2022 Social Security Trustees Report

[pb4uski]

Close enough for me. ..

Close only counts in horseshoes (and hand grenades)... we have a little higher standards here.

 

[Koolau]

Close only counts in horseshoes (and hand grenades)... we have a little higher standards here.

Apparently not when it comes to civility.





Oh, and, by the by, you forgot hydrogen bombs. But I'll offer a bit of grace on that omission.

 

[HarryHawk]

I personally think when the time comes to start cutting SS, it may not be the least of our problems, but it will be only one of many others.

 

[copyright1997reloaded]

Find a single post that I have made where I have claimed that Social Security is sound or that Medicare is sound or that the amount of federal debt isn't a problem or that the Fed balance sheet is A-OK and you might have a valid point. So please, put up or shut up and stop lying. You're being ridiculous now.

Looking back through this thread, you have made it a point to be sarcastic and nasty - not just to me but also to others. If you want to have a civil conversation, even if it is opposite of my thinking, then I am willing to participate. If you aren't, I'm not. This isn't twitter.

 

[MichaelB]

<mod note> Disagreement without being disagreeable is an essential quality of ER Forum and it sets us apart, in a positive way. The moderator team invites all those who believe we embrace higher standards to show it by demonstrating civility and respect in their posts.

 

[Koolau]

<mod note> Disagreement without being disagreeable is an essential quality of ER Forum and it sets us apart, in a positive way. The moderator team invites all those who believe we embrace higher standards to show it by demonstrating civility and respect in their posts.

A bit of whiteout might go a long way in some of our posts occasionally.






Sorry 'bout that.

(Doncha just hate the darn spelling corrector?)

 

[MichaelB]

Spellcheck, now corrected.

 

[copyright1997reloaded]

I'm guessing you've heard of MMT modern monetary theory ?
...
.....

What Is Modern Monetary Theory (MMT)?
Modern Monetary Theory (MMT) is a heterodox macroeconomic framework that says monetarily sovereign countries like the U.S., U.K., Japan, and Canada, which spend, tax, and borrow in a fiat currency that they fully control, are not operationally constrained by revenues when it comes to federal government spending.

Put simply, such governments do not rely on taxes or borrowing for spending since they can print as much as they need and are the monopoly issuers of the currency. Since their budgets aren’t like a regular household’s, their policies should not be shaped by fears of a rising national debt.

https://www.investopedia.com/modern-monetary-theory-mmt-4588060

Yes, I am aware of MMT.

Money has several functions:

It is a medium of exchange - it allows people to exchange goods or services without bartering. This is more efficient than barter. Finding someone who wants to exchange something of equal "value" to your cow is not efficient. (This is one of the reasons forms of commodity money (e.g. pelts, salt, gold, ... ) arose.

It represents a way of accounting for value (i.e. a unit of accounting). It allows us to mark other goods and services against each other.

It is a store of value - it has "worth" in that people trust that they can use it to represent deferred spending (wealth).

Fiat currencies today are not backed by physical commodities, but only from the state's "full faith and credit'. In the end, it is our trust in the system and/or the states ability to enforce its will.

Even MMT's original proponents admit that there are limits to what Government can spend (i.e. money creation w/o debt). That limit is real resources, for example people to work, natural resources, etc. If spending is above that limit, inflation will result. In the case of a country, most countries (including ours now) is not self-sufficient. Our "supply line problems" have made that quite apparent, and it means that the United States cannot just ignore surplus money creation - regardless of what the MMT proponents think.

We, the post Brenton Woods III children, have had the benefits of being the worlds reserve currency. My fear is that those days are coming to an end - and are coming to an end because we've abused the position in a variety of ways - from economic to political - some of which can't be discussed here.

But hey, it's just silly and ridiculous me talking, so everyone should probably ignore.

 

[ownyourfuture]

But hey, it's just silly and ridiculous me talking, so everyone should probably ignore.

I realize that's mostly sarcasm, but don't ever apologize for posting something that 'the herd' doesn't care for.

Politicians/policymakers telling citizens not to worry about SS, reminds me of the following quote.

“When you want to help people, you tell them the truth. When you want to help yourself, you tell them what they want to hear”
Thomas Sowell

 

[lucky penny]

I was interested in this thread when it started.

Please, can we talk about the topic without sniping, sarcasm & anti-government rants?

 

[ownyourfuture]

I was interested in this thread when it started.

Please, can we talk about the topic without sniping, sarcasm & anti-government rants?

I can't understand how people stating their POV/concerns regarding a certain government program, or government spending/debt is anti-government ?

As for sniping & sarcasm, I think it's inevitable @ times, & the little bit that goes on here is incredibly mild relative to some of the things I see outside of this forum on a daily basis. If commenters resorted to using profanity and/or threats, I'd be with you.

Full disclosure: I have real concerns about the future of Social Security, but it's not about me. Barring a worldwide collapse, I'll be fine financially for the rest of my life. Not everyone is that lucky, including several friends/family of mine.

 

[Koolau]

Full disclosure: I have real concerns about the future of Social Security, but it's not about me. Barring a worldwide collapse, I'll be fine financially for the rest of my life. Not everyone is that lucky, including several friends/family of mine.

Well stated. When you consider the utter size of SS/MC and the number of people it serves and the sheer volume of money that flows through its coffers, we do need to talk about if from time to time (and that doesn't mean we don't like it.) We need to recognize its limitations and its potential as a political tool - not just an old age pension or medical insurance. We have to guard our "investment" in this massive bureaucracy. YMMV

 

[ownyourfuture]

we do need to talk about if from time to time (and that doesn't mean we don't like it.)

Good point.

 

[Turbo29]

A much-bigger COLA will cost the program tens of billions of dollars, putting further pressure on the program that is already facing insolvency, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan, nonprofit organization.
“That will cost the program enough money that it could bring the insolvency date forward a year sooner,” MacGuineas said."


Another record-high Social Security cost-of-living adjustment in 2023 could put more money in retirees’ wallets, impact program’s funds

 

[ncbill]

I have yet to see anything written anywhere indicating that a haircut would be anything other than across-the-board, so do you have any authoritative support for your assertions or are you just making sh!t up?

I'm just pointing out all historical changes have been to make the already progressive SS retirement system...even more progressive.

Which helps the early retiree (little benefit to add'l wage earnings beyond the second bend point) but hurts those collecting higher benefits (85% taxed)

If benefit cuts actually become necessary those expecting close to max benefits can expect to have their monthly check percentage wise reduced much more than those collecting only $1,000/month.

 

[pb4uski]

I'm just pointing out all historical changes have been to make the already progressive SS retirement system...even more progressive.

Which helps the early retiree (little benefit to add'l wage earnings beyond the second bend point) but hurts those collecting higher benefits (85% taxed)

If benefit cuts actually become necessary those expecting close to max benefits can expect to have their monthly check percentage wise reduced much more than those collecting only $1,000/month.

Not according to anything that I have read anywhere and they'll need to follow the law, not make stuff up. If you find something, anything, that is authoritative suggesting that the haircut will be anything other than across-the-board, then please share. Also, please look at post #29.

 

[Koolau]

Not according to anything that I have read anywhere and they'll need to follow the law, not make stuff up. If you find something, anything, that is authoritative suggesting that the haircut will be anything other than across-the-board, then please share. Also, please look at post #29.

I think you are correct that the subject hasn't been publicly debated. So we don't actually know how it will play out if it becomes necessary. It would not surprise me if the benefit cuts are progressive however.

 

[ncbill]

Not according to anything that I have read anywhere and they'll need to follow the law, not make stuff up. If you find something, anything, that is authoritative suggesting that the haircut will be anything other than across-the-board, then please share. Also, please look at post #29.

The last time SS retirement system was in crisis Congress did not just leave it up to the trustees or existing law.

Instead they explicitly intervened so that higher-income households were now forced to pay taxes on nearly all of their SS retirement benefit, thus making the system more of a means-tested entitlement not unlike other, progressive federal transfer programs.

So based on actual history, we can expect to see such intervention again.

Cutting the same percentage for those with the lowest monthly benefits (who most likely only have SS for retirement income) as those with the highest monthly benefits would be political suicide.

EDIT: What Koolau said...IF benefit cuts have to happen, though hopefully not, given potential solutions as ERD50 points out in post #29.

 

[Gumby]

Make it 100% taxable for everyone. If you have SS benefits less than the standard deduction of $25,900, you'll pay zero tax. If you are MFJ and have SS benefits less than $ 46,450 (standard deduction plus the 10% bracket), you'll pay 10% of the amount over $25,900, or a max of $2055 per year. I see that as a way to save the trust fund and also be progressive.


Actually, I've never understood why it isn't already 100% taxable. It's income like any other.

 

[Koolau]

Make it 100% taxable for everyone. If you have SS benefits less than the standard deduction of $25,900, you'll pay zero tax. If you are MFJ and have SS benefits less than $ 46,450 (standard deduction plus the 10% bracket), you'll pay 10% of the amount over $25,900, or a max of $2055 per year. I see that as a way to save the trust fund and also be progressive.


Actually, I've never understood why it isn't already 100% taxable. It's income like any other.

Obviously, not everyone agrees with you on that. The state of Hawaii (and several others explicitly exclude SS from state taxation.) Call it a reasoned approach to taxation or naked politics, there is a constituency for non-taxation of (many things) Social Security. Quite honestly, I always thought it strange for the gummint to hand out our money and then tax it. How about taxing Food Stamps? Probably not, right? It's a matter of degrees, but same concept so YMMV.

 

[pb4uski]

... Actually, I've never understood why it isn't already 100% taxable. It's income like any other.

The reason that it isn't 100% taxable and shouldn't be 100% taxable is that part of what you get is a return of after-tax money that you contributed and did not get a deduction for, like a non-deductible tIRA or a contributory defined benefit pension plan.... and the contributions are about 15% on average so that amount is not taxed. The 85% is a combination of employer contributions and interest earned on the funds over the average lifetime.

If I take 72% of what I contributed from my SSA statement divided by my PIA from FRA to an average age of 83 it is close to the 15% that is excluded from tax. The reason for only using 72% of contributions is that my contributions covered survivor benefit for my family akin to life insurance, disability benefits akin to disability insurance and retirement benefits... and I read somewhere that 72% of contributions relate retirement benefits and the other 28% relate to survivor and disability benefits.

 

[Gumby]

The reason that it isn't 100% taxable and shouldn't be 100% taxable is that part of what you get is a return of after-tax money that you contributed and did not get a deduction for, like a non-deductible tIRA or a contributory defined benefit pension plan.... and the contributions are about 15% on average so that amount is not taxed. The 85% is a combination of employer contributions and interest earned on the funds over the average lifetime.

If I take 72% of what I contributed from my SSA statement divided by my PIA from FRA to an average age of 83 it is close to the 15% that is excluded from tax. The reason for only using 72% of contributions is that my contributions covered survivor benefit for my family akin to life insurance, disability benefits akin to disability insurance and retirement benefits... and I read somewhere that 72% of contributions relate retirement benefits and the other 28% relate to survivor and disability benefits.

That makes sense, but it shouldn't be less than 85% taxable. The income tax system is already progressive.

 

[pb4uski]

The last time SS retirement system was in crisis Congress did not just leave it up to the trustees or existing law.

Instead they explicitly intervened so that higher-income households were now forced to pay taxes on nearly all of their SS retirement benefit, thus making the system more of a means-tested entitlement not unlike other, progressive federal transfer programs.

So based on actual history, we can expect to see such intervention again.

Cutting the same percentage for those with the lowest monthly benefits (who most likely only have SS for retirement income) as those with the highest monthly benefits would be political suicide.

EDIT: What Koolau said...IF benefit cuts have to happen, though hopefully not, given potential solutions as ERD50 points out in post #29.

I agree that intervention of some sort is likely and if Congress does something then like the last time they will do a bunch of different things to "reform" the program... like was done last time.

This is a different question though... what happens if Congress does nothing? (which is a distinct possibility given the polarization within Congress).

Under the law, the trust fund can't borrow so it would need to limit benefit payments to tax receipts.

In that scenario the I've read a couple options. One is across-the-board cuts... so if for a particular year taxes are 75% of projected benefits then recipients will get 75% of benefits. Another is where benefits would be delayed so they would pay benefits to the extent that they have cash flow each month and any benefits unpaid would be deferred until they have cash available to pay for them.

 

[pb4uski]

That makes sense, but it shouldn't be less than 85% taxable. The income tax system is already progressive.

The thing that I forgot to add is that if the SSA were to take a broad-brush similar to contributory pension plans then the exclusion ratio would be 15% and that is where the 85% comes from, but lower income people were provided a break and that is why for lower income people it is 100% or 50% excluded... there is no real theoretical rationale for that... it's just a tax benefit provided to lower income people.

 

[corn18]

The thing that I forgot to add is that if the SSA were to take a broad-brush similar to contributory pension plans then the exclusion ratio would be 15% and that is where the 85% comes from, but lower income people were provided a break and that is why for lower income people it is 100% or 50% excluded... there is no real theoretical rationale for that... it's just a tax benefit provided to lower income people.

And fewer and fewer people are eligible for the 100% exclusion because the exclusion amount is not indexed to inflation.

The farthest back I could find pub 915 is 1994 and the base amount was $32,000 for MFJ then, same as today. In 1994 dollars, that is only $17,431. Or to look at it another way, it should be $58,748 if it were indexed to inflation. So, everyone making more than $32,000 and less than $58,748 today is now being taxed when they should not be. That is regressive and hurts low income folks a lot.