Social Security Retirees Could Face $18,000 Cut
 

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

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

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.

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.

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

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 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.

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?

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.

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.

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.

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.

Just ain’t going to happen…

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

Jus fear mongering.

:)

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

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.)

Social Security
 

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.

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.

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

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.

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.

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

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

President Johnson signs Medicare into law | July 30, 1965 | HISTORY


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

No, everyone would see a reduction in benefits.

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.

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.

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.

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.

When was it raised ? Never heard of that

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

43 years ago.

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.

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

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.

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.

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.