What’s funny here is that if you’re a high salaried worker paying max-FICA, the current AIME calculation cuts your additional monthly benefit in half once you reach the 2nd bend point. Now Professor G wants to take it away completely. {{ LOL }}
intercst
The moment a means test is applied, SS becomes :“welfare”, and subject to being demagogued . He also uses the hot button word “tax”. FICA is an insurance premium. Some people are lucky, and come out ahead. Some roll snakeyes, and either don’t make it to retirement, or die shortly after retiring.
Steve
No FICA is a payroll tax.
The money you pay in taxes is not held in a personal account for you to use when you get benefits.
Today’s workers help pay for current retirees’ and other beneficiaries’ benefits. Any unused money
goes to the Social Security trust funds to help secure today and tomorrow for you and your family.
Today Social Security outflows is more than inflows. Special designated US Treasury bonds are cash to pay for the excess outflows. Those Treasury bonds are redeemed with federal general revenue that come from income taxes.
Social Security is a pay as you go system. It is not an actuary based system. If it was; FICA would be higher than 15.3% of payroll.
FICA is a payroll tax
What do the letters F, I C, A, stand for?
Steve
The upper middle class does need SS.
Turns out as a doctor, lawyer, or engineer and some well off businesspeople retire inflation eats up their asset base. These folks are likely to live longer.
It is one thing to cut off the .1%. It is another thing to cut off the 1 to 2%.
By the time professionals are in their 80s SS matters a great deal. Money is getting tighter.
There is a societal principle that if everyone pays in everyone collects. Those who hate randomly destroy our society. Those who hate others and think of themselves have destroyed wide swaths of the public school system. Doing this to SS is something ignorant that should be ignored.
I get irk’ed when I hear SS and Medicare described as "entitlements, ie gifts. I was never asked if I wanted to opt in or out ( I would have opted in ). No denying that there is a funding problem, though. I know someone who has been on SS-DB for a few decades. He has received far, far more than he has ever paid into to the funds during his working career. He is a rabid red-hat. His response to any arguments that these programs are going to be cut is that he’s earned every penny he’s receiving. I offered to help him to analyze his SS work record, the table of yearly payment history of money paid in, and to compare that number to what he’s received. For some reason he never takes me up on my kind offer.
But to the title of this post, there are definitely 10-30% of people who could survive without their SS check. But cut their insurance ( Medicare/Medicaid) benefit and I’d wager that percentage drops substantially.
I know the concensus opinion is that the Politicians would never sit idle while SS gets cut. I’m not sure I believe that anymore. Just call it waste, fraud, and abuse, and let it go away, problem solved.
I largely agree, but I would also point out that had the “someone” been putting these regular payments into the S&P over the years, he probably would be closer to what he is currently taking out with all of the gains the S&P has made through the decades.
Of course, many people do not have the wherewithal or discipline to make regular investment deposits on their own and need a federal program to safeguard them. Which, getting back to an above theme, is why SS both an insurance plan and a payroll tax.
Pete
That is a valid point, for someone who has the discipline to be able to save for the future. Probably 99% of the denizens of this board fall into that category. This guy does not fall into that category. Probably only has 2 years in which he made good, blue collar money. Hardly ever had 2 nickels to rub together. But had newer vehicles, a boat for awhile, etc. And I don’t even care, people can buy/spend however they want for the life they want to try to live. But he is soooo angry with people getting a free ride…which I find awfully ironic.
It remains to be determined as to whether he’s going to get an education on what he voted for. He’d have to be rational enough to see thru the " these aren’t cuts to hardworking Americans, this is weeding out waste, fraud, and abuse". Not sure he has that ability.
But whatever, life is short, we’re all old and not far from the finish line. What do we care what happens to younger Americans ? /sarcasm
A case can be made that ALL Americans need to be given some austerity measures, for the sake of future Americans.
But instead the path appears to be tax cuts that benefits the wealthiest. The middle and lower class will get a few nickels cast their way, also, while also having their “entitlements” lopped off, hard. It will be an uneven tradeoff for them, if they do the math, But math is soooooo overrated, lol.
It’s a tax in name only. The only way SS would have not been declared unconstitutional was to call it a tax. If it was called insurance, savings, or something else, it would not have passed muster with the supreme court.
look at what happened to Obamacare. They called the provision that mandated the purchase of insurance under the plan if they weren’t covered by private insurance a tax to get the supreme court to ok it originally.
Insurance means a contract of liability. The federal government can change the revenue stream or the payout and when the payout can occur. Social Security ain’t insurance no matter what the federal government says. And it is not actuarially sound program either.
The money we paid in went to our parents. We are living off younger workers. And there aren’t enough of them.
The last guy to try that was Jimmy Carter, who asked people to turn off their Christmas lights in the middle of an energy crisis. I think I remember how that turned out.
Meanwhile catchy slogans like “Morning in America” and ”Make America Great” and so on seem to win the day. Not sure “take less money so maybe someday there will be something left for others” is gonna catch on.
And, having paid in an amount of money over 30 years, I am receiving a payout, directly related to what I paid in
Doesn’t every insurance program work that way? Premiums collected this year, are used to pay this year’s claims, plus profits. As in any insurance program, some people collect more than they paid in, while others collect less. I was watching a piece on YT the other day, about a car that had hit a fawn. The insurance company totaled the car for $25,000. I would suspect the owner of that car had not paid that much in to the insurance company. The payout came from money the insurance company collected from other premium payers. Meanwhile, I have been paying collision insurance for years, when driving a newer car, and have never collected a nickle in claims.
Steve
How many insurance companies have trillions of unfunded liabilities? Clearly the 15.3% “premium” is insufficient.
Lots of them if 2008 was any indication. (And yes insurance companies go under when their liabilities exceed their assets, which is why state backstops were invented oh so many years ago.)
That was a speed bump. The TARP bailout act was for $700 billion. But the federal government shelled out less than $500 billion.
I think that’s the key.
If you feel you can’t comfortably replace a vehicle without collision & comp coverage, you can’t afford it.
I saved enough money over the past 25 years to pay cash for a new car, and that’s before adding the stock market investment gains to the insurance “skim” saved.
intercst
100% of multi millionaires/billionaires don’t need anything over 100 million of their wealth.
Hoarding is a sickness whether it is newspapers, canned food, or money.
Yes, we don’t have a homeless problem, or a poverty problem. We have a hoarding money problem.
The overwhelming majority of people can’t “afford” their cars. That’s why they finance for increasingly longer periods.
Steve
I seem to remember hearing that merely taking off the upper bound on the salary susceptible to the tax would solve the problem.
