Will the day come when if your 401K is too valuable, you lose Social Security?

[KansasVoter]

Will it get so bad that if your 401K is over a million you lose SS?

If SS goes broke I guarantee that idea will be floated.

Could get interesting.

[girl gone mad]

1. SS can't "go broke".

It doesn't work like that.

[KansasVoter]

4. If they keep borrowing from it it can. Look it up!

[Hannah Bell]

7. no, it can't. there's nothing to look up.

[KansasVoter]

9. LOL....you are full of information.

[Hannah Bell]

21. you've provided none yourself, plus you called me an "idiot" without any provocation

whatsoever.

anyone who's been here for a while knows my posts on social security.

i'm not replying to you, because you've already played the name-calling card. i'm replying to any posters who may be lurking.

i refer them to the 2009 trustees' report. the trustees' reports are very conservative, & have have actually underestimated SS finances on average since the 90s.

the trustees' reports are the source of *all* information on SS in the media; selectively reported by the wreckers.

On May 12, the Social Security Board of Trustees issued the 69th annual report on the program’s financial and actuarial status.<1> The trustees’ report shows some deterioration in the program’s long-run outlook, a finding that was widely expected (because we're in a major recession).

Nevertheless, the report does not depict a program in crisis. Policymakers should act sooner rather than later to put the program on a sound long-run footing, but today’s beneficiaries and workers approaching retirement need not fear that their Social Security benefits are at risk.

Several key points emerge from the report:

■The trustees now estimate that the trust funds will be exhausted in 2037 — four years earlier than last year’s report projected, but well within the range forecast over the last decade.

■Even after 2037, Social Security could still pay three-fourths of scheduled benefits. Alarmists who claim that Social Security won’t be around when today’s young workers retire misunderstand (or misrepresent) the trustees’ projections.

(Note: "scheduled benefits" have built-in real increases; 75% of benefit in 2040 is equivalent to today's levels)

■The program’s shortfall is relatively modest, amounting to 0.7 percent of Gross Domestic Product (GDP) over the next 75 years (and 1.5 percent of GDP in 2083). A mix of tax increases and benefit reductions — carefully crafted to shield the neediest recipients and to give ample notice to all participants — could put the program on a sound footing indefinitely.

(Note:projected shortfall equivalent, per bruce webb, to an extra $1.50/week)

■As policymakers debate Social Security’s future, they should remember that other factors — notably fast-growing health-care costs and recent tax cuts — are the principal sources of the government’s serious long-run fiscal woes.


to be "broke" is to have no funds. social security is funded so long as workers pay into it.

you provided no information whatsoever but uninformed crisis-mongering.

[dionysus]

123. wow, a post of yours i am in agreement with. good information comrade Bell.

;)

[Statistical]

19. SS is also cashflow negatvie (early because of recession)

[Hannah Bell]

22. no, the trust fund is cash-negative -- if you don't count interest payments, which continue

to keep it in the black.

and it was set up in 1983 to go cash-negative, in order to pay for the boomers' retirements, REMEMBER?

that was the entire justification for overtaxing workers for thirty years, to build up the trust fund so it could be drawn down when the boomers started hitting 65.

now you're presenting that as some kind of "problem".

why?

[Statistical]

24. Because it is going negative faster than anticipated. I ins't a HUGE problem but it exists

Even in the data you provided by 2037 (and that was before trust fund started depleting faster due to recession) the fund will be exausted.
If nothing changes benefits would need to be cut by 25%. Now rather than cut benefits for everyone by 25% it is possible they may means test SS instead (based on 401K/IRA assets). Thus 100% for lower asset people and sliding scale to nothing for those with means.

So while the term "broke" is a poor choice and incorrect it isn't entirely impossible that some people will be denied SS in the future (2030+) based on their other retirement assets.

The reality is that "fixing" SS is rather easy to do but SOMETHING needs to be done. The longer it goes without change the worst it gets.

AARP looked at methods to boost surplus so it will last as long as the Boomer (which as you indicate is the reason for its existence).

http://en.wikipedia.org/wiki/Social_Security_debate_%28United_States%29#Proposals_that_keep_an_entirely_government-run_system

Some modest changes like would make SS infinitely solvent with no reduction in benefits ever:
* removing cap on SS tax
* requiring all workers to participate
* raising contribution rate by half percentage
* raise taxes on benefits of high net worth individuals
* keep estate tax and earmark funds towards SS trust fund

The problem isn't as bad as Republicans make it out to be. The boomers were a demographic abnormality. The surplus simply needs to exist long enough to fund their retirements. After that future workers can essentially be "pay as you go". Really it is just a financial hump.

What I fear is we will push the can so far down the road that we get to a point where choices will be more painful and they will do something like means test SS.

[Hannah Bell]

30. uh, "faster than anticipated" -- because we're in a major recession. the fact is, with the interest

the trust fund is still in the black, and drawing down the trust fund IS NOT A "CRISIS", BUT THE INTENDED WAY IT'S SUPPOSED TO WORK.

Your list of solutions are mostly a list of ways to destroy social security. and THEY'RE NOT NEEDED, BECAUSE SOCIAL SECURITY ISN'T IN CRISIS.

OH, AND EXCUSE ME, BUT REAGAN ALREADY "FIXED" SOCIAL SECURITY "FOR ALL TIME" IN 1983. THAT'S HOW WE GOT 3 TRILLION DOLLARS IN EXCESS COLLECTIONS SITTING IN A TRUST FUND.

another phoney "fix" is going to kill it.

[Statistical]

33. I never used the strawman term "crisis" however I don't consider a 25% benefit cut in 30 years to

be acceptable.

Without a "fix" the plan will not have sufficient funds to meet obligations. Will it go "bankrupt"? No. Will all checks stop? No. However the amounts being promised today simply can not be paid forever without those UTTERLY SIMPLE AND EASY changes.

Why should some Americans be exempt from SS?
Why shouldn't high net worth individuals be taxed on SS income?
Why shouldn't the cap be raised given rapid increase in high networth compensation?

[Hannah Bell]

46. As I've repeatedly told you, it's not a cut at all in terms of today's benefit levels. It would

still represent a real increase, even adjusting for inflation.

So perhaps you should acknowledge this fact before continuing.

In real terms, whatever you can buy with your $1200 check today, you'd be able to buy in 2037.

And an increase of $1.50/week for the workers of 2036 would cover the 25% increase in real benefits built into the schedule.

Most workers, I think, would rather do that THAN PAY UNNECESSARY TAXES FOR 30 MORE YEARS *AGAIN* SO THE SUPER-RICH NEVER HAVE TO PAY BACK THE MONEY THEY ALREADY STOLE OVER THE *LAST* 30 YEARS.

Why do you support such a scam?

[Statistical]

49. Wrong. Wrong. Wrong. Saying it over and over doesn't make it true.

There are NO (not in the past, not now, not ever in the future) real increases in SS benefits. Ever. Not once in the history of the program.

Benefits are simply indexed to cost of living. As cost of living rises SS benefits rise. However purchase power remains EXACTLY the same.

Thus a 25% cut is a 25% cut in purchase power below today's benefit level.

The nominal amount may look large but it simply will mean the prices of everything have gone up.

If we keep w/ historical average SS benefits will double by 2030 however price of goods & services will ALSO double by 2030 thus benefit is exactly the same in 2010 dollars. A 25% cut is a REAL 25% cut.

No different than cutting benefits 25% today. Period.

[Hannah Bell]

53. You are completely mistaken. Let's check. Average monthly SS check (all workers) in

1950 v. average check today, adjusted for inflation:


1940: $22.71 ($343.66 in 2009 dollars)

1950: $29.03 ($255.90 in $2009)

1960: $81.73 ($585.47 in 2009$)

1970: $123.82 ($676.54 in 2009$)

1980: $321.10 ($825.22 in 2009$)

1990: $550.50 ($892.22 in 2009$)

2000: $844.60 ($1041.87 in 2009$)

April 2010: $1067

links for above:

http://www.infoplease.com/ipa/A0780010.html

http://www.westegg.com/inflation/infl.cgi

http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/index.html


I repeat, you're misinformed.

COLA increases are separate from scheduled benefits.

[Statistical]

57. That was only because the wages for THOSE workers rose faster than inflation.

Do you think that is going to happen going forward.

There is no magic "bonus" benefit increase in SS.

You can calculate your SS benefit at retirement here:
http://www.ssa.gov/pubs/10070.html

If your (as you personally) wages rise faster than inflation then your SS benefit at year 1 will be higher. If they don't then it won't.

Your year 1 benefit is based on your wages. Period.

Once that year 1 benefit is calculated IT ONLY GOES UP BASED ON COLA. PERIOD.

Future workers could see 30% annual increase in wages and your benefit ONLY GOES UP BASED ON COLA.

So obviously if you wages rise faster than inflation then your benefit will rise faster than inflation however that isn't something built into SS that is simply BECAUSE YOU WAGES ARE RISING FAST.

Despite the fact that almost nobody understands SS it is a pretty simple system.

Assuming you are retiring this year:
Step 1) All your wages are entered into spreadsheet (capped at annual SS max)
Step 2) Each years wages are adjusted for inflation (into 2010 dollars if you are retiring this year)
Step 3) Top 35 years are used and inflation adjusted average monthly wage is calculated.
Step 4) That average wage is multiplied by the following formula:

90% of wages up to $761 (2010 dollars)
32% of wages between $761 and $4,586
15% of wages over $4,586

That will give you your monthly benefit amount for year 1 of full retirement.

Once you have your monthly benefit amount all future INCREASES ARE ONLY BASED ON COLA. Period.

On year 2 the amount from Step 4 above is multiplied by COLA increase.
On year 3 the amount from year 2 is multiplied by COLA increase.
...
On last year of your life the amount from previous year is multiplied by COLA increase.

[Hannah Bell]

68. Let me remind you of your initial claim:

"There are NO (not in the past, not now, not ever in the future) real increases in SS benefits. Ever. Not once in the history of the program.

Benefits are simply indexed to cost of living. As cost of living rises SS benefits rise. However purchase power remains EXACTLY the same. Thus a 25% cut is a 25% cut in purchase power below today's benefit level."


Now, having been proven wrong, you shift your claim to something else: it's because workers' wages have risen above inflation that benefits have risen.

Which contradicts your first claim.

Then you direct me to the SS "calculator," which has no information about how that "year 1" benefit is calculated.

Let me tell you: it's based on assumptions about future wage levels & productivity, & it represents REAL INCREASES, NOT JUST INFLATION-ADJUSTMENTS.

Maybe you'll believe CBO:

The Congressional Budget Office (CBO) projects that spending for Social Security, adjusted for inflation, will rise from $483 billion in 2003 to $2.5 trillion in 2075. Those estimates are based on CBO's 10-year baseline budget outlook and the "intermediate" long-range assumptions of the trustees of the Social Security system...

Approximately 55 percent of the higher spending is due to an expected increase in the number of beneficiaries...

THE REMAINING 45 PERCENT OF THE RISE IN SPENDING IS DUE TO A PROJECTED INCREASE IN THE REAL VALUE OF SOCIAL SECURITY BENEFIT CHECKS. UNDER THE TRUSTEES' ASSUMPTIONS, THE PURCHASING POWER OF THE AVERAGE EARNERS' BENEFITS AT RETIREMENT IS EXPECTED TO NEARLY DOUBLE BETWEEN NOW AND 2075.

http://www.cbo.gov/doc.cfm?index=4380&type=0


Now could you have the grace to concede YOU'RE WRONG?

[Lasher]

103. Guess not.

Thanks for the informative debate.

[JDPriestly]

85. You are right.

Social Security benefits are calculated based on your earnings. They are supposed to be raised by COLAs. We aren't getting COLAs at this time because, theoretically, we are experiencing deflation. (Of course, the deflation does not affect the prices of things seniors need and buy like utilities, food and medications.)

So, if you retired three years ago, your Social Security benefit will be based on that income. And for that reason, your benefit will probably be higher than your father's benefit because he earned less when he quit working. It will depend. If your father was better paid than you, you might actually get less. Most people probably earn slightly more now than their parents did. Benefits for today's retirees are, therefore higher at the get-go.

[Statistical]

88. Yeah it is a pretty well understood concept....

not sure why Hannah "needs" it to be better than that. I mean SS website explains it clearly.

http://www.socialsecurity.gov/cola/2010/2010faqs.htm#q1

Q. Why is there no COLA for 2010?

A. By law, Social Security and Supplemental Security Income benefits increase automatically each year if there is an increase in the Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), from the third quarter of the last year to the corresponding period of the current year. This year there was no increase in the CPI-W from the third quarter of 2008 to the third quarter of 2009.

Q. If there is no COLA, will my benefits stay the same?

A. If there is no COLA, your Social Security and SSI benefits will remain the same.

One first year social security benefit is based on lifetime average wage (inflation adjusted). Whatever that amount is $800 or $4800 it doesn't matter. All future years ONLY increase by COLA %.

Sadly for 2010 the COLA adjustment was 0 so unless I am mistaken SS checks for 2010 are exactly the same as 2009. Right?


I mean for verification that SS benefits only rise by COLA (thus never exceed inflation) one only needs to look at prior years
http://www.ssa.gov/pressoffice/pr/2009cola-pr.htm

Monthly Social Security and Supplemental Security Income benefits for more than 55 million Americans will increase 5.8 percent in 2009, the Social Security Administration announced today. The 5.8 percent increase is the largest since 1982.

Social Security and Supplemental Security Income benefits increase automatically each year based on the rise in the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), from the third quarter of the prior year to the corresponding period of the current year. This year's increase in the CPI-W was 5.8 percent.

The 5.8 percent Cost-of-Living Adjustment (COLA) will begin with benefits that over 50 million Social Security beneficiaries receive in January 2009. Increased payments to more than 7 million Supplemental Security Income beneficiaries will begin on December 31.

5.8% rise in CPI-W, 5.8% rise in COLA, 5.8% rise in SS check amounts.

[Hannah Bell]

90. The poster said I was right, not you. The COLA has nothing to do with anything.

The Congressional Budget Office & the Social Security Trustees also say I'm right.

Your benefits depend not only on your check & inflation adjustments, but the benefit levels obtaining at the time you retire.

Future "scheduled benefits" assume a rise in real benefit levels.

Thus when it's said SS will only be able to pay 75% OF SCHEDULED BENEFITS, they aren't talking about today's benefit levels, adjusted for inflation.

They're talking about the SS trustees' projected benefit levels, which are higher than today's, in real terms.

it's easy to understand if you're not grinding an ax for tax hikes on labor.

[JDPriestly]

130. I don't think my very, very elderly mother's checks have risen except for inflation.

[JDPriestly]

129. Yes. I am on Social Security, and I worked half of last year, so my SS

Security benefits were reduced to the extent that my income exceeded a certain dollar amount. People who receive a lot of outside income during the years in which they get Social Security may not be receiving the amount of Social Security benefits that they would receive if they did not have that income.

The official retirement age for receiving full Social Security benefits has been raised about to about as high a level as it can realistically be raised. Just because people are living longer does not mean that they stay healthy longer. I know that is counterintuitive, but we know people who have lived for years and years after having pretty debilitating stroke, and people who have been on kidney treatments for a long time.


Some people need to retire in their 50s. They cannot work for health reasons. Others could work into their 90s if employers were willing to hire them. If you have your own business, you will tolerate and accommodate your own infirmities better than a third-party employer will.

For these and, of course, the simple reality of the low demand for workers in the job market, mean that you cannot raise the retirement age still further.

By the way, Social Security is becoming more and more important to retired people. That little nest egg that people thought they had in the value of their homes is dwindling. You get no interest on the money you have saved. Treasury notes pay nothing. And if you are 65 or older, the stock market is too rigged and too tricky right now. Unless you are very wealthy, only a fool would risk investing in stocks at this time. I have read (ZeroHedge) that mutual funds may also be in trouble.

So, Social Security is more important than ever.

The conservatives are trying to pit the younger generation against us seniors on this. But most children love their parents and grandparents and don't want to see their seniors in their own families suffer indignity in their old age. And very few young people want to have to share their homes with their parents or grandparents. Most American housing is not built for multi-generational families.

[Hannah Bell]

89. social security benefits are only partially based on your earnings.

the benefits schedule as a whole is indexed to average national wages prevailing two years before retirement, not one's personal wage level.

colas are in addition to that.

in 1950 the minimum monthly benefit was $10, that's $88 in 2009 money.

the maximum benefit was $45.20, that's $398 in 2009 money.

For a worker retiring at age 66 in 2010, the amount is $2,346.

projections of scheduled future benefits are based on assumptions about wage levels & productivity.

that's what "scheduled benefits" means when the news says SS "will only be able to pay 75% of scheduled benefits".

It doesn't mean SS will only be able to pay 75% of today's inflation-indexed benefits, contrary to the other poster's insistence.

BTW: The COLA increase in 2009 was 5.8%.

Monthly Social Security and Supplemental Security Income benefits for more than 55 million Americans will increase 5.8 percent in 2009, the Social Security Administration announced today. The 5.8 percent increase is the largest since 1982.

Social Security and Supplemental Security Income benefits increase automatically each year based on the rise in the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), from the third quarter of the prior year to the corresponding period of the current year. This year's increase in the CPI-W was 5.8 percent.

http://www.ssa.gov/pressoffice/pr/2009cola-pr.htm

[JDPriestly]

131. In other words, the scheduled benefits are based on projected rises in

wages. I am retired. I think we agree that my base Social Security benefit will not go up.

It's the benefits that future retirees will get that are projected to be higher from the beginning than mine were.

Whether those projections are accurate depends on the rate at which the average American wage rises.

Also, I understand what you are saying about the average wage being the amount that the projected increases are based on.

That is different from the actual benefit that any one person receives which is based on that specific individual's income before and after retirement. I think people are confused by that difference.

Also, with regard to COLAs, I don't think I got a COLA increase this year. I don't know whether they were given in 2009 because I was not fully on Social Security during 2008.

[JDPriestly]

38. Change our trade policy and bring the jobs back to the U.S. and the

whole problem will be solved. In fact, a lot of problems will be solved.

[Statistical]

40. It will help but it won't solve the whole problem.

Quite simply baby Boomers will live longer than originally projected.

Every generation prior to boomers was larger than the one before and thus SS worked fine as a "fund as you go" system.
Boomers are larger thus the post-boomer generation won't make enough revenue to fund Boomers even with 100% employment.

However that was partially accounted for with Trust Fund. By bringing in more revenue than needed for 25 years it created a cushion. The cushion is slightly too small though.
The trust fund will exhausted prior to Boomers dying off (not trying to be cold but that is the reality). So the cushion needs to be larger or benefits will be reduced.

The current recession only made things worse. The long term unemployment picture 9% until end of this year, 8% in 2011, still over 6.5% in mid 2012 only makes the underlying situation worse.

[Hannah Bell]

48. There is no problem except the incessant pounding of the propaganda.

The increase in life expectancy for the boomers was already covered by raising the retirement age to 67.

The increases for younger generations have yet to materialize & are increasingly dubious, as the PTB are doing their best to impoverish them; with poverty comes DECREASING LIFE SPANS, NOT INCREASING ONES.

THE INCREASED TRUST FUND COLLECTIONS WERE A SCAM, NOT A "CUSHION". The Trust fund already HAD a "cushion": one year's payout, as required by the original legislation.

Anything more is a license to steal, and that's precisely what's happened.

AND THE CONTINUING "CRISIS" MEME ENABLES IT.

SOCIAL SECURITY ISN'T IN CRISIS

Except from the crisis-mongers. The biggest and in fact only real threat to the fiscal stability of the program.

[Statistical]

51. I haven't once used the term "crisis".

Statistically SS is not solvent past 2037. Insolvency is a ways off but if nothing changes SS will no longer be able to pay promised benefits after 2037.
Any other financial service (pension, annuity, life insurance company) based on that accounting data would be required to raise revenue to eliminate the future insolvency.

That isn't scare language, it isn't a crisis, isn't even something for people to be fearful of.
However it does exist and it is equally irresponsible to pretend it doesn't.

So if we do nothing and wait until 2037:
a) we can cut benefits 25% (unacceptable and would cripple the poor & those who had retirement savings depleted due to other reasons)
b) we can exclude 25% of SS outlays (means testing of benefits (what the OP worried about in OP)
c) we ask next generation to pay for the difference in shortfall (reckless. Knowing we can fix it not we wait and pass the buck to next generation)

None of those choices are acceptable and thus we need to make simple, easy, and common sense changes to SS. Nothing involving raising retirement, cutting benefits, or heavily increasing taxes.

Doing nothing is not an option, it is as irresponsible as those calling it a crisis.

[Hannah Bell]

54. "Doing nothing" FOR AT LEAST 25 YEARS is in fact the BEST OPTION.

There is already ALMOST $3 TRILLION DOLLARS IN THE TRUST FUND.

That keeps SS completely solvent for at least 25 years; 1/4 of a lifetime.

This is the BIGGEST DEBT the US government owes, & it owes it to its own workers.

OVER $1 TRILLION OF IT WAS GIVEN AS INCOME TAX CUTS TO THE TOP 1%.

PAYING THAT OFF IS JOB ONE.

NOT DOING SO IS THE MOST "IRRESPONSIBLE" OPTION.

Twenty-five years down the road maybe we might have to raise SS taxes a dollar a week in real terms.

So the hell what?

Everyone would prefer that to working to age 70, or having benefits cuts, OR RAISING TAXES NOW TO PAY FOR SOMETHING 30 YEARS DOWN THE ROAD THAT MAY NOT EVEN HAPPEN.

Your arguments are hogwash.

[Statistical]

61. "Twenty-five years down the road maybe we might have to raise SS taxes a dollar a week in real terms

You mean raising taxes on someone else.

However likely they won't want their taxes raised just like you don't.
They won't need taxes raised to get full retirement beneifts.

So luckly they will tell you to fuck off and retirement benefits will decline.

I never said:
"crisis"

I never said:
"raise retirement"

I never said:
"cut benefits"

those are just a strawman from someone who doesn't want to face tax increases so somehow we will pass it on to the next generation.

What if they tell you to fuck off in 2037+. You could have done a bunch of other very simple things to ensure future solvency but didn't so we (future generation) isn't going to clean up your mess. Walmart is hiring greeters though.

[Hannah Bell]

63. My generation (and the previous one, and a couple of ones after us)

ALREADY HAD THEIR TAXES RAISED, UNNECESSARILY, FOR THIRTY FUCKING YEARS. By 1 to 2%, enough, with interest, to RAISE $3 TRILLION DOLLARS THAT WAS BORROWED BY THE TOP 1%.

WHO DOESN'T WANT TO REPAY IT, & INSTEAD WANTS TO PICK LABOR'S POCKET FOR ANOTHER 30 YEARS.

And you're pretending like this is something other than a big, fat, scam.

[Statistical]

65. It wasn't enough.

If it was the fund wouldn't run out in 2037.

Nobody is saying the "rich" (govt general fund) shouldn't repay SS trust fund. Of course they should and it is a good thing the trust fund exists or benefits would need to be cut today (we are already drawing from SS trust fund now). However even assuming 100% repayment of trust fund with interest the fund will be exhausted in 2037.

Doing nothing and waiting for the fund to run out in 2037 it is going to hurt a lot more than making simple changes now.

Hell 80%+ of the funding gap without raising SS tax rate.

* Raise cap to 90% of taxable earnings - covers 39% of funding shortfall
* Include all NEW employees in SS - covers 10% of funding shortfall
* Tax SS benefits for high net worth individuals - 10% of funding shortfall
* Keep estate tax and direct funds to SS trust fund - 27% of funding shortfall

That's 86% of the shortfall without raising SS tax rate.

http://en.wikipedia.org/wiki/Social_Security_debate_%28United_States%29#Proposals_that_keep_an_entirely_government-run_system

[Hannah Bell]

70. the entire "let's put trillions in the trust fund to pay for retirements 30 years in the future" was

a scam from day one.

it was about $2 trillion MORE than "enough," because enough was a something like .003 hike in 1983.

Just like something like a .003 hike will be enough in 2037.

There is no REASON TO RAISE TAXES TODAY TO FUND SOCIAL SECURITY IN 2037, AND PLENTY OF REASONS NOT TO.

The cap is already supposed to be at 90%, and is raised almost every year to keep it at that level.

SS benefits are already taxed, and have been for 30 years; "high net worth individuals", as they have the highest earnings, are already taxed on them at the highest rate.

But "high net worth" individuals GOT OVER A TRILLION DOLLARS IN SOCIAL SECURITY MONEY AS TAX CUTS DURING THE REIGN OF KING GEORGE ALONE.

RAISING THE INCOME TAX RATES FOR SUCH INDIVIDUALS WOULD BE MORE TO THE POINT.

[Hannah Bell]

74. it wasn't? then why did ronnie say it was?

10. Remarks on Signing the Social Security Amendments of 1983 --April 20, 1983


This bill demonstrates for all time our nation's ironclad commitment to social security. It assures the elderly that America will always keep the promises made in troubled times a half a century ago. It assures those who are still working that they, too, have a pact with the future. From this day forward, they have our pledge that they will get their fair share of benefits when they retire.

http://www.ssa.gov/history/reaganstmts.html#1983


every 30 years the scammers come out to defraud a new generation that's ignorant of the last scam.

NOT THIS TIME.

[Statistical]

75. It was close. Less than 0.5% difference between projected funding and projected costs.

Pretty damn close for a projection made 30 years in the past.
It simply wasn't close enough and now there WILL be a funding gap in 2037.

Right wingers want to pretend SS is "dead", you want to pretend there is nothing wrong at all, perfectly fine.

The reality is in the middle but zealots on both extremes have to stick to their principles. I hope you don't get your way and then end up with a 25% benefit cut at some point in the future when it could be so easily avoided now.

[Hannah Bell]

77. Look, I've already disproved every claim you've made. I've actually

looked past the nifty little benefits calculator & hypster headlines into 10 years' worth of trustees' reports and the assumptions they're built on.

which are available to the public if you care to peruse them.

[Statistical]

79. The trustee reports are based on the agregate.

your individual benefit is based on two simple easily calculated factors

1) your intitial year 1 benefit (which SS provides the formula for you to calculate.
2) all future future year benefits are simply inflation adjusted versions of #1.

Now if more people die early, or more trust fund yields a higher return it is "possible" they won't run out in 2037, maybe they run out in 2040, or 2042.

Still your individual benefit is based on SS legislation and the formulas are very simple:

http://www.ssa.gov/pubs/10070.html

There is no "bonus" increase in benefits. Sorry if that is what you are basing your retirement on because it isn't there.

Your wages determine your benefit on the first year and then govt increases it annually based on inflation. Period.
It has been live that for decades.

[Hannah Bell]

84. lol. "the aggregate". this must be why the average benefit rose 29%

between 1980 & 2010, though the average wage stagnated in the same period.

your benefit depends on your wage and the benefits schedule obtaining in the year you retire.

scheduled benefit levels are projected to nearly double in real terms over the next 75 years. that is above inflation.

whatever, you know better than CBO & the social security trustees, no doubt.

[Statistical]

87. Because a retiree in 2010 worked the 3 decades prior.

Wages rose for decades and rose FASTER than inflation.

Someone who retired in 2010 vs someone who retired in say 1980 would have higher SS benefit for 3 simple reasons.

1) average years worked is now higher (due to progressively higher retirement age)
2) wages rose faster than inflation for the first half of working career thus partially compensating for stagnant wages near end.
3) inflation

whatever, you know better than CBO & the social security trustees, no doubt.
That is a strawman. I never claimed I did.

Simply that your interpretation that because benefits rose than means there is some magic "benefit booster" is wrong.
Benefits rose because decades of progressively higher wages combined with higher number of working years.

Benefit is based on your average lifetime wage (indexed for inflation).
After that benefits only rise based on COLA.

Sorry if that is scary there will be no super bonus increase to your future social security checks.

[Hannah Bell]

92. Let me again remind you of your initial claim, the one you've done your best to obfuscate with

continual goalpost moving.

"There are NO (not in the past, not now, not ever in the future) real increases in SS benefits. Ever. Not once in the history of the program.

Benefits are simply indexed to cost of living. As cost of living rises SS benefits rise. However purchase power remains EXACTLY the same. Thus a 25% cut is a 25% cut in purchase power below today's benefit level."



In 1950 the MAXIMUM benefit was less than $400 in inflation-adjusted, 2009 dollars.

That fact alone demonstrates that your initial claim was false.

The Congressional Budget Office explicitly says that benefits are scheduled to nearly double, in REAL TERMS, over the 75-year actuarial window the Trustees' projections are based on.

That fact also demonstrates your second claim: that 2037 projected benefit levels are just 2010 benefit levels adjusted for inflation -- is also false.

Any discussion of 2037 is about the SS Trustees' PROJECTIONS. And they project REAL INCREASES IN BENEFIT LEVELS UNDER THE ASSUMPTION OF REAL INCREASES IN AVERAGE WAGE LEVELS -- not merely inflation with no increase in purchasing power.

COLAs & AWI (Average wage index) increases under the intermediate assumptions of the 2009 Trustees Report

http://www.socialsecurity.gov/OACT/TR/TRassum.html

Those assumptions may not pan out. But one can say the same thing about the projected shortfall.


Oh, & PS:

It's not about MY benefits. It's about what the retiree of 2037 gets in comparison with the retiree of 2010.

And by the Trustees' projections, the retiree of 2037 gets MORE, IN REAL TERMS.

And it's impossible to raise taxes now to create income for retirees 30 years down the road.

We did that once, & got robbed.

NEVER AGAIN.

[Hannah Bell]

106. it's STILL all projections. you act as if they were a fait accompli, a completely

accurate picture of the future.

yet you refuse to acknowledge that the same projections ASSUME REAL INCREASES IN BENEFITS.

man, if you trust those projections sooooo much, why won't you acknowledge THE REAL INCREASES IN BENEFITS that are built into them?

[JDPriestly]

133. No matter what you do, these costs will be passed on to the next generation.

If you cut Social Security benefits, young people will have to pay increased taxes to cover more food stamps and other welfare benefits for the elderly. If you cut Social Security, individual young people who can will soon be living with their retired parents in their spare room (if they are lucky enough to have one).

My generation paid for the retirement of our parents and grandparents. That is the way nature planned it.
If there is one truth in the idea of free market economics, it is that the young and strong take care of the old and weak until death do them part.

The only thing that would prevent our grandchildren from paying for us is a total collapse of the economy or our deaths.

We paid a higher Social Security tax beginning in the mid-1980s ostensibly to reduce the load on our children and grandchildren when we retired. Now we are hearing that that did not solve the problem.

Of course it didn't. That is because money is like music. It has value within time and only within time.

Money is a symbol for the exchange of value. You can save it. But it has no intrinsic value. Until people understand that it is not money but the exchange of services and goods, we will not regain our economic health.

That is why I advocate for the end of open trade with other countries. That is why I advocate for the rebuilding of America's industrial base. Without industry, we have nothing to exchange. Of course our money is becoming worthless.

[JDPriestly]

86. People are retiring early because they can't get jobs. I know.

I retired early as have many of my friends. There just aren't any jobs for older people -- not the kinds of jobs that we are able to do or would be hired to do. I don't think I could work at McDonalds any more. I did that when I was young. But I would not have the physical stamina at my age. I would be willing, but my bosses would not like my work pace.

[JDPriestly]

36. Outsourced jobs an imported products = high unemployment = low tax revenues

and especially low Social Security revenues.

Stop the outsourcing and importing and increase the employment rate and there will be no shortage in the Social Security funds. Plus we can balance our budget with the increased income tax revenue.

We should quit the WTO. It is not working for us. It works against us.

[Hannah Bell]

102. agree with that, except for the balanced budget part. add wage increases to your picture.

percent increase in low wage jobs + increased unemployment + wage stagnation = lower SS revenues

[Incitatus]

13. I thought they were only borrowing the surplus.

If every year ever worker is paying into the fund, then it cannot go broke.

Payments might diminish as the number of retired people grows faster then new workers, but there will always be money in the fund.

[Statistical]

17. "Payments might diminish "

I think that is the point.

SS will exhaust the surplus eventually. When that happens either
a) SS taxes will need to rise massively
b) less SS will need to be paid.

b could be accomplished by reducing payments or b could be accomplished by reducing number of people paid (OP post).

Maybe broke is the wrong word but unless something changes expenditures will exceed revenue and eventually surplus will run out.

[Hannah Bell]

28. the point at which that will happen is 30 years in the future, according to current projections.

which are questionable in the first place, as:

1) they've been wrong more often than not short-to-mid-term, and
2) the assumptions on which they're based are conservative, even for the mid-range forecast, and
3) the accuracy of projections decreases the further into the future they're made, but:

even if they're on the money,

-- SS will continue to pay out 75% of scheduled benefits, better in real terms than todays' level (because of built-in real increases in the schedule), and

-- the shortfall is the equivalent of an average $1.50 a week. not so "massive".

[Statistical]

31. No I agree 100% it isn't massive.

However as I outlined in the above post 75% scheduled benefits could be financed as:
a) 25% reduction in everyones benefits
b) elimination of benefits for those above a certain means test

thus IF (big IF) nothing changes it isn't out the the realm of possibility that SS could be means tested in order to avoid a 25% cut across the board in benefits.

Which is why it is important for us to recognize a funding issue DOES exist.
It is small
It can be resolved

BUT

it does exist.

The longer we push the can down the road the more the effect of compounding works against (and not for) us and the harder the choices get.

[Hannah Bell]

32. your fixes aren't currently needed. there is no "compounding" - the money is just

borrowed into the general budget.

they ALREADY BORROWED 3 TRILLION DOLLARS, WHY DO YOU WANT TO GIVE THEM MORE?

DO YOU LIKE INCOME TAX CUTS FOR THE TOP 1%?

Because that's what we paid for.

[Statistical]

35. Then the trust fund will run out early (2037) and benefits will be cut 25%.

YAY!

Who will that hurt the most? The rich? or the poor?

Without a larger trust fund SS revenue in 2037 WILL be lower than its obligations (promised payments) and the trust fund will be exuasted (there will be nothing left to draw from).
Thus benefits will have to be cut. Pretending nothing needs to happen will lead us to that conclusion.

It is reckless and irresponsible when UTTERLY SIMPLE and PAINLESS changes would make SS solvent infinitely.

100% benefits for all future generations
vs
25% reduction in benefits for those unlucky enough to still be alive after 2037.

[Hannah Bell]

42. you have no idea what will be happening in 2037. last year, the number was different. it's been

higher, it's been lower. it's a *projection* partially dependent on the economic climate at the time it's made.

benefits will be HIGHER IN REAL TERMS in 2037 even if they're cut 25%. That's SCHEDULED BENEFITS, & the schedule HAS BUILT-IN REAL INCREASES -- NOT JUST INFLATION-ADJUSTED ONES.

And full benefits = $1.50 extra in SS taxes a week, on average.

So the choice the wreckers are offering (assuming the projections turn out to be anything close to reality, a dubious proposition over a 30-year window):

-- You can raise retirement ages, cut benefits, and raise taxes now and guarantee you'll get less, and the top 1% WILL NEVER HAVE TO REPAY THE MONEY THEY ROBBED FROM YOU, or

-- You can wait until 2036, see how things are looking then, and raise your SS taxes the equivalent of $50/year AND COLLECT FULL BENEFITS AT AGE 67.


NO ONE WOULD PICK OPTION ONE EXCEPT THE WRECKERS.

[Statistical]

45. No it doesn't.

SS benefits are indexed to cost of living.

Thus the norminal value of benefits rises but the higher $$$ amount doesn't buy anything more in the future.

Today a SS recipient in nominal dollars recives roughly 64% more than one who retired in 20 years ago however the buying power of those funds is exactly the same.
So saying the nominal amount is higher in 2030, or 2050, or 2090 is silly. Inflation doesn't generate wealth.

I would like it if you would read what I wrote:

-- You can raise retirement ages, cut benefits,
I didn't suggest doing either.

You can wait until 2036, see how things are looking then, and raise your SS taxes the equivalent of $50/year AND COLLECT FULL BENEFITS AT AGE 67
That is reckless. The people working in 2036 will then face higher SS taxes to pay the current generation of retirees. They will pay more for no more benefits. While that would help me personally it is materially unfair for those entering work force (on whose backs those taxes will be levied).

They face $50 a year in higher taxes because we didn't act now? That isn't progressive in my book.

[Hannah Bell]

50. you're mistaken. the COLA is completely different from the benefits schedule.

The scheduled benefits are calculated on projected future wage bases which rise in real terms.

COLAs are calculated year-to-year depending on the ACTUAL rates of inflation.

Two completely different things.

You're misinformed.

[Statistical]

52. "which rise in real terms."

real terms as in "related to inflation".

The only way one would have SS benefits materially higher than todays benefits indexed for inflation would be if wages rose continually at a rate exceeding inflation. Given the exact opposite has been true for last decade that isn't something that is either probable or can be counted on.

You benefits are based on your wages not anyone elses wages and not any future generations wages. The formulas are available publicly by SS administration.
That benefit amount is then adjusted by COLA annually.

Thus benefits will never exceed inflation. They never have, and they never will.

A 25% cut in 2030, 2050, 2099, or 21,999 is materially no different for that retiree than a 25% cut today.

Do you support 25% cut in benefits today? If not then you shouldn't support a 25% cut in benefits in 2037.

[Hannah Bell]

56. The projections you're taking as gospel are indeed based on that assumption

& so are the scheduled benefits.

And todays' average benefit is much higher than the inflation-adjusted average benefit of 1940, 1950, 1960, 1970, 1980, 1990.

contra your claim that it is the *same* benefit in real terms, only adjusted for inflation.

it's not.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=8526713&mesg_id=8527116

[Statistical]

64. Your misunderstanding.

YOUR benefits (and my benefits and everyone American's benefits) are only based on your wages.

Good wages = good year 1 benefit.
Crappy wages = crappy year 1 benefit.

What future wages some other generation gets will have absolutely no impact on your SS benefit for year 1. None.
Your SS benefit for year 1 could be lower than any other previous generation of retirees. It simply is based on your wages and only your wages.

Now what happens to years 2 through end of your life?
That is indexed based on COLA.

So while your year 1 benefit *may* be higher than someone elses it may also be lower. It all depends on what your 35 highest years of wages were relative to previous generations and inflation.

Still that benefit amount isn't indexed to anything. It just happens that we had a couple decades of VERY NICE wage increases thus the amount paid into SS increases. That hasn't happend for about a decade though. Today wages are lower than they were a decade ago (adjusted for inflaiton). You have no idea what wages will do over the rest of your working years. Could barely eeke along with inflation, could rise massively in real terms, could be paycut in real tersm.

Regardless you wages determine year1 benefits.
http://www.ssa.gov/pubs/10070.html

After than whatever that number is $990 a month of $9,387 a month all future increases are base don COLA (inflation) only.

[Hannah Bell]

69. No, yours:

Maybe you'll believe CBO:

The Congressional Budget Office (CBO) projects that spending for Social Security, adjusted for inflation, will rise from $483 billion in 2003 to $2.5 trillion in 2075. Those estimates are based on CBO's 10-year baseline budget outlook and the "intermediate" long-range assumptions of the trustees of the Social Security system...

Approximately 55 percent of the higher spending is due to an expected increase in the number of beneficiaries...

THE REMAINING 45 PERCENT OF THE RISE IN SPENDING IS DUE TO A PROJECTED INCREASE IN THE REAL VALUE OF SOCIAL SECURITY BENEFIT CHECKS. UNDER THE TRUSTEES' ASSUMPTIONS, THE PURCHASING POWER OF THE AVERAGE EARNERS' BENEFITS AT RETIREMENT IS EXPECTED TO NEARLY DOUBLE BETWEEN NOW AND 2075.

http://www.cbo.gov/doc.cfm?index=4380&type=0


Now could you have the grace to concede YOU'RE WRONG?

The same projections you're taking as gospel on the shortfall also assume REAL INCREASES IN PAYOUTS.

every statistic concerning SS is a projection based on assumptions that may or may not pan out (historically, they've been inaccurate, mostly pessimistically so).

ALL THE MORE REASON THAT "DOING NOTHING" IS THE BEST OPTION.

[Statistical]

73. Your social security year1 benefit is based on your wages. Period.

If you are hoping some future generations higher wages will help you then you will be sadly sadly mistaken.

The ONLY thing that determines YOUR social security benefit is YOUR wages. Period.

http://www.ssa.gov/pubs/10070.html

Your average wage of top 35 years adjusted for inflation multiplied by benefit formula determines your year 1 benefit (step 6 in link above).

Period. These is no magic bonus payments. Your wages determine you SS benefit.
Then for years 2-99 of your retirement that amount is indexed for inflation.

CBO is simply estimating that wages will rise higher than inflation. That may happen but it may also not happen. Wages haven risen SLOWER than inflation for last decade. There is no guarantee that won't continue for another decade or more.

I know this is a scary concept but social security is based on two simple concepts/formulas:
1) your first year benefit -
This is amount of your first year of full retirement (age 66 for current retirees). This formula is ONLY based on your wages. Not average wages, or living wages but solely your wages. If you make a lot you get a lot. If you make a little you get a little. If YOUR personal wages exceed inflation then your first year benefit check will exceed inflation adjusted value of prior generations. However if you average wages DON'T exceed inflation your year1 benefit amount will NOT exceed inflation. It is solely based on your wages are for last decade (or two decades) wages have had a very poor track record of even keeping up with inflation. The page I provided you give the exact formula SS administration uses to calculate current year benefits.


2) Future benefit increases - Once your year1 benefit is calculated (SOLELY on your own personal wages) the only thing that increases your benefit for the next year (year 2 benefit), and the next year (year 3 benefit), and next year (year 4 benefit) is COLA adjustment (of which it was 0% in 2009 and likely will be 0% in 2010).

So the day you retiree and get a SS check your future benefits are locked into rate of inflation. You can never get ahead. They are never adjusted for anything but COLA. For as long as you live you are locked in to an inflation adjusted check equal in "real terms" to your first year check.

So if your retirement check at age 66 is $1620 then your retirement check at age 67 will be $1620 in inflation adjusted dollars, at 68 it is still $1620, at 69 still $1620, at 139 still $1620.

[Hannah Bell]

76. no, it isn't. it's based on your wages AND THE BENEFITS SCHEDULE.

WHICH IS PROJECTED TO NEARLY DOUBLE IN REAL TERMS OVER THE NEXT 75 YEARS in the exact same projections that you're using to hype the projected shortfall.

THE EXACT SAME PROJECTIONS.

So if you don't believe the benefits increases, you have to disbelieve the shortfall as well.

Because the projections assume both.

Thus "scheduled" benefits.

[Statistical]

81. Nope that didn't say the schedule is going up.

The schedule NEVER goes up.

If your wages rise faster than inflation than your year 1 benefit will be higher (inflation adjusted).
If not then it won't be.

If you are unemployed a lot (in highest 35 years) or have to accept low paying (low hours) jobs then your starting benefit is STILL based on your individual wages.

After that it ONLY increases by inflation.

[JDPriestly]

41. The average Social Security benefit in December 2009 was, I read,

$1,064. You can't reduce that by 25% and keep senior citizens alive. Since that is the average, many, many seniors, especially the very elderly are getting quite a bit less. You cannot cut Social Security.

The benefits of people with high incomes are already reduced according to a formula. If you continue to work, your benefits are also reduced according to a formula.

So the suggestions for cutting Social Security are non-starters. It is barely enough to subsist on if you don't have any other money.

And, don't think you will be able to live on what you save either. Right now, you get no interest on anything you save. That's right. The banks charge credit card users up to 30% yet the banks pay savers next to nothing. It's a scam.

Touch Social Security and you will have hungry and homeless seniors dying on the street.

We have to change our trade policy and get Americans into good jobs.

[Statistical]

43. I think you misunderstand.

I agree 25% benefit cuts are UNACCEPTABLE. Period.

So the question is how do you avoid them?

Pretty simple actually:
* make all employees participate in SS (utterly insane that some state workers can opt out)
* tax SS benefits for high net worth individuals (seems smart right. what is income tax on $1000 in income if you have $150K+ retirement income)
* raise cap on SS contributions (income for high end has gone up far faster than inflation thus every year less and less of their income is taxed)
* keep estate tax for high value estates (no brainer)
* raise SS tax rate by 0.5%. 7.5% instead of 7%. (the hardest of the 5 elements but likely not noticed by most Americans)

Those 5 things combine will provide enough income that BENEFITS WOULD NEVER BE CUT. Not in 2030, not in 2050, not in 2199.

However if we don't do that SS will face 3 bad choices in 2037:
a) cut benefits 25%
b) remove some people from SS (which likely will kill it eventually)
c) start paying for SS from general funds (which will call it welfare)

I don't like any of those 3 choices.

Thus preserving social security means being responsible TODAY to ensure we don't run into a cashflow shortage in 2037.

[Hannah Bell]

60. your list is unnecessary, misinformed, and mostly pernicious.

not to mention that social security benefits have been taxed since 1983, did you not get the memo?

you want to make pernicious changes to the structure of ss for a "problem" which may materialize in 2037 -- or may not.

and if it does, can be completely solved THEN with a $1/week SS tax hike.

WHY do you want to collect even MORE SS taxes now when there's nearly $3 trillion dollars borrowed from the Trust Fund?

The only reason I can see for such a scheme IS SO AS NOT TO PAY BACK WHAT WAS ALREADY "BORROWED".


CAPITAL OWES LABOR $3 TRILLION. THEY NEED TO PAY UP BEFORE THEY BORROW ONE MORE DIME.

[Statistical]

62. "not to mention that social security benefits have been taxed since 1983, did you not get the memo?"

Do you not read.

One of the suggestions provided by AARP was to START taxing benefits for high net worth individuals. That alone would close 10% of future funding shortfall.

http://en.wikipedia.org/wiki/Social_Security_debate_%28United_States%29#Proposals_that_keep_an_entirely_government-run_system

The reality is that the gap can be closed easily and simply however you don't want to make changes now.

You will just raise taxes on workers in 2037 to pay for your shortfall. Hypothetical question what happens in 2037 when "HannahBell 2.0" says forget those irresponsible retirees. Our generation will be more than fully funded for years 2060+. Let them just take a 25% benefit cut. They didn't want to fix the problem while they could.

Your premise simply seems to be based on lets not do anything now we can always lay it on the next generation. Won't they be smart enough to realize that tax increase does them absolutely no good (future generations will be fully funded even w/o trust fund). You don't think anyone else in the future will figure it out?

[Hannah Bell]

71. You think "high net worth individuals" have some kind of exemption from income taxes?

I told you, social security benefits have already been taxed as income since 1983 (thanks, ronnie), & "high net worth individuals" are thus hit at the highest rate.

RAISING THEIR INCOME TAX RATES IS MORE TO THE POINT, NOT SINGLING THEM OUT FOR SOCIAL SECURITY CUTS & THEREFORE GIVING THEM EVEN MORE REASON TO DISLIKE THE PROGRAM AND WISH TO SEE IT ENDED.

ANOTHER TROJAN HORSE FROM THE WRECKING CREW.

[Statistical]

83. Nope it isn't taxed at full tax rate. There is an offset, has been since they started taxing it.

http://www.retirement-income.net/social-security-tax-rates.htm

At most it is taxed at 85% of regular income. So someone with a retirement income of $300,000 a year would still get at least 15% of their SS income taxfree every year for life.

The proposal by AARP is to eliminate that loophole.

[Hannah Bell]

96. SO WHAT? They DON'T GET 85% of the benefits they paid for OVER A WORKING LIFE.

Anyone who wants to take away benefits from high-income workers wants to destroy social security, so far as i'm concerned. It effectively removes most of the support for the program among this highly politically active group of workers.

That includes the bought & paid-off AARP.

If you had to pay $7K ($14K with employers' portion) a year with the likelihood of getting $350/mo BACK, I GUARANTEE YOU'D BE PISSED.

If the cap was removed & you had to pay $20-40K a year with the expectation of getting $350 back, you'd be even more pissed, especially since you'd be funding 60% of the program.

Not to mention you'd be paying much higher total tax rates than the TOP 1% THAT LIVES OFF CAPITAL.

Your "solution" to a non-existent problem COMPLETELY & TOTALLY DESTROYS ANY SEMBLANCE OF THE ORIGINAL FUNDING STRUCTURE AND RATIONALE.

Just as the wreckers want.

[Hannah Bell]

44. The poster is misinformed about that "25%". It's 25% of SCHEDULED benefits.

Scheduled benefits in 2040 are, in REAL TERMS (not just inflation-adjusted ones) HIGHER THAN TODAY'S LEVELS.

Even if they were cut 25%, they'd still be higher than today's.

And (assuming 30-year projections pan out, which they typically haven't), funding 100% = a $1.50/week increase in SS taxes.

The poster thinks it's better to raise SS taxes now to give the government (which already owes us $3 TRILLION) even MORE MONEY TO "BORROW" & GIVE TO THE SUPER-RICH AS TAX CUTS & BAILOUTS.

The poster thinks it's better to raise the retirement age NOW (so more of us can work until we drop)

The poster thinks it's better to reduce benefits NOW --

instead of raising income taxes on the top 1% SO THEY CAN REPAY THE TRUST FUND MONIES THEY "BORROWED" AS TAX CUTS

and waiting until about 2036 to see if social security taxes EVEN NEED TO BE HIKED A LOUSY $1.50 A WEEK.

[Statistical]

47. Wrong. You are 100% wrong and repeating it over and over doesn't change it.

Your SS benefits are based on your actual wages. The wages are used to determine (on a sliding scale) your benefits for year 1 of full retirement.
That amount is then reduced for early retirement and increased for late retirement.

Regardless of which option you take at that point your SS benefits are FIXED in real terms. They are are indexed to cost of living based on COLA so as prices rise so does SS but you can never get ahead of prices. If prices don't rise then SS doesn't rise. If SS rises significantly it simply means so have prices.

SS benefits only rise with cost of living. The nominal amount goes up each year but the purchasing power remains the same.

If you make $50K a year today, say I double your salary but also double the price of everything you need to live on ($7 gas, $5 gallon of milk, etc). Are you richer or poorer? Neither. Despite your paycheck looking impressive your purchasing power is exactly the same. The difference between national and real money.

Notational value of SS benefits rise but the real (purchased) power of SS remains static at your year 1 benefit amount (which is based on your wages).

At 3.5% COLA increase annually (historical average) SS checks in nominal terms will roughly DOUBLE in 20 years however the buying power will be EXACTLY the same as today.


Thus a 25% cut in 2037 is materially no different than a 25% cut today. Sure the check amount might be larger but so will the cost of all goods & services.

[Hannah Bell]

55. Hogwash.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=8526713&mesg_id=8527116

[Statistical]

58. Benefit amount is based on YOUR WAGES.

Nobody elses. If it rises faster than inflation than your benefits on year 1 will be higher than someone elses in the past.

However the converse is also true. If YOUR (as you specifically YOU) wages rise slower than inflation than your year 1 benefit will be less than someon elses in the past.

Regardless once your year 1 benefit amount is determined (100% by your wages only) it only rises by COLA. Period.

SS provides the EXACTLY formula for calculating benefits.
http://www.ssa.gov/pubs/10070.html

[Hannah Bell]

72. hogwash. period.

Maybe you'll believe CBO:

The Congressional Budget Office (CBO) projects that spending for Social Security, adjusted for inflation, will rise from $483 billion in 2003 to $2.5 trillion in 2075. Those estimates are based on CBO's 10-year baseline budget outlook and the "intermediate" long-range assumptions of the trustees of the Social Security system...

Approximately 55 percent of the higher spending is due to an expected increase in the number of beneficiaries...

THE REMAINING 45 PERCENT OF THE RISE IN SPENDING IS DUE TO A PROJECTED INCREASE IN THE REAL VALUE OF SOCIAL SECURITY BENEFIT CHECKS. UNDER THE TRUSTEES' ASSUMPTIONS, THE PURCHASING POWER OF THE AVERAGE EARNERS' BENEFITS AT RETIREMENT IS EXPECTED TO NEARLY DOUBLE BETWEEN NOW AND 2075.

http://www.cbo.gov/doc.cfm?index=4380&type=0


Now could you have the grace to concede YOU'RE WRONG?

[Statistical]

78. CBO is projecting WAGES will rise faster than inflation.

Thus future employees will put more into SS and their benefits will then be higher (inflation adjusted) at year 1.

Nothing the CBO says contradicts with the two principles I outlined:

1) your benefits at year 1 are solely based on your lifetime wages. Period. There is a sliding scale but it is still based on only your wages.

2) your year 2-99 benefits are inflation adjusted exactly equal to year 1.

I hope you have 35 years of good wages at retirement because there is no real increase in annual benefits. The only way you "Get ahead" is if your year 1 benefit is ahead of inflation and that only happens if you wages exceed inflation.

Period.

[Hannah Bell]

80. Your benefits at year one are based on your lifetime earnings AND THE SCHEDULE OF BENEFITS

THAT OBTAINS IN THE YEAR YOU RETIRE.

REAL BENEFIT INCREASES ARE ASSUMED IN THE TRUSTEES' PROJECTIONS, as I've already proven repeatedly.

[Statistical]

82. No trustee report project REAL WAGE increases.

Thus you pay more into SS and as a result your starting benefit is higher.

However once your starting benefit is calculated it ONLY increases by COLA.

[Hannah Bell]

98. Every Trustees' report projects REAL wage increases. Try reading one.

The projections go 75 years into the future -- you know, the time when they PROJECT a NEAR-DOUBLING of REAL wages.

I linked you with that information possibly four times.

You completely ignored it.

[Hannah Bell]

23. correct. the posters are confusing the drawing down of the trust fund --

an expected & indeed planned occurrence -- with the program as a whole.

social security isn't going broke. it's in no danger of going broke, unless the public can be convinced that it is, & allow the wreckers to "fix" it.

[girl gone mad]

25. No.

There are two components of total US public debt:

1. The debt held by the public as a result of the “total net amount borrowed to cover the federal government’s accumulated budget deficits” – that is the government just borrows back what it spends.

2. The debt that is held in so-called government accounts which is “the total net amount of federal debt issued to specialized federal accounts, primarily trust funds (e.g., Social Security)”. Under US law, any surpluses that the trust fund has have to be invested in “special federal government securities”.

If you consult the data from the The Bureau of the Public Debt you will find that as at November 30, 2009 total US public debt outstanding was $12,113,048 million and of that $7,712,387 was held by the public (63.7 per cent) $4,400,660 was held by intergovernmental accounts (36.3 per cent).

The US social security system set up during the Great Depression requires that specially identified payroll taxes be levied to help pay for social security. If there is an excess of revenue raised in any year it goes in to the Social Security Trust Fund which is the responsibility of the US Treasury.

Normally revenue exceeds payouts and the law requires that the surpluses are invested in “special series, non-marketable U.S. Government bonds” which mainstream economists take to mean that the payroll taxes (that is, the Social Security Trust Fund) “finance” US federal government net spending (deficit).

The Trust fund can be supplemented from the US government at any time they like (subject to legislation). The only time this has happened was in 1982 when accrording to the Annual Report the assets of the Trust Fund were close to being depleted and the US Congress allowed the Old Age and Survivors Insurance Trust Fund (OASI), which is the largest of the funds to borrow from elsewhere in the federal system.

The bottom line is that US federal government can always fund its social security obligations and any other nominal obligations that it faces. There is no need for these elaborate arrangements to “store up” spending capacity.

To think that having these “funds” will help governments “afford” commitments in the future is inapplicable in a fiat monetary system.

http://bilbo.economicoutlook.net/blog/?p=6891

[Vickers]

2. That thought has crossed my mind, and once again I will be penalized

for being frugal and planning ahead.

[KansasVoter]

3. So true! Just like paying your mortgage on time.

[WinkyDink]

113. In schools, it's the kids whose parents lived high & in debt who gwe the scholarships.

TRUST ME on this one.

[Hannah Bell]

115. gwe? get?

[Kookaburra]

5. Sorry --

I'm still laughing about the 401k being over $1 million.

:rofl:

With the beating mine took back in 2000 and again last year, I'll be lucky if I don't owe it money.

[awoke_in_2003]

39. yeah, they lost me there. nt

[Statistical]

6. I fear it.

The worst part is planning and not knowing the "rules of the game".

I mean I have neighbors who go on a cruise every year and I try to put 10%-15% away for retirement. Despite them making more than us will we have "too much assets" at retirement and lose our SS? Should I say fuck it and start spending all my income?

Nah I doubt I will but it is troubling trying to make decisions for something 30 years away without knowing the rules. There is no guarantee the rules of SS won't change in the future and you/me have no recourse if/when they do. Unlike an annuity or life insurance contract you have no gurantee what your SS payments will be or even if you will ever get SS.

[Hassin Bin Sober]

16. Buy more BP stock and you won't have a problem

Sorry. Couldn't resist. :)

[Statistical]

121. BURN!

I am glad I had a stop though could have been much worse.

Got in on April 30th, was completely out on May 28th (after 4 day rally broke support). I can' believe how much the stock has deteriorated since then.

[Hassin Bin Sober]

125. How much worse can it get?

I was toy-ing with the idea the other day. They have oodles of cash to ride out the fines and judgments.

But then again, I learned some lessons in 2000-2001 about catching a falling knife.

Hmm.

[Statistical]

126. Yeah I am still watching it but...

the 15% drop yesterday shows the market is ready to ditch it and not looking at fundamentals.

I am looking for a couple things
a) progress on relief wells
b) materially slowing the gusher
c) media getting bored = less headline risk
d) on technical side I want to see 50 day & 120 day turn positive for a couple session in a row.
e) BP have a decline, retest a low, and bounce - (so far every time it retests the lows it punches right through them)
f) Lastly I want high volume 200m+ shares on an up day. So far down day volume far exceeds up day volume.

I "think" BP can build a base around 28-32 likely retesting that multiple times I am just not ready to pull trigger yet.

[Hannah Bell]

8. only if you allow it to happen by buying into the scare stories -- like the one you just repeated,

that social security is "going broke".

it's not.

[Name removed]

11. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Sherman A1]

Thanks!

Hannah for your well reasoned arguments. I agree SS is not going broke and it's just another scam to screw the workers (but as we know, it did work last time).

:thumbsup:

[Sherman A1]

91. Thanks!

Hannah for your well reasoned arguments. I agree SS is not going broke and it's just another scam to screw the workers (but as we know, it did work last time).

:thumbsup:

[The_Casual_Observer]

10. The number of 401ks that go over a million would be so small that

they won't matter.

[KansasVoter]

12. Just an example number. Could be $500,000

[Statistical]

18. Are you account for inflation.

Say 3% inflation. In 2040 $1 million will be the equivalent of $411,986.

A million sounds like a lot but inflation is a killer.

[DURHAM D]

14. No.

And SS is not going broke.

Have you asked yourself why Obama has repeatedly asserted this lie?

[Incitatus]

15. Obama said SS will go broke?

link please?

[DURHAM D]

20. Link?

I gather you didn't watch the debates during the primary.

Or perhaps you don't have a good memory - instead you just go "links ?"

And what do you think the premise for his austerity commission is? He wants the money for the banksters.

[Stardust]

26. Frankly, if your 401K is worth a million, why would you care?

[Statistical]

37. Inflation.

At 3% inflation in 30 years a million is only worth $422K in 2010 dollars.
At 3.5% inflation in 50 years a million is only worth $179K in 2010 dollars.

While the nominal number may look big as prices rise the buying power (true measure of wealth) goes down.

A million dollar has the almost mystical value to some people but it really isn't that much over the long run.

[flamingdem]

59. Shouldn't inflation be offset by gains in the market? nt

[Statistical]

67. Gains in the market is likely how one gets a million dollar 401K.

So say you save 15% of your wages for next 30 years that principle combined with all the gains over 30 years in the market magically equals exactly $1 million.

The point is that 1 million in 2040 isn't worth $1 million in todays dollars because prices have gone up. It is worth less than half that.

[happy_liberal]

27. I hope this chart isn't accurate...

[Hannah Bell]

34. that chart is a bunch of shit. unless you believe it's legitimate to represent *projected*

shortfall over the next 75 years (which is what they've done for both social security & medicare, and which may never materialize, as it is only a PROJECTION based on CONSERVATIVE assumption, which have, since the 90s, been wrong more often than right) as though it were a part of real current debt.

if so, let's calculate the 75-year obligations for military spending by the same rubric.


that chart is dishonest bullshit, designed to mislead, confuse and scare, not to inform. pure garbage.

[Oregone]

29. No

That would be like kicking people off Medicare if they are too rich, or banning their children from public education

Thats the pathway to an institutionalized two tier society...and guess which tier will get the shaft even worse

[SoCalDem]

66. unlikely.. even in the good-times, most people's 401-ks were worth less than 50k

:(

[spinbaby]

94. A good point

My husband and I have been contributing to our 401ks for over 20 years and the two of them together don't come anywhere near a million. Or half a million, for that matter.

[yodoobo]

93. If your a millionaire, you don't need social security

Its quite reasonable and progressive to ask millionaires to give a little back so that everyone can retire.

Frankly we should do it now, BEFORE ss goes broke.

[lamp_shade]

95. +1 I know a bazillionaire who "laughs" at the fact that she gets a SS check every month.

[Hannah Bell]

99. who cares? she got what every other retiree who paid in what she did got.

[WinkyDink]

114. The "Who cares?" part is what kind of nation are we? WHO SAYS THE POOREST MUST PAY FROM THEIR

PITTANCE, WHILE THE TOP "EARNERS" GET A BREAK ON THE UPPER END??

WHO MADE THAT REGRESSIVENESS THE 11TH COMMANDMENT?

[Lasher]

100. The Department of Defense doesn't have a trust fund at all.

So they must be broke already.

[Hannah Bell]

101. :>) good point. & if we project their spending 75 years into the future, it consumes the entire

gdp of this planet and several others.

ergo, cuts must be made, & income taxes on military contractors must be raised.

[Lasher]

104. You are pickin' up what I'm layin' down.

Thanks for your contributions to this thread.

"And if we care about Social Security, which I do, and if we are firm in our commitment to make sure that it’s going to be there for the next generation, and not just for our generation, then we have an obligation to figure out how to stabilize the system. I think we should be honest in presenting our ideas in terms of how we’re going to do that and not just say that we’re going to form a commission and try to solve the problem some other way." - Barack Obama, on the eve of the PA primary, 04/16/08

http://www.ontheissues.org/Celeb/Barack_Obama_Social_Security.htm

[Hannah Bell]

105. ah, the trail of tears & broken promises.

Even so, because benefits are projected to rise each year, even a 24% cut in thirty years would leave those future beneficiaries with higher benefits than Social Security recipients receive today (adjusted for inflation). If there is an argument that benefits and taxes need to be adjusted immediately to avoid future "insolvency,' we must take into account that both incomes and benefits will be higher in those years.

In short, invocations of doomsday scenarios in which we are to believe that Social Security will go belly up and disappear are – even in the context of today's deep recession – utterly false. Under current law, the worst that can happen is that benefits will have to be adjusted automatically downward at some future date, leaving future beneficiaries with benefits that nevertheless will have more buying power than those received by their grandparents.

http://writ.news.findlaw.com/commentary/20090521_buchanan.html

or else they could just agree to a $50/year increase in their social security taxes in 2036 or whenever & get full scheduled benefits.

*if* it trends that way.

which it may not, since projections are not particularly accurate.

the only way ss can go bankrupt is if they rachet workers' salaries down to nothing while continuing to charge full freight for everything else.

but in that case, SS will be the least of our worries.

[KansasVoter]

107. Bullshit! They paid in, they deserve it back!

[yodoobo]

109. Its a payroll tax

Its not a savings account.

I think is time that this country millionaires pitched in and helped a little.

[Hannah Bell]

112. Millionaires make their money from capital, not from wages.

You want millionaires (more to the point, billionaires) to help?

Good. Get someone TO RAISE THEIR INCOME TAXES SO THEY CAN PAY BACK THE MONEY THEY "BORROWED" FROM SOCIAL SECURITY IN THE FORM OF TAX CUTS DURING THE BUSH YEARS.

Which is about half the trust fund to the top 1%.

It's really tiresome to read these posts about how we ought to "stick it to the rich" -- which go on to prescribe exactly the "solution" the truly rich want: more taxes on labor to fund more surpluses they can "borrow".

[yodoobo]

117. why do you care?

If your not a millionaire it doesn't affect you.

If you are, then I suggest that you are a bit biased.

There many ways to solve the SS problem.

One painless method is to not pay benefits to those who do not need them.

There is no "sticking it to them". Its not even something that most millionaires would miss.

[Hannah Bell]

119. THERE IS NO SOCIAL SECURITY "PROBLEM" EXCEPT FOR THOSE WHO WANT TO DESTROY IT.

And their non-stop propaganda assault.

Even at this supposed democratic bastion.

[yodoobo]

128. Even if your right

that there isn't a problem.

Why waste the money paying people who don't need it?

The SS trust fund belongs to everyone.

Once again, assuming that you are correct, by stopping unneeded payments to the wealthy, we could reduce payroll tax withholding on the poor. This would make SS far more progressive than it is now.

[Statistical]

122. Millionare is not as rich as you think especially not in the future.

Inflation is a wealth killer. Even low inflation slowly robs purchasing power.

A million for someone retiring in 2040 has the same purchasing power as $400,000 today (assuming inflation remains low at historical 3%).

Another way to look at it.

Would you consider someone with a pension that pays $2,081 a month (2010 dollars) for life to be "rich"?
Would you take their social security away?

$422,000 today will buy a couple 66 years old an annuity which pays $2,081 until both die.

MILLIONAIRE sounds massive and huge but for those without a pension it is the MINIMUM (especially for those retiring in 20,30,40 years) to provide the same level of income as a pension.

If you wouldn't take SS from a pensioner w/ $2,081 a month guaranteed income why would you do it for a "millionare" which could be used to provide the exact same level of income?

[Lasher]

127. This is a good point.

Retirement planners advise annual drawdown of 5% or less from your retirement nest egg. If you have a total of $1M, that's $50K a year. US median family income was $50,233 in 2007.

If you don't have a monthly pension annuity, you're going to need $1M or more in your IRAs. That's not rich, it's median.

[KansasVoter]

120. They already are. They pay MOST of the taxes.

[Hannah Bell]

108. they currently might "give back" as much of 85% of their earned benefits.

which is a travesty, imo.

why are you so eager to turn social security into a welfare program?

you do know the history of what happens to welfare programs, don't you?

they're defunded.

[yodoobo]

110. then we shouldn't do that.

defund welfare programs that is.

there is no requirement that we continue to do stupid things.

[Hannah Bell]

111. there's no requirement we turn social security into a welfare program, either.

nor any necessity.

[yodoobo]

116. But there is a requirement to fix a system that is going broke.

and this is a painless way to do it.

[Hannah Bell]

118. Social security isn't "going broke," so what system are you talking about?

[LiberalEsto]

97. What 401K? nt

[Skidmore]

124. 401Ks and retirement funds have become a joke since many

people are unable to retire these days given the devastation the mavens of the finance industry have wrought on people. Having been forced into investing pension plans in the stock market and forced into participating in those plans as a condition of employment, I don't give a rat's patootie about whether I get more out of them than what I originally invested. I'd just like my original investment back and in cash. Don't plan to die with debt, don't plan to seek extreme medical intervention to sustain my body should I become very ill. Our village allows residents a free plot in the local cemetery and cremation is the alternative. Scatter my ashes on the prairie. I'll blow out on the same winds I blew in on.


My mother never lived to collect from either her retirement plan or SS. Even with expedited review for terminal illness, her only SS check arrived the day after her funeral. She worked until the day she was diagnosed, exactly 3 months before her death.


Retirement is the hallmark of wealth and I don't know anyone right now who has been able to retire. Stuff and money, the destroyer of worlds. Time to simplify, folks.

[Common Sense Party]

132. How have you been "forced into participating" in any plans as a condition

of employment?

Are you referring to a defined benefit traditional pension plan?

[Change Happens]

134. Yes...