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Re: Can you count on SS?
Old 11-03-2006, 06:28 AM   #41
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Re: Can you count on SS?

Means tested now. Up to 85% taxed PLUS 99.9% of MEDICARE Preimums come out of SS Benefits and they are now (starting in 1/1/07) means tested insofar as the preimum level. Currently approximately 25% of your SS Benefits will never hit your wallet (very low income persons excepted).

All that remains is to tweak the current, already in place system -- 85% goes up, MEDICARE preimum income level comes down.

Additionally, look for CPI adjusted versus Wage Level adjustments to current pre-benefit calculations which IMO would be a very simple, easily implimented, process and may even be possible under current law (?).

Look for the SS/MEDICARE screaming and changes to be pushed IMHO starting on 11/8/06.
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Re: Can you count on SS?
Old 11-03-2006, 09:03 AM   #42
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Re: Can you count on SS?

With the Boomers being the largest block of voters in America, I don't foresee any changes as long as they are still close to SS. However after they are receiving it or have passed away, it will be up to the youngin's to figure out how to either correct the problems with the program or just scrap it all together. Since it is obvious the program is headed for shortfalls in the future. The fix will be painful, fixing it now would be less painful than fixing it later. I feel fixing it earlier would be the most likely way to keep the program and the longer we wait the less likely it will be fixable. I do not expect to ever be able to receive any appreciable amount from SS.
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Re: Can you count on SS?
Old 11-03-2006, 09:58 AM   #43
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Re: Can you count on SS?

Quote:
Originally Posted by tiredofwork
Also, the top earners receive a lower proportion of their lifetime earnings as a benefit than the low earners.
this is a misleading statement. The top earners don't make contributions on a lot of their earnings so why should they get higher benefits from them? This year, there are no contributions on income over $94,200.

In fact, one proposal to fix the system is to simply remove the earinings cap. That'll never happen with Republicans in power.

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Re: Can you count on SS?
Old 11-03-2006, 10:31 AM   #44
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Re: Can you count on SS?

Quote:
Originally Posted by bosco
this is a misleading statement. The top earners don't make contributions on a lot of their earnings so why should they get higher benefits from them? This year, there are no contributions on income over $94,200.

In fact, one proposal to fix the system is to simply remove the earinings cap. That'll never happen with Republicans in power.
It is important to note that each additional dollar a recipient pays in to SS buys less benefit than the previous dollar. At the top of the scale, an individual paying SS taxes on an income of $90K per year can expect to receive very little for each new dollar put in. "Removing the cap" would be less painful if the individuals at the top end at least had the illusion that they woud derive some benefit. Today, SS is not simply an intergenerational wealth transfer, it has become a means of redistributing $$ from higher income individuals to lower income individuals.

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Re: Can you count on SS?
Old 11-03-2006, 10:40 AM   #45
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Re: Can you count on SS?

IMHO, the best way to fix SS would be to get an equity component into the returns to the trust fund. This could have happened with President Bush's plan but, unfortunately, his plan got bogged down over the argument of private accounts. Current law mandates that the SS trust fund be invested in government securities, but this law could be changed by Congress. Private accounts would not be necessary. The Clinton admiministration looked into doing this, but he got bogged down in the Lewinsky mess, which, politically, made it virtually impossible for him to tackle SS. IIRC, the trust fund currently earns something like a 2% real rate of return on it's assets. With the magic of compounding over many years, a relatively small increase in that rate of return makes all the solvency problems with SS go away.
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Re: Can you count on SS?
Old 11-03-2006, 10:52 AM   #46
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Re: Can you count on SS?

Just a reminder that SS contributions buy more than a retirement annuity. There's widows/widowers' and orphans' insurance, disability insurance, and payments for spouses that earned less than the main breadwinner (or didn't work at all). There are plenty of women who never or barely worked and are collecting $10,000-20,000/year in their own names based on their husband's (dead or alive-) SS participation.

Astro's plan to fix SS:
-- Raise the income cap a little faster
-- Phase in equity investments based on US total market (up to 25% of SS funds, max)
-- Phase out the benefit for spouses who collect 50% of their living spouse's benefit
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Re: Can you count on SS?
Old 11-03-2006, 11:11 AM   #47
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Re: Can you count on SS?

Quote:
Originally Posted by bosco
this is a misleading statement. The top earners don't make contributions on a lot of their earnings so why should they get higher benefits from them? This year, there are no contributions on income over $94,200.
Folks earning big bux don't get higher benefits from their earnings over the cap. For example, if you max out at $94,200 you will get the same credit as if you made $1,000,000. Of course, you only pay tax on the first $94,200 for SS. You pay tax on the whole $1,000,000 fo Medicare.

The SS web site is unusually informative and full of easy to understand tables and calculators. They clearly show that low wage earners get a higher percentage of their income back as SS payouts than high wage earners and that SS is a system of wealth redistribution from the highly paid to the low paid. Personally, I have no problem with that.

Here is a statement I picked up from the SS site:

Relationship Between Earnings & Benefits:

Benefits are earnings related -- the higher the
earnings, the higher the benefit.

The benefit formula is weighted in favor of
low wage earners -- the lower the earnings,
the higher the replacement rate (initial
benefits as a percent of pre-retirement
earnings).


One of the interesting provisions is WEP. WEP recognizes that some folks have pensions from jobs where they don't pay into SS such as teachers or some government workers. But, some have part time jobs, summer jobs and other sources of small amounts of income that is taxed under SS. To the regular SS calculation system, they would appear to be long term low wage earners and would benefit from the weighting which favors low wage earners. The WEP corrects this by putting these folks into a separate category where their SS benefit is calculated using a formula which does not weight in favor of low wage earners.

As stated by earlier posters, SS is weighted in favor of low wage earners. Whether it is weighted enough is a somewhat different question and of significant social and political consequence.


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Re: Can you count on SS?
Old 11-03-2006, 11:56 AM   #48
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Re: Can you count on SS?

Quote:
Originally Posted by astromeria
-- Phase out the benefit for spouses who collect 50% of their living spouse's benefit
This idea seems to be popular with spouses who worked and have their own benefits equal to at least 50% of their spouse's benefit. It's less popular with spouses who held low wage jobs, only worked part time or never worked at all.
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Re: Can you count on SS?
Old 11-03-2006, 01:28 PM   #49
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Re: Can you count on SS?

Quote:
Originally Posted by astromeria
Just a reminder that SS contributions buy more than a retirement annuity. There's widows/widowers' and orphans' insurance, disability insurance, and payments for spouses that earned less than the main breadwinner (or didn't work at all). There are plenty of women who never or barely worked and are collecting $10,000-20,000/year in their own names based on their husband's (dead or alive-) SS participation.

Astro's plan to fix SS:
-- Raise the income cap a little faster
-- Phase in equity investments based on US total market (up to 25% of SS funds, max)
-- Phase out the benefit for spouses who collect 50% of their living spouse's benefit
Good points Astro. They reinforce my belief that SS is a cost efficient program. With a little tweaking it will continue to pay for itself. And, as with the TSP, the admin costs are less than what you would pay to a commercial outfit. The fact that we are in a crisis now has nothing to do with the SS system being unable to pay for itself and everything to do with the US running up huge deficits elsewhere that bust the budget and make it impossible to pay back the "loans" we took from the "trust fund."
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Re: Can you count on SS?
Old 11-03-2006, 02:29 PM   #50
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Re: Can you count on SS?

Quote:
This SS delimma will be the biggest social issue of the next decades
it should have been the biggest social issue of the last century!. it was clear in the 70's that the system was unsustainable, but rather than attempting to fix it, the politicians were content to continuously raise benefits and push-off the problem to the next election cycle.
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Re: Can you count on SS?
Old 11-03-2006, 03:21 PM   #51
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Re: Can you count on SS?

I'll take the contrarian approach to you posters who say that SS is currently means-tested due to the taxation of benefits. The benefits themselves are not reduced and you choose how much of your SS is taxed by your planning..The same exists for your IRA withdrawals. Are those means-tested?

There are ways to eliminate the tax on SS for many including Roth conversions and delaying SS.
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Re: Can you count on SS?
Old 11-03-2006, 03:44 PM   #52
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Re: Can you count on SS?

Quote:
Originally Posted by samclem
"Removing the cap" would be less painful if the individuals at the top end at least had the illusion that they woud derive some benefit. Today, SS is not simply an intergenerational wealth transfer, it has become a means of redistributing $$ from higher income individuals to lower income individuals.

"From each according to his abiilty, to each according to his needs."
-K. Marx
the benefit would be the knowledge that you are helping to keep the system financially sound. I'm sorry, but it wouldn't bother me a bit of people that make over $94k/year had to pay an additional 6.15% tax. And for the record, I exceed it myself. I somehow think the word "painful" for someone in this situation is a bit of an overstatement....
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Re: Can you count on SS?
Old 11-03-2006, 03:58 PM   #53
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Re: Can you count on SS?

Darn...

This thread is getting too "serious"

As a Boomer (age 58), I have a simple suggestion...

Let the "youngsters" on this board start "pumping out the kids" (along with having those kids have jobs that ensure solvency to the programs )

That should take care of the SS/Medicare problem (at least while I'm still alive )

- Ron
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Re: Can you count on SS?
Old 11-03-2006, 03:58 PM   #54
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Re: Can you count on SS?

Quote:
Originally Posted by bosco
the benefit would be the knowledge that you are helping to keep the system financially sound. I'm sorry, but it wouldn't bother me a bit of people that make over $94k/year had to pay an additional 6.15% tax. And for the record, I exceed it myself. I somehow think the word "painful" for someone in this situation is a bit of an overstatement....
Heck, If it's so painless why not volunteer to pay the extra SS tax...why wait?
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Re: Can you count on SS?
Old 11-03-2006, 04:44 PM   #55
 
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Re: Can you count on SS?

SS itself is pretty easy to fix, if that is what's wanted. A couple tweaks here and there will put it in great shape. There are probably 10 painless ways to fix it, and it does not have to be 'Fixed' for a decade or so.

The problem last year was that Bush Jr. proposals included 'private accounts'. His solution was to pull the young folks off the SS roles. This would have reduced funding of SS by a huge margin. It took the 'politically challenged' awhile to figure out that he was trying to eliminate S.S. - Not Save it! His proposals would have cost Billions if not Trillions!. What did he care about deficit spending? - He wanted to be the 'The Guy' that dismantled S.S. - A program hated by the right, ever since FDR times!

The real problem is Medicare - Everyone agrees! - If Bush was really concerned with the finances of the nation, he would have brought this to the forefront first! - This is what really bugs me about Bush. He will do anything to promote himself. Even to the detriment of the country. - Iraq is of course the ultimate example!

The reason people focus on S.S. is that we all want to collect money. The reason we don't focus on Medicare, is we all believe we will stay healthy!
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Re: Can you count on SS?
Old 11-03-2006, 07:48 PM   #56
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Re: Can you count on SS?

Quote:
Originally Posted by Cut-Throat
SS instelf is pretty easy to fix, if that is what's wanted. A couple tweaks here and there will put it in great shape. There are probably 10 painless ways to fix it, and it does not have to be 'Fixed' for a decade or so.

The problem last year was that Bush Jr. proposals included 'private accounts'. His solution was to pull the young folks off the SS roles. This would have reduced funding of SS by a huge margin. It took the 'politically challenged' awhile to figure out that he was trying to eliminate S.S. - Not Save it! His proposals would have cost Billions if not Trillions!. What did he care about deficit spending? - He wanted to be the 'The Guy' that dismantled S.S. - A program hated by the right, ever since FDR times!

The real problem is Medicare - Everyone agrees! - If Bush was really concerned with the finances of the nation, he would have brought this to the forefront first! - This is what really bugs me about Bush. He will do anything to promote himself. Even to the detriment of the country. - Iraq is of course the ultimate example!

The reason people focus on S.S. is that we all want to collect money. The reason we don't focus on Medicare, is we all believe we will stay healthy!
Hello C-T. Please tell me this was a CHP.

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Re: Can you count on SS?
Old 11-03-2006, 08:17 PM   #57
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Re: Can you count on SS?


Waiting in my doctor's office, I read the recent Newsweek, which had an article
on Social Security and how it's a pretty good deal and don't assume it's not
worth much.

And how did they back this up ? Our old friend the "instant annuity quote"
calculator at the Vanguard website !

http://www.aigretirementgold.com/vli...ge=SubmitQuote

They basically ran the computation of how much it'd cost to buy a SPIA with
a payout equivalent to SS. Even if you think SPIAs are a really bad idea, this
calculator is a great resource !



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Re: Can you count on SS?
Old 11-03-2006, 09:12 PM   #58
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Re: Can you count on SS?

Quote:
Originally Posted by JohnEyles
Waiting in my doctor's office, I read the recent Newsweek, which had an article
on Social Security and how it's a pretty good deal and don't assume it's not
worth much.

And how did they back this up ? Our old friend the "instant annuity quote"
calculator at the Vanguard website !

http://www.aigretirementgold.com/vli...ge=SubmitQuote

They basically ran the computation of how much it'd cost to buy a SPIA with
a payout equivalent to SS. Even if you think SPIAs are a really bad idea, this
calculator is a great resource !
If you use this approach, it ignores the time value of the SS taxes witheld over 40 years, but it still looks like a good "investment".
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Re: Can you count on SS?
Old 11-03-2006, 10:13 PM   #59
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Re: Can you count on SS?

Quote:
Originally Posted by bosco
this is a misleading statement. The top earners don't make contributions on a lot of their earnings so why should they get higher benefits from them? This year, there are no contributions on income over $94,200.

In fact, one proposal to fix the system is to simply remove the earinings cap. That'll never happen with Republicans in power.

Here's an example I provided in an earlier thread back in August. The results may have changed somewhat because the Social Security COLA was published a few weeks back:

Go to http://www.ssa.gov/OACT/quickcalc/index.html and leave all of the defaults except vary the income. I just did this for incomes of $40000, $60000 and $80000 per year. You will find that the quck calculation gives age 66 annual Social Security payments of $14808 (37% of working income), $19836 (33% of working income), and $22236 (28% of working income). These are incomes that are fully taxable for Social Security. This is what I meant by means testing.
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Re: Can you count on SS?
Old 11-03-2006, 11:12 PM   #60
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Re: Can you count on SS?

Quote:
Originally Posted by Rich_in_Tampa
I believe the calculation uses your highest 35 years of income. Letting it slide for a few years generally wouldn't have a large impact if you have nearly 35 years behind you. But they do count as zeros in the calculation. Being at my peak earnings now, I don't mind a bit when each year replaces a year of $11,000 back in the 70s.
WOW.... sorry, but I will not get in 35 years... at least 35 of real work.. those few years of teenage jobs don't count...
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