Social Security--should I plan on it existing in 30 years or not?

[Snnipe_70E]

@Stringbean

During the debate in the 1930s, the program was referred to as “social insurance.”

Insurance against dying of poverty. It was not ever intended to be a 401(k) and people like yourself who attempt to redefine it as a retirement pension program are doing us all a disservice by over-inflating what it really provides to people.

I am not over-inflating what it rally provides to people. I could live with out my SS. I would not see my grandchildren as often nor would I be able to do any traveling. I could survive. If I tried to survive only on SS I would have to make a complete cutback on all parts of my life. I would have to go back to work.

It was sold on older workers being able to retire making room for new workers.

The biggest agreement against was it created an “national Identity card.” Part of getting SS past was guaranteeing it could not be used as a identity card. In fact my original SS card had a warning “not to carry it on your person at any time”. I lost that card and my replacement had on it “to be carried at all times”. Now all finical information uses your SS number. Banks, credit cards, mortgages, and any financial account.

My point it is there and will be there, but it is not what it was promised to be.

[Wesley_Clark]

@adaher

28% of voters in 2012 made $100K or more:

http://www.washingtonpost.com/wp-srv/special/politics/2012-exit-polls/table.html

If 28% of voters get a negative return from the SS system, the program becomes just another welfare program.

Is that a personal or household income? It sounds like household.

I think the cutoff for top ten percent of personal income is about 120k. The top five percent is maybe 160k. So at least half the people would barely be affected. Furthermore since SS takes your top 140 quarters to get your benefits, an income of 150k may compensate for a lower income earlier in your career.

[Wesley_Clark]

@DrDeth

Yes, I agree, it time to get rid of the limit of taxes- while NOT increasing the maximum benefits paid out. And, since I now earn more than the limit, this would hit me in the pocketbook.

Also we need to raise the ages. For those 60+= none. 50-60= +1/2 year, 40-50+ 1,
35-40= +1.5, 30-25= =2, etc.

I disagree about raising the ages. It is hard for people 50+ to find jobs, they will not have the option of working until 69-70.

Medicare and income taxes affect all income. SS is the exception. I would be OK with keeping the 15% roi that already exists on incomes of 50k+.maybe lower it to 10%.

[Wesley_Clark]

@adaher

It’ll take more than that to cover the shortfall. The donut hole means that only half of the shortfall will be covered. The upper middle class is where the money is, not the wealthy, because for every guy making $1 million there are like 40 people making $200,000.

Or, we could continue to have SS be as it was intended: worker contributions pay directly for benefits. Increase the payroll tax. Now, not when all the Boomers are retired.

What are you basing that statement on? My understanding is only about 5% earn 160k in personal income, and only about 1% earn 380k personal income. I don’t recall exact stats, personal income info is hard to find.

Either way, the (vast) majority of people with a personal income in the top 10% are under 250k. Taxing an extra 50k in income on 7% of the country won’t fix the shortfall. Truly wealthy people are the ones who would need a SS tax the same as they pay Medicare taxes.

[Snnipe_70E]

@Wesley_Clark

I disagree about raising the ages. It is hard for people 50+ to find jobs, they will not have the option of working until 69-70.

Medicare and income taxes affect all income. SS is the exception. I would be OK with keeping the 15% roi that already exists on incomes of 50k+.maybe lower it to 10%.

At 58 it was almost impossible to land a job. The only two I was able to get was because I was known to the companies. The first one also had the problem that they were having a hard time finding qualified engineers that could pass the client’s security check. The second and my final job was because the Chief Engineer was way over his head and needed a good engineer behind him to do all the engineering work because he was only a marginal manager and knew little about equipment. That is he was desperate.

[iamthewalrus_3]

@ITR_champion

Historical examples from other countries suggests that politicians will implement all three approaches: higher taxes, spending cuts, and inflation. But inflation will probably be the largest part of their solution.

Social Security is indexed to inflation, so inflation can’t provide much of an answer without changing the indexing.

Obama tried to do that, but it was quite unpopular. I don’t think it’s very likely that this sort of route will effectively reduce Social Security payments.

That said, I think that the primary future political divide will be between young and old, and what happens to Social Security (and Medicare) will depend on that demographic alignment. Right now, a huge number of government programs are transfers from the young to the old. Social Security and Medicare are the big ones, but there are many more. And on-average, old people have more wealth than young people. But they vote more, so they get the money.

[Wesley_Clark]

@Snnipe_70E

At 58 it was almost impossible to land a job. The only two I was able to get was because I was known to the companies. The first one also had the problem that they were having a hard time finding qualified engineers that could pass the client’s security check. The second and my final job was because the Chief Engineer was way over his head and needed a good engineer behind him to do all the engineering work because he was only a marginal manager and knew little about equipment. That is he was desperate.

That doesn’t even count the health issues. My dad retired at 62. By then his body was so worn out he had trouble getting through the day and all he could do at the end of it was sleep. Others aren’t even that lucky. There are few people working in manual labor past their 50s for a reason.

[Wesley_Clark]

@adaher

That was Democrats’ way of doing a benefit cut without saying it was a benefit cut. Not that it wasn’t justified. If you are a retiree now, you paid even less in commensurate with what you are getting out. What was your tax rate when you first started working? 2%? The government is merely making up for your taxes being too low to cover expected benefits when you were younger.

SS became taxable in 1983 under Reagan (and a democratic congress) and the idea was created by a group headed by Greenspan. The jump to 85% tax rate came from Clinton.

When is Social Security taxable?

In the late 1970s, a Social Security Advisory Council was formed to look at financing for Social Security. The suggestion that some Social Security benefits should be made taxable arose there, and the so-called Greenspan Commission later specifically suggested that 50% of benefits above certain income limits be subject to tax. By the time of the 1983 Social Security Amendments, this suggestion had taken effect: Single workers with incomes of more than $25,000 and joint filers earning more than $32,000 faced taxes on up to half of their benefits.

A decade later, lawmakers added a second, higher tier of taxation. For singles earning more than $34,000 and joint filers with income above $44,000, as much as 85% of their Social Security benefits could be subject to tax.

Both parties have raised taxes on higher income retirees.

http://www.taxpolicycenter.org/taxtopics/images/Combined-payroll-tax-rate-til-2013-70-new_5.gif

The medicare tax and medicare system is the one that needs reform. SS can be fixed by raising (either whole or in part) the cap and raising the rate to 14-15%. Medicare may need the tax tripled this century to almost 10% if medical inflation gets out of hand again. Luckily it has been roughly in line with inflation recently.

Part of the ACA was a group who had to tie the rate of medicare inflation to general inflation +1%. I have no idea what power they have to implement their findings though. I will take a medicare that is 90% decent but affordable and universal vs. one that is 100% but unaffordable with tons of coverage gaps.