Social Security - a ticking timb bomb?

[raycarey]

here we go

Social Security Commissioner Michael Astrue said the agency is bracing for some 80 million Americans to apply for retirement benefits over the next two decades.

"We are already feeling enormous pressure from baby boomers being in their peak disability years and now we're preparing for so many of them to file for retirement," Astrue said at a press conference

First U.S. baby boomer applies for Social Security | Reuters

i would hope that means testing is on the horizon.

[Norton]

Social Security. The boogie man in the closet. The money it's going to take or the changes needed to the system are so politically charged not a single politician would dare to suggest a cure. Lest we forget the last that tried, Barry Goldwater. The current finger in the dike approach seems to be to gradually raise the age of eligibility hoping the problem will magically go away. Ignoring and not acknowledging a huge problem is a proven political ploy. Works well in Thailand.

[Texpat]

^They're going to have to ratchet up the age one year annually now as boomers go for the easy life. That'll go over well.

[Norton]

They're going to have to ratchet up the age one year annually now as boomers go for the easy life. That'll go over well.

The ole carrot and stick approach on the donkey.

[raycarey]

if mccain wins, he'll likely be a one term president.

here's hoping that he would have the stones to tell those 50 and under that the rules have changed.
you've got to work longer to get the check, and you're also going to be means tested.

[Norton]

here's hoping that he would have the stones to tell those 50 and under that the rules have changed.

He may well be the only one who will but if he's smart he will wait until he is elected. Speaking his mind and pushing against the political tide is one of his strengths IMO.

[Norton]

you're also going to be means tested.

Ross Perot suggested this for OASDI. Not very well accepted. All in all seems to me a good way of adjusting payments to align with individual need. Does have the effect of becoming a "welfare" fund for those who have earned enough to do so but failed to properly plan retirement. SSI another large expenditure does require a means test.

[stroller]

All in all seems to me a good way of adjusting payments to align with individual need. Does have the effect of becoming a "welfare" fund for those who have earned enough to do so but failed to properly plan retirement. SSI another large expenditure does require a means test.

I would have thought live-long pension payments amount to a calculated entitlement, not a means adjusted handout - a very odd proposal, I suspect this would be unlawful.

[Norton]

I would have thought live-long pension payments amount to a calculated entitlement, not a means adjusted handout - a very odd proposal, I suspect this would be unlawful.

Yes, retirement benefits are currently calculated on money paid into the system to determine monthly benefit. No matter how much is paid in there is a set maximum benefit for all which is in the neighborhood of 1700/month currently. Most people pay far more into the system than they will ever get back in return.

Legality of the whole SS system has been tested in the Supreme Court and found to be constitutional. Current law requires all to pay into the system so no one can opt out if they prefer their own retirement fund. I think the means test would stand as legal because currently medical benefits are based on means. IMO it may be "legal" but this is a travesty. People with moderate savings end up spending it all on medical care and then once penniless the government starts to pick up the tab. To avoid this many seniors, give their money to children to avoid having to deplete all their savings if they fall ill. The government has imposed limits on how much can be given to prevent this from happening. All of these measures are "legal"!!

[chinthee]

^Norton, aren't retired people getting social security benefits also prohibited from working, more than a few part time hours at the risk of losing their pension?

[Norton]

Norton, aren't retired people getting social security benefits also prohibited from working, more than a few part time hours at the risk of losing their pension?

Yep. Retirement benefits can be prorated (decreased) on income earned if you are still working. This of course disincentive's seniors from working especially at low paying jobs.

[Bugs]

All in all seems to me a good way of adjusting payments to align with individual need. Does have the effect of becoming a "welfare" fund for those who have earned enough to do so but failed to properly plan retirement. SSI another large expenditure does require a means test.

I have a big problem with means testing for SS, and not because it would reduce or eliminate benefits for the top tier. The problem with means testing IMHO is the middle class folks that do plan and save for retirement. They in essence will be punished for saving, punished for forgoing a better lifestyle in their younger years to save for retirement.

Raise the age and lower the benefits for all (except those that are already drawing). Also increase the income level at which one stops having to pay into SS tax, leave a window where one does not have to pay, and then re-impose the tax on income over say $300K or so.

I also think they need to take a real look at what is considered income - to many of the top shelf getting benefits that are not taxed fairly IMHO. Right now not a real issue when if comes to SS tax but if as I suggested above the tax is re-imposed on pay above $300K then it will matter.

[Norton]

^^Good points. The debate around SS would make for a good thread. Perhaps comments re SS should be split into a new OP so this one can remain on subject.

Mods?

[Bugs]

^^Good points. The debate around SS would make for a good thread. Perhaps comments re SS should be split into a new OP so this one can remain on subject.

Mods?

I think this is a SS thread out thier somewhere already.

[Norton]

^^There is now. Thanks to mods.

[raycarey]

kudos to the author of the title of this split thread.

[chinthee]

^My gift to you Ray.

[barbaro]

There is a thread on Social Security. Not to spite the OP, but I'll bump just so folks can look at some of the posts and statistics in it.

SS is a train crash. When I return to the US, I'll pay into it, because by law, I'll have to. I'll take it with a smile.

The Social Security problem is basically mathematical.

[chinthee]

Milky, is that older thread relevant to this discussion? Should they be merged?

[barbaro]

Milky, is that older thread relevant to this discussion? Should they be merged?

Sounds like merging is a good idea.

[Texpat]

Current law requires all to pay into the system so no one can opt out if they prefer their own retirement fund.

Not quite.

My father worked (legally) in the States for 35+ years. He never paid a dime into social security. He retired about 10 years ago with a fantastic pension, but gets no social security.

Railroad Retirement.

They don't play that game, homey.

[barbaro]

Current law requires all to pay into the system so no one can opt out if they prefer their own retirement fund.

Not quite.

My father worked (legally) in the States for 35+ years. He never paid a dime into social security. He retired about 10 years ago with a fantastic pension, but gets no social security.

Railroad Retirement.

They don't play that game, homey.

How was this so, Texpat.

Once you have an SS number YOU HAVE TO pay into SS.

You do not have to get an SS number by law, but once you have one, you have to pay in.

[chinthee]

^I can tell you that even as a self-employed person, or person working for foreign companies, you do have to pay into SS. There is no getting away from it for any US citizen, no matter where you are in the world.

[Texpat]

Dunno MM, but he never paid and gets nothing from SS.

He gloats about not being part of the system every time I see him.

Google railroad retirement.

[barbaro]

^I can tell you that even as a self-employed person, or person working for foreign companies, you do have to pay into SS. There is not getting away from it.

Correct. It's the law. You have to pay in, if you have an SS number.

What really hurts, is the small business owners. If someone is self-employed they have to pay the full amount. This would about 6.4% + 6.4%, which is 12.8%

This is really a bad deal.