When/who will SS reduce?

[augam]

My prediction is that the politicians won't act until they have to - keep kicking the can down the road and only when it is close to a crisis will they act.

If then ...

There is a reason they have not acted.

 

[joeea]

Unable to pay 100% of benefits. I do not believe anyone will make any changes prior to that for obvious reasons.

Keeping all politics out of this course.

Okay thanks. Seems like an odd use of the term "default", but I understand.

I think you are wrong. I'm not sure I see any politicians who want to be the ones who threw out grandma's social security. But we'll see.

 

[REWahoo]

I'm not sure I see any politicians who want to be the ones who threw out grandma's social security.

^ This.

The Importance of Social Security Benefits to the Income of the Aged Population

50% of those over age 65 currently rely on SS for half or more of their income.
25% of those over age 65 currently rely on SS for 90% or more of their income.

To cut SS benefits to those who rely on it so heavily would be political suicide. These are the folks who vote.

 

[ShokWaveRider]

I am always amazed about topics like this that generate so much banter and speculation, when in reality there is not much we at ER.org can or will do about it. OK it is fun to speculate and it does break up our day. But there is not a lot we can do other than get our own houses in order. We are also assuming what we read is actually true about a potential demise, haircut, or whatever. At least based on current speculation we have ~16 years give or take to get our houses in order assuming we (I actually) even make it that far.

 

[scrabbler1]

Okay thanks. Seems like an odd use of the term "default", but I understand.

I think you are wrong. I'm not sure I see any politicians who want to be the ones who threw out grandma's social security. But we'll see.

The 1984 reform began taxing some (50%) of grandma's SS benefits, and nearly everyone involved got re-elected. Only 16 incumbent House members and 3 incumbent senators ran and lost. And President Reagan got re-elected, too.

 

[athena53]

The 1984 reform began taxing some (50%) of grandma's SS benefits, and nearly everyone involved got re-elected. Only 16 incumbent House members and 3 incumbent senators ran and lost. And President Reagan got re-elected, too.

Yeah, but only RICH Grandmas so it's OK! ("Rich" is pretty much anyone who has decent income from sources other than SS.) And now 85% is taxable. That's the impact for THIS rich Grandma.

 

[Which Roger]

The 1984 reform began taxing some (50%) of grandma's SS benefits, and nearly everyone involved got re-elected. Only 16 incumbent House members and 3 incumbent senators ran and lost. And President Reagan got re-elected, too.

I read an analysis that explained that one big reason that the 1984 reform was able to pass is that the legislation was designed so that both parties would take roughly the same political hit. So if some were hurt by taxing grandma's benefits, others were hurt by different aspects of the law.

 

[scrabbler1]

I read an analysis that explained that one big reason that the 1984 reform was able to pass is that the legislation was designed so that both parties would take roughly the same political hit. So if some were hurt by taxing grandma's benefits, others were hurt by different aspects of the law.

This is why some form of divided government is the one most likely to pass SS reform (when doing so becomes politically preferable overall to doing nothing, as was the case in the early 1980s). Both parties will have to hold hands and jump off the cliff together so neither side can score political points against the other. Both sides will have to abandon their most extreme reform proposals in order to gain enough support from the other side. Both sides will have to somewhat embrace some of the less extreme proposals from the other side. Difficult? Very much so. Impossible? No.

 

[joeea]

I am always amazed about topics like this that generate so much banter and speculation, when in reality there is not much we at ER.org can or will do about it.

You can feel helpless and do nothing.

Or you can vote.

 

[joeea]

The 1984 reform began taxing some (50%) of grandma's SS benefits, and nearly everyone involved got re-elected. Only 16 incumbent House members and 3 incumbent senators ran and lost. And President Reagan got re-elected, too.

History tells us that raising taxes can happen safely.
Doing away with Social Security? That's not a bet most politicians would take.

 

[Cut-Throat]

You can feel helpless and do nothing.

Or you can vote.

+1

 

[jollystomper]

I am always amazed about topics like this that generate so much banter and speculation, when in reality there is not much we at ER.org can or will do about it.

1. Vote
2. Pay attention as proposed alternatives are surfaced, and plan accordingly regarding their potential impact to you.
3. Build a retirement plan that is not totally dependent on current SS projections for you to survive. If you luck out and nothing changes for you, you'll have extra.

 

[pjigar]

I am always amazed about topics like this that generate so much banter and speculation, when in reality there is not much we at ER.org can or will do about it.

I think I can vote and I can write/talk to my congress men/women. Or may be I am wrong.

 

[Dtail]

1. Vote
2. Pay attention as proposed alternatives are surfaced, and plan accordingly regarding their potential impact to you.
3. Build a retirement plan that is not totally dependent on current SS projections for you to survive. If you luck out and nothing changes for you, you'll have extra.

Depends what totally dependent means. Our plan does definitely include SS. My DGF is already collecting it. We could take some haircut, but could not do without it completely and live the life we wish to.

 

[gwraigty]

I am always amazed about topics like this that generate so much banter and speculation, when in reality there is not much we at ER.org can or will do about it. OK it is fun to speculate and it does break up our day. But there is not a lot we can do other than get our own houses in order. We are also assuming what we read is actually true about a potential demise, haircut, or whatever. At least based on current speculation we have ~16 years give or take to get our houses in order assuming we (I actually) even make it that far.

My posts are based on the actual proposals submitted, not random news reports. It's speculation as to whether any of these proposals become law, but it's important to know what they're thinking about targeting and how.

Many of us won't have our plans to retire materially affected, whether early or not, regardless of what happens. Yet there are plenty of posts on this forum from people wondering if they have enough to retire immediately if not sooner. Some of those plans could be thrown off-kilter if some of the proposals come to pass. Especially, for those already retired who can't access SS for a number of years yet, it's important to know the possibilities down the road while there may be time to adjust spending, if needed.

I didn't start this topic, but I do believe that it brings an important awareness to the table. It may help in keeping one's house in order.

 

[augam]

I do think the 55+ folks will be immune to any changes unless changes to the spousal portion are "tailored".

 

[gwraigty]

I do think the 55+ folks will be immune to any changes unless changes to the spousal portion are "tailored".

People want to think that, including me, as I'm 55. However, some proposals to limit the spousal benefit, are detailed at the following link:

https://www.ssa.gov/oact/solvency/provisions/familyMembers.html

The suggested timing of many of the proposals would indeed affect those of us 55+.

From page 7 of this PDF, they might eventually make someone worth more dead than alive:

https://www.ssa.gov/oact/solvency/BPCCRSPS_20161011.pdf

"4) Compute benefits on a joint-and-survivor annuity basis beginning with retired workers and spouses newly eligible in 2023.

For individuals attaining age 62 in 2023 and later who are married at the time they first become entitled to either a retired worker benefit or an aged spouse benefit (on a retired worker's account), benefits would be reduced while both spouses are alive to allow for increased survivor benefits, such that the expected present value of total benefits would be unchanged on a cohort basis. For those affected, the surviving spouse would receive 75 percent of the decedent’s benefit plus whatever his or her own benefit would be if both individuals in the couple were still alive.

Because survivors of couples affected by this provision would receive higher benefits than under current law, this provision would also reduce the retired worker and aged spouse benefit such that, on a cohort basis, the expected amount of benefits paid from the worker’s account (with all of the plan’s provisions incorporated) would be actuarially equivalent in present value to the expected amount under current law."

 

[Midpack]

This is why some form of divided government is the one most likely to pass SS reform (when doing so becomes politically preferable overall to doing nothing, as was the case in the early 1980s). Both parties will have to hold hands and jump off the cliff together so neither side can score political points against the other. Both sides will have to abandon their most extreme reform proposals in order to gain enough support from the other side. Both sides will have to somewhat embrace some of the less extreme proposals from the other side. Difficult? Very much so. Impossible? No.

It seems like neither side has the stomach to do anything substantial these days, so they and their respective bases (voters and talking heads) both just demonize the other side and do nothing of consequence. And if you think Federal SS/Medicare/Medicaid is bad, take a good look at Illinois pension financials...

 

[marko]

I am always amazed about topics like this that generate so much banter and speculation, when in reality there is not much we at ER.org can or will do about it. OK it is fun to speculate and it does break up our day. But there is not a lot we can do other than get our own houses in order. We are also assuming what we read is actually true about a potential demise, haircut, or whatever.

The bad news is that there's not much we can do about it.
The good news is that most often there's nothing to do; especially as it relates to social programs, there always seems to be an 11th hour reprieve/fix.
But it does make for an interesting discussion for a few days.

Within this discussion, my so-called 'break even' year is 2034, which as you note, should I be so lucky to still be alive, I'll be thrilled to take a haircut! (and too old to really care)

 

[ShokWaveRider]

My point was that if we have our own finances in order to cover for any / some shortcomings in SS, any eventual outcome would be moot.

And Yes we can Vote (Obviously). Although writing to our congress person, here in our district in Florida at least, seems to only be responded to with a form letter. We have done that a few times with little or no satisfaction with the response, the last being ACA.

 

[scrabbler1]

My point was that if we have our own finances in order to cover for any / some shortcomings in SS, any eventual outcome would be moot.

And Yes we can Vote (Obviously). Although writing to our congress person, here in our district in Florida at least, seems to only be responded to with a form letter. We have done that a few times with little or no satisfaction with the response, the last being ACA.

I have written my elected representatives at all levels often in the last ~25 years. The chance at getting a response goes down as the level of government goes up; the state and local folks are more likely to reply, especially with something more than a form letter. As for these larger, federal issues, I'm lucky nowadays to get even a form letter.

The previous House member we had here from 1997-2014 was very good at writing me back. We had met several times in the late 1990s so we were on a first-name basis. Her replacement (same political party) has never replied to anything I wrote her about, not even a form letter. Very disappointing.

 

[athena53]

And Yes we can Vote (Obviously). Although writing to our congress person, here in our district in Florida at least, seems to only be responded to with a form letter. We have done that a few times with little or no satisfaction with the response, the last being ACA.

A bit OT but writing a letter also means you get on their mailing lists. I do vote, even in primaries, but don't write letters for that reason.

 

[pb4uski]

People want to think that, including me, as I'm 55. However.....

Until any of these proposals gains some traction (like are in a bill) I would not waste brain cells fretting about them.

 

[ShokWaveRider]

Funny how I managed to go through life with a simple mantra that kept me somewhat sane. No so DW who simply does not worry about anything and says I do enough for the both of us. I remember reading this quote somewhere, it escapes me where; "Don't Worry About Things You Cannot Control". I was quite good at following this until we ER'd….. Funny how things change. While we have somewhat more control of money related matters like making our stash last, I still find myself fretting about it sometimes. No matter what FireCalc, I-Orp and other such publications of wisdom may imply.

 

[Independent]

The 1984 reform began taxing some (50%) of grandma's SS benefits, and nearly everyone involved got re-elected. Only 16 incumbent House members and 3 incumbent senators ran and lost. And President Reagan got re-elected, too.

Yeah, but only RICH Grandmas so it's OK! ("Rich" is pretty much anyone who has decent income from sources other than SS.) And now 85% is taxable. That's the impact for THIS rich Grandma.

Let's remember, the factors used for calculating the taxable portion of SS are not indexed. The first level for a single person is $25,000 of "provisional" income. And "provisional" income only counts half of SS benefits.

The median income for male, full-time, year-round workers in 1984 was around $25,000. The median for females was around 2/3 of the male.

The factor was chosen so that retirees didn't start paying any FIT on SS benefits until their total earnings were more than the median wage earner's wages.

So yes, that was not politically devastating in 1984, because it really was limited to the "higher than average" income levels.