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Re: Fixing Social Security game
Old 01-19-2007, 06:51 AM   #21
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Re: Fixing Social Security game

Social Security is one area I don't pretend to know what I'm talking about. I think any changes to the benefit must not be applicible to anybody over 45. That way they are able to change their spending or saving habits to take the new changes into consideration. I liked the idea of allowing me to direct where I want a portion of my social security to go, but with the stipulation that I only receive the amount in the personal account. Obviously only a risk taker should opt to do this. I thought that made more sense, even when I was a teen, than the system we currently have.

I don't support any tax increase that does not go into an account controlled by me. The government has not proved they are responsible with the money they do take from me, so why should I give them more to waste?
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Re: Fixing Social Security game
Old 01-19-2007, 08:33 AM   #22
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Re: Fixing Social Security game

Although I am no expect on this subject, isn't part of the issue with SS that SS funds have been used for other pork projects and benefits and thereby have depleted what SS was actually intended to cover? I do not believe SS should be all that difficult to fix, but what worries me the most is the deplorable costs and lack of healthcare coverage in a country that supposedly has the best medical technology in the world.
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Re: Fixing Social Security game
Old 01-19-2007, 09:14 AM   #23
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Re: Fixing Social Security game

Why not limit the amount of people who can collect on one account ? In these days of mutilple
marriages sometimes there are three people eligible to collect on one account .
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Re: Fixing Social Security game
Old 01-19-2007, 09:50 AM   #24
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Re: Fixing Social Security game

Quote:
Originally Posted by DFW_M5
Although I am no expect on this subject, isn't part of the issue with SS that SS funds have been used for other pork projects and benefits and thereby have depleted what SS was actually intended to cover? I do not believe SS should be all that difficult to fix, but what worries me the most is the deplorable costs and lack of healthcare coverage in a country that supposedly has the best medical technology in the world.
Social Security is basically a pay as you go system. The increases in the 90s started to build up a huge surplus in the books (it still exists). But the surplus wasn't like one of our 401Ks, invested in the market. It was used, sensibly, to offset other Government obligations. That works fine as long as you control those other obligations. In simplistic terms, the idea was that the debt will decrease until the boomer retirements start to pile up. At the height of the boomer exodus we will go rapidly back in debt but shoulda/coulda handled that because we were going to keep taxes level and other Government obligations down. Unfortunately, Bush pushed through a wrongheaded - IMHO - tax cut and then engaged in a wrongheaded war (originally proposed to pay for itself and now hitting 1/2 trillion). So, while the SS surplus still exists, overall debt has skyrocketed instead of decreasing. Thus we need another fix. We also need a fix on medicare costs (not part of the original plan) and health care in general. So get your wallet out.
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Re: Fixing Social Security game
Old 01-19-2007, 12:10 PM   #25
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Re: Fixing Social Security game

Based on all I have read, SS ISN'T a big pile of money somewhere in Washington, it's an empty box filled with IOUs from Congress because they used the money for pork barrel projects and the like years ago.

It's just an accounting entry in the budget. If you stopped collecting SS for a month, and asked the Treasury to pay benefits, they couldn't.......... without having the hugest auction of T-Bills and T-Notes in history...........

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Re: Fixing Social Security game
Old 01-19-2007, 12:35 PM   #26
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Re: Fixing Social Security game

Quote:
Originally Posted by Caroline
Good discussion here. I make more than the cap as will the MBA students in this article. Still, I agree with them that paying SS tax on ALL income, not just the first $90K or whatever it is, is a fair thing to do.

I'm against cutting benefits -- it's a step on the slippery slope to guting the Social Security program altogether.
My understanding is that though income above the MTA (maximum taxable amount) is not taxed for Social Security, said income is also not included when determining the amount of benefits. So for those of you who propose eliminating MTA on the taxation side, would you still want your benefits calculated based only on wages up to the MTA? If not, then the positive effect this would have on the solvency of SS would be mitigated. How much, I don't know.

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Re: Fixing Social Security game
Old 01-19-2007, 01:52 PM   #27
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Re: Fixing Social Security game

SecondCor, I am not sure how the formula is calculated but I believe that there is more weight on the first dollar earned than the last dollar of the MTA. It is a progressive tax in that the lesser income results in a greater proportionate benefit or return. I would venture to say that the last dollar of the MTA has little impact on the benefits paid (and I don't think they include in the computation any amount in excess of the MTA).

I think the progressive nature of SS is necessary and a worthwhile social goal and those with greater income need to bear that weight. For that reason, I also agree to some expansion of the MTA but if the cap were entirely removed, I would be hosed and since I would get no return out of it, it seems painful to the point of being unfair.
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Re: Fixing Social Security game
Old 01-19-2007, 02:47 PM   #28
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Re: Fixing Social Security game

Quote:
Originally Posted by Moemg
Why not limit the amount of people who can collect on one account ? In these days of mutilple
marriages sometimes there are three people eligible to collect on one account .
Are you sure My sister was married to her ex for over 11 years... when she asked about benefits on his account, the lady said his other ex had dibs or something like that.. seemed to be a timing thing.... but, this is second hand
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Re: Fixing Social Security game
Old 01-19-2007, 03:39 PM   #29
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Re: Fixing Social Security game

Think it is 20 years of marriage or something like that. www.ssa.gov has the answer.
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Re: Fixing Social Security game
Old 01-19-2007, 03:44 PM   #30
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Re: Fixing Social Security game

Texas:

Here is a quote from the ssa.gov site.

If you are divorced after at least 10 years of marriage, you can collect retirement benefits on your former spouse's Social Security record if you are at least age 62 and if your former spouse is entitled to or receiving benefits. If you remarry, you generally cannot collect benefits on your former spouse's record unless your later marriage ends (whether by death, divorce, or annulment).

I don't know if there are other conditions but based on the above, it appears that multiple spouses whose marriages lasted at least 10 years and did not remarry afterwards could qualify off of one person's earnings history. Although I do not know of another solution since it would seem unfair to exclude benefits to the first or last spouse merely because the person whose earnings were relied upon remarried.
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Re: Fixing Social Security game
Old 01-19-2007, 03:53 PM   #31
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Re: Fixing Social Security game

Now the question is: If two or more ex-spouses qualify do they split the 50% (or the 100% if the guy/gal dies) -- the survivors, not the dead one. What a system -- quibble about the splits based on earnings and give benefits like SSI to anyone who is breathing -- if they need it.
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Re: Fixing Social Security game
Old 01-19-2007, 05:16 PM   #32
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Re: Fixing Social Security game

Quote:
Originally Posted by donheff
Social Security is basically a pay as you go system.
Saying that SS is a pay as you go system can be a little misleading. It is true in practice since SS collects more than it pays but it isn't limited to being that type of a system. It does have a huge asset base beyond the cash flow from which it can make payments.

Quote:
Originally Posted by donheff
But the surplus wasn't like one of our 401Ks, invested in the market. It was used, sensibly, to offset other Government obligations.
Quote:
Originally Posted by FinanceDude
Based on all I have read, SS ISN'T a big pile of money somewhere in Washington, it's an empty box filled with IOUs from Congress because they used the money for pork barrel projects and the like years ago.
SS' asset base (surplus) is invested in US government bonds, maybe not the best investment but an investment none the same. It is not an empty box, in fact it is like one of our 401Ks, just all invested in bonds. When the time come for SS to draw on that asset base SS will have to cash in the bonds just like someone drawing from their 401K.

BTW what Congress used the money they borrowed from SS for is no more relevent then what they used the money someone invested in Treasuries, TIPS or I-bonds for.
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Re: Fixing Social Security game
Old 01-19-2007, 06:54 PM   #33
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Re: Fixing Social Security game

Quote:
Originally Posted by jdw_fire
SS' asset base (surplus) is invested in US government bonds, maybe not the best investment but an investment none the same. It is not an empty box, in fact it is like one of our 401Ks, just all invested in bonds. When the time come for SS to draw on that asset base SS will have to cash in the bonds just like someone drawing from their 401K.

BTW what Congress used the money they borrowed from SS for is no more relevent then what they used the money someone invested in Treasuries, TIPS or I-bonds for.
The SS trust fund doesn't increase at the regular bond interest rate does it? I thought the money went in the general treasury but was earmarked on the books for SS.
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Re: Fixing Social Security game
Old 01-19-2007, 09:20 PM   #34
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Re: Fixing Social Security game

Quote:
When the time come for SS to draw on that asset base SS will have to cash in the bonds
and where will the $ come from to pay for that?... taxes!
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Re: Fixing Social Security game
Old 01-19-2007, 11:54 PM   #35
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Re: Fixing Social Security game

Quote:
Originally Posted by Old Army Guy
Now the question is: If two or more ex-spouses qualify do they split the 50% (or the 100% if the guy/gal dies) -- the survivors, not the dead one. What a system -- quibble about the splits based on earnings and give benefits like SSI to anyone who is breathing -- if they need it.
Also answered on ssa.gov:
"The amount of benefits your divorced spouse gets has no effect on the amount of benefits you or your current spouse may receive."

You're right, what a system! I'm a high earner so it is possible that 3 people -- myself, my current husband, and my ex-husband -- will base their SS benefits off of my earnings record.
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Re: Fixing Social Security game
Old 01-20-2007, 12:44 AM   #36
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Re: Fixing Social Security game

Quote:
Originally Posted by d
and where will the $ come from to pay for that?... taxes!
The money will come from the same place it comes from when you cash in a US gov treasury/bill/bond. The answer depends on when the cashing in takes place. If you cash in your treasury/bill/bond now the money will come from another investor (maybe even the SSA since right now they are still a net buyer) who is buying a treasury/bill/bond at this time. When the SSA starts cashing in their bonds the money will either come from another investor or if the US gov's budget is in surplus they can be redeemed out of said surplus.
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Re: Fixing Social Security game
Old 01-20-2007, 02:06 AM   #37
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Re: Fixing Social Security game

Buddha,

Thanks... she is remarried, so that is the reason... but I think her ex made more money, so she tried...

As for is there cash or not... yes, there are gvmt bonds that the SS system ownes... BUT, they have been using the surplus when they tell us how big the deficit is each year.... in a few years there will be more going out than coming in for SS, SO, I bet they then decide to 'take SS out of the budget'... if not, then the deficit will balloon and the only way to bring it down is raise taxes...

You either pay now or pay later... since we are not paying enough NOW for the ordinary govmt, we will have a hard time paying for it in a few years..
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Re: Fixing Social Security game
Old 01-20-2007, 05:09 AM   #38
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Re: Fixing Social Security game

Quote:
Originally Posted by Texas Proud
You either pay now or pay later... since we are not paying enough NOW for the ordinary govmt, we will have a hard time paying for it in a few years..
This is good point. The federal budget needs to be brought in line with the revenues from taxes intended for the federal budget minus the trust fund borrowing. This will reduce the obligations for redeeming securities from other sources in a given year and will restore the confidence in the purchase of securities in the future.

The trust funds may have more legal basis than the SS program itself (full faith and trust guarantee on the bonds, promise on the pay-go), I just don't know how much more.

Bruce Webb, a poster at AngryBear claims that the fund growth has been higher than the government estimates for the low-cost projection (never runs out of money) for each year since the focus turned on SS in the late 90's. If boomers work longer than the projections assume, the economy trucks along as it has in the past, OR any other of the adjustable parameters comes in better than the intermediate estimate with all else being the same, the trust fund may not need to be tapped at all. Who knows? The assumptions used in the models are extremely conservative. If the estimates short range or so bad, are the long range ones better? It's all a crapshoot and I find it unconscionable that people would just decide to reduce benefits based on this long-range model that was moving out in time each year. The fund has been getting so flush so fast that they had to go to a more pessimistic future economy in order to keep it in crisis. Perhaps this estimate of the future is a better one; perhaps not. Besides, if benefits are reduced now, the trust fund just gets larger without bound. Remember that as long as it is not used, the interest is reinvested and earns interest, which is reinvested and earns interests, etc. That is what should scare people if the fund keeps over- performing. (Note, I have not independently confirmed all of what I have just written; I have just seen it referenced in many economic conversations. I think, though, the fact that the date of trust fund exhaustion which has moved from 2029 to 2042 and then back to 2041 last year seems to support these observations.)

The politicians are addicted to claiming improved deficit numbers that can be explained, at least in part, by increases in the amount borrowed each year from the excess SS contributions. At some point they may use the excess flow to claim they have no deficit (ala Clinton). If one looks at the right place, all of this borrowing to cover over $500 billion or so per year of deficit, when added to the debt where it collects interest, is a problem that makes me want to pay my income taxes now instead of freezing to death in an unheated apartment in the future. There is a letter from the actuaries somewhere on that site that warned the President about using the “infinite projection” as they were willing to compute it, as requested, but felt it had too much error to be valid. That is the number that many in the “crisis” crowd like to quote, and quote often.

I have no trouble with the government investing some of these excess funds in state and municipal bonds, conservative market investments, etc. simply because I see no difference in “personal accounts” run by the government, the TSP, and trust fund investments. There is no doubt that the funds need to be put in a place where the word “trust” may have a chance to gain meaning and people won’t feel betrayed or jerked around. Right now the trust fund is used as a cash fund to buy re-election through lower taxes. It’s like some old poor bloke who works his butt off is unknowingly contributing to the campaign coffer of a politician without knowing or approving it. But that is another rant for another day, the laundering of tax dollars.
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Re: Fixing Social Security game
Old 01-20-2007, 09:01 AM   #39
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Re: Fixing Social Security game

Quote:
Originally Posted by Tadpole
This is good point. The federal budget needs to be brought in line with the revenues from taxes intended for the federal budget minus the trust fund borrowing. This will reduce the obligations for redeeming securities from other sources in a given year and will restore the confidence in the purchase of securities in the future.
Quote:
Originally Posted by Tadpole
If boomers work longer than the projections assume, the economy trucks along as it has in the past, OR any other of the adjustable parameters comes in better than the intermediate estimate with all else being the same, the trust fund may not need to be tapped at all. Who knows? The assumptions used in the models are extremely conservative. If the estimates short range or so bad, are the long range ones better? It's all a crapshoot and I find it unconscionable that people would just decide to reduce benefits based on this long-range model that was moving out in time each year. The fund has been getting so flush so fast that they had to go to a more pessimistic future economy in order to keep it in crisis. Perhaps this estimate of the future is a better one; perhaps not. Besides, if benefits are reduced now, the trust fund just gets larger without bound. Remember that as long as it is not used, the interest is reinvested and earns interest, which is reinvested and earns interests, etc. That is what should scare people if the fund keeps over- performing.
What is obvious from the above is that our problem is one of generally not living within a reasonable budget (which would allow a deficit to some degree) not Social Security per se. What is most irritating to me is that rethuglicans want to blame useful programs like SS for their own refusal to live with a reasonably balanced budget. I am convinced that since Reagan there has been a concerted neo-con effort to use deficits to drive out social programs like SS despite the fact that most Americans do not support that end.
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Re: Fixing Social Security game
Old 01-20-2007, 09:35 AM   #40
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Re: Fixing Social Security game

My take... again...

You can 'reduce benefits' as you say OR slow the growth of them... to me that is a MAJOR difference...

If last year you made $100,000 and I said next year you will make $101,000 instead of the $103,000 you would get with inflation... I reduced your growth... but the way most dems tell it, I would be cutting down to $95,000 or even $90,000... when you talk CUT, this is what most Americans will think..

AND, I do not want to get rid of SS... It is a great program. It is IMO the best safety net program there is... but you have to look at reality... there is a big group of people that are about to retire. If we did not have immigration at such a high level, we would be in a world of hurt... much like Japan who has (opinion here) more old people than young..

So, let the baby boomers give back a little from their SS payments to make sure it survives over the hump...

BTW.... there is NO govmt program that the politicians will let a big amount of money go unspent... whenever it is said that the SS if solvent or has a surplus, then the benefits will go UP... yes, they could reduce taxes, but that would be hard to do... more than likely they would borrow it like they do today and spend it for that dang bridge...
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