So, no worries at all about SS right?

[2HOTinPHX]

Hopefully below article can help with some of the confusion regarding the SS trust funds. Its a pretty short read that I think is worth a look.

Policy Basics: Understanding the Social Security Trust Funds.

https://www.cbpp.org/research/social-security/understanding-the-social-security-trust-funds-0

From above linked article:
The Social Security trust funds are invested entirely in U.S. Treasury securities. Like the Treasury bills, notes, and bonds purchased by private investors around the world, the Treasury securities that the trust funds hold are backed by the full faith and credit of the U.S. government.

By the end of 2021, the trust funds had accumulated $2.9 trillion worth of Treasury securities, earning an average interest rate of 2.3 percent during that year. The trustees project that the trust funds will earn $68.6 billion in interest income in 2024. In 2021 Social Security began redeeming those reserves to help pay benefits.

What Happens to Trust Fund Surpluses?
When the rest of the budget is in deficit, a Social Security cash surplus allows the government to borrow less from the public to finance the deficit. (The “public” encompasses all lenders other than federal trust funds, including U.S. individuals and institutions, the Federal Reserve System, and foreign investors.) The Treasury always uses whatever cash is on hand — whether from Social Security contributions or other earmarked or non-earmarked sources — to meet its current obligations before engaging in additional borrowing from the public. There is no sensible alternative to this practice. After all, why should the Treasury borrow funds when it has cash in the till?
Money that the federal government borrows, whether from investors or from Social Security, is used to finance the ongoing operations of the government in the same way that money deposited in a bank is used to finance spending by consumers and businesses. The bank depositors will get their money back when needed, and so will the Social Security trust funds. In fact, that has been happening since 2021, as the combined trust funds have been drawing down their accumulated reserves.

 

[Route246]

Political pundits tend to flap their hands and make proclamations that turn out to be wrong all the time. I don't believe SS and Medicare are untouchable anymore. I once did. Roe v Wade was a wakeup call and everyone should be wide awake now that overturning it not only had zero impact on voting trends but actually strengthened the side that made it happen. Roe v Wade and SS cuts do not affect me personally, therefore I have little or no interest in the topic. I have strong feelings about both but not enough to alter my vote.

Heck, the only issue I care about is SALT because I live in California and it costs me 6-figures to have it in place now that I started AA changes. If someone got rid of it and was a convicted felon I would definitely vote for a convicted felon or a conspiring child molester who was a coach at a college and that is a huge ask for someone like me to vote for that kind of person but I would be first in line with that vote if they would get rid of SALT. I know it won't happen because my constituency has no juice with these people.

 

[flyoverstate]

Well I think you'd find a lot of citizens wouldn't be too happy with this idea...even those of us that don't have hundreds of millions.

Define "a lot". I think "a lot" of people on the upper end of the asset and income scales *vastly* overestimate the average American's assets and income. Capital gains are mitigated by the standard deduction. Almost all capital gains taxes are paid by those in the upper 5% of income and assets, and the vast majority of capital gains are paid by 1%'ers or richer. I guarantee that at least 50% of Americans couldn't even tell you what capital gains are, since they have never and probably will never face paying taxes on them.

 

[ncbill]

it will be more than a decade before I start SS retirement

never planned on it doing more than covering my medicare (& supplement) premiums...

 

[ivinsfan]

Define "a lot". I think "a lot" of people on the upper end of the asset and income scales *vastly* overestimate the average American's assets and income. Capital gains are mitigated by the standard deduction. Almost all capital gains taxes are paid by those in the upper 5% of income and assets, and the vast majority of capital gains are paid by 1%'ers or richer. I guarantee that at least 50% of Americans couldn't even tell you what capital gains are, since they have never and probably will never face paying taxes on them.

SS taxes have never been applied to capital gains...say us "poor" rich earn the money, pay SS and income taxes, invest the money, make some gain on the money pay income tax on the gain and then pay SS again? Not going to happen.

 

[ERD50]

ERD50 said:
For perspective, that billionaire isn't getting more than.... In 2024, the maximum Social Security benefit at full retirement age is $3,822 per month.

So compared to Grandma's $1,000, I'm guessing the billionaire paid a heck of a lot more than 4x into SS than Grandma did, and a heck of a lot more in other Fed Tax.

But this is where fundamental ideology differences kick in.

If I were a billionaire, assuming I'm the same person I am now, I would be happy to get ZERO ss, so that all those grandmas can get a bit more - I won't need it! I can't possibly spend it, and I'm already busy giving it away to good charities whenever I take a break from my yacht...

But I know there are plenty who say "i paid more give me more" no matter whether it makes any difference to them or not. The people who "paid a heck of a lot" LESS need it far more.

No question, people have a wide range of opinions on just how progressive (or not) things like SS and taxation should be. I just felt that post, in just pointing out 'Grandma's' $1000 SS benefit compared to a billionaires, was lacking some needed context.

 

[ERD50]

Does anyone know, what would the total contributions and benefits at FRA be for someone who:

A) Earned the minimum to qualify for each of 40 quarters
vs
B) Hit the cap for enough quarters to hit the max benefit.

I tried searching on that, and didn't come up with anything easily. I suppose you'd need to apply an average inflation adjustment to balance those early years?

I just tried using AI, need to 2x check some of that, but it's a start.

 

[GenXguy]

Does anyone know, what would the total contributions and benefits at FRA be for someone who:

A) Earned the minimum to qualify for each of 40 quarters
vs
B) Hit the cap for enough quarters to hit the max benefit.

I tried searching on that, and didn't come up with anything easily. I suppose you'd need to apply an average inflation adjustment to balance those early years?

I just tried using AI, need to 2x check some of that, but it's a start.

If you are qualified to receive spousal benefits, you don't need to contribute anything at all. So, that would be the best payout.

 

[bada bing]

History should give us a good prediction on what will happen with Social Security. Events may not repeat exactly, but they usually rhyme. For time's sake, I am going to use AI (Grok) to discover what happened during the last funding crisis. [Mod Edit]

<snip>

So....my prediction is:

Raise payroll taxes and/or raise or remove cap on SS taxable income
Increase full retirement age to 68, phased in somewhere
Modify COLA a little bit

One theme that is consistent is that the changes won't be done in the most straightforward and transparent way. Optics are important. Being able to claim "No benefit cuts" is important. And "No means test". So the exact same things have been accomplished in round about ways to make the pronouncements nominally true. And that's what is expected this time around.

With respect to COLA's, an easy fix seldom/never discussed is just suspend the COLA's and indexing until the missing increases add up to the 23% shortfall. It would take between 3-10 years of suspended COLA's, depending on how hot inflation was running. Bang, entire problem solved and nobody took a nominal cut. The important concept is that the optics of proposals are a very important consideration. My prediction is that we will get a solution formulated with plausible deniability as a big factor in its makeup. Suspending the COLA's accomplishes the exact same thing as just letting the 23% across the board benefit cut happen *except* it can be claimed that nobody got a cut.

 

[Al18]

Suspending the COLA's is a good idea IMHO. My wife retired over a decade ago and while she received her pension, the COLA's were suspended the year she retired. We planned around her pension check, and pulled money from the IRA as needed.

 

[bada bing]

Does anyone know, what would the total contributions and benefits at FRA be for someone who:

A) Earned the minimum to qualify for each of 40 quarters
vs
B) Hit the cap for enough quarters to hit the max benefit.

I tried searching on that, and didn't come up with anything easily. I suppose you'd need to apply an average inflation adjustment to balance those early years?

I just tried using AI, need to 2x check some of that, but it's a start.

It's complicated by the yearly adjustment to an earnings record by the AWI (wage index). But it's easy if you just accept indexed earnings. An individual's bend points are set in the year they turn 62 if you turn 62 in 2025:
90% of the first $1226 in average monthly earnings (averaged over 35 years)
32% between $1226 and $7391
15% above $7391
That's based on 420 months of earnings. So 10 years to qualify is 120/420.
Minimum for a SS quarter credit in 2025 is $1810, so 1810/3 = $604/month

Minimum earnings to qualify for SS = $1810 * 40quarters = $72,400
SS FICA tax on $72,400 = 72400 * .062 = $4488.80 plus same from employer
FRA benefit = 120/420 * $604 * .90 = $155.30/month

Max benefit is 35 years at the cap.
Earnings cap 2025 $176,100
35 years at the cap = 35 * $176,100 = $6,163,500
SS FICA on $6,163,500 = .062 * $6,163,500 = $382,137 plus same from employer
FRA benefit = ($1226 * .90) + (($7361-1226)) * .32) + ((176,100/12) - $7361) * .15 = $4163.70/month

Notice that $382,137 is not the maximum possible lifetime FICA tax paid. FICA tax continues after 35 years paid in for no additional benefit.

 

[GenXguy]

Suspending the COLA's is a good idea IMHO. My wife retired over a decade ago and while she received her pension, the COLA's were suspended the year she retired. We planned around her pension check, and pulled money from the IRA as needed.

It's not a good idea for SS. A large number of SS recipients rely on SS for large percentage of their income. That would just amount to a benefit cut when they are already scraping by and dealing with high inflation that SS benefits haven't kept up with.

 

[corn18]

Does anyone know, what would the total contributions and benefits at FRA be for someone who:

A) Earned the minimum to qualify for each of 40 quarters
vs
B) Hit the cap for enough quarters to hit the max benefit.

I tried searching on that, and didn't come up with anything easily. I suppose you'd need to apply an average inflation adjustment to balance those early years?

I just tried using AI, need to 2x check some of that, but it's a start.

A) $72,400 total contribution @ min for 10 years (40 quarters). PIA $142 /mo. $1,704 / year which is 2.354% of the total contribution.

B) $6,411,647 total contribution @ max for 35 years. PIA $4,094 / mo. $49,128 / year which is 0.766% of the total contribution.

This is all indexed to 2024.

 

[pb4uski]

This is a somewhat interesting subject. However, Canada seems to have it sorted. When my BIL died, they stopped his Canada Pension (Their version of SS) the following month. The same for my sister when she died too.

What makes you think SS is any different. IME for numerous relatives, the funeral home submits the paperwork.

 

[corn18]

Here are the impacts of a lot of different ideas according to the SSA. I trust this over generalities.

Individual Changes Modifying Social Security

I looked at a lot of them, but got bored trying to find one that even comes close to fixing the problem as eliminating the salary cap. Let us know if you do find one.

 

[pb4uski]

Automatically cease at 115 years old? At the very least the numbers and ages of people getting SS has not been carefully monitored and recorded. Does this mean dead people or not eligible people were getting SS money? Who knows..also they do a lot of payment forecasting, does this mean the forecasts for depleting SS are not correct? I'm really surprised people are actually complaining about making sure the book work is correct.

I'm curious about the EVIDENCE that you have that dead people or not eligible people were getting SS money. I'm not complaining at all about making sure the bookwork is correct but SS has internal controls and audits by the IG covering such things. A post upstream had a link to the IGs report that from 2015 to 2022 so-called improper payments were less than 1%. What I'm complaining about are DOGE seeing very old people on the master record and falsely insinuating that they are all receiving benefits and that fraud is rampant without first trying to understand what the reality of the situation is.

Office of the Inspector General

The Office of the Inspector General is directly responsible for meeting the statutory mission of promoting economy, efficiency, and effectiveness in the administration of Social Security Administration programs and operations and to prevent and detect fraud, waste, abuse, and mismanagement in...

oig.ssa.gov

 

[pb4uski]

Sorry but this statement is wrong. In several ways... Do you know the actual definition of a Ponzi scheme?

Wake up.

The interview with Fox Business was a reminder of Musk’s deep skepticism and even hostility toward the program, which provides monthly benefits to retirees and some children. Trump has promised to defend Social Security from cuts, but Musk has described it as “the biggest Ponzi scheme of all time,” and the administration is shutting down some of the agency’s offices.

“Most of the federal spending is entitlements,” Musk told the Fox Business Network. “That’s the big one to eliminate.”

 

[pb4uski]

Well apparently the counters and checkers did not do a very good job as pertains to the database.

No, many could not be removed from the database due to statutory requirements passed by Congress, so they sit there not receiving benefits... not ideal but not a big deal. SSA would like to remove them but don't have the legal authority to do so.

If you were an SSA employee would you be willing to break the law just to clean up the database when it is doing no harm?

 

[pb4uski]

If you are qualified to receive spousal benefits, you don't need to contribute anything at all. So, that would be the best payout.

 

[GenXguy]

 

[Letj]

A recent IG audit released in July 2024 (https://oig.ssa.gov/assets/uploads/072401.pdf), looked at the FY2015 to FY2022 period. The investigation revealed a less than 1% amount of improper payments. There are problems for sure, but I don't think it falls in the widespread fraud category.

I am not sure why people who aren’t auditors are looking at social security payments. As an ex auditor I can say definitively that nearly all organizations audited would have some findings. It’s normal and expected; after all, they’re run by humans but many of the findings are not reportable findings. I suspect there’s much ado about nothing due to the political nature of the audits.

 

[ivinsfan]

Wake up.

You are obviously quoting a source here. Would you mind referring to the source? I'd like to see the entire quote. Cherry picking quotes isn't ideal.

 

[ivinsfan]

I'm curious about the EVIDENCE that you have that dead people or not eligible people were getting SS money. I'm not complaining at all about making sure the bookwork is correct but SS has internal controls and audits by the IG covering such things. A post upstream had a link to the IGs report that from 2015 to 2022 so-called improper payments were less than 1%. What I'm complaining about are DOGE seeing very old people on the master record and falsely insinuating that they are all receiving benefits and that fraud is rampant without first trying to understand what the reality

Did you actually READ my comment because I literally said,I have no idea if any deceased people get SS checks. And I didn't insinuate anything of the sort...if you want to rant,please leave me out of it

 

[Koolau]

In my experience, that's how it works in the U.S. too.

Someone has to tell them. I did it when each of my parents passed. It required a death certificate. I'm sure I could have allowed the auto-deposits to continue, but 1)I'm too honest. 2)I assumed SOME day, it would catch up to me.

Most billionaires don't draw a salary, they get stock awards, which they then borrow against so that they don't have to pay taxes. Occasionally they will sell a few hundred million worth here or there. The way to get the billionaires riled up would be to add SS taxes to capital gains. You'd get the Elons and the Larrys and Jeffs on their soapboxes in a hurry.

More like starting their own country.

 

[whatnot]

The funeral home contacts SS. My mother passed away 2 years ago, and she did not receive a direct deposit the month she passed, the bank automatically returned it. How they knew, I’m not sure. I was researching how to refund the last payment, but it turns out it was all handled.
Is there fraud in the program, probably. But not in the sense that thousands of people over 115 are still on the system and receiving payments. I have my theories on why misinformation is spread, but I’ll leave it there.
Also, just because we are fortunate not to Need SS to survive, doesn’t mean it will not impact my future standard of living. I feel for those who need it to survive.