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<p>Would you prefer to raise taxes or cut benefits to maintain it in the future?</p>
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<p>Actually, it rewards being born more than about 65 years ago; we are passing the tipping point where previous retirees will get back more than their contribution, while future retirees will get back less.</p>
<p>I would tweak it by raising the retirement age and lifting the cap on taxable wages from $106,000 to no limit. I would also rescind the employer contribution. I love employers and would like to take all fees away that are associated with hiring someone.</p>
<p>Extreme poverty (which could be a likely result of stopping Social Security or similar system to provide some level of financial support for retired people) could create significant societal problems and potentially unrest and more. Personally, I prefer paying for Social Security over Welfare and other programs which don’t require the recipients to do as much as Social Security does. I can’t see how having a large population of impoverished elderly people would be good for our society, which is what I and many predict would happen if Social Security is discontinued. Many have not saved much toward their retirement now and there is no guarantee if they got 7% more that is currently deducted for Social Security that any would be saved.</p>
<p>Agreed that we need to raise the retirement age. SS was never intended to be a 20 year annuity! As much as I believe in personal responsibility, we need SS. As a society we are simply not saving (enough) on our own. Without SS, we would have a lot of destitute seniors. I like that it rewards work (as stated above). I am worried about the potential for means testing: we need to incent people to work and save!<br>
I have a very hard time helping out my inlaws with some bills given their spendy lifestyle and selfish financial decisions. However, for family that has been careful with spending, but is struggling because of health issues or job loss, I would definitely step up with assistance.</p>
<p>ucba - of course we need to tweak it. And I am pretty resigned that our income level will mean that the tweaking will come at my and my spouse’s expense, largely.</p>
<p>I think means testing benefits is one “tweak” they better not attempt.</p>
<p>The normal retirement age to collect SS is 67 for those born in1960 or later.( or 66 & 1/2 for those born in 1957)
My H works a very physical job, there is no way he could physically last for ten more years working full time.
My family also dies relatively young, if I divide the age at death of my mother/ father by two, I get 59. I’m 54 now, and I have the health problems of someone in their 80’s according to my Dr. </p>
<p>I agree with eliminating the cap though.</p>
<p>I’m really excited to pay 12% of my salary each paycheck… I wonder how much of that I will get back in 45 years?</p>
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<p>Benefit cut.</p>
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<p>Tax increase.</p>
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<p>Tax cut, which would require that the benefit cut or tax increase listed above be of greater magnitude to maintain funding.</p>
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<p>What tweaks would you suggest?</p>
<p>It would not be surprising if the post-baby-boom generations will end up paying significantly higher Social Security taxes while getting significantly reduced Social Security benefits. It would not be unreasonable for someone in the post-baby-boom generations to plan as if there will not be any Social Security benefits available to them at all.</p>
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<p>Why? Given the elderly population’s high Gini coefficient, and the very regressive nature of the taxes for Social Security, means testing should be on the table with everything else, since Social Security is really just another pay-as-you-go welfare system.</p>
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<p>If you plan for none, anything that does show up will be a pleasant surprise. That is much better than planning for it to be there for you, then realizing too late that benefits have to be cut because there is not enough money and working people have finally stopped accepting Social Security tax increases.</p>
<p>" since Social Security is really just another pay-as-you-go welfare system."</p>
<p>Really?</p>
<p>That is news to me.</p>
<p>I don’t think so…</p>
<p>Think about it.</p>
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<p>The payroll taxes that working people and their employers pay go directly to pay for the benefit checks of Social Security recipients.</p>
<p>If one were to account Social Security as if it were an actual pension plan (which it is not), then it would be $8.6 trillion underfunded looking into the next 75 years – or $20.5 trillion looking into the indefinite future.</p>
<p>dstark, Social Security is a pay-as-you-go transfer from the set of current workers to the set of retired workers. I assume that that is not what you are questioning. Correct?</p>
<p>There is another question, which I assume you are challenging, which is whether it is welfare or not. Here, it seems unclear as transfers are made with some correlation between what individuals put in while they worked and what they get, but the amounts that they get are not solely related to that, I don’t think. A wife or disabled child gets a distribution whether or not they contributed. While Robert Samuelson sees it as welfare ([Robert</a> J. Samuelson - Why Social Security is welfare](<a href=“http://www.washingtonpost.com/wp-dyn/content/article/2011/03/06/AR2011030602926.html]Robert”>http://www.washingtonpost.com/wp-dyn/content/article/2011/03/06/AR2011030602926.html)), I think this economist’s article ([Robert</a> J. Samuelson - Why Social Security is welfare](<a href=“http://www.washingtonpost.com/wp-dyn/content/article/2011/03/06/AR2011030602926.html]Robert”>http://www.washingtonpost.com/wp-dyn/content/article/2011/03/06/AR2011030602926.html)) is more persuasive. He/she argues that SS is social insurance (probably with some moral hazard) that protects people against the risk that they have bad economic luck or bad savings habits and is insurance and not welfare.</p>
<p>Wow…</p>
<p>I can’t believe what Samuelson wrote. He just made up a definition of welfare to fit his argument.</p>
<p>Ucbalumnus…what you wrote did not show why SS was a welfare system.</p>
<p>Somebody posted earlier that people are going to put more money into SS than they get out. How is that a welfare system?</p>
<p>And…</p>
<p>Let’s say somebody pays $300,000 in SS tax over a 40 year period. Then that person starts collecting over a 25 year period? How much should that person collect?</p>
<p>Way more than $300,000. The time value of money. Right? Way more
than $300,000 should be paid back to the taxpayer.</p>
<p>The bigger issue is we lowered taxes as a percentage of income to the wealthiest taxpayers and we raised SS taxes to pay for this. i am not making this up. It Is a fact. Done in the 80’s. SS has been overfunded
almost every year since it started. Where
did that money go?</p>
<p>If you overfund something for 30 years, you can underfund the same thing for many years. Right? Unless the money was spent on something else</p>
<p>That is what most people do, or I should probably say, should do…</p>
<p>We save our working lives (overfunding) and then we spend that money when we retire and hope the money doesn’t run out before we die (underfunding).</p>
<p>I know I am speaking in a generality here. I don’t want to get into anecdotes about how some people saved enough, so they did not spend down their principal, because that doesn’t change my argunent.</p>
<p>Calling something welfare when it isn’t changes the argument. Doesn’t it? I find that dishonest and creepy.</p>
<p>And before somebody says that…that guy didn’t pay enough into the system and he gets SS so SS is a welfare system, then I guess that somebody is saying that private insurance is a welfare system too.</p>
<p>The private sector is underfunded when it comes to their pension plans too. Quite a bit underfunded.</p>
<p>Social Security never was a real pension plan, even when it had some built-up surplus (that was far short of the assets that a real pension plan would need to cover the liabilities of Social Security). It was always just a transfer payment scheme – tax one group of people (very regressively) to give money to some other group of people.</p>
<p>So…</p>
<p>I hate to repeat myself…</p>
<p>But…if I buy savings bonds, or Zero coupon bonds…</p>
<p>And the money the government receives from me is spent immediately…and
I am paid back 20 years later by tax receipts of the time or another bond offering…</p>
<p>I received welfare?</p>
<p>Really?</p>
<p>I bought some government bonds at $250 per bond and am going to receive $1000 per bond in 22 years or so. The government used that money immediately. This is not just an example…this is true. </p>
<p>The government is probably going to have to borrow more money from the taxpayers of the future to pay me in 22 years. I am going to receive more than I paid, at least nominally.</p>
<p>I am on welfare?</p>
<p>dstark, the argument for considering it welfare is the fact that future generations will not receive what they put in, even nominally. Considering we were not the ones who voted for massive entitlement schemes, yet will be the ones paying for the benefits of two larger generations when we are highly unlikely to see them ourselves, yes to me that is welfare. A clever method of taxation without representation. We were not the ones who voted for overspending. Why should we solely bear the consequences? I’m not against social security, mind you. But if I’m going to pay for social security and medicare that I’m not going to get myself, the least the elderly can do is accept some cuts so we share the burden.</p>
<p>And if you’re going to point to any period as the death of social security, you shouldn’t be looking at the 80s. LBJ was the one who transferred the SS surplus into the general fund, and started the tradition of spending it all.</p>
<p>dstark,
A government bond is a debt instrument; its like buying an IOU. Paying into SS is not the same thing. Paying into SS doesn’t promise to pay you anything.</p>