SS Sustainability without reduction now at 2029

[Pilot2013]

However the benefit calculation is based on the highest 35 AIME, which for people contributing above the current cap could result in PIA above the current maximum. The current "largest possible" benefit is under $4000/month, but very high earners would have much higher benefits...

But we are talking about CHANGING the current situation, so we can change both... eliminating or changing the cap, so I would say you also change the max payout by some amount (let's say that the Top Contributors would get only 25% (as an example) of the increased revenue. ie, the improvement to the plan would get 75% of the additional tax (or as some on here like to say, Gov't income ), while the folks that are asked to provide that increase get a modest increase.

Yes, this is part of the blasphemous redistribution I rail against, but this is the one area that I feel it should be part of our planning, and promise to the elderly.

 

[Z3Dreamer]

+1

I'd like to see some discussion on this thread of what few 'adjustments' to SS that members support to actuarially stablize the program.

Some argue for a higher CPI for COLAs. I would argue for using a lower CPI.

I would like to see some additional delay to FRA for those who are very young. Not much. Maybe a month or two.

I have not embraced an unlimited wage base but would like it to be more than 2017's $127,200.

These are all small changes so they can be done without too much political nonsense. If the above were enacted now, it would put off that magic day a number of years. No, I do not have the actuarial figures to prove it.

Now, the tough ones:
If OASDI is an insurance product, then it should be means tested. Here is my flawed logic: If I insure my house and it doesn't burn, I don't get a check. If OASDI is insurance, I don't get a check if my income is above $xxxx.

If OASDI is a retirement product, then I am getting a terrible rate of return on all of the money I and my employers have put aside for me. Let me cash out with a lump sum representing my pay-ins and some small portion of what my employer put in. I know many are against this concept but please don't hate me because I want my freedom.

 

[Pilot2013]

Now, the tough ones:
If OASDI is an insurance product, then it should be means tested. Here is my flawed logic: If I insure my house and it doesn't burn, I don't get a check. If OASDI is insurance, I don't get a check if my income is above $xxxx.

If OASDI is a retirement product, then I am getting a terrible rate of return on all of the money I and my employers have put aside for me. Let me cash out with a lump sum representing my pay-ins and some small portion of what my employer put in. I know many are against this concept but please don't hate me because I want my freedom.

No hate!

I think I consider SS more of a lousy retirement product. I was just talking to a co-worker and as I told him, I consider SS as a crappy annuity in my AA review for retirement. I don't like to think of it as insurance that would be means tested and taken away because the "house did not burn". Just because it was not originally planned that way. If it had been, then retirement planning COULD have been approached differently/with that in mind.

 

[Hermit]

I would prefer to receive the payout decrease to 75% across the board or whatever SS can payout, keeping everything the same. Everybody suffers equality. Why favor one group over another.

Our whole tax system is designed so that the higher income folks pay more taxes to support the country including social welfare systems. When taxes get to be too much for the "rich", the economy as a whole goes down. The problem is we don't exactly know where that point is.

If I am not mistaken, there really is no money set aside for SS payments. The SS taxes collected has long since been spent and the SS taxes collected today are supplemented by the general taxes and deficit spending. The time when SS runs out of money is the time that the "IOUs" are depleted. There won't really be a major difference in costs to the Government at that point. This, in my opinion, is just a good political reason to implement the hair cut which can help balance the expenses and income, but as currently written will be as hard on the poorer folks as on the better off. The costs of SS will continue to increase. More will need to be done through the political process to correct that. Whether the politicians will do something more than letting the currently defined hair cut happen as a politically expedient approach is anybody's guess. This thread is about making those guesses. I don't think I would base my retirement security on those guesses, including my own.

 

[travelover]

............Like acid rain and the energy shortage I've learned not to spend too much time worrying about these things.

I'm not sure why you dragged in these comparisons, but the reason acid rain and energy shortages are not a problem is because we took intelligent actions to mitigate them, not because calling attention to them was a Chicken Little response.

 

[Just_Steve]

Now, the tough ones:
If OASDI is an insurance product, then it should be means tested. Here is my flawed logic: If I insure my house and it doesn't burn, I don't get a check. If OASDI is insurance, I don't get a check if my income is above $xxxx.

So just income? Then those with millions in assets and no income are not affected? People will just game the system just like they now do with ACA subsidies.

 

[scrabbler1]

Remember that the cap applies to SS payouts as well as FICA taxes. There is a link, albeit a weak one. Raising the tax cap without raising the benefit cap turns all of SS into a welfare program (even more than it is now, perhaps). This is why I oppose raising the cap. The highest income bend point is 15%, a pretty low amount. Should there be another puny one which is even closer to zero, say 7%?


And think about SS's finances - it is not in trouble today but will be in ~12-15 years. I'd rather see measures put into place today which will save money later on, not take in more money today. Maybe raise the payroll tax rate (not cap) by 1% in 15 years. Raise the retirement age, gradually, to 69, over 15 years.


I agree with separating the retirement part of SS from the other parts of it. The other parts of SS assume something tragic and unforeseen had to happen in order for someone to begin collecting benefits. That's what insurance is for - if the unforeseen event never happens, you don't receive anything. Turning 65 is not a tragic or unforeseen event and should be planned for. If this means splitting the FICA tax into two parts, one for retirement and the other for everything else, and subjecting each part to a separate income cap, that is okay.


A way to means test SS on the back end is to make more of SS subject to income taxes for higher income earners. But the income brackets, like the main income brackets, should be indexed - they haven't been changed in over 20 years.

 

[Clone]

Increase the earnings cap by 10%.

Today: Any averaged indexed monthly earnings above $5336 is multiplied by 15%
Future: Any averaged indexed monthly earnings above $5336 is multiplied by 12.5%

Folks that are earning below the second bend point are not affected.
Folks that earn close to today's max taxable earnings would take about a 5% haircut.
Folks that are earning above today's max would be taxed on a higher amount.

This could be sold in many ways:

"We are going to tax the rich by raising the earnings cap by 10%"
"But we are increasing SS benefits available to those rich people, so they do get something for the increased payments"
"We can phase in the calculation by changing it from 15% to 12.5% over a period of years"
"We can increase the max earnings right now, because nobody will feel bad about dipping into those rich people's pockets today!"

 

[Pilot2013]

Increase the earnings cap by 10%.

Today: Any averaged indexed monthly earnings above $5336 is multiplied by 15%
Future: Any averaged indexed monthly earnings above $5336 is multiplied by 12.5%

Folks that are earning below the second bend point are not affected.
Folks that earn close to today's max taxable earnings would take about a 5% haircut.
Folks that are earning above today's max would be taxed on a higher amount.

This could be sold in many ways:

"We are going to tax the rich by raising the earnings cap by 10%"
"But we are increasing SS benefits available to those rich people, so they do get something for the increased payments"
"We can phase in the calculation by changing it from 15% to 12.5% over a period of years"
"We can increase the max earnings right now, because nobody will feel bad about dipping into those rich people's pockets today!"

Not bad... Could play with the numbers a little, but generally close to what I mentioned earlier.

 

[Clone]

Alternative to the change to the 15% rate could be an additional bend point (such as scrabbler1 described).

The thing about adjusting the max earnings and the bend point numbers is that it is not a new law, but a numbers tweak to the existing system. The whole discussion about adjustments based on assets is a massive box of worms. Tweaking the numbers will not eliminate the problem, but it would be a way to boost the inflow without disturbing the natives too much. I would rather see a decrease to the 15% number than an overall haircut (that would affect folks that are lower in the Average monthly earnings by a much more significant amount.

 

[marko]

I'm not sure why you dragged in these comparisons, but the reason acid rain and energy shortages are not a problem is because we took intelligent actions to mitigate them, not because calling attention to them was a Chicken Little response.

I was sitting on the beach and these are just the first things that came to mind.

My point was that there's all kinds of doom and gloom predictions that never seem to materialize. As noted, I've been told that SS would soon be bankrupt since I started working in the 60's.

My vote for an "intelligent action to mitigate"? Eliminate the cap

 

[youbet]

I have not embraced an unlimited wage base but would like it to be more than 2017's $127,200.

If OASDI is an insurance product, then it should be means tested.

Both raising or eliminating the cap for those still working AND means testing SS payments to those already enjoying a bountiful retirement seem to go hand-in-hand. It's a fair, balanced approach spreading the pain between the two groups. If a high earner is going to pay more tax, why shouldn't a high income retiree take a small income haircut?

I know the concept isn't popular here where we have a large number of relatively high income retirees. But really, why should we further tax folks earning a bit over the current cap in order to protect wealthy retirees who describe their SS as "gravy" or "the cherry on top?" I vote for doing both: unlimited cap on FICA taxes + means testing SS payouts.

 

[travelover]

..............My point was that there's all kinds of doom and gloom predictions that never seem to materialize. ...........

Now that you mention it, how about that big Y2K hoax?

 

[marko]

I know the concept isn't popular here where we have a large number of relatively high income retirees. But really, why should we further tax folks earning a bit over the current cap in order to protect wealthy retirees who describe their SS as "gravy" or "the cherry on top?" I vote for doing both: unlimited cap on FICA taxes + means testing SS payouts.

Having read dozens of threads here from "high income retirees" on how to control their income for ACA subsidies, I'd predict a whole new set of similar discussions on keeping that cherry on top [emoji1]

 

[marko]

Now that you mention it, how about that big Y2K hoax?

Hey... DW made a fortune as a Y2K consultant!! It wasn't a hoax..she fixed it! [emoji1]

 

[Fedup]

Both raising or eliminating the cap for those still working AND means testing SS payments to those already enjoying a bountiful retirement seem to go hand-in-hand. It's a fair, balanced approach spreading the pain between the two groups. If a high earner is going to pay more tax, why shouldn't a high income retiree take a small income haircut?

I know the concept isn't popular here where we have a large number of relatively high income retirees. But really, why should we further tax folks earning a bit over the current cap in order to protect wealthy retirees who describe their SS as "gravy" or "the cherry on top?" I vote for doing both: unlimited cap on FICA taxes + means testing SS payouts.

This maybe one of many reasons why I decided against working. I don't want to bust my ass to pay more tax. We're already paying 85% of My husband's SS.

 

[Hermit]

Hey... DW made a fortune as a Y2K consultant!! It wasn't a hoax..she fixed it! [emoji1]

There is a lot of truth in that. A lot of companies and the government spent a lot of money fixing potential problems. Who would'a thought scary predictions would ever fix something?

 

[marko]

There is a lot of truth in that. A lot of companies and the government spent a lot of money fixing potential problems. Who would'a thought scary predictions would ever fix something?

Well I was being sarcastic. She made a bundle but really didn't fix much. More like insuring nothing happened on 1/1. But it was a three year gig for a single large bank; the main thing it insured was her RE afterwards

 

[travelover]

.......... It wasn't a hoax..she fixed it! [emoji1]

I still think it was a hoax. Something dreamed up by pinhead intellectuals to justify their jobs.

 

[ProspectiveBum]

Well I was being sarcastic. She made a bundle but really didn't fix much. More like insuring nothing happened on 1/1. But it was a three year gig for a single large bank; the main thing it insured was her RE afterwards

My Dad similarly made a killing for a few years leading up to Y2K fixing old COBOL programs that would've broken. Lots of money and effort went into making sure that Y2K was a non-event.

With regard to SS, I'd advocate raising the cap, and leaving the 15% bend point in place. Folks who pay more in should get the (admittedly small) benefit that comes from their higher contributions.

Gradually raising the FRA is something else that should be considered.

 

[MRG]

There is a lot of truth in that. A lot of companies and the government spent a lot of money fixing potential problems. Who would'a thought scary predictions would ever fix something?

At Megacorp we had real issues. We were doing development in 1989 for Y2K, since data structures changed we did a lot of other w*rk with the date changes.

 

[youbet]

I don't think Y2K issues were adequately fixed. Isn't it Y2K bugs introduced into SS software that caused the SS sustainability issues we have today? Shouldn't the folks who were supposed to fix Y2K issues and didn't be the ones who take it in the shorts by having their SS reduced?


Just trying to tie things together here folks...........

 

[marko]

I don't think Y2K issues were adequately fixed. Isn't it Y2K bugs introduced into SS software that caused the SS sustainability issues we have today? Shouldn't the folks who were supposed to fix Y2K issues and didn't be the ones who take it in the shorts by having their SS reduced?


Just trying to tie things together here folks...........

Not biting on that worm! [emoji1]

 

[Closet_Gamer]

Mathematically, SS is not part of my plan.

Mentally, I'm noodling with the idea of a SPIA @ 60; SS @ 70 and a Deferred Income Annuity that kicks in @ 80 as a way to bridge inflation & hedge longevity.

Practically, I expect SS to become means tested but in a surreptitious way like a secondary calc @ tax time similar to the Obamacare extra Medicare tax for high earners.

Politically, Americans suck at math & understanding inflation...but they do real well understanding absolute/nominal dollar amounts. Therefore, I expect absolute payouts to never be cut but we will print money in one form or another and inflate away the obligation over time.

 

[scrabbler1]

At Megacorp we had real issues. We were doing development in 1989 for Y2K, since data structures changed we did a lot of other w*rk with the date changes.

I was very busy at my company handling Y2K issues. I oversaw my division's end-user programs and had to make a lot of small changes to them. With the programs I wrote in the mid-1990s, I kept in mind Y2K so the changes were small, too. Some programs were tougher to fix. And our systems analysts were creating new systems to replace the ones written in the 1970s and 1980s. I was the point person in my division in the testing of them. Kept me busy for a good year.