually a bit conservative (we haven't quite lived as long as he thought).

With the crap going on in the stock market, and what the massive influx of funds from retirement accounts, foreign capital, etc did to the housing bubble in search of profits, do you really think privatizing social security and dumping it in the stock market is a smart idea? I'm frankly surprised to hear it come up again, but like alchemy, I guess it never seems to die.

To me, it's just a bunch of fear mongering meant to discredit any and all government institutions so private enterprise (profit motive and golden parachutes anyone?) can loot it all.

To answer the question though, I don't include it in my net worth, but only because I'll be retired quite a bit before I can draw it - it's more like a nice little perk to me. (incudes video)

James Roosevelt, FDR's grandson, spoke at the National Press Club today about Social Security, past, present and future. He had some pretty serious things to say about those who think attacking Social Security in the name of deficit reduction is wise. In fact, he spent a good deal of his 30-minute speech speaking to the attacks on Social Security coming from the Deficit Commission.

No - for the simply reason that the gov giveth, the gov can taketh.

It may be your money but even the Supreme Court has ruled you don't necessarily have the right to get SS even if you paid in all your life.

Mark MasterPo's words: One day soon if you have any sort of other retirement asset (401k, IRA, etc) you'll be disqualified from getting SS.

For many of us, social security won't even exist by the time we retire. Don't they estimate social security will be entirely depleted and gone by 2037? Oh yes, I was right:

So yeah, I can't rely on Social Security. It will be entirely depleted and gone just a year or two before my retirement age. All that money that i was FORCED to pay into, and I won't see a single red cent of it coming back. Makes me sick.

I can't see any advantage in inflating my net worth by including non-liquid assets of unclear or zero resale value like cars, furniture, social security.

Doing so might make me feel like I'm rich when I'm not, spurring more risky investments or less saving.

So I take social security payments into cash flow calculations when I am retirement planning, but I don't inlude them in my NW.

I think social security will be around forever in essentially its current form. Because seriously, what politician could touch it without instantly being voted out, way out? Means testing would make sense, but I can't see that happening either for the same political reasons.

Many gov programs are insolvent but that hasn't stopped them (for example, we're currently funding 2 massively expensive optional (ie non-defense) wars, despite massive gov debt and a trashed economy).

While one could make an argument (though I wouldn't) that social security should be taken into account somehow in calculations of net worth, this method doesn't make any sense. SS income is being compared to the interest off an investment. The owner of such an investment also has the balance of the investment. There is no comparable asset for the SS recipient. A more useful comparison, although still flawed, would be to determine the amount necessary to purchase an annuity paying a similar benefit to SS.

The idea that social security will completely disappear any time soon is a complete fallacy. A lot of the doom and gloom concerns the fact that social security will soon be paying out more annually in benefits than it takes in via payroll taxes. However, the flip side is that this is unusual only because it has almost always taken in more than it paid out, meaning it has a surplus in the form of a trust fund. Also, when people speak of the date at which the trust fund will be "exhausted", it really only means when the trust fund will only be able to pay out about 3/4 of what is it supposed to. Yet it is spoken of as if this meant 0%.

Given all this, not to mention the politics of the issue, SS benefits might end up reduced, delayed, or perhaps somewhat means-tested, but it will not completely disappear.

Dan is right. Social security will not be "bankrupt" or "completely depleted". In about 30 years they are guessing it will have exhausted the trust fund and at that point the money coming in will be enough to pay about 70% of the benefits. The whole thing may change if any one of a dozen economic variables doesn't go as according to plan over the next 30 years.

I'm puzzled why everyone puts so much trust in the ability of economists to project the financial performance of social security 2-3 decades into the future. They can't even tell us when or how fast unemployment will drop yet you all trust them emphatically based on their crystal ball projections of 30 years from now?? Whats up with that?

Wow. I'm amazed at how much faith some have in Social Security.

Read my lips. THERE IS NO SOCIAL SECURITY TRUST FUND!!! Regardless of what Al Gore tells you. It does not exist. Yes, there was a Social Security surplus. Guess what ... our wonderful government leaders (both Democrat and GOP) went out and spent it, and replaced it with government IOU's (aka Treasuries).

Yes, the government may very well choose to continue fully funding Social Security in its current form well past the point where outflows exceed inflows. But it will have to increase its already unsustainable borrowing patterns to do it.

The right thing to do would be to index Social Security to life expectancy so that it keeps its original intent (a social safety net for those who have outlived their money) without morphing into something it never should have become (a government-funded fixed benefit retirement plan on the backs of younger generations). What will probably actually happen is means testing, i.e. those who have prudently saved for retirement will be excluded from receving Social Security, while those who have not (which is the majority, i.e. more votes) will continue to receive it. Essentially, good behavior gets punished while bad behavior gets reinforced. Because that's what our federal government does these days.

Since I don't plan on getting it, I won't ever be adding it to my net worth. I also won't plan on getting it for cash flow purposes for retirement. It will be a nice bonus if I do get anything (I'm 26).

I have no idea how much if any I will be getting since I'm 27, so I wouldn't include it in our net worth.

Bad_Brad, Yes the trust fund money has been borrowed by the federal government. There isn't a giant piggy bank full of social security surplus money, if anyone is under that delusion. It makes more sense for the government to use its surplus than borrow externally, doesn't it?? Obviously it makes even more sense for the government to not over spend while cutting taxes at the same time.

Since I don't know if I can count on SS or my investments being around in 30 years, I don't count either in my Net Worth and will consider any income from either as a bonus. Working on....

I'm also a bit confused by the fear that a pot of money that doesn't exist will run out...

SJ - It's very simple. When the budget gets so out of whack and screwed up that the Government has to either "Raise taxes above what a normal person can pay" or "Cut Social Security", they'll probably pick "Cut Social Security".

Already, our fearless current President has put us into debt to the tune of 13 Trillion dollars. He packed as much debt in his 2 years of "service" than did the Bush administration in its entire 8 years.

Where is the money going to come from to pay all this back? 13 TRILLION DOLLARS. Eventually, other nations are going to quit lending us money if we can't pay this back. And when we can't borrow any more money, where will get money to pay Social Security deficits, if there are more people collecting it than paying into it?

I mean, this seems to be pretty simple math and lending concepts here. You can't pay your lenders back, they don't lend you any more money, and if you can't squeeze it out of the people, then where is the money going to come from?

We're heading for some BLEAK times.

I would not factor a value for SS as the future of all government programs have uncertain outcomes as to the level of funding. I read an interesting article on bloomberg today that covers SS as part of the over fiscal crisis we will face in the future when looking at all obligations. Here it is:

I don't know how you can include it in net worth since you don't "own" it. By that I mean you don't hold title to it and you can't do with it as you please. You can't give it to someone else and your children can't receive it as part of your estate.

But while I wouldn't include it in net worth (nor would I include a pension), it certainly has to be considered in one's retirement planning. Because the program is so popular, I don't see it going anywhere anytime soon, although obviously benefits will need to be cut and the retirement age will need to rise significantly to make the system solvent. As it currently stands it is the world's biggest pyramid/Ponzi scheme.

Here is an article on Social Security woes that was just posted by the AP thirty-seven minutes ago (as of my comment here):

What convenient timing.

Bad_Brad - You're 100% correct.

BD - Just think of in terms of radioactive waste. The "half life". Think of what it would take to pay back just HALF of the current $13 TRILLION debt!! :-O

I would not include it for the simple fact that there is no contract which says what you will be getting.

I think that if you're AT retirement age and you know what your monthly payment is going to be you could argue that your could include the present value of future payments in your net worth, but certainly not some amount that would generate that payment at bond rates.

I am 25 so I don't count it at all. While it is likely that I will have some sort of social security waiting for me in 40 years, it will likely be different and/or pay out less. I intend to shape my retirement goals around fully supporting myself, and if I can get social security payments, that will just be some fun money in my old age.

40 years ago I predicted that Social Security would not be there when I retired. I am now retired and collecting it. I am amazed at the misinformation and pessimism shown in these responses. Social security is safe for Retirees until 2025, unless the "full faith and credit of the United States of America" means nothing. There is a full blown propaganda effort leveled at the program to discredit it so that wall street can get it privatized. Look at your 401(k) and the current mess that wall street has created and tell me that you want your retirement income in their hands.

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