Promising Editorial On SS "Are Benefits Safe" from AARP Bulletin 11-2018

[pb4uski]

USGrant beat me to it. The 2034 and 77% (or thereabout) numbers have been published many places, most importantly in the annual SS trustees report. As to the inevitability of a reduction in payments once the trust fund is depleted, I'd have to find a source, but I'm confident in the information. Look at it this way -- where else would the money come from? They can't just pay it out of general funds.

And just a reminder... if you use opensocialsecurity.com and checked the advanced options, one of the options is whether or not to include a haircut, and if so, beginning when and how much.... so you can see the impact on your benefits and EPV of benefits.

 

[joeea]

I think many of us accept the "facts" as presented and marketed too quickly. I am encouraged that the problem will be solved.

Which of these "facts" do you reject?

 

[audreyh1]

Which of these "facts" do you reject?

I don't think the poster was referring to the facts presented in the OP. But maybe I am wrong.

 

[Independent]

This ignores both the time value of money and inflation over decades.

FWIW, the SS actuaries do a bunch of calculations on this every year. The most recent paper is here. https://www.ssa.gov/oact/NOTES/ran7/an2017-7.pdf

A number over 1.00 means that people appear to earn more than the average rate on longer treasuries. A number under 1.00, the opposite.

The tables show the expected trends.

 

[target2019]

Thanks for this. I still think it is encouraging considering all the commentary and speculation we have all had here over the years about SS.

I think many of us accept the "facts" as presented and marketed too quickly. I am encouraged that the problem will be solved.

Which of these "facts" do you reject?

Wasn't rejecting anything. That is a word you introduced.

"Facts" was simply me expanding on ShokWaveRider's reference to commentary and speculation.

 

[USGrant1962]

Can you please point us to some credible documents that explain this?

I happened to look at my "Your Social Security Statement" this morning and noticed that it is also right there in bold print on page 2, so no need to plow through the Trustees' report.

* Your estimated benefits are based on current law. Congress has made changes to the law in the past and
can do so at any time. The law governing benefit amounts may change because, by 2034, the payroll taxes
collected will be enough to pay only about 77 percent of scheduled benefits.

You can download your statement at www.ssa.gov/myaccount

 

[marko]

Quote:
* Your estimated benefits are based on current law. Congress has made changes to the law in the past and
can do so at any time. The law governing benefit amounts may change because, by 2034, the payroll taxes
collected will be enough to pay only about 77 percent of scheduled benefits.

I already took the money and ran at 62 so I'm just a casual observer but curious:
Has anyone run numbers on how this impacts the "62, vs FRA vs 70" debate? Let's say if one were waiting for age 70 in 2028 or so.

Don't want to kick a hornet's nest here as I do believe this will be resolved beforehand.

 

[MichaelB]

Has anyone run numbers on how this impacts the "62, vs FRA vs 70" debate? Let's say if one were waiting for age 70 in 2028 or so.

Don't want to kick a hornet's nest here as I do believe this will be resolved beforehand.

So, you’re suggesting adding a new variable to this debate might bring greater clarity or basis for agreement? Your optismsm is an inspiration to us all.

 

[Midpack]

I didn't see anything new. It basically says we're OK now, but something has to change by 2034 or we will get 77% of projected benefits.

If anything I'm disheartened that no is planning to address it anytime soon, as the sooner the shortfall is addressed, the less painful it will be for payers and payees - third rail yada yada, thanks to voters, not politicians. Anyone who doesn't consider both payers and payees is being grossly unfair IMO, and AARP has been notoriously and selfishly biased toward payees (their mission), which is why I won't have anything to do with them. I think the pain should be shared, I can't imagine seniors would insist on full benefits as it's their children and grandchildren who would have to make up the difference, and they probably won't see benefits exactly as they are today. But we've all beat that to death.

I built my plan on no SS, though I expect to see 70% of projected benefits. If it's more, gravy...

 

[Popeye]

Quote:
* Your estimated benefits are based on current law. Congress has made changes to the law in the past and
can do so at any time. The law governing benefit amounts may change because, by 2034, the payroll taxes
collected will be enough to pay only about 77 percent of scheduled benefits.

I already took the money and ran at 62 so I'm just a casual observer but curious:
Has anyone run numbers on how this impacts the "62, vs FRA vs 70" debate? Let's say if one were waiting for age 70 in 2028 or so.

Don't want to kick a hornet's nest here as I do believe this will be resolved beforehand.

You are more optimistic than I am. I see this as continuing to be used as a wedge issue for the foreseeable future. It will be a big issue in the 2032 presidential campaign with the winner claiming a “mandate”, even if s/he wins by two votes. Then we’ll cobble together a fix. I wouldn’t rule out a couple of short term band aides where we pay the shortfall from general funds for a period of time. Like how we raise the debt ceiling every so often.

 

[marko]

So, you’re suggesting adding a new variable to this debate might bring greater clarity or basis for agreement? Your optismsm is an inspiration to us all.

Well, things were getting a little dull around here......

Sorry. Maybe I was having one of those "open [-]mouth[/-] laptop, insert foot" moments.

 

[marko]

You are more optimistic than I am.

You're referring to my belief that this will get resolved. I don't want to hijack the thread so I'll just say this and end it here:

I've been hearing about SS being in grave jeopardy since I started working almost 50 years ago. Even back in the 50's as a kid I remember my dad saying that it was unsustainable. Yet, here we are with me going into my fifth year of benefits.

Whether a true fix or another kicking the can down the road, it just seems to be one of those things that will keep going; it's just too valuable and ingrained into our culture at this time.

 

[Popeye]

You're referring to my belief that this will get resolved. I don't want to hijack the thread so I'll just say this and end it here:

I've been hearing about SS being in grave jeopardy since I started working almost 50 years ago. Even back in the 50's as a kid I remember my dad saying that it was unsustainable. Yet, here we are with me going into my fifth year of benefits.

Whether a true fix or another kicking the can down the road, it just seems to be one of those things that will keep going; it's just to valuable and ingrained into our culture at this time.

Agreed! It will be unsustainably sustained indefinitely! And that’s ok.

 

[Dtail]

You're referring to my belief that this will get resolved. I don't want to hijack the thread so I'll just say this and end it here:

I've been hearing about SS being in grave jeopardy since I started working almost 50 years ago. Even back in the 50's as a kid I remember my dad saying that it was unsustainable. Yet, here we are with me going into my fifth year of benefits.

Whether a true fix or another kicking the can down the road, it just seems to be one of those things that will keep going; it's just to valuable and ingrained into our culture at this time.

+1 just a question of what %

 

[MichaelB]

Well, things were getting a little dull around here......

Sorry. Maybe I was having one of those "open [-]mouth[/-] laptop, insert foot" moments.

Just poking a little fun. Actually, what we need in that debate is an economist, who will solve the whole thing with just three words. "Let us assume ..."

Agreed! It will be unsustainably sustained indefinitely! And that’s ok.

Did you ever work in marketing?

 

[bobandsherry]

You're referring to my belief that this will get resolved. I don't want to hijack the thread so I'll just say this and end it here:

I've been hearing about SS being in grave jeopardy since I started working almost 50 years ago. Even back in the 50's as a kid I remember my dad saying that it was unsustainable. Yet, here we are with me going into my fifth year of benefits.

Whether a true fix or another kicking the can down the road, it just seems to be one of those things that will keep going; it's just to valuable and ingrained into our culture at this time.

Back in 2002 expected to be insolvent through 2041

Back in 2008 expected to still be insolvent through 2041 - and then expected to pay 78%

Back in 2010 expected to be insolvent through 2037 - and then expected to pay 76%

In 2011 - exhausted 2036 and 75% payout

And now for 2018 depleted in 2034. And yet all the changes they've made for over a decade hasn't improved things, only worse. So who has confidence that the Trustee's really have a firm grasp on what they are trying to manage?

 

[USGrant1962]

Back in 2002 expected to be insolvent through 2041

Back in 2008 expected to still be insolvent through 2041 - and then expected to pay 78%

Back in 2010 expected to be insolvent through 2037 - and then expected to pay 76%

In 2011 - exhausted 2036 and 75% payout

And now for 2018 depleted in 2034. And yet all the changes they've made for over a decade hasn't improved things, only worse. So who has confidence that the Trustee's really have a firm grasp on what they are trying to manage?

Interesting - but the Trustee's don't make the changes, Congress does.

 

[Niuatoputapu]

Thanks for sharing the article. Agree, nothing new, but always good to see someone air current reality and SS's pulse for our analysis.

DW will start collecting SS as soon as she stops her paycheck, and I will wait until 2027 and age 70. SS will fund 33% of our spending at that time. (Old three-legged stool model). Definitely counting on most of our SS but also aware haircut could happen.

I'm optimistic about a political solution. More and more of us are turning 62 or 65 or 70 every day, and old folks vote.

 

[target2019]

I heard there was electin',
some were red and some were blue.
In the year two-oh-three-four,
We get point seven-seven,
And a bitcoin I-O-U.

 

[Popeye]

Did you ever work in marketing?

Guilty as charged!

 

[donheff]

Back in 2002 expected to be insolvent through 2041

Back in 2008 expected to still be insolvent through 2041 - and then expected to pay 78%

Back in 2010 expected to be insolvent through 2037 - and then expected to pay 76%

In 2011 - exhausted 2036 and 75% payout

And now for 2018 depleted in 2034. And yet all the changes they've made for over a decade hasn't improved things, only worse. So who has confidence that the Trustee's really have a firm grasp on what they are trying to manage?

.
No surprise there. After the deepest recession since the depression coupled with a payroll tax holiday less money comes in and the day of reckoning advances. The trustees work with what they have by law. And they change their assumptions as new economic developments dictate.

 

[ShokWaveRider]

All I said is that it was a "Promising" opinion. Unlike others here I DO like AARP as they do have MY interests at heart. My opinion still stands, it is promising, as opposed to the doom and gloom we constantly seem to hear these days.

 

[USGrant1962]

.
No surprise there. After the deepest recession since the depression coupled with a payroll tax holiday less money comes in and the day of reckoning advances. The trustees work with what they have by law. And they change their assumptions as new economic developments dictate.

I suspect that unusually low interest rates also have something to do with it - the SS trust fund is invested in special Treasuries. But that won't matter as much in the future because there will be no more trust fund.

 

[NH Hiker]

.
No surprise there. After the deepest recession since the depression coupled with a payroll tax holiday less money comes in and the day of reckoning advances. The trustees work with what they have by law. And they change their assumptions as new economic developments dictate.

I don’t believe the payroll tax holiday had any impact. The lost revenue was reimbursed from general revenues.

https://www.nasi.org/research/2012/implications-payroll-tax-holiday-social-security

 

[youbet]

I think the pain should be shared, I can't imagine seniors would insist on full benefits as it's their children and grandchildren who would have to make up the difference, and they probably won't see benefits exactly as they are today. But we've all beat that to death.

I think the "kids" will weigh in on the matter probably insisting that benefits be somehow "means tested." It makes sense. Why should young families struggling to make it in an ever more challenging world pay higher FICA so that wealthy geezers can take an extra week or two while touring Europe or cruising the Mediterranean? It makes no sense to have SS be a transfer of wealth from lower income youth to well healed geezers.

Likely, seniors will go along with this since those whose incomes are low enough that they'll likely not be asked to take a cut control a lot of votes. Those votes, when added to the votes of younger citizens, should be enough to do it.

I have no problem with means testing SS despite the fact I suspect I'll be impacted. Don't want struggling working families subsidizing me........

So, yeah, I agree on "shared pain." Slightly higher FICA taxes for the Kids coupled with means tested benefit reductions for the geezers.