Oh the horror in France, such cruelty, such suffering (btw, many thanks to Taft RIP and Hartley RIP)

Politics
21

Thank you for posting this…

Too many people,many in decision making positions…seem to not get this.

22

If a person works 47 years (age 18 to age 66) and lives to age 70 he will have a higher standard of living than a person who works 1 year and lives to 100

It is easy to see therefore that as life expectancy increases, the portion of income saved and not spent needs to increase (or there will be trouble.) The chart below shows that did not happen in France. As # of years spent in retirement tripled, savings did not triple

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France, like most countries now faces a tough choice.

  • retirement age must move up, and/or
  • folks on the bottom, (which includes retirees) will have less and less.

Which one do you recommend?

23

#1 I don’t see in that chart that years spent in retirement tripled. So in the past someone retiring at 22 and living to 72 (10 years) is now retiring at 62 and living to 92 (10 * 3 = 30 years)? Not buying it.

#2 I can’t speak to what the French should do. Here in the US, SS FRA (Full Retirement Age) is 67 not 62 and if nothing is done to change the formula, then in 2035 the SS Trust Fund (as per the 2022 Trustee report) will be depleted and benefits reduced by 23% so that benefits match revenues.

So what would I do?

Continue to recognize that SS is only part of an overall retirement plan. But recognize that 67 is about as high as many can continue to work. We already see disability claims rise by age cohort and savings from raising the FRA of SS will produce some savings eventually. However the impact will be lessened because some of those savings in SS Retirement, will be consumed by increases in SS Disability as people are unable to work.

I’ve come to believe that we need a re-evaluation of SS Taxes in general. The workforce and economy are very different than they were in 1935 when the system was created. Now I’m leaning more toward, making SS Tax applicable to all income the same way it is determined for Income Tax (wage, interest, dividends, short term stock commodities, and long term capital gains) as a new revenue source. As such:

  • Current SS tax of 12.4% would remain (6.2% by the EE and 6.2% by the ER).
  • Non-wage income would be taxed at a rate equal to 25% of the total FICA rate or another way to say it as 1/2 of the individual EE rate. That would currently be 3.1%.
  • Financial institutions would be required to collect the 3.1% at the time of posting, just like employers (ERs) collect it at the time of payment.
  • Because the non-wage rate is 25% of the wage rate (3.1% compared to the FICA total of 12.4%), then 25% of non-wage income would be credited to SS Income for that year.
  • Current cap of 160K on wage income could remain the same.
  • A cap of 160K would also apply to non-wage income.
  • The sum of the wage credit and non-wage credit is posted as the total SS Income for the year which is then used to determine SS benefit amounts.

Example:
A high wage earner make $300K in wages, taxes are collected on wages up to $160K for a total of $19,840 in wage tax. Applicable income credited for the year for future benefits calculations is $160K. If the same person has in additional $100K of passive investment income, the SS Tax would be $3,100 at 3.1%. Total SS Taxes would then be $22,940. 25% of the $100K passive income would be credited to SS Income for the year equaling $25K since the tax rate is 25% of the full FICA rate. So the individuals total SS Income credited for the year would be $160 + $25K = $185K.

Lower income people won’t be impacted much, since let’s be honest they aren’t going to have much non-wage income to begin with. As incomes increase the impact will be higher and to compensate for that SS Annual Incomes will be increased proportionally, meaning a more favorable benefit calculation.

You asked, and that’s about the best I can do. (Again, I’m not trying to fix France, I’m talking here.)

WW

24

You are correct my chart does not indicate time in retirement tripled. I trust(ed)you know it has more than tripled.

Here in the US, among the biggest shifts in the long-term economic picture since 1970 have been

  • Average hours worked per week has declined by 7% (from 40 hours to just over 35)
  • Workers have responded by decreasing savings almost dollar-for-dollar
  • Workers feel they can no longer afford things people used to save money for (retirement, medical expenses, and college)
    .
    image
25

Businesses cut hours.

Worker savings decrease because they make less money.

Workers feel they can’t afford the same things with less money.
.
.
.
.
Hmmm… That’s amazing.

WW
(Not being nasty, more like humor.)

WW

2 Likes
26

What a stupid post.

1 Like
27

It’s Le Stupid

28

Well in fairness he said he was being humorous.

I know that when I was a HS kid in the 80s it was not unusual for the push for a 35-hour work week to come from labor.

But I can come up with other anecdotes that blame employers, so I cannot say for sure why weekly hours dropped.

What we do know is that the following is true