Trump's Tax Plan will widen Social Security Shortfall

YES!

Not saying government should not be part of the solution. But it has become the solution. And that is a problem.

 

People in general are terrible at saving for retirement. That’s why there were so many elderly in poverty before SS. You can’t just wave a wand and tell the general public to be more financially savvy. It ignores human nature which has nothing to do with the existence of SS; SS is there due to human nature.

More than one in four over 59 have no retirement savings at all, and the median baby boomer account is only $120,000. A forced “savings” plan ameliorates that.

 

Your prior posts were implying that it is an unreasonable position for those who have been paying into SS for years to expect to get some of it back. The gop has been wanting to eliminate SS from the very outset and more recently have been proposing to privatize it. That idea is not out of the goodness of their hearts and is not for our benefit but for theirs.

 

Financially savvy has nothing to do with it. We have been giving people more than they paid for since inception instead of helping people in need. SS should not be a program one looks to. We need people to look to their family and not the government. But when the government began redistributing future generations wealth to current ones as fdr did...we started the rabbit hole that is eventually going to blow up. But who cares if we make the future generations deal with our greed? Right?

Want to create a safety net for those unable to help themselves. I think everyone is okay with government playing a role there. But that is not what we are doing.

 

Look to their family? 11% of people are already at or below poverty line. The average SS check is about $2,000 a month. How many more would be at or near poverty if they had to string together $2k a month extra for each surviving elderly relative?

SS has been around for 90 years. And since then, seniors living in poverty level has dropped from 50% down to just 10%. SS also allows those of us with elderly relatives not to worry about helping them out and allows seniors to remain their independent as long as they are healthy. My father is 83, still drives, plays a mean piano, and lives in the house he's owned for over a decade. He refuses to take a dollar from any of his kids with the exception of the occasional meal. Between SS (about $3500 a month because of survivor benefit), his Fortune 500 pension, and money he makes from music gigs, he's doing just fine. Without SS, he'd have no choice but swallow his pride and take help.

And we've offered. Between my siblings and I, we could cover the $3,500, but we're also paying for our own kids, including my oldest in college, which isn't cheap, even though she stayed in state and received a nice scholarship.

Because my father has a pension and kids who are financially stable, do you take away his SS and his independence, forcing reliance on family? How many more seniors are in a similar situation? And how many would refuse help because of pride and find themselves back below the poverty line?

 

I suppose some would have them end up on the streets or maybe camps is what they have in mind.

 

Anything for a lower tax bill, right?

 

It has everything to do with human nature as it’s one of two core problems we’re trying to solve with SS (plus unfortunate events such as disability, death of caretakers, and cataclysmic economic events that affect even those who save well).

Personally, I don’t find the average SS annual benefit of $23,000 to be something one looks to as their ideal retirement vehicle. I’d call that supplemental for those who plan for retirement and for those that can’t/don’t it’s just enough to scrape by.

 

If the numbers I’m finding on the www are accurate, the SS fund has approximately $2.9-3.0 trillion in assets. Of that, some $2.6-2.7 trillion is invested in US Treasuries. Just how much did the ridiculously low returns on treasuries earlier this decade “cost” the SS Trust fund in lost revenues?

$80-100 billion per year?


Social Security Income, Cost, and Asset Reserves

https://www.pgpf.org/article/the-fe...orrowed-trillions-but-who-owns-all-that-debt/

 

people in general are terrible at saving...doesnt matter that its for retirement or not. Financial literacy is a problem.

 

Refuse help because of pride? How many excuses can we make.

Why don't you drop your pride and have the real conversation with your dad. Tell him that he has already been given more from SS than he paid for and that your neighbors should not be footing the bill. Tell him that you and he (America) needs to fix the problem so we can look your kids and his grandkids in the eye and say we are trying to make sure we leave your generation a noble program that helps those in real need. Not a program that leaves them behind.

Seriously.

Assume an 83 year old that retired at 70 and started collecting at 70. Lets say they have only been getting $3K a month for all 13 years. That is $468K. From 1990 to 2012 they paid 0.062 (Lets even give you the employer portion so 0.124). Assuming they paid the max taxable every year and started working at 20 years old. They would have paid in from 1962 to 2012...$281942.18

1962 300
1963 348
1964 348
1965 348
1966 508.20
1967 514.80
1968 592.80
1969 655.20
1970 655.20
1971 717.60
1972 828
1973 1047.60
1974 1306.80
1975 1395.90
1976 1514.70
1977 1633.50
1978 1787.70
1979 2326.64
1980 2631.44
1981 3177.90
1982 3499.20
1983 3855.60
1984 4309.20
1985 4514.40
1986 4788.00
1987 4993.20
1988 5454.00
1989 5817.60
1990 6361.20
1991 6621.60
1992 6882.00
1993 7142.40
1994 7514.40
1995 7588.80
1996 7774.80
1997 8109.60
1998 8481.60
1999 9002.40
2000 9448.80
2001 9969.60
2002 10527.60
2003 10788.00
2004 10899.60
2005 11160.00
2006 11680.80
2007 12090.00
2008 12648.00
2009 13243.20
2010 13243.20
2011 13243.20
2012 13652.40

Social Security Tax Rates

Contribution and Benefit Base

It is time to fix the problem. Let your pride go. This is a bipartisan problem. Be willing to look in your kids eyes and tell them you are going to work to leave them a noble program. Right now your neighbor is already paying your dad. The problem with that is your kids will be forces to pay you and your neighbor one day.

Don't get me wrong. It is a tough one to swallow knowing how much the government has redistributed. But swallow your pride so we can look in our kids eyes and tell them we left them a noble program. Not one that gave us more while they took less because we had to pay our parents...

 

Now, take the numbers and account for inflation. $1 in 1960 is worth about $10.50 in today's money. That's about the time my father started working My father had a six figure salary from his Fortune 500 job for most of the mid 80s through the early 90s, when he retired and bought a business with my Mother. Combined income for said business was also over six figures a year until they sold it. Money they used to live off of before they took SS so monthly payments could be a bit higher.

If you take inflation into account, my father probably paid a lot more than what he has taken. He also values his full independence. You want to talk to him about taking money from his kids? I'll give you his number. You'd have better luck running into a brick wall, full speed, naked. I know, I've tried several times to have said conversation with my father, especially after my mother died. I'd rather run into the wall.

Social Security isn't perfect, and yes we need to make tweaks to the system. We are living longer and getting older. But SS is a big reason why senior poverty levels have dropped from 50% down to about 10%. Why should we give this program up completely? So we can have more elderly living in poverty again and take away their freedom to be independent, even if that comes with abject stubbornness? Well, an octogenarian has earned the right to be stubborn in my opinion.

 

No doubt it’s supplemental to many (most on GC). Hence we the ability to reform it if we are willing to be honest.

 

LOL!

The max taxable is twice what inflation would have it be.

Stop making excuses.

 

Really? Here's an inflation calculator. That $300 in 1962 would be equivalent of $3,134 in today's dollars. The 1990 contribution of $6,360 is equivalent to $15,355. The 2000 $9,489 contribution today is over $3,000 more at $12,502.

I would argue that my mother took more in SS than she made, as she was a stay-at-home mother until her youngest was in high school. But that was a choice she decided to make. Are you going to say she didn't deserve SS payments for making this choice?

As for my father, his 40+ years of paying into the system is likely more than he's currently received after about 13 years of payments when you account for inflation. Especially when you consider, in 2010, the average SS payment was only $1,200 a month, or $14,400 a year. And in 2010, a 1990 full contribution was equivalent to $10,600. And $300 in 1962, equivalent to $2,166 in 2010.

Doing the math with inflation, and it looks like one year of contributions equals about 2.5 years (a little less actually) of SS payments. Given a 50 year career, then one must be retired 20 years taking SS payments before after inflation, they are taking more than they put in. My father isn't there yet. He has another 4 1/2 years before he hits that number.

Maybe he makes it? Maybe not. A lot can happen to someone in their 80s in 4 1/2 years. And yes, more and more people are living longer and likely taking more from SS than what they have put in. But then there are those like my Mother-in-law, who died at 53 from cancer, and paid in 30 years, never taking a dime in return.

 

Part of the contract with my employer was that SS would be part of the 3-legged retirement stool so dont mess with my stool

 

I like your analysis but ….. you should also consider the compounded returns on the SS withholdings over the period of employment.

The average treasury rate (assumed risk-free rate for the analysis) for the period since 1960 is probably 4.5%. It would be interesting to see where the gentleman’s account is today with that interest included.

 

Do you understand that Social Security has increased its payments as well? Use 1975 as the at is the last year I can find. That $300 has nothing to do with benefits paid.

They paid 157.70 per month. Which is 924.12 in todays dollars using your calculator. Today we are paying $967 for an individual (assuming they are using the minimum payment).

SSI Federal Payment Amounts

 

As AZ showed. SS has increased its payments as well. It is not going to be exact. But...

 

I calculate a value of the deferrals @ an average of 4.5% to be $612K

Year Contrib nper to Rate # per
2012 year FV
1962 300 50.5 4.5% 12 2,899
1963 348 49.5 4.5% 12 3,215
1964 348 48.5 4.5% 12 3,074
1965 348 47.5 4.5% 12 2,939
1966 508 46.5 4.5% 12 4,101
1967 515 45.5 4.5% 12 3,975
1968 593 44.5 4.5% 12 4,376
1969 655 43.5 4.5% 12 4,621
1970 655 42.5 4.5% 12 4,419
1971 718 41.5 4.5% 12 4,631
1972 828 40.5 4.5% 12 5,106
1973 1,048 39.5 4.5% 12 6,178
1974 1,307 38.5 4.5% 12 7,367
1975 1,396 37.5 4.5% 12 7,523
1976 1,515 36.5 4.5% 12 7,806
1977 1,633 35.5 4.5% 12 8,044
1978 187 34.5 4.5% 12 881
1979 2,367 33.5 4.5% 12 10,658
1980 2,631 32.5 4.5% 12 11,326
1981 3,278 31.5 4.5% 12 13,492
1982 3,499 30.5 4.5% 12 13,769
1983 3,855 29.5 4.5% 12 14,503
1984 4,309 28.5 4.5% 12 15,499
1985 4,514 27.5 4.5% 12 15,524
1986 4,788 26.5 4.5% 12 15,743
1987 4,993 25.5 4.5% 12 15,696
1988 5,454 24.5 4.5% 12 16,392
1989 5,818 23.5 4.5% 12 16,718
1990 6,361 22.5 4.5% 12 17,475
1991 6,622 21.5 4.5% 12 17,393
1992 6,822 20.5 4.5% 12 17,132
1993 7,142 19.5 4.5% 12 17,147
1994 7,514 18.5 4.5% 12 17,248
1995 7,589 17.5 4.5% 12 16,655
1996 7,775 16.5 4.5% 12 16,314
1997 8,110 15.5 4.5% 12 16,270
1998 8,482 14.5 4.5% 12 16,268
1999 9,002 13.5 4.5% 12 16,507
2000 9,449 12.5 4.5% 12 16,566
2001 9,970 11.5 4.5% 12 16,712
2002 10,528 10.5 4.5% 12 16,872
2003 10,788 9.5 4.5% 12 16,529
2004 10,900 8.5 4.5% 12 15,967
2005 11,160 7.5 4.5% 12 15,630
2006 11,681 6.5 4.5% 12 15,641
2007 12,090 5.5 4.5% 12 15,478
2008 12,648 4.5 4.5% 12 15,481
2009 13,243 3.5 4.5% 12 15,497
2010 13,243 2.5 4.5% 12 14,817
2011 13,243 1.5 4.5% 12 14,166
2012 13,652 0.5 4.5% 12 13,962
286,422 612,204