Changes Americans are willing to make to fix Social Security

[youbet]

Call it what you want, welfare or not. The income is just not nearly enough income to pay $1000+/mo on Medicare (parts + supplemental), out of pocket costs, plus all of life's other expenses.

Well, no doubt your friend, if given a "do-over," would work the small amount required to get 40 qtrs credit for SS. Now, like so many folks need to do these days, she'll likely need to roll up her sleeves and work past 65. She sure won't be alone. Perhaps the business she partially owns could be modified so she could be paid from that on a W-2 with FICA withheld instead of however she is being paid now.

Yes, my intent wasn't to continue a discussion on it, but it came to my mind when talking about spouses who are getting a benefit despite not meeting the 40 quarters of credit, that there are others who actually paid into SS some who are more needy and won't get anything. But we can end that discussion now.

BigDawg mentioned in an earlier post that only 4.4% of SS recipients are spousal beneficiaries. And of those, many have some benefits of their own earned, just less than 50% of their spouse's benefits. So changing the rules over time might not impact too many people too badly. I think it's getting pretty uncommon for a stay at home, married parent to never work and pay FICA over their entire lives.

 

[Irishgirlyc58]

Yeah, IL. Same as me. I researched into it - no indications that things will change. I don't know what your $130,00 was supposed to be with the comma placement as it was, so I looked it up. Wow, $130,000.

Sorry-yes $130,000.
I think that is a compromise because originally CA had wanted it to mirror the expansion Medicaid for asset testing. Which makes the most sense but this is a start.

 

[Big Gun]

Spousal Rationale

FWIW, both DW and I will receive benefits based on our individual earning records, but the logic behind spousal benefits is to make it fairer for single earner married couples.

Family A - two earners, each earning $50k/year on average.
Family B - single earner, earning $100k/year on average.

So both families contribute identical amounts throughout lifetime.
However, because of the progressivism of the bend points, Family A will receive more the Family B.
Spousal benefits is a means to equalize the discrepancy.

 

[USGrant1962]

FWIW, both DW and I will receive benefits based on our individual earning records, but the logic behind spousal benefits is to make it fairer for single earner married couples.

Family A - two earners, each earning $50k/year on average.
Family B - single earner, earning $100k/year on average.

So both families contribute identical amounts throughout lifetime.
However, because of the progressivism of the bend points, Family A will receive more the Family B.
Spousal benefits is a means to equalize the discrepancy.

Interesting observation, Big Gun.

And welcome to the forum!

 

[GenXguy]

FWIW, both DW and I will receive benefits based on our individual earning records, but the logic behind spousal benefits is to make it fairer for single earner married couples.

Family A - two earners, each earning $50k/year on average.
Family B - single earner, earning $100k/year on average.

So both families contribute identical amounts throughout lifetime.
However, because of the progressivism of the bend points, Family A will receive more the Family B.
Spousal benefits is a means to equalize the discrepancy.

That's a pretty big benefit for someone that never earned any of it.

Family C - two earners, one earning $100K/yr, one $50K/yr'

Basically, for Famiily B, you're giving an unearned benefit to a spouse that stayed home all those years and giving her as much as the spouse in Family C, who worked all those years, and whose household income was 50% higher either Family A or B. Hardly fair.

Family D - one earner $100K/yr

And then the single person not only doesn't get the bonus "spousal benefit" of the married $100K earner but has to pay a higher tax based on the SS taxation threshold on top of higher other taxes. No fairness there, either.

So at the end of the day, it seems completely illogical and unfair to give an unearned benefit to someone that didn't earn it.

 

[pb4uski]

^^^ I think you need to let it go. From the data I have seen, the costs of spousal benefits is about 1% of the total. While I would not object to what you are proposing, for anyone serious about solving the problem there are bigger fish to fry that will be more productive.

I think part of why you are so stuck on spousal benefits is because your friend who never received 40 credits to be able to get free Part A has slipped through a crack in the program. Time to get over it. Stuff happens.

 

[Bigdawg]

That's a pretty big benefit for someone that never earned any of it.

Family C - two earners, one earning $100K/yr, one $50K/yr'

Basically, for Famiily B, you're giving an unearned benefit to a spouse that stayed home all those years and giving her as much as the spouse in Family C, who worked all those years, and whose household income was 50% higher either Family A or B. Hardly fair.

Family D - one earner $100K/yr

And then the single person not only doesn't get the bonus "spousal benefit" of the married $100K earner but has to pay a higher tax based on the SS taxation threshold on top of higher other taxes. No fairness there, either.

So at the end of the day, it seems completely illogical and unfair to give an unearned benefit to someone that didn't earn it.

Family E: One earner $100K/yr, married to 1st spouse-10 years, married to 2nd spouse-10 years, married to 3rd spouse 10 years. Earner plus spouse and the 2 former spouses all live together in a huge mansion collecting one full SS check and 3 spousal checks.

Sorry, this thread has gone off the rails. And I'm part of the problem. Sorry. The politicians going forward will have lot's of hard work to do trying to figure this all out.

 

[bada bing]

From the data I have seen, the costs of spousal benefits is about 1% of the total.

I would find that incredible, if true. I searched for a transparent breakdown of SS expenditures by type, but found nothing. I would believe anything from 5%-15% on total outlays, just anecdotally. But I have no data. And any data I saw would need clarification as to how it is calculated. If a person who receives spousal benefits also qualifies for a lower benefit from their own record, they are "retired receiving benefits" because you don't get either spousal or your own benefit. You get your own benefit plus enough spousal to true up to 1/2 the higher earner's bennie. I would suspect that the ~3M individuals who are classified as receiving spousal are those only qualified under spousal. Those numbers have to exclude the millions who receive some spousal in addition to their own benefit. Lots of accounting tricks to make the numbers what you want, but 1% of program outlays for spousal can not be correct.

Another example of where the spousal stats are underreporting (for sure) is that claims on ex-spouses are classified as survivor benefits, not retiree or spousal.

The proposal I have seen that is the most "fair" is to give each partner in a married couple 1/2 the couple's SS earnings credit for each year and a married couple's earnings cap moved to be 2x a single. And then you get bennies on your own record, period. Low to mid earning married couples with greatly different individual earnings records would still receive an increased combined benefit because of how the bend points work. It also "fixes" the inequity in giving survivor benefits. It is analogous to how QDRO works for the division of retirement assets when divorcing.

 

[corn18]

That's a pretty big benefit for someone that never earned any of it.

So at the end of the day, it seems completely illogical and unfair to give an unearned benefit to someone that didn't earn it.

Then this should apply to the person you keep referring to.

 

[GenXguy]

^^^ I think you need to let it go.

We're not legislating any changes here - just having some discussion. But I thought their post warranted a response. These types of discussions are bound to continue here and elsewhere long term, even if/when changes to the system are finally made. While I think the cost is actually much higher than the 1% or 4% figures touted by a few members here, there's also the principle of the matter when you're asking people who paid in a full 40+ quarters to take a cut while benefits are going out to those that didn't work that long if at all. Anyway, it's good to hear more of you support it, not that I expect it to change. Of course, I realize that's not the silver bullet anyway - we''ll probably need to raise the retirement age for those 55+ or maybe 60+, raise FICA taxes/cap, but hopefully not cut current benefits or COLA that would result in effective cut over time.

I think part of why you are so stuck on spousal benefits is because your friend who never received 40 credits to be able to get free Part A has slipped through a crack in the program. Time to get over it. Stuff happens.

While that's an issue, more so from a health care coverage standpoint, SS spousal (not survivor) benefits have bothered me for much longer. I know personally some spouses that barely worked at all getting nice SS checks, which concerned me well before this more recent situation I became aware of, which I'm trying to end that discussion and deleted many of my previous posts after an earlier complaint from someone that it shouldn't be in this thread.

 

[GenXguy]

Then this should apply to the person you keep referring to.

Yes, no one who hasn't met the minimum 40 quarters should get SS or Medicare, except as a survivor benefit. I don't want to get back to talking about the person I know - I think that's more of a health care coverage thing and should be addressed more like the new change in California, increasing the asset limit. So, I would rather not discuss that further in this thread.

 

[GenXguy]

I would find that incredible, if true. I searched for a transparent breakdown of SS expenditures by type, but found nothing. I would believe anything from 5%-15% on total outlays, just anecdotally. But I have no data. And any data I saw would need clarification as to how it is calculated. If a person who receives spousal benefits also qualifies for a lower benefit from their own record, they are "retired receiving benefits" because you don't get either spousal or your own benefit. You get your own benefit plus enough spousal to true up to 1/2 the higher earner's bennie. I would suspect that the ~3M individuals who are classified as receiving spousal are those only qualified under spousal. Those numbers have to exclude the millions who receive some spousal in addition to their own benefit. Lots of accounting tricks to make the numbers what you want, but 1% of program outlays for spousal can not be correct.

Another example of where the spousal stats are underreporting (for sure) is that claims on ex-spouses are classified as survivor benefits, not retiree or spousal.

The proposal I have seen that is the most "fair" is to give each partner in a married couple 1/2 the couple's SS earnings credit for each year and a married couple's earnings cap moved to be 2x a single. And then you get bennies on your own record, period. Low to mid earning married couples with greatly different individual earnings records would still receive an increased combined benefit because of how the bend points work. It also "fixes" the inequity in giving survivor benefits. It is analogous to how QDRO works for the division of retirement assets when divorcing.

Thanks for the post. I agree with you that the cost is probably much greater than some of the earlier touted figures. I hadn't seen that idea before, but that actually makes a lot of sense.

 

[piccolopat]

I support phasing out spousal benefits. It's not fair that someone can collect when they didn't pay into the system r that they can collect a higher benefit if they married. I know people who never or barely worked but will collect more than my sister simply because their spouse was a high wage earner.

Raise the payroll tax gradually, perhaps automatically to match inflation. Also gradually raise the income subject to the payroll tax.

SSDI also needs to be overhauled but I guess that is for another day.

 

[Magus]

Also gradually raise the income subject to the payroll tax.

SSDI also needs to be overhauled but I guess that is for another day.

1) they do this every year already for inflation. Cap on SS tax is about 35% higher now than it was when I first hit the cap. Some politicians tried to start it again at $400k last year. Honestly, I think that might have passed if it wasn’t tied to that huge bill. The reason they wanted skip to $400k to start again was any increase in SS tax incrementally to current cap really only hits middle class in urban cores and upper middle in suburb areas. I expect this to come back at some point though, perhaps at an even higher amount than $400k.

2) Redoing SSDI would also solve SS solvency as well. I would be in favor but…

 

[athena53]

I support phasing out spousal benefits. It's not fair that someone can collect when they didn't pay into the system or that they can collect a higher benefit if they married. I know people who never or barely worked but will collect more than my sister simply because their spouse was a high wage earner.
<snip>

I look at this from a different angle. First, "in theory" SS contributions were calculated to include the cost of a spousal benefit. I say "in theory" because it's a pay-as-you-go system, as noted earlier, but with the same contributions a worker-only benefit would be higher. Do you believe that it's unfair that private pensions can provide a Survivor benefit to a spouse who never worked in a paid job, in return for the primary earner electing a lower monthly pension amount?

Second- you could argue that some of the spouses who worked only a few years or at low-paying jobs get no benefits from their contributions- they get benefits based on their spouse's record but would have gotten exactly the same if they'd paid nothing into the system at all.

No one will ever collect Spousal or Survivor benefits on my record. I'm 69, Ex and second husband both died before I began collecting on my own record and I have no intentions to remarry. I'm OK with that.

 

[GenXguy]

I support phasing out spousal benefits. It's not fair that someone can collect when they didn't pay into the system r that they can collect a higher benefit if they married. I know people who never or barely worked but will collect more than my sister simply because their spouse was a high wage earner.

Yeah, it's the craziest thing. I can understand survivor benefits, but definitely not the semi-double dipping where both spouses are living, and a spouse is getting a sweet check that was never earned. And I still haven't seen a good rationalization for it while we're looking at possible increases in the full retirement age, possible reductions in COLA, and/or about a 25% cut to people's benefits who actually earned it! It makes the most sense to cut where the benefit wasn't earned and really isn't needed, and I think it adds up to a lot more than some people want to believe.

 

[youbet]

It makes the most sense to cut where the benefit ..........really isn't needed

How do you know it really isn't needed?

 

[GenXguy]

How do you know it really isn't needed?

You let out an important part of the quoted statement. I'm not suggesting cutting benefits for the person who actually worked to earn the benefit, even if they don't really need it.

It makes the most sense to cut where the benefit wasn't earned and really isn't needed

As someone stated earlier, if they were able to get by with one paycheck during the working years, they shouldn't need an unearned SS check during retirement. There are plenty of others who won't get SS checks because they didn't earn them and are not a spouse, even if there is more of a need. So really, no one who hasn't earned the benefit should be receiving it. Previous posts in this thread covered that pretty well.

 

[youbet]

I say "in theory" because it's a pay-as-you-go system, as noted earlier

Is it really a "pay as you go" system or is it more of a "you pay as someone else goes and hope someone will pay for you to go later" system?

 

[GenXguy]

Is it really a "pay as you go" system or is it more of a "you pay as someone else goes and hope someone will pay for you to go later" system?

Pay for you and pay for your spouse that never worked.

 

[youbet]

It makes the most sense to cut where the benefit wasn't earned and really isn't needed, and I think it adds up to a lot more than some people want to believe.

How do you know it really isn't needed?

 

[youbet]

Pay for you and pay for your spouse that never worked.

Kinda low life of you GenXguy to say something negative about my spouse who you don't know and your statement is a complete fabrication.

 

[Amethyst]

Ain't it the truth. Just lost yet another friend in his early 70's, and am bummed about it.

I
ETA: I don’t like the idea of raising retirement age again. I think 67 is plenty old enough. Not everyone lives into their 90’s or 80’s for that matter.

 

[Gumby]

Pay for you and pay for your spouse that never worked.

You may not know as much as you think you do, GenXguy. youbet's wife worked long and hard at a job that is crucial to improving our society. Mine did the same. And youbet and I both paid a boatload to social security, but neither of our spouses will get a dime of spousal benefits or survivor benefits (nor will they get their own SS). So he and I don't get the insurance we paid for and that other husbands get. We have to buy our own private insurance to cover the loss of social security income if we predecease our wives. Ponder that while you are on your high horse about spousal benefits.

 

[Murph]

I favor removing the cap on payroll deductions altogether. Also, reducing or eliminating benefits for very wealthy retirees.
We should NOT raise the retirement age and we should increase benefits.