H.R. 6489, the Social Security Reform Act of 2016

[Trede]

Since I obsess over the safety margins I'll have in FIRE, I dug up the Social Security Administration's analysis of the subject bill, which was proposed a couple days ago by Rep. Sam Johnson (R-TX).  It's not exactly easy reading, but it is very detailed:
https://www.ssa.gov/oact/solvency/SJohnson_20161208.pdf

Forbes also had an article on it, which at least lays out the major points:
http://www.forbes.com/sites/andrewbiggs/2016/12/08/at-last-a-new-social-security-reform-plan/#6868fcb428d1

I invite my fellow Mustachians who can wrap their heads around this bill to weigh in on impacts for our community.  I'm still working out impacts to House of Trede.

[giggles]

Student verification for for kids 15-19 - huge time waster.  4x the work for .1% savings.  Terrible ROI.

WEP/GPO changes is too favorably weighted to former government employees.  Neglects whole idea that their pensions are so generous because they aren't supposed to get SS. 

Lump sum makes program overly complicated and would benefit only savvy, high income beneficiaries, the way most SS tactics already do. 

[Metric Mouse]

Interesting.  Sounds like it addresses some of the worst issues with SS, while making it only a little more complex. Could be a good place to start. Not sure why kids should have to go to school to get ss survivor benefits...

[seattlecyclone]

Not sure why kids should have to go to school to get ss survivor benefits...

The current program gives survivor's benefits to kids up to age 18, with the ability to extend to 19 if they're still in high school until then. I guess this would just be modifying the requirement to cut kids off a bit earlier if they graduate or drop out before age 18? Seems a bit harsh and wouldn't move the budget needle much.

[Metric Mouse]

Not sure why kids should have to go to school to get ss survivor benefits...

Seems a bit harsh and wouldn't move the budget needle much.

My thoughts exactly.

[Monkey Uncle]

About what I'd expect from the R's.  All benefit cuts and no attempt to pick the easiest low-hanging fruit: raising the amount of income that is subject to the SS tax.

And it's bad for my personal situation because it raises my full retirement age by two years, which presumably means I would take a bigger hit if I start drawing benefits early.  I consider it a personal foul to make such a fundamental change to benefits for people who are 30 years into their careers.  Kind of like moving the goal posts when I'm on the 10 yard line.  The elimination of taxes on benefits might help some, but my FIRE income is likely to be low enough that I would not be paying much tax on SS benefits anyway.

[MDM]

About what I'd expect from the R's.  All benefit cuts and no attempt to pick the easiest low-hanging fruit: raising the amount of income that is subject to the SS tax.

Yep, typical Republicans: cutting benefits to high income folks ("...benefits are ... reduced for roughly the top half of retirees.  ... On top of this, high income retirees...would not receive a COLA. Fourth, the plan would limit the size of spousal benefits for higher-income retirees") and increasing benefits to low income folks ("...introduces a stronger safety net component to Social Security. For a low-earner who worked a full career, a new minimum benefit would boost monthly benefits by about 10 percent over current benefits. For a very-low earner with a full career, benefits would rise by over 20 percent").

Oh, wait, that's not what.... ;)

[outoftime]

So, from what I can tell, this plan is bad for early retirees, though not for any of the reasons mentioned so far. The reason is not straight forward so I'll try to explain. (Google "SS bend point" if that isn't a familiar concept to you.)

Under current rules, money earned is pooled across the 35 benefit years to fill up the first bend point, then the second. Thus if you work significantly less than 35 years, you can still use up all of the "90%" space up to the first bend point (from all 35 years) where 90 cents on the dollar of all your income adds to your primary insurance amount (PIA). This gets reduced to 35% after the first bend point and finally 15% after the second bend point. Thus I could work about 20 years (I earn over the SS limit every year) and be able to fill up to the second bend point where additional earnings only increase the PIA by 15%. Thus working past 20 years didn't increase my SS benefit significantly.

Under the new plan, each year gets its own PIA number and the top 35 get summed together. That means that you won't be using the 95% space (increased from 90% in the new law) in all 35 years but only in the year that you earned that money. The net effect is that your PIA could be reduced significantly, say, if you only worked 10 years as income that used to all count 90% toward your PIA would only be counted at 95%, 27.5%, 5%, or 2% depending on how much you earned.

In the grand scheme of things, this change is consistent with Republican goals that encourage people to work as it rewards those that paid into the SS system for a longer period of time. As a result, earning a little money every year after early retirement will help your PIA significantly.

[onlykelsey]

Thanks for posting.  It does seem like it focuses on a lot of areas with minimum budgetary return (early retirees, shifty 15 year olds who are pretending to be students [??]).

I have a SSA history back to 2002, which is not bad for being 30.  I know it's probably overly conservative but I just assume I'm going to see nothing out of SSA in my plans.

[rantk81]

In my 35-year lifetime, the SS payroll tax rate has been increased by 16%, the SS wage base has been increased 328% (with the government's own BLS CPI data shows inflation increasing only 263% in that time), and my full retirement age has been already pushed out two years. 

Now they want to make me pay more, delay my benefits a couple more years, and reduce promised benefits even more?

F that. 

[BTDretire]

Not sure why kids should have to go to school to get ss survivor benefits...

Seems a bit harsh and wouldn't move the budget needle much.

My thoughts exactly.

  I like it!
If your not going to school. get off your butt, get a job and get off the dole.

[BTDretire]

In my 35-year lifetime, the SS payroll tax rate has been increased by 16%, the SS wage base has been increased 328% (with the government's own BLS CPI data shows inflation increasing only 263% in that time), and my full retirement age has been already pushed out two years. 

Now they want to make me pay more, delay my benefits a couple more years, and reduce promised benefits even more?

F that.

 There is not enough money going into SS to meet the money going out in the future.
What fiixes would you propose to correct that very real problem?

[rantk81]

In my 35-year lifetime, the SS payroll tax rate has been increased by 16%, the SS wage base has been increased 328% (with the government's own BLS CPI data shows inflation increasing only 263% in that time), and my full retirement age has been already pushed out two years. 

Now they want to make me pay more, delay my benefits a couple more years, and reduce promised benefits even more?

F that.

 There is not enough money going into SS to meet the money going out in the future.
What fiixes would you propose to correct that very real problem?

Every couple years when the congresscritters pass a new bill to "permanently fix" social security, they never consider making any changes to the people who are already collecting benefits.

Maybe they should re-calculate the benefit calculation for everyone who is already drawing the monthly check, with the same formulas that are supposed to be applied to people who are still working.

[onlykelsey]

Not sure why kids should have to go to school to get ss survivor benefits...

Seems a bit harsh and wouldn't move the budget needle much.

My thoughts exactly.

  I like it!
If your not going to school. get off your butt, get a job and get off the dole.

I don't think most people here are really disagreeing, just saying that it will not improve SS's budget.  There are very few teenagers getting survivor benefits, survivor benefits are small and short term, and most teenagers ARE in school.  There is very little money to be saved by spending government money trying to hunt down teenagers with dead parents who also dropped out of school early. 

Similarly, I worked as much as a teenager legally could in my state, and looking at my statement, I paid like $200 in to the system as a teenager.  Teenagers can't earn enough (on the books) to have it make sense for the government to spend extra money enforcing

[wenchsenior]

In my 35-year lifetime, the SS payroll tax rate has been increased by 16%, the SS wage base has been increased 328% (with the government's own BLS CPI data shows inflation increasing only 263% in that time), and my full retirement age has been already pushed out two years. 

Now they want to make me pay more, delay my benefits a couple more years, and reduce promised benefits even more?

F that.

 There is not enough money going into SS to meet the money going out in the future.
What fiixes would you propose to correct that very real problem?

Every couple years when the congresscritters pass a new bill to "permanently fix" social security, they never consider making any changes to the people who are already collecting benefits.

Maybe they should re-calculate the benefit calculation for everyone who is already drawing the monthly check, with the same formulas that are supposed to be applied to people who are still working.

Just want to point out that the last bill overhauling SS in an attempt to really fix its solvency was in the early 1980s. Not 'every couple years'. 

[scantee]

Getting rid of SS is a death by a thousand cuts situation, since Republicans know they can't do away with such a popular program by enacting big changes, so they propose seemingly minor changes, such as these, couched in misleading language intended to make people think that this will be good for low-income folks at the expense of high-income folks. This is misdirection though, and it's not conjecture to assume as such, since it is perfectly ideologically consistent with them wanting to get rid of SS altogether, a goal that Ryan and other Republicans have been very clear about for forever.

As far as these specific cuts: raising the age for receipt of full benefits is a back door way to cut benefits across the board because most people have the take the reduced amount at an earlier age. Few people are able to work full-time until 69: due to physical reasons, for laborers, and because they are pushed out, for professionals (we don't live in a culture that particularly values experience and wisdom). This is I think one of the bigger "cuts" in the plan since it affects high- and low-income workers alike.

As outoftime mentioned, this plan is bad for people who don't have consistent full-time work histories. Women (mostly) who take time off to be home with young children, people who take time off to care for ailing/dying relatives, those with chronic illnesses, anyone who experiences a long spell of unemployment, and early retirees will receive reduced benefits, regardless of peak earnings, due to their shortened work histories.

Cutting benefits for 15-18 year olds who have graduated will hardly save any money whatsoever, but why pass up an opportunity to limit the benefits of teenagers with deceased parents? Added bonus: 15 to 17-year-olds can't even vote, so it's not as if this is a constituency they need to answer to. Also note, that this cut will add an additional layer of bureaucracy to the system, since teenagers receiving benefits will have to go through an extra step to prove eligibility, and that bureaucracy doesn't pay for itself so it will certainly cost money.

[robartsd]

Every couple years when the congresscritters pass a new bill to "permanently fix" social security, they never consider making any changes to the people who are already collecting benefits.

Maybe they should re-calculate the benefit calculation for everyone who is already drawing the monthly check, with the same formulas that are supposed to be applied to people who are still working.

One way to do this would be to calculate benefits according to the new formula. Immediately raise benefits if the new formula benefits the recipient, if the new formula calls for reduced benefits reduce or cancel future COLA to adjust down over time.

I don't like the benefit bump at 20 years into retirement - the COLA should be set up so that it is not needed.

[AZDude]

scantee hit most of the main points, but overall, IMO, this bill is a giant plop of diarrhea.

Most SS beneficiaries can barely survive on their current income, so any cut is a terrible idea. Raising the retirement age is idiocy since many people physically cannot work until that age(or get laid off and cannot find another job). This would cause people who would get SS to apply for disability or other benefits instead, resulting in a close to zero cost-savings.

The only real solution is to raise taxes. I don't like. You don't like. No one likes it, but that is the truth. Eliminate the thresholds for high income earners. Make them pay SS on all of their income. Raise SS taxes for everyone to a sustainable level(permanently, not until 20XX).

[Mother Fussbudget]

There is not enough money going into SS to meet the money going out in the future.
What fiixes would you propose to correct that very real problem?

Everyone who's interested in this topic should go to your local library, then check-out and read:
"Get What's Yours: The Secrets to Maxing Out Your Social Security" by Larry Kotlikoff 
In the book, it delves into many options that exist for 'saving' Social Security - many of which do NOT involve cutting future benefits, NOR pushing out the retirement age.  However, the ONLY thing you hear out of the Republicans via the media is - "decrease benefits / increase the retirement age".

The most viable solution is to remove the earnings cap on FICA.  Currently, we pay 16% FICA tax on the first $118K of earnings.  That represents your max earnings for SS purposes.  Earnings above $118K aren't taxed, and don't count toward your earnings totals.  The simple solution to add 75 years of viable life to SS is to REMOVE the cap - make earners who earn over $118K/year continue to pay SS tax on ALL income - while still capping the $$'s that count toward SS at $118k.  Those (like myself) earning >$118K/year will miss the little "bump-up" in our typical December paychecks (once we've surpassed the $118K earnings limit, and that additional 16% is no longer removed), BUT... given the option of continuing to take out the 16% now, versus having to wait until 69 to reach full retirement age & SS eligibility (already 67 for anyone over 53), I'll continue to give the tax to keep the program strong enough so I'll at least receive *some* dollars back from the program in the future. 

The book shows that most retirees (48%) sign up for Social Security the first year they're eligible - even though they will receive a larger benefit for every month they delay signing up.  Those who wait until (currently) age 70 receive the largest benefit.  After reading this book, I'm now convinced that SS *WILL* be around once I'm old enough to receive benefits.  BUT... because I've been working all these years thinking the program will be bankrupted, or removed by the time I needed it, I've been saving to avoid needing it.  Therefore, I'll be waiting until the last possible day to sign up - currently age 70... age 72 under the proposed changes.

[ImCheap]

Why do I get the feeling when I get to the SS window is another 15 years is going to say!

[gimp]

I bet this is just the start of four or eight years of "starving the best" where "fiscal conservatives" (unless it's pork spending for their state, military, tax cuts for their donors, etc) are going to try to turn americans against social security.

If this passes - and I bet it will - while I'm going to be pretty upset that all the SS benefits I've paid into will never ever return to me, and chances are I'll continue to be taxed for other people's SS for a long-ass time -

I'm kind of excited to see all the people who voted these republicans into office fucking starve without social security.

They'll probably blame democrats, but I don't really care who they blame - I'll be sitting pretty in my tower, which I've budgeted without ever thinking about SS, as they go hungry due to the choices they made.

Only thing I gotta worry about is them trying to come take more of what's mine, when their representatives steal everything they have. Anyone selling guns and ammo?

[Giro]

I don't agree with raising the ceiling at all....and some want no ceiling....WOW.  Many folks will only see a small percentage of what they paid in now, if we raise the limit...that percentage will be miniscule if they ever even see a penny of it. 

I think we need to do away with spousal benefits.  If you didn't pay in or you paid in a small amount, that's what your benefit should be based on.  You do not get 1/2 of your spouses social security. 

[AZDude]

I don't agree with raising the ceiling at all....and some want no ceiling....WOW.  Many folks will only see a small percentage of what they paid in now, if we raise the limit...that percentage will be miniscule if they ever even see a penny of it. 

I think we need to do away with spousal benefits.  If you didn't pay in or you paid in a small amount, that's what your benefit should be based on.  You do not get 1/2 of your spouses social security.

Fairly ridiculous. If you work a "full career"(not sure how to define that), you should get a retirement from SS that is at least slightly above the poverty level.

Doing away with spousal benefits is also terrible. A SAHP gets screwed and that is not something that should be actively discouraged.

[Trede]

So I just processed what outoftime wrote above and had to write myself out an example to see the effects.  I used the 2017 bend point amounts for current SS, and didn't rebuild what they would be under the new bill because I'm not sure how to do that, but just tested the "mini-PIA" concept.  I assumed a person who worked 10 years and earned 10K in year 1, 20K in year 2, etc. up to 100K in year 10.  Zero earnings for the balance of 35 years, this is just a conceptual example to see the effects on an early retiree.

Under current calculations, the average annual earnings over 35 years is $15,714, or $1369.5/month.  Using current bend points I get a monthly PIA (benefit) of $931.5.

Under the new bill I assume the calculation goes like this: For each year, calculate monthly average earning.  Apply bend point calculation, but then divide the benefit by 35, so the year counts for 1/35 of your benefit.  So, in the 10K year, that's $833/month, which is below the first bend point of $885, so the PIA calculation is 90% of that, but then divided by 35.  For that year, the person earned a permanent $21 addition to his SS benefit.  Fast forward to adding up all the little benefits over this example's 10 year working career, and I got $529.65.

That's a whole lot less than $931.5. 

[teen persuasion]

So I just processed what outoftime wrote above and had to write myself out an example to see the effects.  I used the 2017 bend point amounts for current SS, and didn't rebuild what they would be under the new bill because I'm not sure how to do that, but just tested the "mini-PIA" concept.  I assumed a person who worked 10 years and earned 10K in year 1, 20K in year 2, etc. up to 100K in year 10.  Zero earnings for the balance of 35 years, this is just a conceptual example to see the effects on an early retiree.

Under current calculations, the average annual earnings over 35 years is $15,714, or $1369.5/month.  Using current bend points I get a monthly PIA (benefit) of $931.5.

Under the new bill I assume the calculation goes like this: For each year, calculate monthly average earning.  Apply bend point calculation, but then divide the benefit by 35, so the year counts for 1/35 of your benefit.  So, in the 10K year, that's $833/month, which is below the first bend point of $885, so the PIA calculation is 90% of that, but then divided by 35.  For that year, the person earned a permanent $21 addition to his SS benefit.  Fast forward to adding up all the little benefits over this example's 10 year working career, and I got $529.65.

That's a whole lot less than $931.5.

I think it will look even worse using the new factors: 95%, 27.5%, 5%, 2%.

Then there's that whole minimum PIA (not to be confused with the mini-PIA):  a worker with 35/20/19/15/10 YOW get a PIA of at least 35/35/19/15/0% of AWI / 12, where a YOW = $10,875 in 2017.  So you really need >10 years of work, and more than full-time min wage.

I'm already short years : college work doesn't count, SAHM for 20 years, and now my part time income wasn't high enough for several years (despite being high enough to earn "quarters").

I really hate when they change the rules essentially retroactively for those of us more than halfway through the 35 year span.

[teen persuasion]

Very interesting how it plays out for low income workers - I ran thru my current benefits just with earnings to date, part-time, few years.  Under current methods, $280.  Proposed new bend points and factors, $113 228.  Realized I calculated it wrong.

The 95% applies to earnings under roughly $1k/month.  Go over $12k/year, and the factor drops to 27.5%.  Go over about $48k/year, the factor drops to 5%.

[bobechs]

Why do I get the feeling when I get to the SS window is another 15 years is going to say!

Uhhhmmm...

I think I know where you get that feeling from.

Mod Note: Image removed. Going to the trouble to find a meme that specifically breaks forum rules? Well, at least you put effort into it. Warning issued.

[scantee]

I don't agree with raising the ceiling at all....and some want no ceiling....WOW.  Many folks will only see a small percentage of what they paid in now, if we raise the limit...that percentage will be miniscule if they ever even see a penny of it. 

I think we need to do away with spousal benefits. If you didn't pay in or you paid in a small amount, that's what your benefit should be based on.  You do not get 1/2 of your spouses social security. 

Spousal benefits are one of the only remaining ways we as a society ensure that people who provide unpaid caregiving work do not end up destitute, should they become divorced or widowed. Saying that spouses shouldn't receive an equal apportionment of benefits is a nihilistic viewpoint that indicates you believe there is zero value in the unpaid caregiving and emotional labor that people do for the benefit of young children and the aged or ailing. Hell, let's be honest here, we are not talking about people, generally, we're mostly talking about women, who are much more likely than men to provide this type of care. And I don't believe that's the way it should be, I would love it if more men were involved in these types of unpaid work activities, but a big reason they are not is because they know our society doesn't value it and because it puts them at severe, long-term economic risk. Cheering on policy decisions that only hasten the economic risks of caregiving work is a crass suggestion that completes frays whatever tiny shreds of the civic bonds that still remain in our fallen country.

[robartsd]

I think the simplest way to make spousal benefits fair to single people without penalizing a SAHP would be to credit each member of a married filing joint couple with half of their combined SS wages for the year.

[ender]

I think the simplest way to make spousal benefits fair to single people without penalizing a SAHP would be to credit each member of a married filing joint couple with half of their combined SS wages for the year.

Big bonus for high income, SAHP families though.

[starguru]

The most viable solution is to remove the earnings cap on FICA.  Currently, we pay 16% FICA tax on the first $118K of earnings.  That represents your max earnings for SS purposes.  Earnings above $118K aren't taxed, and don't count toward your earnings totals.  The simple solution to add 75 years of viable life to SS is to REMOVE the cap - make earners who earn over $118K/year continue to pay SS tax on ALL income - while still capping the $$'s that count toward SS at $118k.  Those (like myself) earning >$118K/year will miss the little "bump-up" in our typical December paychecks (once we've surpassed the $118K earnings limit, and that additional 16% is no longer removed), BUT... given the option of continuing to take out the 16% now, versus having to wait until 69 to reach full retirement age & SS eligibility (already 67 for anyone over 53), I'll continue to give the tax to keep the program strong enough so I'll at least receive *some* dollars back from the program in the future. 

First your numbers are off.  The SS tax is 12.4% up to the income limit, half payed by the employee and half by the employer. 

But going on your number,  you think it's "fair" to raise high wage earners marginal rate to 55% (39+16) before even counting sales, state, property, and other federal taxes?

Why not raise the tax 2.8% (split between employer and employee), keep the cap in place, and eliminate the shortfall altogether.   Since lower earners  benefit more from SS than higher earners, this seems more "fair" as the people who benefit most from the system pay into it.

Why not tax income investment the same as earned wages, or add a SS tax to investment income?  Since most "rich" people make money off unearned income, this is the best way to actually "tax the rich" if you believe in that sort of thing.

Why not require people to save money, like they do in Australia?

Why not encourage companies to pay lower wage earners more (via reforming the corporate tax code), thus increasing the amount of income subject to the SS tax.

There are any number of ways to fix SS without demonizing "the rich".

[Monkey Uncle]

About what I'd expect from the R's.  All benefit cuts and no attempt to pick the easiest low-hanging fruit: raising the amount of income that is subject to the SS tax.

Yep, typical Republicans: cutting benefits to high income folks ("...benefits are ... reduced for roughly the top half of retirees.  ... On top of this, high income retirees...would not receive a COLA. Fourth, the plan would limit the size of spousal benefits for higher-income retirees") and increasing benefits to low income folks ("...introduces a stronger safety net component to Social Security. For a low-earner who worked a full career, a new minimum benefit would boost monthly benefits by about 10 percent over current benefits. For a very-low earner with a full career, benefits would rise by over 20 percent").

Oh, wait, that's not what.... ;)

The bill includes a few shiny baubles to make it look like the poor are getting a better deal, but the cuts offset some of that extra benefit (I haven't calculated how much), and middle class folks are the ones who will feel the most pain from the cuts.  The increase in the retirement age hurts low and middle income people the most, because they generally can't afford to wait until full retirement age to start their benefits.  So their payout will be permanently reduced.  For the same reason, they won't benefit from the increase in benefits that is awarded for waiting until age 72 to claim benefits.  The change to chained CPI is a massive benefit cut in disguise; essentially it is an automatic annual cut in the benefit.  Again, it will hurt the most for people of modest means who rely on SS for a large portion of their income and spend much of their income on housing and medical care.  The elimination of taxes on SS benefits will restore some of the cuts that rich folks are taking, but will have no benefit for most middle and lower income people who aren't paying much (or any) tax in the first place.

[BTDretire]

Cutting benefits for 15-18 year olds who have graduated will hardly save any money whatsoever, but why pass up an opportunity to limit the benefits of teenagers with deceased parents? Added bonus: 15 to 17-year-olds can't even vote,

  You can't legally quit school until you are 16, so 16 to 18 year olds.
It seems like a good incentive to keep kids in school, and if they are not in school,
it is best they are working. Single parent children in general are at higher risk for problems,
so keep them busy in school or work, don't just throw a monthly check at them to run the streets.

[MDM]

...make it look like the poor are getting a better deal, but the cuts offset some of that extra benefit (I haven't calculated how much)....
...elimination of taxes on SS benefits will restore some of the cuts that rich folks are taking....

Fair enough - it can't accurately be reduced to a sound bite, because there are many "it depends..." issues and the whole thing is a proposal at this point, not a law.

[onlykelsey]

Cutting benefits for 15-18 year olds who have graduated will hardly save any money whatsoever, but why pass up an opportunity to limit the benefits of teenagers with deceased parents? Added bonus: 15 to 17-year-olds can't even vote,

  You can't legally quit school until you are 16, so 16 to 18 year olds.
It seems like a good incentive to keep kids in school, and if they are not in school,
it is best they are working. Single parent children in general are at higher risk for problems,
so keep them busy in school or work, don't just throw a monthly check at them to run the streets.

To be clear, minors do not get the checks.  They go to the surviving parent or guardian. 

Also, what you can quit school is not a federal matter, there are states that allow kids to stop school before 16.

You can look at the stats on who the minors are who get these benefits: https://www.ssa.gov/policy/docs/ssb/v71n1/v71n1p1.html   It looks like there are about 500,000 15+ year old minors getting survivor benefits.   Nationally the drop out rate is about 7%.  It is higher among high-risk populations (presumably including orphans) but SS benefit recipients tend to be whiter and less poor than the average population, so I think 7% is a fair place to start.  So we are maybe talking about 37,000 orphaned children here.  It doesn't even seem worth us discussing, let alone spending government money enforcing.

[radram]

In my 35-year lifetime, the SS payroll tax rate has been increased by 16%, the SS wage base has been increased 328% (with the government's own BLS CPI data shows inflation increasing only 263% in that time), and my full retirement age has been already pushed out two years. 

Now they want to make me pay more, delay my benefits a couple more years, and reduce promised benefits even more?

F that.

 There is not enough money going into SS to meet the money going out in the future.
What fiixes would you propose to correct that very real problem?

Every couple years when the congresscritters pass a new bill to "permanently fix" social security, they never consider making any changes to the people who are already collecting benefits.

Maybe they should re-calculate the benefit calculation for everyone who is already drawing the monthly check, with the same formulas that are supposed to be applied to people who are still working.

+1
I am getting kind of tired of hearing that the problems created by the baby boomers need to be fixed, but the boomers can not sacrifice anything in order to do it. The fact remains that all of those alive had some part in the 20 trillion spent but not paid for. To make a plan to have future generations pay for it does not sit well with me, especially since we are about to witness the largest transfer of wealth ever seen in human history, and most likely a 100% tax free transfer ($5,500,000 tax free transfer is not enough).

When you die, your debtors come calling to collect before the remaining is given to your beneficiaries. Why isn't the same true for deficits and debt of the country. Do you think we would be talking about tax cuts today if there was a 100% inheritance tax until the national debt is paid off? Not saying that is my solution, but boy would that encourage us to pay our bills as we go.

[calimom]

Not sure why kids should have to go to school to get ss survivor benefits...

The current program gives survivor's benefits to kids up to age 18, with the ability to extend to 19 if they're still in high school until then. I guess this would just be modifying the requirement to cut kids off a bit earlier if they graduate or drop out before age 18? Seems a bit harsh and wouldn't move the budget needle much.

Hard to imagine it's much of a thing, but maybe it's more prevalent than we think. My children receive survivors' benefits and will continue to till 2024. Before 1981, college students were eligible if they had proof of enrollment/attendance. That ended with the Reagan Administration.

[Erica]

I don't think this will go anywhere. It raises the retirement age which hardly anyone wants.

But...it does eliminate the earnings test. Starting Social Security benefits before reaching full retirement age brings into play the earnings test. If a working individual starts receiving Social Security payments before full retirement age, Social Security will deduct $1 in benefits for each $2 that person earns above an annual limit of  $15,720 for 2016

Incentives to work longer, especially for the low income who have very little social security seems appealing. Working P/T keeps people active and happy, and retirement is a silly concept anyhow :)

[Metric Mouse]

I don't think this will go anywhere. It raises the retirement age which hardly anyone wants.

But...it does eliminate the earnings test. Starting Social Security benefits before reaching full retirement age brings into play the earnings test. If a working individual starts receiving Social Security payments before full retirement age, Social Security will deduct $1 in benefits for each $2 that person earns above an annual limit of  $15,720 for 2016

Incentives to work longer, especially for the low income who have very little social security seems appealing. Working P/T keeps people active and happy, and retirement is a silly concept anyhow :)

Great points. I'm just hoping this starts a conversation about SSI reform, and the ball begins rolling. And I think now is a great time to make some hard choices, because nobody will feel bad blaming everything on Trump when he signs a bill. If it's good, the Republicans can take credit for it; if it's unpopular, blame the President, who few people like anyway. I see it as a win-win for congress.

[Erica]

I don't think this will go anywhere. It raises the retirement age which hardly anyone wants.

But...it does eliminate the earnings test. Starting Social Security benefits before reaching full retirement age brings into play the earnings test. If a working individual starts receiving Social Security payments before full retirement age, Social Security will deduct $1 in benefits for each $2 that person earns above an annual limit of  $15,720 for 2016

Incentives to work longer, especially for the low income who have very little social security seems appealing. Working P/T keeps people active and happy, and retirement is a silly concept anyhow :)

Great points. I'm just hoping this starts a conversation about SSI reform, and the ball begins rolling. And I think now is a great time to make some hard choices, because nobody will feel bad blaming everything on Trump when he signs a bill. If it's good, the Republicans can take credit for it; if it's unpopular, blame the President, who few people like anyway. I see it as a win-win for congress.

I agree completely

[FernFree]

I think we need to do away with spousal benefits.  If you didn't pay in or you paid in a small amount, that's what your benefit should be based on.  You do not get 1/2 of your spouses social security.

That's a great idea.  Let's just leave all of the widowed stay-at-home Mom's to live on the streets and eat out of dumpsters.  As long as it doesn't impact my paycheck, right?

[FernFree]

When you die, your debtors come calling to collect before the remaining is given to your beneficiaries. Why isn't the same true for deficits and debt of the country. Do you think we would be talking about tax cuts today if there was a 100% inheritance tax until the national debt is paid off? Not saying that is my solution, but boy would that encourage us to pay our bills as we go.

I love this idea!  Not 100%, but some level of increased inheritance tax until deficit = $0.  The people in power who got us into the debt will be on the hook to pay it off instead of leaving the young and the poor to figure it out "later".

[RangerOne]

One thing about working 35+ years. Is this really realistic? 35 years maybe 40 for people who don't get higher degrees is right on the edge of how long people can work. I don't think this properly considers age discrimination.

A person in their 60's is unlikely to find another job in their primary field and when times get tough they tend to get pushed out or laid off first. Basically telling someone with a career that they can work past 65 is just saying you can go get a job at Wallmart because it is unlikely your primary career is interested in higher an old person at a very high wage based on experience.

Until our society addresses age discrimination in the workforce and whether it even makes sense for old people to linger in the workforce for so long it is at best dubious to ask them to work.

[RangerOne]

With regards to non working spousal benefits this point is too vague in that article to say if its good or bad. I didn't realize that currently a non working spouse could claim 50% of her working spouses benefits at age 66.

That seems unnecessary if the spouse is alive. However I would be concerned if the spouse was not afford a healthy proportional amount of a working spouses benefits if the primary worker passes away first.

A non working spouse often is doing society a great service by being allowed to raise and look after children and generally enable the primary earner to stay focused and in the workforce. I would think defending this dynamic would be a common theme among conservatives with traditional values.

[hogfanboy]

an interactive tool to test your solution
http://crfb.org/socialsecurityreformer/

I like
1) Put any new government workers on the SS system  9% (never understood why they were allowed to have their own system)
2) Apply a 3% surcharge above the current max  24%
3) 1.8% increase in payroll tax rate (0.9 employee and 0.9 employee) 64%  (So my share goes from 6.2%  to 7.1%)

Problem  solved!  what is next on the check list (world peace- N.P.)

[Monkey Uncle]

One thing about working 35+ years. Is this really realistic? 35 years maybe 40 for people who don't get higher degrees is right on the edge of how long people can work. I don't think this properly considers age discrimination.

A person in their 60's is unlikely to find another job in their primary field and when times get tough they tend to get pushed out or laid off first. Basically telling someone with a career that they can work past 65 is just saying you can go get a job at Wallmart because it is unlikely your primary career is interested in higher an old person at a very high wage based on experience.

Until our society addresses age discrimination in the workforce and whether it even makes sense for old people to linger in the workforce for so long it is at best dubious to ask them to work.

Even though many in the US plan on working past 65, most end up retiring before that age due to health issues, layoffs, just can't take it any more etc.  So it strikes me as odd that raising the retirement age even further beyond the already unrealistic 67 is the first solution that many politicians reach for when they're trying to solve the SS conundrum.  The only thing I can figure is that politicians just don't understand (or don't care about) people who live in the real world.

But regarding your comment about working 35 years, yes, I think that is a realistic expectation for most people.  I'm not 50 yet, and I've been working in some capacity or other for 32 years.  Someone who starts working at 20 would only be 55 after 35 years, which is way earlier than most Americans retire.

[MonkeyJenga]

I don't think this will go anywhere. It raises the retirement age which hardly anyone wants.

But...it does eliminate the earnings test. Starting Social Security benefits before reaching full retirement age brings into play the earnings test. If a working individual starts receiving Social Security payments before full retirement age, Social Security will deduct $1 in benefits for each $2 that person earns above an annual limit of  $15,720 for 2016

Incentives to work longer, especially for the low income who have very little social security seems appealing. Working P/T keeps people active and happy, and retirement is a silly concept anyhow :)

Great points. I'm just hoping this starts a conversation about SSI reform, and the ball begins rolling. And I think now is a great time to make some hard choices, because nobody will feel bad blaming everything on Trump when he signs a bill. If it's good, the Republicans can take credit for it; if it's unpopular, blame the President, who few people like anyway. I see it as a win-win for congress.

I agree completely

The polls disagree. Trump is more popular among Republicans than Paul Ryan is, who is the face of congressional Republicans.

Why do you think so many Republicans kept their endorsement through all the scandals? They need him, because he's more popular.

Even though many in the US plan on working past 65, most end up retiring before that age due to health issues, layoffs, just can't take it any more etc.  So it strikes me as odd that raising the retirement age even further beyond the already unrealistic 67 is the first solution that many politicians reach for when they're trying to solve the SS conundrum.  The only thing I can figure is that politicians just don't understand (or don't care about) people who live in the real world.

Republicans don't want social security to exist at all. It's not about a genuine attempt to make the system solvent, it's about how to chip away at it bit by bit. SS is popular, so they can't outright say they want to get rid of it.

[dude]

About what I'd expect from the R's.  All benefit cuts and no attempt to pick the easiest low-hanging fruit: raising the amount of income that is subject to the SS tax.

And it's bad for my personal situation because it raises my full retirement age by two years, which presumably means I would take a bigger hit if I start drawing benefits early.  I consider it a personal foul to make such a fundamental change to benefits for people who are 30 years into their careers.  Kind of like moving the goal posts when I'm on the 10 yard line.  The elimination of taxes on benefits might help some, but my FIRE income is likely to be low enough that I would not be paying much tax on SS benefits anyway.

While I agree generally, it's worth noting that the income cap has been rising steadily for a while now, at far greater than the rate of inflation.  From 2016 to 2017, it's going up 9.3%!  (i.e., from $118,500, to $127,200).  So yeah, that's already happening.

[dude]

About what I'd expect from the R's.  All benefit cuts and no attempt to pick the easiest low-hanging fruit: raising the amount of income that is subject to the SS tax.

Yep, typical Republicans: cutting benefits to high income folks ("...benefits are ... reduced for roughly the top half of retirees.  ... On top of this, high income retirees...would not receive a COLA. Fourth, the plan would limit the size of spousal benefits for higher-income retirees") and increasing benefits to low income folks ("...introduces a stronger safety net component to Social Security. For a low-earner who worked a full career, a new minimum benefit would boost monthly benefits by about 10 percent over current benefits. For a very-low earner with a full career, benefits would rise by over 20 percent").

Oh, wait, that's not what.... ;)

The problem with this approach is it turns the program into a re-distribution program and gives wealthier retirees and workers reason to work to dismantle it, which is ultimately what the GOP would like to see.

[dude]

Getting rid of SS is a death by a thousand cuts situation, since Republicans know they can't do away with such a popular program by enacting big changes, so they propose seemingly minor changes, such as these, couched in misleading language intended to make people think that this will be good for low-income folks at the expense of high-income folks. This is misdirection though, and it's not conjecture to assume as such, since it is perfectly ideologically consistent with them wanting to get rid of SS altogether, a goal that Ryan and other Republicans have been very clear about for forever.

As far as these specific cuts: raising the age for receipt of full benefits is a back door way to cut benefits across the board because most people have the take the reduced amount at an earlier age. Few people are able to work full-time until 69: due to physical reasons, for laborers, and because they are pushed out, for professionals (we don't live in a culture that particularly values experience and wisdom). This is I think one of the bigger "cuts" in the plan since it affects high- and low-income workers alike.

As outoftime mentioned, this plan is bad for people who don't have consistent full-time work histories. Women (mostly) who take time off to be home with young children, people who take time off to care for ailing/dying relatives, those with chronic illnesses, anyone who experiences a long spell of unemployment, and early retirees will receive reduced benefits, regardless of peak earnings, due to their shortened work histories.

Cutting benefits for 15-18 year olds who have graduated will hardly save any money whatsoever, but why pass up an opportunity to limit the benefits of teenagers with deceased parents? Added bonus: 15 to 17-year-olds can't even vote, so it's not as if this is a constituency they need to answer to. Also note, that this cut will add an additional layer of bureaucracy to the system, since teenagers receiving benefits will have to go through an extra step to prove eligibility, and that bureaucracy doesn't pay for itself so it will certainly cost money.

EXACTLY right, as I noted (with less elegance in my last post).  It is a wolf in sheep's clothing.