Recent reports say social security will have
trouble meeting obligations by as soon as
2032 - a mere 6 years from now. I’ve seen
one solution that everybody would receive
about 22% less if nothing is done. Another
proposal by Moreno and Warren is to remove the $184k cap and make all income subject to the 12.4% tax.
What are your preferences or alternatives to this issue.
Mods - If you deem this as falling into the pure politics pot, just lock and/or delete. Thanks
It’s a very important topic.
The cap is ridiculously stupid, shortsighted and unnecessary. The arithmetic needed to fix SS isn’t all that difficult.
I will say, when I was fortunate enough to make past the cap, and was on payroll, not 1099, the day that I hit the cap and all that extra dough was a welcome thing for my family. The irony, is the cap matters more to people in that range, but the interests fighting it will be the higher dollar earners.
3 Possible solutions; or some combination of the three.
The good news is that there are many available solutions to ensure Social Security’s solvency: raising the retirement age, decreasing the program’s benefits, or increasing revenues dedicated to the program; pursuing all in combination would likely provide the most lasting and least painful adjustment for the future.
I’m sure somebody will propose privatizing the system, and I would be interested in how that would work for - current workers and those already collecting.
There would be a huge transition gap shortfall ; how would you fund that ?
so if its going to run out and not going to be there for me when I hit retirement age - why do I have to keep paying for it?
Doesn’t run out; reduced benefit ahead if nothing done. You keep paying today because it is the law.
Max benefit today is $5,181/month at age 70. That would be reduced by 20-25%;
so you would then just get $3,886/month.
- If you retire at full retirement age in 2026, your benefit would be $4,152.
- If you retire at age 62 in 2026, your benefit would be $2,969.
- If you retire at age 70 in 2026, your benefit would be $5,181.
Imagine that… more financial issues that have just been kicked down the road for Gen X and subsequent generations to deal with…
I think raising the retirement age is BS, and privatizing a government program won’t change the underlying fundamentals, and it will create a new group of pockets that has to be lined.
The obvious answer is to modify the cap, but that should be limited to the highest income brackets as a first step.
Agree, this should be done to avoid hitting the middle class. But I don’t think there is a better way to fix this one.
Just for reference, “middle class” being defined as … $56k - $167k.
Nationally, the middle class is generally defined as households earning between two-thirds and double the U.S. median income. With the U.S. median household income at approximately $83,730, the broad national middle-class income range spans from about $55,820 to $167,460 annually. [1, 2]
I wouldn’t define it as such. For one, it’s all highly location dependent.
That’s something that would have to be worked out for sure. But you could still do a lot of good by taking a number well above $170K.
I’d say just remove the cap and all tax brackets pay. As is, it ensnares all income for bottom 3 brackets , and most all of the 4th lowest. Makes no sense imho as is.
There is no Social Security Trust Fund. An accounting fiction. When you do a consolidated Federal Balance Sheet it disappears, as does The Treasury Dept liability for it. The debits and credits disappear.
Congress budgets for it every year. If we had an actual Trust the Trustee would simply disburse the checks, like any Trust works. But he doesn’t. Our Treasury Dept cuts the checks. Because Congress told them to,via the budgeting process.
S.S. ran a negative cash flow when Carter was President. Nothing happened, because Congress put it in the budget and Treasury cut the checks.
There is no difference between a Social Security check, a Defense Dept check, a Medicaid check, nor any other check. Look up The Unified Budget Act of 1968.
In 1968 both Houses of Congress and our White House were controlled by Democrats. The Party that invented Social Security admitted that it was just another Government program. That is why it is budgeted.
As originally created it was supposed to be a break-even program each year. Thus you increase/decrease FICA taxes to match disbursements. But that was abandoned. Think of Gasoline taxes. Disbursements for highways are simply what Congress budgets. Ever hear of the Highway Trust Fund running out of $?
We have Deficit spending every year. Our Treasury Dept borrows the $. You can say we borrow to cover Defense spending, Medicare spending, Social Security,or whatever. It all goes into the same Pig Trough and is spent.
Fears about Social Security are merely excuses to raise taxes so Congress can then spend more $. See the huge increase in FICA taxes in 1980’s as an example. Congress and Reagan spent every $penny of it and told you they “borrowed “ it from Social Security.
No good solution will come as everybody is more concerned about getting their money “back” as opposed for caring for lower income elderly in another city or state. Hence the Social Security is not really about security for society.
That said, my preferred answer is one most here and those with money will not like.
Keep a cap just raise it a little, but focus more on the payouts. I would add an income adjustment. ie, if you have several million in the banks and making $300,000 in interest payout, then you do not need SS.
example: a poorer person who hard a hard life and could not save much, still works part time at 73 making $30,000 would still get full SS payments as calculated. Someone who did average and has some savings, getting $25,000 a year from IRAs and another $30,000 from part time work to avoid boredom, would get a partial SS payout. Last, those that had good lives and are still bringing in over $250,000 annually in interest and annuities would be phased out of SS payments as they do not need it to survive.
I am being generous with the levels as most would balk even more if much tighter. But if much tighter, then maybe possible to lower the SS tax rate.
If under a prorated payout, there were excess funds, then those could be funneled into creating a real SS trust. Biggest factor becomes Socialism vs Capitalism debate for that.
My thoughts though most will disagree (ie, see first paragraph).
My solution is TCU fans pay double
I could support something like this too, but
I’m not clear on what you think a little cap increase should be. Historically the cap creep has been our go to method(see below) Why should the wealthiest get a break ? I could also support raising early retirement from 62 to 65, taking into account longer lifespans. Many ways to fix this problem . Incidentally, an individual salary of $185,000 puts you in the 95-96 percentile. I question why the top 4-5% of individual earners need the tax break on social security.
Or piss the top percenters really off by having a graduated social security tax for
top earners.
2026 cap is at $184,000
How about a doughnut hole so the SS tax resumes at $400k or whatever the actuaries/accountants can figure out?
Damn, I love doughnut holes, but hate
the convoluted ones in taxes ! Keep it simple …keep it flat for all earned income.
Sure, I’d be good with that too if the numbers work.
Rich people need more money to live in their lifestyle.
Poor people need less money to live in their lifestyle.
You guys just don’t get simple math or common sense.
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