Changes Americans are willing to make to fix Social Security

[pb4uski]

...Redoing SSDI would also solve SS solvency as well…

Solve? Hardly. Perhaps contribute toward solving. SSDI is only 12% of total SS benefits... so even if 20% of that is waste that is only 2.4% of a 25% hole to be fixed.

 

[Caskem]

No changes would be needed if the hogs at the trough in Congress hadn’t spent it on crap like cow flatulence studies.

 

[jimbee]

No changes would be needed if the hogs at the trough in Congress hadn’t spent it on crap like cow flatulence studies.

Well this is easy. Plonk.

 

[ychuck46]

Hit the nail on the head

Any survey on "what changes you are willing to make" needs to contain the question "are you personally affected by the changes you are willing to make" .

I suspect virtually everyone here saying they want an increase in income level subject to the tax, and a decrease in benefits for higher income people, are not affected by either. So these people want higher income levels paying more. Do they realize that while SS is favoring low income people in terms of what % they receive, it still goes up for anyone paying more. Oh, some people here don't like that? Then admit this was never meant to be anything more than a wealth redistribution scheme.

 

[pb4uski]

No changes would be needed if the hogs at the trough in Congress hadn’t spent it on crap like cow flatulence studies.

Do you understand that SS is ring-fenced and that SS taxes can't be spent on anything other than SS benefits and administration? Looks like the answer is no and ignorance is bliss.

 

[pb4uski]

I favor removing the cap on payroll deductions altogether. Also, reducing or eliminating benefits for very wealthy retirees.
We should NOT raise the retirement age and we should increase benefits.

I suspect virtually everyone here saying they want an increase in income level subject to the tax, and a decrease in benefits for higher income people, are not affected by either. So these people want higher income levels paying more. Do they realize that while SS is favoring low income people in terms of what % they receive, it still goes up for anyone paying more. Oh, some people here don't like that? Then admit this was never meant to be anything more than a wealth redistribution scheme.

That is the problem... the popularity and acceptance of the SS program is because it is NOT a wealth redistribution program even though it does has some subtle aspects of wealth redistribution (like that lower earners get a richer benefit in relation to their contributions than higher earners)... but generally people pay in and get benefits.

If you "fix" the program by requiring higher earners to contribute more with nothing in return or means-test benefits as some here have proposed so Sam Spender benefits to the detriment of Sally Saver, what you will have done is to bastardize SSA into just another welfare program... and the popular support that the program has enjoyed since 1935 will be destroyed.

 

[Magus]

Solve? Hardly. Perhaps contribute toward solving. SSDI is only 12% of total SS benefits... so even if 20% of that is waste that is only 2.4% of a 25% hole to be fixed.

Sorry I meant *help* solve SS. I would bet over half is waste IMO but that’s a topic for another time…and it stopped a long time ago likely would have extended the life by a lot longer than you think (compounded interest and principal of that spend). Additionally, it would also lower all future spend as well, and thus further close the gap, so I think it would solve a lot more than you think, but not as you pointed out all on its own.

 

[Magus]

Do you understand that SS is ring-fenced and that SS taxes can't be spent on anything other than SS benefits and administration? Looks like the answer is no and ignorance is bliss.

Kind of - they can issue IOUs to the SS Trust Fund and then spend the money. To me that’s still spending the $.

 

[GenXguy]

Kinda low life of you GenXguy to say something negative about my spouse who you don't know and your statement is a complete fabrication.

Youbet, I didn't even know if you personally were married. I was speaking more generically with "you" as people often do, speaking in terms of what other people are paying for if someone has a spouse receiving spousal benefits.

 

[F.I.R.E User]

Lower the age to 60 to get benefits.

 

[corn18]

I suspect virtually everyone here saying they want an increase in income level subject to the tax, and a decrease in benefits for higher income people, are not affected by either. So these people want higher income levels paying more. Do they realize that while SS is favoring low income people in terms of what % they receive, it still goes up for anyone paying more. Oh, some people here don't like that? Then admit this was never meant to be anything more than a wealth redistribution scheme.

When I retired, I was making just north of $700k / year. I would be ok with eliminating the cap. I would not be ok with eliminating the cap and not allowing benefits for what I pay in. But it doesn't have to be 15%. 5% would be fine.

I also don't need SS, but I would not be ok with a means test that took it away from me. Although, like I stated earlier, if they wanted to put a means test in place and then I get to interview and pick who gets my (and my spouse's) benefits, that might work for me. Dirt bags need not apply.

 

[pb4uski]

Kind of - they can issue IOUs to the SS Trust Fund and then spend the money. To me that’s still spending the $.

If the general fund didn't issue the special purpose Treasury securities to the SS Trust Fund they would just have issued them to the public... UST are so in demand they would get snapped up either way... spending would not have changed one iota. It's not like Congress things that the availability of money is a constraint on spending. And the special purpose securities is counted in the national debt amount the me as if the securities were issued to the public.

Second, if the SS Trust Fund couldn't buy these Treasuries from the general fund, what would you suggest that they do with the ~$3 trillion... store it under a mattress somewhere in trash bags full of $100 bills that don't earn any interest? Buy stocks or corporate bonds? What a political fiasco that would be. Point is there isn't much of an alternative.

 

[pb4uski]

Lower the age to 60 to get benefits.

Why?

 

[Turbo29]

I look at this from a different angle. First, "in theory" SS contributions were calculated to include the cost of a spousal benefit.

Really, in that case those who were never married are paying for someone else's spouse to get benefits; they have the same percentage deducted from their salaries.

 

[Magus]

If the general fund didn't issue the special purpose Treasury securities to the SS Trust Fund they would just have issued them to the public... UST are so in demand they would get snapped up either way. Second, if the SS Trust Fund couldn't buy these Treasuries from the general fund, what would you suggest that they do with the ~$3 trillion... store it under a mattress somewhere in $100 bills that don't earn any interest? Buy stocks or corporate bonds? What a political fiasco that would be. Point is there isn't much of an alternative. WADR, I thought you were a pretty smart guy but that last comment has me wondering if perhaps I have misjudged you. Think.

A lot of strawman here. I don’t disagree with anything you just said but the fact of the matter is the Fed gov has been using SS funds in the general fund thru this vehicle since it was cleared by the courts a long time ago and ruled that it is indeed simply a general purpose spending bill (SS that is). Despite your passionate post I’m responding to, I was not attempting to make an argument in favor for or against this practice, simply the point you made is at best a technicality as they are spending it. In fact, the only so called Fed gov surplus in the late 90s depending on counting it as regular income in order to achieve that note.

My intelligence remains unchanged and I won’t lose any sleep over your opinion of me, especially if you want to make a stand simply on whether or not the government uses SS funds to fund their regular spending, which they have for about 50 years. Goodnight

 

[pb4uski]

I think its pretty well establshed that money being available isn't a constraint on Congress' willingness to spend money. And we still haven't heard from you any better alternative to what the SS Trust Fund should do with the $3 trillion so your objections ring hollow.

 

[Magus]

I think its pretty well establshed that money being available isn't a constraint on Congress' willingness to spend money. And we still haven't heard from you any better alternative to what the SS Trust Fund should do with the $3 trillion so your objections ring hollow.

Again, a strawman argument. I made no objection in my posts to this practice or discussed anything to do with spending and in fact literally just stated I made no argument for or against this practice. Go re-read my two other posts on this thread. I simply made the point the gov does indeed spend SS income fully as soon as it comes in for general purposes. And you talk about my intelligence? I can only assume you are mixing my two other comments on this thread with someone else’s argument or had a few glasses of wine tonight

 

[pb4uski]

I'm not so sure that you are correct where you state that "the gov does indeed spend SS income fully as soon as it comes in for general purposes"... the money first goes into the SS fund and then anything in excess of benefit payments to be made that the SS fund can then invest is then transferred from the SS fund to the general fund in exchange for Treasuries... at that point the money is available to the general fund for spending.

While it is true at the end of the day that the general fund spends the money that the general fund raised by issuing debt, it isn't instantaneous as you seem to think.

 

[bada bing]

I think its pretty well establshed that money being available isn't a constraint on Congress' willingness to spend money. And we still haven't heard from you any better alternative to what the SS Trust Fund should do with the $3 trillion so your objections ring hollow.

Read up on Superannuation funds. One of the better ones is Australia's. A much better and more transparent attempt at a general public retirement fund.

 

[pb4uski]

^^^ Sounds like it is similar to our 401ks but compulsory employee and employer contributions like a contributory pension plan. Some recent changes to the 401k which has a 3% default employee contribution that gradually increases is similar except it isn't totally compulsory because the employee can opt-out of those default contributions.

Those plans put the investment risk totally on the employee and is the same reason that we have seen a decline in defined benefit plans in the US... employers preferring to put investment risk to employees rather than retain it.

From what I'm reading you could have two employees with identical employee and employer contribution histories that could have dramatically different retirement benefits depending on how the underlying investments of their scheme performed over their working careers, whereas with our system (warts and all) two employees with identical working history would have identical SS benefits since benefits are based on age and earnings record/contributions because the benefits are defined in SS.

I'm not sure how superannuitation funds are more transparent... in fact they seem more complicated from what I read. SS is pretty transparent... you get taxed based on earnings and there is a defined benefit formula to calculate your benefits based on your age and earnings record/contributions and you get that at your full retirement age (or less if you start benefits earlier or more if you start benefits later) and any excess funds are invested in US government bonds.

The problems with SS are political... if there was some sort of mechanism to adjust contributions rates and benefits to changing conditions like changing longevity and interest earnings then the underfunding problems would not exist. For example, if there was a mechanism that every 10 years the full retirement age and benefits would be adjusted for changes in mortality/longevity and contributions would be adjusted for differences between actual and assumed interest rates the changes would be smoother and the funding would be stronger but it is harder when political factors only allow changes when you are looking over a cliff.

The bigger problem with senior poverty in the US is that a large majority of my generation never got the memo that defined benefit pension plans were being phased out because employers did not want to retain the investment risk and were being replaced by 401k/403b and the like and that as a result people needed to save for their retirement... the traditional 3-legged stool of SS/pensions/personal savings was replaced by SS/401ks/personal savings. The lived larger than their incomes really allowed, paycheck-to-paycheck, and now that they are reaching retirement age the chickens are coming ome to roost and they want us savers to bail them out. Sorry, not interested... they looked down at us savers who drove more modest cars and lived in more modest homes while they lived the high life beyond their means... I have no interest in bailing them out and SS should allow them to not starve.

 

[piccolopat]

I previously posted my opinion that spousal benefits should be phased out. Perhaps it can be replaced with a system that allows people to pay into the system while they are not working or working at a low wage job and then be credited in lieu of actual wage based payroll taxes. Each person would then collect only on their own records.

 

[athena53]

I previously posted my opinion that spousal benefits should be phased out. Perhaps it can be replaced with a system that allows people to pay into the system while they are not working or working at a low wage job and then be credited in lieu of actual wage based payroll taxes. Each person would then collect only on their own records.

I think that would be a hardship for many single-income families. We already have the Spousal IRA option but I'm not sure how much it's used.

If the Spousal benefits were to be re-worked I'd prefer that the wage-earner's benefit be calculated with a 100% Survivor option if the primary wage earner is married. An unmarried wage earner would get more. This would provide a lower benefit than the current formula but no change in household income if the primary wage earner dies first. It would exclude benefits for a spouse who married the wage earner after they started SS but that shouldn't happen that often and hopefully they have their own SS benefit.

We need to be realistic. Last I looked the average SS check was $1,700 for a couple and $1,400 for a single. It wasn't meant to be the sole source of income in retirement but for nearly half of beneficiaries it's 90% or more of their income. If we eliminate spousal benefits we'll have a whole swath of elderly, mostly women, with nothing. Most "worked"- raising kids, holding down the fort at home so husband could focus on his career, taking care of elderly relatives, providing free day care for grandchildren. They just never got paid. I don't fall into this category but my mother and my wonderful DIL do.

We can provide for them through SS, we can support them through our patchwork of needs-based programs or we can let them die. Which will it be?

The bigger problem with senior poverty in the US is that a large majority of my generation never got the memo that defined benefit pension plans were being phased out because employers did not want to retain the investment risk and were being replaced by 401k/403b and the like and that as a result people needed to save for their retirement... the traditional 3-legged stool of SS/pensions/personal savings was replaced by SS/401ks/personal savings. They lived larger than their incomes really allowed, paycheck-to-paycheck, and now that they are reaching retirement age the chickens are coming home to roost and they want us savers to bail them out. Sorry, not interested... they looked down at us savers who drove more modest cars and lived in more modest homes while they lived the high life beyond their means... I have no interest in bailing them out and SS should allow them to not starve.

I agree- there were many who could have saved but didn't. We owe them a no-frills existence, nothing more.

 

[GenXguy]

If we eliminate spousal benefits we'll have a whole swath of elderly, mostly women, with nothing. Most "worked"- raising kids, holding down the fort at home so husband could focus on his career, taking care of elderly relatives, providing free day care for grandchildren. They just never got paid. I don't fall into this category but my mother and my wonderful DIL do.

Even without spousal benefits, while both spouses are living, those people will benefit from the SS benefit their spouses were able to earn by focusing on their careers. The household shouldn't be able to double dip just because one spouse made the choice to do those other things instead of work. The household even would have received generous tax deductions and credits for raising the kids. And married filing jointly tax tables would have been a benefit as well. And you can still have survivor benefits if the SS eligible spouse passes first so that those people are protected without having spousal benefits when both spouses are living.

Someone earlier suggested that for a married couple, to split each years' SS earnings credit between the two spouses, and then after retiring, each will get SS benefits based on their own earnings credit. That's the best suggestion yet. But for everyone already receiving spousal benefits, they should be cut, or they should split the actual earned SS benefit of the spouses between the spouses (so household income is the same as it would have been if the spouses received benefits based on their own earnings). That would make it the most fair and a good place to start with overhauling SS to shore it up long term.

 

[TheWizard]

The bigger problem with senior poverty in the US is that a large majority of my generation never got the memo that defined benefit pension plans were being phased out because employers did not want to retain the investment risk and were being replaced by 401k/403b and the like and that as a result people needed to save for their retirement... the traditional 3-legged stool of SS/pensions/personal savings was replaced by SS/401ks/personal savings. The lived larger than their incomes really allowed, paycheck-to-paycheck, and now that they are reaching retirement age the chickens are coming ome to roost and they want us savers to bail them out. Sorry, not interested... they looked down at us savers who drove more modest cars and lived in more modest homes while they lived the high life beyond their means... I have no interest in bailing them out and SS should allow them to not starve.

I'd be curious on your sources for determining that a large majority the current retiree generation was lax in contributing to their tax-deferred retirement funds.
I and my former coworkers, for example, had mandatory 403(b) contributions from day one of employment, and spanning four decades in my case.

I'm not sure what metric to use to figure inadequate retirement savings. Perhaps look at age 60 to 65 accumulation including taxable account. Maybe define adequate as a $500k accumulation or five times your average income the past three years, something like that.

A related problem is how to turn a $500k tax-deferred accumulation into lifetime retirement income, in many cases for joint lifetimes.
Many folks seem averse to "pensionizing" a major portion of that accumulation to create that third stool leg...

 

[athena53]

I'd be curious on your sources for determining that a large majority the current retiree generation was lax in contributing to their tax-deferred retirement funds.

My former coworkers and I, for example, had mandatory 403(b) contributions from day one of employment, and spanning four decades in my case.

403(b)s are only for workers in certain fields, mainly education and some nonprofits. 401(k)s are indeed voluntary although some employers will automatically sign you up and you have to actively request to drop out. Not only that- at least with 401(k)s you can make "emergency" withdrawals under certain circumstances and borrow against them so it's possible to deplete the accounts before retirement age.

I'd say that the stat I run across frequently when doing a search on the subject, that 42% of retirees rely on SS for 90% or more of their income in retirement is a pretty reliable indication of inadequate savings. I'd be more suspicious of stats on actual account balances- I have a Fidelity account and I have a UBS account that's about 3 X what's in the Fidelity account. It would be hard for someone doing a study to aggregate them.