Some good news…
https://asburyparkpress-nj.newsmemory.com/?publink=0e3497e15_13484e0
This comes up very so often, but it’s hard to imagine that the government would ever let these social support programs ever go broke.
I feel sorry for our kids and grandkids who will have to foot the bill to “bail out” the systems for us.
Well, we did it for our parents. Remember back in the 80s they were fixing SS for all time. Of course anyone in power at that time (and still living) is now on a cushy gummint pension (plus SS.)
I very much doubt it will be across-the-board. ....
It's like someone putting some cash in a wall safe for their new car fund every payday and then immediately taking the same cash out so they can go to dinner and throwing an IOU in the safe to replace the cash.
I have yet to see anything written anywhere indicating that a haircut would be anything other than across-the-board, so do you have any authoritative support for your assertions or are you just making sh!t up?I very much doubt it will be across-the-board.
SS is a very progressive system with its first & second bend points with few additional earnings credited past that second bend point.
Remember, those with higher income in retirement are already taxed on 85% of their SS benefit.
SS has become more like they entitlement program it is in actuality versus the fiction of being strictly an insurance plan.
Those receiving higher benefits are the most likely to see a 25% (or more) reduction in their SS check...e.g. $3,000 instead of $4,000.
Those who never exceeded their first bend point may see something closer to a 5% reduction, if anything.
The 1983 amendments didn't fix SS for all time, and didn't claim to*. At the time, they fixed it into the 21st Century.
I found a the legislative history written in 1983 and it includes a projection table with Trust Fund drawdown starting just after 2020 - pretty darn accurate for a 39-year-old forecast. Look at page 45 (pg 43 in the pdf) https://www.ssa.gov/policy/docs/ssb/v46n7/v46n7p3.pdf
*EDIT - not to say a politician or two didn't say that - just that the legislation was clear that it was a ~40-year fix and I remember that from the day.
So where is the Social Security Administration supposed to store the excess money?
So where is the Social Security Administration supposed to store the excess money?
That's not the point. The point is that one division of the government (SSA) lent it to another division of the government (Treasury) and, as the government has been in a deficit for years, it was already spent. When SSA gets the money back to pay beneficiaries, the Treasury must immediately make up those funds from somewhere else. The "Trust Fund" is just an accounting entity. It in no way indicates that any real resources have been set aside to pay benefits in the future.
By some poster's logic, iBonds and Treasury bonds/bills are hoaxes and are not real. The special securities the Treasury issues for the SS Trust Fund are exactly the same thing. They even pay interest to SSA, which is helping keep SS afloat.
Mixing up deficit spending (a real problem, especially as interest rates rise) and a trust fund that is invested in Treasury securities (real bonds) is a non-sequitur. Unless you think your iBonds and govies are not real?
Nice dodge, but you still haven't answered the question. You would want "real resources" set aside... set aside how? in $100 bills in lockers in a huge vault somewhere? (Makes one wonder how large a storage facility one would need for $2.9 trillion).
U.S. Treasury securities... which are prized by the rest of the world... are not good enough for you?
[mod edit]
Koolau
Of course, the open secret about SS is that there's no actual money available to pay even today's SS recipients. The system has to cash IOU's (treasury bonds pledged against SS money taken to run the country years ago.) Now, even those IOUs are running out, I guess.
Turbo29
It's like someone putting some cash in a wall safe for their new car fund every payday and then immediately taking the same cash out so they can go to dinner and throwing an IOU in the safe to replace the cash.
The point is that one division of the government (SSA) lent it to another division of the government (Treasury) and, as the government has been in a deficit for years, it was already spent. When SSA gets the money back to pay beneficiaries, the Treasury must immediately make up those funds from somewhere else. The "Trust Fund" is just an accounting entity. It in no way indicates that any real resources have been set aside to pay benefits in the future.
The 1983 amendments didn't fix SS for all time, and didn't claim to*. At the time, they fixed it into the 21st Century.
I found a the legislative history written in 1983 and it includes a projection table with Trust Fund drawdown starting just after 2020 - pretty darn accurate for a 39-year-old forecast. Look at page 45 (pg 43 in the pdf) https://www.ssa.gov/policy/docs/ssb/v46n7/v46n7p3.pdf
*EDIT - not to say a politician or two didn't say that - just that the legislation was clear that it was a ~40-year fix and I remember that from the day.
If I am reading this correctly, way back then they predicted the suplus would end right about now.
Amazing.
Yup, it is almost like Congress and SSA use professional actuaries and financial analysts instead of SGOTI's opinion. Who knew?
No, they aren't good enough - too much single issuer risk. The funds should be invested in manner similar to other defined benefit plans (i.e. pension plans), across a variety of asset classes.
Would you suggest that a company that has its entire pension fund invested in debt instruments of that company would be doing its fiduciary duty? And yes, I *do* understand that government debt is different in that they have the power of taxation. The risk is still there - if the US $ at some point is no longer the reserve currency, then paying back $ to the trust fund might become meaningless if the currency has a severe devaluation (i.e. hyper-inflation).
But Koolau (and now others) has dared to say something about the emperors new clothes....so carry on talking about how great they look.
Yup, it is almost like Congress and SSA use professional actuaries and financial analysts instead of SGOTI's opinion. Who knew?
...Social Security was never supposed to be taxed. ...
... The present tax treatment of social security was established at a time when both social security benefits and income tax rates were low. In 1941 the Bureau of Internal Revenue ruled that social security benefits were not taxable, most probably because they were viewed as a form of income similar to a gift or gratuity.
The council* believes that this ruling was wrong when made and is wrong today. The right to social security benefits is derived from earnings in covered employment just as is the case with private pensions.
The council believes that the current tax treatment of private pensions is a more appropriate model for the tax treatment of social security, Pension benefits from contributory private pension plans (including those for government employees) are now taxed to the extent that the benefits exceed the employee's accumulated contributions to the plan. Cumulative retirement benefits up to the employee's own total contributions are not taxed because the income from which the contributions were paid was taxable. That part of the benefit representing the employer's contribution and interest income on both the employee's and the employer's contributions is taxed when received.
Estimates by the Office of the Actuary of the Social Security Administration indicate that workers now entering covered employment in aggregate will make payroll tax payments totaling no more than 17 percent of the benefits that they can expect to receive. The self-employed will pay no more than 26 percent on average. Therefore, if social security benefits were accorded the same tax treatment as private pensions, only 17 percent of the benefit would be exempt from tax when received, and 83 percent would be taxable. . .
"too much single issuer risk"? That has to be the all-time silliest post of any that I have seen since joining in 2010... and I have seen some doozies. These are full faith and credit securities.... NO credit risk. Besides, do you really want the SSA investing in corporate bonds and stocks... with their decisions impacting supply and demand for corporate bonds and stocks... I just don't think that is a very bright idea at all.
I highly doubt that any judge would render a verdict that a pension plan manager was breaching its fiduciary duty if it invested all pension fund assets in U.S. Treasury securities. They don't because they are willing to take a little risk, get better returns which in turn reduce the amount of required pension plan contributions by the sponsor... the SSA doesn't have that incentive.
If you're really concerned on the USD as a reserve currency, how much of your total portfolio is in other than USD denominated assets?
Do you have any evidence to support that statement?
Glad I could make your day and that I get the award (in your mind) of the silliest post you've ever seen.
The US Federal debt is now $245K per taxpayer, and the debt to GDP ratio now 129%. US Unfunded liabilities is approaching $170 trillion dollars. The trend is NOT our friend when it comes to the ability of the US Government to continue these programs. It is all resting on our unique ability to magically buy goods from other countries just by (virtually) printing money.
While my allocations and investments are my concern, I will say that I've moved my slowly but surely tried to hedge. I never rush these decisions, because I can be wrong:
1) Almost all of my fixed is either short term or inflation adjusted.
2) I've moved my commodities and precious metals allocation up from almost nothing a half dozen years ago to 7% or so today.
3) My equities are approximately 85% US and 15% international, but many of my US domiciled companies derive more than half of their revenues overseas.
But you do you, keep believing that Social Security is sound, Medicare is sound, the 30 trillion and expanding debt isn't a problem, 9+ trillion on the Federal Reserve balance sheet is A-OK, our lack of industrial might is perfectly fine, and so on.
I will be silly me, thinking that things aren't getting better and that I need to prepare for bad times....including the eventual impact to Social Security.
... But you do you, keep believing that Social Security is sound, Medicare is sound, the 30 trillion and expanding debt isn't a problem, 9+ trillion on the Federal Reserve balance sheet is A-OK, our lack of industrial might is perfectly fine, and so on. ...