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Old 06-06-2012, 12:45 PM   #41
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But don't raise it for those 50 and over who already had the age increased to 67 and made their retirement plans with that in mind.
Those of us *under* 50 also had their age raised to 67.

I have already started making retirement plans at 46. Why should my older brothers be shared the pain of "shared sacrifice" while I get screwed? And what if the 50+ folks are already affluent and don't *need* SS at all? Why would a 49-year-old who needs it get treated like a second class citizen compared to a wealthy 50-year-old who doesn't?

These blanket exemptions for "X age and up" encourage intergenerational warfare, IMO. Either we're all in this together or we're not, IMO -- enough with the sacred cows.
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Old 06-06-2012, 12:47 PM   #42
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What I would propose is that we share the pain. Stopping the COLA on SS for a couple years would work. BTW, raising the retirement age to 70 for those workers who are now less than 40 would not result in any savings until they reach SS age which is a long ways off. The figures I have seen indicate SS will be short before that time.
+1. I (evidently mistakenly) thought you were suggesting raising the retirement age should be categorically off the table. Unfortunately it may take raising the retirement age in some fashion, slowing COLA, increasing SS contributions, taxing some SS benefits and whatever else - with some age/sensitivity continuum for current (or closer) retirees. I agree the only fair approach is for all to be willing to sacrifice or "share the pain."
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Old 06-06-2012, 02:06 PM   #43
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The problem with most benefit reductions, like increasing the retirement age or changing COLAs, is that they hit low income workers just as much as high income workers.

In fact, since life expectancy has been growing faster among higher income workers, much of the longevity "problem" is created by the higher income group.

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Specifically, male Social Security–covered workers born in 1941 who had average relative earnings in the top half of the earnings distribution and who lived to age 60 would be expected to live 5.8 more years than their counterparts in the bottom half.

In contrast, among male Social Security–covered workers born in 1912 who survived to age 60, those in the top half of the earnings distribution would be expected to live only 1.2 years more than those in the bottom half.
I think the primary purpose of SS is to assure that old people have enough to live indoors and eat. I'm a lot more concerned about preserving the $10k benefit for $15k workers than I am about preserving the $29k benefit for $100k workers. So I tend to look for changes that aren't directly proportional.

https://www.socialsecurity.gov/polic...ers/wp108.html
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Old 06-06-2012, 03:00 PM   #44
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One thing is for sure, the "temporary" reduction in SS taxes on employees cant be helping the problem. And the longer this continues, the more people are going to view it as a tax increase which make it harder to reinstate. The medicare funding crisis is more worrisome to me since the WEP isnt too kind to my future SS income. Higher income people already pay higher premiums if I am not mistaken. This line of thinking could spread to SS in higher income benefit reductions, even though the " bend points" in SS payouts already exist. I imagine, however, I overestimate the amount of "rich people" there are to have benefit reductions to meaningly help the masses in this shortfall.
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Old 06-06-2012, 04:39 PM   #45
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Originally Posted by ziggy29 View Post

I have already started making retirement plans at 46. Why should my older brothers be shared the pain of "shared sacrifice" while I get screwed? And what if the 50+ folks are already affluent and don't *need* SS at all? Why would a 49-year-old who needs it get treated like a second class citizen compared to a wealthy 50-year-old who doesn't?
I think the problem is that those of us over X age -- not sure what age that is -- aren't in a situation where we have enough time to prepare for a different reality. My husband retired at 62. I'm 58 and semi-retired. If someone, suddenly said retirement age was 70 then we have a huge problem as we have acted based upon the current scenario and we don't have the time to go back and change to a new one.

As far as the already affluent...well what does that mean? Someone might think DH and I are already affluent and don't "need" all that SS. But, to us, we've planned based upon it being there and it would significantly change our life for it not to be there. Could we survive? I guess so. Would we have chosen that lifestyle? No. But at this point we couldn't choose it, it would be imposed on us.

I'm not saying that there can't be changes that impact older people. I'm just saying that it is different because they can't do as much to save more money, etc. as someone who is younger.

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One thing is for sure, the "temporary" reduction in SS taxes on employees cant be helping the problem. And the longer this continues, the more people are going to view it as a tax increase which make it harder to reinstate. The medicare funding crisis is more worrisome to me since the WEP isnt too kind to my future SS income. Higher income people already pay higher premiums if I am not mistaken. .
I always thought the temporary reduction in SS taxes was ridiculous and haven't changed my view on that. Made no sense to me at all.

Medicare part B premiums do vary with income. For house related reasons DH and I had unusually high income last year and this year which means when DH turns 65 this fall we will have high Medicare premiums for him for several years.
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Old 06-06-2012, 04:52 PM   #46
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I think the problem is that those of us over X age -- not sure what age that is -- aren't in a situation where we have enough time to prepare for a different reality. My husband retired at 62. I'm 58 and semi-retired. If someone, suddenly said retirement age was 70 then we have a huge problem as we have acted based upon the current scenario and we don't have the time to go back and change to a new one.
But the problem is that "drawing a line" will always have people resisting reforms if they are on the "wrong side of the line" because they are feeling like they have to sacrifice when others don't. And those others may not need it as much as those asking to (yet again) accept a worse deal in the future.

Unless everyone is willing to share sacrifice, I don't see this getting resolved. Does that mean everyone has to suffer? No. But a "magic number" like someone's age is not sufficient, IMO, without other factors being considered. If someone is over 50 or 60 and has a lower income, one that's highly indicative of needing every dollar of their benefit? Spare them. I don't think an affluent person should be spared because they are 52 while a struggling household is told to wait longer or accept a lower benefit because they are 48. Again, I think that invites generational warfare that helps none of us.
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Old 06-06-2012, 05:06 PM   #47
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I think the problem is that those of us over X age -- not sure what age that is -- aren't in a situation where we have enough time to prepare for a different reality. My husband retired at 62. I'm 58 and semi-retired. If someone, suddenly said retirement age was 70 then we have a huge problem as we have acted based upon the current scenario and we don't have the time to go back and change to a new one.
That's true for anyone who has already retired, and that's why most proposals seem to graduate benefit changes according to age - many recommend no change for people above 65 or whatever age(s). But for anyone who has not retired, you can still adjust regardless of what you planned on in the past. For example, if the retirement age is pushed back 2 years, you may have to delay your retirement as much as 2 years, your longevity should remain unchanged and your years in retirement would be reduced by 2 years. Again, I mentioned graduating benefit changes, I assume the consensus will not treat a 63 year old worker the same as 53, 43, 33, etc.

I realize this may not be desirable for pre-retirees, but like Ziggy noted, there's no easy answer that I know of once every generations stake is on the table. In many cases, our children and grandchildren will have to sacrifice even more if the parents refuse to sacrifice. I assume most parents might be willing to share when they realize who's going to have to make up the difference...
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But the problem is that "drawing a line" will always have people resisting reforms if they are on the "wrong side of the line" because they are feeling like they have to sacrifice when others don't. And those others may not need it as much as those asking to (yet again) accept a worse deal in the future.

Unless everyone is willing to share sacrifice, I don't see this getting resolved.
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Old 06-06-2012, 05:18 PM   #48
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One thing is for sure, the "temporary" reduction in SS taxes on employees cant be helping the problem. And the longer this continues, the more people are going to view it as a tax increase which make it harder to reinstate. .
This!

When the "temporary" reduction first happened I immediately increased my 401k contributions by 2%. After all - I was used to not having that money.

I advised all my coworkers to do the same. They looked at me like I had a hole in my head.

Then when the employee stock purchase plan was eliminated, again, I upped my 401k contribution to divert the payroll deduction difference. Again, I advised coworkers to do the same. Again, blank stares or looks of horror.
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Old 06-06-2012, 05:24 PM   #49
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This!

When the "temporary" reduction first happened I immediately increased my 401k contributions by 2%. After all - I was used to not having that money.

I advised all my coworkers to do the same. They looked at me like I had a hole in my head.

Then when the employee stock purchase plan was eliminated, again, I upped my 401k contribution to divert the payroll deduction difference. Again, I advised coworkers to do the same. Again, blank stares or looks of horror.
And the story ends with you retiring early -and your coworkers will 'look at you like you have a hole in your head, blanks stares or looks of horror' (for themselves). So it all works out...
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Old 06-06-2012, 05:25 PM   #50
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How many immigrants of the type that we mostly get in America does it take to support one middle class professional in his old age? How many of our immigrants even work on the books?
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Old 06-06-2012, 05:28 PM   #51
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But the problem is that "drawing a line" will always have people resisting reforms if they are on the "wrong side of the line" because they are feeling like they have to sacrifice when others don't. And those others may not need it as much as those asking to (yet again) accept a worse deal in the future.

Unless everyone is willing to share sacrifice, I don't see this getting resolved. Does that mean everyone has to suffer? No. But a "magic number" like someone's age is not sufficient, IMO, without other factors being considered. If someone is over 50 or 60 and has a lower income, one that's highly indicative of needing every dollar of their benefit? Spare them. I don't think an affluent person should be spared because they are 52 while a struggling household is told to wait longer or accept a lower benefit because they are 48. Again, I think that invites generational warfare that helps none of us.
One of the more talked about reform plans is the "Roadmap for America's Future" proposed by Rep. Ryan. It has the magic number of age 55... those 55 and older keep the old plan... those under 55 get lesser benefits.

This divides my household - DH is 60, I'm 50. It makes the arbitrariness of the age 55 seem ridiculous.

I agree there will need to be shared pain and that the lowest economic folks should be spared cuts. But I don't have any clean solutions.
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Old 06-06-2012, 05:30 PM   #52
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And the story ends with you retiring early -and your coworkers will 'look at you like you have a hole in your head, blanks stares or looks of horror' (for themselves). So it all works out...
Not retired yet... if they muck with SS benefits too much I may have to stay at this j*b longer than I'd planned. (On track for 2014ish... but the down market may kick that longer. Darn it.)
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Old 06-06-2012, 05:37 PM   #53
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When the "temporary" reduction first happened I immediately increased my 401k contributions by 2%. After all - I was used to not having that money.

I advised all my coworkers to do the same. They looked at me like I had a hole in my head.

Then when the employee stock purchase plan was eliminated, again, I upped my 401k contribution to divert the payroll deduction difference. Again, I advised coworkers to do the same. Again, blank stares or looks of horror.
This is called "paying yourself first". It's amazing to me how so many people don't get it. Lifestyle creep is also a big enemy of retirement planning. Back in the days when people sometimes got promotions and raises exceeding inflation, one of the best ways to avoid "lifestyle creep" is to withhold all of the higher real earnings into your retirement plan before it ever hits your checkbook. And yeah, sometimes people look at you like you have a third eye when you say you do this, and they instead go out and buy a new car with the increased cash flow (too often with little or nothing down).
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Old 06-06-2012, 05:54 PM   #54
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One of the more talked about reform plans is the "Roadmap for America's Future" proposed by Rep. Ryan. It has the magic number of age 55... those 55 and older keep the old plan... those under 55 get lesser benefits.

This divides my household - DH is 60, I'm 50. It makes the arbitrariness of the age 55 seem ridiculous.

I agree there will need to be shared pain and that the lowest economic folks should be spared cuts. But I don't have any clean solutions.
Yea, it's called divide and conquer, I think the 55 is too high, 40-55 year olds tend to vote, I think they need to push it to 40 or even 30, at 55 or even 45, it doesn't give you enough time to make adjustments.

The one ? is how do you decide who is lowest economic folks are? By income or net worth. If the former, then you will see a lot of ER folks adjusting their strategy to lower their reported income until 65.
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Old 06-06-2012, 07:20 PM   #55
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I agree there will need to be shared pain and that the lowest economic folks should be spared cuts. But I don't have any clean solutions.
I suppose I should keep quiet, but I think there is a technically possible solution that accomplishes this (I'm not saying it's politically possible).

Most people think that SS should be self-funding. I'll define that as making benefits = taxes in each year. We know there will be years when the current formula will create benefits > taxes.

The solution: Each year, a committee of economists and actuaries projects taxes and benefits for the next year. If they are out of balance, they put a cap on benefits that's just low enough to recover the balance. The person getting $10k sees no impact, the person getting $29k gets a haircut.

As time goes by, the cap will have to come down, so younger people (who will live longer) will see more reductions. But, there is no hard cut-off by age, all age groups take some of the hit. The lowest income people are protected.


(People who like technical details will say that:
- the cap should be on PIA instead of benefit
- we would get a broader sharing by lowering the 32/15 bendpoint instead of using a hard cap
- the tax number should be calculated at a "standard" unemployment rate.
Those are all improvements.)
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Old 06-06-2012, 09:01 PM   #56
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Or don't mess with benefits at all. Raising the contribution ceiling, or possibly raising the contribution ceiling while capping benefit amounts where they are now or slightly higher, or raising the contribution ceiling and putting in a new inflection point above the current max benefit will all solve the problem immediately. Someone just needs to pick one and push for it. The longer we wait the more significant of a course correction will be needed.
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Old 06-06-2012, 09:58 PM   #57
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Those of us *under* 50 also had their age raised to 67.

I have already started making retirement plans at 46. Why should my older brothers be shared the pain of "shared sacrifice" while I get screwed? And what if the 50+ folks are already affluent and don't *need* SS at all? Why would a 49-year-old who needs it get treated like a second class citizen compared to a wealthy 50-year-old who doesn't?
Don't get me wrong. I'm actually not convinced the retirement age needs to go up at all -- 67 is high enough. But if it does need to go up, then it should be accomplished by a continuation of the 1982 reform. In other words:

Born in...
1961 - 67 and 2 months
1962 - 67 and 4 months
1963 - 67 and 6 months
etc., until you get to 70

The idea is that the age would be raised gradually to reflect expanding lifespans (if you buy into that argument). It's not fair, in my view, to move the goal post again for those born in 1960 or before, since they were already part of the last adjustment.

Social Security is already quite progressive. I don't support adding means testing.
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Old 06-06-2012, 10:06 PM   #58
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Don't get me wrong. I'm actually not convinced the retirement age needs to go up at all -- 67 is high enough. But if it does need to go up, then it should be accomplished by a continuation of the 1982 reform. In other words:

Born in...
1961 - 67 and 2 months
1962 - 67 and 4 months
1963 - 67 and 6 months
etc., until you get to 70
I get that, but between the breakdown of the human body as it ages *and* the rampant age discrimination in employment... how practical is it to throw more 67+ into the workforce or force them to stay there? And how desirable is it when there is high unemployment and their remaining in the workforce continues to block entry level hires and promotions? Frankly, of all the proposals I've seen, I consider raising the FRA the least desirable because of these factors. What we save in SS could just be cost-shifting into higher cost of unemployment benefits for younger workers (or the older ones who get laid off but can't get SS yet).
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Old 06-06-2012, 10:20 PM   #59
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I get that, but between the breakdown of the human body as it ages *and* the rampant age discrimination in employment... how practical is it to throw more 67+ into the workforce or force them to stay there? And how desirable is it when there is high unemployment and their remaining in the workforce continues to block entry level hires and promotions? Frankly, of all the proposals I've seen, I consider raising the FRA the least desirable because of these factors. What we save in SS could just be cost-shifting into higher cost of unemployment benefits for younger workers (or the older ones who get laid off but can't get SS yet).
Totally agree. This might sound like I'm giving an idealistic spin to selfish motives, but I actually think the best thing any of us can do is earn our fair share, save to the maximum, and retire early, so younger folks can get their shot.
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Old 06-06-2012, 10:22 PM   #60
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Uh, wishin&hopin those people born after 1960 were also included in the last adjustment. Their SS full retirement age got increased to age 67. I was born in 1952 and my SS full retirement age only got increased to 66. Those younger people are already getting a worse deal than I am and I am not too keen to see them have to adjust to another change without us older folks feeling any of the pain. We are not just talking about faceless, nameless younger people. They are our children and our grandchildren.
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