Social Security Depleted by 2023

[Rianne]

Nothing political here, but this is a reality we may have to face. Are you prepared for this? This is included in the article and I'm not trying to be an alarmist. It is something to think about.


"Because the deferral is voluntary, the language in the memorandum "raises the prospect that you have to get information to 100 million people," Isberg said, and then ensure the tax is only deferred for employees who want it."


"There's a lot of unresolved questions about the implementation of this deferral, [and] some of the unresolved questions are quite basic," Garrett Watson, a senior policy analyst at the Tax Foundation, told NBC News. "When would the deferred tax be owed back? There isn't a date specified. There are many options here that have to be clarified. The other big thing that's hanging over a lot of this is whether or not this deferral will turn into a meaningful reduction in tax liability owed."

https://www.salon.com/2020/08/29/so...-trump-eliminates-payroll-tax-ssa-analysis-2/

 

[copyright1997reloaded]

Simple solution: Since we are "printing" money anyway, the Federal Reserve in conjunction with the Treasury can simply "loan" as much money as needed to the social security trust fund.

Haven't you heard? The federal government has unlimited $ to provide to states, groups, unemployment, payroll protection. It's just bits in a computer.

(And yes, I am being sarcastic - but the social security deficit issue is just one of many issues - it just happens to be a "favorite" or the ER.og crowd.)

ETA: In the meantime, stocks go up and just about every day I wish I had more precious metal holdings as I become more and more convinced that we have a world wide debt to GDP issue.

 

[cathy63]

I think there's a higher probability that all life on earth will be wiped out by an asteroid than that the payroll tax will be completely eliminated next year.

That said, we'd be fine without SS. My Mom would feel some financial pain if her SS disappeared though, so that might lead to us taking on unplanned expenses to help her.

 

[Rianne]

I think there's a higher probability that all life on earth will be wiped out by an asteroid than that the payroll tax will be completely eliminated next year.

I agree, but the idea even being floated irritates me. I know a few younger, meaning < 40 yrs old are not thinking about SS. They think it will be gone by the time they retire, hopefully investing wisely.

 

[Sunset]

I know some people who live entirely on their SS. No pensions, tiny savings.
But hey, they are old so who cares...

This payroll deferral of SS taxes will have to be paid next year, and companies who layoff employees will have to make up the money themselves. So companies are not going to be keen to do this temporary action.
It won't be the election boost some _____ thinks.

 

[mckittri2000]

Not happening. Too many people depend soley on SS for their retirement income (not me). If you think Covid freaked people out, think if they take millions of peoples only source of income away.

 

[Mark1]

Simple solution: Since we are "printing" money anyway, the Federal Reserve in conjunction with the Treasury can simply "loan" as much money as needed to the social security trust fund.

Haven't you heard? The federal government has unlimited $ to provide to states, groups, unemployment, payroll protection. It's just bits in a computer.

(And yes, I am being sarcastic - but the social security deficit issue is just one of many issues - it just happens to be a "favorite" or the ER.og crowd.)

ETA: In the meantime, stocks go up and just about every day I wish I had more precious metal holdings as I become more and more convinced that we have a world wide debt to GDP issue.

+1 I guess I don't understand why the government won't/can't just print/borrow more money to pay SS going forward(?). I'm much more worried about the federal debt than SS going bust.

 

[ShokWaveRider]

This kind of thing makes me laugh. Do the folks who put forward these ideas think people are stupid, and do not know they will have to pay back the backlog next year? Maybe they do, they just want them to see their paycheck go up.... for now.

Seems like a nothing burger to me. No benefits for the postponed PT relief. Some folks live so close to the edge, (Week to Week or month to Month) that it could be worse for them when they have to pay it back, rather than paying it piecemeal as everyone does now.

 

[Gumby]

This kind of thing makes me laugh. Do the folks who put forward these ideas think people are stupid, and do not know they will have to pay back the backlog next year? Maybe they do, they just want them to see their paycheck go up.... for now.

This is exactly the same sort of trick they pulled in early 2018. They changed the employer tax withholding tables so that less would be withheld from each paycheck. (People get a raise in take home pay. Hurray! Maybe they'll vote for us in gratitude.) Sadly, many of those people did not figure out that with less withheld from each paycheck, they were either would not be getting a refund or could actually owe when they filed their income tax returns in early 2019. I saw it coming a mile away and adjusted my withholding manually back to what it had been. Many, many people did not.

 

[njhowie]

The deferral will not be happening. Employers are not going to take the time or effort to implement, nor the risk of what happens next year when the employee has to pay it back or if the employee is terminated or leaves employer before paying it back.

 

[latexman]

Unfortunately, I'm still w#^(@%g, but in this case it gives me a chance to share how MegaCorps are reacting to the Executive Order. My MegaCorp put out an e-mail on Friday, 8/28, which said, "The recent Executive Order to defer Social Security Tax Withholding for employees with annual salaries of less than $104,000.00, signed by the President and scheduled to go into effect on payments made starting September 1 and ending December 31, 2020 is elective by company and" my MegaCorp "has decided not to implement this order. There are various reasons for this decision, as these tax-withholding deferrals would become due with employee’s 2020 Tax Returns on April 15, 2021. Many companies are not implementing this order at this time, as there has been no guidance from the US Treasury regarding implementation to date."

 

[foxfirev5]

Unfortunately, I'm still w#^(@%g, but in this case it gives me a chance to share how MegaCorps are reacting to the Executive Order. My MegaCorp put out an e-mail on Friday, 8/28, which said, "The recent Executive Order to defer Social Security Tax Withholding for employees with annual salaries of less than $104,000.00, signed by the President and scheduled to go into effect on payments made starting September 1 and ending December 31, 2020 is elective by company and" my MegaCorp "has decided not to implement this order. There are various reasons for this decision, as these tax-withholding deferrals would become due with employee’s 2020 Tax Returns on April 15, 2021. Many companies are not implementing this order at this time, as there has been no guidance from the US Treasury regarding implementation to date."

Thanks for input from the real world. ☺

 

[Chuckanut]

I agree, but the idea even being floated irritates me. I know a few younger, meaning < 40 yrs old are not thinking about SS. They think it will be gone by the time they retire, hopefully investing wisely.

I thought so also, yet here I am collecting it.

I do recommend investing as though there will be no or reduced SS. Anybody who puts their financial future fully in the hands of politicians and/or corporate pension managers is being foolish, IMO.

 

[cyber888]

Nothing political here, but this is a reality we may have to face. Are you prepared for this? This is included in the article and I'm not trying to be an alarmist. It is something to think about.


"Because the deferral is voluntary, the language in the memorandum "raises the prospect that you have to get information to 100 million people," Isberg said, and then ensure the tax is only deferred for employees who want it."


"There's a lot of unresolved questions about the implementation of this deferral, [and] some of the unresolved questions are quite basic," Garrett Watson, a senior policy analyst at the Tax Foundation, told NBC News. "When would the deferred tax be owed back? There isn't a date specified. There are many options here that have to be clarified. The other big thing that's hanging over a lot of this is whether or not this deferral will turn into a meaningful reduction in tax liability owed."

https://www.salon.com/2020/08/29/so...-trump-eliminates-payroll-tax-ssa-analysis-2/

They are going to steal your money

 

[Retire52]

double down on stupid to monkey with SSN in this manner. how does giving a tax break, another 12.4% for vague time period, for working labor force help us stimulate the economy?

for one, if you likely have to pay it back?
for two, accelerates the SSN short fall from deficit point of 2032 to? giving us less time to shore up with smart policies. three, doesnt do anything for the 10 million or so unemployed due to the pandemic. four, ratchet up the anxiety with SSN future--since 30% of retirees rely mostly on this income to live? only positive maybe to stimulate economy incrementally and boost electability. wow, very short sighted with little ROI IMO

 

[Rianne]

Unfortunately, I'm still w#^(@%g, but in this case it gives me a chance to share how MegaCorps are reacting to the Executive Order. My MegaCorp put out an e-mail on Friday, 8/28, which said, "The recent Executive Order to defer Social Security Tax Withholding for employees with annual salaries of less than $104,000.00, signed by the President and scheduled to go into effect on payments made starting September 1 and ending December 31, 2020 is elective by company and" my MegaCorp "has decided not to implement this order. There are various reasons for this decision, as these tax-withholding deferrals would become due with employee’s 2020 Tax Returns on April 15, 2021. Many companies are not implementing this order at this time, as there has been no guidance from the US Treasury regarding implementation to date."

Yes, thanks for that input. Glad to hear someone is thinking clearly.

 

[CardsFan]

Nothing political here, but this is a reality we may have to face. Are you prepared for this? This is included in the article and I'm not trying to be an alarmist. It is something to think about.

Reminds me of post #5362 from the pet peeve thread:

Posters who start with the statement "Not to bring politics into the discussion,..." then bring politics into the discussion.

 

[Rianne]

Reminds me of post #5362 from the pet peeve thread:

This is about my SS not politics. Don't mess with my $$$.

 

[cathy63]

I'm not sure it's clear that there are actually 3 different payroll tax issues being discussed.

1) The executive order for a 4 month deferment of the employees' share of the payroll tax, which was supposed to begin today. (Deferment of employers' share was in the CARES Act.) There is very little long term effect from this order, because all the tax will eventually be paid. The SS Trust Fund is only losing a some interest on treasury securities that are paying very low rates anyway. So far it seems that the Fed Gov't has informed its employees they will be subject to the deferral now and will have double taxes collected for the first 4 months of next year until they have paid back the advance. And latexman has posted in #11 that his private employer is not participating.

2) The President's previous statement that he would push to forgive the employees' share of the deferred taxes if he is reelected. He can't do this unilaterally. Only Congress can pass such a law. This obviously has more effect, because SS would lose out on ~1/6th of the expected 2020 contributions. It also has the potential to reduce future SS benefits by a small amount for those who earn less than $100K this year, since they will only get credit for 2/3 of a year's contributions.

3) The President's statement in early August that "In other words, I’ll extend beyond the end of the year and terminate the tax." Again, he can't do this unilaterally. This is the one that would deplete SS in 3 years as the thread title suggests. Even if Congress went along and decided to budget for SS from the general fund, it would also require a major overhaul of the entire SS program since benefits are calculated based on contributions and quarters and all of that would go away. I just don't see that happening any time soon.

 

[street]

I think there's a higher probability that all life on earth will be wiped out by an asteroid than that the payroll tax will be completely eliminated next year.

That said, we'd be fine without SS. My Mom would feel some financial pain if her SS disappeared though, so that might lead to us taking on unplanned expenses to help her.

I agree.

 

[USGrant1962]

I'm not sure it's clear that there are actually 3 different payroll tax issues being discussed.

1) The executive order for a 4 month deferment of the employees' share of the payroll tax, which was supposed to begin today. (Deferment of employers' share was in the CARES Act.) There is very little long term effect from this order, because all the tax will eventually be paid. The SS Trust Fund is only losing a some interest on treasury securities that are paying very low rates anyway. So far it seems that the Fed Gov't has informed its employees they will be subject to the deferral now and will have double taxes collected for the first 4 months of next year until they have paid back the advance. And latexman has posted in #11 that his private employer is not participating.

2) The President's previous statement that he would push to forgive the employees' share of the deferred taxes if he is reelected. He can't do this unilaterally. Only Congress can pass such a law. This obviously has more effect, because SS would lose out on ~1/6th of the expected 2020 contributions. It also has the potential to reduce future SS benefits by a small amount for those who earn less than $100K this year, since they will only get credit for 2/3 of a year's contributions.

3) The President's statement in early August that "In other words, I’ll extend beyond the end of the year and terminate the tax." Again, he can't do this unilaterally. This is the one that would deplete SS in 3 years as the thread title suggests. Even if Congress went along and decided to budget for SS from the general fund, it would also require a major overhaul of the entire SS program since benefits are calculated based on contributions and quarters and all of that would go away. I just don't see that happening any time soon.

Don't bring facts to a "nothing political" thread.

The alarmist thread title refers to number 3 which is nothing but a campaign position and, hence, off-limits political discussion. OP's rant refers to number 1, which, as you point out, would have little if any effect on the trust fund. And number 2 would likely be funded from general revenues just like the last payroll tax holiday was, again with no impact on the trust fund.

 

[ownyourfuture]

This is about my SS not politics. Don't mess with my $$$.

Exactly. As far as I know, neither of the 2 main political parties was mentioned by the OP, or anyone who replied.

 

[W2R]

Personally I'm not expecting Social Security to end, any more than I am expecting little green men to come to my door squeaking "Take me to your leader!".

That said, we will be able to survive without it. Not much more than that, but we'll still have a place to live and food to eat. We might have to cancel having lunch out all the time, and cut back on discretionary purchases, but we'll be OK.

For me, this was part of designing my retirement. I figured on at least three income streams, and being able to survive with any two instead of all three. So, if SS craters then the Dow had better not go to zero and the federal pension system and TSP had better not be dismantled.

 

[Beststash]

There are four issues that can affect my retirement. SS and the support for it going forward, support for PBGC going forward (I wish I had taken lump sum now). There fewer of us that actually have a pension which makes these changes more possible in the future, and the value of my savings in the future (inflation). These are the basic issues for most retirees with a DBP pension.

Sadly all of these can change (although I would have never thought so when I retired almost 20 years ago).

However these days my health is my primary issue - growing old is not for "Sissies".

Party like it is 1999!!

Peace and Love!!

 

[Alan]

Thanks for the discussion.