athena53
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- May 11, 2014
- Messages
- 7,377
FCAS or ACAS?
FCAS.
FCAS or ACAS?
FCAS.
The lack of inflation protection makes me leery of these things. Like others, I am buying my longevity insurance from Uncle Sam by taking SS at 70.
I have no doubt that everyone will get their full SS check. I just expect that the taxes on SS will increase and we'll have Medicare and SS payroll tax increases to cover what's needed.Have you factored in that the fund will run dry in 15 years?
Without legislation, payouts will be limited to about 75% of the current promise. I wouldn't be surprised if some of us get a big negative SS COLA.
The low hanging fruit would be the actuarial increase factors for late commencement or increasing SSNRA.
Are you a "senior" if you were born in the 60s or 70s?
That's who they are going to stick it to. Simply raising the FICA tax rate won't be easy, they will have to cut payouts, somehow.
Yep, and the SS actuaries have calculated the financial impact of many of them.It will be easier to gradually raise FICA tax than cut current SS payments. Extending full retirement age may also be a way to cut future payouts.
There are a basket full of tricks that creative politicians can use to make SS payments get reduced. They could also means test the process. Right now, payouts are taxed, but not at 100% yet, I believe.
^ I solved 100% of the problem.
That is why I qualified it with the term "deferred start". And I think of longevity insurance as that which does start at say age 85 and am aware that you could buy a SPIA that starts at RMD age in an IRA and it gets carved out of the RMD calculation.
The shame is that there are a combination of various actions that they could take now that would save SS and while they would be unpopular with certain constituencies, they could be done without a lot of hardship. However, our politicians lack courage and just keep ignoring the problem but the longer that they fail to act the more extreme the impacts will be. Sad.
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I was surprised, too.I was very surprised that eliminating the cap alone solved 100% of the problem... I suspect because it is really banging those with very high incomes compared to the current approach.
But my point is that there are some things that could be done that are relatively modest in the whole scheme of things but the longer they wait the more difficult it will be.
IIRC, former Senator Simpson claimed that the SS problem could be solved into the foreseeable future by gradually raising the full retirement age to 69 over a period of 20 years.
Given how much longer we are living, I don't see that as a problem, but...... we would need to find a way to keep older people working and avoid age discrimination. Perhaps a phased reduction in hours?
My fear is that people would be laid off in their 50's or early 60's and be forced to drain their retirement accounts in order to survive until they get SS. I saw that situation occur for several acquaintances a few years back. It's not pretty.
breaking the cap violates one key principle of social insurance programs - the relationship between benefits and earnings
I don't think so. The way the current law is written is that the payout is a function of your lifetime contributions.
If you remove the cap on contributions, then your payout will also increase. It will not be 1:1 of course, but the payout is still tied to the contributions.
-gauss
p.s. I agree with you that it is very important to maintain the relationship between benefits and earnings to sustain the program long term.
I don't think so. The way the current law is written is that the payout is a function of your lifetime contributions.
If you remove the cap on contributions, then your payout will also increase. It will not be 1:1 of course, but the payout is still tied to the contributions.
-gauss
p.s. I agree with you that it is very important to maintain the relationship between benefits and earnings to sustain the program long term.
We're talking about changes to the current law. People have proposed both:I don't think so. The way the current law is written is that the payout is a function of your lifetime contributions.
If you remove the cap on contributions, then your payout will also increase. It will not be 1:1 of course, but the payout is still tied to the contributions.
-gauss
p.s. I agree with you that it is very important to maintain the relationship between benefits and earnings to sustain the program long term.
I was surprised, too.I was very surprised that eliminating the cap alone solved 100% of the problem... I suspect because it is really banging those with very high incomes compared to the current approach.