Means testing SS

[Midpack]

I think maybe our government should just keep their hands off of the general fund and we will all be better for it. I'm thinking there is plenty of money for everyones SS but it's being used for other things. Sort of like a piggy bank for the government.

At least that would more accurately show our real deficits, they would have been even higher in past years.

But careful what you wish for. IIRC payroll taxes fell short of the sums paid out to Soc Sec beneficiaries in 2011 if not before, so Soc Sec may have deficits going forward too.

And then there's Medicare? An even bigger problem as it stands...

 

[73ss454]

I think most folks don't have a problem paying more if there is in fact a true deficit. The problem that I have is that the government has access to this money and uses it for the craziest things.

 

[ronocnikral]

I think most folks don't have a problem paying more if there is in fact a true deficit. The problem that I have is that the government has access to this money and uses it for the craziest things.

I agree. In fact, I think the latest way SS is being robbed (granting a tax holiday) is wrong. Of course, in my ideal world, all the proceeds would be going to fund SS, not having an IOU issued. Unfortunately, my ideal world works way different than the real world.

I'm ok with means testing benefits in the future. Being only 29 and having maxed out the contribution for the last 5 years, I'm only ok with it if the money is being used for SS though. Again, all should drink from the benefit reduction cup though, current benfeciaries included.

 

[marko]

LBYM, pay your bills, keep your nose clean, contribute to your 401K and factor in SS payments into your retirement calcualtions...

then leave it to the government to change the rules and consider you 'rich'! Oh, wait! It's called 'fairness'.

 

[Midpack]

I think most folks don't have a problem paying more if there is in fact a true deficit. The problem that I have is that the government has access to this money and uses it for the craziest things.

FWIW FactCheck.org : Democrats Deny Social Security’s Red Ink

 

[73ss454]

I'm ok with means testing benefits in the future. Being only 29 and having maxed out the contribution for the last 5 years, I'm only ok with it if the money is being used for SS though. Again, all should drink from the benefit reduction cup though, current benfeciaries included.

I'm turning 63 this year and haven't taken my SS as of yet. Sorry but I choose not to drink from the benefit reduction cup as you suggest.

 

[ronocnikral]

LBYM, pay your bills, keep your nose clean, contribute to your 401K and factor in SS payments into your retirement calcualtions...

then leave it to the government to change the rules and consider you 'rich'! Oh, wait! It's called 'fairness'.

I like how the bogleheads' chapter about SS starts. To paraphrase, depending on gov't programs is no way to live.

 

[Texas Proud]

FWIW FactCheck.org : Democrats Deny Social Security’s Red Ink

Not trying to be political or anything.... but I think the fact check people are a little off on this one...

"When Lew says Social Security is "entirely self-financing," he refers to the trust funds that have built up assets of more than $2.5 trillion over the years. That’s what the rest of the government has borrowed and spent on other things. Those trust funds and the future interest payments will keep benefits funded at promised levels for years to come, it’s true. But unless the government raises taxes or cuts other spending substantially, the government will need to borrow more from the public to finance its obligations to the trust funds."


What the treasury has to do is stated in the last sentence... instead of the continued borrowing from the trust fund, they now have to borrow from the public to pay back what they owe to the trust fund... so it is not adding to the total debt of the gvmt...

IOW, if you cash in your treasury bond, the gvmt has to issue another one in order to get the money to pay you.... same thing is happening to the trust fund... they are cashing in their bonds...


Now, with the combined budget that they used before, it does make it look like it is SS that is the problem.... but it was all the other spending that was not paid for that created the problem.... and now the SS fund gets to bail out the rest of the budget...

As mentioned, medicare and medicade are part of the bigger problem....

 

[ronocnikral]

I'm turning 63 this year and haven't taken my SS as of yet. Sorry but I choose not to drink from the benefit reduction cup as you suggest.

As expected. Who does? At least you have the veil of "fairness" to hide behind. I feel like I am in the middle of the field with a target on my back.

 

[marko]

I like how the bogleheads' chapter about SS starts. To paraphrase, depending on gov't programs is no way to live.

I agree that 'depending on gov't programs is no way to live'.

However for the past 60 years (and especially since 401Ks came into being) the collective 'we' were advised to factor your 401k, other incomes AND SS into the retirement calculation.

It was part of (here we go) the social contract.

Now, because some of us saved, did all the right things and have a few bucks put away, we hearing 'means testing' an how we're taking more than our 'fair share'.

 

[youbet]

Thanks Midpack. That was an interesting read.

 

[Sesq]

My guess is they won't do a direct haircut. They may increase it to being 100% taxable (vs 85%) and they will likely skim more off the top by making the medicare premiums significantly more means tested. Maybe they will think of some fees.

I think they will also get the haircut by pushing the retirement age back, very slowly, but that isn't means testing. I would advocate we should index it to life expectancy.

 

[GrayHare]

My guess is they won't do a direct haircut. They may increase it to being 100% taxable (vs 85%) and they will likely skim more off the top by making the medicare premiums significantly more means tested. Maybe they will think of some fees.

I think they will also get the haircut by pushing the retirement age back, very slowly, but that isn't means testing. I would advocate we should index it to life expectancy.

+1

Medicare's projected deficit is far more than SS's. Medicare is the program that is unaffordable and the one IMO that will be scaled back, means tested, and/or taxed in some fashion.

 

[scrabbler1]

Another good source for solid information about SS is The Concord Coalition, an organization I have been a member of since 1995 Back in 2005, when SS Reform was a hot topic, Concord did a series of publications about SS. Here is a link to Concord's SS main page:

Social Security | The Concord Coalition

 

[Bestwifeever]

Note that this thread has been moved to the FIRE related political topics forum, but the mods gently remind all keep political commentary to a minimum and only as directly related to FIRE. [/mod hat off]

 

[tjscott0]

As others have stated, I believe means testing will be on income rather than assets. I base this on that is how medicare part B premiums are currently being means tested.

Individuals with income< $85k & couple with income <$170 pay std $99.90.
Then there are several brackets that have surcharges.
Top bracket
Individuals with income >$214k pay & couple with income>$428k pay monthly surcharge of $219.80 which means $319.70 a month for medicare part B

Prescription drug [medicare part-d has surcharges also.
Medicare Premiums: Rules For Higher-Income Beneficiaries

I fully expect the income thresholds will decline as boomers roll onto the roles.
The money has to come from somewhere.

Europe is also facing this problem. Their cuts will be more severe as their demographics are worse than the US's.

 

[ziggy29]

I think they will also get the haircut by pushing the retirement age back, very slowly, but that isn't means testing. I would advocate we should index it to life expectancy.

This sounds reasonable -- except that it would increase unemployment in an era where unemployment is already way too high.

 

[Independent]

Perhaps you meant to look at the income level that was above the FICA tax limit?

.

No, I meant the same thing you said - two people who had the same SS earnings history should get the same benefit. If they want to cut benefits to "better off" people, I'd prefer that they do something like put a cap on the PIA (even retroactively) without looking at your post-retirement income or assets.

 

[Brett_Cameron]

I believe the means testing will be more subtle. More along the lines of tweaking the bend points and percentages that are used calculating the PIA. That and perhaps raise the cap on fica taxae earnings but not raise the cap on earnings used to figure the PIA. It would be almost invisible to change the bend point percentages somewhere along the way.

some one posted that a few tweaks could maintain benefits for a long time and I agree with that.

 

[Dreamer]

Folks in prison get SS. I wonder if there shouldn't be some clawback provision for the room and board.

Social Security benefits while in prison

Updated 10/26/2011 10:53 AM | ID# 259
Does Social Security pay benefits to prisoners?
We pay benefits under both the Social Security and Supplemental Security Income (SSI) programs. Both of these programs prohibit payments to most prisoners. Social Security benefits are suspended if an otherwise eligible person is confined in a jail, prison, or other penal institution for more than 30 continuous days due to conviction of a crime.
We cannot pay benefits to someone who, by court order, is confined in an institution at public expense in connection with a criminal case if the court finds that the person is: guilty, but insane; not guilty of such an offense by reason of insanity or similar factors (such as a mental disease); or incompetent to stand trial for such an alleged offense.
Also, we cannot pay benefits to someone who, immediately upon completion of a prison sentence for conviction of a criminal offense (an element of which is sexual activity), is confined by court order in an institution at public expense. The confinement must be based on a court finding that the individual is a sexually dangerous person or sexual predator (or a similar finding.) However, if a person is not confined in prison or other similar place, benefits may be paid to an eligible individual.

 

[RetireBy90]

Social Security benefits while in prison

Updated 10/26/2011 10:53 AM | ID# 259
Does Social Security pay benefits to prisoners?
We pay benefits under both the Social Security and Supplemental Security Income (SSI) programs. Both of these programs prohibit payments to most prisoners. Social Security benefits are suspended if an otherwise eligible person is confined in a jail, prison, or other penal institution for more than 30 continuous days due to conviction of a crime.

<snip> </snip>

Thanks for the facts. I suspect the earlier post may be because of reports that SSA and other agencies databases don't get updated properly or timely and continue to pay in some cases when they shouldn't. Just as reports claim IRS continues to find bogus returns filed from prisons.

 

[samclem]

Social Security benefits while in prison

Updated 10/26/2011 10:53 AM | ID# 259
Does Social Security pay benefits to prisoners?
We pay benefits under both the Social Security and Supplemental Security Income (SSI) programs. Both of these programs prohibit payments to most prisoners. Social Security benefits are suspended if an otherwise eligible person is confined in a jail, prison, or other penal institution for more than 30 continuous days due to conviction of a crime.

Thanks. Interestingly, an illegal alien married to an incarcerated individual would still receive social security spousal benefits if he/she lived in the US, or if he/she moved to a country with an agreement with the US (Mexico, the Philippines, etc). (Table 1 and Table 2 of the document I linked earlier)

 

[MichaelB]

Thanks. Interestingly, an illegal alien married to an incarcerated individual would still receive social security spousal benefits if he/she lived in the US, or if he/she moved to a country with an agreement with the US (Mexico, the Philippines, etc). (Table 1 and Table 2 of the document I linked earlier)

Of course, someone living outside the US would not be an illegal alien. It is not obvious to me how an unlawful immigrant could collect while living in the US.

 

[Backpacker]

This sounds reasonable -- except that it would increase unemployment in an era where unemployment is already way too high.

My guess is they won't do a direct haircut. They may increase it to being 100% taxable (vs 85%) and they will likely skim more off the top by making the medicare premiums significantly more means tested. Maybe they will think of some fees.

I think they will also get the haircut by pushing the retirement age back, very slowly, but that isn't means testing. I would advocate we should index it to life expectancy.

I am all for upping the retirement age, similar to how the age was raised to 67. You can't "spring" it on people that are within a few years of the magic age. I am 47 and if I were told I have to wait until 70 to draw minimum benefit I would be okay with that; as long as I have LBYM and saved money, my retirement will be driven by my own savings. I still could retire at any age I wish. Allows for FIRE if I have been a good saver vs. penalize me by means testing my income and cutting the monthly benefit.

 

[haha]

I am all for upping the retirement age, similar to how the age was raised to 67. You can't "spring" it on people that are within a few years of the magic age. I am 47 and if I were told I have to wait until 70 to draw minimum benefit I would be okay with that; as long as I have LBYM and saved money, my retirement will be driven by my own savings. I still could retire at any age I wish. Allows for FIRE if I have been a good saver vs. penalize me by means testing my income and cutting the monthly benefit.

I'm for this too. Guess why? I'm 70.

Ha