magellan01 - epitome of racist Republican

[Damuri_Ajashi]

@septimus

SocSec benefits end at death ( :smack: ) which adds a regressive factor since the rich tend to have longer life expectancies.

Yes, a lot of things mitigate the progressivity of social security but I don’t think any of them is enough to turn social security into a regressive system.

EN-05-10070.pdf

In a nutshell, you calculate your average indexed lifetime earnings over 35 years.

Your benefit equals 90% of the first $816 of your lifetime monthly earnings; 32% of the next $4,917 of your lifetime monthly earnings; and 15% of everything over that.

Just using this years rates and caps, if you earn minimum wage, you earn about $1200/month. Your social security payments over 35 years is $31,465. your social security monthly benefit is ~$850/month. Your life expectancy is about 16 years for a total payout of $164,5144 or about 5 times what you paid in

If you earned an average of $1,000,000 every year for 35 years you would have paid in ~$250,000 in social security taxes and your benefit would be ~$2400 every month. Your life expectancy is about 21 years months after retirement so you will get back $596,232 or 2.38 times what you paid in (and it would be paid out over a longer period of time).

The life expectancy difference at 65 between the top half of income earners and the lower half is about 5 years for men (81 versus 86), less for women. 16 years versus 21 years is not enough to over come the rather steep curve in benefits. I think it makes sense to eliminate the social security cap but for some reason this very common sense solution to all this bellyaching about social security’s solvency issues isn’t popular among people who get most of their funding from people who earn more than the cap.

The million dollars earner referenced above would pay in about $2,170,000 over their 35 year career if you eliminated the cap. Their benefit would be about $13,809 per month or $3,479, 910 over their remaining 21 years of life expectancy, or 1.6 times their contribution. If they are self employed, then they might have to live to 90 or 95 to break even.

But I think means-testing would be a bad detour into bureaucracy and other problems. Note that the rich (those with enough investment income to pay income tax) already have to pay income tax on some of their social security benefits.

Means testing changes the anture of the benefit from an earned entitlement to a welfare program. I would raise the cap.

According to the Congressional Budget Office, raising the federal retirement age to 70 would solve about half of (the) Social Security funding problem, while lifting the payroll tax cap would solve all of it. And yet we spend a lot of time and political capital trying to push out the benefits age; means testing benefits; increasing the tax rate or lowering benefit payments.

U.S. employers who outsource to other countries do not pay pensions or healthcare for the outsourcing workers. It’s a shame that America has developed a fallacious dogma that employers should be responsible for their American employees’ health care and SocSec: this leads to to undesired incentives.

Are you under the impression that other developed countries have lower burdens on their emplyers (putting aside the health care issue)?

[Fotheringay-Phipps]

@Damuri_Ajashi

According to the Congressional Budget Office, raising the federal retirement age to 70 would solve about half of (the) Social Security funding problem, while lifting the payroll tax cap would solve all of it. And yet we spend a lot of time and political capital trying to push out the benefits age; means testing benefits; increasing the tax rate or lowering benefit payments.

My feeling is that the percentage of a person’s adult lifetime that they’re expected to be working versus retired should be kept more or less constant. So as life expectancies increase, the SS retirement age should keep pace (proportionately).

If the plan continues to have funding problems after that, then that would call for other solutions as well. But I think the above makes sense in its own right and is the first thing that should be done.

[septimus]

@Damuri_Ajashi

Are you under the impression that other developed countries have lower burdens on their emplyers (putting aside the health care issue)?

I meant outsourcing to undeveloped countries like India and China.

Perhaps developed countries of Europe could also improve their employment stats by shifting from payroll taxes to other revenue sources.

[Damuri_Ajashi]

@Fotheringay-Phipps

My feeling is that the percentage of a person’s adult lifetime that they’re expected to be working versus retired should be kept more or less constant. So as life expectancies increase, the SS retirement age should keep pace (proportionately).

If the plan continues to have funding problems after that, then that would call for other solutions as well. But I think the above makes sense in its own right and is the first thing that should be done.

The social security retirement age in 1935 was 65. The life expectancy at birth was 60 for men 65 for women. The life expectancy today is 76 for men 81 for women.the retirement age would have to be about 80 to maintain the same sort of relationship it once had to life expectancy at birth. Of course thats not life expectancy at retirement but a lot more people are reaching retirement these days. But agree we should look at retirement ages after we lift the cap, mostly because there is very little else we can do besides raise the rates and the rates are already fairly high.

@septimus

I meant outsourcing to undeveloped countries like India and China.

Perhaps developed countries of Europe could also improve their employment stats by shifting from payroll taxes to other revenue sources.

We cannot and probably should not compete with China and India on labor costs. Protectionism and a labor movement is really the only way we can maintain the economic privilege of our citizens (frankly it may already be too late for that).

[Left_Hand_of_Dorkness]

@Damuri_Ajashi

The social security retirement age in 1935 was 65. The life expectancy at birth was 60 for men 65 for women. The life expectancy today is 76 for men 81 for women.the retirement age would have to be about 80 to maintain the same sort of relationship it once had to life expectancy at birth.

True but misleading (or, rather, a few years off but misleading). The low average life expectancy at the time was due to high infant mortality.

@Social Security Administration

[T]he average life expectancy at age 65 (i.e., the number of years a person could be expected to receive unreduced Social Security retirement benefits) has increased a modest 5 years (on average) since 1940. So, for example, men attaining 65 in 1990 can expect to live for 15.3 years compared to 12.7 years for men attaining 65 back in 1940.

[Fotheringay-Phipps]

@Left_Hand_of_Dorkness

True but misleading (or, rather, a few years off but misleading). The low average life expectancy at the time was due to high infant mortality.

Your broader point has validity but your specific stat is misleading.

People attaining age 65 are not the only significant stat. People who work for years and die before 65 are a big part of it too. Because these people put money into the system and take relatively little out of it (other than disability and survivor benefits) and thus fund the benefits of longer lived people.

So while children who die before attaining working age are not part of the equation (since they put nothing in and take nothing out) you can’t limit it to people who reach age 65 either.

[Damuri_Ajashi]

These days it is largely due to the advances we have made in heart disease and cancer.

I’m not suggesting we implement carousel but there was recently a thread about how the boomers have not sufficiently saved for retirement and we are going to be too resource constrained to take care of them in the manner in which they would like to become acustomed