You knew it was coming: Social Security to tap into trust fund for first time in 36 years


#1

Baby Boomers retiring.
Can kicked and kicked down the road.
“THAT DAY” is here.


#2

Ayup.

It’s not like we didn’t know.

source


#3

Trustees report warns Medicare finances worsening.


#4

They need to cut baby boomer benefits yesterday.


#5

Hmm, won’t the Republican tax cuts pay for this? :thinking:


#6

I don’t recall hearing that the Republicans cut FICA taxes. Why the idiotic sarcasm? Nothing intelligent to say?


#7

For decades the Federal Reserve Board has been artificially lowering “market” interest rates. (Called such things as “quantitative easing,” “expanding the Fed’s balance sheet,” “monetizing the debt,” and “stimulating the economy.”)

Perhaps worse, according to the SS Trustees, the “special series” of bonds the SS trust fund is “invested in” pay rates that are below market.

interestRates

Double Whammy!
The Fed Reserve lowers market rates,
then Congress won’t allow the Trust Fund to be paid even that artificially lowered rate.

SEE:
https://www.ssa.gov/oact/progdata/intRates.html


#8

Here are my idea’s:

  1. Adjust the wage max to $250,000 (IE fdic limit – sounds reasonable). The amount subject to fica tax is adjusted every 10 years with the census on a set formula.

  2. Once you start on social security, set the work limit a little higher (say 24,000/year = a job about $12/hour and making 2 grand a month) Every 2 dollars a month over you lose 1 dollar in bennefits. This will continue indefinitly (as compared to now where when you reach a set age you can work as much as you want and don’t get pennalized).

  3. Insurance companies can not kick you off your insurance plan when you reach retirment age and make you go onto medicare/medicaid (whatever). If you can still afford the premiums, then you can and will be expected to stay with private insurance.

  4. At some point in the future when it becomes necessary, ss payments for retirement will become means tested. it will become an insurance policy as it was intended to be.


#9

I’ve frequently read thst SS has had a limited form of means testing built into it since inception. Only the first $127,500 of one’s annual income is subject to FICA taxes, and the benefits calculation also tops out at the same level.

Apparently, when you do the math, lower and middle income earners get back more on what they paid in than high income earners do.

Below is one of many sites making that claim:


#10

The gist from that website is as follows:

First, the program’s benefit formula favors lower-wage workers. Benefit amounts are based on the lifetime earnings history. The first dollars of a worker’s wages are replaced at a 90 percent rate. Earnings in a second bracket (mechanically like an income-tax-rate bracket) are replaced at a 32 percent rate. And any earnings above that level are replaced at only a 15 percent rate. Thus, although higher-wage workers receive more dollars in absolute terms, they receive less back in Social Security benefits per dollar of tax paid over their lifetimes. At the extremes, the difference in the implicit rate of return on those contributions is enormous.

The second key program feature is that a fraction of Social Security benefits can be subject to income taxation, on a progressive basis – and then the income tax that applies to those included benefits itself is progressive. Once a beneficiary’s total income (including half of Social Security benefits) exceeds $25,000 ($32,000 for a married couple), the first dollar of benefits begins to be taxable, up to inclusion of one-half of benefits. And once income (including half of Social Security benefits) exceeds $34,000 ($44,000 for a married couple) the portion of benefits included in taxable income begins to rise further, up to a maximum inclusion of 85 percent of benefits. This provision is designed to have no effect on the low-income elderly, while gradually increasing its impact as total incomes rise.


#11

Note the following from the SS Trustees:

Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits.

Hmm, 2035 is a long long way off. No need to worry now.

https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html


#12

image


#13

Hmm FICA Taxes are 6.2% employee and 6.2% employer . . . . 12.4% total.

The estimated shortfall (17 years away) is 25% of that.

IOW all we need to do to save Social Security is redirect 3.1% of the economy toward saving it.


#14

I’m gonna predict something here and now, two things actually.

  1. Personal savings will not make up the shortfall.
    -and-
  2. Any attempt to grow the economy by reducing savings and increasing demand (i.e. Keynesian policy) will fail. That well has run dry.


#15

Neither party will deal with this. Any politician who brings it up will be demagogued as throwing grandma off the cliff, as Paul Ryan was.

Meanwhile, the big stories of the past few days have been Roseanne, Sam Bee, and the Eagles.


#16

The 2030’s will be a very important decade for many reasons. It’s gonna be a ride! lol


#17

Baby Boomers like my dad and mom have been trying to kill Social Security since they were in their 30’s (now 60’s). They have succeeded. I can’t figure them out. They’re not rich, and complain about how little they get from it. They voted for this…


#18

Inevitable


#19

There has never been a trust fund. Since the first day all extra money was turned over to Congress and promptly spent.

In early debates they considered investing them money but instead decided to spend it. In fact, it was just another revenue stream with a pretext as a disguise.

As for the bonds issued, the same entity cannot both own a bond and owe the debt for it. All that Social Security ever was was unsecured promises to repay at the expense of others. Had it not been for keeping double books, pretending to have an asset in one hand while it is actually offset by a corresponding liability in the other, a practice that might get you put in jail if you tried it, people wouldn’t have been so easily lied to.

But FDR was a progressive, so lies and deceptions are to be expected. His biggest lie was made in taking his oath of office as he had no intention to uphold the Constitution and when he subsequently cast it aside he was just doing as progressives had long wanted to do.


#20

If one believed all the conspiracy theorists this could have been on everything from coast to coast underground highways and high speed rail to secret bases on the moon or mars.

Which is absurd!

It was all used to buy porn…