If you would like a pretty good idea of what Social Security in the USA is all about, I actually think that the wiki page is a decent place to get general background information.

Social security in the USA is going to be a very big problem very soon. Lots more money is expected to go out of the fund than come into the fund, especially with my generation, the "baby boomers", beginning to retire in great numbers now. And it is only going to get worse...

In another thread Gary deftly pushed me to find ways to generate money to fund my liberal utopia and still pay down our crushing national debt.

I responded with a few ideas including:

5. Ok.... #5... and this one is going to open a HUGE can of worms, especially since it is coming from a silly little addled-brain liberal like me (...and a tail-end baby-boomer, no less!!!) Social security is described as a "benefit". Let's treat it like a "benefit". If, in one's retirement, one does not NEED it, then one should not GET it. (Increase in pie dish diameter)

Yes, yes, yes... I know we all paid into it. I know it is "our" money. I know we all want it back. I know we all think we need it and we all think that we deserve it. I sure don't want to PRIVATIZE it, but I do want it restructured.

If your retirement income/savings is above a reasonable point, you shouldn't get that money back. If your retirement income/savings drops below that point, you may dip into social security again.

I know that I'm going to be up against the firing squad for posting this little suggestion, but look at it this way... I pay my fire insurance every year. I don't feel entitled to get THAT money back if my house doesn't burn down this year.

OzzFan responded with:

I think I can agree with most of this. I would also add that there wouldn't be as big of a problem with Social Security if the gov't would stop taking or cutting from that pool of money for other things.

And Gary responded with:

Angela, about fire insurance, do you feel the same way about your 401(k)? How about your IRA? Your bank account?

Unfortunately Mr. FDR and those that came after him didn't sell the Ponzi scheme of Social Security as insurance. They sold it as a mandatory government run (defined benefits) pension plan. That is the expectation today. I don't think you will be able to change that perception.

However I'm surprised to see you arguing for individualization. Well, 90% anyway. Tracking individuals and their specific contributions with your individual means testing. Individualization is the first step to privatization, or allowing individuals to direct how they want their contributions invested.

Horrified that Gary might think that I was arguing for privatization, I responded with:

Whoa Bessie!!! Whoa I say!!! Bad horsie!!!

Gary, I think you are reading more into what I posted than I meant. I'm not for changing the way we put money into Social Security. I'm just for changing the way we draw it out. If I am lucky enough, at age 65, to not need my social security dollars back, then I think there should be a law in place to keep me from drawing them. Will I want "my" money back in the form of social security payments in my retirement??? Sure!!! As I mentioned in a previous post, self-interest tends to trump altruism. That is why I would like to do the "BIG SELL" to all citizens and change the way we think about social security. After the "BIG SELL" perhaps we can enact a law that changes the way we draw money out.

I don't really understand what you mean by "individualization". I think I need more clarification on what that means before I can argue further on the topic of Social Security.

Meanwhile, Glenn gave an Australian perspective with:

Angela there is even a better way , do it the way we are . Then there is no government involvement and after 30 + years as the system starts to take effect you can get rid of the aged pension all togeather and save 15 % on your social security .
Where you went wrong was letting your gov make laws saving it can only be invested in government bonds .
Our government can't get there greedy little hands on ours yet , although the Liberal Party are trying to change things , pity it will be returnd back to what it was after we get rid off Abbott poor Liberal's

Gary was kind enough to clarify my confusion with:

Clarifying. Today they give you a so called benefits statement. It is actually just a record of your payments and an estimate if the world stays rosy what you might expect to receive. It isn't like say your 401(k) statement that goes on to detail what each of your payments did after the government received it, nor does it tell you the value of your account. If SS were individualized you would get a statement much more like you get for your 401(k). Of course this would fly in the face of your insurance, because the money in the pot would be yours, not the governments, to do with or waste and squander as it sees fit.

You see, once the accounts are individual accounts, so means testing can be accomplished, so called privatization is easy. The only step left is to allow you to decide where to place your money.

Now I realize you want to means test to see if a person should get any. Just be aware the tax code already has a version of that in place. There is a rather small floor amount of other income you can earn before those SS checks become taxable. Taking away some of the payout via taxes is somewhat the same as not giving it in the first place.

Cliff responded to Gary with:

I may be mistaken, but I think that only applies to those who are collecting SS but haven't reached full retirement age during that time. In my case, I was forced into retirement at the age of 66 and started collecting SS, along with my VA disability was/is my only income. With any wages that I did/would have earned above x amount, $1.00 for each $1.00 earned was/would have been deducted from my SS check until I reached the full retirement age of 70. After my birthday, this year, if I find suitable employment that would pay beyond x amount it will not affect my SS check in the negative. In other words, any money that I earn via wages, regardless of the amount is mine and does not affect my SS. Of course I will have to pay taxes on those wages. If I so desire I can even have SS taxes voluntarily taken out, which would then affect how much more my SS benefits will increase.

On the other hand if I made enough wages to decrease my SS benefits to much, I could at the time elect to stop my SS benefits until such time as I am no longer employed, then collect SS benefits again. I could to this only once a year. Regardless of which path I did/may have chose/may have chosen, I still paid SS taxes and those taxes would then be applied to my SS account, therefore increasing my monthly SS benefits.

Now we are all caught up. I hope that I have not missed anybody who gave a different viewpoint from something expressed above.

I'm hoping we can continue this discussion on the Social Security Crisis and Solutions here. I think that this topic needed its own thread and that is why I started one.

Everybody continue to be nice, please.

That wiki page on Social Security (see link in first post in this thread) lists this as one of several possible ways to offset the social security crisis:

Means-test benefits. Phase out of Social Security benefits for those who already have income over $48,000/year ($4,000/month) would eliminate over 20% of the funding gap. This is not very popular, with only 31% of surveyed households favoring it.

This was what I meant, but so poorly described, in another thread.

I did not expect it to be a popular idea. I still think we should do it.

Gary said:

Now I realize you want to means test to see if a person should get any. Just be aware the tax code already has a version of that in place. There is a rather small floor amount of other income you can earn before those SS checks become taxable. Taking away some of the payout via taxes is somewhat the same as not giving it in the first place.

Yes. But I don't think this goes far enough. I think it should be a progressive tax, like the rest of our income taxes... or we could have a wealth tax (see discussion elsewhere) and then just not bother about taxing social security at all.

It is my understanding that Social Security was set up to be self funding. And that the money collected through SS taxes was only to be used for SS.
But then in the 60's our greedy money hungry politicians decieded they wanted that money in the general fund. That where the problem started. And the way to end it is to take SS out of the general fund.
Or who decides to raid the SS accounts, They should be mandated to pay it back at 10% interest. End of problem.

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[/quote]

Old James

Gary was kind enough to clarify my confusion with:

Clarifying. Today they give you a so called benefits statement. It is actually just a record of your payments and an estimate if the world stays rosy what you might expect to receive. It isn't like say your 401(k) statement that goes on to detail what each of your payments did after the government received it, nor does it tell you the value of your account. If SS were individualized you would get a statement much more like you get for your 401(k). Of course this would fly in the face of your insurance, because the money in the pot would be yours, not the governments, to do with or waste and squander as it sees fit.

You see, once the accounts are individual accounts, so means testing can be accomplished, so called privatization is easy. The only step left is to allow you to decide where to place your money.

Now I realize you want to means test to see if a person should get any. Just be aware the tax code already has a version of that in place. There is a rather small floor amount of other income you can earn before those SS checks become taxable. Taking away some of the payout via taxes is somewhat the same as not giving it in the first place.

Cliff responded to Gary with:

I may be mistaken, but I think that only applies to those who are collecting SS but haven't reached full retirement age during that time. In my case, I was forced into retirement at the age of 66 and started collecting SS, along with my VA disability was/is my only income. With any wages that I did/would have earned above x amount, $1.00 for each $1.00 earned was/would have been deducted from my SS check until I reached the full retirement age of 70. After my birthday, this year, if I find suitable employment that would pay beyond x amount it will not affect my SS check in the negative. In other words, any money that I earn via wages, regardless of the amount is mine and does not affect my SS. Of course I will have to pay taxes on those wages. If I so desire I can even have SS taxes voluntarily taken out, which would then affect how much more my SS benefits will increase.

On the other hand if I made enough wages to decrease my SS benefits to much, I could at the time elect to stop my SS benefits until such time as I am no longer employed, then collect SS benefits again. I could to this only once a year. Regardless of which path I did/may have chose/may have chosen, I still paid SS taxes and those taxes would then be applied to my SS account, therefore increasing my monthly SS benefits.

I answered Cliff:

Cliff, there are two systems. You are quoting one, and it is the one that has the biggest effect if it applies. The other which I mentioned is straight income tax which applies to all no matter their age. Social Security retirement is taxable as income, but if it is your only income likely you won't have over your personal exemption amount and won't owe anything. With just a bit of other taxable income that will push you over that personal exemption amount and you will be paying income tax.

As to paying in to SS (FICA) after retirement age, if the income is work, yes they still deduct it, but if the income is dividends, or a traditional IRA payout, no SS (FICA) tax.

As to it changing how much you get, the formula is very complex. Your payout is based on your highest earnings by quarter and they average it using 30 years IIRC. Not the last 30 years either, the highest. So what you pay in while retired and drawing, may or may not have any effect on what your check will be. [It isn't based on the total you contribute - it isn't an individual account! yet]

(In any case this point was just a reminder to Angela that there was something in place already that operates similar to her means testing. Perhaps she might consider tweaking that rather than inventing more rules. Her proposal would leave the funds in the SS trust fund, where clawing it back as taxes would put the money in the general fund where it could reduce the national debt.)

Let me add http://www.irs.gov/pub/irs-pdf/p915.pdf to that answer.

http://setiathome.berkeley.edu/forum_thread.php?id=77737 wrote:

That wiki page on Social Security (see link in first post in this thread) lists this as one of several possible ways to offset the social security crisis:

Means-test benefits. Phase out of Social Security benefits for those who already have income over $48,000/year ($4,000/month) would eliminate over 20% of the funding gap. This is not very popular, with only 31% of surveyed households favoring it.

This was what I meant, but so poorly described, in another thread.

I did not expect it to be a popular idea. I still think we should do it.

Gary said:

Now I realize you want to means test to see if a person should get any. Just be aware the tax code already has a version of that in place. There is a rather small floor amount of other income you can earn before those SS checks become taxable. Taking away some of the payout via taxes is somewhat the same as not giving it in the first place.

Yes. But I don't think this goes far enough. I think it should be a progressive tax, like the rest of our income taxes... or we could have a wealth tax (see discussion elsewhere) and then just not bother about taxing social security at all.

Okay, but you didn't answer the question I posed [which you missed in moving the discussion.] Should the money from your reduction be in the trust fund or the general fund?

In any case I agree the trust fund is bankrupt and measures need to be taken to get it solvent. As long as it isn't ponzi scheme is the correct description for the defined benefits program we call Social Security.

Some years ago I posted that I felt the contribution rate needed to go up. I was stunned when Obama lowered it making the bankruptcy come sooner and I said so at the time.

Presently there is a cap on contributions. I think that was put in place as there is also a cap on payouts. It made sense when the trust fund was near solvent. Not now. While there aren't that many people being paid salary at those levels it will be more than a drop in the bucket, although it may only be one or two tablespoons. The reality is the FICA tax rate of 12.4% (15.3% including medicare) has to go up. How much has to do more with how fast we need to get solvency. Once that has happened some future congress can lower the rate to a sustainable number. I haven't run numbers, but IIRC some of the big accounting firms have.

Now what is solvency? Some of you are going to hate me for bringing up General Motors, but it is the perfect example of a defined benefits plan that was underfunded. The government allowed GM to underfund the plan because it created the Pension Benefit Guarantee Company to insure pensions from failure in the very same manner as it created the Federal Deposit Insurance Company to insure bank deposits. It had about the same amount of regulator oversight and about the same clarity of crystal ball as FSLIC did before the S&L crises. In any case companies that had underfunded pension plans were required to pay a higher amount of money for their policy. Not nearly as much as they underfunded the plan by, but default rates were tiny. They were also allowed to use very high numbers for future growth projections also tending to allow underfunding. It didn't really matter as the US taxpayer pledged his full faith and credit to make up any shortfall. [In GM's case the shortfall was made up with TARP money not PBGC money. Either way the US taxpayer was on the hook.]

In any case a fully funded pension plan is one that if today was the last day of contributions, it has enough money in the plan (trust) to pay out every future claim including the administrative expense. Getting congress to engage in such accrual accounting will be impossible as it would expose them to be the thieves they are.

If congress won't raise the contribution rate, then they are going to have to make some significant cuts to the payouts. There are a lot of people who have been getting those benefit statements for many years who may have planned their life on them being somewhat correct. The year congress makes the cut and they see half of their retirement earnings evaporate, well, it isn't going to be pretty. And they are suddenly going to remember all the years Congress raided the pension fund to make up for shortfalls in the general fund, which allegedly were paid back, but with inflated dollars.

As to boomers, http://www.taxpolicycenter.org/taxfacts/Content/PDF/ssrate_historical.pdf you see that for many of their earning years they paid much lower rates than today. Enough wasn't being put aside for the benefits they were being promised. The problem is obvious as is the solution. Now can congress administer the medicine?

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In any case I agree the trust fund is bankrupt and measures need to be taken to get it solvent. As long as it isn't ponzi scheme is the correct description for the defined benefits program we call Social Security.

Any social security fund that wouldn't technically be a Ponzi scheme is a scheme where you save up for your own benefits when you need them later. The problem is that the people who most probably need actual social security are also the people who probably had the least amount of time/money to save. Someone earning minimum wage can't save because all the money goes straight into paying for the things they need right now. Someone without a job can't save much money either.

It is my understanding that Social Security was set up to be self funding. And that the money collected through SS taxes was only to be used for SS.
But then in the 60's our greedy money hungry politicians decieded they wanted that money in the general fund. That where the problem started. And the way to end it is to take SS out of the general fund.
Or who decides to raid the SS accounts, They should be mandated to pay it back at 10% interest. End of problem.

1st: @ everyone... good thread.

2nd: @ James...

'set up to be self-funding'... true.
'money collected through SS taxes was only to be used for SS'... true.
'decided they wanted that money in the general fund'... uhh... no.

The Social Security 'trust fund' has ALWAYS been in the 'general fund', so to speak.

The trust fund was NEVER a pile of money sitting in a locked room in Washington where the Congress can sneak in and grab a few sacks of money at will.

The trust fund surpluses were and are required to be invested in various securities, specifically US Treasury paper which must be paid back (with interest) to the trust fund at maturity.

Every time-period the following happens:

1. SS taxes collected and placed into the SS current account.
2. Matured treasury paper from the trust fund is redeemed and the proceeds principle and interest added to the SS current account.
3. SS Benefits paid from the SS current account.
4a. If there is money left in the current account (a surplus), more US Treasury paper is purchased and placed into the trust fund. Or...
4b. If the current account is negative (a deficit), it is brought back to zero through some other means (like selling off some of the trust fund paper on the open market, for instance), further draining the trust fund.


OK... Since all the SS Trust Fund is essentially a bunch of IOUs, there is NOTHING to raid.

Since the SS Trust Fund is invested in US Treasury paper, it already IS in the 'general fund'... All of it.

They already DO pay interest back to the Trust Fund, just not (currently) the figure you mentioned of 10% (though I wish they did).

'moving the SS Trust Fund into the general fund' is just so much accounting trickery. It is meaningless in the grand scheme of things... and besides, that move in the 1960s was later undone (around 1985, iirc).

Yes, the US Social Security system is in a bit of a pickle. This is due to a combination of demographic shifts (over time, fewer people are paying into the system and more people are receiving benefits), and poor design of the system.

The trust fund is being depleted at an ever-increasing rate, and around 2030 or so the trust fund will be at a $0 balance. At that time, the tax intake will only cover about half of the benefit outlays, if I remember correctly.

The Social Security system passed by Congress in 1935 and amended many times since then is NOT what FDR sold to the American People. Here is a quote from FDR's message on the subject on Jan. 17, 1935:

In the important field of security for our old people, it seems necessary to adopt three principles: First, noncontributory old-age pensions for those who are now too old to build up their own insurance. It is, of course, clear that for perhaps 30 years to come funds will have to be provided by the States and the Federal Government to meet these pensions. Second, compulsory contributory annuities which in time will establish a self-supporting system for those now young and for future generations. Third, voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age. It is proposed that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans.

http://www.pbs.org/wgbh/americanexperience/features/primary-resources/fdr-social-security/



Note FDR's use of 3 words...

1. Insurance.

an agreement in which a person makes regular payments to a company and the company promises to pay money if the person is injured or dies, or to pay money equal to the value of something (such as a house or car) if it is damaged, lost, or stolen

http://www.merriam-webster.com/dictionary/insurance

2. Annuity.

An annuity is a contractual financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time.

http://www.investopedia.com/terms/a/annuity.asp

3. Supplanted.

to replace (one thing) by something else.

http://dictionary.reference.com/browse/supplant

Social Security was sold to the American People as being a program of compulsory contributions to annuities with additional optional contributions allowed to grow the amount of the annuity benefits one receives beyond the mandated minimum.

Social Security was sold to the American People as only having funding through Government Taxes for a limited period of time (FDR said the first 30 years) to cover the people who did not have enough time to amass enough contributions between the inception of the program and their retirement. After the initial 30 year period, Social Security was supposed to be private and Government involvement restricted to telling people that they must contribute at least a minimum amount to their private accounts.

This is what was sold to us...

This is NOT what we got...

Thank you Major Kong for correcting my misconception on my last point.
So if SS was run as a private enterprise, Would that mean the government would not be allowed to raid it when ever they wanted?

I know of people who worked under the table for just about all their working career. Then listen to them cry when they had to go on SSI and get a pittance. They looked at the short term of going tax free. Never thought about adding cash into others and their own wellbeing in later years.

As for a fix. I say do away with the cap on income that can be taxed for SS. Most working stiffs have to pay the tax year after year for there entire working career. Why should those who make more not pay for the whole year like you and I have to?

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[/quote]

Old James

Now can congress administer the medicine?

Gary the answer as you know is no.

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Thank you Major Kong for correcting my misconception on my last point.
So if SS was run as a private enterprise, Would that mean the government would not be allowed to raid it when ever they wanted?

Ask any government that has seized private property. They do it all the time. Just pass a law. Technically it is a bit harder in the US because of that clause in the constitution about just compensation, but they steal land under eminent domain every day in the US.

I know of people who worked under the table for just about all their working career. Then listen to them cry when they had to go on SSI and get a pittance. They looked at the short term of going tax free. Never thought about adding cash into others and their own wellbeing in later years.

Seventy-five and still have to work, well, it was that way before Social Security. Likely in the group that was too proud to take welfare when the jobs didn't quite pay enough to live, or in the group that made too much to qualify and not enough to live. If they weren't and were making lots then they were stupid for not putting that under the table savings into an IRA.

As for a fix. I say do away with the cap on income that can be taxed for SS. Most working stiffs have to pay the tax year after year for there entire working career. Why should those who make more not pay for the whole year like you and I have to?

$118,500 is such an arbitrary number. Yes, get rid of the cap. Of course none of the uber pay a penny into the system anyway, they don't dirty their hands with a job. So just the upper middle class will pay more, but I think they can afford this tax increase. Heck, they may even get it all back when they are retired, because they won't be paying extra taxes to keep the trust fund from going bankrupt.

@MK, Thanks for this history lesson, but it doesn't fix the problem of what we have.

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Now can congress administer the medicine?

Gary the answer as you know is no.

Yes, unfortunately I agree. So the USA awaits the same fate as Greece.

Yes, unfortunately I agree. So the USA awaits the same fate as Greece.

Would that be so bad for us or how bad would that be, not how bad could it be?

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Yes, unfortunately I agree. So the USA awaits the same fate as Greece.

Would that be so bad for us or how bad would that be, not how bad could it be?

How bad would it be? That depends on exactly what was defaulted on, and the behavior of the US Treasury. The first is an unknown until it happens. The second depends on the then-current members of the legislative and executive branches. In other words, one heck of a lot of political theater.

Regardless, this is likely more than a bit off-topic. Let us return to Social Security.

@MK, Thanks for this history lesson, but it doesn't fix the problem of what we have.

Gary,
The most ideal, fiscally speaking, solution would be to go to what FDR proposed in his statement to Congress in Jan. 1935 that I quoted a part of earlier in the thread. Privatization, and getting Government out of it.

However, most here would not countenance that, so in the interest of continued friendly discussion without devolving into an insult-festival, let us assume that the program will remain a Government one.

What I would do in this case? Here is a list:

1. Maintain the cap on yearly benefits, but remove the cap on income subject to the SS Tax. In exchange for this, remove the possibility of means-testing reception of the benefits. The income of the super-rich is enough to greatly help the program regain solvency, but the number of the super-rich is not anywhere near sufficient to greatly affect the solvency of the program, even if they all (as they would) drew the maximum benefit. In my opinion, this would be fair to everyone concerned.

2. Broaden the categories of income subject to SS Taxes to include forms of income typically received by the rich. This would, again, aid in program solvency.

3. Get rid of Early Retirement on everyone not currently drawing it. Migrate the 'normal' retirement age over time to be equal to 'full' retirement age. On my age group, Early Retirement is at 62.5 years. Normal retirement age is 67 years, and 'full' retirement age (the age at which you can no longer put it off and receive higher benefits) is 70 years old. Then, adjust it upwards to be more in line with increased life expectancy of today. Let us say somewhere between 72 and 75 would be a nice compromise. One retirement age, for everyone, and having it a bit higher than current law would DEFINITELY reduce program outlays and therefore increase program solvency.

4. Get rid of exemptions from participating in the Social Security system for people such as Government employees, railroad workers, and others... If everyone is paying into the system, from the President of the USA on down is paying into the system, this can only aid the program solvency.

And finally:

5. Realize that Social Security was NEVER meant to be one's sole source of retirement income, but only a supplement. The US Government needs to do what it can to encourage voluntary (again as FDR said) contributions to a retirement system to increase one's total retirement income. Perhaps extend the current IRA/401k systems to be even more favorable in hopes of convincing people to save more for themselves. It is time that the People in the USA took more personal responsibility for themselves and their future.

Also Note: Social Security is not the BIG DOG of fiscal trouble. Medicare is, and it is in even worse shape.

@MK, Thanks for this history lesson, but it doesn't fix the problem of what we have.

Gary,
The most ideal, fiscally speaking, solution would be to go to what FDR proposed in his statement to Congress in Jan. 1935 that I quoted a part of earlier in the thread. Privatization, and getting Government out of it.

However, most here would not countenance that, so in the interest of continued friendly discussion without devolving into an insult-festival, let us assume that the program will remain a Government one.

Administration will always be their function.

What I would do in this case? Here is a list:

1. Maintain the cap on yearly benefits, but remove the cap on income subject to the SS Tax. In exchange for this, remove the possibility of means-testing reception of the benefits. The income of the super-rich is enough to greatly help the program regain solvency, but the number of the super-rich is not anywhere near sufficient to greatly affect the solvency of the program, even if they all (as they would) drew the maximum benefit. In my opinion, this would be fair to everyone concerned.

Means testing is Angela's idea. As to the income cap, yes, more than a drop in the bucket, but not likely more than a few tablespoons. Hardly enough to make up for the fire hose draining the trust fund.

2. Broaden the categories of income subject to SS Taxes to include forms of income typically received by the rich. This would, again, aid in program solvency.

Might have a revolution by the middle class as their savings efforts are decimated due to the low limits on IRA contributions.

3. Get rid of Early Retirement on everyone not currently drawing it. Migrate the 'normal' retirement age over time to be equal to 'full' retirement age. On my age group, Early Retirement is at 62.5 years. Normal retirement age is 67 years, and 'full' retirement age (the age at which you can no longer put it off and receive higher benefits) is 70 years old. Then, adjust it upwards to be more in line with increased life expectancy of today. Let us say somewhere between 72 and 75 would be a nice compromise. One retirement age, for everyone, and having it a bit higher than current law would DEFINITELY reduce program outlays and therefore increase program solvency.

Work everyone until death. That would be just like before there was social security. It will work, but I'm not sure the populace will put up with it any more than the Greek people are.

4. Get rid of exemptions from participating in the Social Security system for people such as Government employees, railroad workers, and others... If everyone is paying into the system, from the President of the USA on down is paying into the system, this can only aid the program solvency.

As to RR workers, it is likely a zero sum game.
As to government workers, what a wonderful idea. Make them have all the same issues that their subjects do. Long term it should increase cash flow, but short term it likely will decrease it.

And finally:

5. Realize that Social Security was NEVER meant to be one's sole source of retirement income, but only a supplement. The US Government needs to do what it can to encourage voluntary (again as FDR said) contributions to a retirement system to increase one's total retirement income. Perhaps extend the current IRA/401k systems to be even more favorable in hopes of convincing people to save more for themselves. It is time that the People in the USA took more personal responsibility for themselves and their future.

Yes, it was a supplement. Your family of ten kids was supposed to help you. Ten kids stopped. (Also part of the reason SS is broke!) Many companies had traditional pension plans and if you worked there 20 years you had another source or income. That stopped. Took many more years after that before the government created the IRA. Seriously, $2000 a year? The maximum on SS tax today is $7347. And SS is a supplement, the IRA was supposed to be primary?! Today at least the $2000 is higher, but $5500 is still less than the SS cap! The government still assumes your employer is saving for your future, but today that is a false assumption.

Oh, as to those limit caps on SS, they also have limit caps on IRA's. I'll let you figure out what that means to high income people and possible means testing.

Major, I notice you did not mention raising the contribution rate from 12.4%. Obviously that will add solvency to the system. Unfortunately all the other things you mention taken together, to the extent I think there is political will to accomplish them, I don't feel will be enough to get solvency, I don't think we have any choice but to raise the rate at some point. The sooner it happens the less it will have to go up.

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5. Extend current IRA/401K systems to be even more favorable? It's more likely the government will seize private IRA/401K systems.

http://www.infowars.com/government-lays-groundwork-to-confiscate-your-401k-and-ira-this-is-happening/

I think you need a better source for that
http://thesurvivalpodcast.com/forum/index.php?topic=16683.0

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5. Realize that Social Security was NEVER meant to be one's sole source of retirement income, but only a supplement. The US Government needs to do what it can to encourage voluntary (again as FDR said) contributions to a retirement system to increase one's total retirement income. Perhaps extend the current IRA/401k systems to be even more favorable in hopes of convincing people to save more for themselves. It is time that the People in the USA took more personal responsibility for themselves and their future.

Thats rather difficult for a lot of people. I mean, if all your money goes into a house, cost of living and then putting your kids through college (the American dream), well its difficult to save any money for your retirement. If you want to retire easy, best to not have any kids.

Major, I notice you did not mention raising the contribution rate from 12.4%. Obviously that will add solvency to the system. Unfortunately all the other things you mention taken together, to the extent I think there is political will to accomplish them, I don't feel will be enough to get solvency, I don't think we have any choice but to raise the rate at some point. The sooner it happens the less it will have to go up.

I did not feel it necessary to mention tax increases due to it being virtually a given that that will have to happen.

As far as 'political will', There isn't the political will to do ANYTHING about it AT ALL. This entire discussion is purely theoretical. What we have here is a case of the Government over-promising things, well and totally BEYOND the ability of the nation to actually pay for it (just like Greece).

Just the magnitude of the problem is staggering. Over the next 75 years, using projections complying with Generally Accepted Accounting Principles (the accounting standards Businesses have to comply with, but not the Government) Social Security and Medicare are underfunded to the tune of about US$41,660,000,000,000.00! Yes, that is forty-one Trillion, six hundred-sixty Billion United States Dollars. The Social Security/Medicare system is SO BROKEN, if it was a horse it would have been taken out and shot long ago. That is an average per-year of US$555,500,000,000 of ADDITIONAL taxes needing to be collected just to make the two programs solvent. That is about an extra US$1850.00 per year for every man, woman, and child in the USA...

Social Security and Medicare, in 2013 (the most recent year the data is currently available for), received about US$947,000,000,000 in dedicated taxes. So, to cover the unfunded liabilities of social security and medicare, the US Government is going to need to raise the tax rates for social security and medicare by about 58.7% of their current value.

To put it another way, there are 3 'trust funds' involved here. The old-age and survivors trust fund (OASI), the disability trust fund (DI), and the medicare trust fund (HI).

DI will be depleted in 2016 (yes, NEXT year).
HI will be depleted in 2030 (15 years from now).
OASI will be depleted in 2034 (19 years from now).

These dates are per the current Trustee's report from the Social Security Administration itself. Good reading, I recommend everyone read it.

http://www.ssa.gov/oact/trsum/

A sane method of 'saving' these programs is going to have to contain sufficient amounts of both revenue enhancements and spending cuts. The Republicans are going to protest the revenue enhancements and the Democrats are going to protest the spending cuts. Unless something drastically changes in US Politics, there will not be enough political will to do anything before at least the HI trust fund is totally depleted.

Once the trust funds are totally depleted, either the benefits will be reduced to the amount supported by the dedicated tax income at that time (projected to be about a 20% cut in the disability program, and about a 50% cut in the old-age/survivors program and the medicare program), OR (more likely) the difference will have to be made up out of general revenue at the cost of either substantial program cuts elsewhere in the Federal Government or huge tax increases, or even more likely a combination of the two.

'Social Security' has been the third rail of US politics for a LONG time (as in touch it and it is political suicide). Contrary to what many believe, the most powerful lobbying organization in the USA isn't the NRA, but instead it is the AARP. Retired persons tend to be an active involved group in US Politics, and if they (as a group) even suspect that a politician is thinking about proposing cuts to social security, they have a conniption fit jihad on them.

No, the political will is not there to do anything meaningful about Social Security now, nor will it be there until the program totally falls apart sometime in the next couple of decades.

Major, I notice you did not mention raising the contribution rate from 12.4%. Obviously that will add solvency to the system. Unfortunately all the other things you mention taken together, to the extent I think there is political will to accomplish them, I don't feel will be enough to get solvency, I don't think we have any choice but to raise the rate at some point. The sooner it happens the less it will have to go up.

I did not feel it necessary to mention tax increases due to it being virtually a given that that will have to happen.

As far as 'political will', There isn't the political will to do ANYTHING about it AT ALL. This entire discussion is purely theoretical. What we have here is a case of the Government over-promising things, well and totally BEYOND the ability of the nation to actually pay for it (just like Greece).

Just the magnitude of the problem is staggering. Over the next 75 years, using projections complying with Generally Accepted Accounting Principles (the accounting standards Businesses have to comply with, but not the Government) Social Security and Medicare are underfunded to the tune of about US$41,660,000,000,000.00! Yes, that is forty-one Trillion, six hundred-sixty Billion United States Dollars. The Social Security/Medicare system is SO BROKEN, if it was a horse it would have been taken out and shot long ago. That is an average per-year of US$555,500,000,000 of ADDITIONAL taxes needing to be collected just to make the two programs solvent. That is about an extra US$1850.00 per year for every man, woman, and child in the USA...

Social Security and Medicare, in 2013 (the most recent year the data is currently available for), received about US$947,000,000,000 in dedicated taxes. So, to cover the unfunded liabilities of social security and medicare, the US Government is going to need to raise the tax rates for social security and medicare by about 58.7% of their current value.

To put it another way, there are 3 'trust funds' involved here. The old-age and survivors trust fund (OASI), the disability trust fund (DI), and the medicare trust fund (HI).

DI will be depleted in 2016 (yes, NEXT year).
HI will be depleted in 2030 (15 years from now).
OASI will be depleted in 2034 (19 years from now).

These dates are per the current Trustee's report from the Social Security Administration itself. Good reading, I recommend everyone read it.

http://www.ssa.gov/oact/trsum/

A sane method of 'saving' these programs is going to have to contain sufficient amounts of both revenue enhancements and spending cuts. The Republicans are going to protest the revenue enhancements and the Democrats are going to protest the spending cuts. Unless something drastically changes in US Politics, there will not be enough political will to do anything before at least the HI trust fund is totally depleted.

Once the trust funds are totally depleted, either the benefits will be reduced to the amount supported by the dedicated tax income at that time (projected to be about a 20% cut in the disability program, and about a 50% cut in the old-age/survivors program and the medicare program), OR (more likely) the difference will have to be made up out of general revenue at the cost of either substantial program cuts elsewhere in the Federal Government or huge tax increases, or even more likely a combination of the two.

'Social Security' has been the third rail of US politics for a LONG time (as in touch it and it is political suicide). Contrary to what many believe, the most powerful lobbying organization in the USA isn't the NRA, but instead it is the AARP. Retired persons tend to be an active involved group in US Politics, and if they (as a group) even suspect that a politician is thinking about proposing cuts to social security, they have a conniption fit jihad on them.

No, the political will is not there to do anything meaningful about Social Security now, nor will it be there until the program totally falls apart sometime in the next couple of decades.

Im a baby boomer. I will be 63 in eleven more days. I have to work untill 66.
Its not my damn fault our goverenment has their heads up their keysters. They knew about this in the 70's. They just shrugged it off to a later generation to fix. That seems to be how it works in the US now, Pass it on to the next SOB who has to fix it.
I paid in to the system since I enterd the work force when still in high school. They promised me I would get this much when I retired in X number of years. They damn well better pay me that amount! Or give me all the money I paid into back to me.
I was lucky that I worked for a cocmpany that had a pension plan. They also had an IRA plan. To bad when they moved to China so the stockholders could get more rich. I had to spend my IRA on COBRA payments.
I now work for a companyn that only offers a IRS. yep I put money in it. But but every thing goes up but my paycheck. And Im better off than most people I know. They have nothing but SS to fall back on.
So I guess the politicians are just hoping that we all work till we drop dead? Problem solved?
Meanwhile the selfserving idiots we elect are immune to the rules we get subjected to.
Sorry for the rant.

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Old James