If Republicans win, and succeed in raising the age of collecting Social Security

Current collections have ALWAYS funded the majority of payments, and that’s the way it was always planned to be from the beginning. However, it has been more than a decade since current collections could fund the entirety of benefits due, so they’ve been cashing in the IOUs in the trust fund. The problem is that all of the IOUs will have been repaid with interest by around 2034, and at that point the trust fund will be empty and current collections still won’t be enough to pay all benefits due.

Should people around retirement age start collecting SS now, as a hedge against Republicans changing the rules for people who haven’t started collecting?

I’m 65.5 and have not started collecting. The longer I wait, the higher the monthly payment, but the fewer months I will collect it. They adjusted the relationship so your total payout is the same no matter what you choose, if you live exactly the average lifespan – but that’s only true if the rules don’t suddenly change. There’s nothing very special about “full retirement age” in this particular regard.

So, should I start collecting simply to get established in that “already collecting” category?

Yes, and that is reasonable. Increase slowly.

No past increases in age affected those already on, and that would be political suicide.

I can see it being 70yo for those now 20.

Reduced benefits and a cut off if you earn too much. But that could also increase slowly too, in fact, iirc, it has.

“Saving” SocSec is easy- just remove the ceiling on withholding.

No it isn’t. When SS runs a surplus, as it had to after the 1980s fix to make sure it survived the baby boomers, it invests the surplus in government bonds. When it runs a deficit, it cashes those funds like any other investor. Not one cent was stolen. Just where do you think the money is when it’s in trust? In a shoebox somewhere? It is invested in government securities as required by law.

The last changes in full retirement age [FRA], in 1983, only affected people who were aged 45 or younger at that time, and a two-year change in FRA was fully phased-in over a twenty-two year period. (That means that the changes made nearly 40 years ago still aren’t fully implemented, in that the first group of people who would otherwise have been able to retire at 65 and now have to wait until 67, people born in or after 1960, won’t hit 65 until 2025.) I would regard it as highly unlikely that they would consider changes for people who are already at or close to retirement.

And it’s worth noting that there are several other suggestions for saving SS.

But as usual, the Republicans will only ever discuss the “solution” that hurts the people the program is supposed to support.

I guess this is one way to get conservatives/Republicans to be serious about global warming . . . I mean where are we going to put the elderly if we don’t have ice floes?
The folks that think the nearing retirement age should just work a few more years should really look at what employment opportunities are actually like for that age group.
And I’m sure we wont be hearing any complaints from the yutes about old people keeping them from getting the good jerbs.

Well, they certainly won’t be listening to any.

A lot of this depends on what kind of work you do. I’m a retired engineer, and I still get job offers (I’m 63). One of my colleagues worked until he was 74.

But people who work at jobs requiring physical effort don’t have that luxury. Law enforcement officers and firefighters are usually allowed to retire earlier than the general public. There need to be similar provisions for sanitation workers and the like, especially if they raise the age of SS eligibility.

True - more explicitly, I should have noted that at the time, the government was counting the Social Security fund savings as part of the balanced budget - e.g. we take in 2 billion in income taxes, we spend 3 billion, but we are taking in 1 billion in Social Security money in addition (that we have to put in the trust fund), so it balances. Right? Nope.

The Ponzi scheme aspect is the fact that we are relying on taxes on the next generation to pay for at least some of the current generation’s benefits. if the next generation isn’t bringing in enough income, it’ll all fall apart.

This was an accounting gimmick from 1969-1980, no longer true. From the SSA website:

Myth 4: President Roosevelt promised that the money the participants paid would be put into the independent “Trust Fund,” rather than into the General operating fund, and therefore, would only be used to fund the Social Security Retirement program, and no other Government program

The idea here is basically correct. However, this statement is usually joined to a second statement to the effect that this principle was violated by subsequent Administrations. However, there has never been any change in the way the Social Security program is financed or the way that Social Security payroll taxes are used by the federal government.

The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been “put into the general fund of the government.”

Most likely this myth comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the “unified budget.” This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are “on-budget.” This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken “off-budget.” This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are “on-budget” or “off-budget” is primarily a question of accounting practices–it has no affect on the actual operations of the Trust Fund itself.

One of the guys on my vanpool years ago was an engineer, and he took the “early retirement” package offered to his department…when he was 72. But, yeah, if I had a physically difficult job, I’d have been gone earlier than I did go.

I’m not sure why you think this is a Ponzi scheme. It’s a generational transfer, but lots of government spending is a generational transfer. Further, every government bond ever issued relies on future revenues to pay for some benefit today (“we built this road (or bridge, school, warship, whatever) today and intend to pay for it over the next X number of years”); such bonds date back at least five centuries.

For example, would you consider buying a house with a mortgage a Ponzi scheme? You’re living in the house now but relying on future income to be able to pay for it; if future income is insufficient to pay for it, it may all fall apart and you lose the house.

Other changes I could see happening (in addition to tweaking FRA, which I think is pretty iffy to push much further):

  • Bumping the income limit t hat is taxable for Social Security purposes. Right now, if you earn more than about 160,000 dollars, anything over that does not have FICA withheld (I don’t know if the employer has to pay their portion in that case). That’ll affect a fairly small number of people, who likely won’t even notice the difference. And the SS algorithm is designed so that the more you earn, the less effect it has on your benefit - if you earn, say, 100,000 a year that works out to a benefit of 3,000 a month, and someone else earns 50,000 a year, their benefit will be somewhat more than 1,500 a month, and so on.
  • Tweaking the rules so that SS income is somewhat likelier to be taxed, if your overall income is enough. Lowering the threshold, making a higher percentage of the SS income taxable, or the like.
  • Calculating the benefit on a longer period of your earnings history. It’s currently 35 years; making it 36 or 38 would effectively lower your average monthly earnings.
  • Lower the Cost of Living Adjustment (COLA) bumps. Social Security and some government-sponsored pensions are pretty much the only things that do COLA Bumps anyway. FERS (newer Federal retirement plan) and CSRS (the older one, that almost nobody has any more) both do bumps but they are less than the SS bump. I had thought that CSRS was 1% less than the price index change, but a quick google suggests it is normally equal to the SSA bump unless it’s a very spendy year (like this year) in which case it’s reduced; FERS is always less than the price index bump.
  • Make pretax retirement savings NOT subject to FICA calculations. So if you put 10.000 into your 401(k), your FICA contribution is reduced for that year (as is your employer’s), BUT your salary for FICA benefits calculation later on would be lower too. I couldn’t begin to do the math as to whether that would pay off in the long run; basically you’re lowering the tax income to the government right now, but you are also lowering their potential liability for benefits in the future.

I think pushing FRA to age 70 would make a HUGE difference, since a lot of people simply run out of steam before then, and would be forced to take the substantially-reduced payment. I know I won’t still be working at age 70 - I have a sedentary job, but I’m just too damn tired to go much longer.

A couple of points:

For 2022, the income subject to FICA tax is $147,000, and no, neither the employer nor the employee pay into Social Security for any income over that limit. That limit will rise to $160,200 in 2023.

Not necessarily. Wages in your earnings history are indexed for inflation, so if you had a long period of relatively stable wages, averaging in a few more years may make no difference at all. It would only make a significant difference if you had a few years in which you made a lot less even after adjusting for inflation, for example if you had some years of part-time work, or you received some big raises close together.

CSRS gives cost-of-living adjustments based on the same consumer price index (CPI-W) as SocSec, so the COLA is always going to be the same. CSRS will give 8.7% increases in January just like SocSec. FERS has a lower COLA only in years in which the price index increases by more than 2%, and it will never be more than 1% lower. For example, for 2021 SocSec, FERS, and CSRS all received the same COLA (1.3%); in 2022, SocSec and CSRS received 5.9% and FERS received 4.9% increases.

Reducing the COLA is I think a political non-starter, because that one affects today’s retirees (a group that votes regularly). Bumping the income limit, by contrast, affects only people currently working who earn more than the threshold amount, and that’s a small percentage of the workforce. (Per BLM statistics for 3Q 2022, a worker in the 9th decile, earning more than 90% of all American workers, earns about $2,583/week or $135K for the year.)

I stand corrected on the CSRS / FERS; I thought I read that CSRS got reduced by 1% as well - and from memory on the FERS (I actually worked on a system to support FERS calculations, a couple decades ago), that its COLA adjustments weren’t as generous as CSRS. Neither is adequately funded, in any case.

Re the earnings history: Yes, if your income is relatively stable (allowing for inflation), a couple more years won’t change things all that much, but most people have income that varies enough over the years that it would make somewhat of a difference.

I played around with a spreadsheet a year or so back, to try to figure out my benefit. Using SS wage history, and their formulas, it matched. I then added in future years of earnings, assuming I would earn the same amount the next few years, and working another 2 years at my current salary makes just 50 dollars a month difference to my benefit.

I also played around with changing it to include 38 years versus 35, and you’re right, it didn’t make THAT big a difference in my benefit - about 24 dollars a month. Part of that is because they multiply a year’s actual earnings by an Average Wage Indicator (I think that’s the term), so that 50,000 a year, 20 years ago, is treated as 100,000 last year (numbers made up). Still, every little bit helps, right?

Except that for very low wage workers, people earning at or close to minimum wage for more than a few years, using more years may actually make their benefits higher, because inflation has eroded the value of minimum wage. (That $3.35/hr you earned back in 1985 starts looking like $9 to the system.) At that point, it’s not helping the fiscal status of the system to pay out more.

Good point.

My own earnings history, when I apply that AWI multiplier, shows that my highest earning years are well in the past (my employer is not terribly generous with raises / bonuses); the top 10 years are a while ago. Minimum wage earners have absolutely not kept up with inflation.

I don’t know how the numbers would work out - if some got more money by adding more years into the formula, would that be sufficiently offset by others (like me) getting less? I’m quite certain my husband’s benefit would be reduced - he had a major salary bump about 13 years ago, and pushing the timeframe back to 38 years would include more of his time in grad school / post-doc, where he earned a LOT less.

Someone who is a better actuary than I am can probably answer this question: How much has the life expectancy at 65 increased for those who really need social security? That is, how much has it gone up for blue collar workers and the poor?

Engineers, doctors, and lawyers, and other workers at non-physically demanding jobs, can probably work a few years more, but coal miners and brick layers might find it difficult.

Keep in mind that it’s the best 35 (or 38) years mutliplied by the index factor for those years that count, which may not be the most recent. If you worked 45 years ago but got a lot less money 38 years ago, it’s conceivable that those small earnings well in the past may be among your best 35 when the indexing factor is applied. In my case, I made triple in 2011 than I did in 1981, but after applying the indices 1981 is among my top 35 years while 2011 is not.