Social Security Retirees Could Face $18,000 Cut

[Rainger99]

I hope this will not happen. But if it does, it will create major problems.


Social Security Warning Issued as Retirees Could Face $18,000 Cut - Newsweek (https://www.newsweek.com/social-security-warning-retirees-face-cut-2104926)

[CoachKandSportsguy]

only if nothing changes, and that time frame is way too long for nothing to change. .
just a repeat article when there is nothing else to write about, or someone is on vacation

[JRcorvette]

I hope this will not happen. But if it does, it will create major problems.


Social Security Warning Issued as Retirees Could Face $18,000 Cut - Newsweek (https://www.newsweek.com/social-security-warning-retirees-face-cut-2104926)

They need to let younger people put their money into a secure group of Mutual funds so that it will grow to a nice retirement amount. Anytime the government controls things it will not turn out well. They have raided the SS fund many times and used it for other pet projects. Eventually it will dry up. We have way too many government give away programs as it is right now.

[Rainger99]

only if nothing changes, and that time frame is way too long for nothing to change. .
just a repeat article when there is nothing else to write about, or someone is on vacation

You really think that a seven year time frame is way too long? 2018 was not that long ago.

And what do you think will change? We have to cut benefits, increase taxes, or do both.

[biker1]

Not exactly. SS taxes that had been collected, in excess of what was needed to pay benefits, were put in the general fund and spent to support Government operations. Treasury issued special T-Bills to the SSA for these excess funds. Essentially IOUs that the SSA can collect on in the future. This is the so-called Trust Fund and has a value of about $2T. These special T-Bills are now being cashed in to pay benefits as the current SS taxes are less than benefits paid. Essentially, the Government goes out and borrows money from world markets to pay off these special T-Bills as Government expenditures exceed Government revenue. This obviously continues to be a less than desirable situation. This will continue until about 2033 when the Trust Fund has been exhausted and SS taxes can only fund about 80% of benefits. This situation can and will most likely be fixed before 2033.

They need to let younger people put their money into a secure group of Mutual funds so that it will grow to a nice retirement amount. Anytime the government controls things it will not turn out well. They have raided the SS fund many times and used it for other pet projects. Eventually it will dry up. We have way too many government give away programs as it is right now.

[Caymus]

You really think that a seven year time frame is way too long? 2018 was not that long ago.

And what do you think will change? We have to cut benefits, increase taxes, or do both.

They will probably increase the amount of income subjected to SS taxes and increase the retirement age. Another possibility is means testing of benefits.

[Arlington2]

This has been the doom and gloom scare tactic since at least the 60's. I even bought into it and prepared to be financially independent. They will continue to kick the can down the road. Logical solutions are raising the income limit and raising the retirement age. It has lost the original intent of being a safety net and has become an expected retirement plan.

[manaboutown]

It was a Ponzi scheme from the get go. That is why I initiated taking my check at full retirement age on the button. Also I feared a situation like IRMAA where if one received income over a threshold SS payments would be reduced or even eliminated. What I essentially did was invest my SS checks over the years.

It is time to find and eliminate SS disability fraud, too.

[tophcfa]

This has been the doom and gloom scare tactic since at least the 60's. I even bought into it and prepared to be financially independent. They will continue to kick the can down the road. Logical solutions are raising the income limit and raising the retirement age. It has lost the original intent of being a safety net and has become an expected retirement plan.

Folks born in 1960 have already had their retirement age raised 2 years. Hopefully any future benefit reductions won’t apply to anyone already 65 or older, but I certainly wouldn’t bank on that?

[Stu from NYC]

They need to let younger people put their money into a secure group of Mutual funds so that it will grow to a nice retirement amount. Anytime the government controls things it will not turn out well. They have raided the SS fund many times and used it for other pet projects. Eventually it will dry up. We have way too many government give away programs as it is right now.

They should have let younger folks invest some of their funds in mutual funds years ago but now they cannot do that or they will have even less money for benefits

[Bill14564]

They should have let younger folks invest some of their funds in mutual funds years ago but now they cannot do that or they will have even less money for benefits

They would have had less money now for benefits AND they would be figuring out how to help the younger folks who either didn’t invest or invested poorly.

[biker1]

IRMAA penalties are both good news and bad news. The bad news is you are paying IRMAA penalties. The good news is you are making enough money that you are paying IRMAA penalties.

It was a Ponzi scheme from the get go. That is why I initiated taking my check at full retirement age on the button. Also I feared a situation like IRMAA where if one received income over a threshold SS payments would be reduced or even eliminated. What I essentially did was invest my SS checks over the years.

It is time to find and eliminate SS disability fraud, too.

[manaboutown]

IRMAA penalties are both good news and bad news. The bad news is you are paying IRMAA penalties. The good news is you are making enough money that you are paying IRMAA penalties.

IRMAA is theft, plain and simple. It is like based on my income I have to pay $50 for a $10 hamburger. Same burger, several times the price.

[Bill14564]

IRMAA is theft, plain and simple. It is like based on my income I have to pay $50 for a $10 hamburger. Same burger, several times the price.

Maybe it’s more like based on your income the govt will pay more of your health insurance premium. The less you make the more they pay and the lower your portion. The more you make the less they subsidize and the higher your portion.

The burger has always cost $75, the govt has been picking up a larger share so that you could still afford it.

[manaboutown]

Maybe it’s more like based on your income the govt will pay more of your health insurance premium. The less you make the more they pay and the lower your portion. The more you make the less they subsidize and the higher your portion.

The burger has always cost $75, the govt has been picking up a larger share so that you could still afford it.

Government itself pays for nothing. Taxpayers pay. Only about 60% of the population pays income tax, the rest get a free ride.

[golfing eagles]

IRMAA is theft, plain and simple. It is like based on my income I have to pay $50 for a $10 hamburger. Same burger, several times the price.

Maybe it’s more like based on your income the govt will pay more of your health insurance premium. The less you make the more they pay and the lower your portion. The more you make the less they subsidize and the higher your portion.

The burger has always cost $75, the govt has been picking up a larger share so that you could still afford it.

Actually, it's more like paying $50 for a $10 hamburger so the government can play Robin Hood and give 4 other people who produced nothing a hamburger on your dime.

[justjim]

I hope this will not happen. But if it does, it will create major problems.


Social Security Warning Issued as Retirees Could Face $18,000 Cut - Newsweek (https://www.newsweek.com/social-security-warning-retirees-face-cut-2104926)

Just ain’t going to happen…

[dewilson58]

Cuts for current retirees.................ain't going to happen.

Jus fear mongering.

:)

[rsmurano]

SS has nothing to do with income tax. There should be no income related rules for receiving SS. If you don’t want to work when younger you don’t get any SS when you are older, this isn’t a giveaway plan.
SS was never intended to provide you enough money to live on, you have to take responsibility to provide your own income while in retirement, it’s called savings instead of spending every $ you make while working.
SS requirements cannot be changed for you once you are grandfathered into the plan, I hey can only change things for new enrollments.
The government has made it possible for decades for people to make it easier to save for retirement, it’s called the 401k option. Most people either don’t use this option or fund it poorly. You can take a horse to a water trough but you can’t force it to drink.
I paid the maximum I could into my 401k plan for decades, but I also invested 60% of my income into the stock market while working.
1 more thing, you aren’t going to get rich investing in the high cost low gains funds in these 401k plans. Every time I quit a job; I moved my 401k plans into my own IRA account so I had the freedom to invest all of this money anywhere I wanted, no restrictions.
No congress is going to make any unpopular SS changes so we will probably end up with lower SS benefits in 8 years

[MandoMan]

They need to let younger people put their money into a secure group of Mutual funds so that it will grow to a nice retirement amount. Anytime the government controls things it will not turn out well. They have raided the SS fund many times and used it for other pet projects. Eventually it will dry up. We have way too many government give away programs as it is right now.

Young people and everyone else working should be putting 15% of their income into Index Funds with minimum fees that go up as the market goes up. Yes, FIFTEEN %. This is IN ADDITION to what they pay into Social Security. Then they well probably be able to retire to The Villages someday. Meanwhile, workers and employers should each pay an additional 1% in Social Security taxes. This is such an easy fix, and it should have been done long ago. 1%! (It hasn’t been done because so many legislators don’t count on Social Security to get by when they retire, and they listen to businesses who say that 1% comes out of their profit.

I realize that investing 15% with every paycheck means young people and families may not be able to afford that new SUV or that big house or those restaurant dinners or those fancy vacations or a lot of things. But we’ve all read complaints here from people who live only on the Social Security payments they get. I feel bad for them. But if they had done what I recommend, they wouldn’t be in this situation today. My ex-wife and I scrimped and saved, and now we don’t have to worry. I see young people driving $50,000 to $90,000 trucks and SUVs and buying 3,000 sq ft houses and spending $100,000 on remodeling their kitchens and bathrooms, and I wonder how much they are saving for retirement. And putting it into CDs or savings accounts like my parents did won’t do it. My parents saved for decades but put the money into CDs and savings accounts, so the money they have in the accounts has grown, but always less than the inflation rate. Meanwhile, the money I put into mutual funds has quintupled. (But we still need mandatory social Security contributions.)

[Andyb]

I hope this will not happen. But if it does, it will create major problems.


Social Security Warning Issued as Retirees Could Face $18,000 Cut - Newsweek (https://www.newsweek.com/social-security-warning-retirees-face-cut-2104926)
Well, the kicking the can down, the road has finally reached a dead end. No matter who was/is in office or which party is in control, Social Security is going to be insolvent by 2026. Millions of illegals they gave SS didn’t help. Many years of blame to go around. Major changes have to happen. Spending and corruption in government has to stop.

[Cliff Fr]

only if nothing changes, and that time frame is way too long for nothing to change. .
just a repeat article when there is nothing else to write about, or someone is on vacation

I read the same article. The chart at the end has fine print that says the cut would apply to new retirees not existing ones. I do think that annual income that the SS tax applies too should be raised, it has not been raised in a long time.

[biker1]

No, not 2026. It will be partially insolvent (able to pay 80% of benefits) in 2033.

Well, the kicking the can down, the road has finally reached a dead end. No matter who was/is in office or which party is in control, Social Security is going to be insolvent by 2026. Millions of illegals they gave SS didn’t help. Many years of blame to go around. Major changes have to happen. Spending and corruption in government has to stop.

[biker1]

The annual income that is subject to SS tax gets raised every year (the cap). I suspect you mean that there should be no cap on the income that is subject to SS tax.

I read the same article. The chart at the end has fine print that says the cut would apply to new retirees not existing ones. I do think that annual income that the SS tax applies too should be raised, it has not been raised in a long time.

[MikePgh]

If you subject all earned income to FICA and raise the tax by 1% (50/50 between employer and employee) the program would be solvent for a min of 50 years.
Per a prior SS study.

[Bill14564]

Well, the kicking the can down, the road has finally reached a dead end. No matter who was/is in office or which party is in control, Social Security is going to be insolvent by 2026. Millions of illegals they gave SS didn’t help. Many years of blame to go around. Major changes have to happen. Spending and corruption in government has to stop.

Illegals do not receive SS.

Illegals *pay* SS as employees so fewer illegals -> fewer employees -> less SS tax collected -> sooner the trust fund is depleted

[BrianL99]

On a positive note, today is the 60th anniversary of Medicare & Medicaid.

President Johnson signs Medicare into law | July 30, 1965 | HISTORY (https://www.history.com/this-day-in-history/july-30/johnson-signs-medicare-into-law)


Lyndon Johnson's Great Society initiatives probably did more to shape the daily lives of Americans, than any President in our lifetime.

[biker1]

No, everyone would see a reduction in benefits.

I read the same article. The chart at the end has fine print that says the cut would apply to new retirees not existing ones. I do think that annual income that the SS tax applies too should be raised, it has not been raised in a long time.

[LoisR]

How does a possible 21% shortfall equate to $18k loss? Who is being paid $90k, or so, by SS?
Need to raise SS tax rates to those who earn more than $175k.

[nn0wheremann]

Not exactly. SS taxes that had been collected, in excess of what was needed to pay benefits, were put in the general fund and spent to support Government operations. Treasury issued special T-Bills to the SSA for these excess funds. Essentially IOUs that the SSA can collect on in the future. This is the so-called Trust Fund and has a value of about $2T. These special T-Bills are now being cashed in to pay benefits as the current SS taxes are less than benefits paid. Essentially, the Government goes out and borrows money from world markets to pay off these special T-Bills as Government expenditures exceed Government revenue. This obviously continues to be a less than desirable situation. This will continue until about 2033 when the Trust Fund has been exhausted and SS taxes can only fund about 80% of benefits. This situation can and will most likely be fixed before 2033.
Including FICA “contributions “ in the federal budget was done by President Nixon and Wilbur Mills, Chair of the House Ways and Means Committee back in 1972. This was called “dynamic finance”, and was a way to hide deficit spending until the benefits expended surpassed the revenue collected. All this could have been avoided with a minuscule FICA increase 25 years ago, but now the chickens have come home to roost.

[Ptmcbriz]

Illegals do not receive SS.

Illegals *pay* SS as employees so fewer illegals -> fewer employees -> less SS tax collected -> sooner the trust fund is depleted

You are correct. Only citizens are legally eligible for SS. If any illegals somehow got a hold of SS funds, it’s because they did it through fraudulent acts to get it. The government has never allowed anyone but citizens eligible for SS.

When the time comes, no matter the administration, I don’t think Congress will allow the cut in SS because they know it would be shootings themselves in the foot. The public won’t put up with it. The easiest way to fund it is to remove the high income cap and allow all to fund it. Since many high earners don’t receive “income” but make their money on capital gains, there may need to be a new rule for that. Maybe if you don’t contribute to SS but take capital gains, then you have to pay into SS based on capital gains. This would assure high earners to take a SS taxable salary of high earnings, so their capital gains don’t get taxed.

[biker1]

A couple who both start collecting at age 70 and both hit the maximum FICA tax for 35 years would probably have a combined benefit of about $130K. A 20% cut would be about $26K. For a single earner, the spouse would get a 50% benefit (of the FRA benefit, I believe). This could translate to about an $18K reduction in 2033.

How does a possible 21% shortfall equate to $18k loss? Who is being paid $90k, or so, by SS?
Need to raise SS tax rates to those who earn more than $175k.

[JanetH]

Folks born in 1960 have already had their retirement age raised 2 years. Hopefully any future benefit reductions won’t apply to anyone already 65 or older, but I certainly wouldn’t bank on that?

When was it raised ? Never heard of that

[GATORBILL66]

The retirement age needs to be raised by 5 years in steps over the next ten years to save social security.

[BrianL99]

When was it raised ? Never heard of that

43 years ago.

[biker1]

The SS Act of 1983 gradually raised the Full Retirement Age to 67. For those born in 1960 and later have a FRA of 67.

When was it raised ? Never heard of that

[biker1]

Something along those lines might be part of the solution. There will need to be other steps taken also.

The retirement age needs to be raised by 5 years in steps over the next ten years to save social security.

[Aces4]

Young people and everyone else working should be putting 15% of their income into Index Funds with minimum fees that go up as the market goes up. Yes, FIFTEEN %. This is IN ADDITION to what they pay into Social Security. Then they well probably be able to retire to The Villages someday. Meanwhile, workers and employers should each pay an additional 1% in Social Security taxes. This is such an easy fix, and it should have been done long ago. 1%! (It hasn’t been done because so many legislators don’t count on Social Security to get by when they retire, and they listen to businesses who say that 1% comes out of their profit.

I realize that investing 15% with every paycheck means young people and families may not be able to afford that new SUV or that big house or those restaurant dinners or those fancy vacations or a lot of things. But we’ve all read complaints here from people who live only on the Social Security payments they get. I feel bad for them. But if they had done what I recommend, they wouldn’t be in this situation today. My ex-wife and I scrimped and saved, and now we don’t have to worry. I see young people driving $50,000 to $90,000 trucks and SUVs and buying 3,000 sq ft houses and spending $100,000 on remodeling their kitchens and bathrooms, and I wonder how much they are saving for retirement. And putting it into CDs or savings accounts like my parents did won’t do it. My parents saved for decades but put the money into CDs and savings accounts, so the money they have in the accounts has grown, but always less than the inflation rate. Meanwhile, the money I put into mutual funds has quintupled. (But we still need mandatory social Security contributions.)

So you want people to subscribe to another Ponzi scheme, the stock market, IMHO. The market is way overvalued at this point with prices accelerating so "the market" can keep the ever hungry investors fed. Can you not see how wildly overvalued the market would be with your plan for everyone in the US to invest? This is not an answer. We scrimped and saved too and I agree about the overspenders and not savers. But the ridiculous rates of the stock market are just as bad as the overspenders.

[OrangeBlossomBaby]

Not exactly. SS taxes that had been collected, in excess of what was needed to pay benefits, were put in the general fund and spent to support Government operations. Treasury issued special T-Bills to the SSA for these excess funds. Essentially IOUs that the SSA can collect on in the future. This is the so-called Trust Fund and has a value of about $2T. These special T-Bills are now being cashed in to pay benefits as the current SS taxes are less than benefits paid. Essentially, the Government goes out and borrows money from world markets to pay off these special T-Bills as Government expenditures exceed Government revenue. This obviously continues to be a less than desirable situation. This will continue until about 2033 when the Trust Fund has been exhausted and SS taxes can only fund about 80% of benefits. This situation can and will most likely be fixed before 2033.

If they eliminate the cap, and raise the "early" retirement age to 64 instead of 62, it would hopefully solve the problem without creating hardships for most of the lower/middle/working class, who are the people MOST affected by any changes to Social Security. Even if it doesn't completely solve the problem, it'd help by a whole lot.

[opinionist]

The Social Security "Trust Fund" was raided by Congress to fund the Great Society.
It was added to the national debt, which is growing totally out of control.
Fixing the problem would require Congress to control spending and make unpopular decisions.
There is no hint that Congress would ever do that.

[Bill14564]

No. Benefits could be cut by about 20% in 2033 when the Trust Fund is depleted. However, the chances of this happening are small as Congress will, in all likelihood, address the issue so that benefits aren't cut. The article simply addresses what could happen if no action is taken. This has been well known for quite some time. Must have been a slow news day.

I would like to be optimistic but you point out the reality in your post:

This has been well known for quite some time. Congress could have addressed the issue so no benefits are cut. Yet that hasn’t been done so here we are. They still could make changes but it’s far easier to keep kicking the can while claiming there is no problem.

[OrangeBlossomBaby]

This has been the doom and gloom scare tactic since at least the 60's. I even bought into it and prepared to be financially independent. They will continue to kick the can down the road. Logical solutions are raising the income limit and raising the retirement age. It has lost the original intent of being a safety net and has become an expected retirement plan.

It was designed to be an expected retirement plan. That's why it existed in the first place; because companies didn't provide retirement plans/pensions to sustain employees in their retirement, so the government stepped in and set a small percentage of employee paychecks aside and invested it on their behalf. That was the whole point.

Read here: Access Denied (https://www.ssa.gov/history/briefhistory3.html)

for a pretty detailed history of America's pension/retirement options for the poor and working class people, leading up to the creation of the Social Security Act. Around halfway down you'll see the actual formation details of the Act itself, if you don't want to read all the stuff leading up to it.

[biker1]

How to address the problem has been studied extensively. What we don't need, and almost certainly won't do, is to do something that "helps by a whole lot". We need SS changes that will ensure the viability of the program (obviously based on projections) for a substantial amount of time, say 75 years. Passing any legislation that impacts SS will be painful at best. It needs to be done correctly and not half assed since we don't get many chances. I doubt we will see any changes before 2032.


If they eliminate the cap, and raise the "early" retirement age to 64 instead of 62, it would hopefully solve the problem without creating hardships for most of the lower/middle/working class, who are the people MOST affected by any changes to Social Security. Even if it doesn't completely solve the problem, it'd help by a whole lot.

[OrangeBlossomBaby]

When was it raised ? Never heard of that

In 1983, Congress passed legislation to raise the "Full Retirement Age" (FRA) to 67, for anyone born in 1960 or later. People born in 1955 could still retire with full SS benefits at 66 years and 2 months. The change was intentionally gradual.

[OrangeBlossomBaby]

How to address the problem has been studied extensively. What we don't need, and almost certainly won't do, is to do something that "helps by a whole lot". We need SS changes that will ensure the viability of the program (obviously based on projections) for a substantial amount of time, say 75 years. Passing any legislation that impacts SS will be painful at best. It needs to be done correctly and not half assed since we don't get many chances. I doubt we will see any changes before 2032.

In order to implement changes in 2032, the legislation has to be passed now(ish). And it has to give working people time to prepare for those changes, so as to minimize that "pain" of the change.

My point is - there are lots of ways to keep the program going. There is no singular "fix" that will fix everything. Increasing the early retirement age is one possible step. So is eliminating the cap for payroll deductions. Increasing the percentage taken from payroll an additional 1%, with half of the percentage paid by the employer and the other half paid by the employee, is another possible step. Reducing the max age for increases from 70 to 69 is another possible step. Raising the FRA to 66 is another possible step.

A singular change will need to be much more drastic, to have the intended result. But small changes to all these different aspects will be less "painful" and have a greater overall impact to the result.

[midiwiz]

You really think that a seven year time frame is way too long? 2018 was not that long ago.

And what do you think will change? We have to cut benefits, increase taxes, or do both.

that's a very miopic view of the situation. Both of those will not work, it's been tried before and failed to fix anything. you have FAR too much faith in congress. Currently there is nothing wrong, and maybe since things have recently passed that will keep certain congressional parties/people's hands out of the till the fund will do what it was supposed to do WITHOUT intervention.

[justjim]

In order to implement changes in 2032, the legislation has to be passed now(ish). And it has to give working people time to prepare for those changes, so as to minimize that "pain" of the change.

My point is - there are lots of ways to keep the program going. There is no singular "fix" that will fix everything. Increasing the early retirement age is one possible step. So is eliminating the cap for payroll deductions. Increasing the percentage taken from payroll an additional 1%, with half of the percentage paid by the employer and the other half paid by the employee, is another possible step. Reducing the max age for increases from 70 to 69 is another possible step. Raising the FRA to 66 is another possible step.

A singular change will need to be much more drastic, to have the intended result. But small changes to all these different aspects will be less "painful" and have a greater overall impact to the result.

Amen!

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[GWilliams]

I hope this will not happen. But if it does, it will create major problems.


Social Security Warning Issued as Retirees Could Face $18,000 Cut - Newsweek (https://www.newsweek.com/social-security-warning-retirees-face-cut-2104926)

The USA is 32 trillion in debt after collecting taxes. Who wants to spend more?

[jimbomaybe]

So you want people to subscribe to another Ponzi scheme, the stock market, IMHO. The market is way overvalued at this point with prices accelerating so "the market" can keep the ever hungry investors fed. Can you not see how wildly overvalued the market would be with your plan for everyone in the US to invest? This is not an answer. We scrimped and saved too and I agree about the overspenders and not savers. But the ridiculous rates of the stock market are just as bad as the overspenders.
The average rate of return from the markets over their long history is about 7.5- 8%, compound that and you have a good return, certainly better that your return from SS

[Bill14564]

The average rate of return from the markets over their long history is about 7.5- 8%, compound that and you have a good return, certainly better that your return from SS

I’d like to see the numbers on that.

Markets have down years, SS does not.

Drawing down funds from my marketplace accounts means I could eventually hit $0, SS never hits $0.

[OrangeBlossomBaby]

The average rate of return from the markets over their long history is about 7.5- 8%, compound that and you have a good return, certainly better that your return from SS

Not sure what numbers you're looking at, but here's mine (rounded):

Between my payroll deduction and employer contribution, I've paid in just under $60,000 in social security taxes.

I'm getting $40 more per month in social security payments than I did when I started getting them, just 1.5 years ago. I anticipate around $20 more per month for 2026. Regardless:

At the current total of my social security checks, I will have received 100% of what I put in, and what my employer put in, by the 7th year of collecting social security checks. I won't even be 70 years old yet, at that point, because I started getting them when I was 62.

This means that all the checks I receive after I turn 70, will be "in addition" to what I/my employer paid in. If I live to be 90, that'll mean 100% of what I get post 70-years-old will be "profit." I dunno - seems like a pretty good deal to me. Get a 100% return on your initial investment in 7 years after the start of the payout, and then keep getting steady monthly checks for the next 20 (or more) years.

[Caymus]

Not sure what numbers you're looking at, but here's mine (rounded):

Between my payroll deduction and employer contribution, I've paid in just under $60,000 in social security taxes.

I'm getting $40 more per month in social security payments than I did when I started getting them, just 1.5 years ago. I anticipate around $20 more per month for 2026. Regardless:

At the current total of my social security checks, I will have received 100% of what I put in, and what my employer put in, by the 7th year of collecting social security checks. I won't even be 70 years old yet, at that point, because I started getting them when I was 62.

This means that all the checks I receive after I turn 70, will be "in addition" to what I/my employer paid in. If I live to be 90, that'll mean 100% of what I get post 70-years-old will be "profit." I dunno - seems like a pretty good deal to me. Get a 100% return on your initial investment in 7 years after the start of the payout, and then keep getting steady monthly checks for the next 20 (or more) years.

Not true for everybody. It is a progressive system for benefits. Lower lifetime incomes have higher % payouts.

[manaboutown]

Not sure what numbers you're looking at, but here's mine (rounded):

Between my payroll deduction and employer contribution, I've paid in just under $60,000 in social security taxes.

I'm getting $40 more per month in social security payments than I did when I started getting them, just 1.5 years ago. I anticipate around $20 more per month for 2026. Regardless:

At the current total of my social security checks, I will have received 100% of what I put in, and what my employer put in, by the 7th year of collecting social security checks. I won't even be 70 years old yet, at that point, because I started getting them when I was 62.

This means that all the checks I receive after I turn 70, will be "in addition" to what I/my employer paid in. If I live to be 90, that'll mean 100% of what I get post 70-years-old will be "profit." I dunno - seems like a pretty good deal to me. Get a 100% return on your initial investment in 7 years after the start of the payout, and then keep getting steady monthly checks for the next 20 (or more) years.

This narrative totally ignores the time value of money and the interest, dividends and capital gains one can obtain over the years. It is similar to pitches I used to hear from whole life insurance salesmen 50 years ago.

[Aces4]

The average rate of return from the markets over their long history is about 7.5- 8%, compound that and you have a good return, certainly better that your return from SS

And one big blip in the market and all that money is gone in an instant. Nothing like everyone sitting at the craps table for retirement benefits.

[tophcfa]

This narrative totally ignores the time value of money and the interest, dividends and capital gains one can obtain over the years. It is similar to pitches I used to hear from whole life insurance salesmen 50 years ago.

Beat me to it, any analysis that ignores that is completely irrelevant.

[Bill14564]

This narrative totally ignores the time value of money and the interest, dividends and capital gains one can obtain over the years. It is similar to pitches I used to hear from whole life insurance salesmen 50 years ago.

Beat me to it, any analysis that ignores that is completely irrelevant.

It would be interesting to see what would have happened if my SS contributions had been invested in the market over the years.

Simple math says that if I live at least as long as my father I will get a 500% return on the money I paid into SS. More complex math says that number is low due to SS payouts increasing with inflation.

I’m pretty happy with the guaranteed income rather than the market risk.

[OrangeBlossomBaby]

This narrative totally ignores the time value of money and the interest, dividends and capital gains one can obtain over the years. It is similar to pitches I used to hear from whole life insurance salesmen 50 years ago.

Zero, zero, and zero. When you have an incredibly low income, you can't afford the fees associated with financial planning. Plus, because the yearly payout is so low, there's zero tax on it (this was before this year's bill). When you can only afford to put $4 every week aside, you're not going to be convincing a financial planner to help you invest it - unless he's also a financial scammer. I was glad that Social Security took just $2/week from my paycheck, and made my employer pay the other $2/week and now I reap the rewards.

[ElDiabloJoe]

Actually, it's more like paying $50 for a $10 hamburger so the government can play Robin Hood and give 4 other people who produced nothing a hamburger on your dime.
This is exactly how I feel about taxes. I pay enough tax to pay for part of a first responder, yet instead of doing that the government gives warm breakfasts to illegal students and their parents (even on weekends!), then blesses them with free cell phones and airtime plans also. I don't get so much as a thank you, instead I get glares of entitlement telling me to shut up and give more.

[SoCalGal]

Treasury issued special T-Bills to the SSA for these excess funds. [...] These special T-Bills are now being cashed in to pay benefits as the current SS taxes are less than benefits paid. Essentially, the Government goes out and borrows money from world markets to pay off these special T-Bills as Government expenditures exceed Government revenue.

The U.S. Treasury doesn't issue T-Bills (Treasury bills) to the Social Security Administration (SSA). Instead, it issues special-issue Treasury securities, which are not marketable (they can't be sold on the open market). These are special bonds, not typical T-Bills (which are short-term securities typically maturing in a year or less). These special securities earn interest and represent the Social Security Trust Fund surplus. Once issued, the government can't redeem them early (i.e., can't “call” them before maturity, like callable corporate bonds). While they're not callable by the Treasury, the SSA can redeem them on demand to pay Social Security benefits. Think of it like an intragovernmental IOU: the Trust Fund has the right to cash in the bonds whenever it needs to — and the Treasury must come up with the money (via taxes or borrowing). Social Security’s holdings are a special case, and that’s why they can be “cashed in” before maturity to cover benefit payments.

[Shish]

The 1st problem is that there are a lot of people that are "working under the table, not paying into the system."
Supposedly, there is a lot of undetected fraud that needs to be cleaned up.

What DOGE Did About Social Security Records
According to the site:

The Social Security Administration (SSA) began a major cleanup of its records in early 2025.

Over 12.3 million individuals listed as age 120+ were marked as deceased.

The cleanup targeted legacy errors where people were incorrectly listed as alive, including some who were receiving benefits.

Complex cases — like individuals with multiple birthdates on file — are still under investigation.

💡 Why This Matters
These ghost entries have long plagued SSA’s databases, contributing to improper payments and fraud.

The DOGE-led initiative is part of a broader push to modernize federal systems and improve data integrity.

ccording to DOGE.gov:

The Department of Government Efficiency has flagged SSA’s legacy systems as a top priority for modernization.

Plans include transitioning records to cloud-based infrastructure and deploying automated verification tools to fix anomalies like:

People listed as alive who were born before 1905 👀

Multiple birthdates or missing citizenship fields

Incomplete work histories due to inconsistent employer reporting

💸 Why It Matters
These outdated systems lead to improper payments, fraud vulnerabilities, and inaccuracies that impact millions.

SSA has struggled with cost overruns and coordination across data centers in trying to upgrade — past efforts fizzled due to complexity and funding gaps.

[jimhoward]

Not sure what numbers you're looking at, but here's mine (rounded):

Between my payroll deduction and employer contribution, I've paid in just under $60,000 in social security taxes.

I'm getting $40 more per month in social security payments than I did when I started getting them, just 1.5 years ago. I anticipate around $20 more per month for 2026. Regardless:

At the current total of my social security checks, I will have received 100% of what I put in, and what my employer put in, by the 7th year of collecting social security checks. I won't even be 70 years old yet, at that point, because I started getting them when I was 62.

This means that all the checks I receive after I turn 70, will be "in addition" to what I/my employer paid in. If I live to be 90, that'll mean 100% of what I get post 70-years-old will be "profit." I dunno - seems like a pretty good deal to me. Get a 100% return on your initial investment in 7 years after the start of the payout, and then keep getting steady monthly checks for the next 20 (or more) years.

As others have pointed out its not true for everybody. For me the numbers are $342K (my contribution plus employer) plus another $325K for Medicare. There is no earnings limit on medicare, so taxes can get high on that part of it if you make good money. My payback is longer.

But I think your point is still a good one. Also, many people overestimate how much they contributed to SSI even though the numbers are right on the SSi website.

[Pugchief]

How about instead of raising the retirement age (broken promise) we take all the federal pension benefits that allow workers to retire at 55 (not 67 like the rest of us) and put that into the SS Trust Fund. Then give Fed workers the same benefits that those in the private sector receive via SS.

Yeah, that's gonna go over really well.

[eyc234]

Not hard to find the information. Just type in average Social Security rate of return on investment and then average return on investment in stock market. SS over last 55 years returns 1.23% to 1.7%. For the stock market it is approximately 10%. In 2005 President George W Bush attempted to allow a portion of SS to be invested in private accounts. The outcry by retired Americans was so massive that it was stopped. We did not count on getting SS for our retirement but sure would have loved to invested a portion in the stock market as we would have a loooooot more money now. Could have retired better off and sooner than 50.

[jimbomaybe]

I’d like to see the numbers on that.

Markets have down years, SS does not.

Drawing down funds from my marketplace accounts means I could eventually hit $0, SS never hits $0.

https://carry.com/learn/average-stock-market-returns

[biker1]

Really? You want to argue semantics? Ok, fine, I said "special T-Bills" and you said "special-issue Treasury securities". Otherwise you repeated everything I said.

The U.S. Treasury doesn't issue T-Bills (Treasury bills) to the Social Security Administration (SSA). Instead, it issues special-issue Treasury securities, which are not marketable (they can't be sold on the open market). These are special bonds, not typical T-Bills (which are short-term securities typically maturing in a year or less). These special securities earn interest and represent the Social Security Trust Fund surplus. Once issued, the government can't redeem them early (i.e., can't “call” them before maturity, like callable corporate bonds). While they're not callable by the Treasury, the SSA can redeem them on demand to pay Social Security benefits. Think of it like an intragovernmental IOU: the Trust Fund has the right to cash in the bonds whenever it needs to — and the Treasury must come up with the money (via taxes or borrowing). Social Security’s holdings are a special case, and that’s why they can be “cashed in” before maturity to cover benefit payments.

[eyc234]

How about instead of raising the retirement age (broken promise) we take all the federal pension benefits that allow workers to retire at 55 (not 67 like the rest of us) and put that into the SS Trust Fund. Then give Fed workers the same benefits that those in the private sector receive via SS.

Yeah, that's gonna go over really well.

Never understand why fed, state, fire and police get to get retirement at 55 and regular working people cannot touch 401k until 59 1/2 and for non-government it is money they put in not a pension.

[Bill14564]

Not hard to find the information. Just type in average Social Security rate of return on investment and then average return on investment in stock market. SS over last 55 years returns 1.23% to 1.7%. For the stock market it is approximately 10%. In 2005 President George W Bush attempted to allow a portion of SS to be invested in private accounts. The outcry by retired Americans was so massive that it was stopped. We did not count on getting SS for our retirement but sure would have loved to invested a portion in the stock market as we would have a loooooot more money now. Could have retired better off and sooner than 50.

https://carry.com/learn/average-stock-market-returns

My money in SS returned 0% as far as I can tell EXCEPT, I will receive an increasing amount every year until I pass regardless of how much I actually contributed.

On the market side, the amount of money I have in SS the longest is tiny compared to what I contributed the last few years. During that time it has taken at least three big losses. It recovered from each of those but the losses have to be considered as well and could happen again.

The amount that I would be able to withdraw from a market account would also be affected by future market returns affecting a likely decreasing balance. Figure poorly and I would be talking to a reverse mortgage salesman or knocking on my kid’s doors (if I had any children)

[Packer Fan]

Folks born in 1960 have already had their retirement age raised 2 years. Hopefully any future benefit reductions won’t apply to anyone already 65 or older, but I certainly wouldn’t bank on that?

I would bank on it. You people, seriously? Old people like us vote. Any politician that cuts benefits will be unemployed after the next election, any of them. Period. They will fix it sooner or later, but I would be willing to bet a large sum of money the "cuts" will be increasing the retirement age for people in their 30s right now, a small increase in the taxes, increasing the income "cap" on SS taxes for high earners, etc. It will not involve cutting benefits to current or soon to be retirees. If you believe this, I have some beautiful farmland in Arizona to sell you, right on the ocean. Seriously people.

[biker1]

A couple of years ago I put together a quick spreadsheet to figure out the future value of my SS contributions (both mine and my employer's). I assumed 7.5% return each year. I should have used an actual stock market index return - maybe I'll go back and do that. Regardless, the future value turned out to be approximately 5x what was put in. Assuming a withdrawal rate of 5%, it would provide me about 30% more than my SS benefit.

My money in SS returned 0% as far as I can tell EXCEPT, I will receive an increasing amount every year until I pass regardless of how much I actually contributed.

On the market side, the amount of money I have in SS the longest is tiny compared to what I contributed the last few years. During that time it has taken at least three big losses. It recovered from each of those but the losses have to be considered as well and could happen again.

The amount that I would be able to withdraw from a market account would also be affected by future market returns affecting a likely decreasing balance. Figure poorly and I would be talking to a reverse mortgage salesman or knocking on my kid’s doors (if I had any children)

[Bill14564]

A couple of years ago I put together a quick spreadsheet to figure out the future value of my SS contributions (both mine and my employer's). I assumed 7.5% return each year. I should have used an actual stock market index return - maybe I'll go back and do that. Regardless, the future value turned out to be approximately 5x what was put in. Assuming a withdrawal rate of 5%, it would provide me about 30% more than my SS benefit.

I just did mine roughly and at 8% and came up with 4x what was put in. I’ll work on it later with actual market returns. (By way of comparison, I expect to receive over 5x of what I contributed)

I’ll also try the 5% withdrawal to see how many years the money lasts but that will be even more dependent on future returns.

[Nevinator]

This should come as no surprise to anyone. Each administration since 1992 has kicked this can down the road and done nothing to prolong the longevity of this program. A good number of financial service companies have given many good presentations on how to fix this, such as doing away with the maximum SS tax limit, raising the retirement age and raising the percentage of withholding from 6.2% (each for employers and employees) to 7.5%. The fact is that people are living longer for the most part and there are fewer workers supporting those retiring and collecting their benefits.

Information presented below is from the 2001 Annual Report of the board of Trustees of the Federal Old-Age and Survivors Insurance Trust Funds and NCPA calculations:

In 2000, Social Security provided survivors benefits for 38.5 million people and disability for 6.6 million. Meanwhile, 152.9 million workers contributed to the program.

Social Security is a pay-as-you-go program, which means the government writes checks to today's beneficiaries using payroll taxes collected from today's workers.

When Social Security began in 1935, the payroll tax on workers' salaries to support the program was 1% on the first 3,000 of income. Today, Social Security is financed by a 12.4 percent payroll tax - half by the employee and half by the employer - on the first $176,100 in 2025.

Social Security is in Trouble

The number of Social Security beneficiaries is growing faster than the number of workers paying taxes to support them - the number of elderly between now and 2050 will increase 100% while the number of will workers will only increase by 22%.
People are living longer and collecting more Social Security benefit checks. In 1940, life expectancy was 61.4 for men and 65.7 for women. By 2000, life expectancy was 73.8 for men and 79.5 for women; by 2050, life expectancy will be 79 for men and 83.3 for women.

People are having fewer children. For each generation to be the same size and the one before (the replacement rate), women must have 2.1 children. In 1940, the fertility rate was 2.23. Today, the rate is 2.07 and by 2050 it is expected to trend downward to 1.95.

The result has been dramatic. In 1940, there were 42 workers per retiree. Today the ratio is 3-to-1; by 2050 it will be 2-to-1. The burden on each individual worker will increase substantially and we will no longer be able to keep out promises to retirees at current payroll tax levels.

By 2016 Social Security will spend more in benefits than it collects in taxes. By 2040 the program will have spent all the assets credited to the trust fund - taxes will have to rise by half or benefits cut by a third.

Bottom line, the program IS in trouble, but it’s just circling the drain at this point. It’s still fixable, but Congress needs to institute several measures to fix this before it’s too late.

[Nevinator]

This narrative totally ignores the time value of money and the interest, dividends and capital gains one can obtain over the years. It is similar to pitches I used to hear from whole life insurance salesmen 50 years ago.

You’re absolutely correct, and I totally agree with you, however, we tend to neglect the fact that there are millions of people who are collecting social security and have no other source of income whatsoever. Whether it be unfortunate life circumstances, bad planning, or no planning at all, some people need a lot of handholding; some mechanism to squirrel some money away so they will have some means to support themselves in old age, no matter how meager.

[OrangeBlossomBaby]

I would bank on it. You people, seriously? Old people like us vote. Any politician that cuts benefits will be unemployed after the next election, any of them. Period. They will fix it sooner or later, but I would be willing to bet a large sum of money the "cuts" will be increasing the retirement age for people in their 30s right now, a small increase in the taxes, increasing the income "cap" on SS taxes for high earners, etc. It will not involve cutting benefits to current or soon to be retirees. If you believe this, I have some beautiful farmland in Arizona to sell you, right on the ocean. Seriously people.

The change occurred in 1985. That means people born in 1960 were only 25 years old, when they learned they'd need to be 62 to receive "early retirement" SS benefits. That also means they had 33 years to prepare for it.

If the government does that with the current batch of 25-year-olds, then THEIR change won't become effective for another 30-something years or so, giving them plenty of time to prepare for it.

[Blueblaze]

The solution is ridiculously simple, and there will eventually no other option -- start making the wealthy help pay off the debt owed to current retirees. SS is the only government program that the wealthy are excluded from by statute. The moment you hit "wealthy" (about $110K/year, last I checked), you quit having to pay for this boondoggle.

If folks like Elon and Zuck had to pay the same 15% of their lifetime earnings that we did, SS would run a surplus to the end of time. In fact, Zuck alone could cover the SS deficit for the next hundred years by himself, and still be a billionaire 100X over.

If we were a smart country, we would just calculate the amount needed to payoff the current retirees and reimburse the kids. Then we'd divide it up, tax EVERYONE to cover it, and just end the damned thing. With EVERYONE paying, it would be a trivial tax, compared to FICA. In its place, we would set up a privately-funded retirement program, and force everyone to INVEST the same 15% we had confiscated for a Ponzi scheme. Our kids would retire with an actual asset worth millions, instead of just a stupid promise that's forfeited the moment you die.

The only downside would be that the gooberment wouldn't have a slush fund to borrow from, like they have for the last 100 years. But now that they've just about blown through it, anyway, maybe we can finally convince our corrupt politicians to finally give Americans a real retirement system instead of a Ponzi scheme.

Of course, it only works if we retirees don't set our hair on fire the moment we see an ad with somebody pushing granny off a cliff.

[Bill14564]

The solution is ridiculously simple, and there will eventually no other option -- start making the wealthy help pay off the debt owed to current retirees. SS is the only government program that the wealthy are excluded from by statute. The moment you hit "wealthy" (about $110K/year, last I checked), you quit having to pay for this boondoggle.

If folks like Elon and Zuck had to pay the same 15% of their lifetime earnings that we did, SS would run a surplus to the end of time. In fact, Zuck alone could cover the SS deficit for the next hundred years by himself, and still be a billionaire 100X over.

If we were a smart country, we would just calculate the amount needed to payoff the current retirees and reimburse the kids. Then we'd divide it up, tax EVERYONE to cover it, and just end the damned thing. With EVERYONE paying, it would be a trivial tax, compared to FICA. In its place, we would set up a privately-funded retirement program, and force everyone to INVEST the same 15% we had confiscated for a Ponzi scheme. Our kids would retire with an actual asset worth millions, instead of just a stupid promise that's forfeited the moment you die.

The only downside would be that the gooberment wouldn't have a slush fund to borrow from, like they have for the last 100 years. But now that they've just about blown through it, anyway, maybe we can finally convince our corrupt politicians to finally give Americans a real retirement system instead of a Ponzi scheme.

Of course, it only works if we retirees don't set our hair on fire the moment we see an ad with somebody pushing granny off a cliff.

A whole lot of words to explain that you don’t understand how the program works.

See some of the responses above:
- SS taxes during our working years do not cover what we will be paid in retirement
- investing the same amount in the market *might* earn enough to break even if there are no bad years
- SS payouts are capped just as taxable income is capped. If you want to tax more income then be prepared to pay more in benefits, then see the first item above
- The market is a similar “Ponzi” scheme as SS. Without new players to buy your shares your stock is worthless (see memecoins for an example)

SS is suffering from a lower worker to retiree ratio, longer lifespans, and now the new “no tax on SS” scam. The first is fixed by increasing taxes, the second by increasing the retirement age, and the third by ending the games.

[biker1]

The SS cap is actually at $176,100, not $110K. The SS tax is actually 6.2% to the employee and 6.2% to the employer, plus Medicare is 1.45% to the employee and 1.45% to the employer (no cap on Medicare). If you are self-employed it is 15.3% total as you pay it all. The Social Security Trust Fund is over $2T and that will be totally consumed (funding the deficit) in the next 8 years. Zuckerberg doesn't have several trillion dollars. The rest of the stuff in your post, whatever ...

The solution is ridiculously simple, and there will eventually no other option -- start making the wealthy help pay off the debt owed to current retirees. SS is the only government program that the wealthy are excluded from by statute. The moment you hit "wealthy" (about $110K/year, last I checked), you quit having to pay for this boondoggle.

If folks like Elon and Zuck had to pay the same 15% of their lifetime earnings that we did, SS would run a surplus to the end of time. In fact, Zuck alone could cover the SS deficit for the next hundred years by himself, and still be a billionaire 100X over.

If we were a smart country, we would just calculate the amount needed to payoff the current retirees and reimburse the kids. Then we'd divide it up, tax EVERYONE to cover it, and just end the damned thing. With EVERYONE paying, it would be a trivial tax, compared to FICA. In its place, we would set up a privately-funded retirement program, and force everyone to INVEST the same 15% we had confiscated for a Ponzi scheme. Our kids would retire with an actual asset worth millions, instead of just a stupid promise that's forfeited the moment you die.

The only downside would be that the gooberment wouldn't have a slush fund to borrow from, like they have for the last 100 years. But now that they've just about blown through it, anyway, maybe we can finally convince our corrupt politicians to finally give Americans a real retirement system instead of a Ponzi scheme.

Of course, it only works if we retirees don't set our hair on fire the moment we see an ad with somebody pushing granny off a cliff.

[BrianL99]

The solution is ridiculously simple, and there will eventually no other option -- start making the wealthy help pay off the debt owed to current retirees. SS is the only government program that the wealthy are excluded from by statute. The moment you hit "wealthy" (about $110K/year, last I checked), you quit having to pay for this boondoggle.

.

$110,000/year is "wealthy" ? In what universe is that?

& the number where you stop paying for Social Security, is $176,100/year.

[Bill14564]

$110,000/year is "wealthy" ? In what universe is that?

& the number where you stop paying for Social Security, is $176,100/year.

He did say that was the value the last time he checked. Perhaps before commenting he should have come up to speed on the changes since 2012.

[PilotAlan]

The market has never gone to zero, or anything close to it. If it ever did, every form of retirement would be gone (including Social Security), because the government and country are bankrupt. Yes, a recession can hurt you, but you're ignoring the decades of good rates of return before and after.

The rate of return on the Dow Jones has provided the best rate of return over any 40 year period for any investment anywhere, ever. Including the 40 years with the Great Depression in the middle of it.

Even a relatively low income worker, if that 16% of their income was invested in market-tracking mutual funds, would be a multi millionaire by their 60s.

And one big blip in the market and all that money is gone in an instant. Nothing like everyone sitting at the craps table for retirement benefits.

[Rainger99]

Even a relatively low income worker, if that 16% of their income was invested in market-tracking mutual funds, would be a multi millionaire by their 60s.

If you allowed workers to invest 16% for 40-45 years, how do you fund social security during that 40-45 years?

Currently, What you pay into the system does not go into an account for your retirement.

Instead, the money we paid was used for Social Security payments for people that were retired at the time - our parents, aunts, and uncles. That reduced the burden of having to support our parents and pay for their medical treatment.

Our benefits are paid for by younger workers.

[jayteadunn]

Create more jobs, pay more people, collect more social security taxes. Work requirements for healthy able bodied people receiving assistance benefits pre-retirement will also create more social security taxes. Remember for every dollar someone earns in America up to $176,100 earns the government 6.2 cents from the employee and 6.2 cents from the employer totaling 12.4 cents. Self employed people pay the whole 12.4 cents per dollar themselves. That is a lot of money.

[Cliff Fr]

The retirement age needs to be raised by 5 years in steps over the next ten years to save social security.

Would you have the age increase apply to workers doing manual labor?

[Bill14564]

The market has never gone to zero, or anything close to it. If it ever did, every form of retirement would be gone (including Social Security), because the government and country are bankrupt. Yes, a recession can hurt you, but you're ignoring the decades of good rates of return before and after.

The rate of return on the Dow Jones has provided the best rate of return over any 40 year period for any investment anywhere, ever. Including the 40 years with the Great Depression in the middle of it.

Even a relatively low income worker, if that 16% of their income was invested in market-tracking mutual funds, would be a multi millionaire by their 60s.

Only 15.3% and that was only recently.

The amount of income taxed is capped. Cap was $110,000 in 2012 and $176,000 this year.

An individual who retired with an above average salary would have achieved just under $1M, not multi-millions.

[jimhoward]

If a percent of workers salary and an employer match are to be invested in the stock market and the resulting nest egg earmarked specifically for them, as some have suggested, why have a SSI program at all? Workers could just do that themselves. That is what a 401k does.

Despite complaints from those who have done the math and figured out they would have done better investing on their own, social security remains one of the most successful and popular government programs in history.

[MollyJo]

They need to let younger people put their money into a secure group of Mutual funds so that it will grow to a nice retirement amount. Anytime the government controls things it will not turn out well. They have raided the SS fund many times and used it for other pet projects. Eventually it will dry up. We have way too many government give away programs as it is right now.
The SS fund has NEVER been raided for ‘Pet Projects’ Our SS checks are paid by current workers, and any shortage comes from the SS Trust Fund created decades ago in anticipation of shortages due to less children born. The Trust Fund will run out approximately 2033-2034 unless Congress votes to Smash The Cap, currently $176,100 for higher earners. All administrations have done nothing to assure SS remains intact for the future. Politicians want to give SS to Wall Street to invest in stocks=disaster
Call your elected officials to demand they support SS by keeping employees available to help recipients when calling or visiting SS offices.
I found Dr Ed Weir on Utube, he ran the 3rd busiest SS office in the country until he retired. Now, Dr Weir does Utube podcasts daily to help all of us with the latest changes & answers questions WE call or write in. He debunks all the myths. He has his own web page that people can search
mygovexpert.com
He has also partnered with a company I can’t recall at the moment, that will assist you with choosing the best Medicare plan suited to your needs(any state) all for free. Listen to Dr Ed Weir’s Utube videos & you can learn of his vast knowledge on all SS claims & Medicare partnership. It’s all free.

[biker1]

Not exactly. The Trust Fund is the manifestation of the collection of SS taxes in excess of benefits paid. Ideally, the SS tax would be adjusted annually to exactly match benefits paid. By collecting excess SS tax and funneling that money into the general fund (where it was spent paying Government bills) and then issuing IOUs to the SSA for those funds, all they guaranteed was that money would need to be borrowed from global markets to pay benefits when (in the future, which is actually now) they exceed SS taxes collected (pay back the IOUs). Raising the cap on earnings that are subject to SS tax will, by itself, not fix the problem. It will only delay the date when the Trust Fund is exhausted (all IOUs have been paid back by borrowing money from global markets) and benefits are reduced since there is no law to allow SS to pay benefits in excess of what they collect via SS taxes or cashing in of Trust Fund IOUs. Other actions need to be taken.

The SS fund has NEVER been raided for ‘Pet Projects’ Our SS checks are paid by current workers, and any shortage comes from the SS Trust Fund created decades ago in anticipation of shortages due to less children born. The Trust Fund will run out approximately 2033-2034 unless Congress votes to Smash The Cap, currently $176,100 for higher earners. All administrations have done nothing to assure SS remains intact for the future. Politicians want to give SS to Wall Street to invest in stocks=disaster
Call your elected officials to demand they support SS by keeping employees available to help recipients when calling or visiting SS offices.
I found Dr Ed Weir on Utube, he ran the 3rd busiest SS office in the country until he retired. Now, Dr Weir does Utube podcasts daily to help all of us with the latest changes & answers questions WE call or write in. He debunks all the myths. He has his own web page that people can search
mygovexpert.com
He has also partnered with a company I can’t recall at the moment, that will assist you with choosing the best Medicare plan suited to your needs(any state) all for free. Listen to Dr Ed Weir’s Utube videos & you can learn of his vast knowledge on all SS claims & Medicare partnership. It’s all free.

[Caymus]

The SS fund has NEVER been raided for ‘Pet Projects’ Our SS checks are paid by current workers, and any shortage comes from the SS Trust Fund created decades ago in anticipation of shortages due to less children born. The Trust Fund will run out approximately 2033-2034 unless Congress votes to Smash The Cap, currently $176,100 for higher earners. All administrations have done nothing to assure SS remains intact for the future. Politicians want to give SS to Wall Street to invest in stocks=disaster
Call your elected officials to demand they support SS by keeping employees available to help recipients when calling or visiting SS offices.
I found Dr Ed Weir on Utube, he ran the 3rd busiest SS office in the country until he retired. Now, Dr Weir does Utube podcasts daily to help all of us with the latest changes & answers questions WE call or write in. He debunks all the myths. He has his own web page that people can search
mygovexpert.com
He has also partnered with a company I can’t recall at the moment, that will assist you with choosing the best Medicare plan suited to your needs(any state) all for free. Listen to Dr Ed Weir’s Utube videos & you can learn of his vast knowledge on all SS claims & Medicare partnership. It’s all free.

The fund has been raided. There is no Lock-Box.

[Rainger99]

$110,000/year is "wealthy" ? In what universe is that?


The average income in the USA is about $60,000 to $65,000. To a person making the average income, $110,000 looks wealthy.

[Blueblaze]

The SS cap is actually at $176,100, not $110K. The SS tax is actually 6.2% to the employee and 6.2% to the employer, plus Medicare is 1.45% to the employee and 1.45% to the employer (no cap on Medicare). If you are self-employed it is 15.3% total as you pay it all. The Social Security Trust Fund is over $2T and that will be totally consumed (funding the deficit) in the next 8 years. Zuckerberg doesn't have several trillion dollars. The rest of the stuff in your post, whatever ...

OK, I can pick nits, too.

I already said that I hadn't recently checked the cap. OK, it's now $176K. So, what? What does that have to do with my point THAT THE RICH DON'T PAY? By the gooberment's own definition, you aren't rich until you hit that cap.

Yes, the employer picks up half of the 15% -- which they, of course, simply deduct from your wages. It's still 15% or your life that you could have used to save for your own retirement (and pass on to your kids!) THAT THE RICH DON'T PAY.

The entire point you ignored with your childish "whatever" response, is that SS is a literal broken Ponzi scheme that can easily be fixed without hurting anyone. We simply need to open our minds and eyes to the fact that, whatever you want to call it, it's a government debt which we have let the rich off the hook from paying for the past 100 years.

[jimbomaybe]

A couple of years ago I put together a quick spreadsheet to figure out the future value of my SS contributions (both mine and my employer's). I assumed 7.5% return each year. I should have used an actual stock market index return - maybe I'll go back and do that. Regardless, the future value turned out to be approximately 5x what was put in. Assuming a withdrawal rate of 5%, it would provide me about 30% more than my SS benefit.
The numbers don't lie, the markets represent the hard work , creativity of the business system that is forever working to be more efficient, profit = productivity, productivity makes your standard of living . yes there are ups and downs in the markets and as you get closer to retirement you reallocate to a more conservative stance , the common sense , pragmatic idea of investing is lost on many so your government set up a welfare program , SS that pays out more than just retirement benefits, no thinking ' no discipline, just spend your money on all the shiny objects you see, your future taken care of by someone else, your government , setting up a system that is not sustainable , that's ok it will be a problem for somebody else . If you think SS was going to be your sole retirement income you were looking at a very meager standard of living , but then you were not looking too deep

[Rainger99]

An individual who retired with an above average salary would have achieved just under $1M, not multi-millions.

I asked AI to use the average income (about $66,000) and to invest it for 43 years (age 22 to 65) at various rates of return.

According to AI, investing 15% of the average income annually at a 7% return for 43 years could grow to approximately $2.81 million.

A more conservative return (e.g., 6%) would yield around $2.2 million, while a higher return (e.g., 10%) could push it toward $4.5 million.

If the worker made $33,000 a year, a 7% return for 43 years could grow to approximately $1.39 million.

A more conservative return (e.g., 6%) would yield around $1.09 million, while a higher return (e.g., 10%) could reach about $2.23 million.

[Rainger99]

If a percent of workers salary and an employer match are to be invested in the stock market and the resulting nest egg earmarked specifically for them, as some have suggested, why have a SSI program at all? Workers could just do that themselves. That is what a 401k does.

Despite complaints from those who have done the math and figured out they would have done better investing on their own, social security remains one of the most successful and popular government programs in history.

The good thing about a 401(k) is that if a single person dies at 62, the money goes to his heirs.

If a single person dies at 62, social security stops. If he dies before 62, he doesn’t get a penny of social security.

[Blueblaze]

If a percent of workers salary and an employer match are to be invested in the stock market and the resulting nest egg earmarked specifically for them, as some have suggested, why have a SSI program at all? Workers could just do that themselves. That is what a 401k does.

Despite complaints from those who have done the math and figured out they would have done better investing on their own, social security remains one of the most successful and popular government programs in history.

Why have a forced retirement system at all? Because most people are idiots who will not save for their old age, and then the rest of us wind up having to bail them out.

SS is "successful" because those same idiots who won't save for the future can't do math and don't realize how much that Ponzi scheme cost them, so SS just looks like "free stuff" -- to an idiot.

I'm not saying we shouldn't force people to save for their old age. I'm not even saying they have to learn high finance and self-direct their investments. I'm just saying we ought to invest the money in real assets and not just some stupid Ponzi promise that only works when old people die quickly.

And I'm saying that the solution to paying off all of us previous victims is to make the wealthy chip in at some rational fraction of that 15% of our lives that this stupid scam has already cost us normal folks.

[Bill14564]

I asked AI to use the average income (about $66,000) and to invest it for 43 years (age 22 to 65) at various rates of return.

According to AI, investing 15% of the average income annually at a 7% return for 43 years could grow to approximately $2.81 million.

A more conservative return (e.g., 6%) would yield around $2.2 million, while a higher return (e.g., 10%) could push it toward $4.5 million.

If the worker made $33,000 a year, a 7% return for 43 years could grow to approximately $1.39 million.

A more conservative return (e.g., 6%) would yield around $1.09 million, while a higher return (e.g., 10%) could reach about $2.23 million.

So you know many 17 year olds who make even $33,000?

Looking forward you are putting a lot of trust into AI and the markets to assume 10% every year for the next 40 years to achieve the first multi million.

And if you are right, if the 17 year old starts at $33,000, and if the market increases by 10% for every year from now until 2058 then he will have $2M in the account with the buying power of $700,000. Not bad, but hardly a large nest egg.

[SoCalGal]

In 1983, Congress passed legislation to raise the "Full Retirement Age" (FRA) to 67, for anyone born in 1960 or later. People born in 1955 could still retire with full SS benefits at 66 years and 2 months. The change was intentionally gradual.

Thank you for spelling out the acronyms you used. Undefined acronyms have taken over public discourse and it's annoying.

[Rainger99]

So you know many 17 year olds who make even $33,000?


I used 22 instead of 17 to allow for people to graduate college or trade school or to get a few years experience.

The average projected starting salary in the U.S. for the class of 2025 at the bachelor’s degree level is $68,680!

For those people, who don't want to go to college, the minimum wage in Florida goes up to $14 an hour in September. That is $29,120 a year for a high school drop out. I assume that most 17-20 year old people will start at $14 an hour and hopefully get raises as they gain experience in their job.

[jimhoward]

I asked AI to use the average income (about $66,000) and to invest it for 43 years (age 22 to 65) at various rates of return.

According to AI, investing 15% of the average income annually at a 7% return for 43 years could grow to approximately $2.81 million.

A more conservative return (e.g., 6%) would yield around $2.2 million, while a higher return (e.g., 10%) could push it toward $4.5 million.

If the worker made $33,000 a year, a 7% return for 43 years could grow to approximately $1.39 million.

A more conservative return (e.g., 6%) would yield around $1.09 million, while a higher return (e.g., 10%) could reach about $2.23 million.

Shouldn’t you use the average income from 43 years ago?

If this is a going forward analysis you must consider that things double every 10 years or so. One million 43 years from now is worth about $60K is today’s dollars.


edit: I take that back.....with our lower inflation of late we are doubling every 20 years rather than 10, so a million 43 years from now is more like $250K today.

[PilotAlan]

There's a few things that people need to understand:

1 - There IS NO SS TRUST FUND. Current workers' taxes pay current retirees. Income in excess of benefits was "loaned" to the government and SPENT decades ago. Yes, SS holds Treasury bonds for those amounts, but that means nothing.
It's essentially like borrowing the money from your 401(k), spending it all, and saying "I'm set for requirement, my 401k has a million dollars in loans due to it!"

2 - You have NO RIGHT to SS benefits. The Supreme Court ruled long ago and multiple times that Congress can change the terms if SS at any time, or eliminate it entirely, and they don't owe you a penny.

3 - If someone averaged $50,000 a year for 45 years, and invested the money that Social Security would take, they would have over $2 MILLION DOLLARS after 45 years (20yo-65yo).
That's over $100,000 a year in retirement with essentially no chance of running out of money. Plus leaving substantial assets for a surviving spouse, or children.
Purchasing an annuity with that $2m would generate a guaranteed lifetime income of approximately $150,000.

[Blueblaze]

The SS cap is actually at $176,100, not $110K. The SS tax is actually 6.2% to the employee and 6.2% to the employer, plus Medicare is 1.45% to the employee and 1.45% to the employer (no cap on Medicare). If you are self-employed it is 15.3% total as you pay it all. The Social Security Trust Fund is over $2T and that will be totally consumed (funding the deficit) in the next 8 years. Zuckerberg doesn't have several trillion dollars. The rest of the stuff in your post, whatever ...

By they way, I didn't say Zuck could pay for SS himself. I said he could pay the $100 billion total DEFICIT that is expected over the next hundred years.

Look it up.

[Bill14564]

There's a few things that people need to understand:

1 - There IS NO SS TRUST FUND. Current workers' taxes pay current retirees. Income in excess of benefits was "loaned" to the government and SPENT decades ago. Yes, SS holds Treasury bonds for those amounts, but that means nothing.
It's essentially like borrowing the money from your 401(k), spending it all, and saying "I'm set for requirement, my 401k has a million dollars in loans due to it!"

2 - You have NO RIGHT to SS benefits. The Supreme Court ruled long ago and multiple times that Congress can change the terms if SS at any time, or eliminate it entirely, and they don't owe you a penny.

3 - If someone averaged $50,000 a year for 45 years, and invested the money that Social Security would take, they would have over $2 MILLION DOLLARS after 45 years (20yo-65yo).
That's over $100,000 a year in retirement with essentially no chance of running out of money. Plus leaving substantial assets for a surviving spouse, or children.
Purchasing an annuity with that $2m would generate a guaranteed lifetime income of approximately $150,000.

1. The collection of loans owed to the SS Trust Fund are backed by the USG. I believe SS can (and does) call on part of those loans every year to make up the difference between what is collected and what is paid out. They will exhaust those markers in about eight years if nothing changes.

3. The average salary does not matter, the actual salary does. Working with the average salary will skew the compound interest from the earliest years. Working with the actual salary will show slow growth early and faster growth later but less than the growth seen when using the average. I'm tired of doing math for this thread.

[Rainger99]

By they way, I didn't say Zuck could pay for SS himself. I said he could pay the $100 billion total DEFICIT that is expected over the next hundred years.

Look it up.

Not sure what you mean by $100 billion total deficit that is expected over the next 100 years. If the problem were only $100 billion, it wouldn’t be a problem. We have given Ukraine about $180 billion in the past few years.

The estimated Social Security deficit over the next 100 years, in present-value terms, is approximately $28.7–$30.7 trillion.

[biker1]

Wrong, the SS deficit (benefits minus incoming SS tax) is over $2T for just the next 7 years or so. I don't know where you got $100B from but that is just nonsense.


By they way, I didn't say Zuck could pay for SS himself. I said he could pay the $100 billion total DEFICIT that is expected over the next hundred years.

Look it up.

[jimbomaybe]

OK, I can pick nits, too.

I already said that I hadn't recently checked the cap. OK, it's now $176K. So, what? What does that have to do with my point THAT THE RICH DON'T PAY? By the gooberment's own definition, you aren't rich until you hit that cap.

Yes, the employer picks up half of the 15% -- which they, of course, simply deduct from your wages. It's still 15% or your life that you could have used to save for your own retirement (and pass on to your kids!) THAT THE RICH DON'T PAY.

The entire point you ignored with your childish "whatever" response, is that SS is a literal broken Ponzi scheme that can easily be fixed without hurting anyone. We simply need to open our minds and eyes to the fact that, whatever you want to call it, it's a government debt which we have let the rich off the hook from paying for the past 100 years.

"which they, of course, simply deduct from your wages." wrong headed , that adds to their business expenses, just take what you feel you need from the "rich" no one but the rich should have any skin in the game

[OrangeBlossomBaby]

I asked AI to use the average income (about $66,000) and to invest it for 43 years (age 22 to 65) at various rates of return.

According to AI, investing 15% of the average income annually at a 7% return for 43 years could grow to approximately $2.81 million.

A more conservative return (e.g., 6%) would yield around $2.2 million, while a higher return (e.g., 10%) could push it toward $4.5 million.

If the worker made $33,000 a year, a 7% return for 43 years could grow to approximately $1.39 million.

A more conservative return (e.g., 6%) would yield around $1.09 million, while a higher return (e.g., 10%) could reach about $2.23 million.

When you remove 7% from the "average income" then the net income becomes lower than average.

Meanwhile, MY average income from the time I was 16 until my retirement in 2020 was around $20,000/year. When I was 20 years old, $20k/year was a pretty decent living, the cost of living was low, I could rent a studio apartment on Beacon Hill in Boston for only $400/month including heat and hot water. That same studio was most recently rented for $2100/month. So no, $20,000 wouldn't work to cover the cost of living today. But it absolutely did in the early 1980's.

Eventually I discovered I wasn't cut out for full time work. I'm not disabled, since if I was disabled, I wouldn't be able to work at all. But I am autistic and have ADD, and working a normal full-time job has never been in the cards for me. It took me years to realize this. I worked sometimes 3 jobs every week, averaging more than 40 hours a week, but had to pay for my health insurance out of pocket, because all of the jobs were part-time jobs that didn't come with any benefits at all. I was actually the highest paid and most-assigned Kelly Girl for 7 years, getting my pick of temp jobs because I was so good with typing and data entry. I just couldn't deal with 8 hours a day, 5 days a week, at the same office for more than a few months before I'd burn out.

Everyone here is so quick to judge - to say "oh just work harder" or "oh just save better" or "oh get a better job" but that only works if you're ABLE to do all those things. When you're only earning part-time wages, and have to pay the bills, and are not CAPABLE of doing more, then it's pretty hurtful to constantly hear that you're not doing it right, or doing enough.

If you're capable of work, you're not allowed to be "disabled." Even if the work you're capable of doing is short-term, or part-time, or low-wage. You can work? Great. You can't get disability benefits. You can't work a long-term full time job or have a long-term career? Sucks to be you. That's how this system operates.

[PilotAlan]

3. The average salary does not matter, the actual salary does. Working with the average salary will skew the compound interest from the earliest years.

Times have changed. In many states, minimum wage is somewhere near or north $20/hr. McDonalds pays over $20/hr in Colorado.
A college graduate with a decent degree (not Interpretive Dance Theory) starts well north of $50k.
It's not hard to make $50k nowadays.

[RUCdaze]

GOOD EXAMPLE OF FAKE NEWS.
This is why people don't trust mainstream media.

[biker1]

It was not fake news. They did, however, present a worst case scenario; two retired people drawing the SS maximum - this is representative of a small percentage of the population. The also presented some lower benefit level examples. It is old news. It is also a situation that has a low probability of happening.

GOOD EXAMPLE OF FAKE NEWS.
This is why people don't trust mainstream media.

[jimhoward]

If the SS trust fund invested in assets other than USG securities the economics get very complex. If you changed the law to allow the SS trust fund to buy stocks and If you then inject 2.6 trillion into the stock market then prices will rise and the trust fund will pay dearly for the stocks. The future returns on stocks would then be lower than would otherwise be the case. At the same time the USG would still need to borrow that 2.6 trillion because the deficit doesn't get any smaller just because the trust fund doesn't fund it. Those hated government programs still happen. So it would go into the market and auction 2.6 trillion of T-bills. That would cause interest rates to rise. We would then owe the Chinese (or whoever else buys the T-bills) $2.6T instead of the SS trust fund.

So what would be the end result? I have no idea, but I know it is complicated.

[OrangeBlossomBaby]

I used 22 instead of 17 to allow for people to graduate college or trade school or to get a few years experience.

The average projected starting salary in the U.S. for the class of 2025 at the bachelor’s degree level is $68,680!

For those people, who don't want to go to college, the minimum wage in Florida goes up to $14 an hour in September. That is $29,120 a year for a high school drop out. I assume that most 17-20 year old people will start at $14 an hour and hopefully get raises as they gain experience in their job.

Most 17-20-year-olds who drop out of high school, won't get a full time job with benefits with no experience, and no GED. If they're lucky they'll find a part-time 20-hour-a-week job with no paid sick time and no health insurance.

[Rainger99]

Most 17-20-year-olds who drop out of high school, won't get a full time job with benefits with no experience, and no GED. If they're lucky they'll find a part-time 20-hour-a-week job with no paid sick time and no health insurance.

87% of students graduate high school within 4 years.

COE - High School Graduation Rates (https://nces.ed.gov/programs/coe/indicator/coi/high-school-graduation-rates)

A significant number go on to college or trade school.

We are talking averages here.

If you focus on the small minority that don’t graduate high school, I agree that their earnings may be below average in the above example.

However, if 87% graduate high school and most of them go on to higher education, then the vast majority of those people will probably have average earnings and if allowed to invest in the market, they will probably have a significant amount of money when they retire.

[OrangeBlossomBaby]

87% of students graduate high school within 4 years.

COE - High School Graduation Rates (https://nces.ed.gov/programs/coe/indicator/coi/high-school-graduation-rates)

A significant number go on to college or trade school.

We are talking averages here.

If you focus on the small minority that don’t graduate high school, I agree that their earnings may be below average in the above example.

However, if 87% graduate high school and most of them go on to higher education, then the vast majority of those people will probably have average earnings and if allowed to invest in the market, they will probably have a significant amount of money when they retire.

You're the one who brought up high school drop-outs earning $29,120 a year. Here's the words you posted, from your post:

For those people, who don't want to go to college, the minimum wage in Florida goes up to $14 an hour in September. That is $29,120 a year for a high school drop out. I assume that most 17-20 year old people will start at $14 an hour and hopefully get raises as they gain experience in their job.

Consider also most 17-year-olds haven't graduated high school yet, even if they plan to graduate. So no, most 17-year-olds won't be getting full time jobs at minimum wage, while they're 17 years old. They'll be busy going to high school, preparing to graduate.

In addition, MOST full time jobs aren't minimum wage jobs. MOST full time jobs pay more than minimum wage, AND come with health insurance, paid time off, and some manner of pension or 401k. MOST 17-20-year-olds are not working those jobs, while they are 17-20-years old.

In addition, $29,120/year doesn't even cover the minimum cost of living for a single individual with no children in Florida. The minimum cost of living for a single individual in Florida with no children is over $50,000/year. In addition, at $29,120/year, a single individual living in Florida would qualify for SNAP benefits (food stamps).

[Rainger99]

Most 17-20-year-olds who drop out of high school, won't get a full time job with benefits with no experience, and no GED. If they're lucky they'll find a part-time 20-hour-a-week job with no paid sick time and no health insurance.

I didn’t bring up 17 year olds. Another poster asked if I knew any 17 year olds making $33,000 a year. I don’t but I pointed out that minimum wage in Florida goes up to $14 an hour in September and a minimum wage job will pay $29,000 a year.

If the 17-20 year old is not working, they will not be making minimum wage - or any wage.

However, if the drop out wants to work, jobs are plentiful. Most fast food restaurants always have help wanted signs up as to big box stores.

A smart, reliable, hardworking dropout with a great worth ethic (show up on time, etc.) can get a minimum wage job.

[PilotAlan]

First, there’s no $2.6 trillion. There’s IOUs for 2.6 trillion.

Second, SSA could begin a phased transition, with new tax receipts invested in the market and the principal and gains used to pay current beneficiaries.

Then, over the next 30 years or so, the ownership of the funds transition to ownership by the worker.
Let’s say 75% of the funds are owned by the worker, and 25% by SSA to cover disabled folks, provide a minimum level of benefits, etc.

Obviously it would be complex, but it’s sustainable forever, the retiree has assets rather than promises, and it builds generational wealth.

If the SS trust fund invested in assets other than USG securities the economics get very complex. If you changed the law to allow the SS trust fund to buy stocks and If you then inject 2.6 trillion into the stock market then prices will rise and the trust fund will pay dearly for the stocks. The future returns on stocks would then be lower than would otherwise be the case. At the same time the USG would still need to borrow that 2.6 trillion because the deficit doesn't get any smaller just because the trust fund doesn't fund it. Those hated government programs still happen. So it would go into the market and auction 2.6 trillion of T-bills. That would cause interest rates to rise. We would then owe the Chinese (or whoever else buys the T-bills) $2.6T instead of the SS trust fund.

So what would be the end result? I have no idea, but I know it is complicated.

[OrangeBlossomBaby]

I didn’t bring up 17 year olds. Another poster asked if I knew any 17 year olds making $33,000 a year. I don’t but I pointed out that minimum wage in Florida goes up to $14 an hour in September and a minimum wage job will pay $29,000 a year.

If the 17-20 year old is not working, they will not be making minimum wage - or any wage.

However, if the drop out wants to work, jobs are plentiful. Most fast food restaurants always have help wanted signs up as to big box stores.

A smart, reliable, hardworking dropout with a great worth ethic (show up on time, etc.) can get a minimum wage job.

They don't hire full time. You keep using $29k/year as your brag about how great a minimum wage job will pay, and now you're specifying what KIND of minimum wage job - a fast food joint or big box store. They don't hire full time for their minimum wage jobs. Those jobs are part time jobs. They don't pay $29k/year. IN ADDITION - $29k/year is not a living wage.

We're talking about the cost of living for seniors earning Social Security checks, and how "something other than Social Security" would return better income upon retirement.

You're supposing that someone starting out with no high school diploma, and no experience, can get a part-time minimum wage job and live independently while at the same time putting money away in investments instead of social security, and magically come out ahead when it's time for them to retire.

I'm supposing that they'll end up realizing that $14/hour for only 18 hours a week won't even get them a single bedroom in someone else's apartment, AND money to invest, AND utilities, AND food, AND transportation, AND clothing for the year, AND the cost of health care beyond the yearly physical, even if the insurance premiums are free (thanks to the ACA). It can't be done in Florida.

It isn't practical, or kind, or helpful, or useful, to suggest that 17-20-year-olds who drop out of high school can just get a full time minimum wage job and swap out social security payroll deductions for investments, and be able to retire some day having done better. Because they won't even make it to 25 with that ridiculous idea, since they'll discover in their FIRST year of trying, that no such scenario exists.

[golfing eagles]

They don't hire full time. You keep using $29k/year as your brag about how great a minimum wage job will pay, and now you're specifying what KIND of minimum wage job - a fast food joint or big box store. They don't hire full time for their minimum wage jobs. Those jobs are part time jobs. They don't pay $29k/year. IN ADDITION - $29k/year is not a living wage.

We're talking about the cost of living for seniors earning Social Security checks, and how "something other than Social Security" would return better income upon retirement.

You're supposing that someone starting out with no high school diploma, and no experience, can get a part-time minimum wage job and live independently while at the same time putting money away in investments instead of social security, and magically come out ahead when it's time for them to retire.

I'm supposing that they'll end up realizing that $14/hour for only 18 hours a week won't even get them a single bedroom in someone else's apartment, AND money to invest, AND utilities, AND food, AND transportation, AND clothing for the year, AND the cost of health care beyond the yearly physical, even if the insurance premiums are free (thanks to the ACA). It can't be done in Florida.

It isn't practical, or kind, or helpful, or useful, to suggest that 17-20-year-olds who drop out of high school can just get a full time minimum wage job and swap out social security payroll deductions for investments, and be able to retire some day having done better. Because they won't even make it to 25 with that ridiculous idea, since they'll discover in their FIRST year of trying, that no such scenario exists.

Great post. And the term for those people will unfortunately turn out to be "homeless". Unless they can stay on Mommy's couch in the basement.

[Stu from NYC]

If the SS trust fund invested in assets other than USG securities the economics get very complex. If you changed the law to allow the SS trust fund to buy stocks and If you then inject 2.6 trillion into the stock market then prices will rise and the trust fund will pay dearly for the stocks. The future returns on stocks would then be lower than would otherwise be the case. At the same time the USG would still need to borrow that 2.6 trillion because the deficit doesn't get any smaller just because the trust fund doesn't fund it. Those hated government programs still happen. So it would go into the market and auction 2.6 trillion of T-bills. That would cause interest rates to rise. We would then owe the Chinese (or whoever else buys the T-bills) $2.6T instead of the SS trust fund.

So what would be the end result? I have no idea, but I know it is complicated.

the problem is as life expectancy goes up we have more and more people to support with not enough funds going into the system.

Would need to raise the retirement age and do not think congress will do it. They would rather kick the can further down the road with bandaids

[OrangeBlossomBaby]

the problem is as life expectancy goes up we have more and more people to support with not enough funds going into the system.

Would need to raise the retirement age and do not think congress will do it. They would rather kick the can further down the road with bandaids

"raise the retirement age" isn't the only possible option. You can raise the EARLY retirement age from 62 to 64. You can raise the maximum income cap, or eliminate it. Currently it's $176,100. If you raised it to $400,000 that would increase the amount in the fund every year.

You can increase the deduction AND make the increased payout be a lower percentage after the first "x". In other words - if the current max SS check, based on a $176,100 deduction, and you retire at age 70, the most you can currently get is $5,108 per month. If you increase the max from $176.1k to $400k, maybe only increase the max payout to $5,800/month.

You can also cut the age of max payout to 69, making it so the most you can get, you'll get if you retire when you're 69, and not when you're 70. Retiring at age 70 wouldn't give you any added benefit.

You could add a .5% payroll deduction increase, with .25% paid by the employee, and .25% paid by the employer, rounded UP to the nearest penny.

You could do any combination of these things, and the result would be an increase of funds into the system, and more available to pay out to future generations.

[PilotAlan]

Holy Straw Man, Batman! You're debunking arguments that no one has made.

No one's talking about making private 401k contributions in addition to SS, we're talking about making SS contributions go into a market pension. Not optional, just like now.
Yes, someone making minimum wage won't be a millionaire from their investments, but they will still be better off than with the return in the present system.

If someone spends their entire lives working minimum wage, they have larger problems. The vast majority of people rapidly move up the ladder as they gain experience and wisdom. But you already knew that.

You can't make large policy decisions based on edge cases. And the explosion of wealth throughout the economy will provide much more tax funds to help those people in edge cases who need public assistance.

They don't hire full time. You keep using $29k/year as your brag about how great a minimum wage job will pay, and now you're specifying what KIND of minimum wage job - a fast food joint or big box store. They don't hire full time for their minimum wage jobs. Those jobs are part time jobs. They don't pay $29k/year. IN ADDITION - $29k/year is not a living wage.

We're talking about the cost of living for seniors earning Social Security checks, and how "something other than Social Security" would return better income upon retirement.

You're supposing that someone starting out with no high school diploma, and no experience, can get a part-time minimum wage job and live independently while at the same time putting money away in investments instead of social security, and magically come out ahead when it's time for them to retire.

I'm supposing that they'll end up realizing that $14/hour for only 18 hours a week won't even get them a single bedroom in someone else's apartment, AND money to invest, AND utilities, AND food, AND transportation, AND clothing for the year, AND the cost of health care beyond the yearly physical, even if the insurance premiums are free (thanks to the ACA). It can't be done in Florida.

It isn't practical, or kind, or helpful, or useful, to suggest that 17-20-year-olds who drop out of high school can just get a full time minimum wage job and swap out social security payroll deductions for investments, and be able to retire some day having done better. Because they won't even make it to 25 with that ridiculous idea, since they'll discover in their FIRST year of trying, that no such scenario exists.

[CoachKandSportsguy]

the problem is as life expectancy goes up we have more and more people to support with not enough funds going into the system.

Would need to raise the retirement age and do not think congress will do it. They would rather kick the can further down the road with bandaids

there are other means to raise money other than to cut costs. .
One of the issues with increasing the age is that there is real age discrimination in the workforce, even though it's illogical. Hiring after the age of 55 is spotty and lucky at best. . which makes raising the age a nightmare for many people, due to no fault of their own.

Raise the tax on the remaining people who are the ones making the decisions on who should be laid off or fired. . and if the AI hopes and dreams come true, raising the retirement age will be fruitless as there will be no jobs other than commodity labor jobs.

good luck to us. .

[Stu from NYC]

there are other means to raise money other than to cut costs. .
One of the issues with increasing the age is that there is real age discrimination in the workforce, even though it's illogical. Hiring after the age of 55 is spotty and lucky at best. . which makes raising the age a nightmare for many people, due to no fault of their own.

Raise the tax on the remaining people who are the ones making the decisions on who should be laid off or fired. . and if the AI hopes and dreams come true, raising the retirement age will be fruitless as there will be no jobs other than commodity labor jobs.

good luck to us. .

I do not think that AI would destroy the jobs market as you think it will. Believe new jobs will be created in areas we have no clue where they will come from.

[OrangeBlossomBaby]

there are other means to raise money other than to cut costs. .
One of the issues with increasing the age is that there is real age discrimination in the workforce, even though it's illogical. Hiring after the age of 55 is spotty and lucky at best. . which makes raising the age a nightmare for many people, due to no fault of their own.

Raise the tax on the remaining people who are the ones making the decisions on who should be laid off or fired. . and if the AI hopes and dreams come true, raising the retirement age will be fruitless as there will be no jobs other than commodity labor jobs.

good luck to us. .

Exactly. Another case in point: the skilled laborer. The kind that, once upon a time, required apprenticeship and could promote to journeyman, and then master. Such as a mason, carpenter, printer.

They start out in the 1970's and work their way up, eventually earning their right to top pay in companies that provide top benefits. Earning $1200-2000/week, not including overtime, with company-paid fully comprehensive medical benefits for themselves and their spouses, paid time off, paid accruable sick time.

Fast forward to the 2000's, and the company realizes that no one uses that system of apprenticeship/journeyman/master anymore, they can pay new hires MUCH less, and require them to learn more, faster than their predecessors did. So they shut down the workshop and fire EVERYONE. Most of them are at, near, or even over 50 and were planning on taking their full retirement in a few years.

But now, they can't. They're unemployed, with only the pension they've earned and no other benefits, no paid COBRA for 18 months, they've lost all the sick time they've accumulated, it's all gone.

They can't afford to not work - they can't even get social security checks for almost another decade. But companies that are hiring now, in the 2000's, are hiring at lower wages. Former employees got their mortgages based on the pay they were earning in the 1990's. That's all been cut off. They can't afford to take a 50% cut in pay to start over at a new company, which is the MOST they can hope for in a world where their particular skill is no longer valued. They're in their 50's - and their trade is all they know, it's all they've done all their lives, since they started out as an apprentice in high school.

If you're a "professional" - someone with an MBA, or a doctor, or a lawyer, or seasoned politician - those kinds of jobs aren't too hard to get at excellent salaries and benefits, when you're 50 or older.

But skilled tradesmen, they're not a thing anymore. Everyone and their brother is learning to weld in "shop" in high school, or getting vouchers for trade schools now. Employers are hiring young kids, not people who plan on retiring in 5 years.

[Pballer]

I asked AI to use the average income (about $66,000) and to invest it for 43 years (age 22 to 65) at various rates of return.

According to AI, investing 15% of the average income annually at a 7% return for 43 years could grow to approximately $2.81 million.

A more conservative return (e.g., 6%) would yield around $2.2 million, while a higher return (e.g., 10%) could push it toward $4.5 million.

If the worker made $33,000 a year, a 7% return for 43 years could grow to approximately $1.39 million.

A more conservative return (e.g., 6%) would yield around $1.09 million, while a higher return (e.g., 10%) could reach about $2.23 million.

In 43 years, a million dollars is not going to be worth much.

[Rainger99]

In 43 years, a million dollars is not going to be worth much.

I agree. But I don’t think the numbers were adjusted for inflation. I think salaries will be higher 10, 20, 30, and 40 years from now so the 15% yearly contribution will continue to grow over the 40 years.

If he just gets a 3% raise every year (inflation is usually 3-4 % a year) he will be making $212,000 in 40 years. If he gets a raise above inflation, he would be making more.

This is based on past performance. If our $36 trillion debt crashes the market by 90% and we have hyperinflation, we are all in trouble.

[mraines]

Young people and everyone else working should be putting 15% of their income into Index Funds with minimum fees that go up as the market goes up. Yes, FIFTEEN %. This is IN ADDITION to what they pay into Social Security. Then they well probably be able to retire to The Villages someday. Meanwhile, workers and employers should each pay an additional 1% in Social Security taxes. This is such an easy fix, and it should have been done long ago. 1%! (It hasn’t been done because so many legislators don’t count on Social Security to get by when they retire, and they listen to businesses who say that 1% comes out of their profit.

I realize that investing 15% with every paycheck means young people and families may not be able to afford that new SUV or that big house or those restaurant dinners or those fancy vacations or a lot of things. But we’ve all read complaints here from people who live only on the Social Security payments they get. I feel bad for them. But if they had done what I recommend, they wouldn’t be in this situation today. My ex-wife and I scrimped and saved, and now we don’t have to worry. I see young people driving $50,000 to $90,000 trucks and SUVs and buying 3,000 sq ft houses and spending $100,000 on remodeling their kitchens and bathrooms, and I wonder how much they are saving for retirement. And putting it into CDs or savings accounts like my parents did won’t do it. My parents saved for decades but put the money into CDs and savings accounts, so the money they have in the accounts has grown, but always less than the inflation rate. Meanwhile, the money I put into mutual funds has quintupled. (But we still need mandatory social Security contributions.)
Have you ever tried to survive on minimum wage? Some people live paycheck to paycheck and cannot afford to put anything aside. Just sayin. Been there done that.