Another Article On Social Security Running Out of Money

[Blue Collar Guy]

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Originally Posted by Ian S Here's an interactive site where YOU can play with changes to Medicare and see how your suggestions might impact its long term viability: The Reformer: An Interactive Tool to Fix Social Security I made three changes: 1) subject all wages to SS taxation 2) bring all new state and local employees into social security and 3) slow benefit growth for top 20% of earners. The result is to keep SS "solvent" i.e. not requiring general fund revenues for nearly 70 years. The website is sponsored by an organization of mainly conservative deficit hawks so its predictions are probably pretty "conservative." IMHO, trying to predict beyond 70 years is pretty meaningless as many things could change the outlook before that. If my suggestions seem to stick it to more to the high wage earners that's because they've done far better over the last few decades than folks lower on the totem pole and are liable to continue to do so. They can afford it.

My 1 suggestion of investing in the stock market cut the problem by 21 %. Ill accept the Nobel prize now, ty.

[GravitySucks]

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Originally Posted by Blue Collar Guy My 1 suggestion of investing in the stock market cut the problem by 21 %. Ill accept the Nobel prize now, ty.

Are you counting on the fact that limits will be placed on what company's will be allowed to be invested in?
I know there's been talk of your pension not being allowed to invest in tobacco and liquor companies. Pretty sure they were forced to sell off South African holdings at a low point.
I can see the left screaming to not invest in Chik-Fil-A and the right over investing in whoever makes Plan B pills.
I'm still concerned that corruption would be rampant. The US is not Canada or Norway.

[Blue Collar Guy]

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Originally Posted by GravitySucks Are you counting on the fact that limits will be placed on what company's will be allowed to be invested in? I know there's been talk of your pension not being allowed to invest in tobacco and liquor companies. Pretty sure they were forced to sell off South African holdings at a low point. I can see the left screaming to not invest in Chik-Fil-A and the right over investing in whoever makes Plan B pills. I'm still concerned that corruption would be rampant. The US is not Canada or Norway.

I only counted the Vanguard Wellesley fund. at 2.4 Trillion or VTI at 700 Billion. No carve out. Lets not complicate things.

[Lakewood90712]

Although politically unpalatable, the best thing IMO would be to immediately reduce FICA payroll tax , increase the medicare tax, let the SS trust fund quickly deplete, then reduce SS benefits going forward for new recipients. Get it over now.
Someones Oxen is going to be gored in any solution. Anyone who is working, or employers , in favor of substantially increasing FICA tax to be sure you "get your full share in retirement" some day ? I bet not many.

[samclem]

SS is >fairly< close to true "pay-as-you go" right now. It was only last year that SS benefits paid out exceeded payroll taxes. This would be a good time to explicitly link SS payouts to SS revenues.
"Oldsters, the folks working now are going to pay just the same percentage of their income as you paid. From here on out, our "family" SS spending will depend on how much we take in--so your checks will vary each year depending on how many people are working and what they paid in SS taxes. Retirees, you have some skin in this game--the better our workers do, the better our industry does, the beefier your checks will be. And if they have to tighten their belts, so will you."

"Now, in your working years, we had more money coming in than we needed to send out in checks. We spent that money for all kinds of things--roads, a war on poverty, a couple of wars on other things, lots and lots of new programs and benefits. We kept track of the amount, and it is in "special" bonds that we were going to make future taxpayers pay for. We're not going to do that after all. You were adults and voting when that money was spent, apparently you thought it needed to be done. Okay, but we've decided not to stick future generations with the bill for that party."

From then on, it would >truly< be pay-as-we go, and no mixing of the SS money with the general fund.

[Koolau]

I don't have any suggestions. I just know that back in the 80's they said they were "fixing" SS for the foreseeable future. Well, guess what, it's the future! So what ever is done to "fix" SS will be temporary no matter what reassuring words are used to get folks to buy in. "Fool me once, ..." YMMV

[Mr._Graybeard]

The income cap on FICA tax should be raised substantially. That would take a lot of the revenue pressure off SS. $127K is way too low -- a middle-class salary in many parts of the country.

[scrabbler1]

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Originally Posted by Mr._Graybeard The income cap on FICA tax should be raised substantially. That would take a lot of the revenue pressure off SS. $127K is way too low -- a middle-class salary in many parts of the country.

The only thing wrong with this idea is that it severs the tenuous link between the cap on SS benefits and the income cap on SS taxes. The same cap which prevents Bill Gates and Michael Jordan from receiving $1M(?) a year in SS payments keeps them from paying too much in SS taxes. Raising the income cap without raising the benefit cap begins to turn SS into a welfare program, not an income replacement program.

As was pointed out earlier in this thread, SS already replaces a lower percent of income for higher-income wage earners, but at least it replaces some percentage of wage income for each dollar of income subject to the income cap. Raising the income cap without raising the benefit cap basically tells those higher income people, "Thanks for the extra FICA tax dollars, but screw you when it comes to collecting any extra benefit dollars as a result of it!"

[samclem]

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Originally Posted by scrabbler1 The only thing wrong with this idea is that it severs the tenuous link between the cap on SS benefits and the income cap on SS taxes.

If the cap was removed and the high earners also got big SS checks, the program would still make a huge net gain. This is due to the low, low replacement rate for high earners (i.e. SS is a "bad deal" for high earners.). And I suppose this change could also be seen as reinforcing the link between earnings and SS benefits, diminishing the perception that is welfare. In actuality it is a big transfer of wealth from young to old and from high earners to low earners. There are societal benefits and pitfalls to this, but that's the math.

[MichaelB]

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Originally Posted by Blue Collar Guy Use my idea, closes 21% of the gap.

You've posted that already. I don't think the folks responsible for managing the SS fund (or awarding the Nobel Prize) are reading this thread. Perhaps you should direct your message to them.

[pb4uski]

Yes, please.

[Blue Collar Guy]

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Originally Posted by pb4uski Yes, please.

Thanks for piling on, nothing like kicking a man when he is down.. Ill delete the post.

[pb4uski]

Well, do an Advanced Search for posts by Blue Collar Guy with the word "Nobel" in the post and you'll see 5 posts over the last 4 days.

When you post an idea so many times and someone doesn't jump on it and say "great idea"... take the hint.

[Koolau]

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Originally Posted by scrabbler1 The only thing wrong with this idea is that it severs the tenuous link between the cap on SS benefits and the income cap on SS taxes. The same cap which prevents Bill Gates and Michael Jordan from receiving $1M(?) a year in SS payments keeps them from paying too much in SS taxes. Raising the income cap without raising the benefit cap begins to turn SS into a welfare program, not an income replacement program. As was pointed out earlier in this thread, SS already replaces a lower percent of income for higher-income wage earners, but at least it replaces some percentage of wage income for each dollar of income subject to the income cap. Raising the income cap without raising the benefit cap basically tells those higher income people, "Thanks for the extra FICA tax dollars, but screw you when it comes to collecting any extra benefit dollars as a result of it!"

Quote:

Originally Posted by samclem If the cap was removed and the high earners also got big SS checks, the program would still make a huge net gain. This is due to the low, low replacement rate for high earners (i.e. SS is a "bad deal" for high earners.). And I suppose this change could also be seen as reinforcing the link between earnings and SS benefits, diminishing the perception that is welfare. In actuality it is a big transfer of wealth from young to old and from high earners to low earners. There are societal benefits and pitfalls to this, but that's the math.

The other issue is that there aren't really all that many folks at the "top." I don't have the numbers but I'm sure we could look them up. No doubt raising the cap (or removing it) would bring in more money to the system. Still, if you want a "lot of money" you have to take a little from a lot of people, not a lot from a few.

The other issue is that you begin to alter folks willingness to accept their wages in the current form. How many discussions have we had here about saving a few $K through playing the tax code. Folks making a million dollars must be pretty smart (or darn lucky). Smart people quickly figure out how to beat the changing tax codes. If they're really smart, they hire folks to beat the tax system for them.

Since I haven't attempted to put numbers to this argument, I will understand that YMMV.

[Helena]

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Originally Posted by Fedup Thanks for bursting our bubble, I thought we are( my husband at least) is getting a raise this coming year. Something around 2% and Medicare part B is not changed.

That depends on how much you pay for Medicare B. Not everyone pays the same amount and it will be recalculated in 2018.

I posted a topic today about this.

http://www.early-retirement.org/foru...ums-87728.html


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