Inflation and SS Triggers

[TheWizard]

I know a woman who was married to a mafia figure and got divorced. Since all the income was "off the books" she has no Social Security earnings. Her son pays for her expenses and I think she gets SSI, which is like $900 a month. Not a good future ahead for her.

Sounds like she didn't get a savvy lawyer to get her proper alimony.
*shurg*

 

[rothlev]

WADR, I don't buy the whole mental illness card thing... that might be true in some cases, but in the cases that I'm thinking about the people are just cheap and didn't want to pay tax on that income, social security or income taxes... so let's not give them a free pass that they don't deserve by calling it a mental illness.

Unless suddenly, cheap is a mental illness.

I think for the most part this is not mental illness. It is a case of living in the moment. , and not thinking about tomorrow, and being totally unaware of how social security works and what the consequences are of not paying in. Most people have a hard time with deferred gratification.

 

[Chuckanut]

I think for the most part this is not mental illness. It is a case of living in the moment. , and not thinking about tomorrow, and being totally unaware of how social security works and what the consequences are of not paying in. Most people have a hard time with deferred gratification.

Sometimes it's just stupidity. My ex-neighbor's retirement plan was to be a 'waiter'. He was waiting for an uncle to die and leave him a collection of gold coins, as promised. Then he would retire with 50 Grand!

People really do need to study their math.

 

[TheWizard]

Sometimes it's just stupidity. My ex-neighbor's retirement plan was to be a 'waiter'. He was waiting for an uncle to die and leave him a collection of gold coins, as promised. Then he would retire with 50 Grand! ....

That's how it works in at least one European country that I'm familiar with.
You get a house when your ancestor dies...

 

[athena53]

I think for the most part this is not mental illness. It is a case of living in the moment. , and not thinking about tomorrow, and being totally unaware of how social security works and what the consequences are of not paying in. Most people have a hard time with deferred gratification.

I feel guilty about it now but the statute of limitations is up so...

Both DS' caregivers when he was little (one before he started kindergarten, the other in grade school) wanted to be paid in checks made out to "Cash". In their cases they were married to husbands with decent jobs so what they made probably wouldn't have increased their SS but- yes, money should have gone into the system. When I was married to the Ex and working FT we had cleaning ladies- also paid that way. I wonder about them now, especially the one who was divorced.

I don't hire people off the books anymore, at least not knowingly. Most take credit cards and that leaves a trail. The local plumber is licensed and incorporated but prefers checks written out to his business to avoid credit card fees. Every darn dime of my income is tracked and reported to the government and the appropriate taxes applied. I'm not letting anyone else off the hook.

 

[Imackenzie]

Supplemental SS is Welfare

I'm not sure it is much of a matter of fairness... but warts and all SS is NOT welfare... in order to get benefits you need to have paid in for 40 quarters... it has always been that way and isn't a deep, dark secret. If you are short of credits then get a job for the number of quarters that you need.

IMO very few people would think that you should be able to get SS if you haven't paid in.

There is welfare program that hides in the SS program called Supplemental SS. My mother gets it..while living in her $600K house.

 

[TheWizard]

There is welfare program that hides in the SS program called Supplemental SS. My mother gets it..while living in her $600K house.

Supplemental Security Income, yes.
And it's not hiding, been around for a while...

 

[CRLLS]

According to SSA.gov:

SSI is a Federal program funded by general tax revenues (not Social Security taxes).

If true, I would argue that this would be part of the SS program in name only. none of my withholdings or my employers' contributions went to fund this part of SS.

 

[MichaelB]

There is welfare program that hides in the SS program called Supplemental SS. My mother gets it..while living in her $600K house.

Supplemental Social Security (SSI) is administered by Social Security but benefits are paid from general tax revenues, not the Social Security trust. It allows recipients to own a home and an auto and still remain eligible.

 

[Chuckanut]

Supplemental Security Income, yes.
And it's not hiding, been around for a while...

I think SSA is somewhat like Medicare - administered by the Social Security system, but not financially part of Social Security.

 

[pb4uski]

There is welfare program that hides in the SS program called Supplemental SS. My mother gets it..while living in her $600K house.

I agree with the previous posters... you are correct that it is a welfare program but is funded by general revenues and not SS taxes so your claim that it is part of the SS program is incorrect... however it is administered by the SSA.

 

[indiajust]

I find FICA economically destructive. A lousy law with terrible consequences.

FICA impairs US wage competitiveness while making it legal for the old to steal from the old. It divides us into warring tribes, tearing the country apart.

Given our inability to change social policy rationally, pressure is the only option. Do you consent to go to Vietnam or burn your draft card?

FAFSA and FICA are the new draft cards. I'm happy to burn them.

Happy to support actuarially sound retirement plans with floors and caps as a light touch of welfare, like switzerland or chile. I prefer a system less socially and economically destructive. If the choice is comply in poverty or piracy, I opt for pirate.

 

[ShokWaveRider]

I find FICA economically destructive. A lousy law with terrible consequences.

FICA impairs US wage competitiveness while making it legal for the old to steal from the old. It divides us into warring tribes, tearing the country apart.

Given our inability to change social policy rationally, pressure is the only option. Do you consent to go to Vietnam or burn your draft card?

FAFSA and FICA are the new draft cards. I'm happy to burn them.

Happy to support actuarially sound retirement plans with floors and caps as a light touch of welfare, like switzerland or chile. I prefer a system less socially and economically destructive. If the choice is comply in poverty or piracy, I opt for pirate.

OUCH! How would you propose folks pay for their Medicare and Social Security equivalents in retirement then?

 

[Gumby]

.... If the choice is comply in poverty or piracy, I opt for pirate.

You do know that pirates are hostis humanis generis and may be taken and executed wherever they are found, right?

 

[indiajust]

The challenge is to redesign the program to be sustainable. That means a light touch of welfare for those who are unable to contribute much. (that way the pressure to add benefits later is reduced) The current system penalizes the poor and unhealthy, while benefitting the reverse. This could be addressed by adding inheritability. Make FICA more like an IRA that can benefit the children of rich and poor, not just the rich healthy cohort at the expense of the reverse.

The welfare aspect establishes a basic floor for benefits at poverty level and not much more. It can be paid for with a ceiling for benefits, since those that do quite well will not rely on FICA anyway.

The vast majority of folks between the floor and ceiling get a sliding benefit proportional to contributions.

This transforms FICA from a wealth transfer political program into a wealth building program, much like IRA/401k plans are today. The third rail of american politics can be removed, forever. Politicians would lose the ability to manipulate benefits or taxes to buy votes. Or quietly fund the military industrial complex.

And this would eliminate the intergenerational warfare that characterizes FICA discussion, current voters vs the unborn or not yet voting.

And then there is the problem ShokWavRider mentions: We have to operate on the patient without killing them. Agreeing on a destination for FICA is one big problem. Agreeing on how to migrate from our current insolvent mess is a very hard problem.

Alternatives: ignore it and print 200 Terabucks to paper over the entitlement program insolvencies and watch Rome burn. Wait for angry young voters to out vote the retirees and push them aside... and watch Rome burn.

This is a hard problem to solve. Chile and Switzerland and about a dozen other nations have had successful reforms. It takes decades to complete the transition.

I much prefer legislative sausage via a functioning congress. Lacking that, the pirates will run the blockades, as will the rest of the world, building inexorable force for change or poverty. I fear the monetary destruction required to pay for the current system will do what the war on communism did, kill the villagers to save them.

The Kennedy clan were pirates of prohibition. Many pirates are executed, some are exalted.

I like the Gimli quote here from LOTR: "Certainty of death. Small chance of success. Well, what are we waiting for?"

 

[Chuckanut]

Alternatives: ignore it and print 200 Terabucks to paper over the entitlement program insolvencies and watch Rome burn. Wait for angry young voters to out vote the retirees and push them aside... and watch Rome burn.

This is a straw man. ^^^^^^^

IMO, it reflects the kind of simplistic tribalism that causes a lot of people to make a lot of faulty assumptions.

There are other options, such as reforming the age levels for retirement, increasing the amount of earnings that pay into SS tax, and reducing benefits. It's not an easy problem to solve, but that's what our elected representatives are getting paid to do. It could be solved, but somehow they have forgotten who they work for. We need to remind them. My 2¢.

I do admit the part about watching Rome burn was colorful.

 

[MichaelB]

The pension reform in Chile is interesting but can’t be considered successful. It doesn’t cover enough people, the pension amounts are not adequate, administration costs have consumed much of the gains, and it struggles to deal with the same issues public pension systems face - longevity, work force participation, how to invest the funds, and 1-2 decades of declining interest rates.

There is no system that works perfectly. I think it would help if boomers paid for a greater share of the retirement resources we are consuming between SS and Medicare.

 

[TheWizard]

...There is no system that works perfectly. I think it would help if boomers paid for a greater share of the retirement resources we are consuming between SS and Medicare.

I'm a boomer, born 1950.
I'm helping by paying $442/month for Medicare part B, compared to the base amount of $170/mo.
I urge all other boomers to do similarly...

 

[pb4uski]

WADR, indiajust lacks a basic understanding of how SS operates. Lower earners get a much higher benefits in relation to contributions than higher earners. S/he mentions inheritability but that aspect already exists in the form of survivor benefits. SS has very broad support by the American public, warts and all.

 

[indiajust]

My fear with raising the age eligibility is you push the program closer to death before retirement. There's a famous quote from an early FICA administrator who admitted that folks were supposed to die and never get paid anything. An actuarially sound program eliminates killing the customer to balance the books. That allows the less healthy to both participate and use as needed, while eliminating a "final solution" approach that is all too common in government.

Yes there is FICA inheritability inside a marital relationship. I am referring to more of an IRA that would have a beneficiary, regardless of marital status. The idea is a real asset that is inheritable, not a 50 year work history, dead at 66, and a 300 death benefit, for the unmarried.

I understand that there is a skew for low earners, which I favor.

There is room for options to make a much better system that helps the poor and sick, while eliminating the risk of asset theft by the system.

The people lead and the government follows. Far more likely that congress will be swayed by monied interests and cares of the moment. I have no experience of relying on representatives because they are paid to do it.

The real success of the Chilean system is that the entire population is now vested in the success of the chilean economy. This lowers cost of capital and raises growth rates, productivity, employment... Thus the success of Chile relative to the rest of LATAM.

Not aiming for perfection, just incremental improvement over the current system. Really my only requirement is an actuarial basis that balances the books, not a political balancing act between conflicting voter groups that feeds the tribal furies.

 

[MichaelB]

My fear with raising the age eligibility is you push the program closer to death before retirement. There's a famous quote from an early FICA administrator who admitted that folks were supposed to die and never get paid anything.

You definitely need to provide a source for this, it’d not credible.

The real success of the Chilean system is that the entire population is now vested in the success of the chilean economy. This lowers cost of capital and raises growth rates, productivity, employment... Thus the success of Chile relative to the rest of LATAM.

“Success has many fathers while failure is an orphan”. Chile’s relatively good economic performance can be attributed to many factors. This is the first time I’ve seen it attributed to pension reform. It’s possible - but most likely there are other factors at play. There’s no doubts however, that the pension reform is not meeting expectations.

Not aiming for perfection, just incremental improvement over the current system. Really my only requirement is an actuarial basis that balances the books, not a political balancing act between conflicting voter groups that feeds the tribal furies.

Despite the colorful language, SS is neither of these, it is both overly simplistic and unrealistic. The reality is to be actuarially neutral it would need an end date, which doesn’t exist. Financially solid is probably a more realistic aim. As for the voter groups and tribal furies, the less said the better, but SS reform does not appear to be tribal in nature.

 

[jimbee]

I'm a boomer, born 1950.
I'm helping by paying $442/month for Medicare part B, compared to the base amount of $170/mo.
I urge all other boomers to do similarly...

Based on your part B premium, I didn't make as much as you do now when I was working, let alone when retired. I vote nope.

 

[pb4uski]

... There's a famous quote from an early FICA administrator who admitted that folks were supposed to die and never get paid anything. ...

If it is a "famous quote" then indiajust should be able to provide it. There is an element of truth to it though in that the original age 65 retirement age was selected in an era where life spans were lower. I have a faint recollection that when the program was started that it was exepected that retirement benefits would be paid out for an average of 12 years. Of course advances in medical technology since then have resulted in longer lives so benefits are paid for a much longer period than originally expected and that increased longevity is the principal cause for thencial stress on the system.

• The original Social Security Act of 1935 set the minimum age for receiving full retirement benefits at 65....
• Since the program first began paying monthly Social Security benefits in 1940 the average life expectancy for men reaching age 65 has increased nearly 4 years to age 81; for women reaching age 65, their average life expectancy has increased nearly 6 years to age 84 ...

So, when are you moving to Chile?

 

[CardsFan]

Happy to support actuarially sound retirement plans with floors and caps as a light touch of welfare, like switzerland or chile. I prefer a system less socially and economically destructive. If the choice is comply in poverty or piracy, I opt for pirate.

So, when are you moving to Chile?

Or Switzerland?

 

[indiajust]

Choosing a retirement location is hardly a one dimensional choice, as a quick peek at the ex-pat sites show. The benefits of reform will have no effect on me, as I am already at the finish line. Future generations will pay taxes and opportunity for naught.

I carried my quotes around in a hanging file folder, pre-Internet. Too many moves to keep the heavy paper copies and journals. Like my color family pix from the 70's that turned to purple and brown mud in the albums, it no longer exists.

My expectation is that the reform bill is already written and waiting for the crisis, just like the patriot act, and we will pass it to find out what it contains.

Until then my worst case plan covers the monetary destruction to pay for these programs. It is anyones guess how the demographic decline will interact with these programs. Younger folks can't fix it, and if elders won't, then it breaks in an uncontrolled manner.

And we are back to pirate territory.