Will Social Security be there?

[teejayevans]

Sorry - that's not the way SS works.....

Technically not, but I would bet a great majority thinks that is how it works, and they are going to be screaming if you try to cut what they said we would be getting. The politicians that support that will get fried by the 3rd rail.

 

[Badger]

FYI This was copied directly from SSA.gov . I hope this helps Rocky mtn high. He may be confused.



"The current Social Security system works like this: when you work, you pay taxes into Social Security. We use the tax money to pay benefits to:• People who have already retired.• People who are disabled.• Survivors of workers who have died.• Dependents of beneficiaries.The money you pay in taxes isn’t held in a personal account for you to use when you get benefits. We use your taxes to pay people who are getting benefits right now. Any unused money goes to the Social Security trust funds, not a personal account with your name on it."


Cheers!

 

[Out-to-Lunch]

I think is was said better by the inimitable Dave Barry:

First, we need to clear up a misconception. Many Americans believe that Social Security works this way: The government takes money out of your paycheck, keeps it for you in a safe place such as a giant federal mattress, then, when you retire, starts giving it back to you. If that's how you think it works, then let me quote the famous French economist Francois Quesnay (1694-1774): ''Ding dong, you're wrong.''

What actually happens is, the government takes money out of your paycheck and immediately gives it to a retired person (in your particular case, this person is Mrs. Edwina P. Loogersnapper of Yeasting Springs, Vt.; she says ''hi''). This system works fine as long as there are enough younger people working to support the retired people.

(I always loved the "She says 'hi'" line!)

 

[Rocky mtn high]

I know that is not the way it works but they took our money with the promise of giving money back to us 30 years later. They should not be allowed to break that promise!

 

[Rianne]

I know that is not the way it works but they took our money with the promise of giving money back to us 30 years later. They should not be allowed to break that promise!

I guess they feel they can adjust that promise to fit today's needs. Kind of like wedding vows. I think I've stuck to my promise to my DH. Oh, wait, that "honor and obey" part. Then, "through good times and bad" Hmmmm, for the most part. There were a few heated discussions along the way. Then "until death due us part." Well, so far, that promise is still there.

 

[Rocky mtn high]

Just like how they ADJUSTED how much they tax your SSI, just like how they ADJUSTED IRA rules, just like they ADJUSTED RMD. it goes on and on. Our government is bankrupt and everyone just seems to make excuses for them.

 

[pb4uski]

I know that is not the way it works but they took our money with the promise of giving money back to us 30 years later. They should not be allowed to break that promise!

I agree... a deal is a deal. Now if/when the SS Trust Fund is depleted and tax revenue only allow x% of benefits to be paid, then benefit should be reduced across the board. Absent any intervention from Congress that is what will happen.... that ws the deal.

 

[MrsHaloFIRE]

I would not be opposed to means testing of SS benefits resulting in cuts beginning for households with over $30,000 of "other" retirement income and phasing out completely at $50,000 of other income so that the most needy of seniors can get their full promised benefit.

I'm most definitely opposed to that. Imagine buying a life insurance policy and paying for it monthly for 30 yrars, and then when you pop clogs the insurance company tells your heirs sorry. Too bad. You had too much in your checking account when you died. Uncool. Very uncool. Refund my paid in Soc Sec taxes and we can discuss.

 

[Out-to-Lunch]

I know that is not the way it works but they took our money with the promise of giving money back to us 30 years later. They should not be allowed to break that promise!

I totally agree. The social contract is and was important. Some tweaks may be (read "are") necessary, but the spirit should remain intact.

 

[GenXguy]

I'm most definitely opposed to that. Imagine buying a life insurance policy and paying for it monthly for 30 yrars, and then when you pop clogs the insurance company tells your heirs sorry. Too bad. You had too much in your checking account when you died. Uncool. Very uncool. Refund my paid in Soc Sec taxes and we can discuss.

With SS, you're not making a choice to buy a product. You're not making bets. You're not investing. And you're not playing a game (there's no 9th inning silliness). The government has already made various changes to SS over the years - higher FICA tax, raised the retirement age, taxing benefits, added an 80% taxation threshold, changed how spousal benefits are handled. So a means test for handling benefits fits in with these changes nicely, so people that don't really need SS will see a cut in their benefit or have it completely eliminated, while more needy seniors can see increases to their benefits. I hate to see struggling poor seniors and am willing to make this sacrifice myself. It seems only fair.

 

[GenXguy]

It’s more likely they will change it by making the benefits more taxable. The benefit remains the same, but the higher the overall income, the more that is taxed away.

This is already happening. A greater percentage of SS benefits are taxed every year because the taxation thresholds are not indexed to inflation while the benefits are increased. However, they could still steepen the curve, tax 100% of SS benefits for people with over $30,000 of "other" income, for example. That would probably be a good idea, but I think it should be indexed to inflation after correcting the previous policy errors by adjusting the original thresholds to inflation.

 

[explanade]

You think there would be greater public support for taxing benefits or lifting the income cap used to calculate the social security taxes?

 

[MissMolly]

What would stop people over the threshold from pulling enough of their invested assets out and putting them in something not reportable/trackable as income (say under the mattress, or maybe in Bitcoin, although I have no idea how Bitcoin works, or whatever) so they can still get the SS payments they had planned on?

I think means testing would be a huge disincentive to save for retirement only to be penalized once you reach it. While some scrimp and save all their lives to have a healthy nest egg, others have frittered it away on a high lifestyle. It seems they would be getting rewarded for not saving.

 

[youbet]

I'm most definitely opposed to that. Imagine buying a life insurance policy and paying for it monthly for 30 yrars, and then when you pop clogs the insurance company tells your heirs sorry. Too bad. You had too much in your checking account when you died. Uncool. Very uncool. Refund my paid in Soc Sec taxes and we can discuss.

I think you misunderstand how SS works. That is, what the "deal" is.

You paid SS taxes over the years and those dollars were spent to pay benefits to those collecting SS. Paying them their benefits was what you got for your tax dollars. When you apply for SS, you'll be paid dollars tax payers contribute at that time. Paying you is what they get for their tax dollars.

You're owed nothing other than what current (at the time) SS laws dictate (likely constrained by how much the then current SS taxpayers can/want to contribute).

Personally, I don't like these kind of ponzi schemes and think the politicians that created them are given far too much credit. But that's the way it is.

My own feelings are that any mix of fixes to bring the system into balance (tax in = payments out) is OK with me EXCEPT that I believe working folks should NOT pay higher FICA taxes if SS is not means tested. It just makes no sense that some poor stiff making minimum wage should see her FICA tax rate increase so that Bill Gates and Warren Buffet can receive full SS benefits. That's just too regressive for (generally conservative) me.

 

[youbet]

What would stop people over the threshold from pulling enough of their invested assets out and putting them in something not reportable/trackable as income (say under the mattress, or maybe in Bitcoin, although I have no idea how Bitcoin works, or whatever) so they can still get the SS payments they had planned on?

I think means testing would be a huge disincentive to save for retirement only to be penalized once you reach it. While some scrimp and save all their lives to have a healthy nest egg, others have frittered it away on a high lifestyle. It seems they would be getting rewarded for not saving.

You do realize that we already means test in many areas, right? Progressive income tax rates, for example. Folks who saved for retirement generally pay income taxes at higher marginal rates than folks who didn't. That's a disincentive to save for retirement, but we do it just the same.

As far as your fear that folks might hide/manipulate income to avoid SS means testing, isn't that the popular thing to do for obtaining ACA subsidies? Are you also for eliminating the means testing involved in doling out those dollars?

 

[Rianne]

This is a SS discussion but I think Medicare should be included. There’s a danger of losing that too, or at least reduced benefits. We paid into Medicare as well. It would hurt us more to lose Medicare than SS. Adjusting or capping the benefits could be catastrophic. Especially since both of us have pre-existing conditions where treatment for those would dwarf our NW.

 

[youbet]

This is a SS discussion but I think Medicare should be included. There’s a danger of losing that too, or at least reduced benefits. We paid into Medicare as well. It would hurt us more to lose Medicare than SS. Adjusting or capping the benefits could be catastrophic. Especially since both of us have pre-existing conditions where treatment for those would dwarf our NW.

Good point. Medicare is apparently in worse financial shape than SS.

Tacking onto the "means testing" portion of the discussion, Medicare does do heavy duty means testing via the IRMAA mechanism. Perhaps that needs to be increased? And, obviously, we have to find some way to control costs. One way or the other, tax input = payment output has to be achieved.

 

[pb4uski]

With SS, you're not making a choice to buy a product. You're not making bets. You're not investing. And you're not playing a game (there's no 9th inning silliness). The government has already made various changes to SS over the years - higher FICA tax, raised the retirement age, taxing benefits, added an 80% taxation threshold, changed how spousal benefits are handled. So a means test for handling benefits fits in with these changes nicely, so people that don't really need SS will see a cut in their benefit or have it completely eliminated, while more needy seniors can see increases to their benefits. I hate to see struggling poor seniors and am willing to make this sacrifice myself. It seems only fair.

I can see that it might seem fair to a GenX. But to those of us who have paid in for 40-50 years (my first year of contributions was 1970), having promised benefits cut or "completely eliminated" is not at all fair. Had I known that was a possibility I might have structured my income in a way that reduced or avoided such significant contributions to SS.

You're clearly in the minority... so give it up.

In addition, there were some sensible reasons for some of the changes... the extension of the FRA in 1983 was to reflect increased longevity and reset the expected longevity past age FRA to what it was when the program was originally established, the taxation of benefits effectively aligned the taxation of SS with the taxation of other post-tax retirement savings programs like contributory pension plans, non-deductible IRAs and the like and for many years the OASDI tax was regularly changed.

 

[youbet]

to those of us who have paid in for 40 years, having promised benefits cut or "completely eliminated" is not at all fair.

Benefits promised when? The benefit rules and regs that existed the day you first contributed? The benefit rules and regs that existed the day you started to collect? The rules and regs from some other point in time where it most benefits you?

You keep talking about these "promises" made to you personally. What specific promises are you referring to?

 

[pb4uski]

.... It just makes no sense that some poor stiff making minimum wage should see her FICA tax rate increase so that Bill Gates and Warren Buffet can receive full SS benefits. That's just too regressive for (generally conservative) me.

But you're missing the whole point... everyone contributes and everyone is entitled to collect... that is why the program is so popular.

Now of course, if you're rich beyond your wildest dreams and don't apply for benefits then you won't receive them. Alternatively, you could collect them and donate them to your favorite causes.

Though I would agree that I would favor changes to preserve the system other than just increasing SS taxes to fill the gap.

 

[pb4uski]

Benefits promised when? The benefit rules and regs that existed the day you first contributed? The benefit rules and regs that existed the day you started to collect? The rules and regs from some other point in time where it most benefits you?

You keep talking about these "promises" made to you personally. What specific promises are you referring to?

Come on... smarten up for chrissakes.

SSA sends me a statement annually telling me what I would receive monthly if I retire at my FRA, at 70 or at my current age. See below. millions of American taxpayers receive them. I bet you do too.

The wording is pretty definitive...."your payment would be about".

 

[youbet]

But you're missing the whole point... everyone contributes and everyone is entitled to collect... that is why the program is so popular.

Now of course, if you're rich beyond your wildest dreams and don't apply for benefits then you won't receive them. Alternatively, you could collect them and donate them to your favorite causes.

Though I would agree that I would favor changes to preserve the system other than just increasing SS taxes to fill the gap.

We can just agree to disagree then. I don't feel low wage working folks should see their FICA taxes increase (one bit) so that wealthy geezers can collect their so-called "full as promised" SS retirement payments. We're big kids, let's "hitch 'em up" and stop looking for the handicapped woman working part time at McDonalds to pay more so we don't take a minor haircut.

My view would cost me money. But that's the way I see things.

 

[youbet]

Come on... smarten up for chrissakes.

SSA sends me a statement annually telling me what I would receive monthly if I retire at my FRA, at 70 or at my current age. See below. millions of American taxpayers receive them. I bet you do too.

The wording is pretty definitive...."your payment would be about".

Are the rules and regs that determine the numbers in that statement the same now as they were during all the years you payed into the system? Or have things changed?

 

[ShokWaveRider]

The moral here is, that Government (Whoever that may be at any given time) can change the rules whenever they want, can say what they want with No Consequence at all, and not much effect on themselves (They will make sure their pensions and Healthcare are guaranteed). The only other platform that folks that say things with no consequence is most forms of advertising in the USA.

 

[MissMolly]

You do realize that we already means test in many areas, right? Progressive income tax rates, for example. Folks who saved for retirement generally pay income taxes at higher marginal rates than folks who didn't. That's a disincentive to save for retirement, but we do it just the same.

As far as your fear that folks might hide/manipulate income to avoid SS means testing, isn't that the popular thing to do for obtaining ACA subsidies? Are you also for eliminating the means testing involved in doling out those dollars?

This is entirely different and a straw man's argument. People have not paid into ACA for their entire working lives expecting it to be there for them when they were old. No comparison.