Social Security—keeping it afloat
Aug 27 2008
Unlike the debate on the cause of global warming, I think most folks believe the reports that Social Security will be in Hurtsville in the next few decades. Too much outflow and not enough inflow.
So the question on the Hill is how do we keep the program afloat and prevent the villagers from attacking the Capitol with pitch forks and torches? I don’t know about you but paying more for the program in taxes is not appealing to me. That said, the program has to get leaner and more focused. Well you know what they say about people and opinions, so here goes…
Have you heard young people talk about Social Security? They doubt the program will be around for them. As a result, they are planning as though the burden of their retirement is all on them since they can’t count on the government. Whoa, people whose entitlement mentality hasn’t taken hold, yet. This cultural shift among young people is our ticket out of the pickle we’re in. We should start an evolutionary (long, slow, weaning process of incremental reforms) plan now to reform the program for people coming into Social Security 25 to 40 years down the road. How about…
§ Automatic gradual increases in the Full Retirement Age related to the mortality age over time. Like a COLA increases your Social Security and military retirement pay, a mortality adjustment each year would increase the Social Security full retirement age. If not automatic, at the very least, Congressionally mandated increases to the full retirement age based on mortality tables every 5 or 10 years. As we live longer and longer, the goal of retiring at age 62 – 67 becomes a greater luxury of early retirement and that luxury shouldn’t be a requirement placed on the government (us taxpayers).
§ No Social Security retirement benefit for people over a certain income level. Practically speaking, after a point, the greater your income in retirement, the less Social Security means to your retirement lifestyle. At some point, why can’t we just say you don’t meet the requirements for the benefit? Your contributions will support all the folks who worked the jobs that didn’t offer them the opportunity (in pay and benefits) to retire as comfortably. How do we decide who gets and who doesn’t? Tough question. Maybe indexed to your county’s medium income levels. Say, if your income is more than twice (three times?) the county’s medium income, you are ineligible for Social Security retirement benefits.
§ No more early retirement option and no more stepped-up retirement benefits after the full retirement age. Everyone has to wait until full retirement age to apply. Everyone gets a set amount at full retirement age. You can apply at or after full retirement age but the amount is the same. The COLA still applies.
§ Start aggressive financial education in schools to plant the seed that Social Security retirement benefits are no longer an entitlement for all. Teach kids the importance of taking care of themselves in their futures and how to do it.
Obviously there are loads of pros and cons to these ideas. Some of these ideas go against principles I believe in. However, tough action is necessary and some of us will have to buck up if others are to have the safety net. Otherwise, just turn your income over to the government and get in line to have the government give it back at the rate it thinks you have earned. I just felt a shiver down my back even thinking that thought. Here are some ideas to start Social Security reforms. What are your ideas?
Maybe disability should be removed from Social Security Funds. I see a lot of ads on TV by lawyers stating they can get you Social Security disability and I recall reading somewhere that the SS disability rolls were in the millions. These payments are made regardless of age.
It would be difficult to tell someone who paid into the system all their working years that they made too much money to qualify for SS retirement.
Needs testing is a horrible idea. It would lead to those who pay in the most getting the least or, in your case, zero. Not a fair approach. According to the IRS, the top 5% of families in income are already paying 80% of all Federal personal income taxes collected. How much more do you think should be taken from them? What ever happened to the concept of equal treatment under the law?
I’m fine with your other ideas. But you only covered the retirement benefits part of the Social Security program. I believe I’ve read that the other parts of the program actually pay out more than the retirement payments each year. In any case, one needs to look at the whole program for savings.
When are the politicians going to admit that they caused the problem with Social Security beginning in 1965 when they moved social security surplus to the general fund and have been milking it ever since. Enough of the smoke screen.
The brain trust should also consider that they have made a contract with those serving now and ensure that they “grandfather” all agreements. Let’s also make sure that we don’t have another Supreme Court decision that Congress did not have the authority to promise something like our medical care for life. Then, they can play around and experiment to see if they can get enough recruits to buy into their program.
Former president Bill Clinton laid out three options for fixing the SS program funding problem: raise taxes, cut benefits, or privately invest.
One obvious reform that has been avoided for many years (politically seen as a horrific tax increase) is to do away with the maximum income against which the Social Security tax is charged. The current SS tax structure is summed up as 6.2% on earnings up to $102,000 (from ssa.gov website). If the ceiling were removed, it would have no effect whatsoever on the majority of the population that have an income < 100K. From those top income earners such as sports professionals, screen actors, corporate top management that earn 100K in a month or less, it would generate much needed revenue, and be very equitable (IMHO) in the process. For example, someone earning $1 Million in 2008 would pay a maximum SS tax of $6324. If the ceiling were removed, they would pay $62,000–quite a difference for our depleted coffers, but maybe not even noticable at their stratospheric income levels.
Categories and numbers of SS beneficiaries have swollen over the years due to legislative and executive actions designed to extend a financial “safety net” to protect individuals seen as needing protection due to various disabilities, disadvantages, or calamities. Paring these categories back will be seen as draconian, but is necessary if we want the SS system to survive long enough to pay the current generation of wage earners back what they have put in.
Permitting private investment (personal retirement savings accounts) has significant potential, but has also been politically polarizing since it is seen as taking money away from the generation of workers that have paid in for many years and are now receiving SS payouts.
Another change that needs to be made is to set Social Security back up the way it was originally, as a trust fund. Funds in SS should be untouchable except to SS recipients regardless of other National priorities. Reading on this subject indicates that the “trust-fund” (accumulated money) was quietly ransacked by Congress as a convenient way to reduce budget deficits and help pay for the unpopular Vietnam War. The current “trust fund” is only an accounting artifact and does not represent a real fund with any real money in it. It contains only government IOUs to itself. SS functions as a pay-as-you-go arrangement where the current year of taxpayers fund the current year of recipients with their tax dollars. This arrangement is forecast (due to baby-boomer vs. current worker numbers) to become imperilled in 2018 and broken/bankrupt in 2042. (reference “http://www.heritage.org/Research/SocialSecurity/em940.cfm” )
This is a bit off the cuff. Just some quick thoughts. Thirty-five years ago, when I was young I didn’t think SS would be around either, but it is. First thing we can do is to stop adding things to the program. I can accept one age for full retirement but put it back to 65. Our longivity is largely the result of the decline in death of children. Not that many more people are living longer, some -yes, but not all that many. And, not the same amount for everyone. If I put in more, I should get more. If Needs Testing is to go forth, then those that will not qualify should be allowed to drop out at a certain point where they can be fairly sure they won’t need it. Something in the age of 50 to 60. Disability covers a lot of ground. I know a 53 year old on disability. He cannot stand on his feet or walk for long period, but there are plenty of other things he could do, but he might need help getting a decent job. On the other hand, someone wheelchair bound with severe limits should have some help. Presently we have SS offices automatically turning down 85 % of claims forcing peple to the lawyers and taking years to receive their payments. An overhaul is needed, but maybe tweeking using some unorthodox ideas would work.
What began as a retirement supplement changed over the years to a welfare program. It was never intended to be for disability, spouse, children…etc. It was to be for the worker, the person that put money in….. not all those other people. If it stays the same as it is now, you are right. It has to change. How come, no one suggests that we go back to the roots? A retirement program….not THE retirement program but A retirement program to be added to an individuals retirement PLAN.
Social Security, the name says it all! We do need to consider many changes to ensure Social Security is still around when it is needed. In addition to the obvious, if you already get retirement to ensure you are secure in the basic needs, your benfit should be cut. I feel the argument that I paid in so all that is mine is both greedy and not showing any evidence of an understanding of the costs of Social Security that outpace any money paid in. Please note: If we had a Social Security system that did not allow spending the Social Security taxes as if they were the general fund (IOUs) by our two political parties then the Social Security fund could be more fat with cash and long term investments, just like it is with the Norway Sovereign Wealth Fund approach. Social Security should be off the books and not counted when the federal budget deficient is determined.
I think that anyone,no matter their financial status,should at least recapture the money that they paid into the program.That being said, I propose first, a “lock box” so there is actual money in the system instead of “IOUs” that Congress has put in SS while wasting the money on “pork”.Second, eliminate all of the non-contributers from the program-ie- illegals.Third, either make SS totally mandatory ie-Congress,teachers etc.; or voluntary with gates at certain stages of the work life-maybe every ten years-to let people opt out or into the system.Fourth, eliminate taxing SS or raising the income levels where the taxes kick in.Once all of these things are accomplished and SS is on a firm financial level, the other suggestions can be addressed such as age requirements to collect,disability and lump sum payments.
One clarification is in order. It’s a common misconception that Congress has exepmted themselves from Social Security taxes. Although that once was the case, it is no longer. Congressmen and Senators under the old Civil Service Retirement System (CSRS) did not contribute to the SS fund. Neither did other civil servants; the military didn’t contribute until 1957. Since 1984 however Congress is covered by the newer Federal Employee Retirement System (FERS) any fully participates in the system. They pay Social Security taxes and are eligible to collect benefits when the retire or are disabled. There are still Senators and Congressmen who are still covered by CSRS and exempt from SS taxes, but only those who began surving before 1984. Anyone elected for a first tem since then is under FERS.
There are other groups who do not pay into the system; some state and local government employees and some teachers retirement systems are still exempt. However, those groups can not collect SS benefits, or if they do, through other covered employment, their benefits are reduced significantly. I can’t comment about illegals, but unless they’re paid “under the table”, they are taxed as well.
I know that this has been a concern for a long time now and that various elected officials have made efforts to improve the program and its processes. I also know that the program was established as a retirement system for the majority of our citizens (contrary to what is now stated by officials and experts alike). I am in favor of utilizing the funds provided by our citizens for the SS program and not into the general fund, this in and of its self will greatly aid in the continued existance of this program for the future. I am also in a bit of anger to find that non-citizens are provided one dimes worth of SS funds when they in no way shape or form are entilted to this benift that comes with citizenship, citizenship that you or I have to work and invest a specific number of quarters into to become eligable to earn at retirement age. What I am not inclined to support is for my and the millions of other americans to have our investment go to those who simply fail to plan at retirement age leaving us without our entitlement because we did plan. In a nut shell use the SS program for what it was and is intended for, don’t provide benifits to non-citizens and take it back from the general fund and we would all be amazed at how fast it can become the program for america that it was intended to be.
Too complicated but it makes me angry when we are paying
Social Security to foreigners who worked in the US. Example
of a Polish man who worked in Chicago. He divorced, moved
to Germany and remarried a Polish lady. Because Germany has reciprosity with the USA, he, and his new lady, receive monthly payments. His wife while he was working could also receive money if she moved here.
I read the previous comments and think that many of them have at least some merit and should be given serious consideration. However, there is one proposal that will not work: phasing out Social Security and educating people to save and plan for their own retirement. In my 20 years as an income tax preparer I have seen many lower income people who just do not have the income to save for retirement. I was amazed at the number of people who live strictly paycheck to paycheck and borrow from quick loan companies at ridiculous interest rates and charges to meet any emergencies. Others have no concept of the time value of money and will spend every nickel as soon as they receive it. Therefore, if you told people they had to save for their own retirement in about 20 years you would have a large population of homeless old people begging on the streets. Since we are a compassionate society we would never allow that to happen and would have to fund a giant welfare program out of our tax dollars. Social Security needs revision, but it does serve a useful purpose as a welfare program.
Since we, and I mean all of us, paid an extra amount of money into the system to prepare for the so called “baby boomer” retirement glut and since Congress saw fit to give those that didn’t pay so much into the system such great benefits and also saw fit to pump so much of the Social Security Trust Fund into the General Fund, and I don’t want to hear the old song about the Democrats, I think the present Congress needs to find a way to pump those funds back into the Social Security Trust Fund. When I would salute the offgoing Officer of the Deck and tell him “I have the Deck” it didn’t matter what was wrong or right about the ship it was my responsibility period and this Congress needs to take that responsibility as well. Quit the whining and do something about it. The American people are going to complain about the solution no matter what the solution is and they always will, it’s in our nature. Social Security is the only retirement that most Americans have or ever will have and we can’t abandon it period. The vast majority of people wouldn’t know how to invest a dollar if they had to and we shouldn’t expect them to. Is that socialism? Who gives a rats ass. If we can’t take care of the least of these as someone once said we don’t amount to a whole lot to start with.