Social Security’s Finances Erode Further and Could Spell Benefit Cuts

[BirdinHand]

Why shouldn't you also be denied benefits since your vote also contributed to the problem?

I don’t expect to ever collect a penny of Social Security

Never have and have spent my entire working life anticipating that I won’t.

If I do manage to see it, it will be happy icing on the cake

I’m still more than 20 years away from retirement - and still building my retirement portfolio with the anticipation that I’m on my own. Same with my husband - and we are both Gen X and have NEVER anticipated that we’d ever get a penny from SS.

I don’t even open the mail I get from SS to see what my “anticipated” benefits would be, because I don’t count on ever seeing it.

 

[BirdinHand]

I didn't vote for "it" nor did I vote for the current MAGA crowd in charge.

I'm old school GOP and an anti-trumper.



Wouldn't supply and demand kick in.

If we have BUI for everyone, who pays the massive taxes to fund BUI?

WW

Tax rates would have to increase significantly - including in corporations and the extremely wealthy.

We have been there before and it’s when our middle class - and country - was the strongest.

Time to stop believing in trickle down economics bullshit and start taxing more in line with other countries in the world - and providing the benefits to Americans that people in other countries have.

From healthcare to stronger social safety nets.

The US has been gobbling up rhetoric that if we cater to the wealthiest and give them more and more tax breaks - it somehow benefits everyone for decades. And it’s a lie.

 

[BabaVoss]

The system is dependent on demographics. The population grows in waves. The system has to be adjusted periodically. That’s all this requires. There are several solutions on the table. Some combination of those ideas can solve it. Reagan did it. But…
This congress appears to be utterly incapable.
This president seems incapable and uninterested.

One additional hit SS will experience in the short term is the reduction of those undocumented workers who have been paying into but never benefitting from the system. One of many weary the current war on undocumented workers will damage our economy.

I doubt Trump's tariffs have anything to do with this.

Unrelated, although price increases and inflation will hit retirees at lower income levels hard.

The Society Security Administration has been projecting this situation for at least a decade or more.

Yes.

Problem basically is fewer people are working and paying FICA payroll taxes,

??? The number of people working has increased over time.

In good years excess FICA was even loaned to the govenment.

Unrelated.

Unfortunately the huge baby boomer generation which had been the prime FICA payer is now retired and drawing their payments and the smaller generations coming up aren't able to mining SS payments in the current range.

Hence the needed adjustments.

 

[gbg3]

Not accounting for potential impacts of Trump's tariffs and deportations which may worsen the picture, we're eight years from a 23% cut to benefits.

Social Security’s Finances Erode Further and Could Spell Benefit Cuts

Yep, it's long past time that a president becomes willing to "touch" SS.

 

[Irredentist]

SS is currently solvent and as posted earlier boomers will leave more than they take.

You want to deprive 76 million boomers of an earned benefit because you don't like how congress handled the fund.

You voted for some of those congressional members. Why shouldn't you also be denied benefits since your vote also contributed to the problem?

Imagine how much more money I could make, and how much better my life would be over the next thirty years if I didn't have to pay social security taxes to support old people that I neither know nor care about.

 

[jmotivator]

Not accounting for potential impacts of Trump's tariffs and deportations which may worsen the picture, we're eight years from a 23% cut to benefits.

Social Security’s Finances Erode Further and Could Spell Benefit Cuts

And how would tariffs and deportations impact SSA?

 

[WorldWatcher]

Problem basically is fewer people are working and paying FICA payroll taxes,

??? The number of people working has increased over time.

He's not talking about absolute numbers, I believe that reference is to the ratio of workers to retirees. The ratio of workers to retirees has decreased from about 4:1 in the 1960's to just over 2:1 now.

And many of those workers are illegal aliens using false documents, meaning they are paying in but will not draw benefits. Further impacting the worker/retiree ratio. Removing the illegal aliens will decrease SSA revenues by Billions.

WW

 

[WorldWatcher]

Yep, it's long past time that a president becomes willing to "touch" SS.

The President can't "touch" SS.

That would required Congress to act to change the law.

WW

 

[WorldWatcher]

Imagine how much more money I could make, and how much better my life would be over the next thirty years if I didn't have to pay social security taxes to support old people that I neither know nor care about.

Now attempt to extrapolate that into a population of hundreds of millions.

What works for a single person acting a lone is different then when dealing with populations.

WW

 

[gbg3]

Does this include Trump's commitment to eliminate taxes on Social Security?

That didn't make it to either the House or Senate bill. The only thing that made it in, is a new and likely temporary tax deduction for seniors bringing in less than $75,000 annually. That's a pretty low income and MANY a typical SS recipient won't qualify for that senior deduction. It's a tax deduction for the nation's poorer seniors and there is nothing wrong with that concept, but it is entirely unrelated to "eliminate taxes on Social Security".

 

[gbg3]

He couldn’t have that done via reconciliation, so the OBBB does this:

List of Tax Cuts in the Big, Beautiful Bill - Americans for Tax Reform

The One Big Beautiful Bill delivers on President Trump's promise of across the board, pro-growth tax relief for American households and businesses. Below is a list of the tax cuts in the One Big Beautiful Bill passed on Thursday, May 22: Income Tax Cuts: Trump-level Personal Income Tax Brackets Are…

atr.org

The Senate version has this deduction at $6,000. We'll see what the final bill has.

But you're right, the no taxes on SS couldn't work within reconciliation, so this entirely different concept is what replaced it.

 

[aociswundumho]

Now attempt to extrapolate that into a population of hundreds of millions.

Go ahead, it still holds.

In the end, SS is a poor-to-rich transfer. Older Americans are the wealthiest age group, while younger people are the poorest, yet the money flows from the young to the old.

 

[WorldWatcher]

That didn't make it to either the House or Senate bill. The only thing that made it in, is a new and likely temporary tax deduction for seniors bringing in less than $75,000 annually. That's a pretty low income and MANY a typical SS recipient won't qualify for that senior deduction. It's a tax deduction for the nation's poorer seniors and there is nothing wrong with that concept, but it is entirely unrelated to "eliminate taxes on Social Security".

"Many" is a qualitative term not a quantitative term.

Meaning it's open to interpretation.

WW

 

[gbg3]

A simple ‘fix’, to prevent exhausting the SS ‘trust me’ fund, would be to increase the SS FICA ‘payroll’ tax rate(s) from 6.2% to 7.75%.

Using liberal math, that’s only a 1.55% tax rate increase.

There is your proposed idea and a whole bunch of other fixes, which include a smaller increase than you've discussed here - but come at the SS shortfall from various directions (impacting both retirees and workers).

The problem is no Congress is willing to compromise on a fix and no president/party wants to "look bad" for doing the right thing.

 

[WorldWatcher]

Go ahead, it still holds.

In the end, SS is a poor-to-rich transfer. Older Americans are the wealthiest age group, while younger people are the poorest, yet the money flows from the young to the old.

So what is your solution?

#1 Stop paying SS at all, and allow people to invest voluntarily (or spend it with no plan for retirement)?

#2 Stop paying SS and have mandatory individual accounts similar to 401K but where contributions are mandatory and untouchable until retirement age?

#3 Continue paying SS for existing retirees and allow people to opt out and invest voluntarily (or spend it with no plan for retirement)?

#4 Continue paying SS for existing retirees and have mandatory individual accounts similar to 401K but where contributions are mandatory and untouchable until retirement age?
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Under #3 and #4 how do we fund current commitments if people aren't paying into the system?

WW

(BTW - I support transitioning to individual accounts, the trip up is always how to pay for it.)

 

[gbg3]

The system has too pay for itself. That means some changes have to come. Raise the tax, extend the age a year, lift the cap. These are not had things to think of, but Congress is so spineless. Both parties ought to have all members vote yes on these things to fix it. No pointing fingers at the other side, just get it done, save the system and then you can go back to partisan politics.

DITTO!

 

[BirdinHand]

Imagine how much more money I could make, and how much better my life would be over the next thirty years if I didn't have to pay social security taxes to support old people that I neither know nor care about.

And who largely repeatedly voted themselves into this situation by not addressing SS for the past 30 years when they knew this was coming



The plurality of voters in the US just voted to screw other people - I say we give them exactly what they asked for.

Let the leopards really feast.

 

[gbg3]

Clearly the boomer generation didn't pay enough into the system to cover the benefits they believe they deserve - but not to worry, they have a solution. By simply raising the cap, we can have the millennials make up the difference. What's one more financial challenge in the big scheme of things?

I agree. It's absurd to put the whole burden on the worker side. There are many directions this can be tackled from which impact both workers and retirees without landing all the pain on just one group.

 

[gbg3]

Extending (raising) the SS ‘full benefit’ age (which has already been done) is a benefit cut. Claiming that cutting SS benefits (for some) is a ‘fix’ to cutting SS benefits (for all) is ridiculous.

Yes, it is a "benefit" cut. Just like raising FICA is a pay cut. That's the way fixing a financial shortfall can tend to go - with a little pain and sacrifice.

 

[gbg3]

The Second Quote is incorrect.

The Income Taxes paid on SS benefits go back to the SSA for payment of current benefits. Removing the Income Tax on SS will accelerate the Trust Fund shortfall because it will reduce current revenue to the SSA.

WW
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Taxation of benefits

Well, removing income tax on SS benefits isn't in either version of the new bill, so don't worry about it.

 

[gbg3]

You are confusing Social Security Retirement, Social Security Disability, and Social Security Survivor benefits. Those are different programs with different sources of funding.

WW

Social Security survivor benefits have a different source of funding than regular social security benefits? I wasn't aware of that. Do you have a source so I can read and learn about that?

 

[OrphanSlug]

I am starting to think most in the thread are unfamiliar with the current function of Social Security.

Without increasing contribution there is a finite amount of time before benefits are forced to go down, all by law.

 

[gbg3]

Agreed.

But to give credit where it's do. It was recognized that the Boomers (us) were going to run out of SS funds. The changes made in 1983 (and tweaked in 1990'ish) were to protect SS for 50 years.

1983 + 50 = 2033

So those changes achieved what they were supposed to do.

Problem is there have been no more tweaks since.

WW

There were some tweaks in Obama's term. File and suspend was eliminated and a few more changes. Those changes were to help lessen the growing shortfall issue.

 

[Lord Tammerlain]

Nope, doubling of something is a 100% increase in it.

Ah but the old number is 50% of the new number,

 

[ttwtt78640]

There is your proposed idea and a whole bunch of other fixes, which include a smaller increase than you've discussed here - but come at the SS shortfall from various directions (impacting both retirees and workers).

The problem is no Congress is willing to compromise on a fix and no president/party wants to "look bad" for doing the right thing.

Why, exactly, should (some?) SS beneficiaries get less than they were ‘promised’?