Social security discussion

[sam_gordon]

I agree with mnrose. Have Congress put back the money they've "borrowed" out of the fund, and write a law saying they're not allowed to borrow any more. Problem solved.

 

[QueenIsabella]

The SS age needs to be increased. People may not like that idea, but at the time when SS was implemented, the life expectancy was 65, so that's the number they chose. Life expectancy has gone up, so SS eligibility date needs to go up.

My problem with raising the cap on what wages are taxed is, it's not fair--you can only collect a maximum amount from SS, based on your earnings that were taxed. So, someone who makes $112k a year gets the same SS check as someone who makes $112M. Now, one could argue that someone making millions shouldn't "need" SS. There's some merit to this, but--if they paid into it like everyone else, why should they not get a payout like everyone else? Why punish them for being successful?

Honestly, I don't know what the answer is. Dh and I have always believed that SS wouldn't be available for us. Because of that paranoia, we saved well on our own. Now that we're in our fifties, it's likely that SS will still be available when we reach retirement age...but we're likely to be punished for sacrificing and saving all these years.

 

[mefordis]

The SS age needs to be increased. People may not like that idea, but at the time when SS was implemented, the life expectancy was 65, so that's the number they chose. Life expectancy has gone up, so SS eligibility date needs to go up.

My problem with raising the cap on what wages are taxed is, it's not fair--you can only collect a maximum amount from SS, based on your earnings that were taxed. So, someone who makes $112k a year gets the same SS check as someone who makes $112M. Now, one could argue that someone making millions shouldn't "need" SS. There's some merit to this, but--if they paid into it like everyone else, why should they not get a payout like everyone else? Why punish them for being successful?

Honestly, I don't know what the answer is. Dh and I have always believed that SS wouldn't be available for us. Because of that paranoia, we saved well on our own. Now that we're in our fifties, it's likely that SS will still be available when we reach retirement age...but we're likely to be punished for sacrificing and saving all these years.

I agree that raising the cap is not the answer. It has been calculated that it really won't make that huge of a difference in funds, either. Besides that, the government will only waste the excess, instead of making it available through payment increases. Also, the cap IS raised nearly every year. It's not fair to tax someone 6% on everything they make. Once people start making above that cap, I think they tend to agree. That is a LOT of money coming out of the check each pay period.

I think they should take disability out of the equation and pay that from a separate fund. Social security should be ONLY retirement insurance. If you are below the age to collect, you are on something else (government disability?) Raising the age - yes - except most employers don't want to hire old people (over age 55 I'd say). That's a sad fact.

 

[Dawnlight]

My problem with raising the cap on what wages are taxed is, it's not fair--you can only collect a maximum amount from SS, based on your earnings that were taxed. So, someone who makes $112k a year gets the same SS check as someone who makes $112M. Now, one could argue that someone making millions shouldn't "need" SS. There's some merit to this, but--if they paid into it like everyone else, why should they not get a payout like everyone else? Why punish them for being successful?

.

People pay into many programs that they'll never qualify to get paid out from. Why should SS be any different than, say, food stamps or health care? Paying into the system doesn't equate to getting a return on an investment.

 

[Tinkerdreams]

There are many ways that SS could be improved. 1. You can force people to only begin their payout when they reach full retirement. As is stands, everyone can begin receiving SS at age 62 (albeit at a lower payout). 2. SS can do a means test for everyone that applies. Basically, the amount that you receive would be dependent on your assets at full retirement age. This concept was presented to us at our company 35 years ago.

Unfortunately, with the way the private sector is providing benefits, SS needs to be available since these companies have eliminated pensions and medical benefits after retirement.

However SS plays out, I do believe there will be a breaking point.

 

[mnrose]

I agree that raising the cap is not the answer. It has been calculated that it really won't make that huge of a difference in funds, either. Besides that, the government will only waste the excess, instead of making it available through payment increases. Also, the cap IS raised nearly every year. It's not fair to tax someone 6% on everything they make. Once people start making above that cap, I think they tend to agree. That is a LOT of money coming out of the check each pay period.

I think they should take disability out of the equation and pay that from a separate fund. Social security should be ONLY retirement insurance. If you are below the age to collect, you are on something else (government disability?) Raising the age - yes - except most employers don't want to hire old people (over age 55 I'd say). That's a sad fact.

We should restore the principal we've had for a LONG time that we tax 90% of income in the US for SS benefits (that is, 90% of all income is taxed). Right now, because we've raised the income cap VERY slowly, we tax 84% of all income. To reach the 90% level, we'd raise the cap from $115K to 180K (roughly).

Also, there is NO cap on the amount of income we tax for Medicare. Why is that acceptable (or is there some evidence that wealthy people have disproportionately more health problems?) and not for SS benefits.

The money to fund SS has to come from somewhere. There are two alternatives. Raise the rate on all of us, or apply the same tax level to everyone, regardless of income.

 

[mnrose]

There are many ways that SS could be improved. 1. You can force people to only begin their payout when they reach full retirement. As is stands, everyone can begin receiving SS at age 62 (albeit at a lower payout). 2. SS can do a means test for everyone that applies. Basically, the amount that you receive would be dependent on your assets at full retirement age. This concept was presented to us at our company 35 years ago.

Unfortunately, with the way the private sector is providing benefits, SS needs to be available since these companies have eliminated pensions and medical benefits after retirement.

However SS plays out, I do believe there will be a breaking point.

I understand this in concept. But, what this does is punish those of us who are savers (and not spenders) and gives the spenders the benefits we all paid for. I get that occasionally people are victims of circumstances beyond their control (such as unforeseen medical expenses, job loss, etc). However, it is also true that there are people who are flagrant spenders (new car every couple of years, buying more house than they can afford, taking vacations they can't afford because "you never know about tomorrow"----how often have we seen THAT attitude expressed here on the DIS, and on and on and on.

DH and I were aggressive savers. We drive our vehicles, on average 15+ years before getting a new one. We've lived in smaller, less extravagant homes than we could "afford." We take vacations which are less than we could "afford." Our entire house, save for one or two pieces, is furnished with things purchased second hand. So, yes, we have substantial retirement savings. Should I be "punished" for that and get less in SS? I have to admit this makes me very angry. I see out of control spending everywhere around me. And, those people get more in SS than me because they don't have a clue how to save or don't care?

Nope. That's why "means testing" won't work unless you also have a "means" to test whether the person doesn't have means because of things beyond their control or because they loved living high on the hog. The latter deserves nothing more than me, IMO.

 

[morgan98]

There are many ways that SS could be improved. 1. You can force people to only begin their payout when they reach full retirement. As is stands, everyone can begin receiving SS at age 62 (albeit at a lower payout). 2. SS can do a means test for everyone that applies. Basically, the amount that you receive would be dependent on your assets at full retirement age. This concept was presented to us at our company 35 years ago.

Unfortunately, with the way the private sector is providing benefits, SS needs to be available since these companies have eliminated pensions and medical benefits after retirement.

However SS plays out, I do believe there will be a breaking point.

I agree that delaying benefits is one step in the equation. However, I am not very comfortable about means testing. How exactly would we do that? I understand testing assets. However, you can have two families, each earning say $150k (two people with $75k/yr jobs for example). One family are savers and live below their means and manage to save a decent amount for retirement and the other spends every last dime. I am not very comfortable with the fact that those two families paid the same amount into social security, but the ones who tried to save and provide for themselves do not see a dime of the benefits they paid. This is the kind of situation I am not sure most people are going to be willing to stomach.

 

[mnrose]

People pay into many programs that they'll never qualify to get paid out from. Why should SS be any different than, say, food stamps or health care? Paying into the system doesn't equate to getting a return on an investment.

Except that's not the way SS was "sold" to the American people. There are definitely general societal obligations that are paid for by all of us...roads, air traffic control, ag subsidies, etc...but NONE of those programs were sold to us as "if you pay in, you will get it when you retire." SS is NOT an "entitlement" program (as SNAP is). SS is something we all (or nearly all of us) pay for on the promise that we will get benefits from it when we reach retirement age.

 

[mom2rtk]

One thing we know for sure. When they "fix" it, there will be some unhappy people. Just like when they "fixed" healthcare. That's what happens when you pick winners and losers.

 

[mnrose]

One thing we know for sure. When they "fix" it, there will be some unhappy people. Just like when they "fixed" healthcare. That's what happens when you pick winners and losers.

That's why "fixing it" should be done in as neutral a fashion as possible, such as gradually raising the age at which you can collect benefits and raising the income level at which the SS tax applies. Both are much more neutral than saying people who save get nothing but people who are spendthrifts get it all. What kind of message does THAT send about whether you should save on your own?

I'm all in on raising the age to at least 70. SS was meant for the last few years of your life, NOT nearly 1/3 of it. That alone would result in a substantial lengthening of the life of the fund. It would be phased in as the last increase was....my "collect age" is 67.5, rather than 65 (for "full benefits). Add another 2.5 years unto that current max and phase it in over the next 10 years.

 

[Tinkerdreams]

I agree with those that don't like the means test, I'm not crazy about that either, but the SS office came into our company and presented a few different "solutions" to resolve the upcoming crisis. That one happened to be the one they were pushing.

I do believe that the first one I mentioned in my post is the most beneficial to everyone. If the government raises the retirement age AND adjusts when someone can receive their full retirement benefit and lock it in, then you would have a population of people working to support the fund until they could take it and not give them options on when they could take it.

 

[mefordis]

We should restore the principal we've had for a LONG time that we tax 90% of income in the US for SS benefits (that is, 90% of all income is taxed). Right now, because we've raised the income cap VERY slowly, we tax 84% of all income. To reach the 90% level, we'd raise the cap from $115K to 180K (roughly).

Also, there is NO cap on the amount of income we tax for Medicare. Why is that acceptable (or is there some evidence that wealthy people have disproportionately more health problems?) and not for SS benefits.

The money to fund SS has to come from somewhere. There are two alternatives. Raise the rate on all of us, or apply the same tax level to everyone, regardless of income.

This will never happen. It would have been done by now. The reason? All members of Congress pay Social Security taxes in the same amounts as they would if they were employed in the private sector at the same salary level. They do not want to see a loss of thousands of dollars per year household income, which would happen if the cap were lifted. Influential constituents would not wish for that either. Notice how presidential candidates never talk about doing this (except for one candidate who doesn't have a chance against his opponent).

It is fair to have that cap in place because it is there for everyone. Like I posted, once people start making over the cap they realize how significant that % is. I mean, already a person making 150k pays $7080 per year Fica tax. A person making 80k per year only pays $4800. They will both most likely collect the same paltry sum upon retirement. How much more unfair do you want this to be?

 

[georgina]

I don't think of SS as 'paltry' at all. My DH has never made anywhere near the cap, but he is planning to wait until age 70 to collect and will get about $3000 a month! Plus I think I will be eligible for half that in addition. That's is a substantial amount of money to us.

 

[mnrose]

This will never happen. It would have been done by now. The reason? All members of Congress pay Social Security taxes in the same amounts as they would if they were employed in the private sector at the same salary level. They do not want to see a loss of thousands of dollars per year household income, which would happen if the cap were lifted. Influential constituents would not wish for that either. Notice how presidential candidates never talk about doing this (except for one candidate who doesn't have a chance against his opponent).

It is fair to have that cap in place because it is there for everyone. Like I posted, once people start making over the cap they realize how significant that % is. I mean, already a person making 150k pays $7080 per year Fica tax. A person making 80k per year only pays $4800. They will both most likely collect the same paltry sum upon retirement. How much more unfair do you want this to be?

That's one way of looking at it. Here's the other. The person making 80K pays only 2080 dollars less than the person making nearly twice as much. Percentage wise, the person making 150K pays 4.7% of their income, while the person making 80K pays 6%. A person making 1000000 a year pays less than 1% of their income. That's not "fair" either. What you pay into SS has never borne a direct relationship to how much you collect, for a whole variety of reasons. The only concept SS has was that "if" you pay in, you will collect out.

 

[mefordis]

I don't think of SS as 'paltry' at all. My DH has never made anywhere near the cap, but he is planning to wait until age 70 to collect and will get about $3000 a month! Plus I think I will be eligible for half that in addition. That's is a substantial amount of money to us.

That is quite a bit. Just curious, (if you don't mind answering) why would you only qualify for half? Did you quit work to stay home with your kids? That's what I did and even though I worked since I was 14 and contributed quite a bit for 20+ years before quitting work, I wonder what I'd collect if I stayed out of the workforce.

 

[georgina]

Exactly. SAHM.

 

[mefordis]

That's one way of looking at it. Here's the other. The person making 80K pays only 2080 dollars less than the person making nearly twice as much. Percentage wise, the person making 150K pays 4.7% of their income, while the person making 80K pays 6%. A person making 1000000 a year pays less than 1% of their income. That's not "fair" either. What you pay into SS has never borne a direct relationship to how much you collect, for a whole variety of reasons. The only concept SS has was that "if" you pay in, you will collect out.

It is fair because the cap is there for everyone and everyone has the chance to increase their income to exceed that cap. Hopefully that 80k salary will increase over the years for that person. To me fair means presenting the same opportunity or rules for everyone.

 

[morgan98]

That is quite a bit. Just curious, (if you don't mind answering) why would you only qualify for half? Did you quit work to stay home with your kids? That's what I did and even though I worked since I was 14 and contributed quite a bit for 20+ years before quitting work, I wonder what I'd collect if I stayed out of the workforce.

I believe this is how the spousal benefit works. You would collect the higher of your own benefit (calculated on your earnings) or half of your spouse's.

At the risk of getting flamed, I am not going to voice another opinion that I have. I believe the spousal benefit is fair in the case of one of the spouses dying. This would probably help to ensure the surviving spouse is not receiving a tiny benefit. However, this is the 21st century and I think a spouse who has not been in the workforce getting to collect another 50% of the working spouse's benefit is part of what is draining the system. In my opinion, not paying into social security is one of the results of leaving the workforce. If one has not been paying in, I am not sure it is fair to double dip at the time of collection.

 

[Pea-n-Me]

The problem is it doesn't work and hasn't in years. People ned to look ahead.

I don't know that that's true. It does work for a lot of people. Without it, many who are in retirement now might have no income at all. I think there are definitely things that could be fixed and improved, though.

Not everyone's job pays into social security- I have worked steady on the books for 30+ years and in my lifetime I have only paid in about 140.00 into social security. Instead I pay into railroad retirement which you pay more into but it also pays me more and I start to collect it at 60 years old.

Yes, people like you, and many teachers, are taken out of the equation. You don't pay in, but you don't take out.

Social Security was never meant to fund a persons entire retirement, it was more like just an extra to help you out a bit.

Back in 1935, times were different and life expectancies were lower than they are today. Social Security, in its most basic form, was meant to be a system that people paid into that would help give them "security" when they could no longer work. How we think of that today has changed somewhat, as our world has changed. But here's what SS pioneer - then Secretary of Labor and chairwoman of the President's Committee on Economic Security, Frances Perkins - had to say about it in 1960, on the 25th anniversary of the SS Act.

https://www.ssa.gov/history/perkins6.html

"But this was a different summer and I shouldn't talk more about the past because no one likes to hear the reminiscences of those who may be incorrect in a part of their reminiscence. But the summer was so different. I wish I could make it clear to you. In the first place it was hot, really hot. If any of you have looked at the newspaper pictures of the Congress assembled in that long, hot period, because they didn't adjourn and didn't adjourn -- it was still in session in August -- have looked at the pictures of the ceremony ofsigning the bill in President Roosevelt's office, have looked at the bedraggled state of the hair and the clothes of the people who were present, will realize it was a terrifically hot Washington summer and we worked all through that terrifically hot summer. Then again there was another difference. We were not yet out of the woods of the Great Depression and, of course, it was the Great Depression which we must never forget in this country, which was the approximate cause of this movement which was launched at that time -- this movement to write under the lives of the American people a basis of security which came to them out of the orderly and substantial, and regular, contributions to their future and to the future hazards. It would not have been done in that year, I am sure, except for the fact that the Great Depression was still staring us in the face and we were conscious of it whenever we walked on the streets of Washington. These were the different days. Today this is a very different world. You even have air conditioning, which we never heard of, you know. There wasn't an air conditioned spot in Washington in '34 and '35 and, as for how we were going to keep the records, you know, of the social security program once it was launched, was one of the great problems. The IBM hadn't been invented, the machines you all operate so easily. And I want you to realize that it took some courage, Mr. Secretary, to launch the program without the IBM machines. I would like to add that under any circumstances I was always a bit nervous about it, and I remember the day that Arthur Altmeyer, who was then First Assistant Secretary of Labor, walked into my office and said, "You know I think we found it." Because he had been talking about, you know, handwritten pieces of records and how they were to be organized and stacked up, "I think we've found it. These new IBM machines, I believe they can do it." And so out of that really inventive group, that worked in the IBM research group we found a way by which this could be done.

So I think in every step as the social security program has progressed from year to year, and year to year, and in the attitude of the people themselves toward the payment of the tax there has come the answers to many of the questions that we knew not how to solve when we began, but which we were determined we had to solve and I am thankful to say that I believe we did solve them. And I learned from your own speech, Mr. Secretary, that you too believe that problem has been solved and that we will go forward into the future a stronger nation because of the fact that we have this basic rock of security under all of our people."

Frances Perkins: https://www.ssa.gov/history/fperkins.html