How should we "save" Social Security?

Remove the earnings cap, and encourage more immigration of young people who will work and pay taxes. Also, subsidize child care and other policies that will be helpful to those who want more children.

Why pay any SS to folk who retire with assets - say >$25 million? Or retirement income above $300k/yr? (#s pulled out of my butt.)

Because they put money into the system with the agreement that they would get paid something later.

I think one reason Social Security is widely supported is because it’s available to everyone; If instead rich people didn’t get benefits, it would be seen as yet another welfare program.

As someone who pays tax on SS benefits, I’m fine with it.
But raising the tax rate was required. As is clear, we have to do it again, though raising the cap seems the best way to keep it non-regressive.

And if you look at the payment schedule SS is progressive, in that rich people get relatively less for their money than poor people. Which is a feature in my book. But getting something keeps them inside the corral.
(The taxes aren’t progressive, just the payments.)

A lot of rich people don’t get benefits, because they don’t qualify. And many of them do think it’s a welfare program. The Republican Party would have abolished or privatized it years ago if they could have gotten away with it. And if it were privatized, the benefits would not have been near as good as they are.

Yeah - well IMO (which I’m sure many don’t share) - that’s too bad. SS has been expanded innumerable times, such that folk who never contributed drew benefits. I do not see why it should be impermissible to contract it - especially from people who clearly have succeeded within the system, and are in no NEED of the minimal additional income they would receive from SS.

IMO, it has been a misnomer to suggest that SS is a “savings” program. From the very beginning, it was primarily about wealth redistribution. But, I guess calling a spade a spade is of limited use in politics.

If you make receiving social security some kind of means-tested thing, then its popularity will drop like a stone, and administering it will get much more difficult and expensive. And, it won’t help much – there just aren’t that many people who have retirement income above $300k/year.

So, it won’t help much, its popularity will plummet, and it will be more difficult to administer. What’s not to love?

I questioned this statement until I did a bit of Googling. An individual qualifies for SS based on her/his income from employment or self-employment. So if someone inherited a fortune and/or received income solely from investments or dividends, for example, then that person would not qualify for SS benefits.

I have no idea how many people are included in this group.

Not so. From the Social Security website:

A5. Neither immigrants nor anyone else is able to collect Social Security benefits without someone paying Social Security payroll taxes into the system. The conditions under which Social Security benefits are payable, and to whom, can be found in the pamphlets available on our website.

Right. However we can cap max benefits while still having no cap on taxes. Not to mention, in order to get benefits, you have to have Wages, etc. Not just investment income.


Nor would they have paid into the system.

Correct. Which is why I stated that an individual qualifies based on employment, where the earnings are taxed.

You do realize that when SS was created in the 30s, old folk began to draw retirement immediately, who had never contributed. For other examples, look here. In some of these instances, SOMEONE paid in, but not the recipient.

Another alternative would be to pay full benefits to retirees with certain high levels of wealth - just tax them at 100%! :wink:

I agree that a specific debate about health care could easily lead to a massive hijack, but in my view it’s also important to note that this has to be a major part of any solution to long-term SS viability. Otherwise you just keep hiking SS taxes and expanding their base in order to funnel ever-increasing amounts of money to seniors to cover ever-increasing health care costs. Whereas introducing an efficient system of UHC attacks at its source one of the biggest single costs facing seniors, and allows SS payouts to be much lower while enabling the same quality of life for retirees.

Again, please let’s not digress into a health care debate, but this is really an important consideration to keep in mind. In Canada, the equivalent of Social Security – the Canada Pension Plan – is doing great and is projected to have at least a 75-year viability just as it stands right now. There are two basic reasons for this.

One reason is that, Canada being a relatively small country, the fund is small enough to be managed like a very big private investment fund, and makes lucrative investments in all kinds of national and international markets. The SS fund is probably too big to be able to do that without excessively distorting the markets.

But the other important reason is that payroll deductions for CPP and scheduled payouts can be much lower than that of SS, because health care costs don’t enter into it. In fact, in rough numbers, the maximum SS payout at full retirement age is more than twice the maximum CPP payout, although to be fair Canada also provides a nominal non-contributory pension benefit, Old Age Security, but it’s not very much. But I can personally attest to the fact that not having to give a second thought to health care costs completely changes my perspective on requirements for pension income and reserve funds.

The first person to receive a social security payment paid into the fund.

January 31, 1940 Ida M. Fuller became the first person to receive an old-age monthly benefit check under the new Social Security law. She paid in $24.75 between 1937 and 1939 on an income of $2,484. Her first check, dated January 31, was for $22.54.

So many people are so sure of things about Social Security that aren’t true. They think that Congress raided the trust fund. They think that “illegal immigrants” instantly qualify for benefits. They think the government saves their individual contributions over the years and pays them out of those same contributions. They think that SS contributions used to be pretax and the eeeevil eeeevil Democrats changed it. Check out the SS myths, here and here.

Of course the people who swallow all these myths vote for the party who has worked tirelessly for 80 years to destroy it.

So Mrs. Fuller paid $24.75 over two years, and received a benefit of $22.54 in her first month? No, she didn’t pay for it. Someone else did.

You seem to have no comprehension of how Insurance works. People pay in- many do not get out all they put in. Some get more.

Or maybe you think that if someone buys a Life Insurance policy of $100K for their spouse, but dies after only paying $2,500 in premiums, the surviving spouse should only get paid $2,500?

So? That’s what happens with basically everyone. Most people these days receive far more in benefits than they receive, though it’s less of a good deal considering the time value of money involved. She paid into the system, so she qualified for benefits. Other people paid for those benefits in the same way that it works for absolutely everyone. Maybe a little more extreme in her case, but the same basic thing. If she had died before retiring, that money would have been lost.

The SS trust fund wasn’t always as large as it was just before it started to be drawn down a year or two ago. The reason for the large size of the trust fund for the last 20-30 years is the demographics of there being a large cohort just entering retirement starting in the last few years. The government managed to project this need far enough ahead of time and raised taxes so that there was something to draw from when the large cohort retired. But that’s entirely different than people’s taxes going into some savings account at SS and being returned to them. That’s not how it works at all. The system is designed for later people to pay for previous people, and that wouldn’t be necessary if all the early people had paid for everything themselves. The system met a pressing need at the time.

I’m sure if there was political will, we could raise the SS tax high enough for a few decades to get a real sovereign wealth fund going that would be able to allow the taxes to eventually be lowered because of all the investment income coming in, even if it was continuing to only be from treasury bonds. However, the country currently suffers from a dearth of long-term planning capability, and no one wants taxes to be raised on themselves just so people’s taxes later can be lowered.

Additionally, I think people investing their own SS contributions would lead to a rash of poverty several decades down the road. I’m sure Republicans would love to lord is over people who made poor investment decisions, but the Democrats tend to focus on helping people out regardless of their past decisions. It’s more important for them to avoid such a rash of poverty when there would be the alternative, currently in place, to provide all workers and their spouses with a base amount of retirement income that goes a long way to keeping most of the elderly out of poverty.