Net Worth test for SS cuts

[RetiredHappy]

Since I put my assets in a trust, my net worth is very small.

Irrevocable trust? If it is revocable trust, they remain in your net worth.

 

[GenXguy]

Nor will it happen. Skin in the game. SS was never meant to fund all living expenses.

Who said "all?" Social Security provides the majority of income for about half of all seniors.

 

[Montecfo]

Who said "all?" Social Security provides the majority of income for about half of all seniors.

Sounds like you agree that SS was never meant to fund all living expenses.
If we are going to fix SS everyone will need to have skin in the game.

The needed changes will not be enjoyed but the end result of a solvent trust fund will be welcome.

 

[Mulligan]

Sounds like you agree that SS was never meant to fund all living expenses.
If we are going to fix SS everyone will need to have skin in the game.

The needed changes will not be enjoyed but the end result of a solvent trust fund will be welcome.

It will be a tough nut to crack in terms of solving the problem in a fair and equitable manner (keep in mind I personally dont believe that a solution of fair and equitable for all is even possible) for all.
It would be easy to for me to pontificate a 25% cut across the board for everyone is needed because SS taxes are high enough. But the devil is in the details as a 25% SS cut for me would hurt my “take home” monthly income $100 a month. From money I dont even live off of. While someone who actually lives off of SS from a full SS contributing working career needing it would view that very unfair. And rightfully so IMHO as my SS years just consisted of some minor short term Mickey Mouse jobs and H.S. and college PT work.

 

[GenXguy]

Sounds like you agree that SS was never meant to fund all living expenses.

Not relevant to my comment since I was referring to SS as a whole, and the effective cuts from insufficient COLA hurt people, even many with additional income or savings, so it's not just about those who receive "all" income from SS. Your comment is a straw man that I wasn't talking about.

If we are going to fix SS everyone will need to have skin in the game.

Everyone already has skin in the game, except those receiving spousal benefits. But everyone else worked to earn their benefits. I'm just saying that the COLA needs to keep up with the true increased costs for all seniors receiving SS, and the current method doesn't do that. Consumer Price Index for the Elderly (CPI-E) would be more accurate. So, it sounds like you are saying spousal benefits should be eliminated since they didn't contribute anything.

 

[Koolau]

Phalanx CIWS take them out and a lot cheaper than missiles.

Yeah, and I saw at least one drone shot down using either 50 cal or 20 mm cannon fire from aircraft. My understanding is that the radar signature of drones is so small that they're on top of you before you have time to react with cannon fire. Too bad as they must be pretty easy to shoot down since they move slowly. But you have to actually see them to shoot them.

I think this is the one aspect of modern war that we have not kept up on as a nation. Odd since we've seen drones do the heavy lifting in Ukraine.

 

[Montecfo]

Genxguy,
You seem to enjoy returning to pet issues: inflation (most threads you post in) and spouses that "unfairly" draw SS, which you, as a single person with no skin in that game, view as an easy cut. However I have seen no serious proposals along those lines from reformers.

Surely you can recognize that increasing benefits for some some and cutting benefits completely for others are unlikely to form the basis for equitable and lasting reform.

 

[Koolau]

Nor will it happen. Skin in the game. SS was never meant to fund all living expenses.

You're correct. But the expansion of the SS program itself and especially political treatment of SS has led people to believe SS was designed to cover retirement expenses without saving for it. Too bad politicians allowed that to happen, but they did. Now we're stuck with it.

 

[GenXguy]

Genxguy,
You seem to enjoy returning to pet issues: inflation (most threads you post in) and spouses that "unfairly" draw SS,

Not true. Nice try, but this isn't about general inflation (which I haven't even discussed anywhere lately lol ), or even lack of inflation, but rather keeping SS benefits keeping up with senior cost of living while sustaining the SS system in others ways (I've have mentioned various methods before, if you take the time to read). I'm not the one who recommended cutting COLA in this thread. So, you don't have a problem with eliminating SS benefits for those (spouses) that don't have any skin in the game (something you brought up, not me). Thanks for clarifying.

 

[TheWizard]

You're correct. But the expansion of the SS program itself and especially political treatment of SS has led people to believe SS was designed to cover retirement expenses without saving for it. Too bad politicians allowed that to happen, but they did. Now we're stuck with it.

I'm not sure they "allowed that to happen".
They invented things like IRAs, 401(k)s, and 403(b)s to supplement ye olde fashioned taxable investment account which has been around forever.
But, of course, participating in any of those accounts was not mandatory and probably should not be, on the Federal level.

Note: participating in the 403(b) plan at my former employer WAS mandatory to a certain degree...

 

[GenXguy]

You're correct. But the expansion of the SS program itself and especially political treatment of SS has led people to believe SS was designed to cover retirement expenses without saving for it. Too bad politicians allowed that to happen, but they did. Now we're stuck with it.

It was a distraction he attempted. I was never referring to only people relying 100% on SS. There are still many others who rely on SS for a majority of their expenses, despite saving to help fund retirement. Cuts to benefits would hurt many of those people. I haven't seen anyone posting to this forum who is fine with giving up their own SS benefits, either.

 

[Sunset]

When FDR pushed the plan thru, it was NEVER, EVER actuarially sound: They started paying benefits to people who never put a nickel into the plan. It is a massive Ponzi scheme and ONLY worked this long because of the massive birth rate after WWII.

You say Ponzi, I say Taxation.

It never was an investment in a person's future retirement, it was a separate taxation system to pay for the retired folks of the day.

Somehow Joe Public just thinks there is a SS account with their name on it and their money sitting in that SS bank account.

 

[GenXguy]

You say Ponzi, I say Taxation.

It never was an investment in a person's future retirement, it was a separate taxation system to pay for the retired folks of the day.

Somehow Joe Public just thinks there is a SS account with their name on it and their money sitting in that SS bank account.

Exactly. When someone says SS is a Ponzi scheme, I know they don't know what they are talking about or what a Ponzi scheme is.

 

[homestead]

Everyone already has skin in the game, except those receiving spousal benefits. But everyone else worked to earn their benefits.

I believe most of the people getting spousal benefits were lower earners not people who never paid into SS.

 

[GenXguy]

I believe most of the people getting spousal benefits were lower earners not people who never paid into SS.

You don't have to pay anything at all into the system or reach the 40 quarter minimum to get spousal benefits. If someone paid sufficiently into the system, they could claim their own benefits. So, if they are instead getting spousal benefits, it's someone else's skin they are taking advantage of.

 

[homestead]

You don't have to pay anything at all into the system or reach the 40 quarter minimum to get spousal benefits. If someone paid sufficiently into the system, they could claim their own benefits.

True, but your post made it sound like people getting spousal benefits never paid into SS when most did.
"Everyone already has skin in the game, except those receiving spousal benefits. But everyone else worked to earn their benefits."

 

[pb4uski]

Since I put my assets in a trust, my net worth is very small.

Careful, it depends on the kind of trust.

Not if you are the beneficiary of the trust. Are income from trust assets reported on your personal income tax return? That is common and if that is the case then they are still your assets. Also, if it is a revocable living trust then revocability alone makes the trust assets your assets.

If you have a irrevocable trust, then I would agree.

 

[GenXguy]

True, but your post made it sound like people getting spousal benefits never paid into SS when most did.
"Everyone already has skin in the game, except those receiving spousal benefits. But everyone else worked to earn their benefits."

Right, but that's because someone else brought up people having skin in the game. And that's just an example of someone who doesn't. Plus, if they are getting spousal benefits, it's actually someone else's skin, not their own, that earned the benefits.

 

[Car-Guy]

I get the argument for "why" non income earning spouse should be getting any social security benefits. But I suspect those payments were factored in when the payment calculations for the working spouse were developed. Or, in other words, if they didn't pay benefits to non working spouses, maybe the benefits payments for the working/income earning spouse would be significantly higher?

 

[pb4uski]

I get the argument for "why" non income earning spouse should be getting any social security benefits. But I suspect those payments were factored in when the payment calculations for the working spouse were developed. Or, in other words, if they didn't pay benefits to non working spouses, maybe the benefits payments for the working/income earning spouse would be significantly higher?

No. If a lower-earning spouse qualifies for spousal benefits because their PIA based on their own work record is less than 50% of their higher-earning spouse's PIA the fact that SS pays spousal benefits to the lower-earning spouse does NOT impact the higher-earning spouse's benefits (even if the lower-earnings spouse's benefits are $0 because they never worked or didn't work for 40 quarters).

In the 1930s, the "traditional" American family typically consisted of a male breadwinner and a female homemaker. Policymakers recognized that if a retired worker’s benefit was only enough to support one person, the spouse (who likely had no independent earnings history) would be left in poverty. The 1939 Amendments established that a wife was entitled to a benefit equal to 50% of her husband’s to ensure the couple’s collective "social adequacy."

 

[Dalton]

"Or, in other words, if they didn't pay benefits to non working spouses, maybe the benefits payments for the working/income earning spouse would be significantly higher?"

...or they'd get the same and the system would be solvent.

 

[pb4uski]

"Or, in other words, if they didn't pay benefits to non working spouses, maybe the benefits payments for the working/income earning spouse would be significantly higher?"

...or they'd get the same and the system would be solvent.

Well to begin with, many SAHMs would dispute your description of certain spouses as "non-working" but I digress.

If you have two people with identical earnings records then they would have identical SS retirement benefits whether they are married or not... marital status is not part of the benefits calculation, so if they eliminated spousal benefits it would not impact benefits paid to working spouses.

While eliminating spousal benefits would make the system more solvent, it would not make it solvent... it would only solve 4-5% of the total 75-year funding shortfall... small potatoes.

 

[youbet]

Why couldn't the SS payout system work like Medicare Part B premiums? You do your income taxes and if your MAGI exceeds designated hurdles, your SS payment is reduced. For Medicare, they increase your premiums via IRMAA. The system is already in place and working. Folks, including me, whine about it but it is the way it is and helps to fund Medicare. And implementation would be a breeze since the related Medicare IRMAA system is already well established. When they calculate your IRMAA, they just do your SS payout at the same time!

 

[pb4uski]

I would ask why should the Medicare Part B premiums work the way that they do? Medicare taxes are not capped so high earners paid a lot into the system to begin with compared to the average Joe and everyone gets the same Medicare benefits. So they paid more their entire working career for the same benefits. Then, to add insult to injury if one has saved and has high income in retirement then you pay more for the same benefits... again!

Why would we as society want to perpetuate such inequities?

BTW, I don't pay IRMMA but DM did after DF died.

 

[TheWizard]

Why couldn't the SS payout system work like Medicare Part B premiums? You do your income taxes and if your MAGI exceeds designated hurdles, your SS payment is reduced. For Medicare, they increase your premiums via IRMAA. The system is already in place and working. Folks, including me, whine about it but it is the way it is and helps to fund Medicare. And implementation would be a breeze since the related Medicare IRMAA system is already well established. When they calculate your IRMAA, they just do your SS payout at the same time!

Don't give the govt any new ideas, please.
TYVM...