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Old 05-04-2012, 10:56 PM   #141
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Originally Posted by explanade View Post
In 20 years, the demographics are suppose to be more favorable if a lot of Baby Boomers are gone?
Sorry, but no.

The key demographic numbers for SS are life expectancy and birthrate. The problem with the BB's isn't that there are so many of them, but that they only had two kids per couple. The WWII generation had three. If the BB would have had that one extra kid, we'd have 50% more workers and nobody would be talking about SS.

The 2.0 or 2.1 birthrate rate didn't move up when the X-gen started having kids. See Table V.A1 here ASSUMPTIONS AND METHODS UNDERLYINGACTUARIAL ESTIMATES
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Old 05-04-2012, 11:20 PM   #142
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Originally Posted by EvrClrx311 View Post
I find it interesting to see how the cap on SS taxes has changed over the years

In 1954 the max SS tax was on your first $3,600 wages... which in today's dollars would be the first $28,862 of your salary

In 1975 the max SS tax was on your first $14,100 wages... which in today's dollars would be the first $56,488 of your salary

In 1995 the max SS tax was on your first $61,200 wages... which in today's dollars would be the first $86,686 of your salary

In 2011 the max SS tax was on your first $106,800 wages... which is today's dollars


Could this be part of the problem with SS... has its sustainability over the last 50 years been partly due to its rising cap (bringing in more money), but now its gotten to a point where raising the max doesn't cover as much income anymore because its well beyond the average American salary?

Could the fix that people are now suggesting, that is removing the cap entirely, just be a temporary band-aid and in another 20 years we'll be in the same situation... except then there would be no cap to raise anymore?
Interesting point. I think the most meaningful statistic is the percent of all earned income that is below the wage base. In 1955, the average wage was about $3,155. In 2011 it was $41,674. The wage base clearly grew faster than the average wage, so more wages are taxed.

The 1983 amendments indexed the wage base to the average wage. Contribution and Benefit Base Determination
The thought was that the percent of total wages that would be taxed would be stable. But, unequal wage growth has the recent trend going the opposite direction, with greater proportions of the wages above the wage base.

Even with that, as you say, eliminating the cap entirely does not completely solve the SS funding problem. We're currently taxing about 84% of all earned income, but the actuaries project that in 20 or so years the taxes will only cover 77% of benefits.
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Old 05-04-2012, 11:42 PM   #143
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Sorry, but no.

If the BB would have had that one extra kid, we'd have 50% more workers and nobody would be talking about SS.
My young wife and I are planning two more over the next 10 years, So I will be doing my duty and also helping out one of you old slackers!
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