The Social Security 2100 Act

[joeea]

There is a lot of talk about taking some IRA and 401k...It could be added to SS.

What does "taking some IRA and 401k" mean here?
Do you have a link to this talk?

 

[hulurt1]

They have had talks about retirement in congress. What has been talked about is taking your IRS and 401k and give you a annuity when you are gone that money would go government or SS. If the folks in Washington are talking about Medicare for all and taking you insurance away..don't think SS for all can't happened by taking you IRA. I'm sorry I don't the lady pushing this, I do think she teaches at Boston u

 

[MichaelB]

They have had talks about retirement in congress. What has been talked about is taking your IRS and 401k and give you a annuity when you are gone that money would go government or SS. If the folks in Washington are talking about Medicare for all and taking you insurance away..don't think SS for all can't happened by taking you IRA. I'm sorry I don't the lady pushing this, I do think she teaches at Boston u

This sounds like the stretch IRA. There’s a lengthy discussion here http://www.early-retirement.org/forums/f28/rmd-going-to-72-a-97142-17.html

 

[pb4uski]

I don't think it would be doubled.

A person who worked at least 30 years is currently guaranteed a minimum of $10,470 per year.

Under the proposed legislation, that would go to $15,612. That's less than a 50% increase.

I was looking at 27 years... $8,897.... 75% increase.

If the increase is 50% or 75% it would be a huge strain on the finances.... the system can't meet its promises as it is so increasing those benefits 50% or 75% makes the problem much worse.

This provision is trying to convert SS to be the centerpiece of retirement rather than one-leg of a three-legged stool as it was originally designed to be.

A social insurance system does not and need not undertake to furnish complete protection to all whom it covers under all circumstances. The social insurance approach is to assure that the benefits would provide a minimum protection, leaving to the individuals the responsibility of buying additional protection from private sources through their private means.

- Social Security Board Chairman Arthur Altmeyer

If you want to expand benefits that much then make individual IRA contributions mandatory so people build those extra legs of the stool at their own expense.

 

[latexman]

I was confused by this donut hole at first. Just, why?

Senators and House Representatives make $174,000/year. VP makes $233,000. U.S. President makes $400,000.

Now I see it!

 

[pb4uski]

They have had talks about retirement in congress. What has been talked about is taking your IRS and 401k and give you a annuity when you are gone that money would go government or SS. If the folks in Washington are talking about Medicare for all and taking you insurance away..don't think SS for all can't happened by taking you IRA. I'm sorry I don't the lady pushing this, I do think she teaches at Boston u

This sounds like the stretch IRA. There’s a lengthy discussion here http://www.early-retirement.org/forums/f28/rmd-going-to-72-a-97142-17.html

No, I don't think it is the stretch IRA.

I think it is this. https://www.forbes.com/sites/teresa...ity-needs-more-revenue-not-cuts/#ac21a0446900

In her book When I'm Sixty-Four: The Plot against Pensions and the Plan to Save Them, Ghilarducci proposed mandatory participation in a government-run savings plan to which each worker and his employer would supplement his Social Security pension by contributing 5.0 percent each of her or his salary. The plan would be administered by the Social Security Administration, but would be separate from Social Security records. In turn, a refundable tax credit of $600 would go to each participant, regardless of his contributions. The account would have a guaranteed interest rate equal to the government's official inflation rate plus three percent.

 

[MichaelB]

No, I don't think it is the stretch IRA.

I think it is this. https://www.forbes.com/sites/teresa...ity-needs-more-revenue-not-cuts/#ac21a0446900

Right. I saw IRA, 401K and annuity and jumped to the wrong conclusion. The link you provides solves that. It doesn't seem to be part of the proposal in the OP; it's not legislation proposed or under consideration.

 

[pb4uski]

Agreed... though the dramatic increase in SS benefits for low wage workers to 125% of the poverty level is a small step in that direction at the low end of the scale... but no impact for the vast majority of SS beneficiaries.

 

[joeea]

What has been talked about is taking your IRS and 401k and give you a annuity when you are gone that money would go government or SS.

You think someone in the government is talking about "taking your IRS and 401k and give you a annuity when you are gone that money would go government or SS."? Or someone just tossed out the wackiest idea they could come up with over coffee one day?

Sorry, I'm not buying it until I see a credible link.

I don't even know what "taking your IRS" would mean.

 

[joeea]

If the increase is 50% or 75% it would be a huge strain on the finances.... the system can't meet its promises as it is so increasing those benefits 50% or 75% makes the problem much worse.

The problem wouldn't be worse if taxes were raised sufficiently to cover the increased benefits. (I suppose it depends which "problem" you are referring to.)

This provision is trying to convert SS to be the centerpiece of retirement rather than one-leg of a three-legged stool as it was originally designed to be.

That's one view. Another view would be that the whole "three legs" concept went the way of the dinosaurs when most companies did away with pensions.

If you want to expand benefits that much then make individual IRA contributions mandatory so people build those extra legs of the stool at their own expense.

Depends on the details. The people who need Social Security the most are the people least likely to be able to afford the reduction in take home pay.

 

[pb4uski]

The problem wouldn't be worse if taxes were raised sufficiently to cover the increased benefits. (I suppose it depends which "problem" you are referring to.)


That's one view. Another view would be that the whole "three legs" concept went the way of the dinosaurs when most companies did away with pensions.


Depends on the details. The people who need Social Security the most are the people least likely to be able to afford the reduction in take home pay.

I guess that I'll concede the point on the increase from minimum to 125% of poverty level... it looks like it is only $95 million a year.

On the three-legged stool, what many people don't realize is that personal savings was a big leg of the stool even to begin with since many Americans didn't have a pension.... however, I contend that the pension leg was essentially replaced by 401ks/403bs/IRAs since those retirement savings vehicles arose as defined benefit pensions were declining... unfortunately, too few Americans heeded the warnings that you needed to save for retirement and are now in a pickle. I'm not interested in bailing them out.

 

[CardsFan]

After reading the posts here, scanning the actual bill, and doing a little more research, I'll make a few comments, in no particular order:

- Increasing contributions: Well all knew that would be part of the solution

- Raising minimum PIA to 125% of poverty line: I did not find the $95 million cited by pb4uski, but came to the conclusion it must be a fairly small number. Will probably only help a small percentage of people, but I can live with it

- 2% increase in benefits: I don't understand this one. We are trying to make SS solvent, and we INCREASE benefits for EVERYONE?

- The donut hole in contributions: Another one I don't get. Why have the gap? My only guess is, since there is not a new bend point being created it is just a surcharge on very high income earners, who will not get any adjustment to their PIA from it.

- The change in taxable amounts: Since the original amounts have been in effect for a while and were not COL adjusted, they are probably due for a change. I have no idea if the proposed changes are the proper numbers or not.

WRT the OP's question of changing FIRE plans, if passed: Possibly, but I'm not going to spend any time on it, since I don't expect this bill to become law as it stands.

 

[Go-NoGo]

- The donut hole in contributions: Another one I don't get. Why have the gap? My only guess is, since there is not a new bend point being created it is just a surcharge on very high income earners, who will not get any adjustment to their PIA from it.

There is a significant number of middle class voters in this category - and they would scream bloody murder if their taxes were increased. It is meant to provide cover to our elected representatives of both political parties and allow them to to vote for the bill

 

[CardsFan]

There is a significant number of middle class voters in this category - and they would scream bloody murder if their taxes were increased. It is meant to provide cover to our elected representatives of both political parties and allow them to to vote for the bill

Yeah, that is kinda what I was saying, without actually saying it.

 

[joeea]

however, I contend that the pension leg was essentially replaced by 401ks/403bs/IRAs since those retirement savings vehicles arose as defined benefit pensions were declining

That's true.

All of the risk and all of the required knowledge and expertise were transferred from employer to employee.

... unfortunately, to few Americans heeded the warnings that you needed to save for retirement and are now in a pickle. I'm not interested in bailing them out.

Some heeded the warnings, some didn't. Generic "you need to save" warnings are pretty much useless for most. Some were able to figure out on their own how much they needed to save and others weren't able to do so.

I think the 401k defaults (not usually automatically enrolled, for those that were, they were enrolled at a ridiculously low level) contributed to many folks' downfall.

 

[pb4uski]

My read was similar to CardsFan... 2% increase in benefits seems to be a gratuitous bone thrown in to get some support but why it is needed from a public policy perspective is a mystery... the donut whole is a blatant soak-the-rich thing which I can't support because it is unfair (I'm assuming that PIAs would not be increased to reflect the increased taxes collected).

The $95 million was my number... based on SS retirement benefit recipients data from the SSA website that are under $1,300/month and the amount needed to bring them up to $1,300/month.

 

[joeea]

- 2% increase in benefits: I don't understand this one. We are trying to make SS solvent, and we INCREASE benefits for EVERYONE?

As with most legislation, they were trying to accomplish more than one thing. Here, they found a way to make SS solvent for the remainder of the century while simultaneously increasing benefits.

- The donut hole in contributions: Another one I don't get. Why have the gap? My only guess is, since there is not a new bend point being created it is just a surcharge on very high income earners, who will not get any adjustment to their PIA from it.

Indeed, the point of the donut hole is clearly to impose a surcharge on very high earners, while not doing so for not as high earners.

 

[beowulf]

We already have an extra tax for medicare on higher earnings that was imposed a few years ago. See https://www.irs.gov/newsroom/what-is-the-additional-medicare-tax.
The over $400K extra tax sounds a lot like Medicare one.

 

[Midpack]

This isn’t going anywhere with the current Senate, so there’s not much use in hashing out the pros and cons of the legislation until 2020 if then.

For many, their POV on SS reform hinges largely on where they stand on this.

... unfortunately, to few Americans heeded the warnings that you needed to save for retirement and are now in a pickle. I'm not interested in bailing them out.

Some heeded the warnings, some didn't. Generic "you need to save" warnings are pretty much useless for most. Some were able to figure out on their own how much they needed to save and others weren't able to do so.

I don’t buy ‘some weren’t able to figure out what they needed to save’ - too often negligence or willful ignorance. I worked with people who didn't save and invest year in and year out - I know because we met with them re: their 401k's annually for 18 years and 90% of them couldn't have been less interested, or got interested much too late. And I am sure we didn't corner the market on financially irresponsible peeps with our hiring...

 

[JustCurious]

I don’t buy ‘some weren’t able to figure out what they needed to save’ - more often willful ignorance.

I agree. A more accurate statement is "Some were not able to figure out what they needed to save, while others simply don't have the interest or motivation to try."

 

[joeea]

I don’t buy ‘some weren’t able to figure out what they needed to save’ - too often negligence or willful ignorance.

Polls repeatedly show that most folks think they only need to save up to the company match, and no more.

 

[CardsFan]

Polls repeatedly show that most folks think they only need to save up to the company match, and no more.

Polls have been known to be wrong .

And people have been known to make poor decisions. That's the way it is.

 

[beowulf]

Or, for the vast majority of blue collar and lower paid workers, they don’t have the ability to eat, pay rent and purchase necessities, let alone put money aside for retirement. 13.5% of Americans (43.1 million) live in poverty. The number of people in the United States living in "near-poverty," including those in poverty, is around 100 million, or nearly a third of the U.S. population. These are not people who tend to waste money buying unneeded items. If you have the income to save and you don’t, then it’s on you.

 

[joeea]

Polls have been known to be wrong

Really? are you sure?

And people have been known to make poor decisions. That's the way it is.

Is it really?

 

[CardsFan]

Really? are you sure?


Is it really?

Yes and Yes.