Social Security Hot-Button Topic Among Presidential Hopefuls

[kent]

www.msn.com/en-us/money/retirement/social-security-hot-button-topic-among-presidential-hopefuls/ar-BBkDCHD?li=AA4Zjn

[Politically_Incorrect12]

All this talk of increasing the age up to 70, or taking out the cap, means testing, or even increasing taxes is crazy when people complain that the private market is too risky because it can't have guaranteed gains.  A combination of the above or all of it will probably happen at some point, and eventually Medicare will probably have its age of eligiblity increased as well and people will just say "we need to save it."  At some point a serious discussion probably needs to be had about reworking the system and possibly phasing in some sort of privatized portion.  Maybe even work out a system where people can start drawing the privatized portion out at an earlier age (maybe 60 or 62) and then having the government portion to kick in at age 70 so that the privatized savings only need to last 8-10 years before the government portion kicks in.  In this way people will not have to keep working until 70, especially if they have jobs that might not really be made for it.  Now Medicare is a whole other issue.

[Ombud]

Not only should they increase max age to 70 but they need to scale back SSDI to the same payment as retirement age with minimum early retiree as the least amount. It's only fair JMO

[Politically_Incorrect12]

I just think 70 is way too old, especially for people that would be most effected by the age increase. It doesn't usually go over very well when a company or the government basically says "we want you to pay more and cut expenses by paying you less." It also pits younger people (many of whom think SS won't be around by the time they retire) against older people since it is younger people they are asking to wait until 70.  I think people would be more receptive (although still not like it) if an approach was taken to raise SS tax maybe 5% that went directly into privatized accounts that people could start drawing at 62 tax free.  In this way there would be some savings and since the government funded portion would start at 70, those funds would only need to last 8 years before it kicked in...although ideally, it would be better if those funds lasted longer. 

Personally I think Target Date Funds would work well for those investments, and as an added bonus when people see those funds growing, it might encourage them to try and save even more in other retirement types accounts.  Doing this would still offer all the current features of the SS system we have now with disability and survivor benefits (which are good benefit to have).  I think it would also help people have more in retirement because that would be taken directly out of their checks and they wouldn't get used to it.

[Ombud]

FRA is 67 for those born 1960 on. Why not increase it by 2 months per year until it reaches 70? Granted that would step it up at those born 1978. But it's fair warning and due given longevity

[djAdvocate]

i actually agree with Ombud.  but i would index it to life expectancy, and make it an "old age pension".  otherwise, we will just be kicking the can further down the road.

[Deleted]

I think the SS money should of been left as a separate fund and not changed and spent as general fund money.  It would still be there instead of a pile of IOU's.  This discussion probably wouldn't be happening.

[bean29]

My Dad was a construction worker, he retired at about 58, he tried to do other jobs, but he had physical limitations and employers were not happy so he kept losing those jobs. He was denied for SS disability, but did manage to hold out with his pension until he could take early SS. I really think it is unrealistic to just say ok, everyone is going to retire at 70, how many people do you know that worked until 70?

I think I only know 1, possibly 2. I know more that worked to 65 and 68 but 70 is a long way.

We told my FIL he had to work until 68 b/c then my MIL would be 65 and could access Medicare.  He was kind of Mad at us, but it worked out fine.  His health has deteriorated considerably in the 5 years since he retired.

Luckily my parents were savers so they managed to live on what they had saved and the pension/ss when they could access it.

ETA:  While Dad was denied for Social Security Disability - it was kind of a case of if you don't qualify who does.  Dad had broken his hip and could no longer walk the same.  First it was a cane then a walker, then a wheelchair and finally he could not even roll over or feed himself.  His Death Certificate said he had ALS.  They told us before he died it was not ALS, but something similar.  Dad was not a slacker, I find myself asking myself how my Dad kept working as long as he did and how many years was he in pain before he actually retired. 

[mmhmm]

Jun 5, 2015 10:54:35 GMT -5 bean29 said:

My Dad was a construction worker, he retired at about 58, he tried to do other jobs, but he had physical limitations and employers were not happy so he kept losing those jobs. He was denied for SS disability, but did manage to hold out with his pension until he could take early SS. I really think it is unrealistic to just say ok, everyone is going to retire at 70, how many people do you know that worked until 70?

I think I only know 1, possibly 2. I know more that worked to 65 and 68 but 70 is a long way.

We told my FIL he had to work until 68 b/c then my MIL would be 65 and could access Medicare.  He was kind of Mad at us, but it worked out fine.  His health has deteriorated considerably in the 5 years since he retired.

Luckily my parents were savers so they managed to live on what they had saved and the pension/ss when they could access it.

I worked until I was 71. I only retired because I had to take care of mother. Fortunately, I'm in good health. That's certainly not true for everyone, unfortunately.

[bean29]

mmhmm you were a Nurse right? Isn't it unusual for Nurses to work that long? 

I know it is more then norm for people to continue working in offices, people that have physical jobs tend to need to retire earlier.  

I plan to work as long as I am physically able, but I am trying to save b/c I don't want to feel I have to continue to work b/c I have no savings to fall back on.

[Politically_Incorrect12]

Jun 5, 2015 8:17:22 GMT -5 Ombud said:

FRA is 67 for those born 1960 on. Why not increase it by 2 months per year until it reaches 70? Granted that would step it up at those born 1978. But it's fair warning and due given longevity

Of the many people who knew they could get early SS at 62, what percentage of those people who collect it have other savings?  I'm not sure "fair warning" is applicable in this situation because the people that will be most affected by it are likely the ones who could use it the most.  It looks more to me like the government is just trying to say they want to pay out less and enough people are so hooked into the system that they think getting something is better than nothing, so they go along with just increasing the age and with whatever other changes are likely to come from it.  And if people can't continue working in their current jobs, I guess Walmart could use more greeters or whatever other job they can find to hold them over until they can collect SS. 

[Ombud]

Aren't we the 'taxpayers' the ones that pay out? I'm not aware of a money tree

[Politically_Incorrect12]

Jun 5, 2015 12:15:33 GMT -5 Ombud said:

Aren't we the 'taxpayers' the ones that pay out? I'm not aware of a money tree

Yes "we" the taxpayer pay out, just like "we" the taxpayer pay into the system.  If this was a voluntary system and the government/company said they wanted to increase the age to 70, then fine.  However, if you are going to force people to pay into the system, then they should have a right to expect to get a benefit at a reasonable age.  IMO, 70 is not a reasonable age.  While hoping enough people die sooner can help the government pay out less, it isn't really a good plan.  Like I said, if you want to increase the age, then just increase the tax on SS with the stipulation that ALL of that extra money goes into a privatized account for people to start drawing tax-free at 62 and then have the government portion kick in at age 70 because the people that will be hurt the most by the age increase are the ones who probably will need it the most.

[Ombud]

It's already non taxable to a certain income level

[Politically_Incorrect12]

Jun 5, 2015 12:56:32 GMT -5 Ombud said:

It's already non taxable to a certain income level

Yes it is, but that is neither here nor there.  The point of making the privatized portion tax-free is to help it stretch farther until the government portin kicks in.

[Ombud]

So we agree to disagree. I am not in favor of privitization as a method to fix the system just as I'm not in favor of making other taxes voluntary

[Politically_Incorrect12]

In the end, it's probably going to be means-tested in some way (the move is already made to do the same for Medicare) because "those rich people don't need it as much."  All of this because people don't want to face the fact that even though the system has some good things, there are issues with the way it was set up.  The pay-as-you-go system was great for those in the beginning that paid very little, but it seems that now there is an expectation for people to take less and less.  Now there are going to be those that say people get more in benefits than they pay, but I'm not sure that is true when adding in the time-value-of-money and what could have been made on it.  Of course people could just as easily have blown through it all and had nothing to show in return.

I have to ask why you don't want any part of SS privatized?  Honestly, what is the real fear of privatizing a portion that people can collect earlier and having a portion being government controlled that is collected later?

[zibazinski]

It shouldn't be means tested. Govt had no issue stealing that money and saying they'll pay you this set amount but now that you're ready to collect it-no- you don't need it so il steal it to give to others. It's wrong. It shouldn't be allowed.

[Politically_Incorrect12]

I don't think it should be means-tested, I'm simply stating an opinion that I think that's where it's headed.  If people making over a certain amount can be made to pay more for Medicare, what makes any of us think the same logic won't be applied to SS?

There isn't much we can do about the current system without forming some sort of hybrid and we can't really do that right now without increasing taxes for it.  I think people wouldn't like an increase in taxes, but they would be more ok with it if that money went directly into a privatized account with a choice of investments similar to what is offered to government employees now.  There will still be growing pains with it, but in the long run I think it would be a better system.  


I think the same thing for Medicare in increases taxes to go into a privatized HSA type account for people to use in order to afford different health insurance coverage.  I also think it will give couples where one spouse stayed at home during the marriage more options because (and I might be wrong on this) I don't think Medicare covers spouses until they turn 65.  I'm nor entirely sure how it works after that if the spouse doesn't have enough credits (I want to say they are charged a higher premium).  Whether Medicare should cover dependents such as a SAHS is another discussion all together.  I also realize that such a program could cause other issues such as increasing cost since insurers would know people have those accounts, but it would also allow for more competition to keep them under control.

[Ombud]

Politically_Incorrect12, personally I have no fear of privatization as I am not counting on collecting SSA. But most don't save & i don't want a bunch of marginally housed 80 year olds & my x will be amoung them if not drawing off mine

[djAdvocate]

Jun 5, 2015 14:05:42 GMT -5 deminmaine said:

I agree that it shouldn't be means tested.  It is not welfare, it is an entitlement that one earns through their working life.

It is taxable, however, if the recipient also has over a certain amount of income in addition to the SS.  In fairness, it should also be taxable as a result of passive income over that same threshhold.

this is one of those positions i have adjusted during my time on this board.  i also agree that it should not be means tested, and for exactly the same reason.

[mroped]

SS was never conceived as a"pension" however, many treat it as such. That is why many don't save for retirement. And maybe the low, crapy wages that they've been getting are part of the reason too.
From the creation of SS to today, life expectancy went way way up so it would seem about necessary to increase the age at which one qualifies for it.
I didn't pay much attention to age increase in regards to it and honestly don't realy count to draw. And I'm just 47 so imagine what those that are 25 think about it.
Nonetheless, 70 looks like a good idea-since life expectancy is 79.5- but wouldn't be possible to have eligibility age based on various factors such as the type of work you do or health issues and so on? 
I know it might look biased to some if it is done but for the sake of argument: one office worker and one miner. Do we realy expect the miner to make it to 70 down in the hole?
Forget about pensions and such. They both contributed to SS funding, they bother have equal rights to draw and I suspect an office worker will have a longer life span than a miner.

Question:how does one means test SS or anything else for that mater. The concept is lost on me!

[Ombud]

mroped, there are 3 parts to Social Security in 2 buckets dispensing finds independently.

DISABILITY: broke in 2016
SSI - $$ without work history
SSDI - $$ with work history based on FRA grant

RETIREMENT:
SSA - $$ based on sliding scale with current (new) FRA from 66 - 67 depending on year of birth

The current means testing is done by income taxing it above a certain AGI but that could be construed as dbl taxation as the source it was derived from was already taxed

SS was never conceived as a"pension" however, many treat it as such. ... I know it might look biased to some if it is done but for the sake of argument: one office worker and one miner. Do we realy expect the miner to make it to 70 down in the hole?
Forget about pensions and such. They both contributed to SS funding, they bother have equal rights to draw and I suspect an office worker will have a longer life span than a miner.

[Deleted]

The Social Security "fix" is easy... if politicians had the "balls" to do it.

> Remove the cap on the social security tax collected from payroll.
> Include ALL forms of wage compensation (including "stock options" or whatever, at value at time given)
> Lock the payout of Social Security to no greater than 1.5 times the Federal "poverty line".
> (new idea for me on this one) Change the "scoring system" from it's current "40 points earned at 4 points possible a year" to "4 possible points a year, 2 per year required for each year between 18 and year you claim retirement (so you COULD earn all your points (100) in as little as 25 years of working (If you get all 4 points each year) if you retire at 68 (50 years "between age 18 and claiming Social Security")".



From the Social Security "Retirement Benefits" .pdf:

How do you qualify for retirement benefits? When you work and pay Social Security taxes, you earn “credits” toward Social Security benefits. The number of credits you need to get retirement benefits depends on when you were born. If you were born in 1929 or later, you need 40 credits (10 years of work). If you stop working before you have enough credits to qualify for benefits, the credits will remain on your Social Security record. If you return to work later, you can add more credits to qualify. We can’t pay any retirement benefits until you have the required number of credits

Source

[djAdvocate]

Jun 5, 2015 19:13:47 GMT -5 @richardintn said:

The Social Security "fix" is easy... if politicians had the "balls" to do it.

> Remove the cap on the social security tax collected from payroll.
> Include ALL forms of wage compensation (including "stock options" or whatever, at value at time given)
> Lock the payout of Social Security to no greater than 1.5 times the Federal "poverty line".
> (new idea for me on this one) Change the "scoring system" from it's current "40 points earned at 4 points possible a year" to "4 possible points a year, 2 per year required for each year between 18 and year you claim retirement (so you COULD earn all your points (100) in as little as 25 years of working (If you get all 4 points each year) if you retire at 68 (50 years "between age 18 and claiming Social Security")".



From the Social Security "Retirement Benefits" .pdf:

How do you qualify for retirement benefits? When you work and pay Social Security taxes, you earn “credits” toward Social Security benefits. The number of credits you need to get retirement benefits depends on when you were born. If you were born in 1929 or later, you need 40 credits (10 years of work). If you stop working before you have enough credits to qualify for benefits, the credits will remain on your Social Security record. If you return to work later, you can add more credits to qualify. We can’t pay any retirement benefits until you have the required number of credits

Source

i like this position, Richard.  is this YOURS, or did you get it from someone?

[Deleted]

It's mine. It's been my position for about 15 years now.


ETA: except that last one... about more points being needed. Just thought that one up.

[Politically_Incorrect12]

Jun 5, 2015 19:13:47 GMT -5 @richardintn said:

The Social Security "fix" is easy... if politicians had the "balls" to do it.

> Remove the cap on the social security tax collected from payroll.
> Include ALL forms of wage compensation (including "stock options" or whatever, at value at time given)
> Lock the payout of Social Security to no greater than 1.5 times the Federal "poverty line".
> (new idea for me on this one) Change the "scoring system" from it's current "40 points earned at 4 points possible a year" to "4 possible points a year, 2 per year required for each year between 18 and year you claim retirement (so you COULD earn all your points (100) in as little as 25 years of working (If you get all 4 points each year) if you retire at 68 (50 years "between age 18 and claiming Social Security")".



From the Social Security "Retirement Benefits" .pdf:

How do you qualify for retirement benefits? When you work and pay Social Security taxes, you earn “credits” toward Social Security benefits. The number of credits you need to get retirement benefits depends on when you were born. If you were born in 1929 or later, you need 40 credits (10 years of work). If you stop working before you have enough credits to qualify for benefits, the credits will remain on your Social Security record. If you return to work later, you can add more credits to qualify. We can’t pay any retirement benefits until you have the required number of credits

Source

So you want to remove the cap and have the top marginal rate be 39% federal, another 6+% for SS, and then add in state tax for most people to where the government can take half their check...then you want to cap the benefits?  You think giving the government more money is a "fix?"

[Politically_Incorrect12]

Jun 5, 2015 15:19:25 GMT -5 Ombud said:

Politically_Incorrect12, personally I have no fear of privatization as I am not counting on collecting SSA. But most don't save & i don't want a bunch of marginally housed 80 year olds & my x will be amoung them if not drawing off mine

So you think raising the tax another 5% and privatizing would cause more people to be marginally housed?  I'm simply offering a compromise to those that seem to want to raise the age and those that seem to want to raise the taxes paid.  Raise the taxes, but put it in a privatized account, let people draw off that account earlier and have the government controlled portion for a later age.

[djAdvocate]

Jun 8, 2015 21:28:59 GMT -5 Politically_Incorrect12 said:

Jun 5, 2015 19:13:47 GMT -5 @richardintn said:

The Social Security "fix" is easy... if politicians had the "balls" to do it.

> Remove the cap on the social security tax collected from payroll.
> Include ALL forms of wage compensation (including "stock options" or whatever, at value at time given)
> Lock the payout of Social Security to no greater than 1.5 times the Federal "poverty line".
> (new idea for me on this one) Change the "scoring system" from it's current "40 points earned at 4 points possible a year" to "4 possible points a year, 2 per year required for each year between 18 and year you claim retirement (so you COULD earn all your points (100) in as little as 25 years of working (If you get all 4 points each year) if you retire at 68 (50 years "between age 18 and claiming Social Security")".



From the Social Security "Retirement Benefits" .pdf:

So you want to remove the cap and have the top marginal rate be 39% federal, another 6+% for SS, and then add in state tax for most people to where the government can take half their check...then you want to cap the benefits?  You think giving the government more money is a "fix?"

i don't think he mentioned state taxes, nor did he mention the 39% federal tax.  removing the cap and treating all compensation as "income" would indeed fix the problem with social security, and would probably go a long way to closing the deficit, as well.

what is YOUR fix?

[Deleted]

Jun 8, 2015 21:28:59 GMT -5 Politically_Incorrect12 said:

Jun 5, 2015 19:13:47 GMT -5 @richardintn said:

The Social Security "fix" is easy... if politicians had the "balls" to do it.

> Remove the cap on the social security tax collected from payroll.
> Include ALL forms of wage compensation (including "stock options" or whatever, at value at time given)
> Lock the payout of Social Security to no greater than 1.5 times the Federal "poverty line".
> (new idea for me on this one) Change the "scoring system" from it's current "40 points earned at 4 points possible a year" to "4 possible points a year, 2 per year required for each year between 18 and year you claim retirement (so you COULD earn all your points (100) in as little as 25 years of working (If you get all 4 points each year) if you retire at 68 (50 years "between age 18 and claiming Social Security")".



From the Social Security "Retirement Benefits" .pdf:

So you want to remove the cap and have the top marginal rate be 39% federal, another 6+% for SS, and then add in state tax for most people to where the government can take half their check...then you want to cap the benefits?  You think giving the government more money is a "fix?"

That was JUST my fix for Social Security... If you'd like my fix for all taxes, of all kinds... I'll happily expand my answer.

My fix for Income Tax would be:
Every living human gets a $10,000 deduction, and then the wage earners pay a "flat tax" (maybe 15%-20%... have to crunch the numbers... see what's fair/reasonable) of all income above that. And by "all income" I mean ALL income. If it's a "stock option" it's income. if it's interest from the bank, it's income. If it's a prize won on a game show, it's income. If it's ANY money that you didn't have before, from ANY "business relation"... it's income.

And the part poor people (myself included) would hate... discontinue the "EITC".

My fix for paying for healthcare would be:
A federal sales tax on all sales. 3%. Collected for 5 years BEFORE using it to pay ANY medical cost. While at the same time, tracking medical costs over those 5 years, based on "real costs" not "expanded costs to make up for people that can't pay" (example: counting aspirins as 5 cents each... not $20 each). Then adjusting that tax rate as necessary/reasonable... While, at the same time, putting in price controls on medical care.