Social Security Trust good to 2035

[GrayHare]

These are just numbers in a spreadsheet, no? There's no lockbox holding FICA/SS money separately. Incoming FICA is commingled with other money coming into the government. If dollars commingle on the way in, SSA can draw from the same big pile when needed in the future.

[gerntz]

Good news is my income taxes will be lower.

[USGrant1962]

Quote:

Originally Posted by GrayHare These are just numbers in a spreadsheet, no? There's no lockbox holding FICA/SS money separately. Incoming FICA is commingled with other money coming into the government. If dollars commingle on the way in, SSA can draw from the same big pile when needed in the future.

Not true. The SS trust fund is in special Treasury securities. The FICA/SS money is as separate as it can be and accounted for to the penny. SS can only draw from those bonds and current SS taxes, and cannot draw from General Revenues.

Now, you could argue that the Government already spent the excess and issued bonds to replace it, but those bonds Treasuries so are quite real as long as the U.S. Government is around.

[220volt]

So come 2035 will they immediately cut benefits to all existing retirees, soon-to-be retirees
or
will they start preemptively cutting future benefits of younger generations who haven't earned SS credit yet?

I read it as 20% cuts immediately across the board - existing and future.

[Crabby Mike]

Quote:

Originally Posted by 220volt So come 2035 will they immediately cut benefits to all existing retirees, soon-to-be retirees or will they start preemptively cutting future benefits of younger generations who haven't earned SS credit yet? I read it as 20% cuts immediately across the board - existing and future.

Yes, the latter -- according to everything I've read, that's how the law reads.

[timo2]

I've scheduled in a 20% SS haircut on my spreadsheet. If I'm fortunate enough to still be alive at 82. DW will only be 75 though.

[Amethyst]

Federal retiree (CSRS) here. Your post is entirely correct. Lifetime pensions for one-term representatives is up there with "Don't you dare call Social Security an entitlement!"

Quote:

Originally Posted by Crabby Mike To add and clarify (and no doubt someone will correct me if I get this wrong): Policymakers (members of Congress and the like) basically earn the same retirement benefits other Federal workers get, based in time of service and age. The former system (Civil Service Retirement System, or CSRS) was the one that paid a defined benefit pension, and the employees didn't participate in Social Security. The "new" system (Federal Employees Retirement System, or FERS) began in the 1980s, and covered all new employees going forward, with those under CSRS given the option to switch. FERS retirement benefits consist of the Thrift Savings Plan, or TSP (basically a 401K) and a tiny pension, along with the ability to participate in the Federal health insurance program (by paying premiums) in retirement. The majority of CSRS participants have already retired, or will soon. The frequently-circulated nonsense that members of Congress get lifetime pensions after one term, etc. is just that -- nonsense. The only Federal employee that gets a lifetime salary is the President.

[Cut-Throat]

Quote:

Originally Posted by Beststash It's time to do something about it instead of just talking. We seem to be able to cut taxes without any consideration of the long term effects but ignore our major problems without any thought whatsoever.

Well that should tell you everything you need to know.

[ShokWaveRider]

Quote:

Originally Posted by Cut-Throat Well that should tell you everything you need to know.

That was profound!

[Independent]

I used to believe that no congresscritters would back a bill that balanced the SS income/outgo. Such a bill would require either raising taxes or cutting benefits, and those are both politically DOAs.

But, I was wrong. HR 860 (Social Security 2100) would actually do the trick. The big numbers come from raising taxes.

The bill has one sponsor and 203 cosponsors. If they can get 14 more reps, they will have a majority of the House on board. IMO, that's a big deal.

The sponsor is the chairman of the House Subcommittee on Social Security, Committee on Ways and Means. That would normally mean that the bill will get hearings.

I'm not saying that this is my idea of the best bill. But, it could get things moving.

https://larson.house.gov/social-security-2100
https://www.congress.gov/bill/116th-...house-bill/860

[Independent]

Quote:

Originally Posted by GrayHare These are just numbers in a spreadsheet, no? There's no lockbox holding FICA/SS money separately. Incoming FICA is commingled with other money coming into the government. If dollars commingle on the way in, SSA can draw from the same big pile when needed in the future.

Quote:

Originally Posted by USGrant1962 Not true. The SS trust fund is in special Treasury securities. The FICA/SS money is as separate as it can be and accounted for to the penny. SS can only draw from those bonds and current SS taxes, and cannot draw from General Revenues. Now, you could argue that the Government already spent the excess and issued bonds to replace it, but those bonds Treasuries so are quite real as long as the U.S. Government is around.

I agree with GrayHare. The trust fund has no economic significance. Physically, it is just a worksheet.

I also agree with USGrant. The trust fund has a lot of legal significance. The secretary is required to pay benefits as long as the number on the spreadsheet is positive, and is prohibited from paying benefits if the number is negative.

The legal side matters to those of us getting benefits.

(I disagree with USG on the "as long as the US government is around". The US government can choose to default on the bonds. That would, of course, require two houses of congress and the prez. But, it could be done. Since this is a special series of bonds, such a default would not have the extreme economic significance of defaulting on other bonds. But, in practice, it is easier for congress to reduce benefits so the issue of bond default never comes up.)

[joeea]

Quote:

Originally Posted by Jerry1 My thinking is that this means the IOU’s are coming due and this will need to be addressed right away. I mean come on, I don’t think Al Gore got his lock box, so isn’t the money going to come from the general fund and start to contribute to the annual budget deficit?

No. IOUs are already counted as part of the deficit. No new contribution.

There is nothing to be addressed right away.

Quote:

Cashing in the IOU’s will hopefully spur action.

Seems very unlikely that "cashing in the IOUs" spurs anything.

[joeea]

Quote:

Originally Posted by 220volt I read it as 20% cuts immediately across the board - existing and future.

That is the current rule.

[joeea]

Quote:

Originally Posted by Independent I used to believe that no congresscritters would back a bill that balanced the SS income/outgo. Such a bill would require either raising taxes or cutting benefits, and those are both politically DOAs. But, I was wrong. HR 860 (Social Security 2100) would actually do the trick. The big numbers come from raising taxes. The bill has one sponsor and 203 cosponsors. If they can get 14 more reps, they will have a majority of the House on board. IMO, that's a big deal.

The House, yes. The Senate, no.

[Independent]

Quote:

Originally Posted by Jerry1 I read something that said that SS will stop bringing in more than they are paying out in 2020. This will require that they start tapping the Trust Funds. My thinking is that this means the IOU’s are coming due and this will need to be addressed right away. I mean come on, I don’t think Al Gore got his lock box, so isn’t the money going to come from the general fund and start to contribute to the annual budget deficit? 2035 is just the point where there are no more IOU’s to cash. That doesn’t mean that there won’t be issues long before that. Cashing in the IOU’s will hopefully spur action.

The OASDI benefits have been greater than the taxes in every year since 2010. The annualized spreadsheet is table VI.A.3 here: https://www.ssa.gov/OACT/TR/2019/VI_...st.html#282924

The great majority of Americans didn't notice.

However the shortfall has been less than the interest credited, so the balance has continued to grow. In 2018, the growth was 0.3% of the revenue (including interest). That's tiny, but I don't recall any headlines. Maybe there is some psychological impact of the balance starting to shrink, I'm skeptical.

[Sunset]

Congress folks have to work 5 years to get a pension, so 1 term won't make it, but 2 will and they don't have to be consecutive.
Run for Senate though and retire after 1 term:

Frankly either one is a pretty sweet deal... wonder who voted for it... ?

But ".... senators are eligible for a pension after one term, but it won’t be their full salary."

https://www.factcheck.org/2015/01/co...nsions-update/
"CRS, June 13: Members of Congress are eligible for a pension at the age of 62 if they have completed at least five years of service....."

[jimandthom]

Quote:

Originally Posted by Sunset Congress folks have to work 5 years to get a pension, so 1 term won't make it, but 2 will and they don't have to be consecutive. Run for Senate though and retire after 1 term: Frankly either one is a pretty sweet deal... wonder who voted for it... ? But ".... senators are eligible for a pension after one term, but it won’t be their full salary." https://www.factcheck.org/2015/01/co...nsions-update/ "CRS, June 13: Members of Congress are eligible for a pension at the age of 62 if they have completed at least five years of service....."

I hope that people read the whole article, as it more properly and fully explains the calculation. Seems to be pretty much the same policy, CSRS or FERS, that my spouse retired from with 35 years.

[Crabby Mike]

Quote:

Originally Posted by jimandthom I hope that people read the whole article, as it more properly and fully explains the calculation. Seems to be pretty much the same policy, CSRS or FERS, that my spouse retired from with 35 years.

It's FERS now, and the pension would be quite small with only 6 years of service (one term Senate).

[youbet]

Let's hope any adjustments to SS (input and/or output) share the burden among all. Today's youngsters already have a tougher row to hoe than we geezers, so why dump all the burden on them?

[Cut-Throat]

It seems to me that the Current Fiscal problems are much worse than what may or may not happen in 2035.... If we cannot solve today's budget problems, why all the concern for something over 15 years down the road?


If the powers that be concerned themselves with the present, it would help things immensely for the future.