Should Social Security and Medicare Entitlement Ages Be Raised?

[MandoMan]

[The link below is to “Reclaiming Our Fiscal Future: Fiscal Year 2022 Budget,” produced by the Republican Study Committee of the U.S. House of Representatives and signed by the ten congressmen on the committee. See the chapter on Social Security (p. 98) and also the chapter on Medicare.]

What do you think? Do you agree?

Depending on one’s state, people aged 65 are statistically likely to live between 17 and 21 more years: to between 82 and 86. When Social Security was started, the average life expectancy was around 65, so most people who lived to collect any Social Security at all died within a few years. Because that has changed, Social Security has become increasingly expensive. But you know that.

The current age to receive full Social Security is now 67. The current age to receive Medicare is now 65. The Republican Study Committee recommends that the age for full retirement be raised to 70 over the next 12 years. I don’t know if there would be a change in minimum age up from 62, but I assume that people retiring at 62 would get an even smaller percentage of the full SS retirement benefit. The Republican Study Committee of the U.S. House of Representatives also recommends that the age for receiving Medicare benefits be raised to 67 now and rise along with the age for full SS to 70 in 12 years, in 2034. This responsible set of rule changes, they say, would keep Medicare and Social Security funded.

Again, do you agree? I’m 68, and I retired at 66, which was then the age for full SS. I first used Medicare at 67. Since then I’ve had two major surgeries, and Medicare and my supplemental policy have paid all of it. I’m very grateful. Thank you, all you taxpayers. I have mine! You have yours! Our big concern is to not get less. Maybe we shouldn’t worry about those ten years younger. But I know this: I had employer-provided health care until I retired. Could I have worked as a professor until I was seventy? Cushy job. Maybe. But if I were to retire at 66 and have to pay many thousands a year for COBRA health insurance, I’d really be hurting. Won’t these future retirees feel the same?

Please excuse me, but I’m going to speak here exclusively about European-Americans. (We all know that life expectancy is lower for African-Americans and Hispanics and American Indians, and some people assume that they make up most of the poor.) Among both Republicans and Democrats there are millions and millions and millions of European-Americans who are called Middle Class by politicians, but they aren’t. They are Working Class, and the Working Class includes at the top tradesmen who own their own companies and some people who make cars and drive trains and such who earn more than I ever did. But it also includes millions who are the Working Poor and millions who are poor and unemployed and barely making it, skipping insurance payments, putting off medical care. Most of these people have only a high school diploma or less. Many of them are laborers or work so hard that they are exhausted. (Lots of them are Republicans, reader!) Their hands wear out. Their knees wear out. Their hips wear out. Diabetes and heart disease take their toll. Many of you are 80 and still playing golf and dancing every day. You won the jackpot. But there are many millions who are counting the days to 62 because their bodies are just worn out. They’ll retire and maybe do without health insurance until they are Medicare age. Can they hold out until they are 70? Thousands here in The Villages are getting by on their Social Security checks and worrying how to pay an amenity fee that goes up a few dollars a month. What if their younger siblings have to carry on a few more years and die before 70?

I’d like your thoughts on this, and I’ll give my solution in my next post, below.

https://banks.house.gov/uploadedfiles/budget_fy22_final.pdf

[dewilson58]

:sigh:

[Jayhawk]

[The link below is to “Reclaiming Our Fiscal Future: Fiscal Year 2022 Budget,” produced by the Republican Study Committee of the U.S. House of Representatives and signed by the ten congressmen on the committee. See the chapter on Social Security (p. 98) and also the chapter on Medicare.]

What do you think? Do you agree?

.

https://banks.house.gov/uploadedfiles/budget_fy22_final.pdf


The original Social Security contribution rate was 1% of pay, which was matched by employers. The tax rate grew to 1.5% in 1950 and gradually increased to top 5% by 1978. The current tax rate of 6.2% has been in effect since 1990. However, higher earners don't pay Social Security taxes on all of their income. The Social Security tax applied only to earnings of $3,000 or less in 1950 and earlier. The tax cap has increased over time to $51,300 in 1990 and $147,000 in 2022.

[billethkid]

for those of us who paid into it all of our working lives, do not view it as an entitlement..........I am not word nit picking.....in this day and age, entitlement is very much abused and misused.
IMHO!

__________________________________________

:censored:

[MandoMan]

This year, workers pay 6.2% of their first $147,000 in FICA taxes and their employers match that. If they make more than that, no FICA tax. Self-employed people pay 12.4% in FICA tax. Next year workers will pay FICA tax on the first $160,000 of income, above which there is no FICA tax. As for the Medicare Subsidy, people pay the same percentage no matter how much they earn. But not for Social Security.

I recommend that FICA tax be paid, like the Medicare Subsidy, on ALL income, no matter how much people earn. Perhaps we might spare employers and ask those making more than $160,000 next year to pay all 12.4%. A non-self-employed person next year making $160,000 would pay almost $10,000 in FICA tax. But under my proposal, if that person earned $1 million next year, the person would pay about $110,00. (Top of my head estimate.) Someone making that much can afford it. Be honest. Did you ever earn $160,000 in a single year? I barely earned half that. This wouldn’t hurt me at all. It probably wouldn’t hurt you, either. But think how many millions it would help. This would make raising the age for full retirement and Medicare unnecessary. It would rescue Social Security.

I admit that I invested a lot in mutual funds and did very well—until this year. Millions of us making under $160,000 a year still managed to invest and prosper. I have a couple friends who are billionaires, and I know several dozen who have at least ten million. Nice people! I like spending time with them. But frankly, they are rich. I’m not, and you aren’t either, probably. I don’t care if you are a Republican or a Democrat. But why should we coddle and protect the rich? We are never going to be one of them, though I think many Working Class and Middle Class people secretly believe they will. But they won’t. The document above also recommends cutting even more from the Social Security received by those making more than just Social Security payments.. (I had to pay $10,000 of my Social Security income last year in tax, in addition to what I also paid on other retirement income.) But that definitely won’t solve the problem. It really hurts people like me. I say let those with high salaries pay a fair share on all their income to help those in the bottom 60%. They can afford it, but millions of less prosperous Republicans and Democrats can’t. It is not our duty to do our best to make the rich richer. I’m a Capitalist, and I love my country, salute our flag, and believe in democracy and Wall Street. I like what I have. But we all know that some people have profited far more than most of us, some making millions a year. I pay a lot in taxes, and I’m against raising them, except on those paying far less than a fair share. Do you want tax cuts for yourself? The money has to come from somewhere. The Study Committee suggests taking it from the little guys like our children, the Middle Class and Working Class, even though it really hurts those reaching retirement and Medicare age. We should stand up and say we aren’t going to take it!

[Babubhat]

Lowered . Money is worth less the older you are. Not everyone lives a long life

[MandoMan]

for those of us who paid into it all of our working lives, do not view it as an entitlement..........I am not word nit picking.....in this day and age, entitlement is very much abused and misused.
IMHO!

__________________________________________

:censored:

That’s the word used in the document. In this case it means you are entitled to it BECAUSE you paid into it. Don’t think of it as a dirty word. You are entitled to it, so be careful about letting politicians take it away. I think I paid a total of around $180,000 in Social Security FICA tax over my working years, and so did my employer. So what I paid I’ll get back in six years. What my employer and I paid, I’ll get back in about twelve years. That money was borrowed by the government, I think, as bonds, so it earned interest. Some. Lots of people will die before they get everything back. Some won’t. So it goes.

[manaboutown]

This is NOT a political post. It is a fair, clear-headed, non-partisan look at a proposal that links to the original document so you can check it out. Nothing to do with politics!

The post(s) reveal deep seated envy and resentment in addition to being inherently political.

[retiredguy123]

This year, workers pay 6.2% of their first $147,000 in FICA taxes and their employers match that. If they make more than that, no FICA tax. Self-employed people pay 12.4% in FICA tax. Next year workers will pay FICA tax on the first $160,000 of income, above which there is no FICA tax. As for the Medicare Subsidy, people pay the same percentage no matter how much they earn. But not for Social Security.

I recommend that FICA tax be paid, like the Medicare Subsidy, on ALL income, no matter how much people earn. Perhaps we might spare employers and ask those making more than $160,000 next year to pay all 12.4%. A non-self-employed person next year making $160,000 would pay almost $10,000 in FICA tax. But under my proposal, if that person earned $1 million next year, the person would pay about $110,00. (Top of my head estimate.) Someone making that much can afford it. Be honest. Did you ever earn $160,000 in a single year? I barely earned half that. This wouldn’t hurt me at all. It probably wouldn’t hurt you, either. But think how many millions it would help. This would make raising the age for full retirement and Medicare unnecessary. It would rescue Social Security.

I admit that I invested a lot in mutual funds and did very well—until this year. Millions of us making under $160,000 a year still managed to invest and prosper. I have a couple friends who are billionaires, and I know several dozen who have at least ten million. Nice people! I like spending time with them. But frankly, they are rich. I’m not, and you aren’t either, probably. I don’t care if you are a Republican or a Democrat. But why should we coddle and protect the rich? We are never going to be one of them, though I think many Working Class and Middle Class people secretly believe they will. But they won’t. The document above also recommends cutting even more from the Social Security received by those making more than Just Social Security payments.. (I had to pay $10,000 of my Social Security income last year in tax, in addition to what I also paid on other retirement income.) But that definitely won’t solve the problem. It really hurts people like me. I say let those with high salaries pay a fair share on all their income to help those in the bottom 60%. They can afford it, but millions of less prosperous Republicans and Democrats can’t. It is not our duty to do our best to make the rich richer. I’m a Capitalist, and I love my country, salute our flag, and believe in democracy and Wall Street. I like what I have. But we all know that some people have profited far more than most of us, some making millions a year. I pay a lot in taxes, and I’m against raising them, except on those paying far less than a fair share. Do you want tax cuts for yourself? The money has to come from somewhere. The Study Committee proses taking it from the little guys like our children, the Middle Class and Working Class, even though it really hurts those reaching retirement and Medicare age. We should stand up and say we aren’t going to take it!
Here is the math for a high income self-employed worker:
$160,000 × 12.4 percent x 35 working years = $694,400 in FICA taxes paid

SS income at full retirement age of 67:
$3,345/month x 12 = $40,140 minus income tax at 35 percent = $26,091 net income per year

Breakeven point:
$694,400 ÷ $26,091 = 26.6 years at age 94.

I think it is already a bad deal.

[rustyp]

SS would be whole if it could collect what is due from all those system scammers with their pay me under the table deals. To add insult to injury they then complain why do I get the max and they don't.

[Toymeister]

Before there is any talk of raising the SS age let's deal with the elephant in the room: tax all earnings not just the earnings up to $137,700. Simple, effective and is clearly a tax. No sugarcoating, a tax. A fine for being successful. Taxes are ugly but that is what SS is.

[retiredguy123]

for those of us who paid into it all of our working lives, do not view it as an entitlement..........I am not word nit picking.....in this day and age, entitlement is very much abused and misused.
IMHO!

__________________________________________

:censored:
Social Security is a cleverly designed system to make low income people believe that they are funding their own retirement because they pay FICA taxes. So, they don't want to call it an entitlement. But, as the math calculation in Post No. 11 demonstrates, high income workers are actually funding the retirement income of low income workers, and receiving almost no benefit themselves. And, if you increase the FICA tax even further on the high income workers, the discrepancy will become even more skewed. But, yes, it is just a fine for being successful.

[OrangeBlossomBaby]

The original Social Security contribution rate was 1% of pay, which was matched by employers. The tax rate grew to 1.5% in 1950 and gradually increased to top 5% by 1978. The current tax rate of 6.2% has been in effect since 1990. However, higher earners don't pay Social Security taxes on all of their income. The Social Security tax applied only to earnings of $3,000 or less in 1950 and earlier. The tax cap has increased over time to $51,300 in 1990 and $147,000 in 2022.

I'd love to see the cap lowered to 5%, but the max income affected raised to $250,000 per person.

Consider also a few things:
1. In some states, state employees don't pay Social Security tax but instead get a pension. they aren't entitled to collect social security payments at all.
2. Immigrants who work, and are not yet full citizens, have to pay social security tax out of their paychecks, but are not permitted to collect social security payments when they retire.
3. Full time students under the age of 23 are exempt from income tax, and only have to kick in social security tax.
4. Many of the wealthier people in this country have so many tax shelters they never pay a dime toward social security - and generally don't collect any either. But they should still pay toward the pool - that's how it's able to sustain itself. If you're earning over a million bucks every YEAR - and can't manage to kick in 5% of the first $250k then you need a new accountant.

[tophcfa]

Well, I paid the maximum amount possible in FICA taxes for over 25 years and will never get back anything close to what I paid into the system. I already got screwed by having the age where I get standard benefits bumped from age 65 to 67 and really don’t want to get screwed anymore, so if they change future benefits hopefully it will only be for young people who haven’t already paid big bucks into the system.

[Babubhat]

Well, I paid the maximum amount possible in FICA taxes for over 25 years and will never get back anything close to what I paid into the system. I already got screwed by having the age where I get standard benefits bumped from age 65 to 67 and really don’t want to get screwed anymore, so if they change future benefits hopefully it will only be for young people who haven’t already paid big bucks into the system.

Why are people not outraged that they are taxed on Social Security? They took it out of your paycheck, gave you no deduction and now double tax you

[Paper1]

There seems to be a real misconception regarding monies paid into SS and Medicare. These are both pay as you go systems meaning the taxes you and employer paid were used to paid benefits to your parents and grandparents. They died much earlier than we are so the extra money collected was spent as part of general fund and the catchy phrase "Trust Fund" was invented giving many and impression they have been paying into this fund for years and want their just due. Your children and grandchildren are funding your medical care and SS checks, your quarrel is with them. There is no Trust Fund so we do need to start a serious discussion and stop whistling through the graveyard.

[manaboutown]

///

[walterray1]

This year, workers pay 6.2% of their first $147,000 in FICA taxes and their employers match that. If they make more than that, no FICA tax. Self-employed people pay 12.4% in FICA tax. Next year workers will pay FICA tax on the first $160,000 of income, above which there is no FICA tax. As for the Medicare Subsidy, people pay the same percentage no matter how much they earn. But not for Social Security.

I recommend that FICA tax be paid, like the Medicare Subsidy, on ALL income, no matter how much people earn. Perhaps we might spare employers and ask those making more than $160,000 next year to pay all 12.4%. A non-self-employed person next year making $160,000 would pay almost $10,000 in FICA tax. But under my proposal, if that person earned $1 million next year, the person would pay about $110,00. (Top of my head estimate.) Someone making that much can afford it. Be honest. Did you ever earn $160,000 in a single year? I barely earned half that. This wouldn’t hurt me at all. It probably wouldn’t hurt you, either. But think how many millions it would help. This would make raising the age for full retirement and Medicare unnecessary. It would rescue Social Security.

I admit that I invested a lot in mutual funds and did very well—until this year. Millions of us making under $160,000 a year still managed to invest and prosper. I have a couple friends who are billionaires, and I know several dozen who have at least ten million. Nice people! I like spending time with them. But frankly, they are rich. I’m not, and you aren’t either, probably. I don’t care if you are a Republican or a Democrat. But why should we coddle and protect the rich? We are never going to be one of them, though I think many Working Class and Middle Class people secretly believe they will. But they won’t. The document above also recommends cutting even more from the Social Security received by those making more than Just Social Security payments.. (I had to pay $10,000 of my Social Security income last year in tax, in addition to what I also paid on other retirement income.) But that definitely won’t solve the problem. It really hurts people like me. I say let those with high salaries pay a fair share on all their income to help those in the bottom 60%. They can afford it, but millions of less prosperous Republicans and Democrats can’t. It is not our duty to do our best to make the rich richer. I’m a Capitalist, and I love my country, salute our flag, and believe in democracy and Wall Street. I like what I have. But we all know that some people have profited far more than most of us, some making millions a year. I pay a lot in taxes, and I’m against raising them, except on those paying far less than a fair share. Do you want tax cuts for yourself? The money has to come from somewhere. The Study Committee proses taking it from the little guys like our children, the Middle Class and Working Class, even though it really hurts those reaching retirement and Medicare age. We should stand up and say we aren’t going to take it!

know a couple of billionaires and several over $10 million. La di da. Is this post political?

[tuccillo]

...

[JGibson]

Your not taxed on Social Security if your income is under a certain amount a year.

Funny they're doing studies on this while they just found a loophole in Medicaid that will pay for housing and various other non medical things.

This country is going to go bankrupt eventually anyway, I'll probably be dead by then. I feel bad for the younger generation who are being priced out of ever owning a home or getting ahead in life. The can kick the can only so far.

[tuccillo]

Not exactly. I believe it is of value to be precise about this. The Trust Fund does exist. It's value is just shy of $3T. It represents the amount of SS tax collected in excess of the benefits paid plus interest. It is essentially an IOU from Treasury to the SSA. Pragmatically, it represents future debt that Treasury must take on to repay the IOU, which is starting now and will be done in about 12 years assuming Congress does nothing.


There seems to be a real misconception regarding monies paid into SS and Medicare. These are both pay as you go systems meaning the taxes you and employer paid were used to paid benefits to your parents and grandparents. They died much earlier than we are so the extra money collected was spent as part of general fund and the catchy phrase "Trust Fund" was invented giving many and impression they have been paying into this fund for years and want their just due. Your children and grandchildren are funding your medical care and SS checks, your quarrel is with them. There is no Trust Fund so we do need to start a serious discussion and stop whistling through the graveyard.

[Laker14]

Here is the math for a high income self-employed worker:
$160,000 × 12.4 percent x 35 working years = $694,400 in FICA taxes paid

SS income at full retirement age of 67:
$3,345/month x 12 = $40,140 minus income tax at 35 percent = $26,091 net income per year

Breakeven point:
$694,400 ÷ $26,091 = 26.6 years at age 94.

I think it is already a bad deal.

Your math does not include the "time value" of money. Most of that 694K collected by the government could have been invested (or spent) by the worker decades before it was distributed back to the worker, hence it would have either more purchasing power at the time of taxation, or would have grown to a much bigger number were it invested..
However, it was never intended to be a good deal for the more affluent workers. It was intended to be a safety net for the least affluent workers.
And, like all laws, it was designed and conceived by the very most affluent people, and consequently filtered by their sense of fairness, which is why it is not collected evenly throughout the income levels.

[Caymus]

I'd love to see the cap lowered to 5%, but the max income affected raised to $250,000 per person.

Consider also a few things:
1. In some states, state employees don't pay Social Security tax but instead get a pension. they aren't entitled to collect social security payments at all.
2. Immigrants who work, and are not yet full citizens, have to pay social security tax out of their paychecks, but are not permitted to collect social security payments when they retire.
3. Full time students under the age of 23 are exempt from income tax, and only have to kick in social security tax.
4. Many of the wealthier people in this country have so many tax shelters they never pay a dime toward social security - and generally don't collect any either. But they should still pay toward the pool - that's how it's able to sustain itself. If you're earning over a million bucks every YEAR - and can't manage to kick in 5% of the first $250k then you need a new accountant.


I think there was an attempt originally to not have it be a complete welfare system.

[retiredguy123]

Your math does not include the "time value" of money. Most of that 694K collected by the government could have been invested (or spent) by the worker decades before it was distributed back to the worker, hence it would have either more purchasing power at the time of taxation, or would have grown to a much bigger number were it invested..
However, it was never intended to be a good deal for the more affluent workers. It was intended to be a safety net for the least affluent workers.
And, like all laws, it was designed and conceived by the very most affluent people, and consequently filtered by their sense of fairness, which is why it is not collected evenly throughout the income levels.
Correct, but you don't need to include the time value of money to demonstrate that, for high income workers, it makes no sense to participate in a retirement system that really offers them no financial value. They are just being forced to fund other people's retirement, and some people want to raise their FICA taxes even more. Raise taxes if you want, but don't pretend that everyone is participating in the retirement system.

[retiredguy123]

Why are people not outraged that they are taxed on Social Security? They took it out of your paycheck, gave you no deduction and now double tax you
I am. But, I am more outraged that some people pay about $170 per month for the Medicare Part B premium while others pay over $500 because they have a higher income (IRMAA). Both groups receive the exact same product, but one group is charged 3 times as much. It's kind of like paying for groceries at Publix based on how much money you have.

[ffresh]

Your not taxed on Social Security if your income is under a certain amount a year.

Funny they're doing studies on this while they just found a loophole in Medicaid that will pay for housing and various other non medical things.

This country is going to go bankrupt eventually anyway, I'll probably be dead by then. I feel bad for the younger generation who are being priced out of ever owning a home or getting ahead in life. The can kick the can only so far.

To place it into perspective: We now have intransient politicians, whether on the Left or Right, whose overriding objective is reelection, spending other peoples' money, while at the same time, residing far away from the people that they supposedly "represent" ... what could possibly go wrong? :shocked:

Fred

[Priebehouse]

Here is the math for a high income self-employed worker:
$160,000 × 12.4 percent x 35 working years = $694,400 in FICA taxes paid

SS income at full retirement age of 67:
$3,345/month x 12 = $40,140 minus income tax at 35 percent = $26,091 net income per year

Breakeven point:
$694,400 ÷ $26,091 = 26.6 years at age 94.

I think it is already a bad deal.

Wow, if only I made $160K in any 2 years of working! Good points to ponder Mando. However, with less workers in the mix, many only getting 20-30 hours per week and less coming into the "pool", I fear that the SS funds still will not keep pace with the financial draw as more people get on the rolls. :undecided:

[Moderator]

This has derailed into political comments. Thread closed.