reconsider when to take SS?

[samclem]

Quote:

Originally Posted by pb4uski Agreed in both cases. Raising or eliminating the cap would go a long ways to solve the problem.... depending on whether you then count the higher contributions in computing those taxpayers future benefits... or not.

For a lot of practical reasons the increased contributions would have to increase the expected payout to some degree. With the present "bend points", the "payback" is already pretty meager, so raising the cap still improves the financial position of SS. And, there's no reason legislation couldn't be passed to reduce the payback rate even further at higher levels of pay. To maintain the appearance of it being "insurance" rather than "welfare", the increased taxes would need to provide at least some meager increase in benefits.

[bingybear]

Quote:

Originally Posted by pb4uski No need to "deal with" those people... they didn't pay in so they don't get benefits. I don't see means testing as politically palatable... I know that I would be if savers are penalized at the expense of spenders.

My comment on the people who did not have to pay in... is based on my assumption that I'll be means tested out of SS for both myself and DW. By taking some people out of the system is just another means of screwing up system... not that it is likely a real large part of the problem.

I expect all solutions will not be palatable to many... just what they actually implement and when.

[pb4uski]

I guess I would suggest that any assumption that you'll be means tested out of SS is not likely and that was the basis for my response, but I understand your point.

[Looking4Ward]

My thought has always been that these doomsday projections are all based on a very large percentage of the population collecting SS benefits, which also means there would be a very large percentage of the population that is not likely to quietly accept any negative changes to those benefits.

[eytonxav]

Quote:

Originally Posted by Senator One the minimum wage is raised to $15+ per hour, the extra SS taxes will likely be enough. Once everyone is making $30K+ per year, as long as inflation doesn't rise, SS will have plenty of money.

That would be interesting, but I am more concerned about all the small businesses that will go out of business by virtue of a $15 minimum wage.

[Independent]

Quote:

Originally Posted by dtbach The article states that in 2035 payroll taxes will only collect only enough taxes to pay 79% of benefits and the trust fund will have no reserves left to make up the difference, triggering an automatic 21% cut. I've never heard that there would be an "automatic" cut but that is what the article states.

The "automatic" refers to current law.

Congress has authorized the Treasury to send SS checks only as long as the "trust fund" shows a positive balance. For this purpose, the trust fund is like your checking account balance. You only write checks (we hope) if you have funds to cover the checks.

When the trust fund hits zero, the Treasury will not have the legal authority to write checks. But, the trust fund is constantly getting income from taxes. It will eventually refill to the point that there is enough money to cover one month's checks, so the Treasury will write one month's worth of checks (but they'll be late).

At the projected income and cost rates, the Treasury will be able to write about 9 "monthly" payouts per year.

On a different forum, I saw a post by a former SS actuary who said they actually looked at the law to see if they would
1) pay 12 checks, each about 75% of the scheduled amount, or
2) pay 9 checks, each 100% of the scheduled amount.

His group thought the law describes (2).

[Independent]

Quote:

Originally Posted by Ready They could raise the cap from $118,500 to a much higher amount, like $150K. That would probably be the least painful way to plan for the eventual deficit.

I'm not sure which "eventual deficit" you're referring to.

SS is already spending more each year than it collects in taxes.
The difference is currently less than the "interest on the trust fund"
At some point, it will need to start taking principal from the trust fund.
At some point (around 2034) the trust fund will be exhausted.

Completely eliminating the cap on taxes, starting in 2015, and not paying benefits on that extra income would:
Keep taxes above benefits until 2025.
Keep the deficit below the interest until about 2030.
Keep the trust fund positive until 2070.

If they paid benefits at the 15% rate on the excess, the trust fund would run out in 2060.

Long Range Solvency Provisions

[marko]

Quote:

Originally Posted by Senator One the minimum wage is raised to $15+ per hour, the extra SS taxes will likely be enough. Once everyone is making $30K+ per year, as long as inflation doesn't rise, SS will have plenty of money.

As long as inflation doesn't rise?? A $15 minimum wage (and/or 'everyone making $30K per year) will certainly cause inflation. I don't see how it would be avoided.

But back to the OP:
I stopped worrying about SS a long time ago.

Over 45 years ago I was advised that "SS will be long gone by the time you'd be eligible". It's demise has been greatly exaggerated over the years.

An immediate/permanent fix would be to end the income limit and tax it through the highest incomes. I used to reach my limit in April/May but would never have minded paying through the year.

[Cobra9777]

My retirement spreadsheet includes a "factor" to reduce SS benefits based on my belief that by the time we hit 67-70, Congress will have implemented some combination of: additional income tax on SS benefits, means testing, reduced COL adjustments, increased retirement age, or just allow the mandated reductions to happen. The factor is currently set at 70%. Sometimes I set it as low as 50%. During the accumulation phase, I never thought SS would be a reality for us at all. I'm now beginning to think it will be, but not at the levels currently promised.

[marko]

Quote:

Originally Posted by Cobra9777 My retirement spreadsheet includes a "factor" to reduce SS benefits based on my belief that by the time we hit 67-70, Congress will have implemented some combination of: additional income tax on SS benefits, means testing, reduced COL adjustments, increased retirement age, or just allow the mandated reductions to happen. The factor is currently set at 70%. Sometimes I set it as low as 50%. During the accumulation phase, I never thought SS would be a reality for us at all. I'm now beginning to think it will be, but not at the levels currently promised.

This is one of the factors that made me take it at 62. "Get in now before they change the rules we had all playednby and hope to be grandfathered"

[W2R]

Quote:

Originally Posted by marko Over 45 years ago I was advised that "SS will be long gone by the time you'd be eligible". It's demise has been greatly exaggerated over the years.

I remember hearing that and believing it in the early 1970's. At the time, I bitterly protested about how unfair that would be, to my mother. She had just claimed her SS. Her response? She told me that I would most certainly get SS. I didn't believe her.

Well, she's gone now so I can't tell her she was right, but I am getting SS each month right now.