SS Decisions Could Get More Complicated - SSA 2100

[Tekward]

I hope this is not too political, but it highlights a potential major impact to retirement planning that could happen this fall.

The Social Security 2100 Act Is a Bad Deal for Workers


"... H.R. 5723 adopts more than a dozen benefit increase provisions, but only for five years. Previous changes to Social Security have always been permanent because workers are supposed to be able to plan for how much to save to supplement their Social Security benefits in retirement. Temporary changes that introduce legislative uncertainty undermine that goal."


https://www.cato.org/blog/social-security-2100-act-bad-deal-workers

 

[USGrant1962]

The SS 2100 bill has been knocking around for a couple of years and is yet to make it out of committee, so not really real at this point. Having said that, I agree that sunset tricks to make the numbers work are particularly bad for something like SS.

 

[pb4uski]

I'm guessing that the sunset trick is to allow the bill to be passed under reconciliation and avoid a fillabuster in the Senate... the other side pulled a similar sleight-of-hand with the TCJA in 2017 where lower rates for individuals sunset after 2025.

 

[prudent_one]

The complaint that people would do better if they were allowed to save on their own is a non-starter to me, though I have personally been good at saving over the years. Although the math has worked out that way, it might not always work out that way. Who is going to manage the investments, or should we treat SS like a 401k and let people do what they want? Hoping when it's time to actually buy that annuity (which would allegedly pay better than SS) that they haven't screwed it up by going all in on meme stocks just before the collapse? I can imagine financial advisors loving the idea of getting to manage trillions more in assets, for a small fee of course.

The advantage of SS is you can't mess it up. Hucksters can't convince you to give it to them to manage. The last thing I want is for millions of Americans to torpedo their self-managed SS piggy bank and they can't support themselves in retirement.

This plan wants to make the minimum payment above the poverty line. I suppose with no regard to how much someone has paid in, as long as they are eligible for benefits? What a windfall that could be. You would only need to work enough to earn $7,000 in a year to earn 4 credits, do that in 10 different years, and you're guaranteed at least poverty level SS benefits in retirement along with Medicare. You could put in as little as $5400 lifetime out of your earnings to get SS and Medicare.

And of course it's true that while this says it's only for five years, once enacted and those five years have gone by, if it's not extended there will be rioting because "they are cutting Social Security benefits!"

 

[Gumby]

The complaint that people would do better if they were allowed to save on their own is a non-starter to me, though I have personally been good at saving over the years. Although the math has worked out that way, it might not always work out that way. Who is going to manage the investments, or should we treat SS like a 401k and let people do what they want? Hoping when it's time to actually buy that annuity (which would allegedly pay better than SS) that they haven't screwed it up by going all in on meme stocks just before the collapse? I can imagine financial advisors loving the idea of getting to manage trillions more in assets, for a small fee of course.

The advantage of SS is you can't mess it up. Hucksters can't convince you to give it to them to manage. The last thing I want is for millions of Americans to torpedo their self-managed SS piggy bank and they can't support themselves in retirement.
.....

Exactly. One wonders if the people promoting this position have ever met an average American. They will not save and do not know how to invest. Those elderly people who currently have nothing but social security to rely on would likely have even less under this alternative. And then we'll need to institute a new welfare program to keep them from starving. I'll stick with the Social Security System, thanks.

 

[gauss]

+1

The two people I know who worked full career jobs at Megacorp and are poor in retirement both have one thing in common. They cashed in their pension and turned the lump-sum over to "a guy" to manage for them. In both of these two cases it did not go well.

Of course there may be many others who did the same thing and it did go well.

-gauss

 

[Aerides]

The SS 2100 bill has been knocking around for a couple of years and is yet to make it out of committee, so not really real at this point.

Exactly. You can find a whole lot of stuff in this category, good, bad, and worse, and most of it will never see the light of day.

 

[skyking1]

What prudent one said. Many people need that kind of stopgap that they can't mess up.

 

[pb4uski]

The complaint that people would do better if they were allowed to save on their own is a non-starter to me...

+ 1. People have been given this opportunity many years along with a nice income tax break as a carrot and they have failed miserably.

SS seems to me to be serving its purpose of ensuring that the elderly are not totally poor but it was never intended to be a complete retirement plan.

 

[SecondAttempt]

About 30 years ago a stockbroker tried to convince me that SS would be gone by the time I retired. My retort was simple. Doing away with SS would require political suicide by over half of Congress and a president. Plus the government owns the printing press.

Looks like I was right. There is no doubt SS has problems. But beyond a few games, I don't think Congress has any choice but to prop it up for several more decades. Retired people vote more reliably than the younger people who will fund it. And if the government had not used it as a piggy bank and had paid it market rates over the years it would be very healthy.

 

[Fire2019]

+ 1. People have been given this opportunity many years along with a nice income tax break as a carrot and they have failed miserably.

SS seems to me to be serving its purpose of ensuring that the elderly are not totally poor but it was never intended to be a complete retirement plan.

+1 without it we'd have even more people on welfare. At least with SS they had to pay into it a little.

 

[jollystomper]

While the thought of being able to save and invest on their own would be fine by me, it is because I have know how to save and invest. As was said above, the average American does not. Those of us who are good and saving and investing are helped by the fact that most people are not. Perhaps one should have to pass a financial literacy test before allowing one to self-manage SS .

One real problem is that so many folks expect SS will be all they need for retirement, and their are few public red flags shouting warnings from the rooftop about this.

 

[RetireBy90]

One problem is that if you never have to assume responsibility for your actions and decisions many don't take it seriously. If as a society are not willing to see those that made poor decisions eat cat food or suffer in elder years then do we do it for them like the kid still in mom's basement ? I'm fortunate that errors cost me on occasion and mostly I learn from them. Others see they will be bailed out and learn from that.

 

[Time2]

I was one that always wished that I could invest my SS money myself. But now retired and anticipating about $60k between the wife and I when I hit 70, I'm glad it's there. I also agree that most people if allowed to not pay SS tax or invest themselves would hit retirement age and have very little saved.
I'm glad that they were forced to pay into a system that will pay them enough to survive, without additional taxpayer money.
It was also good for my dad who had a severe heart attack 43 years old and was disabled, I may not have been able to save my nest egg if I had to take care of his expenses. It is good for society.

 

[ERD50]

... One real problem is that so many folks expect SS will be all they need for retirement, and their are few public red flags shouting warnings from the rooftop about this.

IMO, there should have been some sort of mandatory education that went along with paying into SS. Monthly, semi-annual, something.

Explain the 'three legged stool' concept, that SS alone won't provide a life that many might assume. Provide some estimates of how personal savings can grow, and what it can provide. Take a quiz, don't pass - no paycheck for you (until you pass, just take it again, the point is to educate)!

-ERD50

 

[ShokWaveRider]

IMO, there should have been some sort of mandatory education that went along with paying into SS. Monthly, semi-annual, something.

Explain the 'three legged stool' concept, that SS alone won't provide a life that many might assume. Provide some estimates of how personal savings can grow, and what it can provide. Take a quiz, don't pass - no paycheck for you (until you pass, just take it again, the point is to educate)!

-ERD50

That will not work as there are a lot of dopes that collect SS.

More important would be to not have SS & Medicare removed completely in the next few years as so many rely on them.

 

[Time2]

That will not work as there are a lot of dopes that collect SS.

50% of SS recipients have below average IQ.

 

[REWahoo]

50% of SS recipients have below average IQ.

Combine that with the fact numbers is hard and what do you get?

Asking for a friend.

 

[Time2]

Combine that with the fact numbers is hard and what do you get?

Asking for a friend.

Your tag line says you get it!

 

[Teacher Terry]

When I started to work for the state at 43 the first thing I did was sign up for the deferred compensation program. I was shocked at the people that worked there for years thinking their pensions were enough and many didn’t know about losing much of their SS because of WEP. It would be a huge mistake to get rid of SS and Medicare.

 

[ERD50]

That will not work as there are a lot of dopes that collect SS.

More important would be to not have SS & Medicare removed completely in the next few years as so many rely on them.

I wasn't suggesting that we shouldn't protect SS/Medicare. Just that there should be education for people on just what to expect from SS, and why they should be saving in addition. If they don't, that's on them, but the education would be a step in the right direction, and open the eyes of at least some of them, IMO.

-ERD50

 

[Out of Steam]

About 30 years ago a stockbroker tried to convince me that SS would be gone by the time I retired. My retort was simple. Doing away with SS would require political suicide by over half of Congress and a president.

I longer believe that current retirees can't be convinced to accept cuts in their own benefits, such as reduction/loss of inflation protection. Methods of manipulating public opinion have become tremendously powerful, and politics as a substitute for religion (both sides) makes people want to support what their side supports.

There's political risk to SS benefits that wasn't there several years ago.

 

[jldavid47]

About 30 years ago a stockbroker tried to convince me that SS would be gone by the time I retired. My retort was simple. Doing away with SS would require political suicide by over half of Congress and a president. Plus the government owns the printing press.

+1

I have never bought into the argument over the years that Social Security would not be there for me when I retired. In fact, I have always made Social Security payments an integral part of our retirement plan.

The current bill is a non-starter. However, I think there will eventually be so much political pressure that both sides of the aisle will be forced to come together on a long-term "permanent" solution. Whatever that solution is I doubt that it will include lowering benefits for any current recipient. It is likely that there will be some kind of adjustment for future retirees such as delaying the FRA beyond what it is today.

In the 1980s Ronald Reagan and Tip O'Neill worked together to extend the life of the system. It's time for another bipartisan effort to do the same. It may seem impossible given the current political divide in this country, but I believe it will happen before the SHTF.

 

[SecondAttempt]

+1

I have never bought into the argument over the years that Social Security would not be there for me when I retired. In fact, I have always made Social Security payments an integral part of our retirement plan.

The current bill is a non-starter. However, I think there will eventually be so much political pressure that both sides of the aisle will be forced to come together on a long-term "permanent" solution. Whatever that solution is I doubt that it will include lowering benefits for any current recipient. It is likely that there will be some kind of adjustment for future retirees such as delaying the FRA beyond what it is today.

In the 1980s Ronald Reagan and Tip O'Neill worked together to extend the life of the system. It's time for another bipartisan effort to do the same. It may seem impossible given the current political divide in this country, but I believe it will happen before the SHTF.

There is no doubt that SS and Medicare are in trouble. And I think both sides should have the foresight to work toward long term solutions. But sadly, the age of statesmen is over.

I think current retirees would accept some modest cuts. But a full scale gutting of the system would be disasterous. Younger people might object to higher taxes and push for needed reforms...until they see their own grandparents starving and begging.

What I find most despicable is that the system would be not only solvent but flush if it had been allowed to invest in government bonds at market rates. Instead it was paid low rates that got us where we are.

 

[Winemaker]

In the 1980s Ronald Reagan and Tip O'Neill worked together to extend the life of the system. It's time for another bipartisan effort to do the same. It may seem impossible given the current political divide in this country, but I believe it will happen before the SHTF.

If there was never a last minute, nothing would ever get done.