The difference is, after 30 years of paying a mortgage you legally own a house. You can live in it, sell it, give it to your kids, go to Vegas and blow it all on red. Whatever.
After 30 years of paying into SS, you legally have nothing but a non-binding promise. There have been Supreme Court cases over this. The gov’t doesn’t owe you a thing, you have no right to a payment. And the tax revenues are largely spent the year they are collected - it’s mostly a pay-as-you-go program. The burden is on our children to fund our retirement.
If you were born after 1965 or so and have been hitting the max for most of your working life, your lifetime total return on your SS taxes (on average) is likely to be negative. Doesn’t seem like that would be hard to beat.
The problem with programs like SS is that it is impossible to create a set of rules which will be total “fair”, whatever your definition of fair is, in all circumstances. I imagine child survivor benefits were added to help families back in the single-earner days if the main bread-winner died. Some corner cases came out of that that may not be exactly what was intended.
You can dramatize as much as you like. In practice, in my generation people are getting the money back binding or nonbonding.
We are not talking about survivor benefits, are we? If we are, what I say is not relevant. Survivor benefits should be left alone with child support intact. What I’d like to know is who is getting child support with regular ss benefits. Are they mostly low income? My impression was that it may be more likely upper income people. If so, just dropping child suport will be more effective than expanding means testing broadly.
I wouldn’t know what people pay in ss tax these days. What’s max tax they pay? And what are they scheduled to get paid when their time comes?
I thought it was already means-tested. We pay tax on 85% of SS income, I think. Are you saying if it becomes 100%? 85% to 100% is not that big a difference. And why does it make it a welfare? You pay income tax on just about any other income. SS income had been tax-exempt. Does reversing that somehow make it welfare?
The grandparents raising grandkids would only get SS for them if they legally adopted the kids, I believe. Those who are effectively raising them but who haven’t adopted them won’t be able to collect for said kids.
Some people have children after 40 because they had been trying since their thirties and it didn’t occur to them to stop trying once they had their 40th or 41st or 42nd birthday. (Neither did it occur to them to collect SS benefits on the kid who was the eventual result of all that trying.)
We still need to know what fraction of kids are raised by grandparents on SS to form an opinion whether SS child support is helping needy people or being wasted on people who are well set financially.
Did you stay home when kids were born? Do you get spousal benefit from your husband SS?
Yes, I stayed home for many years raising our kids and then worked part time. H has not contributed much to SS so is not entitled to any SS. He has a significant federal pension so any spousal benefit he would eventually otherwise be entitled to would offset by this pension.
Counting both employer and employee contribution, $15,772.80. It went up 7.3% this year.
Max benefit at FRA (which is 67 for anyone born later than 1960) is $2687/month, or $32,224 per year. So it takes about two years of taxes to cover one year of benefits.
And chances are the FRA will be raised to 68 or 69 in the future. Each year it is raised is about an 8% lifetime benefit cut.
SS is already progressive in that lower lifetime earners get a much much better return on their taxes than higher lifetime earners. The higher earners are the ones who, if we had invested that money wisely along the way, could have had a better return than we will get from SS. And families with two high earners get less return than families with one. If one spouse has low earnings, that spouse can collect 50% of the high earner’s benefit. If both spouses had high earnings, each only gets 100% of their benefit amount, not 150%. So the family amount is high, but the amount compared to taxes paid in is lower. But the program in general retains high levels of popular support because all the long time contributors do in fact get our payouts if we live long enough. If it is further means tested to the point where the high earners no longer get checks, that could cut support.
There are people at all income and educational levels who, if they had that money to invest or squander along the way, would have squandered every last cent and borrowed against more if they could. We all know them. And that is the great thing about having the benefit as a monthly check starting late in life. Protects people from themselves.
The benefit to older parents isn’t a high enough percentage of the total outlay for me to bother forming an opinion about. I have enough to do forming opinions on the proper weight and demeanor of service animals.
What I consider “means testing” doesn’t mean how you are taxed upon it, but how much SS you receive, and if you get any at all. For example, if you were above whatever threshold they chose (whether it’s your income or assets), you would get a reduced amount or none at all, no matter how much you had paid on it. And if you made (or had) less than that, you get it. If you pay for it and don’t receive it because you’re too well off, and others get it because they’re not, that is welfare.
Right now, you could be a billionaire, yet have a low annual income, and pay extremely low taxes on your social security pay out. Paying taxes on it is not what they are considering when they are talking about “means testing”, I believe.
I think means testing is commonly interpreted as @busdriver11 says. For example, if you make $100k, your benefit is cut in half. If $150k, it’s cut entirely.
At 85% taxed, even at the highest tax rate, is roughly a 34% cut.
The point, @MomofJandL, is that SS is not like a pension but has a built in redistributive function. I’m fine with that as I’d rather not live in a world with lots of starving old people. People who object to the redistributive function might call it welfare, which in the US has a pejorative connotation. Others, like Mike Mulvaney call it theft (“Taking money from someone without an intention to pay it back is not debt. It is theft. This budget makes it clear that we will reverse this larceny.”). Those are labels.
I am not counting on SS at all. I figure that we are going to have a period with even more dislocation. A small number of people are going to become wealthy or wealthier because of productivity-enhancing technology of various kinds that has the effect of eliminating jobs in the US. We as a polity will not do a very good job of redistributing from the technology owners to the people who will lose jobs. When white upper middle class folks are losing their jobs and savings as a result of automation, we will probably stop calling it welfare or theft and think of redistribution as necessary social policy. At that point, pots of $$ that are available, like SS, will be directed to alleviate the effects of the economic dislocation.
Or people who just want intellectual honesty might call it welfare. I personally don’t object to it, and think going further might be the right solution since we’ve massively overspent as a country and we want people to have a means of survival, no matter their poor luck or planning. However, when you take away from people who have paid for something, because they have means, and give it to people who have not paid for it, or paid little, that is welfare. You can call it something more palatable like “redistribution”, but that is the exact same thing.
And upper middle class white people are losing their jobs and savings because of automation and a million other reasons. You know all those auto workers in Detroit who lost their jobs? That is just one example of upper middle class good paying union jobs going away. And yes, many of those people are white. Maybe those robot taxes are a good idea.
The difficult thing about means testing is that some people have a pension or other assorted tax sheltered retirement funds and other people have similar amounts, but taxable. If you means test and shield tax sheltered funds, then you are doubly unfair to the person who is saving and being taxed on it along the way.
I do have a soft spot for grandparents adopting/raising their grandchildren. It’s usually sad circumstances, and some of those grandparents are true heroes.
I selfishly don’t want means taxing (beyond current taxation situation). DH and I both contributed, so it seems like we should both be able to withdraw reasonable amounts even if we do have higher than average savings/income. If we still had our defined benefits pensions (and pre-65 medical benefits), perhaps I’d be less concerned. It is nice to have one source of income that we know (hope?) will least our full life span. However, while we are still working… I do support progressive taxation… perhaps even higher than current rates.
