Young people are convinced that they are paying into SS but will never get it. Had book club last night and two of our members are 30-somethings. One got very angry about it. My own sons just assume they’ll never see what they are putting in.
Can anyone here speak to the subject of what could be done to save it? Considering it is set to be depleted in 2035, I’d say we’d better get it in gear to do something.
“Considering it is set to be depleted in 2035, I’d say we’d better get it in gear to do something.”
No, it is not being depleted in 2035.
It’s always been an assumption among our generation that we wouldn’t get it despite paying into it. It’s just been an accepted fact our whole lives.
And then people are surprised that we’re overwhelmingly backing candidates that favor removing the SS tax cap (among other reforms) so that we don’t have to disproportionately shoulder the burden without full benefits. shrug
I’m about to turn 50 and we’ve done all our retirement planning assuming we won’t see a penny of SS.
I’m 65 and when I was in my 30’s we thought we’d never see a dime of SS either. But it’s good to save for retirement and not be dependent on SS.
There are plenty of suggestions for ‘saving’ SS out on the internet, and most simple math. Many of those suggestions will get adopted, sometime.
I never thought I’d get Social Security. I thought it would be gone by the time I got to full retirement age. And now on the second Wednesday of every month I’m like, “Look, they did it again, they put money in my account.” It wouldn’t be that hard to fix it so that future generations will have the same benefit. Don’t want to get political but there are some fixes that are pretty obvious.
Just as most of those above, DW and I planned for retirement assuming we wouldn’t receive SS benefits. I’ve always assumed it would be means tested, and thought it would be better to aggressively save and invest, and also to maximize our income that wasn’t subject to SS withholding (meaning passive income and income in IRA’s).
To me the obvious solutions to long term trust fund solvency are 1) raising or eliminating the SS wage cap, 2) means testing benefits, and 3) establishing a system where the work of undocumented workers is normalized and taxed, including SS withholding.
I realize my third suggestion raises some interesting political questions (should they receive SS benefits in exchange for their withholding?, should they pay a “guest worker penalty” dedicated to helping the trust fund?, etc., but I won’t touch those questions. Not allowed.
I’m 50 and have been aggressively saving for retirement for 25 years. I am not depending on SS. I hope I get to benefit from all that I’ve paid in.
It certainly would have been nice to take that money and invest it privately. I’d be sitting really good right now if I could have.
My biggest fear now is that somewhere down the road the “tax and spend” government decides to dip into my personal savings and redistribute it to those that haven’t sacrificed for their future.
I’ve resigned myself to the reality that SS might not pay me because of my good planning but I am not happy with the thought they may go even further.
I’ve always believed I would get something from SS. Older folks are more likely to vote and elected officials generally want to stay in office. They will work towards at least a partial solution, but I suspect they will be like students who wait until the night before the paper is due to become truly motivated.
(3) should probably be for undocumented work, regardless of whether or not the worker is undocumented, since there are lots of situations (not necessarily involving undocumented workers) where cash payments are not properly documented or have taxes withheld or paid on them, while undocumented workers sometimes give false SSNs that have taxes withheld on them (but benefits are never collected on).
But note that all solutions to Social Security finances basically come down to either (a) increasing the tax revenue, or (b) reducing the benefits. Neither is what people want to hear.
I would expect the benefits schedule to change at some point (already has when Full Retirement Age (FRA) increased form 65 - 67) and it probably should due to life expectancy. The key is where they set the “grandfathering” to minimize retirement planning disruption.
But it’s not going away. No way that happens if for no other reason than politics and optics.
You missed the obvious: raising the FRA.
Back when SS was started, the US life expectancy was 61. In other words, when established, it was not designed to pay out anything to most. Obviously longevity has increased.
Exactly. This ain’t rocket science. Just simple (actuarial) math.
btw: for those interested,
https://web.stanford.edu/class/e297c/poverty_prejudice/soc_sec/hsocialsec.htm
One could argue that FRA’s should be based on life expectancy, with differentials for different groups that can realistically expect to live longer or shorter. Coal miners die younger than than school teachers. Should both groups retire at the same age, allowing the teachers many more years of SS benefits?
I believe worst case, even if nothing is done, people will still get about 75% of promised benefits. It won’t be zero, as the next generation will continue paying in.
This is assuming the funds don’t get raided for other things, of course.
Still, I personally don’t count SS as part of my retirement plan. Whatever I get will just be “mad money” - nice to have but I’m not banking on it.
I believe this was used in some countries.
https://www.cato.org/sites/cato.org/files/pubs/pdf/bp61.pdf
The link above addresses the racial disparities of SS. While the numbers are from 1996, it shows the average life expectancy for white males was 73.1 as opposed to 66.9 for Black males, meaning the average white male receives many more years of benefits than the average Black man.
I expect SS to always be around, but it does make sense for younger and middle aged people to be less happy about how things have changed. The current oldest recipients are getting back far more than they ever put in because their contributions were pretty low for decades. Current young and middle age workers are paying in a lot more (with the intent to try to build the trust fund mentioned above) and the benefits they will get relative to what they paid in is less.
I thought Medicare was in worse shape.
Just want to make the point that, though life expectancy per se might have been 61 when SS began, life expectancy of an adult would certainly be much higher. So the low age, which takes into account the much bigger number of infant and childhood mortality of the past, does not mean that most people would not have gotten SS. And additionally, since, obviously, most adults at the time it started wouldn’t yet be at retirement age, many even from that time would have reaped the increasing benefits of better healthcare as they aged.
The misuse of past life expectancy numbers is a pet peeve of mine.
The younger kids will get their benefits for a far longer period based on life expectancy.