Best way to reform Social Security?

[Franzl]

...but I think we can all agree that if we keep the current plan going, were screwed. 

No!  Thats just right-wing propaganda.  The current plan is great, we just need to increase taxation of the wealthy, who have been getting away with not paying social security taxes, and increase benefits for the poor.

Indeed, the system itself is in good shape. We will need to raise taxes somewhat to continue funding it, however.

We're lucky we have such a high birth rate, because social security really is in trouble in countries like Germany (where the birth rate is under 1.5). The birth rate in the U.S. is more than 2.0 per woman, basically ensuring that the system itself will survive.

[Storebought]

...but I think we can all agree that if we keep the current plan going, were screwed. 

No!  Thats just right-wing propaganda.  The current plan is great, we just need to increase taxation of the wealthy, who have been getting away with not paying social security taxes, and increase benefits for the poor.

Indeed, the system itself is in good shape. We will need to raise taxes somewhat to continue funding it, however.

We're lucky we have such a high birth rate, because social security really is in trouble in countries like Germany (where the birth rate is under 1.5). The birth rate in the U.S. is more than 2.0 per woman, basically ensuring that the system itself will survive.

The Social Security Administration disagrees with you:

Social Security's financing problems are long term and will not affect today's retirees and near-retirees for many years, but they are very large and serious. People are living longer, the first baby boomers are nearing retirement, and the birth rate is lower than in the past. The result is that the worker-to-beneficiary ratio has fallen from 16.5-to-1 in 1950 to 3.3-to-1 today. Within 40 years it will be 2-to-1. At this ratio there will not be enough workers to pay scheduled benefits at current tax rates.

If Social Security is not changed, then by about 2041 payroll taxes will have to be increased, the benefits of today's younger workers will have to be cut, or some other source of revenue, like transfers from general revenues, will be required. Social Security's Trustees state, "If no action were taken until the combined trust funds become exhausted in 2041, then the effects of changes would be more concentrated on fewer years. For example, payroll taxes could be raised to finance scheduled benefits fully in every year starting in 2041. In this case, the payroll tax would be increased to 15.94 percent at the point of trust fund exhaustion in 2041 and continue rising to 16.60 percent in 2082. Similarly, benefits could be reduced to the level that is payable with scheduled tax rates in every year beginning in 2041. Under this scenario, benefits would be reduced 22 percent at the point of trust fund exhaustion in 2041, with reductions reaching 25 percent in 2082.”

And, truth be told, the decrease in benefits will be far larger than a mere 25% -- we are talking about retiring baby boomers after all.

[Ban my account ffs!]

As has been said, the retirement age will need to be raised a little, we can remove the cap, and cut benefits to the wealthy.

Social security is exactly what the name sounds like:  ensuring that your likely reduced retirement income (back from the day of pensions) plus the social security benefits equals a similar quality of life to what you enjoyed while working without actually having to work.

The poverty rate among senior citizens would be drastically higher if it weren't for social security and that situation would likely put a huge damper on the economy as the elderly would be forced to move in with children (if they have them) or onto the streets where we would have to pay for the consequences, as well as a lowered life expectancy.

It would probably be more expensive once you factor in higher emergency medical costs, setting up homeless shelters, putting a burden on younger working families (who would have to make room for and care for their elderly parents)... it would be a major disaster..

and as easy as it is to stand on the sidelines and wave your finger screaming "PERSONAL RESPONSIBILITY", you'd be paying a much higher price just to prove a point.

[Storebought]

As has been said, the retirement age will need to be raised a little, we can remove the cap, and cut benefits to the wealthy.

Social security is exactly what the name sounds like:  ensuring that your likely reduced retirement income (back from the day of pensions) plus the social security benefits equals a similar quality of life to what you enjoyed while working without actually having to work.

The poverty rate among senior citizens would be drastically higher if it weren't for social security and that situation would likely put a huge damper on the economy as the elderly would be forced to move in with children (if they have them) or onto the streets where we would have to pay for the consequences, as well as a lowered life expectancy.

It would probably be more expensive once you factor in higher emergency medical costs, setting up homeless shelters, putting a burden on younger working families (who would have to make room for and care for their elderly parents)... it would be a major disaster..

and as easy as it is to stand on the sidelines and wave your finger screaming "PERSONAL RESPONSIBILITY", you'd be paying a much higher price just to prove a point.

Why should an older person have an income equal to their working years? They've already paid off their mortgage; their children have moved out (or at least have not boomeranged back); they don't need to commute; their medications and hospital bills are already taken care of by taxpayers through Medicare. As it is, Social Security should be just enough to cover food and utility bills (possibly rent) for a married couple -- the numbers can be determined by the Labor Dept.

Remember this: Every dollar transferred to the elderly today by current workers is a walloping $1500* that does not go into supporting yourself in your own dotage, increasing your burden
to all workers, not just those of one's immediate family.

And, yes, personal responsibility is a prerequisite for retirement planning in any event. It takes decades of saving, of consistently living below ones means, to fund a retirement even after including SS as a source of old age income.

*That is the amount of saving just one dollar per month for 30 years in an account that has a real return of 8%.

[opebo]

Why should an older person have an income equal to their working years?

Why shouldn't they?  After all, they are finally freed from toil and have leisure time - it takes money to fill that with dining out, etc.

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You assume too much - many are renters, certainly the majority of the needy ones.

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Why should it?  These things are just political decisions, Storebought.  I think SS should be far more than you... which view is more popular?

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Well, for a worker.

And btw, your account that consistently provides 8% is a pipe dream.  Figure 2 or 3% after inflation is, while very optimistic, within the realm of reason.

[Storebought]

Why should an older person have an income equal to their working years?

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And why should taxpayers fund someone's leisure? SS is meant to prevent destitution caused by inability to work due to old age or illness, not to be a jealous and greedy taxpayer-funded ticket to an unearned good life. 

They've already paid off their mortgage

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Some 76% of retired people own homes -- I believe that is a safe assumption to make.

As it is, Social Security should be just enough to cover food and utility bills (possibly rent) for a married couple -- the numbers can be determined by the Labor Dept.

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Isn't this the "Political Debate" thread?

And, to answer your question, in a war between the ant and the cicada, the cicada will of course win.

Increasing the transfer of wealth from young, asset-poor wage earners starting families and mortgages and careers, to wealthy retirees living the high life (by your own admission!) on the wage earner's dime, would be a far more disastrous long-term proposition for SS than simply decreasing current benefits to ensure that all current workers will see some income distribution from SS when they need it.

And, yes, personal responsibility is a prerequisite for retirement planning in any event. It takes decades of saving, of consistently living below ones means, to fund a retirement even after including SS as a source of old age income.

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What does that even mean? Wealth only need be acquired once during a lifetime.

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8% is the long-term return for a balanced portfolio in a tax-advantaged account. Even after including inflation, you will still get 6% if you held mostly US and developed-nation stocks. I stand by my numbers.

[opebo]

And why should taxpayers fund someone's leisure? SS is meant to prevent destitution caused by inability to work due to old age or illness, not to be a jealous and greedy taxpayer-funded ticket to an unearned good life. 

'Unearned good life' - sounds like the owning class to me.  As for 'taxpayers' funding a working person's leisure, this is social insurance, Storebought - everyone pays in, everyone is secured.

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Some 76% of retired people own homes -- I believe that is a safe assumption to make.[/quote]

No, you leave out the poorest 24% who need Social Security the most.

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What does that even mean? Wealth only need be acquired once during a lifetime.[/quote]

I was referring to the fact that an owning class person does not have to struggle or toil to fund their retirement - we gaurantee it for him.

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People with only $100 or so available for 'investment' cannot access a 'balanced portfolio'.  Anyway, I find you such an optimist!  rose coloured glasses

[Undisguised Sockpuppet]

Means test it for the poor elderly and make everyone have mandatory high interest savings accounts(think same percentage taken out automatically as is done now) and put strong tax deductions/perks for saving/investing.

[Bogart]

Means test it and gradually reduce benefits as income rises until benefits become unavailable. Raise the income cap.

[Albus Dumbledore]

Means test it and gradually reduce benefits as income rises until benefits become unavailable. Raise the income cap.

Bogart, don't go bringing logic and reason into the debate on social security. That's just not sporting.

[defe07]

I'm surprised hasn't considered this idea. When people start saying "Social Security should be controlled by the government" or "Social Security should be privatized", isn't it imposing something against what people want? In case you guys are asking, I support personalizing Social Security. Personalization in the sense that a person should be given the choice to do whatever he or she wants with her money. Offer people the choice of having a personal parallel account to put money away. Social Security should be kept as a safety net, for those who chose to keep their money there. If people want to put it in a private account, it's their choice.

[Frodo]

All that needs to be done is to stabilize the long-term funding for Social Security by taking the following steps:

raise the retirement age to seventy

raise the payroll tax as well as eliminate the cap on it

indexing Social Security benefits to inflation as opposed to wages
--------------------------------

And as for the idea of adding non-taxable private retirement accounts:  they are unnecessary, and could in fact detract from the effort to put Social Security on a sound fiscal footing.  And besides, we already have IRAs and RothIRAs for those seeking to supplement their Social Security income when they retire -that's good enough.

[Badger]

There is no good reason why government should be involved in people's retirement at all, much less the federal government. As long as Social Security is under the federal government's control, problems will continue and proposed solutions will be temporary. Let people control and be responsible for their own retirements. Social Security should be gradually privatized.

Don't worry. Hopefully President Hoover will get reelected and lick this here depression without all this socialism that Roosevelt character is talkin'. That socialist security he wants won't mean nothin but trouble to old folks, right?

<sigh> Those that forget history are doomed to repeat it vote Republican.

[A18]

Your post contains no critique of his position.

Anyway, complete abolition should be the goal. But at the very least, the wage-indexing formula should be replaced with simple price-indexing.

[Badger]

Your post contains no critique of his position.

Anyway, complete abolition should be the goal. But at the very least, the wage-indexing formula should be replaced with simple price-indexing.

Then I'll elaborate:

Social Security has singularly has transformed the status of elderly Americans from one of destitute poverty to one of middle class solvency. It is the undeniably the most successful social experiment in our country's history, and was a fundamental foundation in developing the middle class as we know it today. Anyone with even a passing knowledge of depression to present day history would know this. Still there's always the knee jerk anti-government argument that opposes programs like Social Security on pure ideological grounds by ignoring its undeniable success as if the last 70 years never existed. Sorry if it was too obtuse a reference before. Hey, it made sense to me! ;-)

Anyhoo, lift the cap on taxable income, lower the overall tax rate, means test benefits, and raise full eligibility age to 67.

[A18]

The program has been very successful at transferring large amounts of money from the young to the old on a yearly basis. The claim that the program has "singularly . . . transformed the status of elderly Americans from one of destitute poverty to one of middle class solvency" is not nearly so obvious. I'd like to see some hard data on this transformation in living standards. In particular, the notion that "elderly Americans" are or ever were a homogeneous group, with a single financial status, defies common sense. But why, in any case, assign so much credit to Social Security? The earliest generation doubtless benefited, but modern-day retirees had to pay into the system their whole lives, making its net effect on retirement income ambiguous.

The bottom line is that Social Security is a program that takes money from the young, rich or poor, and gives to the old, rich or poor. There may be some justification for a program that exclusively supports needy seniors. But Social Security, as we know it today, is not that program; it is an arbitrary and immoral substitute.

[Badger]

The program has been very successful at transferring large amounts of money from the young to the old on a yearly basis. The claim that the program has "singularly . . . transformed the status of elderly Americans from one of destitute poverty to one of middle class solvency" is not nearly so obvious. I'd like to see some hard data on this transformation in living standards. In particular, the notion that "elderly Americans" are or ever were a homogeneous group, with a single financial status, defies common sense. But why, in any case, assign so much credit to Social Security? The earliest generation doubtless benefited, but modern-day retirees had to pay into the system their whole lives, making its net effect on retirement income ambiguous.

The bottom line is that Social Security is a program that takes money from the young, rich or poor, and gives to the old, rich or poor. There may be some justification for a program that exclusively supports needy seniors. But Social Security, as we know it today, is not that program; it is an arbitrary and immoral substitute.

Well, historically seniors were the most pverty stricken group in America; today they tend to be at least middle class.

Regarding today's effects, though, I actually somewhat agree with you. Hence my proposal to raise elegibility age and means test benefits.

[Marokai Backbeat]

Eliminate the income cap on payroll taxes, so that all income is thus taxed

Bingo.

Also, though I think the "crisis" over SS has been slightly overblown by Conservatives, we shouldn't start raising and raising the age for eligibility, or we basically just make the program ineffective or irrelevant. (It's a temporary fix anyway. It doesn't really do anything but push the problem back a bit and slightly lowers the amount of the people in the program for awhile.)

[Ban my account ffs!]

Cut benefits for the rich while making the social security tax progressive.  Raise the retirement age to 70 over a period of 30 years or so.

That should be plenty.  Focus on benefits for the middle class and poor with the poor getting the largest benefits, with the rich getting almost nothing.

I know.. it's unfair to the rich, but such is life.

[Nym90]

Increase the payroll tax for those making more than $250k/year.

Ideally I'd prefer eliminating the payroll tax altogether and financing it through the income tax instead.