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Old 11-14-2017, 08:38 PM   #61
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Here's a graphical summary of the latest status of SS. It is a little more user friendly than the full Trustee's report. https://www.ssa.gov/policy/docs/char...st_facts17.pdf

Interesting tidbits:
  • OASDI payments are ~5% of GDP
  • 2017 payments are estimated to be $950B (soon to be a trillion...)
  • Median income for married couples 65+ was $55K in 2015
  • Median income for singles 65+ was $21K
  • SS is about 33% of aggregate income for 65+
  • New benefit awards started to increase in the late 90s, and skyrocketed in 2008
  • Average monthly benefit for new retirees is ~$1,400
  • Average monthly benefit for retired men is ~$1,500
  • Average monthly benefit for retired women is ~$1,200
  • Ratio of workers to beneficiaries is down around 3, heading for 2 in the late 2030s.
  • The official shortfall estimate is 77%, that is how much of benefits that revenue will cover after the trust fund is depleted.
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Old 11-14-2017, 09:05 PM   #62
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Here's a graphical summary of the latest status of SS. It is a little more user friendly than the full Trustee's report. https://www.ssa.gov/policy/docs/char...st_facts17.pdf
Oh, and 9.2% of SSI revenue is interest on the Trust Fund, which revenue of course goes away as the fund is depleted. The thought that the fund has been "raided" and is not there is urban legend. It is invested in government bonds that pay interest.
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Old 11-14-2017, 09:11 PM   #63
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I wouldn't call it urban legend as much as semantics. If the fund has invested in gov't bonds and the gov't owes so much that the bonds become worthless, or at least inflated beyond any real value, it's pretty much the same. It hasn't happened yet, but as the deficit climbs toward the bajillions, I could see it happening.
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Old 11-15-2017, 05:33 AM   #64
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I wouldn't call it urban legend as much as semantics. If the fund has invested in gov't bonds and the gov't owes so much that the bonds become worthless, or at least inflated beyond any real value, it's pretty much the same. It hasn't happened yet, but as the deficit climbs toward the bajillions, I could see it happening.
Are you saying it's sort of the Government stating the age old saying "I would rather owe it to you, than cheat you out of it"?
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Old 11-15-2017, 05:44 AM   #65
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I wouldn't call it urban legend as much as semantics. If the fund has invested in gov't bonds and the gov't owes so much that the bonds become worthless, or at least inflated beyond any real value, it's pretty much the same. It hasn't happened yet, but as the deficit climbs toward the bajillions, I could see it happening.
Keep in mind, regular US Treasuries which are gobbled up all over the world are no different. If anyone can keep the whole thing floating it is us. And the fiat currency enthusiasts think we could go a lot farther.
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Old 11-15-2017, 06:40 AM   #66
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I have to wonder what the effect on the Trust Fund future would be if the Gov't Bonds were at a floating interest rate. That is, if the current Bond rate goes up, then all monies "loaned" see an increase in that paid interest. I think the General Fund should not benefit from long term contracts at the expense of another Gov't entity.

Maybe I'm wrong and this is already done?
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Old 11-15-2017, 09:04 AM   #67
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I have to wonder what the effect on the Trust Fund future would be.... if a Martian spaceship landed in the Pentagon parking lot.
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Old 11-15-2017, 09:37 AM   #68
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I have to wonder what the effect on the Trust Fund future would be.... if a Martian spaceship landed in the Pentagon parking lot.
File that one under "Things not to lose sleep over."
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Old 11-15-2017, 09:46 AM   #69
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I have been listening to scare stories like this since the 1970's. Actually they were far worse in 1973 than what I am hearing now, IMO.
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+1.
Having said that, I've been an advocate of "take the money and run" (at 62) for just such an instance.
Someone who is now 52 or so might want to recalculate the 62/FRA breakeven point.
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Old 11-15-2017, 10:17 AM   #70
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One option that might be considered is removing this ceiling on the 6.2% social security tax, and subject all earned wages to it.
The problem with this is the more people pay into it, the more the are supposed to get out of it.
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Old 11-15-2017, 10:51 AM   #71
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I try to leave enough of a buffer in our plan that if we get the cut it will only impact our kids' inheritances, so I see it as more of their problem. But I suspect the odds of a SS cut and maybe even a few other events of that magnitude are possible, if not probable, for us over a 40 year time span and plan accordingly.


I reran the Fidelity planner with the lower SS numbers and the "kids" (they'll be in their late sixties by then) would get about $20k less each in the crappiest market scenario.
They'll get over it.
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Old 11-15-2017, 12:37 PM   #72
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The problem with this [removing the ceiling on wages subject to SS] is the more people pay into it, the more they are supposed to get out of it.
Yes, but there's a whole lotta income redistribution going on. The SS benefit formula starts by indexing all your past wages (limited to the SS wage ceiling) to current levels and then getting an average. The benefits for new SS recipients in 2018 will be 90% of the first $896 average monthly wages, plus 32% of the $4,503, plus 15% of the excess over that. You can see that it's heavily weighted in favor of lower-income workers. Taxing more wages at the upper end doesn't give those workers a very good return on their SS contributions, so it helps the system.
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Old 11-15-2017, 12:49 PM   #73
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Yes, but there's a whole lotta income redistribution going on. The SS benefit formula starts by indexing all your past wages (limited to the SS wage ceiling) to current levels and then getting an average. The benefits for new SS recipients in 2018 will be 90% of the first $896 average monthly wages, plus 32% of the $4,503, plus 15% of the excess over that. You can see that it's heavily weighted in favor of lower-income workers. Taxing more wages at the upper end doesn't give those workers a very good return on their SS contributions, so it helps the system.
And why couldn't they make it 10% over $×× and 5% over $×××? Higher income earners have the option of saving / investing in addition to SS. those on mimium wage really don't
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Old 11-15-2017, 05:22 PM   #74
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The problem with this is the more people pay into it, the more the are supposed to get out of it.
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Yes, but there's a whole lotta income redistribution going on. The SS benefit formula starts by indexing all your past wages (limited to the SS wage ceiling) to current levels and then getting an average. The benefits for new SS recipients in 2018 will be 90% of the first $896 average monthly wages, plus 32% of the $4,503, plus 15% of the excess over that. You can see that it's heavily weighted in favor of lower-income workers. Taxing more wages at the upper end doesn't give those workers a very good return on their SS contributions, so it helps the system.
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And why couldn't they make it 10% over $×× and 5% over $×××? Higher income earners have the option of saving / investing in addition to SS. those on mimium wage really don't
According to the SOA, if you lifted the caps and still allowed benefits to increase for those paying more, the combination of the two would solve 71% of the problem.... vs 88% if you lift the caps and don't allow any credit to those paying more. To me, the benefit of having those paying more get something out of those higher payments and feeling good about supporting the system rather than thinking of it becoming just another welfare program is well worth giving up the 17% difference.

On the last part of those with low income not being able to save... while it is certainly harder it is not impossible. DS earns more than minimum wage but not a lot more and still saves but his lives simply and his expenses are very low (proud of him but sometimes wish he would spend more). Dgrandmother's SS was less than minimum wage and she still saved but her expenses were low. It is what you spend... not what you earn. When DW was doing social work with low income people she saw lots of clients who had nicer cars then we drove, premium cable tv pacages that we chose not to have, more expensive cell phone plans and nicer cellphones than we had, etc and it all adds up.
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Old 11-15-2017, 07:27 PM   #75
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IMHO the benefit amount should be capped but on a sliding scale. 88% is a lot better than 71%. But I wonder one thing. Are they permanently carving out SSDI from this equation or including SSDI and SSA to arrive at only a 71% success ratio
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Old 11-15-2017, 07:28 PM   #76
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The problem with this is the more people pay into it, the more the are supposed to get out of it.
"Supposed" and "will" are different. I would imagine along with raising taxes their would also be a lid on what you could get out of it.

Isn't there a cap right now on the maximum social security benefit at $2,639? They could tax that higher income but still keep maximum limit in place. And then increase the tax on your SS payments based on other (passive or non-passive) income you have...
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Old 11-15-2017, 07:31 PM   #77
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"Supposed" and "will" are different. I would imagine along with raising taxes their would also be a lid on what you could get out of it.

Try, but then after you take out what you put in they should just send the check from the welfare department.
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Old 12-19-2018, 05:24 PM   #78
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I read an interesting comment from Tom Margenau who writes the Social Security and You blog of 12/19/2018:

https://www.creators.com/read/your-s...=subscriptions

Quote:
But here is the deal: Social Security can be made financially secure for generations with some relatively modest changes that include both. For example, if the Social Security payroll tax was raised by one half of 1 percent (the rate hasn't changed in 30 years) and if Social Security cost-of-living increases were cut by one half of 1 percent (basic benefits haven't been cut in 80 years), the program would be solvent until the year 2100.
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