Boehner: Raise SS age and means-test benefits

[ziggy29]

And the answer is ...
20

Since when? I thought it was 42....

 

[aaronc879]

What about blue-collar workers who are often not physically able to do the work until age 60 let alone through out their entire 60's. They're going to have to be supported one way or another or there will be a lot more homeless people roaming the streets in their 60's.

 

[DeborahB]

* 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.

The problem with that is the money is taxed as income when you take it out, and then the gain is taxed again if you don't need it all. UGH!

 

[samclem]

The problem with that is the money is taxed as income when you take it out, and then the gain is taxed again if you don't need it all. UGH!

But, if your tax rate is the same when you withdraw it as when you would have withdrawn it (later), then it's (almost) a wash, right?

*excepting the effects of compounding you lose when you pay the tax on the growth every year vs paying the tax on the accumulated gain when it is withdrawn. This is a small amount, IIRC, under most timeframes/growth rates. Or, I could be wrong.

 

[DeborahB]

But, if your tax rate is the same when you withdraw it as when you would have withdrawn it (later), then it's (almost) a wash, right?

*excepting the effects of compounding you lose when you pay the tax on the growth every year vs paying the tax on the accumulated gain when it is withdrawn. This is a small amount, IIRC, under most timeframes/growth rates. Or, I could be wrong.

Or you could be right - good point, hadn't thought about that.

 

[Texas Proud]

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.

It would be to hard to do with net assets.... it is easier to hide than AGI... go look at the gold coin thread... it is one of the reasons some like it...

Also, like when someone asks your net worth... we get so many questions as 'what do you mean'.... so again, not a simple solution... AGI is the only way I can see it being simple and easy to check...

 

[Westernskies]

Do away with cushy Congessional pensions and replace them with the same SS benefits, age requirements, and means testing they are proposing for the rest of us... Problem solved.

 

[lets-retire]

I think it's a good idea. SS was started when the life expectancy was much lower than it currently is. I also think any changes should have a fairly long phase in period. So those who are within 10-15 years of retiring, wouldn't have any changes to their system. Then phase it in over the course of five or six years. Raise all ages for SS. Even the early retirement age should get raised by two or three years. If it were up to me, and I know it isn't, I'd try to tie it to life expectancy at a selected age, so it wouldn't need to be adjusted again.

 

[Lazarus]

I think it's a good idea. SS was started when the life expectancy was much lower than it currently is. I also think any changes should have a fairly long phase in period. So those who are within 10-15 years of retiring, wouldn't have any changes to their system. Then phase it in over the course of five or six years. Raise all ages for SS. Even the early retirement age should get raised by two or three years. If it were up to me, and I know it isn't, I'd try to tie it to life expectancy at a selected age, so it wouldn't need to be adjusted again.

But it would be raised again. Just as soon as the money ran out.

 

[MasterBlaster]

Fixing SS redux...

We fixed the system before in 1983. What short memories we all have. All I can see is that I have paid significantly higher taxes. And for what - pork spending ? The outlook for payments is now worse than ever. Check out the suggestions of 75 year solvency and surpluses forever below from the 1983 "fix".

<from wikipedia>

The federal government appointed the National Commission on Social Security Reform, headed by Alan Greenspan (who had not yet been named Chairman of the Federal Reserve), to investigate what changes to federal law were necessary to shore up the fiscal health of the Social Security program.[4] In addition to recommending tax increases to alleviate the short-term funding problem, the Greenspan Commission projected that the system would be solvent for the entirety of its 75-year forecast period.[4] The changes to federal law enacted in 1983 pursuant to the recommendations of the Greenspan Commission increased the Social Security payroll tax so that revenues derived from the tax would exceed the amounts needed to fully fund current benefits, thus causing a reserve to accumulate, which could be drawn upon when necessary. The resulting surplus is accounted for in the Social Security Trust Fund. As of the end of calendar year 2008, the accumulated surplus stood at just over $2.4 trillion. [1] Projections are that current receipts will continue to exceed expenditures until 2017 (according to Charles Blahous, Special Assistant to the President for Economic Policy). Thereafter, there will be a shortfall that will be made up by withdrawals from the Trust Fund, although the Trust Fund will continue to show net growth until 2025 because of the interest generated by its bonds. [2]
The Trust Fund will gradually be drawn upon to cover the difference between tax receipts and benefit payments. It will be completely depleted by 2042 (according to the Social Security Administration) or 2052 (according to the Congressional Budget Office). However, if the US economy performs better than the economic assumptions and projections used by the SSA and CBO, the trust funds may remain in surplus indefinitely.

 

[Emeritus]

Do away with cushy Congessional pensions and replace them with the same SS benefits, age requirements, and means testing they are proposing for the rest of us... Problem solved.

Do you really believe that virtually Members of Congress are not in social security?
This is such an incredibly old urban legend that I'll reprint the whole thing

Benefits Paid to Members of Congress
You may have read that Members of Congress do not pay into Social Security. Well, that's a myth.
Prior to 1984, neither Members of Congress nor any other federal civil service employee paid Social Security taxes. Of course, the were also not eligible to receive Social Security benefits. Members of Congress and other federal employees were instead covered by a separate pension plan called the Civil Service Retirement System (CSRS). The 1983 amendments to the Social Security Act required federal employees first hired after 1983 to participate in Social Security. These amendments also required all Members of Congress to participate in Social Security as of January 1, 1984, regardless of when they first entered Congress. Because the CSRS was not designed to coordinate with Social Security, Congress directed the development of a new retirement plan for federal workers. The result was the Federal Employees' Retirement System Act of 1986. Members of Congress receive retirement and health benefits under the same plans available to other federal employees. They become vested after five years of full participation.
Members elected since 1984 are covered by the Federal Employees' Retirement System (FERS). Those elected prior to 1984 were covered by the Civil Service Retirement System (CSRS). In 1984 all members were given the option of remaining with CSRS or switching to FERS.
As it is for all other federal employees, congressional retirement is funded through taxes and the participants' contributions. Members of Congress under FERS contribute 1.3 percent of their salary into the FERS retirement plan and pay 6.2 percent of their salary in Social Security taxes.
Members of Congress are not eligible for a pension until they reach the age of 50, but only if they've completed 20 years of service. Members are eligible at any age after completing 25 years of service or after they reach the age of 62. Please also note that Members of Congress have to serve at least 5 years to even receive a pension.
The amount of a congressperson's pension depends on the years of service and the average of the highest 3 years of his or her salary. By law, the starting amount of a Member's retirement annuity may not exceed 80% of his or her final salary.
According to the Congressional Research Service, 413 retired Members of Congress were receiving federal pensions based fully or in part on their congressional service as of Oct. 1, 2006. Of this number, 290 had retired under CSRS and were receiving an average annual pension of $60,972. A total of 123 Members had retired with service under both CSRS and FERS or with service under FERS only. Their average annual pension was $35,952 in 2006.
US Congress Salaries and Benefits – Salaries and Benefits of US Congress Members

 

[ziggy29]

Do you really believe that virtually Members of Congress are not in social security?
This is such an incredibly old urban legend that I'll reprint the whole thing

Go back and read what you are responding to. Nowhere was it asserted that Congress doesn't pay into SS. You're reading something into it that wasn't said.

The point is that if Congress wants to means test SS and raise the full age to 70, they should do the same to their own Congressional pensions or forego their own pensions. (Which would mean most of them, regardless of party, would get nothing from them in either case.)

Lead by example, y'know?

 

[TromboneAl]

...he suggested reducing or eliminating benefits to Americans with a "substantial non-Social Security income" while retired.
​

Do you think that refers to investment income? Withdrawals from IRAs?

"We're all living a lot longer than anyone ever expected,"

​

​

 

[Emeritus]

Go back and read what you are responding to. Nowhere was it asserted that Congress doesn't pay into SS. You're reading something into it that wasn't said.

The point is that if Congress wants to means test SS and raise the full age to 70, they should do the same to their own Congressional pensions or forego their own pensions. (Which would mean most of them, regardless of party, would get nothing from them in either case.)

Lead by example, y'know?

I'm sorry, but you not me, misread the post
the precise quote was
"Do away with cushy Congessional pensions and replace them with the same SS benefits, age requirements, and means testing they are proposing for the rest of us... Problem solved."

This is a demand to eliminate congressional pensions, not change them as you suggest
the request is that the Pensions be REPLACED

The total claim was that there were Cushy Congressional pensions that should be "replaced" with "The same SS etc." That is clearly a statement that Congress is not covered by SS.







It said

 

[ziggy29]

This is a demand to eliminate congressional pensions, not change them as you suggest
the request is that the Pensions be REPLACED

I guess that wasn't covered in the part where I said "or forego" their Congressional pensions.

My bad.

 

[MasterBlaster]

"We're all living a lot longer than anyone ever expected,"


​

It may be that Americans are living longer. However this chart doesn't support that conclusion. This chart mainly supports the better infant mortality stats than that we are living longer.
​

To support your conclusion you need a mean age at death chart or something equivalent.​

 

[Westernskies]

Go back and read what you are responding to. Nowhere was it asserted that Congress doesn't pay into SS. You're reading something into it that wasn't said.

The point is that if Congress wants to means test SS and raise the full age to 70, they should do the same to their own Congressional pensions or forego their own pensions. (Which would mean most of them, regardless of party, would get nothing from them in either case.)

Lead by example, y'know?

Thanks, Ziggy. At least you read the post before responding with a diatribe. I say forego Congressional pensions altogether- Congress was never intended to be a full-time Government career, with lifetime perks and benefits. If they were relying on SS for their retirement like 99% of their constituents, they might get serious about fixing and funding the problem. Just like the health care issue.

 

[Emeritus]

Thanks, Ziggy. At least you read the post before responding with a diatribe. I say forego Congressional pensions altogether- Congress was never intended to be a full-time Government career, with lifetime perks and benefits. If they were relying on SS for their retirement like 99% of their constituents, they might get serious about fixing and funding the problem. Just like the health care issue.

If you want government of the rich, by the rich and for the rich even more than we have now, eliminate congressional salaries and pensions. Make them all beholden to corporations and wealthy patrons. I'm sure that will improve pensions.

Even better have each billionaire simply designate their senator or representative and keep turning them over so its not a career.

 

[samclem]

It may be that Americans are living longer. However this chart doesn't support that conclusion. This chart mainly supports the better infant mortality stats than that we are living longer.

To support your conclusion you need a mean age at death chart or something equivalent.​

According to the neat WolframAlpha knowledge engine Martha recently steered us to:
-- In 1935, the average person reaching 65 in the US could expect to live to be 77.76 years old, thus drawing on SS for 12.76 years.
-- In 2005. the average person reaching 65 in the US could expect to live to be 83.82 years old, thus drawing on SS for 18.82 years.

So, the average senior is drawing checks for about 1/3 longer now than when the program started. Add in all the other benefits that SS didn't have in the beginning (for kids, disability, etc) plus the demographic changes, and it's easy to see why the Ponzi scheme (beloved as it is) is in trouble.

 

[harley]

I'm sorry, but you not me, misread the post
the precise quote was
"Do away with cushy Congessional pensions and replace them with the same SS benefits, age requirements, and means testing they are proposing for the rest of us... Problem solved."

This is a demand to eliminate congressional pensions, not change them as you suggest
the request is that the Pensions be REPLACED

The total claim was that there were Cushy Congressional pensions that should be "replaced" with "The same SS etc." That is clearly a statement that Congress is not covered by SS.

YouTube - Monty Python - Argument Clinic

 

[Emeritus]

According to the neat WolframAlpha knowledge engine Martha recently steered us to:
-- In 1935, the average person reaching 65 in the US could expect to live to be 77.76 years old, thus drawing on SS for 12.76 years.
-- In 2005. the average person reaching 65 in the US could expect to live to be 83.82 years old, thus drawing on SS for 18.82 years.

So, the average senior is drawing checks for about 1/3 longer now than when the program started. Add in all the other benefits that SS didn't have in the beginning (for kids, disability, etc) plus the demographic changes, and it's easy to see why the Ponzi scheme (beloved as it is) is in trouble.

Depends on the tax rate and other factors. SS is no more of a Ponzi scheme than any other pension system. The fundamental backing for social security is the American economy , which is what backs any US stock or bond based pension. Only a functioning economy can convert assets into income.

 

[kyounge1956]

(snip)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...

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.

Maybe adding another level of Social Security benefits would address this issue. Set the ages for early retirement, "full" retirement and late retirement (currently 62, 65-67, and 70) to float with increasing life expectancy, but make "emergency retirement" available to anyone who has paid into the SS system for enough quarters to be eligible for benefits and is over 50. I would leave that as a fixed age, because it's more a function of what age makes it difficult to find another job than of life expectancy. Make the amount actuarially equivalent to full retirement, so the cost to the system will be the same regardless of the age a person retires at. I will guess that making the benefit at this earlier age equivalent to full retirement benefits starting some 15 or 20 years later, would probably reduce the monthly benefit enough that few people would elect to retire at 50 unless they've run out of other alternatives. A possible additional qualification would be that to be eligible, you first must exhaust any unemployment benefit you might have coming. The benefit wouldn't be a large amount, but combined with one of those "not very good" jobs which may be all that's available to people in this predicament, would keep food on the table and a roof over the head.

Of course you could still ER if your savings were sufficient to support you, but the earliest such a retiree would be able to start SS would be 62 (and older as life expectancies increase). Anyway, all the arguments that are now leveled against taking SS at 62 would apply even more strongly to starting at 50 if you didn't need to.

 

[Katsmeow]

I think it's a good idea. SS was started when the life expectancy was much lower than it currently is. I also think any changes should have a fairly long phase in period. So those who are within 10-15 years of retiring, wouldn't have any changes to their system. Then phase it in over the course of five or six years. Raise all ages for SS. Even the early retirement age should get raised by two or three years. If it were up to me, and I know it isn't, I'd try to tie it to life expectancy at a selected age, so it wouldn't need to be adjusted again.

But the relevant life expectancy wasn't much lower when SS was started. It is true that overall life expectancy was lower. However, it wasn't like people were living until 65 and then suddenly dropping dead. Life expectancy was primarily lower because of people dying young (infant mortality for example). So people who lived to late adulthood had a fairly long life expectancy.

SS itself explains this on their webpage. SS indicates that if you look at people at age 65 the life expectancy has only increased by about 5 years. SS is also clear that the more important drivers for financial problems for SS are not the change in life expectancy -- rather, it is the size of the baby boom generation and number of workers v. number of recipients (which is also related to size of baby boom generation).

http://www.ssa.gov/history/lifeexpect.html

 

[lets-retire]

kyounge--That sounds like a good plan to me.

Katsmeow--Read Sam's post. Also with the number of people receiving SS any change does not have to be large to get large results. A five year increase in life expectancy could literally cost hundreds of millions of dollars, without the increase in number of people receiving the benefit. Add to it the increase in number of people that number easily raises to billions or hundreds of billions of dollars. This isn't even considering the income side of the equation.

 

[samclem]

Maybe adding another level of Social Security benefits would address this issue. Set the ages for early retirement, "full" retirement and late retirement (currently 62, 65-67, and 70) to float with increasing life expectancy, but make "emergency retirement" available to anyone who has paid into the SS system for enough quarters to be eligible for benefits and is over 50. I would leave that as a fixed age, because it's more a function of what age makes it difficult to find another job than of life expectancy. Make the amount actuarially equivalent to full retirement, so the cost to the system will be the same regardless of the age a person retires at.

If the average 65 YO can now expect to live 18 more years, then allowing someone to start taking withdrawals at 50 would mean a monthly check of less than 1/2 of the full retirement amount. For many workers, that will be below the government poverty line, which will mean more transfer payments from the taxpayers for these "can't afford it but want to quit" early retirees. Plus the already mentioned taxpayer subsidies for health insurance for low income folks (who,because they quit work at 50 haven't yet reached 65 and the Medicare eligibility). Once you start piling on the gravy, it's hard to stop.
I think if we want a competitive economy it would be better to encourage work than to encourage people to not work. That's the lesson of Europe.