It will be interesting to see what - if anything - is done when. Nothing more to add other than to observe that IMO, the people who complain about raising the cap sound mighty greedy. Someone has worked hard enough and been fortunate enough to earn well over $100K, and they are upset over having to pay more to support the safety net for the country in which they enjoyed their success.
IMO, as much as Social Security needs to be tweaked, it is one of the things our society should be the most proud of. While it is certainly “income redistribution”, it falls far short of taking food out of the mouths of the wealthy. Eliminate it and we might as well acknowledge that “the American way” is “I got mine, so fuck you!”
Full disclosure, I’ve been over the max for years, and fully support its removal. But I guess that makes me stupid, or un-American, or something.
They are raising the cap, or they have anyway, depending on how you look at it. They raise the cap every year and they have raised the age limit too. And they’ve added means testing within the last 20 years IIRC. All of these since I started paying so I think its fair to say I’m not going to be getting what I might have expected when I first started working.
Back when I was 14 I paid my 6% (or whatever) right off the top, before I saved anything for bubblegum or that bike I was working toward. When I was in college I paid my 6% before my rent or tuition. After school when I worked minimum wage Uncle Sam still wanted that 6% out of every dollar with a hearty “too bad for you” if I couldn’t keep my car running. I was supporting the safety net AND working toward supporting myself at the same time. I’m going to be extremely pissed if all I get is a kick in the pants and a “ha, ha, you fool” from the SSA. It’s not un-American to expect that at least part of the promise that was made is kept. I certainly kept my end of the deal, like it or not.
It might sound greedy until you consider that there are different aspects to the social security old age pension. Some little widow that never worked a day in her life, and her husband dies and leaves her nothing? I’m charitable, and don’t mind funding that. For someone who works his entire life, and doesn’t manage to save, then I’m not so charitable. If it weren’t for social security taxes, that person would have been able to save about 15% of his income in order to take care of himself. Let’s say that we only need 3% to fund little old widow ladies and the disabled (I have no idea what the real figure is). That would leave 12% of all our our incomes available to use how we see fit, and to do as we want with. It’s not greedy to want to keep what’s yours. (Is it greedy for all of the bleeding hearts to say that they don’t want their taxes to support the military?)
The “American way” is personal freedom and personal liberty, and the ability to enter into free agreements with others. Social Security as is is one of the things that free persons should be most critical and ashamed of in this country.
I hope I didn’t sound “mighty greedy.” I support lots of tax proposals that would raise my taxes, such as getting rid of the Bush tax cuts on the wealthiest Americans (of which I may be one). I don’t even oppose raising or eliminating the cap on the Social Security Tax, but it would be a very significant tax increase for me (since I’m self employed and pay 100% of it). I am just proposing that giving me a slightly larger benefit if I pay three times the current tax might be “fair.”
Thanks for the responses. Just stating my opinion.
Freedom, liberty and the ability to freely contract go a lot further the more personal advantages one has. And I suspect a good percentage of those who claim to have pulled themselves up by their own bootstraps tend to significantly underestimate the public services and institutions that assisted them along the way.
I just get a kick out of when I hear folks making over $100K a year, living in the most comfortable and secure nation in the world, complaining that they ought to have more.
Some stats from 2009 (the latest I have handy):
35% of aged SS beneficiaries depend on SS for 90% or more of their income
64% depend on it for 50% or more
The average monthly SSI payment in 09 was $478
In 12/08 nearly 56 million people received SS benefits
-48.3 million OASDI only
-4.9 million SSI only
11.1 million adults received payments based on their own disability
More than 1.15 million kids receive SSI disability
So - who do you want to cut off? Personally, I’d start with the kids.
I’m not sure how feasible it would be, but I’m all for an opt out option in Social Security. Leave my money to me to invest as I will. If a person thinks that they will not be able to invest their money wisely, then let them contribute to social security, let the government manage it, then give it back to them upon retirement, in monthly dividends so they don’t spend it all in one place. If they die before they are able to use it all, it will become part of their estate. Essentially a government managed 401K.
The disabled (of which my father is one) can draw from welfare for food and living expenses and Medicaid for health expenses. (And, in this model, all health expenses are covered if needed for a good quality of life, including medicine.)
If you opt out of SS and find that you can’t make ends meet after retirement, then tough. Go back to work or rely on welfare (or both, if needs be) if you are deemed unable to work as a result of advanced age (aka disabled). The same applies if you opt in but your monthly dividends are not enough.
Does it have flaws? Of course. There will never be any sort of social program that does not. They are inherently flawed through human nature and the fact that social programs are a logical absurdity (“Here, have some free money and resources!”).
This is not to say that I am against social programs. I am all for them, for those who need them. We need to move away from the “Everybody gets something” model and move into the “If you need help you’ll get help” model.
(Note: I am sure there are many flaws and and holes in my logic. No need to point them out as I know such an idea of mine has absolutely no chance of ever coming about. I am giving my own opinion, not debating what’s best.)
Another who has income that goes over the cap, and I think it should be removed as well. It creates a regressive tax situation. Honestly, its nice when we hit the cap and the paychecks go up. But it isn’t something I can’t afford.
This is a fine example of the standard idiocy of basing public policy on a fantasy of what people should be doing, not the reality of what they are doing.
Are you going to force workers (and employers) to contribute to retirement funds? And not let them withdraw their contributions? And not let them get snookered by get rich quick schemes? You say anyone who doesn’t save should just go on welfare. Sure, the same clowns would vote for your plan would be very willing to vastly increase government welfare expenditures. I could just hear the cries of moral hazard now. Why would anyone invest if the government is going to bail them out? (The fact that welfare payments are skimpy won’t stop them. )
Anyone who knows anything about investing knows you need to take risks only with money above a nice solid base. Stupid, stupid plan.
Social Security is not free money. If you ever gotten a paycheck, you’d know that. I don’t quite see the problem with forcing people to invest for their future in a nice and safe defined benefits plan rather than letting people not and then giving them free money.
And yet another. It would be good to let benefits go up slightly to build support for removing the cap, but definitely not in direct proportion to the increased payments. Those of us well over the cap can afford to save and thus not need the increase in benefits as much as those who never get near it.
Thanks for the data. We met with our financial planner this morning, and looked up our SS benefits in preparation. I’ve been over the cap for ages, my wife hasn’t ever made it. Still, if we retire at 66, we’d get well over $40K a year. That’s a 4% return on a million dollar retirement fund, which is nothing to sneeze at. It is a significant chunk of retirement income even for those of us with substantial retirement savings. If you are making millions a year, maybe it is trivial, but not for most people.
We covered that already. Social Security doesn’t have any reserves, just a promise to raise taxes in future to replace the money that has been already been spent.
If you don’t agree, then how about the deal I offered?
Social security was robbing Pete to pay Paul from the beginning. That doesn’t make it a Ponzi scheme, I agree, but it also doesn’t make it a normal retirement or savings fund. The reserve is not my money, invested for me, waiting for me to retire. I have a promise from the government that is slowly eroding as I get closer to that magic date, which keeps moving farther away.
What is the difference between the government selling a bond to Social Security versus the government selling a bond to the Chinese? (Besides that in the former case Americans get the benefit.)
I don’t understand if your deal refers to people or the government as a whole. For people, it makes no sense because you will get money eventually after you stop payments. For government, I can only think that you are myopically seeing government as one big entity, and are unable to view the parts in separation. My company makes computers. When my group needs to buy one, we pay real money from our budget to another division to buy one. Maybe it stays in the company, but from our point of view it is equivalent to buying from outside, and from their point of view it is equivalent to selling outside.
The only objection I can see with even a little bit of validity is that sales to SS encourage government to overspend. But I’d like to see some evidence of this. Government spending seems to be not at all tied to Social Security investments. SS payments didn’t go down when we reduced the deficit, and they didn’t go up when Bush increased the deficit during prosperity.
Manage the same as ObamaCare. Force them to buy something they may not want. If it’s good enough for a luxury like health insurance, isn’t it good enough for a necessity like old age income?
But social security isn’t a defined benefits plan. I’m vested in my pension, which is a defined benefits plan. Short of my company going bankrupt, it can’t be changed. My social security benefits (and all the money that I’ve paid into them) can be changed on a whim because a bunch of people think I have too much money and no longer deserve it.
What are you talking about? It is actually very close to HCR. Early in life people think they live forever, they don’t save enough for retirement, then panic later on, still can’t catch up, and want the government to bail them out. Solution: make them save for retirement, like it or not.
Health care. Early in life, people are healthy, think, correctly, that paying for insurance is probably going to be a losing proposition, until they get older or get a disease, and then they want to get insurance when it is a winning proposition. Since insurance companies will naturally say screw you, or hike up their rates to an unaffordable level, and they’ll go to the government for help.
Either we the taxpayers cover for their short sightedness, or we have people dying or begging in the streets. Which do you prefer? I prefer to make each person pay for what he or she is going to need, unless they do us the favor of dying early.
sigh defined benefit versus defined contribution like a 401K. When have people getting the benefit ever have it go down? While you are working your company can change how much they contribute to your pension - or even eliminate it going forward - with no problem. Company defined benefit pensions are nearly dead, and good thing too. For years before 401Ks engineer and programmers would moan about portable pensions, because if you change jobs fairly frequently you wind up with nearly nothing. I have a pension coming for 15 years at AT&T, now administered by Lucent. Since it will be over 20 years old when I retire, I’m not even counting it. I figure it will keep me in mochas - and I don’t drink many mochas.
I have always been troubled by companies going through bankruptcy and continuing to do business while welshing on their pension obligations. But that is just me.
And it cracks me up to hear folk talk about T-bills being held by SS as some terribly risky, unsecured instrument, whereas they are generaly touted as just about the most secure investment around. If the gov’t starts to default on them, we’re going to have a lot bigger problems than SS.
Yeah, I’m guessing that for most people who saved, SS would still be a significant chunk of their income. Which is why if you means test, you are going to have to make sure its done in such a way that the savers don’t get shafted big time.
And while I do my retirement planning (I’m 44) without social security in the mix, then put in back in as a “bonus” not everyone does - and people a few years older than I am were not told early to think about that possibility.
Perhaps that is to encourage savings, and not have people assume SS is going to be enough to maintain a nice lifestyle.
The advice we got was to compute how much money we’d need in retirement, compute steady income from SS and pension, and then structure our investments to get the rest. We already have some nice equity funds structured to return income - which rose slightly faster than our standard equity funds over the past year.
To be reasonable, means test would have to be set so high as to not make that much of a difference in payout, and so I don’t think it would be worth the political effort.