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Social Security Fix

Your Identity and For/Against this SS Reform model


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danielpalos

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We could eventually end the need for the social security program, by folding it into unemployment compensation, simply for being unemployed on an at-will basis in our at-will employment States.
 

danielpalos

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Do we really need the Expense of duplication of Government? The doctrine of separation of powers should not be micromanaging Congressional management.
 

imagep

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It is broken. The politicians broke it by doing exactly what you pointed out. And they have no intention of paying it back. They will just continue to rob from it and ask it's intended future recipients to delay their retirement or accept less benefits

That's not factually correct, it's a myth.

It is not true that congress has removed any money from Social Security. What HAS happened is that SS is required to invest it's trust fund into Treasury bonds, which is the safest investment in the world, and this has been the case ever since SS was started. the US treasury has never defaulted on it's bond obligations, and never will and never will have to. The government issues money and also has the power to tax and issue bonds, so there is no reason that a country that issues it's own money would ever need to default on an obligation which is denominated in it's own currency.
 

ttwtt78640

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We could eventually end the need for the social security program, by folding it into unemployment compensation, simply for being unemployed on an at-will basis in our at-will employment States.

Rest assured that "we" will not be offering the option to retire (remain unemployed) at age 18.
 

Waddy

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Just take it from the "rich"... you know, anyone making over 100K per year. That's the fix for everything.
 

iguanaman

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"Just impose a 12.6% tax on everyone earning over $106k. That's a great idea and nobody would ever have a problem with it!"

I thought we should all pay the same? Why do those that need it least always get the breaks? Isn't that what got us into this mess to begin with? Most all of us pay that tax on 100% of what we earn but the wealthy only pay it on 10% of what they make? That sounds fair to you?
 

mrjurrs

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Here is my proposal:

Allow workers to opt into a partially privatized system, where of their 7.65% FICA expenditures, 5% goes into a private TSP-style account; and the Employers match follow the same. the remaining 2.65% (or, when you count the match, 5.3%) will go straight into SS, but it will be revenue for which SS will never see a liability. the cost for opting out

welllll, let's do a quick example:

Joe graduates High School and goes to work, making 25,000 a year. Not anyone's idea of incredible pay, but there you are. Joe gets' a 2% raise every year to account for his increasing talent, experience, etc. The 10% of his income goes into a mix of funds that matches the S&P 500 Combined Annualized Growth average since 1982: 7.98% (after you account for inflation). If Joe retires nice and early at 62; his retirement fund will be worth $1,030,110, and if placed into an annuity / conservative account that generates a 5% annual return, his monthly benefit will be $4,292. That would be slightly less than his last monthly paycheck of $4,979; but still quite livable. If Joe works until he's 65, his monthly benefit will climb above his monthly income to $5,473; and if he decides (as most of us probably will) to delay retirement to 68, he's looking at a monthly retirement check of $6,966.

And remember, Joe isn't exactly one of society's higher paid workers.

But he also had the advantage of time. Let's say instead Joe went to two years of college, and got an associates before entering the workforce to earn that 25,000; and let's say that instead of 2%, Joe turns out not to learn new skills that well, and his annual raise above inflation is actually 0.5%. We're stacking the deck a little against ole Joe, but he still seems to come out okay; his monthly benefit at age 62 is $3,050; at age 65 it's $3,875; and at age 68 it's $4,915. It's worth noting that under this model, the most Joe ever made was $31,672 in a given year; and that his monthly retirement benefits at age 65 represents a $1,200 monthly pay increase over his monthly income. Even if Joe retires early at 62 he will have more in income off of his account than he would from working; and the longer he chooses to keep working, the greater, obviously, his return is.

AND ALL THIS WITHOUT COSTING OLE JOE A SINGLE RED CENT. since the money was cash he was losing to taxes in the first place, his take-home pay wasn't reduced one iota; but because we partially privatized social security, Low Income Worker Joe can retire a millionaire.

OR, if he didn't want the 'risk' of the marketplace, he could have chosen to stay with regular social (in)security. average monthly payout: about $1,100 dollars. or, roughly 1/3rd of what Joe made in our worse case scenario at age 65.


BUT WAIT!!! WHAT IF THE MARKET TANKS!!!

Markets recover. If the market tanks right as Joe was planning on retiring, he can work for an extra year while it rights itself, or simply choose to draw less from the account in order to leave more in there to ride the upswing. OR, if Joe makes the worst decision possible, at the worst time possible and withdraws all of his money while the market is at the low point on the trough (say, a 40% drop, similar to what we just saw), to purchase a 5% annuity... then his monthly income in our worse-case scenario at age 65 will still be more than twice what he could have expected from Social Security.





I am particularly interested in liberal critiques of this plan. Conservative ones (it leaves Social Security, which is unConstitutional, still in place, so on and so forth) I already know, but tend to discount them as beyond the politically palatable. It strikes me that this offers a little something for both sides of the economic aisle: for you Keynesians, the existence of a retirement fund growing tax-free will spur people to consume more and save less; for you Austrians, the existence of a steady flow of capital into the market irrespective of what it is doing will smooth out the business cycle, and create a massive interest group against easy money (people like few things less than watching their nest eggs dwindle thanks to inflation).

More complicated than it needs to be. Just remove the cap on income taxed. People that stop paying because they've topped out are likely taking advantage of other tax advantaged retirement programs. SS is NOT unconstitutional, you can tell by the fact that the SCOTUS has not declared it to be unconstitutional.
 

molten_dragon

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This isn't a fix to social security. It's a fundamental change to what social security is. If we want to discuss that, let's do it in honest terms.
 

rickc

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Social security fix

Remove the salary cap on imcome subject to the social security tax

Make.all income, earned and unearned, subject to the social security tax

If that doesn't do it.then raise the tax rate

Social security benefits need to be raised not cut

The retirement age should be 65. Not many people who actually do physical work can continue in their trade much after that. Not many 70 year old concrete finishers, iron workers or other labor intensive workers out there.
 

cpwill

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More complicated than it needs to be. Just remove the cap on income taxed. People that stop paying because they've topped out are likely taking advantage of other tax advantaged retirement programs.
Thanks for reading through and responding :) two issues arise with this plan:

1. It doesn't raise sufficient funds, especially when you take into account likely behavioral changes

2. This would make Social (in)Security even worse in it's effects - namely, it would expand the degree to which it locks Americans' retirement funding into a terrible program with atrocious ROI which fails to adequately take care of our seniors, particular or low-income ones.

If we have to change Social Security anyway, let's at least try to make it better for the people using it.


SS is NOT unconstitutional, you can tell by the fact that the SCOTUS has not declared it to be unconstitutional.

:) I'm aware that it was considered a tax and therefore constitutional by that court. Some disagree with that decision, and I was acknowledging them.

Sent from my Moto G (5S) Plus using Tapatalk
 

cpwill

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This isn't a fix to social security. It's a fundamental change to what social security is. If we want to discuss that, let's do it in honest terms.
If "Social Security" is how we "provide some measure of protection against poverty in old age", then this isn't a fundamental change in what Social Security Is, but rather a change in how cash flow is handled within the program and the benefit formula.

Sent from my Moto G (5S) Plus using Tapatalk
 

cpwill

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Social security fix

Remove the salary cap on imcome subject to the social security tax

Make all income, earned and unearned, subject to the social security tax

If that doesn't do it.then raise the tax rate

While I Included some of this (for example, I, too, got rid of the cap), mathematically, if that's the totality of it, this makes Social Security worse in terms of taking care of people, both workers and retirees, so, while it is a plan, I don't think it's one we want to use when we have better alternatives.

Social security benefits need to be raised not cut

I concur (you will notice that my plan not only raises the guaranteed minimum, but more than doubles the average retirees benefit) but, what you suggest as a means to get us there.... well, doesn't get us there that well, and certainly not without large negative externalities.

If the goal is "Increase Social Security Benefits, Especially For Low Income Workers", who not choose the option that produced a better result along that metric, v one focused on "increase taxes". Is "Increase Taxes" more important to you than "Increase Benefits"?


The retirement age should be 65. Not many people who actually do physical work can continue in their trade much after that. Not many 70 year old concrete finishers, iron workers or other labor intensive workers out there.

Nancy Pelosi, of all friggin people, made this point once in a way that I had to accept was logical and reasonable. If anything, I would say for some 65 may be too old, and -if anything - we may want to allow partial benefits drawn at 59 1/2, to match our 401(k) / IRA structure, so as to allow those who physically cannot do the demanding work that is their skilled profession to slow down. What do you think?
 

cpwill

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I think Republicans should run on “fixing” social security.
[emoji38] while I'd love to see it, it probably won't happen soon - wise policy is terrible politics. One of the many reasons the Founders feared mob rule.

But it's possible. Marco Rubio campaigned on it in Florida, IIRC, in his first Senate campaign, and won.

We are going to kick this can down the road until it becomes a crises and we have no good options left, and then we are going to blame the very politicians whom we would have punished for trying to address the problem sooner for having not fixed it. :)
 
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Dans La Lune

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[emoji38] while I'd love to see it, it won't happen soon - wise policy is terrible politics. One of the many reasons the Founders feared mob rule.

We are going to kick this can down the road until it becomes a crises and we have no good options left, and then we are going to blame the very politicians whom we would have punished for trying to address the problem sooner for having not fixed it. :)

Or Republicans could run on their true agenda, Democrats could run on theirs, and give the voters an honest choice. That’s not mob rule, it’s representative democracy. By the way, Obama even (foolishly) offered cuts to social security and Republicans didn’t take it.
 

JMaximus

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Here is my proposal:

Allow workers to opt into a partially privatized system, ...

Social Security doesn't need to be privatized - it needs to be paid for.

That starts with getting rid of the cap on taxable earnings and ends with getting rid of the cap on taxable earnings.
 

cpwill

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Social Security doesn't need to be privatized - it needs to be paid for.

That starts with getting rid of the cap on taxable earnings and ends with getting rid of the cap on taxable earnings.

As described above, while I've included that in my proposal, that alone:

1. Actually makes the program worse, and

2. Still doesn't pay for it

So, I don't think that it's likely to get us to the best policy.
 

cpwill

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Or Republicans could run on their true agenda, Democrats could run on theirs, and give the voters an honest choice.

Both parties have platforms that are their agenda; what changes is the extent to which they are willing to put effort into any particular part of it. Republicanism decided last election cycle that they no longer wanted to avoid a crises in the entitlements, and joined the Democrats in our government's slow-moving-race to the most obvious cliff in fiscal history. Then, when we get there, each party will try to blame the other.

By the way, Obama even (foolishly) offered cuts to social security and Republicans didn’t take it.

I'd have to go look it back up, but, IIRC,

A) OASI wasn't going to be cut, so much as it was going to grow slower.

B) The Grand Bargain was spiked by the White House under pressure from the parties' left.


Regardless, I'm trying to do the opposite of cutting Social Security - I think, if we move now, we may still have time to even expand OASI benefits. But if we wait until it's a crises, we will have no good options.
 

Dittohead not!

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Social security fix

Remove the salary cap on imcome subject to the social security tax

Make.all income, earned and unearned, subject to the social security tax

If that doesn't do it.then raise the tax rate

Social security benefits need to be raised not cut

The retirement age should be 65. Not many people who actually do physical work can continue in their trade much after that. Not many 70 year old concrete finishers, iron workers or other labor intensive workers out there.

While we're at it, let's treat all income the same for tax purposes. Why is it that money earned as salary is taxed at a higher rate that money earned by letting the money work for you? Could it be because most of our lawmakers get most of their income through investment and growth of funds? What about inheritance? Earn money by working, you pay taxes. Get it dropped in your lap by grandpa, and it's tax free.

and that retirement age: Yes, there's a reason we don't want septuagenarians to have to do hard labor. They (we) aren't up to high stress, high energy sorts of jobs, either, you know, jobs like being president.

IMO, several of the pretenders to the throne this time around are simply too old, and that includes the incumbent.
 

aociswundumho

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Democrats could run on theirs, and give the voters an honest choice

LOL, that's rich, considering the rotten lying Democrats who intentionally deceived the voters when they created the social security system in the first place. I'm talking about the fallacious split tax between employer and employee which was an intentional lie to make the program more palatable to the American people. The truth is, there is no split. The employer does not pay half of the tax, the employee pays all of it in the form of lower wages, because all that matters to the employer is the total cost per hour (or per week) that the employee costs him. His half of the SS tax is figured into that number.

Suppose I hire a floor sweeper for $10 per hour without any SS tax. That is the maximum amount I am willing to pay, period. If the government then says to me that I have to pay a 5% tax on the wages of my floor sweeper, then the floor sweeper's wage drops to $9.50 per hour. It doesn't matter to me that the government is robbing him, all I care about is the total cost. Hence the employee pays the tax, not me. Here's uncle Milty explaining it better:

 

antiquity

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Which is why it's handed out to everyone regardless of means. Makes sense.

Not totally true...Standard SS is according to one's work record which 40 quarters are required to get a SS check upon retiring. Now I am not talking about SSI or other disabilities benefits but a standard SS benefit. The amount you may receive depends on the amount of money you paid into the SS Fund during your working years. For example 40 quarters equal 10 years. IF one works for 40 years the highest 40 quarter are the determining factor in one's final benefit pay out.

Most people know that a worker must have worked and paid into the Social Security system in order to collect Social Security retirement and disability benefits. People who are particularly aware of their retirement rights may even know that in order to collect Social Security retirement benefits they must have worked and received at least 40 “quarters” in order to qualify for such benefits. But when it comes to qualifying for Social Security Disability Insurance (SSDI) coverage, the work history requirements become much cloudier in the minds of most people.

Work History Requirements for Social Security Disability Insurance | Special Needs Alliance

If you didn't pay into the SS system you will not get a standard SS check when you retire.
 

haymarket

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Social security fix

Remove the salary cap on imcome subject to the social security tax

Make.all income, earned and unearned, subject to the social security tax

If that doesn't do it.then raise the tax rate

Social security benefits need to be raised not cut

The retirement age should be 65. Not many people who actually do physical work can continue in their trade much after that. Not many 70 year old concrete finishers, iron workers or other labor intensive workers out there.

Perfect solution. Exactly.
 

cpwill

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While we're at it, let's treat all income the same for tax purposes. Why is it that money earned as salary is taxed at a higher rate that money earned by letting the money work for you?

I would say, off the top of my head:

1. that money has already been taxed, and
2. because the more you tax something, the more you discourage it. Some activities are more vulnerable to this than others. Labor (especially low and middle income) is very inelastic - they need that money. Capitol? Capitol can move pretty quickly and fairly easily. Cut that golden goose up too much, and you'll find the golden egg you're pulling out is your last.
 

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Here is my proposal:

Allow workers to opt into a partially privatized system, where of their 7.65% FICA tax, 5% goes into a private TSP-style account; and the Employers match follow the same. the remaining 2.65% (or, when you count the match, 5.3%) will go straight into SS, but it will be revenue for which SS will never see a liability. the cost for opting out is that part of your pay continues to go to pay for others, but the upside is that you get a combined total of 10% of your annual income going into a retirement account that belongs to you, and grows tax-free. Social Securities' revenues will instantly drop, but nowhere near as severely as their liabilities. To ensure solvency in the adjustment period (and to make it politically palatable); lift the cap. We can lift the cap on only the worker (and not the employer) if we want to encourage job-creation; or lift it on both if we need the revenue to ensure solvency, or if that's the only way to get the thing passed; here is room for compromise wiggling. Higher paid workers will see more of their money leave in the form of taxes, but those making less than $604,000 will get back even more in the form of ownership of personalized accounts (assuming the employer cap isn't lifted, and that's not figuring for the added benefit of those accounts growing tax-free), and so they will be willing to make the trade. Perhaps another compromise point would be to raise the cap to $604K. Poorer workers can either spend their lifetime building far more wealth than they ever would have seen under Social Security if they are younger, or keep the guaranteed program benefits if they are older.
the American people and the Government are left better off.

how much better off?

let's do a quick example:

Joe graduates High School and goes to work, making 25K a year. Not anyone's idea of incredible pay, but there you are. Joe gets' a 2% raise every year to account for his increasing talent, experience, etc. The 10% of his income goes into a mix of funds that matches the S&P 500 Combined Annualized Growth average since 1982: 7.98% (after you account for inflation). If Joe retires nice and early at 62; his retirement fund will be worth $1,030,110, and if placed into an annuity / conservative account that generates a 5% annual return, his monthly benefit will be $4,292. That would be slightly less than his last monthly paycheck of $4,979; but still quite livable. If Joe works until he's 65, his monthly benefit will climb above his monthly income to $5,473; and if he decides (as most probably will) to delay retirement to 68, he's looking at a monthly retirement check of $6,966.

And remember, Joe isn't exactly one of society's higher paid workers.

But he also had the advantage of time. Let's say instead Joe got an associates before entering the workforce to earn that 25K; and let's say that instead of 2%, Joe turns out not to learn new skills that well, and his annual raise above inflation is actually 0.5%. We're stacking the deck a little against ole Joe, but he still seems to come out okay; his monthly benefit at age 62 is $3,050; at age 65 it's $3,875; and at age 68 it's $4,915. It's worth noting that under this model, the most Joe ever made was $31,672 in a given year; and that his monthly retirement benefits at age 65 represents a $1,200 monthly pay increase over his monthly income. Even if Joe retires early at 62 he will have more in income off of his account than he would from working; and the longer he chooses to keep working, the greater, obviously, his return is.

OR, if he didn't want the 'risk' of the marketplace, he could have chosen to stay with regular social (in)security. average monthly payout: about $1,100 dollars. or, roughly 1/3rd of what Joe made in our worse case scenario at age 65.


BUT WAIT!!! WHAT IF THE MARKET TANKS!!!

Markets recover. If the market tanks right as Joe was planning on retiring, he can work for an extra year while it rights itself, or simply choose to draw less from the account in order to leave more in there to ride the upswing. OR, if Joe makes the worst decision possible, at the worst time possible and withdraws all of his money while the market is at the low point on the trough (say, a 40% drop, similar to what we just saw), to purchase a 5% annuity... then his monthly income in our worse-case scenario at age 65 will still be more than twice what he could have expected from Social Security.

I'm wondering how this thread might have gone if political leaning had been omitted? Only 3 choices were really necessary, and

For
Against
I am for it, but with a particular modification (explain)

But these are the kind of questions we should be asking and seeking answers to, regardless of political leanings.
 
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