SS Could Be Insolvent in 8 Years

[Koolau]

Quote:

Originally Posted by daylatedollarshort I don't see where anyone in this thread has suggested Congress would cut all SS recipients 35%. That isn't in any of the current fix proposals, and that is not what they did during the last crisis. That is a different position than posters saying Congress would never make any cuts to SS, or make any cuts to current recipients, which is not supported by historical facts.

I didn't suggest CONGRESS would cut by 35% - just that they would NOT allow the depleted SS fund to make that cut. (I forget the exact number but 35% is close IIRC.) Of course, I have no special insight - just 74 years of watching congress buy votes with our money.

[pb4uski]

Quote:

Originally Posted by Koolau .... I forget the exact number but 35% is close IIRC. ...

From 2021 Trustees Report:

Quote:

... The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, will be able to pay scheduled benefits on a timely basis until 2033, one year earlier than reported last year. At that time, the fund's reserves will become depleted and continuing tax income will be sufficient to pay 76 percent of scheduled benefits. ...

So 24% haircut, not 35%.

[Markola]

Life expectancy dropped (is dropping?) in the U.S. Presumably, that grim fact will show up in future data about SS projections.

https://www.nbcnews.com/health/healt...demic-n1272206

[Closet_Gamer]

I think there is another political reality rumbling around here:

Broadly speaking, our nation isn't terribly good at dealing with an issue until its hitting us square in the face with actual short term impacts.

That's a by-product of many things but I would argue generally true.

In that case, I doubt we will see substantive action on this until 2028 (inside one election cycle) or maybe even 2030. Then the national mind will focus.

Also broadly true is that once we get the national mind focused, we do tend to get things sorted out.

Its not pretty and its far from perfect...but it does seem to work.

[harllee]

Quote:

Originally Posted by Markola Life expectancy dropped (is dropping?) in the U.S. Presumably, that grim fact will show up in future data about SS projections. https://www.nbcnews.com/health/healt...demic-n1272206

I was wondering about this. If life expectancy drops shouldn't that eventually start reducing SS payments? To offset this I guess there may be more disability claims from people who caught the virus and cannot work.

[karen1972]

Quote:

Originally Posted by harllee I was wondering about this. If life expectancy drops shouldn't that eventually start reducing SS payments? To offset this I guess there may be more disability claims from people who caught the virus and cannot work.

I think it may be awhile before it shakes out how the pandemic impacts things.
- Additional people may be on disability
- How many took early retirement that otherwise might have worked to FRA?
- How many close to retirement seeing record gains will stay in the labor force or retire early w/ or w/o SS.
- CDC estimates at least 550k excess deaths and given the stats of COVID you have to assume a vast majority of those were already on SS.
- will we get back to full labor participation? I know lots of people still choosing to home school, not sure if/when they will re-join the labor force.

So lots of factors including likely changes to peoples decisions will change the total $$ spent in the upcoming years, not sure any of that can truly be modeled at this point.

[tmm99]

The ex-spouse who was married for 10 years or more having the right to receive half of the SS of the ex-spouse seems strange to me while the benefit of someone who's been married for eternity and is still married is not more. My DH who is Canadian and has never lived in the US gets the same benefit, which again is strange. Even if you're married to someone American for a very short time, you get the same benefit, which is strange yet again.

Maybe the government will cut SS in some of those areas...

[Koolau]

Quote:

Originally Posted by pb4uski From 2021 Trustees Report: So 24% haircut, not 35%.

Thanks. My math is okay, but my memory - not so much.

[Koolau]

Quote:

Originally Posted by karen1972 I think it may be awhile before it shakes out how the pandemic impacts things. - Additional people may be on disability - How many took early retirement that otherwise might have worked to FRA? - How many close to retirement seeing record gains will stay in the labor force or retire early w/ or w/o SS. - CDC estimates at least 550k excess deaths and given the stats of COVID you have to assume a vast majority of those were already on SS. - will we get back to full labor participation? I know lots of people still choosing to home school, not sure if/when they will re-join the labor force. So lots of factors including likely changes to peoples decisions will change the total $$ spent in the upcoming years, not sure any of that can truly be modeled at this point.

While pandemic deaths are the big factor right now, other causes of death are also up. Drug overdose deaths have been on the rise for quite some time. IIRC the numbers are on the oder of 70K or more/year. That's astounding to me but YMMV.

[ncbill]

Quote:

Originally Posted by Closet_Gamer I think there is another political reality rumbling around here: Broadly speaking, our nation isn't terribly good at dealing with an issue until its hitting us square in the face with actual short term impacts. That's a by-product of many things but I would argue generally true. In that case, I doubt we will see substantive action on this until 2028 (inside one election cycle) or maybe even 2030. Then the national mind will focus. Also broadly true is that once we get the national mind focused, we do tend to get things sorted out. Its not pretty and its far from perfect...but it does seem to work.

+1000

IMHO they'll remove the wage cap first.

[Koolau]

Quote:

Originally Posted by ncbill +1000 IMHO they'll remove the wage cap first.

Yeah, that's probably an easy one. Wild guess is that doing so will not make a big difference. I could be wrong, so YMMV.

[lem1955]

I seem to remember OpenSS suggesting taking SS at 68 and a few months for me if there will be a reduction in benefits. I will likely be 68 and even 70 before the SS situation is resolved. Have people changed their Take Date based on this new information?

[Tadpole]

It strikes me that the model for reductions (if any) will follow the same general bend point, etc. method that benefits currently follow. Therefore, including those already collecting, the 24% will be spread from 0% on the lower benefit amounts to whatever it takes to get the equivalent of 24% across the board reductions.

I've watched this "need to fix it now" go on for a little under 20 years and I am sure it was going on before I started watching. The pull and tug between fixing SS and ending SS, including privatization schemes, just keeps on making it harder.

[ShokWaveRider]

What may happen is that "they" may change the rules for those younger than .......... say 55. And those folks may have to deal with reductions, if any. Just a thought as nothing has been set in stone and probably will not be in my lifetime.

[Koolau]

Quote:

Originally Posted by Tadpole It strikes me that the model for reductions (if any) will follow the same general bend point, etc. method that benefits currently follow. Therefore, including those already collecting, the 24% will be spread from 0% on the lower benefit amounts to whatever it takes to get the equivalent of 24% across the board reductions. I've watched this "need to fix it now" go on for a little under 20 years and I am sure it was going on before I started watching. The pull and tug between fixing SS and ending SS, including privatization schemes, just keeps on making it harder.

Quote:

Originally Posted by ShokWaveRider What may happen is that "they" may change the rules for those younger than .......... say 55. And those folks may have to deal with reductions, if any. Just a thought as nothing has been set in stone and probably will not be in my lifetime.

I am more in line with what ShokWaveRider suggests. Here is why. For those already receiving a "check" (yeah, I know, it's a direct deposit) it will be 3rd-rail time to suddenly see a big (or even small) drop in benefits. Remember the big brouhaha that surrounded the increases in monthly charges for Medicare which come out of SSA payments? That was only a few dollars and (I don't recall how it was resolved) but there was talk of grandfathering in payments instead of making people pay for the extra cost of Medicare. (I could be wrong on this, I've slept a few times since the issue arose a few years back.) So imagine suddenly someone's SSA payment will be cut by 24% (or in Tadpole's scenario, even more than 24% for "rich" old people.)

I still recall my in-laws "washing their hands" of (IIRC) Reagan because something in the press suggested he was going to cut SSA. That was it. They were "done" with him. They would have voted for Bernie Sanders had he been a candidate at the time.

No idea how it will all turn out, but major cuts to those already receiving benefits seem unlikely. Old folks vote - Even "rich" old folks vote - and they all vote their pocket books. YMMV

[Chuckanut]

Quote:

Originally Posted by ncbill +1000 IMHO they'll remove the wage cap first.

And increase the percent of SS taxed for high income people.

[Chuckanut]

Here's one person's view on the future fixes of SS:

https://www.creators.com/read/your-s...l-not-go-broke

Quote:

My emails clearly indicate that news has many of my readers saying, "Oh my God, what do we do now?" But frankly, it's got me saying, "Ho-hum. Been there, done that!" Without trying to be too flippant, let me explain.

Quote:

Listed below are eight commonly mentioned reforms. Four involve cutting benefits and four deal with raising revenues. Next to each is a number expressed as a percentage. The number indicates the portion of Social Security's long-range deficit that would be eliminated if the proposal became law. Also listed is a brief argument for and against each proposal.

[RetireeRobert]

I have already been on SS for almost fourteen years. I'm not going to worry about it.

[TheHobbit]

Laughable. Won’t happen: it’s political suicide.