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Social Security Fund to Run Out in 2035, Trustees Say
Definitely reduction of payroll taxes in the last couple of years made the situation worse. I am personally not sure if I will ever be able to get a paycheck from SS administration. If the inflows to SS trust fund is not increased by increased payroll taxes or my lifting the $110K income limit significantly higher, than we should expect lower payouts from SS and perhaps a means testing.
Shame on both the republican and democratic administrations and congress for not taking care of this important and popular social safety net.
Hi Investor, If I recall and understand properly, there is a family (don't personally know them) in our community who lost the husband/father from an accident. I believe the family receives some form of SS...supplemental from his SS payments. I find this to be of value in helping the family remain monetarily stable to help the children to become contributing and decent members of society moving into their adult years. My contributions are well spent for such help. I am sure the family would rather have their husband/father. Regards, Catch
Your response is particularly interesting to me because I find that the "supplemental" SS seems to usually be quite contentious with respect to my stable of conservative friends. To be honest, I've not looked very deeply into this area myself. I think that it's safe to say that in ANY system designed to provide help to those in need there will ALWAYS be a certain percentage of opportunists who will do their best to game the setup. Just the nature of human beings, unfortunately. The question then isn't whether such things happen, but rather is the concept of any particular "program" both reasonable to start with, and designed in such a way as to at least keep the games to a minimum.
Oh, I won't disagree. Geez, we find all sorts of the crooks and thieves gaming the system in SS, Medicare, Medicaid, etc. And yes, the systems are a mess in some areas; and the vast size of the federal level programs has shown us too many times that there is a lack of ability to monitor the system properly. I too, have my points of intolerance of waste and duplication; but there are some programs that allow for a small price today if enough folks can be helped along into a better position in their lives; so as not to take the wrong paths and be a larger burden upon society in future years.
Sidenote: there has been and remain generational welfare families in this state; even during the wayback days when the big 3 autos were hiring people without a high school education. These folks still stayed home and drew whatever upon and from welfare benefits available.
Sociial Security is easy to fix while medicare and medicaid are hard. Best way to fix social security is to impact everyone a little . Not only does misery insist on company but by hitting everyone a little poliicians can't argue we should have either taxed the rich, make the poor pay more etc. Without doing the arithmetic to figure outprecise percentages or the bottom line do the following . Gradually raise the age , Raise the top limit at which social security is taxed by the employee from the current figure of about 108k to some other higher number and index with inflation. Keep the upper limit paid by employers so as not to discourage hiring ,Add a fraction of a % to the amount taken out of the paycheck and use a wage index to inflate payments rather than cpi. Everyone loses a little, no one loses much and the problem is solved for at least 8 presidential elections,
This table is taken from the SS Commission reports and relates only to OAS without DI (Social Security Trust Fund alone - no disability or Medicare). It is what it is but I post it to show the movement of the numbers depending on the recently experience economy. (By the way, the payroll tax reduction was technically paid from the general fund.) This is Date / Year of exhaustion / Actuarial imbalance. 1994 / 2029 /- 2.13% 1995 / 2030 / -2.17% 1996 / 2030 / -2.19% 1997 / 2030 / -2.23% 1998 / 2032 / -2.19% 1999 / 2034 / -2.07% 2000 / 2037 / -1.89% 2001 / 2038 / -1.86% 2002 / 2041 / -1.87% 2003 / 2042 / -1.92% 2004 / 2042 / -1.89% 2005 / 2041 / -1.92 2006 / 2040 / -2.02 2007 / 2041 / -1.95 2008 / 2041 / -1.7 2009 / 2037 / -2 2010 / 2037 / -1.92 2011 / 2036 / -2.22 Also, CBO uses a bit different algorithm or parameters/assumptions. Their exhaustion dates have gone as far as 2052 in one of the years that the SSA estimate was 2042. Always keep in mind that the "trust fund" is not the pay-go so, as long as there is SS payroll tax collection, SS can never go broke. I haven't read this year's report yet but had the numbers above laying around in a spreadsheet I made from a CBPP report last year.
Pretty cool, but it didn't really allow "mix and match". Had to take only one of two possible approaches. Still, gives a pretty good idea what the realistic options are. Thanks!
Hey Maurice- yes, indeed, I do have quite a number of conservative friends. Sometimes they drive me totally nuts, but I'm well aware that neither side has anything remotely resembling definitive and fair answers to many of the contentious issues. That's why it is such an unfortunate thing that "compromise" seems to be equated with "spawn of the devil" these days.
If my memory serves as well, I think that you are pretty close on your recall, above. And once again, I pretty much agree with your suggestions re the problem.
Reply to @Maurice: Well, Maurice, it isn't war time unless an educational opportunity constitutes a call to war.
"... Vietnam. The President, Lyndon B. Johnson, ... so he borrowed from the Trust Fund with an IOU, with no interest necessary. Since that time, every president, Republican and Democrat, has not paid back the amount borrowed. Additionally, every president has continued ...." On this I will simply refer you to two places: 1) http://www.ssa.gov/history/BudgetTreatment.html and 2) http://www.ssa.gov/oact/tr/2012/VI_A_cyoper_hist.html#228468
So, it seems that the budget records of what the general fund owes the entitlements and the interest owed are quite in tact. (There is a table for OASI, DI, and HI available.)
"I could get into how Social Security has funded Medicare, welfare (SSI) and other programs that are not self-funded by the Federal government, but that would get us into a quagmire of another dozen issues." Yes, you could but your lecture would be wrong. Not one cent of the SS money has been spent on the SSI program or any other program that exists outside of the SS system. Disability has it's own "trust fund" and tax amount. Non-working wives and survivors may be part of what you are thinking. If so, it is debatable since SS is a form of insurance.
"But you see it is not Social Security that is faces a financial disaster, but the Federal budget." It is true that Social Security has no crisis level financial problems and can be "fixed" in many minor ways. The Federal budget disaster is a matter of opinion or rather bond market confidence. So far we can sell US bonds and the US is still the richest country.
"There are solutions. Social Security could be paid back by the Federal government for all the money with interest, it has siphoned off. New excesses to SS spending would be added to the New Trust Fund." Maurice, Maurice, Maurice - this is just another accounting gimmick. The "trust funds" are in tact everywhere except in the Internet rumor mill and the snopes debunked emails. (Paying back the trust funds bonds is another conversation but it's the same conversation as paying back the 401K bonds during the boomer wave.)
"We could have federal, state and municipal workers be mandated to join the Social Security system." All new federal workers, including Congress critters and Presidents have paid into OASDI (SS and Disability) since 1983. Most states participate but the degree of participation varies. It would help to bring the rest into the system. Everyone pays into HI (Medicare).
"Many retirees are collecting anyway given, how few quarters one must work to gain access to benefits." Not sure what you are saying here but it takes 40 quarters (10 years) of contributions above a critical minimum to qualify for benefits and 35 years are counted (wage adjusted) in to the level of the benefit.
"We could make the Social Security payouts more progressive, by having payments to retirees be part of a more tiered scale, based on years one pays into the system." The payroll tax is regressive but the benefits are progressive as a % of SS taxable wages (35 years). Whereas a high wage individual might hope to replace a little more than 20% of their income, a median wage individual might see 40% and a low wage individual 70%. (or more or less; I can google some example numbers if you like.) Again, the years paid in (highest 35) DO affect the benefit. If a person has 20 years of zero income, zeroes go into 20/35 of the computation of the benefit level.
" We could segregate the SSI payments and all other programs into a separately funded (or unfunded) program that has nothing to do with SS. " Answered above.
"We could mandate that any increase of age requirements to collect SS, be matched by the Federal and States pension programs, if for no other reason but fairness." Well, perhaps we should add anyone working, pension or no pension, must work until they are 70 if they cannot self-fund. You know, just to be squeaky fair. Joking aside - raising the age reduces the early retirement benefit. This really hurts people that do hard labor. Disability would probably increase as a response if the early retirement age were raised.
Hmmmmm, strange. At least it is not taking you to my home page to discover all of my secrets....:):):) Try this.......it is the direct link to the item 5 I mentioned. Should be titled to the affect of "half truths". http://halife.com/seniors/social_security0714.html
Reply to @Old_Joe: Ironically, some conservatives and tea partiers have no problem receiving benefits from SS, Medicare and Medicaid. This group seems to have a problem with others receiving benefits.
Comments
Shame on both the republican and democratic administrations and congress for not taking care of this important and popular social safety net.
If I recall and understand properly, there is a family (don't personally know them) in our community who lost the husband/father from an accident. I believe the family receives some form of SS...supplemental from his SS payments. I find this to be of value in helping the family remain monetarily stable to help the children to become contributing and decent members of society moving into their adult years. My contributions are well spent for such help. I am sure the family would rather have their husband/father.
Regards,
Catch
Oh, I won't disagree. Geez, we find all sorts of the crooks and thieves gaming the system in SS, Medicare, Medicaid, etc.
And yes, the systems are a mess in some areas; and the vast size of the federal level programs has shown us too many times that there is a lack of ability to monitor the system properly.
I too, have my points of intolerance of waste and duplication; but there are some programs that allow for a small price today if enough folks can be helped along into a better position in their lives; so as not to take the wrong paths and be a larger burden upon society in future years.
Sidenote: there has been and remain generational welfare families in this state; even during the wayback days when the big 3 autos were hiring people without a high school education. These folks still stayed home and drew whatever upon and from welfare benefits available.
Take care,
Catch
Without doing the arithmetic to figure outprecise percentages or the bottom line do the following . Gradually raise the age , Raise the top limit at which social security is taxed by the employee from the current figure of about 108k to some other higher number and index with inflation. Keep the upper limit paid by employers so as not to discourage hiring ,Add a fraction of a % to the amount taken out of the paycheck and use a wage index to inflate payments rather than cpi. Everyone loses a little, no one loses much and the problem is solved for at least 8 presidential elections,
1994 / 2029 /- 2.13%
1995 / 2030 / -2.17%
1996 / 2030 / -2.19%
1997 / 2030 / -2.23%
1998 / 2032 / -2.19%
1999 / 2034 / -2.07%
2000 / 2037 / -1.89%
2001 / 2038 / -1.86%
2002 / 2041 / -1.87%
2003 / 2042 / -1.92%
2004 / 2042 / -1.89%
2005 / 2041 / -1.92
2006 / 2040 / -2.02
2007 / 2041 / -1.95
2008 / 2041 / -1.7
2009 / 2037 / -2
2010 / 2037 / -1.92
2011 / 2036 / -2.22
Also, CBO uses a bit different algorithm or parameters/assumptions. Their exhaustion dates have gone as far as 2052 in one of the years that the SSA estimate was 2042. Always keep in mind that the "trust fund" is not the pay-go so, as long as there is SS payroll tax collection, SS can never go broke. I haven't read this year's report yet but had the numbers above laying around in a spreadsheet I made from a CBPP report last year.
http://www.cbpp.org/files/5-24-11socsec.pdf
From the American Academy of Actuaries, You fix it.
Play the Social Security game:
http://www.actuary.org/socialsecurity/game.html
If my memory serves as well, I think that you are pretty close on your recall, above. And once again, I pretty much agree with your suggestions re the problem.
Regards- OJ
This link has numerous choices, but scroll down to the number 5 link.
His explanation about where the monies go for SS and related seem to be fairly clear. You'll need to read down or scroll to where he discusses where the SS monies move to and from.
I have not verified his answer.
https://www.google.com/#hl=en&sclient=psy-ab&q=when+was+social+security+moved+to+general+fund&oq=when+was+social+security++g&aq=0q&aqi=g-q4&aql=&gs_nf=1&gs_l=hp.1.0.0i22l4.1769.13503.0.18536.27.14.0.13.13.0.283.1908.0j13j1.27.0.aDKN-XPzlKE&pbx=1&bav=on.2,or.r_gc.r_pw.r_qf.,cf.osb&fp=b10f389bad4889f0&biw=1224&bih=577
Regards,
Catch
"... Vietnam. The President, Lyndon B. Johnson, ... so he borrowed from the Trust Fund with an IOU, with no interest necessary. Since that time, every president, Republican and Democrat, has not paid back the amount borrowed. Additionally, every president has continued ...." On this I will simply refer you to two places: 1) http://www.ssa.gov/history/BudgetTreatment.html and 2) http://www.ssa.gov/oact/tr/2012/VI_A_cyoper_hist.html#228468
So, it seems that the budget records of what the general fund owes the entitlements and the interest owed are quite in tact. (There is a table for OASI, DI, and HI available.)
"I could get into how Social Security has funded Medicare, welfare (SSI) and other programs that are not self-funded by the Federal government, but that would get us into a quagmire of another dozen issues." Yes, you could but your lecture would be wrong. Not one cent of the SS money has been spent on the SSI program or any other program that exists outside of the SS system. Disability has it's own "trust fund" and tax amount. Non-working wives and survivors may be part of what you are thinking. If so, it is debatable since SS is a form of insurance.
"But you see it is not Social Security that is faces a financial disaster, but the Federal budget." It is true that Social Security has no crisis level financial problems and can be "fixed" in many minor ways. The Federal budget disaster is a matter of opinion or rather bond market confidence. So far we can sell US bonds and the US is still the richest country.
"There are solutions. Social Security could be paid back by the Federal government for all the money with interest, it has siphoned off. New excesses to SS spending would be added to the New Trust Fund." Maurice, Maurice, Maurice - this is just another accounting gimmick. The "trust funds" are in tact everywhere except in the Internet rumor mill and the snopes debunked emails. (Paying back the trust funds bonds is another conversation but it's the same conversation as paying back the 401K bonds during the boomer wave.)
"We could have federal, state and municipal workers be mandated to join the Social Security system." All new federal workers, including Congress critters and Presidents have paid into OASDI (SS and Disability) since 1983. Most states participate but the degree of participation varies. It would help to bring the rest into the system. Everyone pays into HI (Medicare).
"Many retirees are collecting anyway given, how few quarters one must work to gain access to benefits." Not sure what you are saying here but it takes 40 quarters (10 years) of contributions above a critical minimum to qualify for benefits and 35 years are counted (wage adjusted) in to the level of the benefit.
"We could make the Social Security payouts more progressive, by having payments to retirees be part of a more tiered scale, based on years one pays into the system." The payroll tax is regressive but the benefits are progressive as a % of SS taxable wages (35 years). Whereas a high wage individual might hope to replace a little more than 20% of their income, a median wage individual might see 40% and a low wage individual 70%. (or more or less; I can google some example numbers if you like.) Again, the years paid in (highest 35) DO affect the benefit. If a person has 20 years of zero income, zeroes go into 20/35 of the computation of the benefit level.
" We could segregate the SSI payments and all other programs into a separately funded (or unfunded) program that has nothing to do with SS. " Answered above.
"We could mandate that any increase of age requirements to collect SS, be matched by the Federal and States pension programs, if for no other reason but fairness." Well, perhaps we should add anyone working, pension or no pension, must work until they are 70 if they cannot self-fund. You know, just to be squeaky fair. Joking aside - raising the age reduces the early retirement benefit. This really hurts people that do hard labor. Disability would probably increase as a response if the early retirement age were raised.
Try this.......it is the direct link to the item 5 I mentioned.
Should be titled to the affect of "half truths".
http://halife.com/seniors/social_security0714.html
Thank you for your efforts with this, too.
Regards,
Catch
Thanks Catch,
Your link lead me to this additional link:
http://halife.com/seniors/your_social_security.html