The Social Security 2100 Act

[JustCurious]

The number of people in the United States living in "near-poverty," including those in poverty, is around 100 million, or nearly a third of the U.S. population. These are not people who tend to waste money buying unneeded items.

That's not my experience. I see poor and "nearly poor" people buying lottery tickets and cigarettes and alcohol all the time, not to mention the latest and most expensive smartphone.

 

[gwraigty]

That's not my experience. I see poor and "nearly poor" people buying lottery tickets and cigarettes and alcohol all the time, not to mention the latest and most expensive smartphone.

I know people who regularly go out to eat and attend events that cost them money, yet can't scrape together enough funds to pay their car insurance in full to avoid the monthly service fees. Broke and the car is on it's last legs. Unable to pay for needed medicine. It boggles my mind.

 

[beowulf]

And you know how many of those 100,000,000 people below or near the poverty line? Sure, there are people who who squander what little money they have. Many of them earn very good salaries. Gee, I know people who make $200K and $300K who are house poor and deep in credit card debt. That’s on them. But I’m sure there are far more who earn minimum wage and live a life of quiet desperation.

 

[JustCurious]

And you know how many of those 100,000,000 people below or near the poverty line?

Enough to relate my observations. I agree that there are some who make minimum wage and live a life of quiet desparation, and there are people across the income spectrum who squander their money, and certainly people with higher incomes squander more since they have more. My beef was with your statement "these are not people who tend to waste money buying unneeded items." That's a generalization, and as with most generalizations, it's not necessarily true because some poor people or nearly poor people do in fact waste their money buying unneeded items, just like some higher income folks.

 

[pb4uski]

I know people who regularly go out to eat and attend events that cost them money, yet can't scrape together enough funds to pay their car insurance in full to avoid the monthly service fees. Broke and the car is on it's last legs. Unable to pay for needed medicine. It boggles my mind.

+1 DW once worked for WIC and with clients on public assistance and frequently visited their homes and would chit chat with her clients as part of her work... they often had premium cable channels that we didn't subscribe to, fancier phone services, fancier cars in some cases, etc. IOW, they often frittered away some of the little money that they had on relative luxuries and then complained that they didn't have enough money to feed their kids.

 

[bigcmagor]

Our neighbors both need to work. She lost her job in March and knew it was coming. So what does that call for? Ten days in Orlando/Disney. She is still unemployed but pushing stick on fingernails to all of her friends. He lost his job two weeks ago. Guess what? Ten days in Orlando/Disney. It costs them $60 per day to have the dog sitter visit three times daily. It's not often enough because the house reeks of dog urine. The day after they returned, they hired a baby sitting service @ $15/hour so they could go out and party. I feel sorry for the pool cleaner and lawn service people who are banging on the door wanting to be paid for their services. Both cars are 200,000 miles plus and they don't have health insurance on themselves or the 18 month old. How can people be so stupid?

 

[hulurt1]

Sister in law-2 kids no dad, food stamp,$64 a month for rent, medical covered. 60 years old has never worked. 33 year boy is now a girl and the girl is a boy after this summer.
Who do you will pay for that. They all vote guess who for.

 

[ziggy29]

+1 DW once worked for WIC and with clients on public assistance and frequently visited their homes and would chit chat with her clients as part of her work... they often had premium cable channels that we didn't subscribe to, fancier phone services, fancier cars in some cases, etc. IOW, they often frittered away some of the little money that they had on relative luxuries and then complained that they didn't have enough money to feed their kids.

It is things like this that are increasingly attracting me to a "minimum guaranteed income" idea. Here is what you get, here is ALL you get, spend it how you wish, if you need more, seek charity.

I'd like to be out of the business of society deciding who is "worthy" of our help and who is not (assuming we are qualified to judge anyway).

That said.... was this a really common thing or more of an outlier? I would imagine it's not extremely rare, but I also suspect it's far from the norm.

Though this has really strayed far from proposed Social Security changes.

 

[Aerides]

Let's try to keep this thread on the topic of the proposed legislation, not the overall financial status of the population, or their motivations, or the other SS and entitlement programs, who buys what at the store, and who votes for whom.

This is NOT a debate on the overall SS program. If/when it becomes one, this thread will be closed.

 

[beowulf]

I don't know anything about the supposed SS Act of 2100, and frankly, if it takes that long to have any effect, I could care less. Sounds more like science fiction than anything else. I don't think anyone knows what the US be be like in 81 years. I do know that very few of us, if any, will be around to see. My issue is the automatic assumptions and judgments of a few people's behavior that is applied to everyone in a class. What many here are saying is that poor people squander what little money they have are are not deserving of anything from the public - because they are lazy? Spendthrifts? Low IQ? The wrong color? The wrong religion? Most of the negative comments seem to be aimed towards people seen spending money who clearly don't have much money to spend. The fact that 74% of people aren't saving enough for retirement has many interpretations. Spending too much may be one reason. Not having enough income to save may be another (try saving money working for minimum wage - especially in HCOL areas). And yes, I've seen people in the supermarket pay for food with whatever food stamps are called now and get into a really expensive car after they leave. Of course there is something wrong with that picture, but to assume all 74% of those not saving enough (no matter what their income level) because they are spending too much, without knowing their personal situation is straight out bigotry. What do you suggest we do about that 74%? I see more and more folks in their 60s and 70s working as greeters in stores, cashiers, etc. Maybe that's what they always did, but I don't judge them. I fully agree that they made their choices and have to live with those choices. But I just can't see the greatest country in the world letting its citizens starve.

 

[Independent]

A few clarifying points points on the bill:

- The congressman says "Provides an increase for all beneficiaries that is the equivalent of 2% of the average benefit." The actual formula change is to increase the first factor from 90% to 93%. That gives (almost) everyone an additional $333 per year. The high and low earners get the same dollar amount. Presumably, the average SS PIA is around $16,700 per year.

- There is an additional benefit for the over-$400k earners. It is very small, just 2% of the excess AIME (compared to 15% in the top band today).

- The donut hole makes sense if you know that collecting the full tax rate on all the earnings over the current cap would "overfund" SS in the short term. They are bringing in the additional tax dollars gradually. Of course, they could have taxed everything over the current cap at some reduced rate, then increased the rate gradually. Presumably, they figured the dh was more politically acceptable.

https://www.ssa.gov/OACT/solvency/LarsonBlumenthalVanHollen_20190130.pdf

 

[Independent]

If I were thinking about retiring today, and this bill passed, I'd be more likely to retire sooner.
If I were 61 and this bill passed today, I'd be more likely to defer benefits.

 

[Independent]

I don't know anything about the supposed SS Act of 2100, and frankly, if it takes that long to have any effect, I could care less.

Both the tax and benefit provisions of the proposal would go into effect in 2020.

The 2100 in the title doesn't mean we'd wait 81 years before things change.

 

[Dash man]

My guess is the donut hole will disappear over time and the inflation increases each year close in on the $400,000.

 

[ziggy29]

Both the tax and benefit provisions of the proposal would go into effect in 2020.

The 2100 in the title doesn't mean we'd wait 81 years before things change.

I think the intention is to suggest that it would keep SS "solvent" through 2100.

That said, I remember the SS reform in the 1980s which was expected to keep SS solvent for the next 75 years. It doesn't even look like it will make 50, and might barely make 40.

And while I applaud the increase in the limit for income that won't trigger taxation of SS, it still looks like it is not inflation-indexed, which has been a big problem with the current law for the last 35 years or so.

 

[joeea]

I don't know anything about the supposed SS Act of 2100, and frankly, if it takes that long to have any effect, I could care less.

Sounds more like science fiction than anything else. I don't think anyone knows what the US be be like in 81 years. I do know that very few of us, if any, will be around to see.

You should try reading a bit about it, so you would understand. What you just wrote makes no sense.

My issue is the automatic assumptions and judgments of a few people's behavior that is applied to everyone in a class. What many here are saying is that poor people squander what little money they have are are not deserving of anything from the public - because they are lazy? Spendthrifts? Low IQ? The wrong color? The wrong religion? Most of the negative comments seem to be aimed towards people seen spending money who clearly don't have much money to spend.

It's class warfare. And it's sad to see.

The fact that 74% of people aren't saving enough for retirement has many interpretations. Spending too much may be one reason. Not having enough income to save may be another (try saving money working for minimum wage - especially in HCOL areas). And yes, I've seen people in the supermarket pay for food with whatever food stamps are called now and get into a really expensive car after they leave. Of course there is something wrong with that picture, but to assume all 74% of those not saving enough (no matter what their income level) because they are spending too much, without knowing their personal situation is straight out bigotry. What do you suggest we do about that 74%? I see more and more folks in their 60s and 70s working as greeters in stores, cashiers, etc. Maybe that's what they always did, but I don't judge them. I fully agree that they made their choices and have to live with those choices. But I just can't see the greatest country in the world letting its citizens starve.

Agreed! Let's not revert back to the nonsensical "welfare queen" theories again. It was a lie back then, and it's a lie now.

 

[Independent]

My guess is the donut hole will disappear over time and the inflation increases each year close in on the $400,000.

Your guess is correct.

These provisions apply the OASDI payroll tax rate to covered earnings above $400,000 paid in 2020 and later. The $400,000 level is a fixed amount after 2020 and not indexed to price inflation or average wage increase. All covered earnings would be taxed once the current-law taxable maximum exceeds $400,000, which is projected to occur in 2048.

This allows them to phase in the tax revenue.

 

[brucethebroker]

Had a conversation with a 30 year old (my guess) banker last week. She asked if I was retired and how I felt about SS benefits. Further discussion led to me laughing and telling her I had been told since age 28 that SS would most likely be there for me- nearly 40 years ago. She was surprised-thought this "SS is broke" thing was brand new. "People tell me that all the time-that I cannot depend on SS being there when I retire." Well, I guess the politicians are still hard at work, scaring the dickens out of young people, trying to keep their fat jobs through fear mongering-nothing new to see here.

Told the banker about the old 3 legged stool theory of retirement: SS, personal savings and pension (now replaced with 401-k for many). Told her it works, and would most likely work for her.

 

[brucethebroker]

"I was told SS would most likely NOT be there for me-nearly 40 years ago." Sorry....

 

[pb4uski]

A few clarifying points points on the bill:

- The congressman says "Provides an increase for all beneficiaries that is the equivalent of 2% of the average benefit." The actual formula change is to increase the first factor from 90% to 93%. That gives (almost) everyone an additional $333 per year. The high and low earners get the same dollar amount. Presumably, the average SS PIA is around $16,700 per year.

- There is an additional benefit for the over-$400k earners. It is very small, just 2% of the excess AIME (compared to 15% in the top band today).

- The donut hole makes sense if you know that collecting the full tax rate on all the earnings over the current cap would "overfund" SS in the short term. They are bringing in the additional tax dollars gradually. Of course, they could have taxed everything over the current cap at some reduced rate, then increased the rate gradually. Presumably, they figured the dh was more politically acceptable.

https://www.ssa.gov/OACT/solvency/LarsonBlumenthalVanHollen_20190130.pdf

If there are 44 million retired worker beneficiaries (as of June 2019) and each one gets $333/year more.... isn't that and additional $14.7 billion (with a b) annually? Morons!

Keep benefit formulas as they are, forget about any increases to benefits nd forget about any donut hole, eliminate the cap and allow an increase in benefits (add another bend point if necessary) and adjust the rate as needed to keep the system solvent.

 

[Independent]

I think the intention is to suggest that it would keep SS "solvent" through 2100.

That said, I remember the SS reform in the 1980s which was expected to keep SS solvent for the next 75 years. It doesn't even look like it will make 50, and might barely make 40.

And while I applaud the increase in the limit for income that won't trigger taxation of SS, it still looks like it is not inflation-indexed, which has been a big problem with the current law for the last 35 years or so.

I agree that's what they meant by "2100" in the title. Note that "solvent" doesn't mean the trust fund runs out in 2101. " the combined Social Security Trust Fund would be fully solvent throughout the 75-year projection period, ... In addition, because the projected trust fund ratio is increasing at the end of the period, the proposal meets the conditions for sustainable solvency."

I don't recall "solvent for the next 75 years" for the 1983 amendments. This is from the SSA's history:

Estimates prepared for the NCSSR showed that the
Commission’s proposals would reduce the revenue/expenditure
gap for 1983-89 by $168 billion and reduce
the long-range deficit of 1.80 percent of payroll by 1.22
percent. The supporters of the package were divided
as to how the remaining deficit (0.58 percent of payroll)
should be eliminated.

https://www.ssa.gov/policy/docs/ssb/v46n7/v46n7p3.pdf

I think those calculations were done for a 75 year horizon. It looks like they thought they were closing 2/3 of the gap. The current estimate is that the trust fund will run out in 2035. That's about 51 years after the 1983 amendments were effective.

 

[Independent]

If there are 44 million retired worker beneficiaries (as of June 2019) and each one gets $333/year more.... isn't that and additional $14.7 billion (with a b) annually? Morons!

Keep benefit formulas as they are, forget about any increases to benefits nd forget about any donut hole, eliminate the cap and allow an increase in benefits (add another bend point if necessary) and adjust the rate as needed to keep the system solvent.

SS actuaries generally provide cost/revenue estimates as percents of the current law taxable "payroll" (actually, all income subject to SS taxes). The extra 3% up to the first bend point is estimated at 0.24% of payroll. The increased minimum would cost 0.12%.

I would go with the second but not the first.

I'd make other, more extensive, changes. But, I think that's outside the scope of this thread.

 

[Senator]

A few clarifying points points on the bill:

- The congressman says "Provides an increase for all beneficiaries that is the equivalent of 2% of the average benefit." The actual formula change is to increase the first factor from 90% to 93%. That gives (almost) everyone an additional $333 per year. The high and low earners get the same dollar amount. Presumably, the average SS PIA is around $16,700 per year.

Does the 93% mean that someone making $1,000 a month while working, they will make $930 a month in SS?

 

[pb4uski]

That suggests that it might be more. OASI income for 2018 is estimated to be $828.8 billion. The OASI rate is 10.3% (employee & employer or self-employed). This suggests that taxable payroll is $8,046 billion.... 0.24% of $8,046 billion would be $19.3 billion annually.... a large addition to benefits for a system that is financially challenged to begin with.

I agree, I would be ok with the increased minimum.

 

[pb4uski]

Does the 93% mean that someone making $1,000 a month while working, they will make $930 a month in SS?

No.

Primary insurance amount (PIA) equals
90% of the first $895 of average indexed monthly earnings (AIME), plus
32% of AIME over $895 through $5,397, plus
15% of AIME over $5,397

So under the current formula, someone with AIME of $1,000/month would have a PIA of $839.10.... the proposed 3% increase would increase it to $865.95.