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Old 02-01-2013, 02:10 PM   #21
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The higher the perceived adequacy/ "comfort" of the safety net, the greater the number of people who never pay serious attention to meeting their needs themselves.
The root cause of the great debate over where the safety net line should be drawn........
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Old 02-01-2013, 02:58 PM   #22
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The info in the report posted by MichaelB (above) generally supports this. In a chart there, older groups were more in favor of FICA tax increases and removing the income cap than younger people by a significant margin.

I guess that's not a surprise. People who are going to receive a benefit and pay nothing or little for it favor it. People who are going to receive a benefit and pay a lot for it don't favor it as much.
Unfortunately, there is little that younger people can do about it. Older folks are retired and have more time on their hands to give politicians a piece of their minds. In the end, currently promised entitlements are unsustainable, no matter who receives them.
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Old 02-01-2013, 03:07 PM   #23
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One of the factions pushing for reform, which usually means private accounts, is the financial industry, which stands to reap huge revenues from fees.
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Old 02-01-2013, 03:13 PM   #24
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The root cause of the great debate over where the safety net line should be drawn........
Wherever they are drawn there will be unremitting pressure to expand what is covered. There are many focused and politically powerful constituencies for expansion, but only a diffuse poorly focused constituency for restraint.

It will go on, and overall increase, until governments finally really cannot borrow any more, at which point the entire western welfare state will collapse.

Likely still a long way off, but this day will come.

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Old 02-01-2013, 03:56 PM   #25
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Would it make more sense to pay into deferred annuities rather than into the SS fund ? I have paid the maximum SS 'tax' since I have been working in the US for the last 10 years, and still my projected benefit when I reach 62 is only about $1k.
That sounds about right. Remember, SS benefits are calculated on the highest 30 years of contributions. Ten years will not get you a large benefit, even at the max SS contribution. After 30 years of the max you would now get about 2500/month @ full retirement age.
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Old 02-01-2013, 04:07 PM   #26
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Would it make more sense to pay into deferred annuities rather than into the SS fund ? I have paid the maximum SS 'tax' since I have been working in the US for the last 10 years, and still my projected benefit when I reach 62 is only about $1k.
Do you have a choice, or is this just an academic question?

SS gives you some other useful benefits besides retirement, and I assume you are also paying into Medicare so you'll also qualify for those benefits at some point.

If I were paying the top SS tax and had a way to opt out of it, I would look for cheaper ways to buy the same protection.
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Old 02-01-2013, 04:19 PM   #27
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That sounds about right. Remember, SS benefits are calculated on the highest 30 years of contributions. Ten years will not get you a large benefit, even at the max SS contribution. After 30 years of the max you would now get about 2500/month @ full retirement age.
Just a detail, but actually it's 35 years. With only 30, SSA will use 5 years of $0 wages.

Computing benefits with less than 35 years of work
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Old 02-01-2013, 04:39 PM   #28
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The info in the report posted by MichaelB (above) generally supports this. In a chart there, older groups were more in favor of FICA tax increases and removing the income cap than younger people by a significant margin.

I guess that's not a surprise. People who are going to receive a benefit and pay nothing or little for it favor it. People who are going to receive a benefit and pay a lot for it don't favor it as much.
Which charts are you referring to? I didn't see them all but in the ones I did see even young people strongly supported (65%) SS in general and making SS more stable by increasing their own taxes.

The opinions across all age and income groups reflect strong support of SS and willingness to increase the taxes the respondents pay.
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Old 02-01-2013, 04:46 PM   #29
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Which charts are you referring to? I didn't see them all but in the ones I did see even young people strongly supported (65%) SS in general and making SS more stable by increasing their own taxes.
To me the bigger question is: Will they willingly increase their own taxes while those who are older, including those who are older and very wealthy, do not have to share the sacrifice?

The devil is in the details. There is often a lot of support for shared sacrifice. But politicians rarely want to make the pain "shared"; they have their own pet special interests to protect.
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Old 02-01-2013, 05:07 PM   #30
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Yes, this is the big problem with most of the talk about cutting entitlements. Everyone talks about cutting things for people that are more than 10 years from retirement, while leaving everyone currently retired or close to retirement untouched.

Frankly that won't work. It doesn't do much to help the budget, since that leaves us trying to support the Boomer generation with tax revenue from later generations who will know they are getting the shaft. It's going to be tough to keep people willing to pay more and more into a system that will give them less and less.

Any cuts to benefits will need to affect current retirees as well as future retirees, or we will face an ugly generational split.

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To me the bigger question is: Will they willingly increase their own taxes while those who are older, including those who are older and very wealthy, do not have to share the sacrifice?

The devil is in the details. There is often a lot of support for shared sacrifice. But politicians rarely want to make the pain "shared"; they have their own pet special interests to protect.
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Old 02-01-2013, 07:44 PM   #31
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To me the bigger question is: Will they willingly increase their own taxes while those who are older, including those who are older and very wealthy, do not have to share the sacrifice?

The devil is in the details. There is often a lot of support for shared sacrifice. But politicians rarely want to make the pain "shared"; they have their own pet special interests to protect.
That's a fair question, and also an important one. For me, the great appeal of Bowles-Simpson was that everyone shared tax increases and spending reductions. That everyone shared was evident to everyone else. No one was exempt. There is no viable way out where only some must pay.
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Old 02-01-2013, 08:26 PM   #32
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That's a fair question, and also an important one. For me, the great appeal of Bowles-Simpson was that everyone shared tax increases and spending reductions. That everyone shared was evident to everyone else. No one was exempt. There is no viable way out where only some must pay.
This is a main advantage of a "grand bargain" approach (whether we are talking about SS, the federal budget, etc). If we try to do these things incrementally, first targeting a small group for tax hikes, then a small group for benefits cuts, etc with all the finger-pointing and vitriol about who should be skewered next because they are the root of all evil, the process just looks and feels like a series of victimizations. Do it at once, show that lots of folks are sacrificing to solve the problem, and maybe we end up with a lot less rancor and some goodwill and trust is established to let us move forward on the next problem.
But that's not what we are doing at all.
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Old 02-01-2013, 09:03 PM   #33
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That sounds about right. Remember, SS benefits are calculated on the highest 30 years of contributions. Ten years will not get you a large benefit, even at the max SS contribution. After 30 years of the max you would now get about 2500/month @ full retirement age.
I'm in the same situation -- about 10years of SS contributions (pretty much at the max or close to it for most the years). For this I get a little less than $1k/month at 62 and about ~1300 at FRA. Seems like a pretty good deal since I only paid in about 6k*10years = $60k. Even if you include the employer match, I still think it's a pretty good deal.
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Old 02-01-2013, 09:29 PM   #34
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Could be.

Here's a link to the study http://www.nasi.org/sites/default/fi...icans_Want.pdf

Pretty strong support. No sign of "other people's money" syndrome either. People like Social Security and want to see it strengthened.
Interesting that there was widespread support for the 2010 "payroll tax relief" maneuver with only a few voices complaining that it would weaken SS-

Tax cut threatens Social Security? - Salon.com

And now folks are complaining about their taxes "going up"when actually workers' payroll tax (SS tax) just went back to pre- "payroll tax holiday" levels.

Abstract answers to surveys are one thing, but actually seeing the smaller NET (after-taxes) paycheck can be another. US public tends to be funny that way
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Old 02-01-2013, 10:45 PM   #35
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Very large majorities across every age group, political affiliation and income group said they would be willing to pay more to maintain current benefits.

Just 14 percent of households report they expect to have enough money to live comfortably in retirement, according to the Employee Benefit Research Institute. Barely two-fifths of private-sector workers ages 25 to 64 have a retirement plan of any sort with their job, Boston College's Center for Retirement Research reported recently.
So let me see. People seem unwilling to save for their own retirement but are willing to pay more into SS for someone elses. Sounds stupid to me.
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Old 02-02-2013, 07:55 AM   #36
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That's a fair question, and also an important one. For me, the great appeal of Bowles-Simpson was that everyone shared tax increases and spending reductions. That everyone shared was evident to everyone else. No one was exempt. There is no viable way out where only some must pay.
Right. Simpson-Bowles can be appealing to folks like you and me, since it took a balanced approach and shared the pain broadly. That makes it wildly unpopular on Capitol Hill, though, because it doesn't allow them to carve out exceptions and special deals for their pet constituencies.
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Old 02-02-2013, 08:15 AM   #37
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So let me see. People seem unwilling to save for their own retirement but are willing to pay more into SS for someone elses. Sounds stupid to me.
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Old 02-02-2013, 09:17 AM   #38
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Make sure that your math includes the disability insurance that it provides everyone, and the life insurance that it provides parents of young children.

There is more to SS than just the retirement income.
Just to be clear, this is not correct. "Social Security" as we usually discuss it is only the old age pension and death benefits. SSI, the disability income program, is not Social Security. It is Supplemental Security Income and is often confused with Social Security.

From the ssa.gov website:

Supplemental Security Income (SSI) is a Federal income supplement program funded by general tax revenues (not Social Security taxes)
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Old 02-02-2013, 09:53 AM   #39
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Right. Simpson-Bowles can be appealing to folks like you and me, since it took a balanced approach and shared the pain broadly. That makes it wildly unpopular on Capitol Hill, though, because it doesn't allow them to carve out exceptions and special deals for their pet constituencies.
Pet constituencies = those who pad their pockets
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Old 02-02-2013, 09:57 AM   #40
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