Author Topic: Social Security will not be bankrupt  (Read 12989 times)

robartsd

  • Handlebar Stache
  • *****
  • Posts: 1813
  • Location: Northern California
Re: Social Security will not be bankrupt
« Reply #150 on: June 19, 2018, 01:30:48 PM »
I ran the numbers and found that retirement benefits for nearly all earners could easily be paid for by the Social Security taxes paid on their earning record. It only takes about 30 hours a week at federal minimum wage ($7.25) to fill the first bend point ($895/mo) in the Social Security Primary Insurance Amount. Assuming someone earns this much from age 35 to age 70 then takes SS at age 70 and lives to be 100 their rate of return on SS taxes (including employer portion) would be about 6.3%. Working full-time at minimum wage from 18-70 then taking SS from 70 to 100 results in a rate of return of about 4.4% (earning $15/hr age 18-70 and taking SS 70-100 results in a rate of return of 3.5%). Although higher earners are not likely subsidizing the retirement benefits of lower earners, they likely are subsidizing the disability and/or survivor benefits received by some lower earners and their families.

maizeman

  • Magnum Stache
  • ******
  • Posts: 2997
Re: Social Security will not be bankrupt
« Reply #151 on: June 19, 2018, 02:40:49 PM »
I ran the numbers and found that retirement benefits for nearly all earners could easily be paid for by the Social Security taxes paid on their earning record. It only takes about 30 hours a week at federal minimum wage ($7.25) to fill the first bend point ($895/mo) in the Social Security Primary Insurance Amount. Assuming someone earns this much from age 35 to age 70 then takes SS at age 70 and lives to be 100 their rate of return on SS taxes (including employer portion) would be about 6.3%.

Okay, so let's run those numbers. $7.25/hour * 30 hours/week * 52 weeks a year = $11,310/year in income.

If we assume they were paying the current social security payroll tax of 12.4%/year, that means they paid $1,402/year in social security taxes.

Over 35 years, they've paid $395,850 in taxable earnings. Let's call it 400k. And .124*400k = $49.6k in social security taxes.

Now what about those benefits? Our hypothetical retiree averaged $942/month for their 35 highest earning years. The first bend point is at $895, so their monthly benefit is ($895*.9) + ($942-$895*.32) = $820/month. But you have them retiring at 70, which is three years past full retirement age, so their benefit is $820*1.08^3 = $1,033/month.

Then you have them live from 70 to 100, so $1,033 * 12 months * 30 years = $371,880 in total benefits.

That's a ratio of pay in to pay out of ~7.5:1.

Now in reality a 70 year old woman has, statistically only 16.5 years left to live, so that drops out the payout to $205,534 with a payout ratio of ~4:1.

I'm not quite sure how you're calculating the return, but even if we assume the taxes payed into social security compound at a rate above inflation*, and even if we assume that rate was 6.3% above inflation** and even if we assume the retiree continued to earning a constant zero volatility*** return of 6.3% while they were pulling money out of their personal social security lock box, they end up more than $140,000 in the hole by the end of their 35 year long retirement.

And this doesn't even get into spousal benefits which are paid out while you and your significant other are both still alive and create an automatic 50% bump in the total social security payout for low income single earner households (and single earner households are significantly more likely to be low income than dual income households, so this represents another net transfer from high income to low income households).

Social security is a remarkably progressive system that transfers wealth from high income households to lower income households. Now that's nothing wrong with that. Our hypothetical person who worked for 35 years making less than $12,000/year almost certainly had no chance to accumulate significant retirement savings, and if it weren't for social security would likely either be out on the streets or become a burden on their children (if they had any) once they were no longer able to work. So I'm happy that this part of social security works so well. But it is indeed an progressive system where those with high incomes dramatically subsidize those with low incomes. And we should be open about that. 

*Which they haven't because most of it was immediately paid out to older retirees, and what wasn't paid out was invested in government treasuries earning approximately the same rate as inflation. If we pretend each retiree's payments are really sitting somewhere earning stock market like returns until they retire, it's easier to make the numbers balance on social security, but you end up creating a hypothetical sovereign wealth fund worth approximately $7.5 trillion dollars.**** And yes, if we have a $7.5 trillion sovereign wealth fund to support future social security payments, there wouldn't be any problems sustaining the current payout and pay in rates indefinitely.

**Which is pretty good even for the stock market, which has volatility, which social security does not. 

***Volatility is the reason that the stock market can have a long term CAGR of 6.8%, but even spending 4% of your initial investment each year can sometimes mean you run out of money. Even so you're able to pull out more per year than if you put your money all into bonds or other low volatility investments. If we assume 3.5%/year

****Assumptions: 125M working adults in america, the average adult has been working for 18 year (random guess), and has been earning an average of $16,000/year (seems low, but another random guess), and their contributions have been invested and have been compounding at 6% annually after inflation (about what you'd get from a moderately aggressive stock/bond investment mix).

robartsd

  • Handlebar Stache
  • *****
  • Posts: 1813
  • Location: Northern California
Re: Social Security will not be bankrupt
« Reply #152 on: June 19, 2018, 05:14:03 PM »
I'm not quite sure how you're calculating the return, but even if we assume the taxes payed into social security compound at a rate above inflation*, and even if we assume that rate was 6.3% above inflation** and even if we assume the retiree continued to earning a constant zero volatility*** return of 6.3% while they were pulling money out of their personal social security lock box, they end up more than $140,000 in the hole by the end of their 35 year long retirement.
I used precisely $895/mo for earnings (a little less than 30 hr/wk at $7.25). I used Excel's IRR function. 65 periods (35 years earning, 30 year retirement). $-1331.76 for 35 years, followed by $11,985.85 for 30 years. I agree that 6.3% guaranteed after inflation return is unrealistic (but not earning anything until age 35 and expecting to live to 100 are also unrealistic). Adding in 17 more years of earning (18 to 35) reduces the rate to a much more reasonable 3.8%. Keeping only 17 years of retirement further drops the rate to 2.9%. (Adjusting the retirement date when using a reasonable life expectancy has little effect on the IRR.) The point is the taxes paid can reasonably pay for the retirement benefit - even if it is insufficient to also pay the insurance benefits. The vast majority of people drawing a social security retirement today are not getting more than they deserve from a retirement system.

And this doesn't even get into spousal benefits which are paid out while you and your significant other are both still alive and create an automatic 50% bump in the total social security payout for low income single earner households (and single earner households are significantly more likely to be low income than dual income households, so this represents another net transfer from high income to low income households).
Single income households are more likely to have lower household income, but I'm not buying the argument couples with an earner making less than minimum wage are more likely to be single income.

I had expected the bend points to take away the significance of the spousal benefit quickly, but it does not. Even at the cap for social security taxes (where this progressive system suddenly becomes regressive) the spousal benefit nets about $100 more than two earners with half the income each would earn ($10,700 average monthly income - $4562 for one earner plus spouse, $4462 for two equal incomes).

With one earner earning $10,740/yr from age 18 to age 62 (44 years) and the earner and spouse collecting benefit from age 62 to age 87 (25 years), the IRR is 4.1%. Still not a heavily subsidized by other earners.

Of course, if you can manage to only pay SS taxes for the 10 years prior to drawing a benefit you could really game the system to get huge returns - maxing out the first bend point ($37,590/yr) from age 57 to age 67 (getting your 40 credits to qualify) then taking SS at age 67 delivers 10% annual return after just 5 years of retirement - those who inherit financial independence could pull off something like that, those who must earn their living cannot.

maizeman

  • Magnum Stache
  • ******
  • Posts: 2997
Re: Social Security will not be bankrupt
« Reply #153 on: June 19, 2018, 05:29:19 PM »
The point is the taxes paid can reasonably pay for the retirement benefit - even if it is insufficient to also pay the insurance benefits.

As I explained above, this is simply not correct. Even after accounting for inflation, a person whose lifetime earnings bring them only up to the first bend point receives several multiples of all the taxes they ever payed into the system in social security benefits.

By assuming substantial interest above and beyond inflation, you as effectively creating a hypothetical multi-trillion dollar investment account which simply does not exist, and concluding that, if it did exist, social security would be able to pay out its benefits.

The fact that the interest rates needed to collect the dramatic differences you see are single digit percentages is a reflection of the power of compound interest over a seven decades or more, not that low income earners pay about as much into the system as they receive back in benefits.

robartsd

  • Handlebar Stache
  • *****
  • Posts: 1813
  • Location: Northern California
Re: Social Security will not be bankrupt
« Reply #154 on: June 20, 2018, 08:50:55 AM »
By assuming substantial interest above and beyond inflation, you as effectively creating a hypothetical multi-trillion dollar investment account which simply does not exist, and concluding that, if it did exist, social security would be able to pay out its benefits.
Correct, the investment account dose not exist - but if Social Security contributions were managed as an investment account the system could easily pay the retirement benefits promised even in the best offer to the lowest income contributors (probably even if the managers got a ridiculous 1% AUM fee). Instead the government uses the funds to pay the disabled and elderly and as a source of cheap credit; with a simple promise to pay retirement benefits to contributors when they are old. I'm just arguing that low income retirees aren't freeloaders in this system - they are getting reasonable retirement benefits for the contributions made based on their own employment (they did get disability and life insurance paid for by others that they were fortunate enough not to need).

maizeman

  • Magnum Stache
  • ******
  • Posts: 2997
Re: Social Security will not be bankrupt
« Reply #155 on: June 20, 2018, 09:06:44 AM »
By assuming substantial interest above and beyond inflation, you as effectively creating a hypothetical multi-trillion dollar investment account which simply does not exist, and concluding that, if it did exist, social security would be able to pay out its benefits.
Correct, the investment account dose not exist - but if Social Security contributions were managed as an investment account the system could easily pay the retirement benefits promised even in the best offer to the lowest income contributors (probably even if the managers got a ridiculous 1% AUM fee). Instead the government uses the funds to pay the disabled and elderly and as a source of cheap credit; with a simple promise to pay retirement benefits to contributors when they are old. I'm just arguing that low income retirees aren't freeloaders in this system - they are getting reasonable retirement benefits for the contributions made based on their own employment (they did get disability and life insurance paid for by others that they were fortunate enough not to need).

I think you're putting a lot more moral weight on whether people putting in more than they take out than I do. Do you consider recipients of food stamps freeloaders? What about people with section 8 housing?

The government cannot manage contributions in an investment account because the contributions of the first generation to pay social security taxes was used to pay the retirement benefits of the last generation to not pay social security taxes. The only people who got a free ride from social security died decades ago. As a result, social security isn't backed by a multi-trillion dollar sovereign wealth fund, and the only reason we're able to pay enough to people who made barely minimum mage their whole lives enough to survive in retirement when they are no longer able to work is because people who make a lot more money pay more into the system than they will ever get back out of it.

That doesn't make people who weren't able to get a job making more than minimum wage their whole lives bad people or less deserving of a full stomach and a warm place to sleep in retirement.

I'm going to continue arguing this point is that your position (that it's okay to pay low income earners their full social security benefits because through one type of math or another they paid enough into the system) is that is carries with it the implicit assumption that, if they hadn't paid enough, it would be okay to leave them to starve in the streets once they were too old or too sick to work.

Jrr85

  • Handlebar Stache
  • *****
  • Posts: 1204
Re: Social Security will not be bankrupt
« Reply #156 on: June 20, 2018, 09:17:02 AM »

I think you're putting a lot more moral weight on whether people putting in more than they take out than I do. Do you consider recipients of food stamps freeloaders? What about people with section 8 housing?
  Free loaders is a loaded term, but certainly they are welfare recipients, just like SS and Medicare recipients.  Certainly them working to the best of their ability and having paid taxes previously when they were earning more makes them more "deserving", just like people who paid SS and medicare taxes are more "deserving" of those benefits.

The government cannot manage contributions in an investment account because the contributions of the first generation to pay social security taxes was used to pay the retirement benefits of the last generation to not pay social security taxes. The only people who got a free ride from social security died decades ago. As a result, social security isn't backed by a multi-trillion dollar sovereign wealth fund, and the only reason we're able to pay enough to people who made barely minimum mage their whole lives enough to survive in retirement when they are no longer able to work is because people who make a lot more money pay more into the system than they will ever get back out of it.
  It's really not relevant what people will get back out of it.  What we can pay just depends on how much current tax revenue we take in. 

That doesn't make people who weren't able to get a job making more than minimum wage their whole lives bad people or less deserving of a full stomach and a warm place to sleep in retirement.

I'm going to continue arguing this point is that your position (that it's okay to pay low income earners their full social security benefits because through one type of math or another they paid enough into the system) is that is carries with it the implicit assumption that, if they hadn't paid enough, it would be okay to leave them to starve in the streets once they were too old or too sick to work.

Nobody is arguing that we don't have welfare for the elderly that ensures they have a full stomach and shelter.  The question is over how much more than that should be provided, and whether welfare for the elderly should be means tested and to what extent. 

How much people paid into it is relevant to the fairness question.  I'm not sure having paid taxes previously really is a good argument for making young people pay you, but certainly it's not a good argument to claim that young people should have to pay more than you paid, to give you more than you paid in. 

FIRE@50

  • Bristles
  • ***
  • Posts: 330
  • Age: 41
  • Location: Maryland
Re: Social Security will not be bankrupt
« Reply #157 on: June 20, 2018, 09:31:01 AM »
The idea that some of you have that the benefits that the government provides will ever equal the taxes that you pay as an individual is simply wrong. That isn't how it works at all.

At the local level, people with more expensive homes are paying more property taxes than the people with less expensive homes. Both sets of homeowners get to drive on the same roads and send their kids to the same schools.

At the federal level, wealthy states pay far more in taxes while receiving far fewer federal dollars in return.

Taxes will always involve taking from the rich to give to the poor. If you got back every dollar that you put in, there wouldn't be any point to the taxes. If more people realized this, I think they would make different choices on election day.

Paul der Krake

  • Magnum Stache
  • ******
  • Posts: 4348
  • Age: 10
  • Location: USA
Re: Social Security will not be bankrupt
« Reply #158 on: June 20, 2018, 04:54:48 PM »
I think you're putting a lot more moral weight on whether people putting in more than they take out than I do. Do you consider recipients of food stamps freeloaders? What about people with section 8 housing?
Of course they're freeloaders, but so what? I listen to NPR and PBS but never contribute to their pledge drives, that makes me a freeloader too. I even got a country to pay for my entire education before decamping to another because I could get paid more.

If you're in the lower end of the income spectrum, you are being subsidized by the rest. Maybe it's temporary, maybe you'll move up, maybe you won't, that's fine. It's normal that the ones who benefit the most from having a stable society contribute more to the common good. There's no need to sugarcoat things and pretend everyone contributes equally to the financial bottom line, because that's just not true.

Corollary: the louder someone bitches about "their tax dollars", the more likely they are to not come close to paying the 10-12k of taxes per year it would require from all of us to get to the total government spending.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1311
Re: Social Security will not be bankrupt
« Reply #159 on: June 20, 2018, 06:01:11 PM »
Calling SS welfare is ridiculous.  Many will pay into it all of their careers and never get back a dime or draw for a short time until they pass, both high and low income folks.  If we're going to call that welfare, then we might as well call all families with children on welfare since single people pay far more taxes than a family with the same income while using a fraction of the resources, including property taxes which fund schools and parks used mostly by families/kids.  All those subsidies I'm paying for families added up far exceeds the SS payroll tax deducted from my paycheck, so those other taxes concern me more than paying a SS payroll tax, which I would be happy to pay much more in payroll tax to help shore up SS and Medicare for those deserving seniors who paid into it for their entire careers to fund the generations prior to them while now seeing their SS taxed more heavily with each passing year (as explained earlier in this thread) and as seniors' expenses increase at a higher rate than the CPI metric used to calculate SS benefit increases.  That makes it hurt twice as bad for seniors.

But neither are actually welfare, but that's just to put that ridiculous argument into perspective.

Tax example showing single woman subsidizing families with children:
https://forum.mrmoneymustache.com/welcome-to-the-forum/the-'i-don't-get-it'-thread-rants-accepted/msg2040846/#msg2040846

Welfare is already means tested, just like Medicaid and ACA PCT and CSR.  SS could be be means tested by factoring in other "non-SS benefit" income in retirement to more sharply roll off SS benefits for those who have other income (such as interest, dividends, pension payments, IRA distributions) above a certain threshold, a formula that would eventually result in $0 in SS benefits, so it would be more effective than the current bend points.  I explained this in detail in previous posts as one of several ways SS can be propped up without having to cut benefits for seniors and those within a decade of SS age and without raising the age to claim benefits for those currently within 10 years of being able to draw benefits (age 62), who have already seen their FRA increased by 2 years.  Those with a longer term horizon have more time to adjust to a higher retirement age, not to mention a likelihood of a slightly increased expected life span, so long term, the FRA should probably be increased for those over 10 years out from the age 62 qualification age and even more so for those under 40.
« Last Edit: June 20, 2018, 06:25:34 PM by DreamFIRE »

maizeman

  • Magnum Stache
  • ******
  • Posts: 2997
Re: Social Security will not be bankrupt
« Reply #160 on: June 20, 2018, 06:36:32 PM »
Calling SS welfare is ridiculous.  Many will pay into it all of their careers and never get back a dime or draw for a short time until they pass, both high and low income folks. 

I'm afraid I don't follow your reasoning here.

Wouldn't these criteria apply equally to food stamps? Many folks will pay income taxes all of their life, and never receive a dollar in food stamps, or only receive food stands for a short time once in their lives.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1311
Re: Social Security will not be bankrupt
« Reply #161 on: June 20, 2018, 06:37:41 PM »
The idea that some of you have that the benefits that the government provides will ever equal the taxes that you pay as an individual is simply wrong. That isn't how it works at all.

2004 data showed what it called low skilled households paying only $9,689 in taxes and said, "Thus, low-skill households received at least three dollars in benefits and services for each dollar in taxes paid. If the costs of public goods and past financial obligations are added, the ratio rises to four to one."

Interesting when you think of the family earning $70K/yr in my example only pays federal income tax of $1139, or $284.75 per person.  Think about how terrible that ratio looks in 2018 compared to those figures in the 2004 study!  They certainly aren't pulling their own weight, which looks even worse when you factor in the additional public resources they use, but thank goodness for the single people who are paying extra to make up the difference.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1311
Re: Social Security will not be bankrupt
« Reply #162 on: June 20, 2018, 06:52:59 PM »
Calling SS welfare is ridiculous.  Many will pay into it all of their careers and never get back a dime or draw for a short time until they pass, both high and low income folks. 

I'm afraid I don't follow your reasoning here.

Wouldn't these criteria apply equally to food stamps? Many folks will pay income taxes all of their life, and never receive a dollar in food stamps, or only receive food stands for a short time once in their lives.

I never commented on food stamps, that was a previous poster.  My response was more related to a previous poster stating that SS is welfare in part because they get more back than they paid in, which clearly isn't the case for many people, some who will get nothing back.  I'm pretty sure that getting food stamps doesn't require you to pay in for 40 quarters, either, but is a means tested assistance program.  Also, a key point, is that if you are calling SS welfare, then where do you draw the line?  I gave examples of how singles subsidizing families could just as easily be called welfare in that case, and is even more costly to me than payroll taxes deducted from my paycheck.  But I realize that's the way it is that I have to subsidize these young families and kids.  But I don't really personally consider that or SS to be welfare.




maizeman

  • Magnum Stache
  • ******
  • Posts: 2997
Re: Social Security will not be bankrupt
« Reply #163 on: June 20, 2018, 07:23:43 PM »
I never commented on food stamps, that was a previous poster.  My response was more related to a previous poster stating that SS is welfare in part because they get more back than they paid in, which clearly isn't the case for many people, some who will get nothing back.
Yes, clearly not everyone could get back more than they pay in (absent a magical fountain of money). But again this criteria (some people pay in more than they get out, some people pay in less than they get out) government program, or to government spending generally.

I pay taxes to support food stamps and section 8 housing vouchers. Absent some major life catastrophy, I anticipate I will never receive any money back from those programs. Other people pay taxes to support those same programs, but receive back much more than they've paid in. So clearly this criteria isn't a bright line between social security and other components of the social safety net in this country. 

Quote
I'm pretty sure that getting food stamps doesn't require you to pay in for 40 quarters, either, but is a means tested assistance program.

Social security is means tested as well, with people who made less money over their lifetimes receiving much higher proportional benefits, and people with high income in retirement receiving lower net benefits after taxes. Again, means testing doesn't appear to be a bright line between social security and other components of our social safety net in the USA.

Quote
Also, a key point, is that if you are calling SS welfare, then where do you draw the line?  I gave examples of how singles subsidizing families could just as easily be called welfare in that case, and is even more costly to me than payroll taxes deducted from my paycheck.  But I realize that's the way it is that I have to subsidize these young families and kids.

And I pay lots of payroll taxes to support both poor and wealthy older folks, and lots of income taxes to support poor young folks (especially those with small children). The only one of those that bothers me is the part I'm paying to support wealthy old folks, and even then, I don't let it keep me up at night.

If you're moving money from richer people to poorer people through government policy, that seems to be an aspect of the social safety net (or welfare if you prefer). I guess my question to you is, what is so bad about admitting social security being a program that takes tax dollars from people like me, who can afford to pay it, and uses it to ensure people don't go hungry and have a warm place to sleep at night?

Jrr85

  • Handlebar Stache
  • *****
  • Posts: 1204
Re: Social Security will not be bankrupt
« Reply #164 on: June 21, 2018, 08:31:00 AM »
Calling SS welfare is ridiculous.  Many will pay into it all of their careers and never get back a dime or draw for a short time until they pass, both high and low income folks. 

I'm afraid I don't follow your reasoning here.

Wouldn't these criteria apply equally to food stamps? Many folks will pay income taxes all of their life, and never receive a dollar in food stamps, or only receive food stands for a short time once in their lives.

I never commented on food stamps, that was a previous poster.  My response was more related to a previous poster stating that SS is welfare in part because they get more back than they paid in, which clearly isn't the case for many people, some who will get nothing back.  I'm pretty sure that getting food stamps doesn't require you to pay in for 40 quarters, either, but is a means tested assistance program.  Also, a key point, is that if you are calling SS welfare, then where do you draw the line?  I gave examples of how singles subsidizing families could just as easily be called welfare in that case, and is even more costly to me than payroll taxes deducted from my paycheck.  But I realize that's the way it is that I have to subsidize these young families and kids.  But I don't really personally consider that or SS to be welfare.

SS is welfare because the government takes money from some people (people with earned income) and gives it to other people (disabled and people over 62 who are claiming benefits).  It's different from most welfare in that it is not means tested.  Doesn't matter if you are rich, you are eligible for Social security benefits that will be paid primarily by people much poorer than you.  Some people seem to think this makes it better.  To me it seems it makes social security much worse. 

And you are only subsidizing young families and kids if you don't believe you will receive social security and medicare.  If you think you will receive social security and medicare, those families are paying the vast majority of the costs to raise the people who will pay for your social security and medicare

tomsang

  • Handlebar Stache
  • *****
  • Posts: 1085
Re: Social Security will not be bankrupt
« Reply #165 on: June 21, 2018, 10:14:23 AM »
SS is welfare because the government takes money from some people (people with earned income) and gives it to other people (disabled and people over 62 who are claiming benefits).  It's different from most welfare in that it is not means tested.  Doesn't matter if you are rich, you are eligible for Social security benefits that will be paid primarily by people much poorer than you.  Some people seem to think this makes it better.  To me it seems it makes social security much worse. 

And you are only subsidizing young families and kids if you don't believe you will receive social security and medicare.  If you think you will receive social security and medicare, those families are paying the vast majority of the costs to raise the people who will pay for your social security and medicare

There are tons of things that are welfare in the US. That does not make them bad.  The roads, electricity, hospitals, schools, libraries, internet, water, military, all have components of welfare built into them. 

Virtually everyone making less than $250k a year are not paying enough for the services that they are using.  So 95% of the US population is on welfare. 

The other area that you elude to but you don't quantify is that Social Security is an insurance program. Like your home owners insurance or life insurance.  There are many components to the program that we are paying for that we hope to not use.  Disability benefits, survivor death benefits, to name a few.  When comparing whether you can invest and get a better return, you would need to include the value of all of the benefits that are imbedded in the program. 

I personally don't want people not choosing to buy these other benefits as I don't like going to third world countries and seeing the poor, disabled and widowed begging on the streets.  We as a country are better than that.  Same with health insurance.  If people choose to not have health insurance, I would like them to sign a form that says if they have a heart attack, car accident or some other life changing event, that the hospital is authorized not to save them until they can prove that they can pay for all of the services.  I don't like that my insurance is jacked up because others choose to not have insurance and our hospitals are forced to treat them. 

Jrr85

  • Handlebar Stache
  • *****
  • Posts: 1204
Re: Social Security will not be bankrupt
« Reply #166 on: June 21, 2018, 11:23:12 AM »
SS is welfare because the government takes money from some people (people with earned income) and gives it to other people (disabled and people over 62 who are claiming benefits).  It's different from most welfare in that it is not means tested.  Doesn't matter if you are rich, you are eligible for Social security benefits that will be paid primarily by people much poorer than you.  Some people seem to think this makes it better.  To me it seems it makes social security much worse. 

And you are only subsidizing young families and kids if you don't believe you will receive social security and medicare.  If you think you will receive social security and medicare, those families are paying the vast majority of the costs to raise the people who will pay for your social security and medicare

There are tons of things that are welfare in the US. That does not make them bad.
  AGreed.  I don't know why people get their hackles up when the obvious is pointed out. 


  The roads, electricity, hospitals, schools, libraries, internet, water, military, all have components of welfare built into them. 
I would disagree with this.  Military is a public good.  Roads are more or less a public good (even if you believe it's feasible to exclude people on major interstates, I'm not sure it's feasible to exclude them on local roads).  Water, electricity, and interent, while there is welfare available to help with those and there is often some cross subsidization built into rates, they're generally just a service/good for sale.  Schools and libraries I can see the argument since they aren't non-excludable.. 

Virtually everyone making less than $250k a year are not paying enough for the services that they are using.  So 95% of the US population is on welfare. 
  I don't think that's close to right.  Even two earner couple making $250 a year between them is going to pay around $38k just in FICA (assuming they are both making $125k and under the FICA cap). 

The other area that you elude to but you don't quantify is that Social Security is an insurance program. Like your home owners insurance or life insurance.  There are many components to the program that we are paying for that we hope to not use.  Disability benefits, survivor death benefits, to name a few.  When comparing whether you can invest and get a better return, you would need to include the value of all of the benefits that are imbedded in the program.
  It's not insurance like your home or life insurance.  That is a financial instrument that helps spread risk and provides legally enforceable rights.  SS is insurance in the same way SNAP is insurance.  You pay taxes now, and don't get welfare.  You hope that in the event you need them, the political calculus will not have changed too much and you will get to benefit from them.  Of course SS is not like SNAP in that you hope you don't need SNAP, but you hope you do collect SS.  It's really just a weird program.  A lot of effort to transfer resources from the young to the old, regardless of need.  "Hey, grandpa, you're a multimillionaire and I'm making $30k a year.  Why am I paying >$4500 a year to pay for your SS and Medicare?"  "Because when I was working, I paid for the SS and Medicare of people older than me, whether they were richer than me or not."  That doesn't seem like a compelling argument to me, but it obviously is to the vast majority of voters.   

I personally don't want people not choosing to buy these other benefits as I don't like going to third world countries and seeing the poor, disabled and widowed begging on the streets.  We as a country are better than that.
  That's a good argument for having means tested welfare, and maybe even a separate program for means tested welfare for the elderly.  It doesn't seem to have much to do with forcing poor workers to pay taxes to give to rich older people.  It'd also be a good argument for forced savings, where people have to put say 10% in their income into savings. 

Same with health insurance.  If people choose to not have health insurance, I would like them to sign a form that says if they have a heart attack, car accident or some other life changing event, that the hospital is authorized not to save them until they can prove that they can pay for all of the services.  I don't like that my insurance is jacked up because others choose to not have insurance and our hospitals are forced to treat them.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1311
Re: Social Security will not be bankrupt
« Reply #167 on: June 30, 2018, 08:50:23 PM »
I pay taxes to support food stamps and section 8 housing vouchers. Absent some major life catastrophy, I anticipate I will never receive any money back from those programs. Other people pay taxes to support those same programs, but receive back much more than they've paid in. So clearly this criteria isn't a bright line between social security and other components of the social safety net in this country. 

There are other differences, but if it comes down to you wanting to use the word "welfare", that's fine, as I'm actually more concerned about SS benefits being sustained for seniors for the long haul, not whether someone wants to call it welfare.  I don't consider it to be so anymore than my heavy subsidizing of young families with kids to be welfare for them.

Quote
Social security is means tested as well, with people who made less money over their lifetimes receiving much higher proportional benefits, and people with high income in retirement receiving lower net benefits after taxes. Again, means testing doesn't appear to be a bright line between social security and other components of our social safety net in the USA.

SS is NOT means tested for eligibility, despite the bend points which reduce the increase in benefits for higher incomes.  It's generally considered a non-means tested program by the government and rather "earnings tested".  I went into detail about the means testing that I recommended in previous posts, which would eliminate SS benefits altogether for retirees with other household income over a threshold of a specific amount (such as $50K/yr just to throw a figure out there).  As it is now, it doesn't matter how many millions of dollars of taxable income you have at FRA, you can still receive SS benefits.

Quote
Quote
Also, a key point, is that if you are calling SS welfare, then where do you draw the line?  I gave examples of how singles subsidizing families could just as easily be called welfare in that case, and is even more costly to me than payroll taxes deducted from my paycheck.  But I realize that's the way it is that I have to subsidize these young families and kids.

And I pay lots of payroll taxes to support both poor and wealthy older folks, and lots of income taxes to support poor young folks (especially those with small children). The only one of those that bothers me is the part I'm paying to support wealthy old folks, and even then, I don't let it keep me up at night.

So if it bothers you, it sounds like you agree with me about means testing SS benefits for eligibility so that you would no longer have to support wealthy seniors who have significant income outside of SS benefits.

Quote
If you're moving money from richer people to poorer people through government policy, that seems to be an aspect of the social safety net (or welfare if you prefer). I guess my question to you is, what is so bad about admitting social security being a program that takes tax dollars from people like me, who can afford to pay it, and uses it to ensure people don't go hungry and have a warm place to sleep at night?

I do admit it, but I also admit that I'm paying those taxes as well, and even more to subsidize young families with kids, but I don't call it welfare.  I think it's a waste of time to argue over the term, though.  I don't have a problem with paying payroll taxes, and as I've said a few times on this forum recently including this thread, I would be willing to pay a higher payroll tax to help retired seniors so that they get the benefits they're supposed to get with no increase in the retirement age for those nearing retirement.  Long term, maybe the FRA will need increased, means testing implemented for eligibility, removing the cap on taxable income, and a few other possibilities that I've mentioned.  From another aspect, I believe the tax thresholds should be increased for inflation from the 1983 figures as it amounts to a yearly tax increase as benefits are indexed to inflation while the thresholds for taxation are not.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1311
Re: Social Security will not be bankrupt
« Reply #168 on: June 30, 2018, 09:13:12 PM »
And you are only subsidizing young families and kids if you don't believe you will receive social security and medicare. 

Actually, NO.  I'm subsidizing then because I am paying much higher taxes while they get big tax breaks, for a household with the same income as me.   I am not receiving SS or Medicare, so that is a moot point for what is happening today.  I'm currently paying payroll taxes as well, but my other taxes are higher (fed/state income, property).
« Last Edit: July 01, 2018, 06:58:44 PM by DreamFIRE »

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1311
Re: Social Security will not be bankrupt
« Reply #169 on: June 30, 2018, 09:17:29 PM »
SS is welfare because the government takes money from some people (people with earned income) and gives it to other people (disabled and people over 62 who are claiming benefits).  It's different from most welfare in that it is not means tested.  Doesn't matter if you are rich, you are eligible for Social security benefits that will be paid primarily by people much poorer than you.  Some people seem to think this makes it better.  To me it seems it makes social security much worse. 

And you are only subsidizing young families and kids if you don't believe you will receive social security and medicare.  If you think you will receive social security and medicare, those families are paying the vast majority of the costs to raise the people who will pay for your social security and medicare

There are tons of things that are welfare in the US. That does not make them bad.  The roads, electricity, hospitals, schools, libraries, internet, water, military, all have components of welfare built into them. 

Virtually everyone making less than $250k a year are not paying enough for the services that they are using.  So 95% of the US population is on welfare. 

The other area that you elude to but you don't quantify is that Social Security is an insurance program. Like your home owners insurance or life insurance.  There are many components to the program that we are paying for that we hope to not use.  Disability benefits, survivor death benefits, to name a few.  When comparing whether you can invest and get a better return, you would need to include the value of all of the benefits that are imbedded in the program. 

I personally don't want people not choosing to buy these other benefits as I don't like going to third world countries and seeing the poor, disabled and widowed begging on the streets.  We as a country are better than that.  Same with health insurance.  If people choose to not have health insurance, I would like them to sign a form that says if they have a heart attack, car accident or some other life changing event, that the hospital is authorized not to save them until they can prove that they can pay for all of the services.  I don't like that my insurance is jacked up because others choose to not have insurance and our hospitals are forced to treat them.

I would agree with that.

sherr

  • Pencil Stache
  • ****
  • Posts: 528
  • Age: 33
  • Location: North Carolina
Re: Social Security will not be bankrupt
« Reply #170 on: July 01, 2018, 09:26:49 AM »
a mute point

Moot.

I don't consider it to be so anymore than my heavy subsidizing of young families with kids to be welfare for them.

I've wanted to ask before but stopped myself up till now. We all get it, you are incredibly bitter about the fact that families with kids pay less in taxes than you do. But what's the point of constantly bringing it up in every thread?

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1311
Re: Social Security will not be bankrupt
« Reply #171 on: July 01, 2018, 10:55:15 AM »
a mute point
Moot.

If you want to point out typos, you can spend a lot of time doing it on this forum.  There are many.  You've made them yourself, but I hope you have better things to do with your time.  Personally, I type my responses quickly and usually don't bother to proofread.

Quote from: sherr
I've wanted to ask before but stopped myself up till now. We all get it, you are incredibly bitter about the fact that families with kids pay less in taxes than you do.

Wrong!  I have never said that I was incredibly bitter, and I'm certainly not.  Merely pointing out that it's no more welfare than social security does not make one bitter, either.  In fact, I mentioned in one of my last few posts in this thread that I wouldn't have a problem paying higher payroll taxes despite paying other high taxes.  I even responded in a thread yesterday that I didn't have a problem with the way those taxes are applied now.   I'm not sure how that translates to "bitter".   Reference:

I'm not opposed to the way things are now as to tax credits for kids, property tax funding for schools, etc.

Quote from: sherr
But what's the point of constantly bringing it up in every thread?

Wrong again!  I've brought it up in very few threads and only when I felt it was relevant or fit into the line of discussion.  Just search all of the threads I have posted in vs. the ones where I mentioned anything about this.  I've probably mentioned it in only three or four recent threads, and sometimes it's just part of a longer reply, such as in this thread, when someone else brought up the issue of younger people paying payroll taxes to fund SS.  It seems odd that you would even bother to mention this considering how few threads I've actually mentioned it in.  Are you running for forum police?

austin944

  • 5 O'Clock Shadow
  • *
  • Posts: 85
  • Age: 57
Re: Social Security will not be bankrupt
« Reply #172 on: July 01, 2018, 03:15:19 PM »
There are tons of things that are welfare in the US. That does not make them bad.  The roads, electricity, hospitals, schools, libraries, internet, water, military, all have components of welfare built into them. 

We could greatly expand the definition of welfare in order to make it a meaningless term, and thereby side-step the argument.  But a consultation with a suitable dictionary would probably put us back on track.

pecunia

  • Pencil Stache
  • ****
  • Posts: 563
Re: Social Security will not be bankrupt
« Reply #173 on: July 01, 2018, 04:35:35 PM »
austin944:
Quote
We could greatly expand the definition of welfare in order to make it a meaningless term, and thereby side-step the argument.  But a consultation with a suitable dictionary would probably put us back on track.

How about calling it "relief?"  That's what they called it in the great depression.  It's got a known sound to it.  Makes it sound like an antacid pill.  That shouldn't raise anyone's hackles.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1311
Re: Social Security will not be bankrupt
« Reply #174 on: July 01, 2018, 04:45:56 PM »
We could greatly expand the definition of welfare in order to make it a meaningless term

Yep, that was my argument when a previous poster started using the term welfare simply because he didn't like the program.  What you actually call it doesn't change what needs or can be done to shore it up.  Plenty of suggestions have been made about what can be done to do so while protecting seniors.

maizeman

  • Magnum Stache
  • ******
  • Posts: 2997
Re: Social Security will not be bankrupt
« Reply #175 on: July 01, 2018, 05:14:57 PM »
There are tons of things that are welfare in the US. That does not make them bad.  The roads, electricity, hospitals, schools, libraries, internet, water, military, all have components of welfare built into them. 

We could greatly expand the definition of welfare in order to make it a meaningless term, and thereby side-step the argument.  But a consultation with a suitable dictionary would probably put us back on track.

The key distinction would see to be whether SS is intended as a way to make sure seniors don't starve or end up cold and on the streets, or is it an program that entitles even the wealthy to an unalienable right to take money from future generations, because they payed money to past generations, regardless of their actual need?

Depending on the answer to that question, there are different approaches which can be taken to ensure social security continues to fulfill its core mission in decades to come. But a discussion about how to ensure social security continues to meet its core mission between people who don't agree on what that core mission is will tend to be unproductive and unpleasant for both parties.

Jrr85

  • Handlebar Stache
  • *****
  • Posts: 1204
Re: Social Security will not be bankrupt
« Reply #176 on: July 02, 2018, 08:33:37 AM »
And you are only subsidizing young families and kids if you don't believe you will receive social security and medicare. 

Actually, NO.  I'm subsidizing then because I am paying much higher taxes while they get big tax breaks, for a household with the same income as me.
  In the past when you've used this argument, you've done income per household and not income per person.  That doesn't seem reasonable at all.  If we're going to have progressive taxes, then why would you look at income per household rather than income per person?

   I am not receiving SS or Medicare, so that is a moot point for what is happening today.  I'm currently paying payroll taxes as well, but my other taxes are higher (fed/state income, property).
 

Somebody might as well say that they are not getting subsidied now because they cashed their TANF check yesterday.  Certainly you may individually not end up receiving SS/Medicare, but on the whole, with respect to SS/Medicare, it is parents who are paying huge subsidies for non-parents.  Whether that is balanced out or overcome by other taxes and government programs is another question, but you can't just ignore it. 



Villanelle

  • Handlebar Stache
  • *****
  • Posts: 2260
Re: Social Security will not be bankrupt
« Reply #177 on: July 02, 2018, 09:00:52 AM »
TheHusbandHalf will get Raiiroad Retirement, rather than SS.
I read that SS was based on Railroad Retirement, so does anyone know if it's all one pool of money, or is it a separate chunk?

He just got his SS statement in the mail today! They estimate his monthly payment would be about the same as his RR payment, but the RR will add in extra because he paid tier 1 and tier 2.

I paid into SS for 9 1/2 years (114 months). To get SS, one has to have 10 years worth of employment. Oh well, guess I helped out somebody.

I grew up thinking there would be no SS too. My kids are thinking the same.

I stopped reading so maybe this has been addressed, but getting a part time job for a year (20 hours) might be well worth it to get you that extra half a year.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1311
Re: Social Security will not be bankrupt
« Reply #178 on: July 04, 2018, 10:06:50 PM »
And you are only subsidizing young families and kids if you don't believe you will receive social security and medicare. 

Actually, NO.  I'm subsidizing then because I am paying much higher taxes while they get big tax breaks, for a household with the same income as me.
  In the past when you've used this argument, you've done income per household and not income per person.  That doesn't seem reasonable at all.  If we're going to have progressive taxes, then why would you look at income per household rather than income per person?

I'm comparing household income.  It's couples filing jointly with kids as a household using current tax law that gives them the big tax breaks.  But, if you think it would make me feel better if I break down the tax paid "per person" in the comparison, the difference is even more stark.  I've posted this before, but I highlighted the "per person" information in red for you.

Quote
Exactly.  I was surprised to see some of the other responses that missed the point that it wasn't about paying taxes in general, but unfair share of the tax burden for those that use the most resources compared to those who use less.

I posted this in a previous thread as an example, and it applies here and should clarify what my original comment was referring to when I stated I was subsidizing families with kids.

Here are some figures I calculated with the Dinkytown 2018 tax calculator using a simple comparison:

Household income of single woman with no kids $70,000
Total federal income tax $8700
Federal income tax per person $8700

Household income of married couple with 2 kids $70,000
Total federal income tax $1139
Federal income tax per person $284.75

The single woman household pays over 7 1/2 times as much tax in this example.  She is subsidizing the family with kids by paying many more times in federal income taxes despite the family utilizing far more $ in public resources. If you divide the tax by each person in the household, the difference in tax burden per household member is even more stark at over 30X!

Quote from: Jrr85
   I am not receiving SS or Medicare, so that is a moot point for what is happening today.  I'm currently paying payroll taxes as well, but my other taxes are higher (fed/state income, property).
 
Somebody might as well say that they are not getting subsidied now because they cashed their TANF check yesterday.  Certainly you may individually not end up receiving SS/Medicare, but on the whole, with respect to SS/Medicare, it is parents who are paying huge subsidies for non-parents.  Whether that is balanced out or overcome by other taxes and government programs is another question, but you can't just ignore it.

You're being obtuse if you're comparing someone who didn't pick up a check yesterday with someone who may or may not get SS two decades into the future.  Total apples and oranges.

And that is simply false about parents subsidizing as to be laughable.  Single people are subsidizing families with kids, as can be seen by my example above.  The family of four uses far more public resources yet pays 1/30th the amount of tax per person in that example.

And that's before factoring the large percentage of property tax that single people pay that goes towards schools (for kids) and parks (used more by families/kids).  Add that in, and the subsidizing by single people of young families with kids is even greater.
« Last Edit: July 04, 2018, 10:24:20 PM by DreamFIRE »

shuffler

  • Bristles
  • ***
  • Posts: 301
Re: Social Security will not be bankrupt
« Reply #179 on: July 04, 2018, 11:04:41 PM »
Single people are subsidizing families with kids, as can be seen by my example above.  The family of four uses far more public resources yet pays 1/30th the amount of tax per person in that example.
There's a valid discussion to be had around the tax-benefits of MFJ, or child tax credits.
But your example/conclusion is just ridiculous.

Here are some figures of my own:
 * The family is nearly living in poverty.  They're only making $17,500 per person.
 * The family is overcrowded.  Every member of the family has 3 flatmates.
 * The family is disenfranchised.  They only get 0.5 votes per person.  The single person wields twice the per-capita political power.
 * The family is drowning in medical debit.  They stub a toe at four times the rate of the single person.

Sounds like that single person is living a pretty sweet life.  I don't mind taxing them a bit more.

</s>

Jrr85

  • Handlebar Stache
  • *****
  • Posts: 1204
Re: Social Security will not be bankrupt
« Reply #180 on: July 05, 2018, 07:38:43 AM »
And you are only subsidizing young families and kids if you don't believe you will receive social security and medicare. 

Actually, NO.  I'm subsidizing then because I am paying much higher taxes while they get big tax breaks, for a household with the same income as me.
  In the past when you've used this argument, you've done income per household and not income per person.  That doesn't seem reasonable at all.  If we're going to have progressive taxes, then why would you look at income per household rather than income per person?

I'm comparing household income.  It's couples filing jointly with kids as a household using current tax law that gives them the big tax breaks.  But, if you think it would make me feel better if I break down the tax paid "per person" in the comparison, the difference is even more stark.  I've posted this before, but I highlighted the "per person" information in red for you.

Quote
Exactly.  I was surprised to see some of the other responses that missed the point that it wasn't about paying taxes in general, but unfair share of the tax burden for those that use the most resources compared to those who use less.

I posted this in a previous thread as an example, and it applies here and should clarify what my original comment was referring to when I stated I was subsidizing families with kids.

Here are some figures I calculated with the Dinkytown 2018 tax calculator using a simple comparison:

Household income of single woman with no kids $70,000
Total federal income tax $8700
Federal income tax per person $8700

Household income of married couple with 2 kids $70,000
Total federal income tax $1139
Federal income tax per person $284.75

The single woman household pays over 7 1/2 times as much tax in this example.  She is subsidizing the family with kids by paying many more times in federal income taxes despite the family utilizing far more $ in public resources. If you divide the tax by each person in the household, the difference in tax burden per household member is even more stark at over 30X!


In other words, a person with $70k pays an effective tax rate of 12.42% on their income (or really, I'm guessing more like 25.76% since it looks like your example is ignores the ~14.2% FICA taxes).  While the person with $17,500 pays an effective tax rate of 1.62% on income (or really, 15.7%).  I'm all for making the tax code flatter, but I'm not sure politically how you are going to get much more than that out of a household with about $18,838.75 of income per person.   


Quote from: Jrr85
   I am not receiving SS or Medicare, so that is a moot point for what is happening today.  I'm currently paying payroll taxes as well, but my other taxes are higher (fed/state income, property).
 
Somebody might as well say that they are not getting subsidied now because they cashed their TANF check yesterday.  Certainly you may individually not end up receiving SS/Medicare, but on the whole, with respect to SS/Medicare, it is parents who are paying huge subsidies for non-parents.  Whether that is balanced out or overcome by other taxes and government programs is another question, but you can't just ignore it.

You're being obtuse if you're comparing someone who didn't pick up a check yesterday with someone who may or may not get SS two decades into the future.  Total apples and oranges.

And that is simply false about parents subsidizing as to be laughable.  Single people are subsidizing families with kids, as can be seen by my example above.  The family of four uses far more public resources yet pays 1/30th the amount of tax per person in that example.

And that's before factoring the large percentage of property tax that single people pay that goes towards schools (for kids) and parks (used more by families/kids).  Add that in, and the subsidizing by single people of young families with kids is even greater.

It's not "someone" who may or may not get SS two decades into the future.  You are talking about parents in general.  If you want to talk about individuals, you have to look at individual tax burdens and benefits, in which case a lot of parents and non-parents are subsidizing other individuals, some of whom are parents and some of whom are not.  If you are talking about parents versus non-parents in general, you can only ignore the SS issue (or even significantly discount it) if you think there is a reasonable chance SS won't exist two decades into the future.  Certainly there's a chance it will not, but it's extremely likely that it will. 


TheWifeHalf

  • Bristles
  • ***
  • Posts: 499
Re: Social Security will not be bankrupt
« Reply #181 on: July 05, 2018, 10:01:16 AM »
TheHusbandHalf will get Raiiroad Retirement, rather than SS.
I read that SS was based on Railroad Retirement, so does anyone know if it's all one pool of money, or is it a separate chunk?

He just got his SS statement in the mail today! They estimate his monthly payment would be about the same as his RR payment, but the RR will add in extra because he paid tier 1 and tier 2.

I paid into SS for 9 1/2 years (114 months). To get SS, one has to have 10 years worth of employment. Oh well, guess I helped out somebody.

I grew up thinking there would be no SS too. My kids are thinking the same.

I stopped reading so maybe this has been addressed, but getting a part time job for a year (20 hours) might be well worth it to get you that extra half a year.

This is true, and something I've looked into. However, TheHusandHalf got a written verification of what he will get from Railroad Retirement (SS), and I would NEVER come even close to what I would receive as a spouse.  We'll just consider my payments to SS a donation to those years ago.

Undecided

  • Handlebar Stache
  • *****
  • Posts: 1075
Re: Social Security will not be bankrupt
« Reply #182 on: July 05, 2018, 10:42:40 AM »
The key distinction would see to be whether SS is intended as a way to make sure seniors don't starve or end up cold and on the streets, or is it an program that entitles even the wealthy to an unalienable right to take money from future generations, because they payed money to past generations, regardless of their actual need?

Are those the only choices? Are they exclusive? I see social security as aimed at goals similar to the former (although with the 40-quarters requirement, it's obviously not exactly that), made politically palatable by broader participation (with the top end of earners subsidizing the majority, but still getting something, so they don't see it as a naked grab). Doesn't seem like a crazy approach (perhaps supported by the fact that it's made it 80 years).

pecunia

  • Pencil Stache
  • ****
  • Posts: 563
Re: Social Security will not be bankrupt
« Reply #183 on: July 09, 2018, 10:53:55 AM »
We are due for a political change.  The current crop of politicians is not doing too well.  After the change, i predict they will fix it.

maizeman

  • Magnum Stache
  • ******
  • Posts: 2997
Re: Social Security will not be bankrupt
« Reply #184 on: July 09, 2018, 11:06:46 AM »
The key distinction would see to be whether SS is intended as a way to make sure seniors don't starve or end up cold and on the streets, or is it an program that entitles even the wealthy to an unalienable right to take money from future generations, because they payed money to past generations, regardless of their actual need?

Are those the only choices? Are they exclusive? I see social security as aimed at goals similar to the former (although with the 40-quarters requirement, it's obviously not exactly that), made politically palatable by broader participation (with the top end of earners subsidizing the majority, but still getting something, so they don't see it as a naked grab). Doesn't seem like a crazy approach (perhaps supported by the fact that it's made it 80 years).

Not exclusive, but a lot of the more straightforward and politically feasible solutions to allow social security to continue to fulfill one of those two missions would mean acknowledging it's not going to do as good a job of fulfilling the other going forward.

More generally, it's been my observation that many people tend to have one of those two missions in their head as the primary one, and so don't understand why it is so hard to fix social security so that it continues to be sustainable when most people agree on the important of the program: we agree it's important, but we don't fundamentally agree on what it is.