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  #831  
Old 12-03-2017, 05:00 PM
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...I think it's appalling how long Congress has delayed doing something about the shortfall, though. They used to act on a fairly regular basis when the Trustees Report pointed up a looming problem. Now it's looming a lot closer!
That's not really true. The faulty "double-indexed" benefit formula enacted into law in 1972 took more than 5 years to fix. Meanwhile, they baked in lots of unjustified cost through rising replacement rates and got perilously close to financial problems.

The 1977 amendments, which fixed the 1972 flaw, were expected to cure Social Security's financial problems for all time (said President Carter), but bad economic experience threw that forecast in the trash within 4 years. Stopgap legislation in 1981 allowed Social Security to borrow just enough from Medicare to stay afloat until July 1, 1983. Still, Congress dithered.

The 1983 Amendments, basically the law in effect ever since then, were signed by President Reagan on April 20, just 70 days before the trust funds would become unable to pay full benefits on time. That's cutting it about as close as you possibly can.

A similar financial problem is probably 17 years away right now. I wish that Congress would act sooner rather than later, but I can understand their lack of urgency. It's also worth noting that waiting steers policy inexorably in the direction of tax increases rather than benefit reductions. Who would prefer which outcome?

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  #832  
Old 12-03-2017, 05:22 PM
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http://www.thinkadvisor.com/2017/12/...paign=12012017

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How to Protect Social Security in the Long Term

Spoiler:
A technical change in the Republican tax bills adds up to a significant tax increase over time. The legislation would change the way tax brackets are adjusted for inflation each year. The new measure of inflation, called the chained CPI, would be less generous than the old one. As a result, each year slightly more people would move into higher tax brackets than under the current measure.

(Related: The Consumer Price Index Starts a New Chapter)

The Tax Policy Center estimates that this shift would bring in $125 billion in extra revenue over the next decade — which helps Republicans reach their goal of cutting taxes by no more than $1.5 trillion.

President Barack Obama suggested that he might be willing to use the chained CPI to calculate the annual cost-of-living adjustments for Social Security, too. Over time that would lead to lower spending on the program.

Many economists believe that the current Consumer Price Index overstates inflation and that the chained CPI is a more accurate measure. (Conservative scholar Scott Winship wrote about the gory details a few years ago.) Opponents of moving to the chained CPI for Social Security say that it understates inflation among the elderly, but it is not clear that they are right — and even less clear that a better measure exists.

If Social Security checks and tax brackets should be adjusted each year for inflation, they ought to be adjusted by the best measure we have. That’s the best argument for what Republicans are doing on taxes and what Obama suggested doing on Social Security.


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  #833  
Old 12-05-2017, 06:01 PM
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The Republicans will now be targeting SS. No doubt about it.
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  #834  
Old 12-05-2017, 07:41 PM
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The Republicans will now be targeting SS. No doubt about it.
So a good partisan name-calling event makes you feel better about the 2037 deficit?
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  #835  
Old 12-05-2017, 09:33 PM
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So a good partisan name-calling event makes you feel better about the 2037 deficit?
Both parties deserve criticism for getting us into this situation and both should share responsibility for the pain of fixing it. That said, there are various methods of fixing it, including more taxes (with major subcases for how much more tax various groups pay) and lower benefits (with at least some subcases as to what group's benefits are cut and and in which years). IMO, republican legislators as a group are more likely to seek more fix from benefit restrictions and less from tax increases, and to prefer that any tax increases be more regressive (or less progressive) than democratic legislators as a group would prefer.

One could also feel that major tax changes now should not be considered independent of fixes for social security / medicare, and the republicans do not seem to want the current major tax changes to be a bipartisan project, even if they would welcome some democratic support for what they have decided to do.
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  #836  
Old 12-06-2017, 09:31 AM
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I don't really have much hope that they're touching Social Security before 2019.

I do wonder if something is going to come of the various MEP failures.
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  #837  
Old 12-06-2017, 10:36 AM
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So a good partisan name-calling event makes you feel better about the 2037 deficit?
He doesn't care about the US deficit. Although he might be worrying about what Brexit will do to his employer.
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  #838  
Old 12-27-2017, 10:59 AM
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I highly doubt most people deciding to start their Old Age benefits even know about the "automatic" benefit cut that Congress will never allow to hit in one year.
Some do. Particularly members of my family who often repeat that you should get it while the getting is good.
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  #839  
Old 01-16-2018, 11:53 AM
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http://reason.com/archives/2018/01/1...-because-socia

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Start Saving Now, Because Social Security Is Screwed
If Congress doesn't address its insolvency issues, payouts will need to be slashed by a quarter starting in fewer than 20 years.
Spoiler:
The single largest government program in the United States will soon have an annual budget of $1 trillion a year. Yet even that amount isn't sufficient to fulfill the promises it has made. If Congress doesn't address its insolvency issues, payouts will need to be slashed by a quarter starting in fewer than 20 years.

The program is Social Security, and our national pastime seems to be turning a blind eye to its dysfunctions.

The problems with this entitlement aren't unique. Obamacare is also a mess, while cumulative government spending on Medicare and Medicaid is growing at a faster rate than Social Security is, and eventually will consume a larger share of the economy.

But that's no reason to ignore the serious fiscal issues with America's main retirement program. Since 2010, it has been running a cash-flow deficit—meaning that the Social Security payroll taxes the government collects aren't enough to cover the benefits it's obliged to pay out. That should have been a signal that the time had come to look at reform.

Instead, we've spent the last seven years ignoring the problem. To get by, the program started tapping into the assets set aside beginning in the 1980s for rainy days. Prior to 2010, the program collected more in payroll taxes than was needed to pay the benefits due at the time. The leftovers were "invested" into Treasury bonds through the so-called Old Age Trust Fund, which is now being drawn down.

In fact, the Treasury bonds are nothing but IOUs. When it's time to disburse benefits they can't afford, Social Security administrators turn in those paper promises in exchange for hard cash from the Treasury Department.

But Treasury also doesn't have the money: It has already spent it on wars, roads, education, domestic spying, and much more. So when Social Security shows up with its IOUs, Treasury has to borrow to pay the bonds back. That adds to the debt that future generations will be on the hook for via higher taxes.

Did you catch that? Past generations of workers paid extra payroll taxes to bulk up the Social Security system. But the government spent that additional revenue on non-retirement activities, so now your children and grandchildren will also have to pay more in taxes to reimburse the program.

You may be tempted to wave away this problem. After all, there's more than $2.3 trillion left in the trust fund.

Don't. The Social Security trustees have calculated that the cash-flow deficit over the next 80 years will amount to a staggering $44.2 trillion, and that's after adjusting for inflation. Under current projections, the make-believe assets in the fund will only be enough to pay full benefits until 2034. At that point, the system will have to revert to paying out only the amount taken in through annual taxes. And that means benefit cuts across the board of 25 percent.

This will screw up everybody's plans, but it will be especially hard on lower-income Americans, who are more likely to depend entirely on the program during their later years.

Options for reform at that point will be limited. With the national debt projected to be 105 percent of GDP, or $39.1 trillion, in 2034—and with Medicare and Medicaid facing even bigger long-term problems—Congress will be too broke to restore full benefits for all. The most likely scenario is that higher-income earners will see their benefits disproportionately reduced, their taxes disproportionately hiked, or both. To them I have but one piece of advice: Start saving now.

Given this predicament, Congress should make it easier for all Americans to save. One way to do that is through the creation of Universal Savings Accounts, or vehicles that allow people to invest money without all the complicated rules that now apply to IRAs and 401(k)s. In addition, Congress should boost the maximum contributions people can make to Health Savings Accounts, so that more Americans can afford the medical expenses most of us inevitably incur in our old age.

More broadly, Congress should shift away from Social Security into a "funded" system based on real savings, much as Australia and others have done. The libertarian economist Daniel J. Mitchell notes that, starting in the '80s and '90s, that country has required workers to put 9.5 percent of their income into a personal retirement account. As a safety net—but not as a default—Australians with limited savings are guaranteed a basic pension.

That program has generated big increases in wealth. Meanwhile, Social Security has generated big deficits and discouraged private saving. Who would you have emulate the other?

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  #840  
Old 01-18-2018, 04:18 PM
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http://host.madison.com/business/inv...c40531483.html

Quote:
What Raising Social Security's Retirement Age Really Means
Spoiler:
ocial Security faces a long-term financial crisis. The demographic bump of baby boomers that have been retiring in recent years will continue to flow into the Social Security system for many years to come, and the corresponding outflow of Social Security benefits will not only use up all available payroll tax revenue but also eat into Social Security trust fund reserves. Current projections suggest that by the mid-2030s, Social Security will have a shortfall that leaves roughly a quarter of scheduled benefits unfunded.

Many lawmakers see raising the full retirement age for Social Security benefits as a potential solution to the program's financial woes. Proponents cite the rise in life expectancies and the resulting shift in demand for Social Security as reasons to modify the retirement age upward. Yet with many of the proposals to raise the retirement age, the net impact likely won't be to get people to claim Social Security later but rather simply to reduce what they receive when they do claim.

Image source: Getty Images.

The history of Social Security's retirement age
Proposals to increase the retirement age for Social Security aren't new. One need only look back at history to see how such ideas have played out in the past. Back in the early 1980s, a grand compromise between President Ronald Reagan and a Democratic-controlled Congress led to a gradual increase in the retirement age. Over the course of nearly 40 years, the retirement age went from 65 to 67, with a long break in the middle at 66. Currently, those who have turned 62 in the past year have started to see slightly older retirement ages, and the age will rise in two-month increments annually before topping out at 67.

Now, lawmakers are looking at similar proposals for the future. Ages of between 68 and 70 have been suggested for a possible new law, with the same arguments about economic stability of the program supporting the moves. Yet amid most of the proposals, few actually stop to look at the actual impact on benefits that would occur.

Does a higher retirement age really affect behavior?
The way that most people discuss potential increases in the retirement age suggests that people would end up working longer. There's an idea that most people used to work until hitting 65. When the Social Security full retirement age and the age for claiming Medicare were aligned at that same 65-year-old point, there were multiple reasons why people would target 65 as a prospective retirement date.

Yet when it comes to claiming actual benefits, few people wait that long, and the rise in retirement age to 66 and subsequently toward 67 has shown no signs of reversing that trend. More people claim at 62, when early Social Security benefits first become available to workers, than at any other age. That fact hasn't changed markedly even with changes in the full retirement age under the program.

Higher full retirement age + no change in claiming behavior = benefit cut

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When lawmakers advocate for higher retirement ages without making similar changes to the age for collecting early benefits, then net impact is simply to cut monthly benefits to retirees. The exact amount depends on the age at which you'd claim, but in general, benefits go down between 5% and 10% for every year that the retirement age goes up. As an illustration, you can see below what happened when the full retirement age went from 65 to 66 and what will happen as it moves to 67.

Claiming Age

Benefit With Full Retirement of Age 65

Benefit With Full Retirement of Age 66

Benefit With Full Retirement of Age 67

62

$750

$700 (7% less)

$650 (13% less)

63

$833

$750 (10% less)

$700 (16% less)

64

$917

$833 (9% less)

$750 (18% less)

65

$1,000

$917 (8% less)

$833 (17% less)

66

$1,080

$1,000 (7% less)

$917 (15% less)

67

$1,160

$1,080 (7% less)

$1,000 (14% less)

68

$1,240

$1,160 (6% less)

$1,080 (13% less)

69

$1,320

$1,240 (6% less)

$1,160 (12% less)

70

$1,400

$1,320 (6% less)

$1,240 (11% less)

Data source: Social Security Administration. Based on $1,000 primary insurance amount as determined by work history.

Similar cuts would occur under current law if retirement ages were increased from 67 to higher levels.

Proponents argue that giving early retirees the chance to get at least some benefits is better than simply eliminating the ability to claim early at all. Yet with many people relying on Social Security for the bulk of their retirement income, reducing that amount further from current levels is a recipe for financial disaster for millions of Americans.

Consider the consequences
There's no easy solution to Social Security's financial woes, and other proposals to shore up the system would also have impacts on participants and the American public as a whole. As lawmakers come up with new ideas, you'll want to look at them closely to see what the true impact is likely to be. Only if you're comfortable with all the consequences does it make sense to support one proposal over another.
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