But isn’t it really a forced savings plan? They took from me when I was getting paid the minimum wage of $2.90/hour. If they only skimmed from the top earners over all of those years which would have started hitting me much later, I’d understand.
The deal has already changed multiple times. The FICA tax rate was 1% of the first $3K in earnings in 1937; now it’s 6.2% on the first $147K. Automatic cost of living increases started only in 1975. Disability benefits started in the 1950s, initially only for older workers, while the cap on family benefits and the requirement for ongoing disability reviews came along in 1980. Full-time students aged 18-21 who were children of retired, disabled, or deceased were eligible for benefits beginning in 1965, but these were phased out in the 1980s. Tax treatment of benefits has changed multiple times. etc., etc., etc. What deal, exactly, is the deal you want the government to abide by?
They also changed the age at which you max out for people around my age and younger after I’d already been working for a couple years. Obviously because of inflation, they need to change certain limits.
The deal, and I honestly can’t believe that I have to explain something so obvious, is that everyone who put into the program gets the same benefit from the existing program.
It is and it isn’t. If instead of SS, my employer and I were forced to contribute the same amount of money into an actual individual account ( 401K or the equivalent or an actual bank account) , then I could leave whatever remains to whoever I want when I die. Not the case with SS - if I die at 35 with no children or at 59 with no spouse , I can’t choose someone to receive what I contributed to SS.
However, if I had died at 35 with children , the payments to my children until the age of 18 would very possibly have exceeded what I contributed and someone who retires at 62 and live into their 90s will almost certainly collect more than they put in. The only way that works is if some people get less than they contributed, which is more like an insurance policy and less like savings.
Then there is the wealth redistribution - lower income people get a higher percentage of their income replaced. Someone whose average monthly income was $1024 or less will have 90% of their income replace, while someone with a higher income will get 90% of the first $1024 and a lower percentage of the amount above that threshold (32% up until around $6000 and 15% above that) Which of course means that less than 90% of the total income is being replaced for higher-income people.
But they don’t get the same benefit, and they never have. Lower-income workers get a higher percentage of their salary back. For someone retiring in 2023, the “bend points” are (a) 90 percent of the first $1,115 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $1,115 and through $6,721, plus
(c) 15 percent of his/her average indexed monthly earnings over $6,721.
That’s fine that you feel that way. IMO, SS was instituted in order to help the least fortunate - the destitute elderly. And a great majority of folk who - if left to their own devices - would save NOTHING for retirement. In order to “sell” it, they packaged it as a forced savings program, rather than a tax/income redistribution.
IMO (which many don’t share) a great many relatively well-off people do not acknowledge the advantages they received in getting to where they were. Most think of themselves as succeeding against adversity, pulling themselves up by their bootstraps… Again, that’s fine. IMO, such people strike me as somewhat selfish.
So you took part in a “deal” which allows you to retire in considerable comfort, and preserve a good portion of your wealth to pass on to any heirs. Great. I don’t mind the idea of some of my wealth going towards a societal safety net, which can be done without sacrificing my comfort one bit.
This is correct of course but the higher earners also stop paying in at a certain level.
I object to a means test as to whether or not I get benefits. Someone who had the sane earnings ad me who fucked off and blew through their money shouldn’t get paid while I don’t.
That isn’t me at all. I’m aware of the privilege that made it easier for me to get where I am. Given that I never complained about the “high” income taxes that I paid. I put SS in a different category
We each develop whatever mindset we feel helps us justify ourselves and our actions. Many people donate more than I to charities.
This thread was asking for how to “save” SS. IMO, the proper approach would be one that would likely piss off EVERYONE except the neediest. So, as I said, raise the age, raise the tax, raise/eliminate the income taxed, and install means test.
It is very common for people (I’m not sure if it is you) to say they are fine with changing things - just so long as it doesn’t adversely affect THEM one bit. Makes it hard to come up with a workable solution that NO ONE pays for, but that seems to be what our government seems to imagine possible.
Lots of other things they do could change the amount they might get under existing law. Somebody who did something really stupid and got themselves declared disabled, for example, might start collecting Social Security and Medicare benefits in their 20s, while you had to work for another 40 years to start collecting. Transferring their wealth to their kids early enough could leave them able to get nursing home care completely funded by the taxpayer (Medicaid). Different career choices, different investment choices, different lifestyle choices: even if they had the same earnings, there’s no guarantee they’re going to face the same retirement.
Have a big 'ol war and kill off many of the future recipients? This may be the plan, don’t laugh. Otherwise, the whole thing looks, on paper, like a disaster. Rest assured there will be some fancy smancy figure juggling at some point.
Is the money even there to begin with? Hasn’t the fund been depleted over the years and the money replaced with Treasury Notes, which are just a promise to pay like an IOU? Can we trust “them” to tell us the truth on any of this anyway?
Inflation, which is built into the US monetary system, is the real worry. If I have a high paying job in my early years, that dollar value ain’t worth much in terms of future dollars.
There’s a lot wrong in your post, but that last sentence really doesn’t make sense - social security is indexed to inflation.
In real life terms, the index is not even close. I know, I’m a retiree, and the increases I have been getting are fictitious, and nowhere near the actual real cost of living increases. Housing costs have gone through the roof these last few years.
OK. I’m not really interested in debating this, I just mentioned it in case you weren’t aware.
It isn’t a debate, and please look up the definition of satire.
Look, none of knows here how to “save” social security, this is just a rhetorical question really. Even if we did know, no one here has the power to do anything about it. It just is what it is, so save money, expect the worst and hope for the best.
I think Social Security is a very easy thing to fix. Just raise the cap on who is taxed. Allow higher earnings above the current cap to be taxed at some percentage rate (not sure what the rate needs to be), and that would extend SS’s trust fund life for decades into the future. We shouldn’t raise the age anymore, as 67 years old for full benefits is already a late age, in my view. People shouldn’t have to work until they’re 70 to receive full benefits.
The item that needs a fix moreso than SS is Medicare. We have to rein in healthcare costs, and make elderly living less expensive. Healthcare cost growth is the bigger issue, not SS.
They don’t. They have to live until 70 and hold off on signing up to receive “full” benefits. Full benefits is a misnomer in my opinion. There’s a sliding scale and you have a choice when to start.
So for this to work, I assume we’re going to change the draft eligibility to 60+?
Got it and thanks for the correction. I should’ve been more careful in my typing.
There will be many - probably millions - who will need to keep working until age 70 in order to maximize their financial security, as the SS amounts factor into that. We shouldn’t be raising the age for full benefits. And it is a sliding scale, but “full benefits” is not a misnomer.
If we do that we also need to pay out more in benefits to the folks putting in the extra money.
After all, the formula for your personal pay-out is based on your personal pay-in, albeit with a progressive feature so the person with low lifetime wages gets proportionally more out than do folks with higher- or truly high lifetime wages.
The other thing is that SS taxes as presently constituted are paid on W2 income, not total income. An executive earning, e.g. a $500K salary plus $3M of stock options would pay SS taxes on just the $500K in a cap-less system. Not the full $3.5M.
Both of these issues mean that many projections about how much raising the cap will solve the problem overstate the incremental tax revenue gain and understate the incremental benefit costs. Gotta be careful whose projections you cite.
There’s another factor:
If you want to break either of the features I cited, you’re really throwing away the ideological underpinnings of the largest “socialist” feature of the US government. If you pull down those foundations here in the current political zeitgeist, you’re probably going to sink the whole project and SS will be shut down, rather than “saved”. Be careful what you wish for.