… what do community members think?
Raising Social Security Full Retirement Age To 69 Proposed By House Conservatives
I’ve found the current Social Security regime to be personally awesome.
intercst
5 Likes
Both political parties have zero interest in solving the current fiscal situation with social security. It is little like two people with diarrhea facing rising water in a single plugged toilet — one says the only solution is call rotorooter and they other say keep flushing the toilet.
Facts bother both sides – both want to pick the parts of history that support their preferred solution.
I am no different – I hold my views which happen to be:
When first passed people got old age benefits at age 65 and way less than half the people born in 1870 were alive in 1935. I don’t have data, but feel confident the benefit started out much lower when measured against the average household income. (And keep in mind social security started in the middle of depression when unemployment benefits did not exist and more than 25% of the population had no job, no income, etc.)
Because politicians are what they are, I favor a COLA system - but I would eliminate the restriction that benefits can not decrease - even if Medicare costs increase more than retirement benefits.
I would raised the full benefit age gradually to age 70 – maybe add 2 months every year.
I would also gradually decease the option for reduced retirement benefits - maybe 2 months a year with the exception of people who were born about 1990 and earlier.
I am not an actuary and if such changes would not make the system fiscally sound, adjust the rates of edibility as necessary.
Finally, I would would eliminate the current Congressional retirement benefit program. They should live more like the people they represent.
8 Likes
When push comes to shove Congress will probably take action. The longer they wait the worse it will be. Removing the income cap on taxes should be easy. Raising taxes and full retirement age are likely solutions.
Social Security is the third rail of politics. No one wants to touch it. But the usual solution is to make the law effective years in the future. Maybe in stages. Then when it becomes effective the politicians involved are long gone or can blame others.
4 Likes
I don’t know about raising the FRA another 2 years as the first option - FWIW I like your other options better. What they NEED to do is eliminate the payroll tax cap on high earners - companies don’t need to pay in more, but major league athletes pulling down millions a year, for example, but paying in the same amount as a barely-six-figure earner is just wrong.
5 Likes
I appreciate the idea somebody earning say $100K should not pay as much as somebody earning $10,000K - if that is the only consideration. But what about the fact an average NFL player has less than 5 years in the league? I don’t see any way to implement this, but things would be more equitable if one looked at lifetime earnings using inflation adjusted dollars.
Sorry I don’t buy the idea businesses should not pay more. There is nothing fair or equitable companies with millions net income paying zero income tax. I believe business manipulates Congress to write the laws so they avoid taxes. If the tax code were changed so corporate taxes were assesses on the amount of money that shows on their P/E statements, you would have a valid point. But these funds are not taxed do to corporate loop holes like depletion allowances (but a worker depleting his body or skills gets no deduction) and loss carry forwards (but workers to not get to lower tax burdens similarly)
All that said almost every tax issue people what to solve by getting funds from anyone but themselves.
6 Likes
We’ve been over this before, and it’s a wildly wrong assumption. While the life expectancy in 1870 was under 65, most of that was due to deaths in infants and young children - an irrelevant statistic so far as Social Security is concerned since they neither paid in nor took out. The correct statistic is “how many people 20 and older who were alive in 1890 were still alive in 1935 to collect benefits?”
If we look at life expectancy statistics from the 1930s we might come to the conclusion that the Social Security program was designed in such a way that people would work for many years paying in taxes, but would not live long enough to collect benefits. Life expectancy *at birth* in 1930 was indeed only 58 for men and 62 for women, and the retirement age was 65. But life expectancy at birth in the early decades of the 20th century was low due mainly to high infant mortality, and someone who died as a child would never have worked and paid into Social Security. A more appropriate measure is probably *life expectancy after attainment of adulthood*.As Table 1 shows, the majority of Americans who made it to adulthood could expect to live to 65, and those who did live to 65 could look forward to collecting benefits for many years into the future. So we can observe that for men, for example, almost 54% of the them could expect to live to age 65 if they survived to age 21, and men who attained age 65 could expect to collect Social Security benefits for almost 13 years (and the numbers are even higher for women).
https://www.ssa.gov/history/lifeexpect.html
One section of the Social Security enabling legislation was the creation of unemployment compensation.
Why? Taking the benefits early is actuarily neutral insofar as Social Security revenues are concerned. If people want to leave the workforce because they are broken down or can’t find good jobs at age 62, why deny them? (Shocking, I know, to find that corporate America isn’t really thrilled to find a 62 year old on their doorstep, except perhaps as a cashier at a Dollar Store.)
As true as that is, it’s terribly misleading. When Social Security was enacted it was not intended to be static. It started low because of the funding mechanism and the pay-go system employed (there was no “trust fund.”) Over time the contributions from both employee and employer were raised with the specific intention of increasing the payout to a more livable, while sustainable benefit. (Also added later: survivor benefits, mostly for wives, and disability.) It also covered less than half the working population at the outset.
Even as the Social Security legislation moved through the Congress in the late winter and spring of 1935, it was acknowledged by many supporters that the old-age program then under consideration was but a first step in providing comprehensive protection for American workers against loss of earnings. President Roosevelt, in signing the Social Security Bill into law noted that *"This law, too, represents a cornerstone in a structure which is being built but is by no means complete."*https://www.ssa.gov/history/50mm2.html
It’s also true that life expectancies vary widely between so-called “desk jobs” and “worker jobs.” Those in more rigorous occupations (trucking, building, etc.) have much shorter “retirement lives” than those who 1) are higher paid and 2) have fewer physical demands. Your idea of increasing the retirement age to 70 is among the worst “solutions” I’ve seen, especially for those people (but frankly also for those below the rank of General Manager in nearly any industry.)
You should read the history of Social Security. Perhaps next time you won’t make these terrible claims.
4 Likes
I agree this is a much better data set, if it exists. I have looked in the past and not found it. Have you found that data?
Google tells me that in 1940 222,488 people got social security checks. Similarly the population in the 1940 censes list as 132,164,569. My calculator say this is 0.17% of the population.
Bing say that 16.5% of current US population is over 65
I seriously doubt that anybody in the presentation of push for social security in the 1930s thought the program should be available for 16.5% of the population.
6 Likes
Less than half of the population was even covered by Social Security when it began. Agriculture workers, for example, were ineligible. So were Federal government workers - and state - and local. Women were almost universally ineligible, unless they had a full time job which, at the height of the Depression, was a laughably small number. Anyone who had what we would call today “gig work” was ineligible, i.e. “part time” or “temporary” jobs. That, of course, involved most of the construction trade, farm workers, people who could not find regular work, and nearly all minorities (many of whom were employed as domestics and whose wages went unreported.)
So when you divide the “total population” by the “number of checks” your answer is off by several orders of magnitude.
I would also caution you about extending the fallacious reasoning to today, because we are in the middle of a once-in-a-millennium event: the baby boom bulge working its way into their retirement years. So the “number of checks” is artificially inflated while the “working population” is somewhat smaller. The good news is that this will pass, but not before there is some pain, albeit temporary. The other bad news is that yes, people are living longer - but not really by that much. While the average age at death is up almost 20 years, the average age of death of those who reach adulthood is only up about 5.
We discussed it several times on the old MeTAR board, which is now disappeared. I’ll look for it again, but it exists.
Again I refer you to the page on the history of the program.
In May 1937 … the Senate Committee on Finance and the Social Security Board jointly appointed an Advisory Council on Social Security. This outside advisory group, which would be the first of many to study and make recommendations concerning Social Security over the years,* was instructed to study possible ways of making the program more fully effective sooner than contemplated under the 1935 law.
The program “contemplated” supporting people in old age, rather than having them live in poor houses or in their daughter’s attic. It didn’t cover women, but now it does. It didn’t cover farm workers, but now it does. It didn’t cover government workers, but now it does. (Etc. etc.) Those people did not “pay in”, but now they do. The program is probably the most effective social program in the country - but not perfect, but whose defects are manageable.
16% is a little high, but not terribly (especially considering the covered populace has essentially doubled by adding women), and will come down a little over time. There are solutions - fairly easy ones (but not politically easy). In this form of government we rarely take action until a crisis is upon us (see: Pearl Harbor, road building, unions, slavery, Sputnik, etc.) I have hope that this will be handled when it finally reaches that point.
6 Likes