When/who will SS reduce?

[retiredtuna1]

Solutions calculator & likely progressive solution

1. Here is the website that offers readers an opportunity to select their own solutions to the SS shortfall: The Reformer: An Interactive Tool to Fix Social Security . To me, it demonstrates that solutions are possible.

2. My recent SS forecasted benefits statement includes a notice something like that under current law, unless Congress addresses the issue, I could expect a 21% reduction in payments by 2033. This surprised me because I had often read 23 or 25% in various newspaper articles.

3. I strongly suspect that part of the fix will include a progressive reduction of benefits for people with 'higher' incomes. Those whose income is lowest will see very few cuts, while those whose total income after retirement exceeds certain thresholds (let us say 150k or 200k) will see a X% additional reduction, which will be way above the 23% forecast needed to close the deficit. It will be a disguised new tax.

 

[athena53]

And remember that SS replaces more for those who had lower incomes than for higher incomes a greater percentage of it within the wage cap. This makes the program a better deal for those who paid less SS tax than for those who paid more.

And don't forget we all get the same Medicare other than the differences in the supplements and the prescription plans we choose. I was over the SS max salary for most of my career and I get the same Medicare A as someone who worked 40 quarters at Wal-Mart.

 

[USGrant1962]

1. Here is the website that offers readers an opportunity to select their own solutions to the SS shortfall: The Reformer: An Interactive Tool to Fix Social Security . To me, it demonstrates that solutions are possible.

Nice tool. In playing with it, I can see a case where Congress does a bunch of lesser fixes and kicks the can down the road 20 years or so. That's where I ended up before doing things I considered too painful or disruptive. Less political pain that way - nothing says they need to do a complete solution.

2. My recent SS forecasted benefits statement includes a notice something like that under current law, unless Congress addresses the issue, I could expect a 21% reduction in payments by 2033. This surprised me because I had often read 23 or 25% in various newspaper articles.

From the 2018 SS Trustees report, the 23% reflects the combined trust funds - old age plus disability. 21% is just the old age portion of the fund. I'm not sure it was ever actually 25%, but I round to that in my calculations.

3. I strongly suspect that part of the fix will include a progressive reduction of benefits for people with 'higher' incomes. Those whose income is lowest will see very few cuts, while those whose total income after retirement exceeds certain thresholds (let us say 150k or 200k) will see a X% additional reduction, which will be way above the 23% forecast needed to close the deficit. It will be a disguised new tax.

Oh boy, then we can have threads here about the ethics of asset-rich retirees avoiding SS benefit loss by structuring their income . That would be very complicated. Much simpler to tax 100% of SS benefits, raise the contribution cap, adjust retirement age (been there done that), adjust COLA, etc.

 

[Independent]

1. Here is the website that offers readers an opportunity to select their own solutions to the SS shortfall: The Reformer: An Interactive Tool to Fix Social Security . To me, it demonstrates that solutions are possible.

.

Yep.
I picked
- eliminate the cap on taxable income
- index retirement age to longevity
- slow benefit increases (actually, reduce benefits) for top 20% of workers

Those three essentially eliminate the shortfall.

 

[scrabbler1]

1. Here is the website that offers readers an opportunity to select their own solutions to the SS shortfall: The Reformer: An Interactive Tool to Fix Social Security . To me, it demonstrates that solutions are possible.

2. My recent SS forecasted benefits statement includes a notice something like that under current law, unless Congress addresses the issue, I could expect a 21% reduction in payments by 2033. This surprised me because I had often read 23 or 25% in various newspaper articles.

3. I strongly suspect that part of the fix will include a progressive reduction of benefits for people with 'higher' incomes. Those whose income is lowest will see very few cuts, while those whose total income after retirement exceeds certain thresholds (let us say 150k or 200k) will see a X% additional reduction, which will be way above the 23% forecast needed to close the deficit. It will be a disguised new tax.

Some of the suggested solutions are broad and too simplistic. Your third point, which I tend to agree with, can't really be translated into any of the options in the CRFB game. I can choose an across-the-board reduction in initial SS benefits of x%, but I can't allocate that across the income spectrum by, say, reducing specific bend points (i.e. 32% and 15%, for the two highest incomes) while leaving the lowest (90%) intact.

Another slight drawback of the interactive game is that you don't get a breakdown of the total needed to cover the nearer-term shortfall even if you can close the 75-year funding gap. I was able to get to balance in the longer-term but not as easily in the shorter term. I couldn't really figure out which reform proposals worked better toward the shorter-term gap.

 

[jimbee]

And don't forget we all get the same Medicare other than the differences in the supplements and the prescription plans we choose. I was over the SS max salary for most of my career and I get the same Medicare A as someone who worked 40 quarters at Wal-Mart.

There isn't a salary limit on the Medicare tax.

 

[MrLoco]

I know lot of business owner who "game" the system by only taking $1000 a quarter in "salary" i.e. qualify for lowest SS benefit at someone else's dime.

And what's wrong with that? Good for them.


I am a multi-millionaire and I manipulate my taxable income every year to qualify for a subsidy under the ACA. Good for me.


It's legal and smart people take advantage of every tax benefit they can.

 

[athena53]

There isn't a salary limit on the Medicare tax.

I know (saldy). Just did a quick calculation. In the 38 years since I started working FT out of college, my employers and I paid 12 times the Medicare contributions that would have been paid by a minimum-wage worker and his/her employers during that same period. Wow. Hopefully, few people actually stayed at minimum wage during their entire careers, meaning the ratio would be lower- but how much lower? Not a lot of upward mobility in most minimum-wage jobs.

And don't get me started on the IRMAA surcharge on top of all that!

 

[Teacher Terry]

Retire by: you obviously know nothing about SSDI. I worked in the field and it is extremely difficult to obtain. It takes 2 years of constant appeals and if paperwork not perfect they deny you and you have to start over. If you hang in and do everything right after 2 years it goes before a law judge that has a vocational expert (like me) to advise based on the clients disabilities and the labor market requirements for the type of work they can both physically and mentally.

 

[Dtail]

Retire by: you obviously know nothing about SSDI. I worked in the field and it is extremely difficult to obtain. It takes 2 years of constant appeals and if paperwork not perfect they deny you and you have to start over. If you hang in and do everything right after 2 years it goes before a law judge that has a vocational expert (like me) to advise based on the clients disabilities and the labor market requirements for the type of work they can both physically and mentally.

+1 exactly. My DGF is receiving SSDI.

 

[MRG]

Retire by: you obviously know nothing about SSDI. I worked in the field and it is extremely difficult to obtain. It takes 2 years of constant appeals and if paperwork not perfect they deny you and you have to start over. If you hang in and do everything right after 2 years it goes before a law judge that has a vocational expert (like me) to advise based on the clients disabilities and the labor market requirements for the type of work they can both physically and mentally.

+1

DW is on SSDI. She fought for over six years!
After multiple declines and her Doctor's testimony (multiple letters and her doc took her personal day to fight for DW). Oh yeah, she had to see a SS doc, who had been a student of her doctor. Her ruling came back she was disabled the entire time(6 years), but SSDI only backpayed two years. [emoji111]

Honestly the original post about the ease of SSDI shows a huge amount of ignorance about the people who need it.. I sincerely hope anyone who thinks it's such an easy handout never needs it.

 

[Cut-Throat]

+1
Honestly the original post about the ease of SSDI shows a huge amount of ignorance about the people who need it.. I sincerely hope anyone who thinks it's such an easy handout never needs it.

+1 ....

 

[pjigar]

And what's wrong with that? Good for them.


I am a multi-millionaire and I manipulate my taxable income every year to qualify for a subsidy under the ACA. Good for me.


It's legal and smart people take advantage of every tax benefit they can.

Fair enough.

 

[Independent]

Some of the suggested solutions are broad and too simplistic. Your third point, which I tend to agree with, can't really be translated into any of the options in the CRFB game. I can choose an across-the-board reduction in initial SS benefits of x%, but I can't allocate that across the income spectrum by, say, reducing specific bend points (i.e. 32% and 15%, for the two highest incomes) while leaving the lowest (90%) intact.

Another slight drawback of the interactive game is that you don't get a breakdown of the total needed to cover the nearer-term shortfall even if you can close the 75-year funding gap. I was able to get to balance in the longer-term but not as easily in the shorter term. I couldn't really figure out which reform proposals worked better toward the shorter-term gap.

The SS actuaries show a number of gradual income-sensitive reductions here:
https://www.ssa.gov/oact/solvency/provisions/benefitlevel.html#B1
I don't see anything with an immediate reduction.

 

[copyright1997reloaded]

+1

DW is on SSDI. She fought for over six years!
After multiple declines and her Doctor's testimony (multiple letters and her doc took her personal day to fight for DW). Oh yeah, she had to see a SS doc, who had been a student of her doctor. Her ruling came back she was disabled the entire time(6 years), but SSDI only backpayed two years. [emoji111]

Honestly the original post about the ease of SSDI shows a huge amount of ignorance about the people who need it.. I sincerely hope anyone who thinks it's such an easy handout never needs it.

I can't comment on how difficult it is to obtain SSDI, but can look at the number of people on SSDI: https://www.ssa.gov/oact/STATS/dibGraphs.html

If the criteria were stable (i.e. how difficult to get SSDI), one would expect a growth chart that was either a function of population growth or more likely a function of population growth weighted by age category. But the graph doesn't appear to show this. Instead, it "appears" to be related to economic activity - big jumps during the post dot com burst and then another increase in the rates during/after the 2008/09 recession, followed by decreasing numbers as the economy has improved.

I really haven't studied this much, so I can't really comment further than the above less than scientific observation of summary data.

 

[marko]

Retire by: you obviously know nothing about SSDI. I worked in the field and it is extremely difficult to obtain. It takes 2 years of constant appeals and if paperwork not perfect they deny you and you have to start over. If you hang in and do everything right after 2 years it goes before a law judge that has a vocational expert (like me) to advise based on the clients disabilities and the labor market requirements for the type of work they can both physically and mentally.

My experience must be an outlier.
I hired a lawyer who specializes in SSDI when my brother became disabled. $1200 and 20 minutes on the phone with the guy. Never even met him.
Took 8 pages of paperwork and two months. Done!
From what I'm reading here DIY is not the way to go.

 

[USGrant1962]

I can't comment on how difficult it is to obtain SSDI, but can look at the number of people on SSDI: https://www.ssa.gov/oact/STATS/dibGraphs.html

If the criteria were stable (i.e. how difficult to get SSDI), one would expect a growth chart that was either a function of population growth or more likely a function of population growth weighted by age category. But the graph doesn't appear to show this. Instead, it "appears" to be related to economic activity - big jumps during the post dot com burst and then another increase in the rates during/after the 2008/09 recession, followed by decreasing numbers as the economy has improved.

I really haven't studied this much, so I can't really comment further than the above less than scientific observation of summary data.

Well, from that graphic it looks like up to 9 million people have done it out so it can't be that hard.

 

[retiredtuna1]

Yep.
I picked
- eliminate the cap on taxable income
- index retirement age to longevity
- slow benefit increases (actually, reduce benefits) for top 20% of workers

Those three essentially eliminate the shortfall.

Independent: slow benefit increases (actually, reduce benefits) for top 20% of workers. This is similar to the 'progressive' solution in the third point of my comments made above.... this approach would slowly decrease the benefits of those better off while maintaining the benefits of those less well off.

 

[retiredtuna1]

Yep.
I picked .....

- slow benefit increases (actually, reduce benefits) for top 20% of workers

Those three essentially eliminate the shortfall.

This is essentially the same as a progressive adjustment .. taking away more of the benefits from those who could afford the loss while not affecting those who can least afford it.

 

[JoeWras]

Honestly the original post about the ease of SSDI shows a huge amount of ignorance about the people who need it.. I sincerely hope anyone who thinks it's such an easy handout never needs it.

Friend's wife had early dementia. It took some work to get it despite the very grim diagnosis.

Easy handouts are only easy to get in certain areas where the lawyers, doctors AND judges were crooked.

Federal investigators discovered that Conn, who launched his law practice in 1993, had been bribing a doctor and a judge to rubber-stamp disability claims based on sham medical evidence. (The doctor and the judge have also been charged in the scheme.) Conn, as part of his plea deal, agreed to pay the feds $5.7 million and reimburse Social Security some $46 million.
https://www.nbcnews.com/news/us-new...550m-social-security-fraud-disappears-n768321

 

[Crabby Mike]

Well, from that graphic it looks like up to 9 million people have done it out so it can't be that hard.

Or looking at it another way, considerably less than half the people who apply eventually get an award, so it can't be that easy.

I actually didn't need a graph to tell me that. Our DIL is disabled (a complex set of autoimmune problems), and it took around two years to get hers, shepherded by a lawyer all the way. Outcomes vary greatly by region, as individual judges (I think that's what they called them) have very different approval rates. But typically, cases are automatically rejected the first go-round, which tends to weed out many of the pretenders. The ones who truly can't work are more likely to keep trying. Of course, there will always be some slackers who will work the system.

 

[Huston55]

I can't comment on how difficult it is to obtain SSDI, but can look at the number of people on SSDI: https://www.ssa.gov/oact/STATS/dibGraphs.html

If the criteria were stable (i.e. how difficult to get SSDI), one would expect a growth chart that was either a function of population growth or more likely a function of population growth weighted by age category. But the graph doesn't appear to show this. Instead, it "appears" to be related to economic activity - big jumps during the post dot com burst and then another increase in the rates during/after the 2008/09 recession, followed by decreasing numbers as the economy has improved.

I really haven't studied this much, so I can't really comment further than the above less than scientific observation of summary data.

As the old saying goes, ‘correlation does not imply causation.’

However, even though it’s not a major factor, economic cycles do impact SSDI applications. Here’s a good link explaining the actual causes of SSDI application increases.

Summary:

“Part II: Why Did SSDI Enrollment Grow?

The number of disability beneficiaries grew substantially in recent decades, though it has since started to decline. The bulk of the increase stemmed from four big demographic factors:

Population growth
Aging of the baby boom
Growth in women’s labor force participation
Rise in Social Security’s full retirement age from 65 to 66”

https://www.cbpp.org/research/socia...ial-security-disability-insurance#Section_two

 

[Teacher Terry]

Something not well known is that some people are able to return to work who were once too ill to work. You have to expect to not be able to work at least a year. One client was a nurse and developed uncontrollable seizures all the time. On SSDI for 5 years. Then went to a doctor in NYC that stabilized her. While she could not return to nursing she was able to return to college and get a social work degree. She just needed vocational rehabilitation to pay for it. 2 years later she was off the rolls and working f.t. until retirement. Some clients are eventually able to work p.t. When the economy is good companies are more likely to modify a job so someone with a disability can work. Look at the horrible stats for employment rates for people with disabilities. It is not because they don’t want to work. It is a very complicated problem. When I was young SSDI was much easier to get. That has not been true the past 30 years. I have seen such heartbreaking stuff happen while people wait to get approval. Losing savings, homes and spouses. Sure some lazy people just don’t want to work. Trust me they are in the minority.

 

[copyright1997reloaded]

As the old saying goes, ‘correlation does not imply causation.’

However, even though it’s not a major factor, economic cycles do impact SSDI applications. Here’s a good link explaining the actual causes of SSDI application increases.

Summary:

“Part II: Why Did SSDI Enrollment Grow?

The number of disability beneficiaries grew substantially in recent decades, though it has since started to decline. The bulk of the increase stemmed from four big demographic factors:

Population growth
Aging of the baby boom
Growth in women’s labor force participation
Rise in Social Security’s full retirement age from 65 to 66”

https://www.cbpp.org/research/socia...ial-security-disability-insurance#Section_two

Yes, I am very well aware that correlation != causation. Econ major here and lover of stats. That's why I couched my post with all kinds of disclaimers. Thanks for the link to the study, I will check it out.

p.s. One of my favorite sites: Spurious Correlations. "Per capital cheese consumption" and "Number of people who died by becoming tangled in their bedsheets" w/r=0.947071. If I had a study with a correlation coefficient of 0.95 I'd be jumping for joy.

 

[JoeWras]

Something not well known is that some people are able to return to work who were once too ill to work. You have to expect to not be able to work at least a year. One client was a nurse and developed uncontrollable seizures all the time. On SSDI for 5 years. Then went to a doctor in NYC that stabilized her. While she could not return to nursing she was able to return to college and get a social work degree. She just needed vocational rehabilitation to pay for it. 2 years later she was off the rolls and working f.t. until retirement. Some clients are eventually able to work p.t. When the economy is good companies are more likely to modify a job so someone with a disability can work. Look at the horrible stats for employment rates for people with disabilities. It is not because they don’t want to work. It is a very complicated problem. When I was young SSDI was much easier to get. That has not been true the past 30 years. I have seen such heartbreaking stuff happen while people wait to get approval. Losing savings, homes and spouses. Sure some lazy people just don’t want to work. Trust me they are in the minority.

I applaud your client. That's really commendable. It really is!