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Subscribe to RSSA Life Inc. post this week on ways to fix Social Security’s longer term funding issues prompted an intense debate over whether the system can be fixed, how to do it – and when.
Social Security could start to face funding shortfalls in about two decades if nothing is done. Experts say now would be a good time to think about how to fix the potential shortfalls, because it would give lawmakers years to ease in the changes gradually.
Many also note that there are some relatively simple, if not very popular, ways to amend the current system. They include raising taxes on some or all Americans, reducing benefits and extending the age at which people can start collecting benefits.
Many readers agreed that now is the time for action.
“Fixing it before it goes broke is easier and less painful than waiting. Get it done. Now,” one reader urged.
But others – perhaps watching how little progress politicians have made on the fiscal cliff negotiations - were more skeptical about whether the current roster of lawmakers would take any meaningful action.
“Our collective first mistake is to trust politicians,” one reader lamented.
Readers also were starkly divided on whether Social Security benefits will be available to them when they retire,
“I'm paying all of this money into SS that will likely not be paying back what I put in. I'm tired of supporting everyone when I need to (save),” one reader wrote.
Others noted that confidence about receiving benefits is probably tied to age.
“This is an age sensitive question. I'm 59, so I suspect my answer is quite different than my youngest child's would be at 27,” another wrote.
Still, some also pointed out that people have been worrying about Social Security for decades, and yet it’s still around.
“I'm 72 and all of my life it's been said Social Security was going to run out of money. Yet 2 years ago I began withdrawing my deposits,” one reader wrote.
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Everyone should know that the only way to fix social security, is to pass a law so that all the congressmen should have to draw it like we ordinary people do. They are no better than we are, even though they seem to think they are. That's why nothing gets fixed in congress, because they govern themselves with different laws than we ordinary people do. Believe me, they aren't worried about us.
Guess what, those in Congress have been paying payroll taxes just like everyone else for many years. Try doing a little research before you post.
Instead of the research, Peter, you may want to take some reading classes. Wayne does not say anything about paying, only about drawing. I am sure he is speaking about the huge Pension Plan that Congresspeople receive for only serving a minimum of 6 years in Congress. Maybe they should draw the minimal amounts of retirement (after age 62) out of the Social Security System instead of the huge retirement benefits that they will be receiving as ex-Congresspeople
Wayne--sorry, nice cop out, but the fact is, there are only 435 members of congress, most of whom are millionaires, who would not be hurt of SS went belly up right now. What WOULD hurt them would be if they sincerely tried to reform SS, because like Mitt Romney or not, he WAS right about the 47% NEVER voting for anyone who calls for THEM to sacrifice.
Our country has become a nation of "I want MINE now, and don't give a rat's patootie if that means my children or grandchildren will have to go without to pay for it."
Shame on us.
SS was NEVER intended to be ALL of a person's retirement money, except for the relatively small numbers of people who, thanks to the great depression/crash of the stock market/great drought caused so many people to lose their pensions, their bank accounts and savings, and their family home.
We have been WARNED since I was in HS in the 60's that it was only intended to be ONE THIRD of our retirement planning--the other 2/3 being your OWN private pension/savings and investments, and the equity of owning a PAID OFF home.
Instead, most who retire on SS alone do not OWN their home, (at least not outright, with no mortgage or equity loans due) have absolutely NO pension or savings, (meaning that even after raising a family is over, they made NO effort to save for themselves) and NO CLUE.
People are not likely to save any extra money that they would get by not paying the ss taxes. What would you do with the 95% that would not save anything, and have nothing at retirement? The wages of the last 35 years have not been enough for most families to save anything. You are lucky enough, apparently to have a job that pays enough to be able to save after paying for necessities. The minimum wage today buys about 70% of what it did in the 1960's, yet nobody can "afford" to raise it. But CEOs have seen up to a 700% increase in their pay. It's all about the rich, and no one else, is it,rich boy? You are the jacazz with NO CLUE.
SS = ponzi scam
Really alan? You don't say! I mean, the horror! It's so terrible!
Wait, you mean to say that the governmental system which takes in taxes from working individuals in order to pay to retired/disabled individuals is taking money from people now and spending it now, so it's "not your money!" that you're getting back, is a Ponzi Scheme?
Shocked! Shocked and outraged! Shocked, outraged, and somewhat hungry!
Did you also hear that they are taking our money to pay for other things, too? Like a military? The freeloaders!
All this post done in sarcasm (irony through absurdism).
Or if you prefer, pyramid scam. I calls em like I sees em.
@Janstice. ROTFLMAO. Great Post. I never cease to be amazed at the level of ignorance around the SS system. People actually still believe that they have an account full of all the money they have ever "contributed". Thank you FDR.
What is the writer's definition of "fixed"? ... Always paying out 3 times what it takes in? Paying out no more than it takes in and remaining viable longterm? Always there to be used as a political football during election years? Always there to be leveraged to promote more class warfare by any politician so inclined?
The question needs to be asked and the question needs to be answered by the "leaders" before we proceed further into the discussion of SS and Medicare
The definition of 'fixed' is the government keeps the leveargae and the ponzi scam going so the average Wall Streeter salary continues as $1 million.
Simple fix, 2 parts:
1. Tax all types of income (dividends, capital gains)
2. No maximum level.
Problem solved.
Not true. The actuaries for SS who monitor the system say the only real fix is to raise the full retirement age. They suggest a one year increase around 2040 and another one year increase around 2075 as the primary component, just as was done in the early 1980s. When you have a problem you go to the source to fix it. It is a demographic problem, people are living longer and we have the slowest population growth in our history.
The people living longer are the wealthier ones. The ones that need Medicare the least. I suggest means testing and "Death Panels" Way too much end of life care over 80 if you ask me. My 88 year old had a blank check from Medicare...and he had means, too. But we all chose to use your money. He died anyway. Do you know why? He was 88.
Dirp--absolutely. Lets ALSO tax that OTHER income, including WIC, Unemployment, Welfare, gov't housing subsidies, EIC, etc.
At least those who earn dividends and capital gains did SOMETHING to get the money invested in the first place.
The MINUTE this country stops rewarding people for having babies they cannot afford, I'll be willing to talk.
Meanwhile, to quote my dearly departed dad, "If you want to have a DOZEN kids, and YOU personally can afford to pay for their food, clothing, housing, education, medical care etc, then have at it. But if you want ME to help YOU pay for your kids, I should have some say in how many ""WE"" are going to have."
Does anyone really expect the current crop of politicians in D.C. to address anything that is not in imminent danger of collapse?
They will allow the current folks who pay SS taxes to twist in the wind until the fund is down to its' last dollar, then they'll scramble. And yes, of course that is always more painful and costs more, but it's the government we voted for, isn't it?
Letusreason--exactly--and that is because IF Congress had the stones to do what is right, they would immediately be "unelected" by those who live SOLELY on government money.
Never MIND that the goverment does not HAVE that money, and never MIND that the IOU will be damped in the laps of our kids, grandkids, et al.
We deserve the government we have, when we don't DEMAND they do what is RIGHT, rather than what will get them re-elected.
And what is RIGHT is not continuing to hand out money whether we have it, the recipients actually deserve it, or it is practical.
In my first economics class in college we discussed the pending impact of Boomers on social security and the need to fix the problem. That was in 1974, I was 18. The problem has been out there for almost 40 years. So, don't bet on any fix.
Also, to that 27 year old, be careful what you wish for. My experience is that the years go by very fast and you might find that social security is the only "home run" you are going to hit! Like the Stones song says, "you can't always get what you want".
Politicians will likely be able to come up with a "fix" for SS because they can do so without a significant impact on anyone who will be retiring in the next 20-25 years.
The same is not true for Medicare - that is where the real battle will be. Nobody has come up with a plan to fix Medicare that doesn't have real pain in it for just about everyone.
Better managed medicare (Palin calls it "Death Panels"). That is what is needed. Want something experimental? Perhaps you are over 80? Spend your own money. That is what makes sense to me.
@peter17 - Please stay on topic. Medicare is a totally different system.
Medicare is an easy fix. We and our employers each pay 1.45% (look @ your next paycheck if you don't believe me). Bump that up by a tenth of a percent, increase funds to police for fraud, and you've got it more than fixed. If you need to justify the extra tenth - Bush added Part D coverage, without increasing what the fund took in to pay for it.
B70--I'll go you one further--I wrote a paper in my high school (Junior year) civics class in 1968 that proposed that we begin RIGHT THEN, with telling all new HS grads they would NEVER be able to depend on more than about 20% of their retirement income coming from SS, and that they needed to SAVE and invest to make up the difference. Those a decade older could only count on SS providing 40%, with their contribution being the rest, and so on, up till the ones who at that time were already at or near retirement level still being able to count of full SS.
45 YEARS ago, we were taught in HS that WE NEEDED TO BE RESPONSIBLE.
And as a full on boomer, (age 62)who has been retired for 5 years without drawing a penny from the government (and no, I'm not rich, just comfortable) while living in a fully PAID FOR home, driving a fully PAID for car, I know it CAN be done.
But not if you go through life spending every penny you make on things you WANT.
I look at highschoolers now, who all have I phones, cars, way too many clothes, etc, whose parents don't demand the kids do chores, or get jobs, or even volunteer, but demonstrate a slew of poor choices in the plethora of 'toys' they consider 'essential', and I KNOW they will neither be prepared when they get to retirement age.
And they will BLAME that on congress.
Anybody on this post drawing social security or about to? (me, five years to go for early draw...and that is what I will do.)
B70--absolutely--I hit 62 in a couple of months, and I intend to immediately start to withdraw, and hand it all to my three kids to invest for their own retirement. Because SS is NOT going to be there for them.
(and as a person who has a family history of fairly early cancer deaths, I figure it is a no brainer to wait, as there is NO guarantee I'll be around long enough to make the delay worth it)
I don't NEED the money, but I sure don't see why my KIDS should not get it.
How about we cut off SSI for "iffy" ailments? No more payments to alcoholics or drug addicts? No more payments to ADHD kids or families of incarcerated felons. SSI was supposed to help the truly handicapped (like blind or paralyzed) and the elderly not the stupid or the lazy. And we complain that its broke!
Disability is now being paid to about 5% of working year folks. Was .5% just a few years ago. Yes, the social security office in central Illinois was full of 20 somethings with children in tow applying for easy money.
The 2% tax cut did not and does not help actuarily. However, we elect representatives for a two year term and they seldom can easily scan the time horizon beyond tomorrow mornings campaign fund raiser breakfast.
We will have at least 4 more wars before social security hits the leverage point. Maybe we need to elect folks who can listen to others, rather than draw their saber without just cause.
You make a good point about SS disability payments. They always skyrocket in hard times because there are many people who remain at work even though they are partially disabled when they have employment. The laid off truck driver with a bad back who continued to work heads for the SS office instead of the unemployment office.
Social Security has enough money in the Trust Fund plus payroll taxes to pay 100% of benefits to about 2035 and then could pay 75% of benefits indefinitely. If you know the "magic of compounding" - how tiny amounts continually applied can yield large amounts in the future - you know it won't take anything drastic to fix. My guess is that it would be fixed if the part of FICA that goes to Soc.Sec., 6.2% from the employee and a matching amount from the employer, could be raised 0.05% each year for ten years (0.8% per year) so that the effect would be less than the average raise and relatively painless. Perhaps Medicare FICA taxes could be slightly raised too so that 1% per year for 10 years went to fix both programs.
The age I can draw full Social Security has already been raised from 65 to 67: I've been working since I was 17 and have paid through my nostrils for decades. I'm sick of the bs and the "borrowing" against the funds supposedly allocated for our retirements.
I feel despair for this Nation: everything is a game and we the people are all pawns for the Vanderbilts, Astors, Rockefellers, Morgans, etc... Banks and Insurance companies are the bane of our existence as well as Religious institutions that pay NO TAXES but take from their "flocks" over and over and over again.
Tell Boehner and O'Connell to put their big boy pants on and move ahead: if you're making 250K a year, I'm sure an extra 1 or 2% will not send you into freefall.
So, 2Cents--have YOU been saving a little bit every month all your working life to put away for your OWN retirement? NO?
Then you are part of the problem.
NOBODY ever intended SS to be ALL of your retirement funds.
NOR did anyone ever imagine that people would consider fancy cell phones, cars that cost more than my first house, cable TV (and netflix et al) game systems, a $100 a month cigarette habit, a more than that amount BEER habit, etc., to be ESSENTIALS.
You are NOT 'entitled' to ONE penny of anyone else's money, no matter how disgustingly wealthy they are.
P.S. Take away the "cap" amount on Social Security input and voila! some common sense.
PS--I agree that they should take away the 'cap' on SS.
But then, I also agree that they should ELIMINATE the EIC.
Even after two decades of "full" solvency, Social Security would still be able to pay out 75% of benefits. Make "all" income subject to SS insurance, instead of income up to only $110,100. If all income is subject to FICA, then the Trust fund would be solvent and paying 100% of benefits for the next 75-100 years. Let's do this, NOW!
Totally agree with "My Two Cents". And to the azze wipe who says SS is a "Ponzi Scheme" it actually has a SURPLUS of about 3 TRILLION dollars of IOUs that the Politicians stole from the "lock box" to pay for their phony wars, and just plain steal.
The basic concept is very sound and worthy. It's when crooked politicians and Banksters get involved that the little guys get screwed, blued, and tattooed.
18% of SSI recipients are either disabled or children of deceased or disabled. That's the problem. This segment skyrocketed and they never paid into the system.
I paid my social security for many years. Now I got a cost of living increase, " I believe this is the second time in four years" and the total amount comes to $4.38 a week. What a generous bunch in Washington. Or should I say what a bunch of horses asses. They are getting a raise again!!!!!! That shows you the lazy bunch of dirty basterds do not care about us.
Henry, sorry, but did you go to High School? Did you not PAY ATTENTION to the Civics teacher then who WARNED that SS was NEVER intended to be ALL the income you would have to live on in retirement?
Did you NEVER save one penny for your OWN retirement? I mean, after your kids were grown and gone, (say, by the time you were 50, max) you SHOULD have been putting MOST of that money you USED to spend on their upbringing into a savings plan to provide yourself with income over and above your SS.
You also, by age 50, should have PAID OFF your home, and now have a decent place to live at no cost other than yearly taxes and utilities.
But my guess is, instead, you went blithely along, living paycheck to paycheck, and now are disgruntled when you don't get MORE from the government.
The DIRTY basterd who did this to you is the same one you see in the bathroom mirror every morning.
When people say that they would be better off by investing the money they have deducted from their paychecks for social security, they forget that their employer matches that withholding. They also forget that they probably lack the willpower to actually invest that money and the intelligence to invest it wisely. Of course, they usually lack the willpower and intelligence to save adequately for retirement. Therefore, they probably need a socialistic government in order to survive and to depend on the more conscientous taxpayers to pay their way.
hello i have been paying medicare for a few years and have not used it as i go to the va and they dont use it
Remove the cap on earnings and start taxing capital gains over 30,000/year. Gradually raise the FICA/Medicare tax rate from 7.65 to 9.0. Raise the retirement age in the future as average life expectancy increases. And force all workers pay into the system, including all government workers, NO exceptions. (the rest of us are forced to pay, why not force everyone). If these things could be accomplished SS and Medicare would not only be sound for the rest of this centruy, it would be able to actually increase the amount it pays each recipient. The surplus that accumulates should be used to help pay off the federal government debt only. The savings on interest would be added to the SS system. it would be a win-win situation and remove the burden we are leaving future generations.
Raising any tax is not popular. The 6.25% is plenty. The United States spends and has spent untold amounts of money in the pursuit of living longer and healthier lives. When FDR developed Social Security in 1935, someone could receive it at 65. The average life span was 63. A Trust Fund did exist, but President Lyndon Johnson eliminated it to hide the true cost of the Vietnam Conflict. The fix is simple. Slowly begin to raise the age requirement five additional years for those beginning at 55 years old. Make the increase over ten years to receive benefits. People 45 years old today have to wait five more years to receive full benefits, but, they will be available to everyone because the age is now more accurate with today's life span. Most importantly, return the Social Security Trust Fund to it's original form, before the LBJ move, so it is a seperate part of the budget process --- it is not part of it. Then create a framework for a balanced budget process that works.