Boehner: Raise SS age and means-test benefits

[ziggy29]

Let's keep this focused on the issue and not the partisanism, please; I'd hate for Porky to make a quick entrance. This was a little too relevant and important to the retirement issue not to share.

Top Republican: Raise Social Security's retirement age to 70 - The Hill's Blog Briefing Room

A Republican-held Congress might look to raise the retirement age to 70, House Minority Leader John Boehner (R-Ohio) suggested Monday.

Boehner, the top Republican lawmaker in the House, said raising the retirement age by five years, indexing benefits to the rate of inflation and means-testing benefits would make the massive entitlement program more solvent.

I've been saying all along that I expect most public benefits to be means-tested by the time I'm a senior, so this adds credence to my strategy to configure a cheapskate lifestyle which needs a fairly low income to maintain.

No doubt, too, that the "line" would be drawn such that I'd be among the oldest to have the age raised to 70.

And exactly where are all these extra jobs going to come from, to say nothing about the rampant age discrimination that already exists even below age 65?

 

[dex]

I think there was a thread about this recently.

 

[Sarah in SC]

Like you, this is what I'm expecting. Only makes sense, really. But I also see the problem with hiring older folks--there will have to be some kind of incentive to convince employers to retain or hire above 55, to me.

 

[ziggy29]

I think there was a thread about this recently.

Not about this specific comment, which was made only yesterday. It shows that these are very real considerations on the table, not just theoretical "what ifs".

 

[IndependentlyPoor]

Any ideas on how the means testing would be done?

 

[ziggy29]

Any ideas on how the means testing would be done?

I'm guessing AGI would play a part in it, but they might also have to look at things like Roth distributions (which would be, in some sense, a "hidden tax" on a supposedly tax-free withdrawal). They could also look at the value of your retirement accounts and impute some annuitized income stream. There's a lot of possibilities.

 

[MuirWannabe]

I had the same question. How will means testing be done? I don't see how it would work if its based on AGI. That can be manipulated. Seems like it would have to consider your net worth in some fashion. But that gets complicated quickly as well.

It's sad to see this being discussed. But I understand why even if it is all so regretable.

My projected ER date will be drastically off base should SS be unavailable as currently planned.

 

[ziggy29]

I had the same question. How will means testing be done? I don't see how it would work if its based on AGI. That can be manipulated.

True, but that already seems to be how they plan to means-test subsidies for individual health insurance starting in 2014. If they continue down that road my strategy of engineering a high net-worth, low taxable income retirement will look like sheer genius! Some here have said that the number of people who are able to do this will be low enough that we can "fly under the radar," and I hope they are right.

 

[FIREd]

And exactly where are all these extra jobs going to come from, to say nothing about the rampant age discrimination that already exists even below age 65?

That, to me, is the main hurdle which is often ignored in this discussion. Mathematically, yes, raising Social Security's retirement age makes sense. People live longer, they should work longer, I have no problem with that logic. Reality is a tad different though. I already know too many people whose career imploded in their 50's and that are just fighting for survival until they can get some relief from a SS check. But perhaps, surviving is all we should expect in the future...

 

[FinanceGeek]

By mandating contributions, but means testing benefits, our society will no longer even be able to pretend that SS is a forced-participation program that funds everyone's retirement. It'll be a welfare system for poor seniors, end of story.

 

[ronin]

FRA is already 67 for those born 1960 or later, so it isn't really extending retirement age by 5 years, rather by 3. Semantics, I guess. In saying they'd be going out 20 yrs. it isn't clear if that would be the beginning or end of a phase-in period, or if it would drop of the cliff w/no phase-in. That would be important to know for those on the bubble.

Of course, it's just an idea, with a long row to hoe before it ever came to fruition.

 

[MuirWannabe]

True, but that already seems to be how they plan to means-test subsidies for individual health insurance starting in 2014. If they continue down that road my strategy of engineering a high net-worth, low taxable income retirement will look like sheer genius! Some here have said that the number of people who are able to do this will be low enough that we can "fly under the radar," and I hope they are right.

Genius, yes. It is already a genius strategy just for dealing with ever increasig taxes. Much less such a scenario as this poses for SS.

Maybe its a separate thread or a subject in many older threads. But I'd be interested in learning more about how to effectively deploy such a genius strategy. How do you accomplish this high net worth / low income strategy? What are the tactics to bring this about? Can it be done by anyone or do circumstances have to be just right?

 

[ziggy29]

Maybe its a separate thread or a subject in many older threads. But I'd be interested in learning more about how to effectively deploy such a genius strategy. How do you accomplish this high net worth / low income strategy? What are the tactics to bring this about? Can it be done by anyone or do circumstances have to be just right?

* Have no debt, own your own modest home (lower property taxes, utilities and insurance) without a mortgage and learn to embrace simple, low-cost or no-cost pleasures in life so your income needs are minimized.

* Build a lot of Roth and taxable savings/investment wealth and use some of that as retirement income which won't hit your AGI.

* Even if it's more than you need, withdraw just enough from IRAs and 401Ks to be just below some threshold of increased tax rates or means-testing, and transfer it into your bucket of already-taxed wealth to withdraw from later.

Obviously, if the means-testing involves net worth or total assets, all bets are off. But in that scenario you're going to be snared either way.

 

[FIREd]

Obviously, if the means-testing involves net worth or total assets, all bets are off. But in that scenario you're going to be snared either way.

I guess you could always buy an annuity to bring your net worth below the threshold . I think that income is a lot easier to means test than wealth. Countries with a wealth tax have found that accurately determining people's wealth is a very arduous and labor-intensive task. Wealth is a lot harder to track than income usually. A few hundred gold coins buried in the garden, a pile of cash hidden in a Swiss lockbox or an offshore property can escape the scrutiny of the tax man. Income, on the other hand is easier to track because of multilateral reporting requirements (Vanguard sends a 1099 to the IRS and your employer sends a W-2 to the IRS so you better report that income on your return if you don't want to get nailed).

 

[MuirWannabe]

* Have no debt, own your own modest home (lower property taxes, utilities and insurance) without a mortgage and learn to embrace simple, low-cost or no-cost pleasures in life so your income needs are minimized.

* Build a lot of Roth and taxable savings/investment wealth and use some of that as retirement income which won't hit your AGI.

* Even if it's more than you need, withdraw just enough from IRAs and 401Ks to be just below some threshold of increased tax rates or means-testing, and transfer it into your bucket of already-taxed wealth to withdraw from later.

Obviously, if the means-testing involves net worth or total assets, all bets are off. But in that scenario you're going to be snared either way.

Thanks. Those all make good sense. Appreciate the recommendations. My only hurdle is that I seem to need the high income now in order to build the taxable savings wealth. But later that may change.

As for the proposed SS changes. Something needs to change so it's good to think if the Repubs do return to power they might get serious about it. However, I'd sure like to see spending cuts in other areas before changing what has become a social contract. Maybe not one I ever wanted. But one that has been promised and therefore needs to be honored.

Proving the govt can cut spending would go a long ways towards me swallowing austerity measures such as this.

 

[ziggy29]

As for the proposed SS changes. Something needs to change so it's good to think if the Repubs do return to power they might get serious about it. However, I'd sure like to see spending cuts in other areas before changing what has become a social contract. Maybe not one I ever wanted. But one that has been promised and therefore needs to be honored.

I know the minority party is seriously talking up fiscal responsibility and entitlement reform these days, but I really do think the minority leader may have picked the wrong issue to showcase their new-found austerity.

I also think the option to start at 62 needs to remain, even if it requires a bigger "hit" to your monthly check. There are just too many people who are below retirement age and can't find jobs, and they need some sort of a lifeline. In reality, any raising of the retirement age is likely to worsen the unemployment problem, perhaps substantially, so that needs to be factored into the discussion.

 

[haha]

Any ideas on how the means testing would be done?

Yes. If you can afford a tall latte, you are out of luck.

Ha

 

[FinanceGeek]

In reality, any raising of the retirement age is likely to worsen the unemployment problem, perhaps substantially, so that needs to be factored into the discussion.

IIRC (and I don't - not old enough to know this first hand) - one of the original selling points of social security was the idea that many older workers would leave the workforce and open up jobs for younger folks. Before social security, I think most people worked until they died.

 

[jIMOh]

Let's keep this focused on the issue and not the partisanism, please; I'd hate for Porky to make a quick entrance. This was a little too relevant and important to the retirement issue not to share.

Top Republican: Raise Social Security's retirement age to 70 - The Hill's Blog Briefing Room

I've been saying all along that I expect most public benefits to be means-tested by the time I'm a senior, so this adds credence to my strategy to configure a cheapskate lifestyle which needs a fairly low income to maintain.

No doubt, too, that the "line" would be drawn such that I'd be among the oldest to have the age raised to 70.

And exactly where are all these extra jobs going to come from, to say nothing about the rampant age discrimination that already exists even below age 65?

Can someone help me out...

what would "means tested" mean?

 

[ziggy29]

Can someone help me out...

what would "means tested" mean?

The more money you make from other sources, the less they give you.

 

[IndependentlyPoor]

And the answer is ...
20

 

[samclem]

And exactly where are all these extra jobs going to come from, to say nothing about the rampant age discrimination that already exists even below age 65?

They might not be very good jobs for older folks. Oldsters who don't keep their minds fit and don't retain the flexibility to learn/embrace new technology just aren't going to be worth as much to employers. The "traditional" pattern of ending your working life at your highest income level may be a thing of the past as these factors, plus increasing global competition driving down US pay, take hold over the coming years.

On the flip side, the virtual elimination of defined benefit plans and the likely elimination of employer-sponsored health plans reduces the disincentive to hire older workers. And, though it may be a stereotype, I think many employers do find that older workers have a stronger work ethic and are more customer-focused than their younger counterparts. When I'm in Lowes looking for an employee who knows something, I'll go to the old guy shuffling down the aisle rather than anyone with ear gauges.

I'm not sure why Boehner would choose this particular method to highlight the issue of government spending. It does demonstrate a willingness to take on hard, intractable issues, but I think I'd file it under "mistake" rather than "bravery."

 

[RonBoyd]

Like you, this is what I'm expecting. Only makes sense, really. But I also see the problem with hiring older folks--there will have to be some kind of incentive to convince employers to retain or hire above 55, to me.

A major hurdle will be that the great advantage of younger employees is the way they tackle any job (no matter how idiotic) with much enthusiasm and energy. Think in terms of why an 18 year old makes a better soldier than most over 50 (40?). And they are willing to do it for a tremendously discounted price. I can't see anyone over the age of 62, being forced to w*rk, jumping out of bed every morning filled with much joy and happiness. Would that present an attractive choice for any company (read Stockholder)?

I may be wrong (and there are certainly exceptions to the above described individuals) but expecting that there will be jobs for all those "boomers" comes from a shaky conceptual foundation. I believe, for instance, that it will take another ten years for the jobs scene to recover even a little.

 

[ronocnikral]

* Build a lot of Roth and taxable savings/investment wealth and use some of that as retirement income which won't hit your AGI.

B/c of the uncertainty of my future tax bracket and living well below my means and the possibility of the gov't "taxing" my roth distributions in retirement, i'm settling on a 50/50 roth/trad philosophy. Not sure what you deem as "a lot"...

 

[jIMOh]

The more money you make from other sources, the less they give you.

thx

I was thinking it was a new way of calculating an average (mean=average) so this one comment helps me understand many other comments THX!