Monthly Newsletter: October 2023

👋 Hey there and welcome to the WalletBurst newsletter for the month of October 2023.

Will Social Security still exist when I reach standard retirement age?

  • The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays out Social Security benefits, is projected to be depleted by 2033. At this point, the social security system will have depleted it’s cash reserves, and going forward from 2033, the projected tax receipts will only cover 77% of scheduled benefits.
  • It is likely that in the coming decade, at least one of three things will happen to keep the Social Security system solvent: payroll taxes will increase, the age of eligibility for social security benefits will increase, or benefits will be reduced.
  • While social security benefits may be impacted in some way in the future, they will likely still exist to some extent, even for earners currently in their 20s like myself.

FIRE and Social Security bend points

  • The topic of social security benefits is often overlooked in the FIRE community, where you typically see people making their FIRE projections independent of social security benefits.
  • If you’re getting serious about early retirement in your 30s, 40s, or 50s, then it’s definitely worth your time to understand where your career earnings put you relative to the social security bend points. The bend points are the two points at which you receive diminishing returns in your monthly benefit once your career earnings total certain amounts.
  • At a minimum, before retiring early you should have at least ten years or 40 quarters of social security contributions to be eligible for social security at standard retirement age.

📈 is an amazing free and simple-to-use online tool that you can use to understand your social security benefits based on your income history and plan into the future.

How Much is a 3% Mortgage Worth? by A Wealth Of Common Sense

  • How much is a sub 3% mortage rate worth in a world where mortgage rates are now close to 8%? The answer is hundreds of thousands of dollars for the median home purchase.
  • In 2021, the total interest paid over the course of the loan on a median house was just 41% of the purchase price, while in 2023, the total interest paid is now 116% of the purchase price!

Monthly mortgage payment in the USA (Source)

💰Average Net Worth by Age Analysis by Nick Maggiulli

  • How are you doing relative to your peers financially? My guess is, since you’re reading this newsletter, you’re probably doing pretty well.
  • Anyways, Nick does a nice analysis showing the difference between average and median net worth by age and then separates out household net worths by different percentiles.

Graph of 75th percentile net worth by age group

My monthly spending report

I’ve been tracking my spending a bit closer lately and figured I’d share it here: this month I spent about $3,100 total, living in the SF bay area.

Get my Personal Budget Template for free here

End Note

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Have a great day,

Andrew ✌️