Net Worth test for SS cuts

[JackJester]

Just read about a proposal by Mark Warshawsky (a senior fellow of a think tank ... so take that for whatever it is worth). He proposes using a Net Worth asset test to determine how much of cut you would have to take, vs an income-based means test. Any ideas as to how this test would work? I'm assuming it would have to be assets that can validated by other independent data, such as house property tax assessments, and auto license registration (make/model), IRA and brokerage balances, checking/savings account balances, etc. Similar to a basic net worth calculator: https://www.nerdwallet.com/article/finance/net-worth-calculator
Seems like you would need a brand new sub-department of the SS Admin to deal with all the validation and challenges related to this asset testing (vs just using the existing IRS MAGI data).

This is the article:

What could happen to Social Security benefits in six years if Congress doesn’t act? It depends, experts say

Social Security's trust funds are due to run out, which would prompt benefit reductions. Yet those cuts do not have to affect all beneficiaries, experts say.

www.cnbc.com

"Additionally, the benefit changes would focus on certain net worth thresholds. Those with net worths less than $470,400 in 2025 dollars would be excluded from cuts. Partial benefit cuts would apply to individuals with net worths below $785,400 at the median benefit, according to Warshawsky’s plan."

 

[braumeister]

Any ideas as to how this test would work?

You would have to ask him.
People are always coming up with grand concepts they have no idea how to implement, and the devil is in the details.

 

[USGrant1962]

You would have to ask him.
People are always coming up with grand concepts they have no idea how to implement, and the devil is in the details.

Yup, totally unworkable.

 

[GenXguy]

Crazy idea, in general. People currently receiving SS benefits or within 5 years shouldn't receive any cuts. The person who wrote that probably has a big pension that he knows wouldn't be factored in with that ridiculous idea.

 

[pb4uski]

Yup, totally unworkable.

Yes, totally unworkable... and that is the reason that all current means testing is income based. The only thing close to new worth based is the estate tax but that is a once in a lifetime thing and is a big hassle to get appraisals for assets that are not readily marketable and lots of gray areas... it can't be done annually.

 

[COcheesehead]

Laughable

 

[rk911]

I'm not opposed to some sort of means testing but net worth seems a bad idea. Our NW is in upper 7-digits but very, very little of that is used for day-day living. Maybe AGI minus SS and IRA withdrawls that are not directed to QCDs? Not perfect, I know, but if SS was/is for folks who need help make ends meet than those who have higher incomes from pensions and IRA withdrawls might have decreasing SS benefit payments.

But....I think the entire SS system needs a radical overhaul. If SS were a person we'd be gathered around the patient awaiting their death. I'd be in favor of, at some point in the future, those entering the work force now who pay into the system to have some control over a % of their 'contributions' and where/how they are invested. As current SS recipients die SS might eventually morph for those truly in need and/or into a fully voluntary/privatized system competing with other options.

 

[MichaelB]

You would have to ask him.
People are always coming up with grand concepts they have no idea how to implement, and the devil is in the details.

Exactly.

 

[marko]

Net worth is easier to ummm..... "adjust" than income.

 

[Beldar]

By the time "net worth" determination is needed for SS distribution, an AI agent will perform that task nearly instantaneously. Count on it.

_B

 

[Aerides]

would never work. Very easy to obscure NW, especially by those with lots of it.

In addition, the idea of NW as a modifier for SS is politically non-viable, and will remain that way until at least anyone on this forum is far beyond it.

 

[braumeister]

would never work. Very easy to obscure NW, especially by those with lots of it.

In addition, the idea of NW as a modifier for SS is politically non-viable, and will remain that way until at least anyone on this forum is far beyond it.

Especially since the average net worth of our Congresscritters dwarfs that of the typical citizen.

 

[Gumby]

People usually get only one chance to really annoy me without consequence. Mr. Mark Warshawsky has used up his.

 

[Dtail]

Will never happen.

 

[Focus]

People usually get only one chance to really annoy me without consequence. Mr. Mark Warshawsky has used up his.

Hard to decide which part of his plan is most enraging. Maybe this: "The cuts would focus on those ages 62 to 74 who receive either retirement or widow(er) benefits, based on the idea that younger retirees could more easily adapt or perhaps reenter the labor force to make up for the lost income, according to Warshawsky’s proposal."

 

[mrfeh]

Laughable

I would use the word pointless.

Who cares what somebody at a "think tank" proposes?

 

[Fermion]

I mean anyone can come up with a proposal. If we captured 16 Psyche, it would totally fix SS for the next 500 years.

 

[COcheesehead]

I would use the word pointless.

Who cares what somebody at a "think tank" proposes?

The verifiability of net worth though…
From the makers of TurboTax comes the new TurboWorth, so now you can not only wrestle with your income, you can also wrestle with your net worth.

 

[mh]

Just read about a proposal by Mark Warshawsky (a senior fellow of a think tank ... so take that for whatever it is worth). He proposes using a Net Worth asset test to determine how much of cut you would have to take, vs an income-based means test. Any ideas as to how this test would work? I'm assuming it would have to be assets that can validated by other independent data, such as house property tax assessments, and auto license registration (make/model), IRA and brokerage balances, checking/savings account balances, etc. Similar to a basic net worth calculator: https://www.nerdwallet.com/article/finance/net-worth-calculator
Seems like you would need a brand new sub-department of the SS Admin to deal with all the validation and challenges related to this asset testing (vs just using the existing IRS MAGI data).

This is the article:

What could happen to Social Security benefits in six years if Congress doesn’t act? It depends, experts say

Social Security's trust funds are due to run out, which would prompt benefit reductions. Yet those cuts do not have to affect all beneficiaries, experts say.

www.cnbc.com

"Additionally, the benefit changes would focus on certain net worth thresholds. Those with net worths less than $470,400 in 2025 dollars would be excluded from cuts. Partial benefit cuts would apply to individuals with net worths below $785,400 at the median benefit, according to Warshawsky’s plan."

seems like the oft proposed removal of (or alteration of) ceilings on SS contributions is a lot more workable

 

[luckydude]

Just read about a proposal by Mark Warshawsky (a senior fellow of a think tank ... so take that for whatever it is worth). He proposes using a Net Worth asset test to determine how much of cut you would have to take, vs an income-based means test. Any ideas as to how this test would work? I'm assuming it would have to be assets that can validated by other independent data, such as house property tax assessments, and auto license registration (make/model), IRA and brokerage balances, checking/savings account balances, etc. Similar to a basic net worth calculator: https://www.nerdwallet.com/article/finance/net-worth-calculator
Seems like you would need a brand new sub-department of the SS Admin to deal with all the validation and challenges related to this asset testing (vs just using the existing IRS MAGI data).

This is the article:

What could happen to Social Security benefits in six years if Congress doesn’t act? It depends, experts say

Social Security's trust funds are due to run out, which would prompt benefit reductions. Yet those cuts do not have to affect all beneficiaries, experts say.

www.cnbc.com

"Additionally, the benefit changes would focus on certain net worth thresholds. Those with net worths less than $470,400 in 2025 dollars would be excluded from cuts. Partial benefit cuts would apply to individuals with net worths below $785,400 at the median benefit, according to Warshawsky’s plan."

First, we need to define what net worth is...

Also, some folks like to include SS in their net worth calculation, so I'm not sure how that's going to work...

 

[Koolau]

As much as I resent taking yet another hit for SS (I "saved" SS back in the early '80s) now someone wants me to calculate and comply with reporting something that's no one's business but mine.

I DID my part to save SS already. Get off my lawn!

 

[pb4uski]

I have a problem with means based testing just to start with. To me it is inequitable that two people who have identical earnings history and therefore identical SS retirement benefits before any means-based adjustments could have different SS retirement benefits because one was a saver and the other was a spender. Totally unfair and un-American.

 

[rk911]

I fail to understand what an individiual's net worth..however it's calculated..can have any meaningful relationship to SS benefits. House rich but $ poor.

 

[rk911]

I have a problem with means based testing just to start with. To me it is inequitable that two people who have identical earnings history and therefore identical SS retirement benefits before any means-based adjustments could have different SS retirement benefits because one was a saver and the other was a spender. Totally unfair and un-American.

Well, FICA withholding is a tax, not a contribution to a retirement account so distribution doesn't need to be equitable. But IF there will be a means test for SS, AGI as reported on the most recent 1040 MIGHT be a way to be as equitable as possible.

 

[pb4uski]

Re-read my post I never said "contribution"!

So you contend that if two people pay identical FICA taxes over their careers that their SS retirement benefits should not be identical?