Join Early Retirement Today
Closed Thread
 
Thread Tools Display Modes
Old 06-08-2022, 09:06 PM   #41
Thinks s/he gets paid by the post
 
Join Date: Aug 2013
Posts: 1,969
Quote:
Originally Posted by bloom2708 View Post
Raise the cap on SS wages. Raise it to $400k.
Why not make it to $500K
__________________
No to consumerism, Living a simple life, enjoying the experience - not the material stuff
cyber888 is offline  
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-09-2022, 04:54 AM   #42
Thinks s/he gets paid by the post
 
Join Date: Aug 2005
Location: Crownsville
Posts: 3,711
I'm surprised that raising the cap on SS earnings would eliminate so much of the shortfall, especially since they're only bringing it back at the $400+ and up threshold, which implies to me that $147K-$400K would not be affected.

Years ago, I read that the cutoff (currently the $147K) was designed to capture 90% of all wage income. So if that's still the case, it doesn't seem like there's much income left out there to tax.
Andre1969 is offline  
Old 06-09-2022, 06:19 AM   #43
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
athena53's Avatar
 
Join Date: May 2014
Posts: 7,326
Quote:
Originally Posted by corn18 View Post
And add another bend point. Taxation without benefits will never fly. But add another bend point at say 5% of the amount over $10,000. Won't be a good ROI, but for high earners, at least the gov't can say they are getting some benefit from having their income taxed.
I'd support this (and no, it would not affect me). People making over $400K/year are in a far better position to save on their own.

Getting more young people into the system, through immigration or reproduction among our current populace, is not a long-term solution. we're just making the same unsustainable promises to them while handing over their payroll taxes to current SS recipients.
athena53 is offline  
Old 06-09-2022, 06:21 AM   #44
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2009
Posts: 6,682
Quote:
Originally Posted by SecondCor521 View Post
Most people don't understand that currently income above the cap is neither OASDI-taxed nor contributes to the individual's SS benefits.

If they raise the cap, the income would be taxed but there are two options:

1. Also reflect that income in the individual's SS benefits. Politicians may decry this as raising Social Security benefits for the rich.

2. Not reflect that income in the individual's SS benefits. I think this is new ground in the sense that all other OASDI-taxed dollars have at least a chance of providing a benefit down the road. Straight taxation without any benefit wouldn't sit well, but it wouldn't sit well with higher income folks, so they might just have to suck it up.

I suppose one could create a third bend point as a compromise between the two above options.

My prediction continues to be that there will be a political response sometime before 2035 where the OASDI taxes will be raised and benefits will be increased somehow. The increasing benefits part doesn't make much sense in terms of solvency, but I think it helps people accept the higher taxation: "Oh, well at least I know get free Netflix with my SS benefit" or whatever it ends up being.
Thank you for describing so well the problem with raising the income cap without the corresponding benefits cap, and how raising the former without the latter breaks the link between the two and is IMHO very unfair.

I am somewhat open to creating another bend point to bridge that income gap between payroll taxes paid in and benefits paid out. But I see another problem with this type of solution:

When SS was reformed in the mid-1980s, the concept of prefunding the program with excess payroll taxes collected in the early years so they could be used to pay out benefits later hasn't worked as intended. Congress and the president used all that extra money paid in payroll taxes for other purposes, from spending to other tax cuts. All that was left were a bunch of IOUs which amount to nothing more than claims on future taxes (i.e. the SS Trust Fund) or the issuance of more public debt to pay those claims.

Raising the income cap will continue this unfortunate practice.

One solution to close the funding gap I did not see in the linked article. What about taxing SS benefits more and applying those extra taxes toward the SSTF, something which is done since the tax law change back in 1993-94 which raised the tax rate for higher earners to 85% of SS? This would be a backhanded means test and would shield lower income SS recipients. In return for doing this, we should also index the income cutoffs (read: tax brackets) for taxation of SS benefits, something which is not done today even though other income tax brackets are indexed.

As for raising the retirement age for full benefits, I could see raising it to 68. Given that so much time has elapsed since SS reform was widely discussed (in 2005, after Bush got re-elected), my main concern about moving the goalposts a second time for people already paying into the system has gone away. The youngest people affected by the 1980s reform which raised the retirement age for full benefits from 65 to 67, and who were already paying into the system, are in their mid-50s. I can't see any change to the retirement age failing to grandfather those people into the current max retirement age of 67.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline  
Old 06-09-2022, 06:21 AM   #45
Full time employment: Posting here.
 
Join Date: Sep 2008
Posts: 999
Received an email this morning
"Your New Social Security Statement is now available"
Not much new, but opened an attached PDF associated with it.
I have heard about possible reductions, but do not recall seeing it posted on the SS website.
Its listed as a 22% reduction.
Retirement Ready: Fact Sheet For Workers Ages 49-60 (Am 60 till Sep)
https://www.ssa.gov/myaccount/assets...kers-49-60.pdf

"New Social Security Statement
Social Security will be there when you retire The Social Security taxes you pay go into the Social Security Trust Funds that are used to pay benefits to current beneficiaries. The Social Security Board of Trustees estimates that, based on current law, the Trust Funds will be able to pay benefits in full and on time until 2034. In 2034, Social Security would still be able to pay about $780 for every $1,000 in benefits scheduled."

Will be 62 in 2024. Am thinking I should grab the 10 years at the full rate guaranteed more or less. Rather than waiting 8 years till 70 to take it, at a possible 22% reduction. As I have little faith in the decision making process of our government these days. Just wanted to share the pdf link. Was news to me, might be old news to you.
__________________
"I couldn't wait for success, so I went ahead without it." Ret. 2013 @ 51.
almost there is offline  
Old 06-09-2022, 06:35 AM   #46
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2009
Posts: 6,682
Quote:
Originally Posted by USGrant1962 View Post
This tool lets you play with fixing SS. It is updated through the 2021 report. You will see, for example, that eliminating the taxation cap could close 57% of the funding gap - but doesn't solve it. Increasing FRA to 68 fixes 12% of the gap.

https://www.crfb.org/socialsecurityreformer/
While I like this tool and like the CRFB and its leader, Maya MacGuineas (always look for her on C-Span, where she appeared last week), this tool lacks the creation of an extra bend point to offset an increase in the income cap and keep that link alive.

Its proposal to increase the taxation of benefits doesn't align with mine so well, but I chose it anyway.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline  
Old 06-09-2022, 07:42 AM   #47
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: NC
Posts: 21,204
Quote:
Originally Posted by almost there View Post
Received an email this morning
"Your New Social Security Statement is now available"
Not much new, but opened an attached PDF associated with it.
I have heard about possible reductions, but do not recall seeing it posted on the SS website.
Its listed as a 22% reduction.
Retirement Ready: Fact Sheet For Workers Ages 49-60 (Am 60 till Sep)
https://www.ssa.gov/myaccount/assets...kers-49-60.pdf

"New Social Security Statement
Social Security will be there when you retire The Social Security taxes you pay go into the Social Security Trust Funds that are used to pay benefits to current beneficiaries. The Social Security Board of Trustees estimates that, based on current law, the Trust Funds will be able to pay benefits in full and on time until 2034. In 2034, Social Security would still be able to pay about $780 for every $1,000 in benefits scheduled."

Will be 62 in 2024. Am thinking I should grab the 10 years at the full rate guaranteed more or less. Rather than waiting 8 years till 70 to take it, at a possible 22% reduction. As I have little faith in the decision making process of our government these days. Just wanted to share the pdf link. Was news to me, might be old news to you.
They’ve been telling us about the shortage for decades, not new.

And you believe Congress won’t do anything to mitigate the blow for current recipients? I don’t. The only fair solution to me is some sacrifice by all, lots of ways to get there, none painless. The orgs that lobby for NO changes for recipients expecting current payers make up the contribution shortages to keep recipients 100% whole repulse me, even though I’m a senior. YMMV
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
Midpack is offline  
Old 06-09-2022, 07:58 AM   #48
Recycles dryer sheets
 
Join Date: Jan 2006
Posts: 369
Quote:
Originally Posted by MercyMe View Post
I couldn't agree more!

Get rid of the cap entirely.



Problem solved
wallygator69 is offline  
Old 06-09-2022, 08:00 AM   #49
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
Quote:
Originally Posted by aaronc879 View Post
I am in favor of most of those changes but not the age increase. A large amount of blue-collar workers can't even physically work until age 62 let alone 67 or 68. If they raise the retirement age to 68 they at least would have to keep the minimum SS age at 62 and institute the minimum benefit stated in the article that includes people who retire at age 62 as long as they had 30 years of work.
agreed for blue-collar jobs
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline  
Old 06-09-2022, 08:06 AM   #50
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
Quote:
Originally Posted by Midpack View Post
They’ve been telling us about the shortage for decades, not new.

And you believe Congress won’t do anything to mitigate the blow for current recipients? I don’t. The only fair solution to me is some sacrifice by all, lots of ways to get there, none painless. The orgs that lobby for NO changes for recipients expecting current payers make up the contribution shortages to keep recipients 100% whole repulse me, even though I’m a senior. YMMV
+1 IMO the political reality is that everyone has to "contribute" to SS financial strengthening but the reality is that much of the burden will fall on non-seniors.

I would definitely favor raising the cap significantly but also including another bend point so those high earners get a little something for the additional taxes that they pay. Forget the whole donut hole thing of capping and then uncapping... that's just a political gimmick.

Raise the FRA to 68 to recognize that lngevity has improved since age 67 was set back in the 1980s. Increase the payroll tax 0.5% annually until it is 13%... then hold it at 13%. Go with chained CPI for COLAs.

The above, along with a few other things would probably get you there.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline  
Old 06-09-2022, 08:08 AM   #51
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: Les Bois
Posts: 5,761
Quote:
Originally Posted by Andre1969 View Post
I'm surprised that raising the cap on SS earnings would eliminate so much of the shortfall, especially since they're only bringing it back at the $400+ and up threshold, which implies to me that $147K-$400K would not be affected.

Years ago, I read that the cutoff (currently the $147K) was designed to capture 90% of all wage income. So if that's still the case, it doesn't seem like there's much income left out there to tax.
you have leveraging, as SS benefits (as a % of pay) for those over the TWB are much less in proportion to those who aren't
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline  
Old 06-09-2022, 08:09 AM   #52
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Car-Guy's Avatar
 
Join Date: Aug 2013
Location: Texas
Posts: 10,864
If I had bought and paid into a retirement annuity from a private insurance company with promised benefits for 40+ years and then they decided to change the benefits structure (negatively) once I retired, what would that be called?
__________________
20's "something" mind, trapped in a 70's "something" body
Car-Guy is offline  
Old 06-09-2022, 08:15 AM   #53
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2009
Posts: 6,682
Quote:
Originally Posted by Car-Guy View Post
If I had bought and paid into a retirement annuity from a private insurance company with promised benefits for 40+ years and then they decided to change the benefits structure (negatively) once I retired, what would that be called?
It could be heroic, if that's the alternative to the company going bankrupt so you get zero.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline  
Old 06-09-2022, 08:19 AM   #54
Thinks s/he gets paid by the post
 
Join Date: Oct 2014
Posts: 1,537
one change I am in favor of is the way spouses are treated. After death of primary earner I am fine with surviving spouse taking the higher earners SS. But, while alive and only one spouse paid into the system there should only be one SS check going out. Having one spouse receive 50% of the other spouses SS benefit despite never paying into the system is wrong in my opinion. Seems to me that if a traditional SAHM lived her whole life without a pay check she should be fine without a SS check (until her spouse dies or course). This would work the same if the stay at home spouse was male.

I am preparing for the hate mail. Bring it.
__________________
-Big Dawg-FI since 9/2010. Failed ER in 2015. 2/15/2023=DONE! "Blow that dough"-Robbie

" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
Bigdawg is offline  
Old 06-09-2022, 08:20 AM   #55
Thinks s/he gets paid by the post
 
Join Date: Mar 2013
Location: Coronado
Posts: 3,674
Quote:
Originally Posted by almost there View Post
Received an email this morning
"Your New Social Security Statement is now available"
Not much new, but opened an attached PDF associated with it.
I have heard about possible reductions, but do not recall seeing it posted on the SS website.
Its listed as a 22% reduction.
Retirement Ready: Fact Sheet For Workers Ages 49-60 (Am 60 till Sep)
https://www.ssa.gov/myaccount/assets...kers-49-60.pdf

"New Social Security Statement
Social Security will be there when you retire The Social Security taxes you pay go into the Social Security Trust Funds that are used to pay benefits to current beneficiaries. The Social Security Board of Trustees estimates that, based on current law, the Trust Funds will be able to pay benefits in full and on time until 2034. In 2034, Social Security would still be able to pay about $780 for every $1,000 in benefits scheduled."

Will be 62 in 2024. Am thinking I should grab the 10 years at the full rate guaranteed more or less. Rather than waiting 8 years till 70 to take it, at a possible 22% reduction. As I have little faith in the decision making process of our government these days. Just wanted to share the pdf link. Was news to me, might be old news to you.
If you take SS at age 62, then you will take a 30% cut on your FRA benefit for claiming early, and ten years after starting you may take another 22% cut on that. If you wait until age 70 to claim, then you get a 24% bonus on your FRA benefit, which may get cut by 22%.

If your FRA amount would be $1K/mo, and you claim at age 62, then you're only getting $700/mo. If that gets cut by 22% after ten years, it would go down to $546/mo. If you wait until age 70 to collect, then you'd get $1240/mo for the first two years and $967/mo thereafter.

Even with a future reduction, the break-even is at age 82. If you expect to live longer than that, you'll get more money out of the system if you wait and take SS at age 70. (This ignores spousal considerations and things like investment returns on the money you claim early.)
cathy63 is offline  
Old 06-09-2022, 08:25 AM   #56
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
Quote:
Originally Posted by Car-Guy View Post
If I had bought and paid into a retirement annuity from a private insurance company with promised benefits for 40+ years and then they decided to change the benefits structure (negatively) once I retired, what would that be called?
I think you need to frame it differently. The private insurance company undercharged the premiums paid for the promised benefits and as a result doesn't have sufficient assets to pay the promised benefits and went into receivership. The company only has sufficient financial resources to pay 75% of benefits so rather than a 25% reduction of benefits, the receiver is considering alternatives that include some reductions to benefits for existing policies along with higher premiums for new policies.

I'd suggest that any of the alternatives that they ultimately put in place will give you more than a 25% haircut.

So what would you rather have... some targeted reductions to the benefits structure that you were promised or 75% of the benefits that you were promsed?
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline  
Old 06-09-2022, 08:28 AM   #57
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
athena53's Avatar
 
Join Date: May 2014
Posts: 7,326
Quote:
Originally Posted by Bigdawg View Post
one change I am in favor of is the way spouses are treated. After death of primary earner I am fine with surviving spouse taking the higher earners SS. But, while alive and only one spouse paid into the system there should only be one SS check going out. Having one spouse receive 50% of the other spouses SS benefit despite never paying into the system is wrong in my opinion. Seems to me that if a traditional SAHM lived her whole life without a pay check she should be fine without a SS check (until her spouse dies of course). This would work the same if the stay at home spouse was male.

I am preparing for the hate mail. Bring it.
No hate here- an interesting idea. I think it would be more likely to fly now with more women having earnings on their own records. I'm the mother-in-law of a wonderful DIL who's a SAHM and I still agree. It could free up some $$ to pay more to lower-income earners but would eliminate the shock when one spouse dies (usually the husband goes first) and the other finds that household SS has been reduced by 1/3- from 150% of the principal earner's amount for the couple to the Survivor benefit of 100%. This makes it really hard for a lot of widows who should have seen it coming but...)
athena53 is offline  
Old 06-09-2022, 08:36 AM   #58
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Car-Guy's Avatar
 
Join Date: Aug 2013
Location: Texas
Posts: 10,864
Quote:
Originally Posted by Bigdawg View Post
one change I am in favor of is the way spouses are treated. After death of primary earner I am fine with surviving spouse taking the higher earners SS. But, while alive and only one spouse paid into the system there should only be one SS check going out. Having one spouse receive 50% of the other spouses SS benefit despite never paying into the system is wrong in my opinion.
The DW and I talk about this a lot.... (She was a stay at home mom) She now gets roughly half of the SS $ of what I get... HOWEVER, I've often wondered when SS was originally setup (or sometime later) if that wasn't considered in the payout calculations. Surely it was... Would mine be ~50% more now, if spousal benefits were never considered or enacted?

Not trying to stir it up, "this time" since I really don't know (the logic) of how/why this came about.
__________________
20's "something" mind, trapped in a 70's "something" body
Car-Guy is offline  
Old 06-09-2022, 09:08 AM   #59
Full time employment: Posting here.
 
Join Date: Sep 2008
Posts: 999
Quote:
Originally Posted by Midpack View Post
They’ve been telling us about the shortage for decades, not new.
I know. But I had not seen the the actual / official percentage 22%. Guess it was out there and I didn't see it.
__________________
"I couldn't wait for success, so I went ahead without it." Ret. 2013 @ 51.
almost there is offline  
Old 06-09-2022, 09:10 AM   #60
Full time employment: Posting here.
 
Join Date: Sep 2008
Posts: 999
Quote:
Originally Posted by cathy63 View Post
If you take SS at age 62, then you will take a 30% cut on your FRA benefit for claiming early, and ten years after starting you may take another 22% cut on that. If you wait until age 70 to claim, then you get a 24% bonus on your FRA benefit, which may get cut by 22%.

If your FRA amount would be $1K/mo, and you claim at age 62, then you're only getting $700/mo. If that gets cut by 22% after ten years, it would go down to $546/mo. If you wait until age 70 to collect, then you'd get $1240/mo for the first two years and $967/mo thereafter.

Even with a future reduction, the break-even is at age 82. If you expect to live longer than that, you'll get more money out of the system if you wait and take SS at age 70. (This ignores spousal considerations and things like investment returns on the money you claim early.)
Thanks, I would have thought it pushed out the actual break-even point past 82.
Getting 8 yrs from 62 without the 22% reduction. (2024 to 2031) Will be 62 in 2024.
In my case (as of today) its $2173 at 62, $3089 at 67, $3830 at 70 in 2024 dollars/ or $2988 with the - 22% in 2034.
__________________
"I couldn't wait for success, so I went ahead without it." Ret. 2013 @ 51.
almost there is offline  
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Older car: to fix or not to fix? Sojourner FIRE and Money 47 11-11-2016 01:18 PM
Americans are willing to pay more for Social Security Midpack FIRE Related Public Policy 52 02-11-2013 10:54 AM
How to fix Social Security novaman FIRE and Money 142 05-04-2012 10:42 PM

» Quick Links

 
All times are GMT -6. The time now is 07:59 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.