Protect SS, it's important

[GregLee]

I have for some time had difficulty understanding this persistent skepticism about SS paying the benefits that have been promised to retired workers. We know that politicians are very wary of implying any threat to the "third rail" SS system, so how could the SS system ever fail to meet its obligations? If the money coming in from SS tax comes to be insufficient to pay current obligations to retirees, legislators will just have to find the money elsewhere. It's that, or we fire them, and politicians really, really do not like to be fired. I'm sure they'll find a way.

 

[samclem]

If the money coming in from SS tax comes to be insufficient to pay current obligations to retirees, legislators will just have to find the money elsewhere. It's that, or we fire them, and politicians really, really do not like to be fired. I'm sure they'll find a way.

They only have to satisfy 50% of the voters plus one. Guess how they might do that with the available money.

 

[Ronstar]

The entire welfare component of social security is paid for by middle income workers.
The rich are absolutely totally exempt from this welfare tax
Class Warfare on a grand scale.

I wouldn't consider a 'rich' employer exempt when he/she has to pay their own ss plus matching ss for each one of their employees.

 

[Independent]

I know that I read the SSA "statement" too. I just like to see how the wording changes with time.


Yep, they could make things shorter and clearer: "These bonds will only cover 76 cents of every dollar that is owed to you and others under the present formulas. As a result, you may get smaller checks."

I'm sure I would change two words: "Future taxes will only cover 76 cents of every dollar that is owed to you and others under the present formulas. As a result, you may get smaller checks."

 

[GregLee]

Guess how they might do that with the available money.

What is the available money of which you speak? Is it possible for a government to spend all the available money and consequently be unable to spend any more? (I don't think so.)

 

[keegs]

You have to deconstruct the social security problem into its components.

Social Security has two critical components, which we can call the Earned component

and the Welfare component. The welfare component of social security includes spousal benefits, added benefits for low income workers and benefits for disabled children. The earned components are pensions for middle and upper contributors and disability payments.

you can tell the difference because all wage earners benefit from the earned component in proportion to taxed earnings.
the welfare components are "detached" from the earnings i.e. they are calculated based on the earnings but no taxes are paid to support them. In particular there are no taxes collected to support the spousal benefit.

The entire welfare component of social security is paid for by middle income workers.
The rich are absolutely totally exempt from this welfare tax
Class Warfare on a grand scale.

I have not seen recent estimates of the welfare component but the last ones I saw indicate its about 50% of the SS tax for middle and upper income wager earners. (50-100,000 )
Its highest for the Dual income wager earners close to the social security limit.

All repeat all of the social security privatization arguments are based on eliminating this welfare payment. that is how they make the numbers work. In particular they always eliminate the spousal pensions.

The easiest path to solvency for social security is to shift the welfare component to the general government budget. There is simply no rational basis for taxing only middle income workers for social welfare payments.

I heard the welfare characterization allot during the privatization debate.

If I put 6% of my salary into an annuity for fifty years and selected a survivor benefitiary option, in your world. would you call the insurance company a welfare benefator?

In many instances, participants in the SS system never receive a benefit and their dependent's eligability is age limited.

FICA ...Federal Insurance Contributions Act.

 

[samclem]

I'm sure I would change two words: "Future taxes will only cover 76 cents of every dollar that is owed to you and others under the present formulas. As a result, you may get smaller checks."

Yes, you are right.

 

[keegs]

Yes, you are right.

No...he'll be right in 2037. Until then it's payback time.

 

[Emeritus]

last I looked, high income workers paid the same maximum SS tax as anyone would. They were not exempt.

And last I looked high income workers received way less in benefits than they ever paid. talk about a crummy deal.



I don't believe that you thought this one through. When the welfare component gets shifted to the main budget then it will be diminished just like all the other welfare programs have been. If you disguise it within SS it then it gets funded.

High income workers pay a far lower share of their income for this welfare system
Individuals with incomes who don't work don't pay at all
The crummy deal goes to 100,000 a year workers
million a year workers have a great deal

 

[Emeritus]

If I put 6% of my salary into an annuity for fifty years and selected a survivor benefitiary option, in your world. would you call the insurance company a welfare benefator?

You pay for it with a reduced benefit.
If you got it free from the government, its welfare

 

[Emeritus]

I wouldn't consider a 'rich' employer exempt when he/she has to pay their own ss plus matching ss for each one of their employees.

SS is simply simply part of the compensation for the job. All economist agree that the Employee pays both halves. If the employee doesn't provide value for the full compensation the employee doesn't get hired.

 

[Emeritus]

My 2010 statement has a section on the front page entitled "About Social Security's future ... "

My 2009 was dated Oct 27th
When did you get a 2010?

BTW the same quote is on my 2009 statement

 

[Emeritus]

I don't believe that you thought this one through. When the welfare component gets shifted to the main budget then it will be diminished just like all the other welfare programs have been. If you disguise it within SS it then it gets funded.

The welfare component of SS should be transparent Exempting the income of the rich and non workers is a ludicrous price to pay

 

[Emeritus]

IMO the best method for fixing the SS shortfall is to remove the income cap on FICA and adding a 4th, even lower, level for computing the benefit for the income above the present cap. doing this would also eliminate Emeritus' concern

I agree that removing the income cap largely eliminates the unfairness of the current system, however non working income would continue to be exempt.

 

[keegs]

You pay for it with a reduced benefit.
If you got it free from the government, its welfare

The benefit as well as the survivor benefit is based on the contribution.

You seem confused whether this is a crummy deal or not.

 

[Emeritus]

The benefit as well as the survivor benefit is based on the contribution.

You seem confused whether this is a crummy deal or not.

Sure they are both BASED on the contribution But
Are they the same benefit ??
or is it reduced?

Our pensions were calculated as an annuity. if you took a survivor benefit it reduced the pension. Every annuity Ive ever seen worked that way

 

[keegs]

Sure they are both BASED on the contribution But
Are they the same benefit ??
or is it reduced?

Our pensions were calculated as an annuity. if you took a survivor benefit it reduced the pension. Every annuity Ive ever seen worked that way

So SS should offer a choice with a higher benefit to those chosing not to elect a beneficiary? OK.

And I'm sure you're not confusing SSI with SS.

Pension? What pension.

 

[Ronstar]

SS is simply simply part of the compensation for the job. All economist agree that the Employee pays both halves. If the employee doesn't provide value for the full compensation the employee doesn't get hired.

Well, then I don't agree with economists. The employers portion is a tax paid by employers. Which brings up the question - what is the reasoning for the employer and employee each paying half?

 

[keegs]

Well, then I don't agree with economists. The employers portion is a tax paid by employers. Which brings up the question - what is the reasoning for the employer and employee each paying half?

Yeah...your're right ...employers should fund the program.

 

[ronocnikral]

Well, then I don't agree with economists. The employers portion is a tax paid by employers. Which brings up the question - what is the reasoning for the employer and employee each paying half?

the question is, if SS went away, would your income go up 6-7%? or whatever the effective increase would be.

my company adds that in as a benefit when trying to sell the "total compensation package" to naive college students. it's also a big fat minus in the pension calculation.

 

[HFWR]

Someone is paying that other half: employee by reduced wages, customer by increased price, etc. The company is only paying the portion they can't [-]foist[/-] offload to someone else.

Most of this is obfuscation. SS should be fairly straight forward to "fix". Keeping the ppoliticians out of the cookie jar, on the other hand...

Seems to me that Medicare is the great unknown, unless we all get sick and croak on schedule. Oh, wait, we'll have death panels for that.

 

[jazz4cash]

That's recent. Until a couple years ago it said stuff like "Social Security is there for you - You can count on it"

"About Social Security's Future.....
Social Security now takes in more taxes than it pays out in benefits. The excess funds are credited to Social Securityis trust funds, which are expected to grow to over $4T before we need to use them to pay benefits. In 2014, we will begin to pay our more in benefits than we collect in taxes. By 2034, the trust funds will be exhausted and the payroll taxes collected will be enough to pay only about 71 percent of benefits owed......"

Social Security Annual Statement Feb 2, 2000

 

[Ronstar]

Most of this is obfuscation. SS should be fairly straight forward to "fix". Keeping the ppoliticians out of the cookie jar, on the other hand...

That's just it - the current system is ripe for corruption. It would be interesting to see what pct of the incoming $ goes to welfare payments, retiree benefits, administration of the program, etc.

It would be better funded from an increased federal income tax, and scrapping the FICA deductions. It seems this would lessen the bureaucracy and create a more equitable funding mechanism.

 

[kaneohe]

And last I looked high income workers received way less in benefits than they ever paid. talk about a crummy deal.
.

Is there data that supports this? I had the impression it had a crummy return but that they got back what they paid.

 

[samclem]

Is there data that supports this? I had the impression it had a crummy return but that they got back what they paid.

It can be negative, especially if we use real (i.e. including inflation effects) rate of return.

Here's a simple calculator you can use that shows rate of return. I'd have more faith in it if I could see their formulas/underlying spreadsheet.