Fixing(?) Entitlements

[Schneed10]

Originally Posted by MTK

The retirement age is already gradually increasing for benefits. The easy solution to me is to drastically raise the cap or eliminate it. Right now the maximum earnings subject to Social Security payroll tax is only $132,900. If we want to get serious about expanding and strengthening Social Security I'm down with Bernie's ideas.

I would agree with raising the cap. When the cap was set it was done in a time when $100K was a real high salary.

The age of eligibility and the cap both need to get with the times. We live longer now, and $250K is the new $100K. Put both in line relative to when the plan was instituted and then you've got something. It's a mathematically objective notion too.

[dmek25]

raising the cap could be the starting point. its old, and needs adjusted. part of the issue is also congress dipping into the fund. its a great fall back for those who cant budget correctly

[Schneed10]

Congress didn't take money from the SS fund, that's a myth.

As for Social Security's most pervasive and borderline irritating myth, that goes to the belief that the federal government raided Social Security's coffers and never put the money back. As a financial journalist of nearly eight years, I can confirm that the comment section on most Social Security articles over the years has been riddled with allegations that Congress stole money from Social Security and never put it back -- and that this is the primary reason why the program's asset reserves will be depleted within the next 16 years.

In reality, none of this is true.

The folks who perpetuate this myth strongly believe that Social Security's current asset reserves of nearly $2.9 trillion is a sham. In other words, they don't believe the money is there. They believe lawmakers on Capitol Hill absconded with this money, and that seniors and future retirees will suffer as a result.

The truth is that the Social Security Administration takes this extra cash, which would be earning nothing if it were sitting around in a trust, and invests it in various special-issue bonds, and to a lesser extent certificates of indebtedness, with staggered maturity dates ranging from a year to perhaps longer than a decade from now. By placing this excess cash -- which has been built up since 1983 as a result of Social Security being a cash-flow positive program -- into special-issue bonds and certificates of indebtedness, it earns interest. In 2016, $88.4 billion of the $957.5 billion in revenue that was generated came from interest income earned on its bonds and certificates of indebtedness.

Does the federal government use the cash that's invested in these bonds, as well as non-special-issue bonds, for regular revenue items? Absolutely! Selling Treasury notes is a common way Congress raises money to pay the bills. The thing is, these bonds are backed by the full faith of the U.S. government, and the federal government is legally obligated to honor both the interest payments and maturities as they come along. Every single interest payment on Social Security's special-issue bonds has been paid, and every last maturity has been met with a full repayment.

Just because Congress uses this cash for its everyday expenditures in no way means that lawmakers raided Social Security. The program operates now as it has for decades, and the excess cash that's been built up since 1983 will be there through 2034, according to estimates.

About the only true concern is the U.S. debt level. If national debt continues to climb in relation to GDP, then it could become difficult, many decades down the road, for the federal government to meet its interest and maturity obligations on bonds. The thing is, with Social Security expected to deplete its asset reserves by 2034, it won't have any excess cash in 16 years, so this really isn't an issue.

Long story short, the federal government didn't steal from Social Security. If you want to accuse lawmakers of shorting the American public, slight them for not having yet fixed Social Security's long-term cash shortfall, despite having no shortage of possible solutions on the table.

https://www.fool.com/retirement/2018...-security.aspx

[Buffalo Bob]

Originally Posted by Schneed10

I would agree with raising the cap. When the cap was set it was done in a time when $100K was a real high salary.

The age of eligibility and the cap both need to get with the times. We live longer now, and $250K is the new $100K. Put both in line relative to when the plan was instituted and then you've got something. It's a mathematically objective notion too.

Raising the cap is a lot better than raising the retirement age. Even though people are living longer the wear and tear on the body on a lot of manual labor jobs hasn't changed since social security was implemented.

[Buffalo Bob]

Originally Posted by Buffalo Bob

As much as I hate to say it all entitlement programs need more government oversight. Through the years I have come across way too many people abusing welfare and social security disability. The people I know that were gaming the system could have been easily exposed with a little surveillance and a few surprise visits.

Originally Posted by MTK

Usually the juice isn't worth the squeeze. OIG has bigger fish to fry than Joe Schmoe who may be working a little on the side. (People are actually allowed to work while on disability and/or SSI to certain limits, just to note.)

My issues are when Joe Schmoe is healthy enough to work a full time job, but lazy and gaming the system. People that do that often seem to run in family circles.
I had an employee who had a couple cousins, females in their mid 30's who were on social security disability, claiming to have fibromyalgia. I gave them both all expense paid vacations to Vegas complete with cash to gamble with in exchange for help working a couple conventions promoting our products.

I spent a better parts of 2 weeks with these women and neither showed one sign of being less than perfectly healthy.

As for the welfare fraud I have worked with plenty a guy who fathered children out of wedlock, one guy had 5 , lived with the mother who was collecting welfare on the children he fathered all while he had a full time job that paid a livable wage.

I have just seen too much of this in my small world to not think it strains the system.

[Schneed10]

Originally Posted by Buffalo Bob

Raising the cap is a lot better than raising the retirement age. Even though people are living longer the wear and tear on the body on a lot of manual labor jobs hasn't changed since social security was implemented.

Can't design a whole system around the portion of the workforce aged 65-70 who remain in physical labor jobs.

My perspective is simple - when the program was conceived the retirement age was set such that there was a 7 year gap between retirement and life expectancy (death). And it was set with a cap of $100K because that was a shitload of money at the time.

Update both to today's terms. Take life expectancy minus 7, that's the new retirement age (72). And take the cap and inflate it to today's dollars ($250K or so). Both factors together return the program to a) what it was intended to be all along and b) solvency.

Don't cherrypick, you expose your political bias. Both should be done, otherwise it's gerrymandering the original intent of the program.

[Schneed10]

Or you could privatize it - let us choose our own investments and we'd all be way better off.

[Chico23231]

Originally Posted by Schneed10

Or you could privatize it - let us choose our own investments and we'd all be way better off.

This is my suggestion as well as raising the age to a more reasonable level to accommodate the rise in life expectancy.


Good stuff from everybody here...I just think this issue needs to raised with more urgency.

[Schneed10]

Originally Posted by Chico23231

This is my suggestion as well as raising the age to a more reasonable level to accommodate the rise in life expectancy.


Good stuff from everybody here...I just think this issue needs to raised with more urgency.

It does. Right now the only people that feel the urgency are financial professionals and those with an understanding of the time value of money. It's just not a large enough percentage of the population to motivate the votes on the hill.

GW Bush tried in 2005 to partially privatize and allow us to divert portions to our own preferred investments as individuals. It died on the hill, even with a Republican controlled house, and then when 2006 midterms came the Democrats took control of the house and his proposal was effectively squashed. It was such a shame because it truly would have made an immense difference - my retirement account is healthy today because I can invest it into targeted date funds - everyone could have done the same with SS under Bush's plan. But when people hear the program won't become insolvent for another 25 years, even Republicans pushed off the vote.

Such a lack of foresight. That was our best chance to do something. Now we can be assured nothing will happen until it's nearly too late.

[Giantone]

Originally Posted by Schneed10

Or you could privatize it - let us choose our own investments and we'd all be way better off.

Not true. Yes you might be very good at it but be honest ,do you really think many Americans understand the market and investing?

[Chico23231]

Originally Posted by Giantone

Not true. Yes you might be very good at it but be honest ,do you really think many Americans understand the market and investing?

This is off the top...but say if you could pool with others to buy into approved funds that look only long with multi-layer low risk products? What about percentage based options with which puts a governor on trading and/or the amount of the nest egg that could be in market?

You certainly don't want day traders messing with this shit.

[MTK]

Originally Posted by Buffalo Bob

My issues are when Joe Schmoe is healthy enough to work a full time job, but lazy and gaming the system. People that do that often seem to run in family circles.
I had an employee who had a couple cousins, females in their mid 30's who were on social security disability, claiming to have fibromyalgia. I gave them both all expense paid vacations to Vegas complete with cash to gamble with in exchange for help working a couple conventions promoting our products.

I spent a better parts of 2 weeks with these women and neither showed one sign of being less than perfectly healthy.

As for the welfare fraud I have worked with plenty a guy who fathered children out of wedlock, one guy had 5 , lived with the mother who was collecting welfare on the children he fathered all while he had a full time job that paid a livable wage.

I have just seen too much of this in my small world to not think it strains the system.

Eh, everyone knows someone who knows someone who does something, etc. It's anecdotal stuff.

Medicare billing fraud is a much bigger issue and puts more strain on the system than Joe Schmoe.

Besides, everyone complains about how hard it is to get social security disability in the first place right? That's because it is hard to get. Even people with disabilities have good days, good weeks, etc. And there's the mental conditions that you don't necessarily see.

[Giantone]

Originally Posted by Chico23231

This is off the top...but say if you could pool with others to buy into approved funds that look only long with multi-layer low risk products? What about percentage based options with which puts a governor on trading and/or the amount of the nest egg that could be in market?

You certainly don't want day traders messing with this shit.

Thank you for proving my point. You think the majority of American across the country know what you just said?

[Schneed10]

Originally Posted by Giantone

Not true. Yes you might be very good at it but be honest ,do you really think many Americans understand the market and investing?

When there’s cash at stake people figure out a way.

And besides, I don’t like the idea of robbing those with half a brain an opportunity for the sake of those without one at all.

[Chico23231]

Originally Posted by Giantone

Thank you for proving my point. You think the majority of American across the country know what you just said?

Look at it this way, I often hear folks complain when the market is doing well...that it is "only" working for a certain class of people (which isn't completely true, but whatever) so if you could educate and get folks to participate who in the past didn't, you could really open up a group of people to a new experience which could motivate them to invest elsewhere.