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  #811  
Old 07-23-2017, 04:15 PM
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http://www.crfb.org/papers/analysis-...rustees-report

Quote:
Analysis of the 2017 Social Security Trustees Report

The Social Security and Medicare Trustees today released their annual reports on the financial status of the two programs. The projections show that both programs continue to face large funding gaps that will only grow over time. This year’s report on Social Security shows that:

Social Security is Heading Toward Insolvency. On a theoretical combined basis, the Old-Age, Survivors, and Disability Insurance (OASDI) trust funds face a 75-year shortfall of 2.83 percent of taxable payroll (1.01 percent of Gross Domestic Product) and are projected to be insolvent by 2034 (2028 for Disability Insurance; 2035 for Old-Age and Survivors Insurance).
Social Security’s Deficits are Large and Growing. Social Security will pay out $27 billion more in benefits than it will generate in tax revenue this year, and cash-flow deficits over the next decade will total $1.4 trillion. Annual deficits will grow to 3.77 percent of payroll (1.36 percent of GDP) by 2037 and 4.48 percent of payroll (1.54 percent of GDP) by 2091.
Action is Still Needed on SSDI. Despite a temporary “reallocation” of payroll tax revenue, the Trustees project the Disability Insurance (SSDI) trust fund will run out of reserves by 2028. A number of smart reform options are available to both avert SSDI insolvency and improve the program for current and potential beneficiaries.
Failure to Act Will Lead to Large, Abrupt Benefit Cuts. Assuming continued reallocations, all Social Security beneficiaries – regardless of age or income – are projected to face a 23 percent benefit cut in 2034, when today’s 50-year-olds reach the normal retirement age and today’s youngest retirees turn 79. Cuts would grow over time, reaching 27 percent by 2091.
The Trustees Project a Larger Shortfall. Overall, this year’s report represents a slight deterioration over last year’s, which showed the same combined trust fund exhaustion date of 2034 but a 75-year actuarial imbalance of 2.66 percent of payroll (0.17 percentage points lower than this year). The current shortfall is now roughly 47 percent larger than the 1.92 percent shortfall estimated in 2010.
With many baby boomers already in retirement and only 17 years until insolvency, time is running out to make thoughtful reforms to the program. Policymakers should act soon and put all options on the table to make Social Security solvent.

.....
The Cost of Waiting
When the OASDI trust fund is exhausted, beneficiaries will face an across-the-board 23 percent benefit cut, the equivalent of about $5,800 per year in today’s dollars for a typical beneficiary reaching the full retirement age in 2033. This cut would be immediate and would affect all beneficiaries regardless of age, income, health or wellbeing. The size of the cut would also grow over time, reaching 27 percent by 2091.



Avoiding these abrupt cuts and making Social Security solvent would require the equivalent of immediately raising the Social Security payroll taxes by 22 percent, from 12.4 to about 15.2 percent of payroll; reducing benefits for all current and future beneficiaries by about 17 percent; reducing benefits for all new beneficiaries by 20 percent; or some combination of the three.

The necessary benefit cuts or tax increases only become larger the longer that policymakers delay action. If policymakers wait until 2034 to make any changes, they will have to increase the payroll tax by 32 percent (to 16.4 percent) or cut benefits for all new and existing beneficiaries by 23 percent to attain solvency, and even eliminating benefits for new beneficiaries would not be enough to avoid insolvency. A much smarter course of action would begin changes much earlier so they can be spread among more generations and phased in more gradually with more warning to affected beneficiaries.

Importantly, even with an immediate payroll tax increase large enough to make the program solvent, cash-flow deficits would return by 2029 – meaning further changes would be necessary to make the program sustainable over the long term. That is why policymakers should look beyond simply keeping the program solvent for 75 years and pursue “sustainable solvency,” which ensures the program raises about as much as it pays out over the long run.

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Old 07-23-2017, 10:43 PM
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Originally Posted by Elinor Dashwood View Post
I'm always curious how they measure these things. Do they account for the fact that many people have multiple retirement accounts?

Say I have $1,000,000 in one account, and $800 in another account and $5,000 in a third account. Do they correctly say "Elinor has saved $1,005,800 for retirement" or do they say "the average retirement savings is $335,267"?

With how often people switch jobs, I could see that making a substantial difference.
I've always wondered about that too. Every so often, you see articles come out suggesting that more than half of the population has less than $1,000 in a savings account, which, if true, is pretty scary. Then again though, savings accounts at most banks only pay somewhere in the ballpark of 0.05% interest, and even the high interest online savings banks (e.g., Ally Bank) only pay a little more than 1% now. There's not much of an incentive to keep much more than a few months of emergency fund expenses in a savings account, and even then, if you've got a $10,000 emergency fund, keeping it in a 0.05% savings account isn't really much better than simply keeping it in a checking account. I'd imagine most people don't bother with savings accounts these days.
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Old 07-24-2017, 09:49 AM
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You can check the triennial Survey of Consumer Finances - it goes by household iirc, not individual:

https://www.federalreserve.gov/econres/scfindex.htm
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Old 07-24-2017, 05:18 PM
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http://www.thinkadvisor.com/2017/07/...paign=07232017

Quote:
How to Fix Social Security: Alicia Munnell
Benefits cuts could hit millennials hard

Alicia Munnell wants to make one thing clear. Social Security is not going bankrupt. The program that the economist calls “the most valuable component of our retirement system” is a sustainable system and can be fixed. America has just been avoiding the hard choices it has to make if it wants to keep Social Security around for future generations.

Munnell, who worked at the Federal Reserve Bank of Boston for 20 years, the Treasury Department for two years during the Clinton administration, and served on a U.S. Social Security Advisory Board in 2015, is director of the Center for Retirement Research at Boston College.

She has parsed just about every argument for how to reset Social Security’s finances. In a recent conversation and paper, Munnell, 74, laid out the stark choices Americans face, and the solutions suggested by two diametrically opposed pieces of legislation.

We all know Social Security has long-term cash-flow issues. How would you describe the challenge?

Munnell: It’s a very simple system. It’s not like the health care system, where you have insurance companies and doctors and patients. This is money in, money out.

The recent Social Security trustee’s report said the same exact thing it’s said almost every year since 1992 or 1993. We have a deficit—it’s a little bigger now than in the past—that’s equivalent to 2% to 3% of taxable payrolls, and we need to fix it. Every year the actuaries tell us there’s a deficit; every year as a nation we do nothing. It’s very easy to put off making changes for something that won’t happen. You really won’t see anything until the trust fund actually is exhausted in 2034. At that point, benefits have to be cut or revenue increased, because the system is not allowed to pay out money that it does not have.

By the way, when people talk about how the Social Security deficit will lead to big increases in the budget deficit, well, Social Security can’t run a deficit. When people say that, either they don’t understand how the law works or are trying to create alarm about the system.

One misperception about Social Security is that it should be enough to live on, which was never really the intent. How much income does it actually replace for workers?

The current level of tax revenues coming in mean that the replacement rate—benefits relative to preretirement earnings—would drop from 36% for the typical 65-year-old worker right before the trust fund is exhausted to about 27% by 2070. That’s a level we last saw in the 1950s. Right now, the replacement rate is already set to decrease from 39% to 36% for those claiming Social Security benefits at age 65. That’s because of the gradual increase in full retirement age, from 65 to 67, that was part of the legislation in 1983.

You describe two proposals out there as good “bookends” to consider when looking at ways to get rid of the deficit facing Social Security.

I like the proposals as bookends because they are so different, they don’t compromise at all. One is all on the benefit side, just big benefit cuts. The other says it would enhance benefits a little and make big tax increases. And those are the two ways to go. They highlight the notion that we should really decide politically—and I don’t know quite how we do this—what share of the solution Americans want in benefit cuts, and what share they want in tax increases.

It’s not really arguing about the specific provisions—should we change the inflation indexing to the Consumer Price Index for the Elderly, the CPI –E [an inflation measure geared to rising costs faced by the elderly, such as medical expenses]. The big question: Is this program important enough to people that we as a nation want to pay up and maintain current benefit levels, or are people willing to split the reform between benefit cuts and tax increases somehow.

.....
The first proposal you analyzed in a recent paper was legislation proposed last year by Rep. Sam Johnson, a Republican from Texas who is chairman of the House Ways and Means Social Security Subcommittee. What does he propose?

The Johnson proposal wants to cut benefits sharply so that the reduced benefits match the current income for the program. He would raise the age when you can collect full benefits to 69, cut benefits for above-average income earners, and reduce cost of living adjustments (COLAs) for people making more than $85,000 ($170,000 for couples). For those who would get COLAs, he would use a chain-weighted Consumer Price Index. [That index “employs a formula that reflects the effect of substitution that consumers make across item categories in response to changes in relative prices,” according to the Bureau of Labor Statistics website.]

What would the impact of that be on average Americans?

I looked at the ratio of proposed to current benefits at different points on the earnings scale. Since doing away with COLAs has a bigger impact as retirees age, I looked at individuals who were 85 years-old. It has no impact on the benefits of lower earners. But medium earners—which I calculate as having an income of $49,121—would see benefits cut to 77% of what they would get under current law. [That would be for someone born in 1995, turning 85 in 2080.] Those making $118,500 would get 34% of what they would get under today’s benefit schedule.

What does the other proposal, from Rep. John Larson, the Connecticut Democrat who is the ranking member of the House Ways and Means Social Security Subcommittee, suggest?

His proposal, a few years old, has some small enhancements to benefits and two big revenue changes. He would raise the total payroll tax paid by employers and employees by 0.1% a year until it reaches 14.8% in 2042. And he would have the payroll tax apply to earnings over $400,000. The current cap on wages that the payroll tax is applied to is $127,200. [The current gap between $127,000 and $400,000 would not be subject to payroll tax.]

It would also use a different measure of inflation when adjusting benefits—the CPI-E. This rises faster than the inflation measure used now, the CPI-W, the CPI for Urban Wage Earners and Clerical Workers. The income threshold for the taxation of Social Security benefits would be raised. [The threshold at which a portion of one’s Social Security benefit gets taxed hasn’t been adjusted since 1984. It is $25,000 for singles and $32,000 for married couples.] Larson would raise it to $50,000 for singles and $100,000 for marrieds. His proposal would also increase the “special minimum benefit” that goes to long-term low earners or people with sporadic work histories.
recent paper:
http://crr.bc.edu/briefs/social-secu...n-perspective/
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Old 08-18-2017, 11:05 AM
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http://crr.bc.edu/working-papers/why...ecurity-later/

Quote:
Why Are U.S. Households Claiming Social Security Later?

byWenliang Hou,Alicia H. Munnell,Geoffrey T. SanzenbacherandYinji Li
WP#2017-3

Abstract
Over the past two decades, the share of individuals claiming Social Security at the Early Eligibility Age has dropped, and the average retirement age has increased. At the same time, Social Security rules have changed substantially, employer-sponsored retirement plans have shifted from defined benefit (DB) to defined contribution (DC), health has improved, and mortality has decreased. In theory, all of these changes could lead to a trend toward later claiming. Disentangling the effect of any one change is difficult because they have been occurring simultaneously. This paper uses the Gustman and Steinmeier structural model of retirement timing to investigate which of these changes matter most by simulating their effects on the original cohort (1931-1941 birth years) of the Health and Retirement Study (HRS). The predicted behavior is then compared to the actual retirements of the Early Baby Boomer cohort (1948-1953 birth years) to see how much of the later cohort’s delayed claiming and retirement can be explained by these changes.

This paper found that:

The Early Baby Boomer cohort was less likely to be fully retired than the HRS cohort at both age 62 (36.7 percent vs. 44.0 percent) and age 64 (49.5 percent vs. 53.9 percent).

The model suggests that the shift from DB toward DC plans was the biggest contributor to these declines, followed by better health.

Changes to Social Security rules and improvements in mortality played smaller roles.

Taken together, the four changes explain about 60 percent of the drop in full retirement at 62 – the remainder could be due to changes in preferences or other changes not simulated like the rising cost of health care.


The policy implications of this paper are:

As DB plans continue to fade in the private-sector, claiming will likely be further delayed.

If health continues to improve, claiming could be moderately delayed.The resumption of the increase in the Full Retirement Age is not likely to lead to substantial delays in claiming.
full paper:
http://crr.bc.edu/wp-content/uploads...p_2017-3-1.pdf
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Old 08-19-2017, 08:53 PM
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Old 09-22-2017, 05:12 PM
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https://www.cbpp.org/research/social...ty-trust-funds

Quote:
Policy Basics: Understanding the Social Security Trust Funds
Few budgetary concepts generate as much unintended confusion and deliberate misinformation as the Social Security trust funds. Despite being described by some as “funny money,” or “IOUs,” the Social Security trust funds are invested in Treasury securities that are just as sound as the U.S. government securities held by investors around the globe; investors regard those securities as being among the world’s safest investments. Although Social Security has a long-term financial shortfall that must be closed, the program’s combined trust funds will not be depleted until around 2034, which gives policymakers time to develop a carefully crafted solvency plan.

UPDATED
SEPTEMBER 21, 2017

.....
What Is the Trust Funds’ Financial Status?

Social Security is adequately financed in the short term but faces a modest long-term financial shortfall amounting to 1.0 percent of gross domestic product (GDP) over the next 75 years, the period that the program’s actuaries use in evaluating the program’s long-term finances. Social Security has run a surplus in every year since 1984, as was anticipated when Congress enacted and President Reagan signed the legislation based on the recommendations of the Greenspan Commission in 1983.

Under current projections, the combined Social Security trust funds will continue to run annual surpluses until 2022. The interest income that the trust funds earn on their bonds, as well as the proceeds the trust funds will receive when their bonds are redeemed, will enable Social Security to keep paying full benefits until 2034.

In 2034, the combined trust funds are projected to run out of Treasury bonds to cash in. At that point, if nothing else is done, Social Security could still pay three-quarters of its scheduled benefits using its annual tax income. Contrary to a common misunderstanding, benefits would not stop. Of course, paying three-quarters of promised benefits is not an acceptable way to run the program, and Congress will need to act to restore long-term solvency to this vital program.

Most analyses of Social Security focus on the combined OASI and DI trust funds, since both are integral parts of Social Security, but the two trust funds are, in fact, separate. The DI trust fund faces exhaustion in 2028, and the much larger OASI fund is projected to last until 2035. Congress must therefore act by 2028 to replenish the DI trust fund. Increasing the share of the payroll tax that is allocated to DI (and reducing the OASI share) would assure that both the OASI and DI programs remained solvent through 2034.

Is It Better to Act Sooner Rather Than Later?

Not necessarily. Some people mistakenly suggest that Social Security’s shortfall gets larger the longer policymakers wait to address it, but that’s only an artifact of the projections. The annual Social Security trustees’ report includes projections that span the next 75 years. For example, the 2016 report included projections for 2016-2090, while the 2017 report includes projections for 2017-2091. Including the relatively large deficit for 2091 in the projection increases the estimated 75-year gap, even if the shortfall in each individual year of the projection remained the same.

That said, acting sooner to address the shortfall, whether by reducing benefits, raising contributions to Social Security, or a combination of the two, would spread the burden over more generations of workers and beneficiaries and allow for smaller future adjustments. For example, if Social Security tax increases were phased in soon, current workers could contribute to restoring solvency. But if payroll tax increases were delayed until the 2030s, they would fall entirely on younger workers still in the labor force after that date, and the required increase would be larger. At the same time, however, future generations will be more prosperous and better able to afford adjustments. Policymakers will need to balance these competing concerns.

Acting sooner to restore Social Security solvency would give workers plenty of notice about changes so that they can plan their work, saving, and retirement. It would also strengthen public confidence in the system by easing worries about its financing. Social Security faces no imminent crisis, however, and policymakers have time to develop a carefully crafted solvency package that minimizes cuts to the program’s modest but critical benefits.

.....
Is Trust Fund Debt Real?

Yes. Budget experts generally focus on debt held by the public — which reflects what the government must borrow in private credit markets and which excludes trust fund holdings — as the most useful measure of federal debt for economic analysis. Some have argued that it is inconsistent to adopt that focus while simultaneously viewing the debt held by Social Security as real. This argument is incorrect: both measures of debt are important, but they measure different things.

Debt held by the public is a measure of the federal government’s overall fiscal health. It represents money that must be borrowed and periodically refinanced in private credit markets; interest payments on that debt represent a current drain on government resources. If the specter of excessive debt led investors to lose confidence in U.S. government securities, federal interest costs could increase substantially, with potentially troubling implications for U.S. and world economies.

Debt held by Social Security, by contrast, provides information about the adequacy of the program’s dedicated financing. Debt held by trust funds does not have the same broader economic significance as debt held by the public. Since it does not need to be financed in private credit markets, it cannot lead to a refinancing crisis. As legal authority to spend money in the future, it is essentially similar to legal authority to meet spending commitments for other entitlement programs that are not financed through trust funds and are not included in measures of federal debt. In addition, an increase in trust fund balances that provides authority for higher Social Security expenditures in some distant year is not equivalent to issuing more publicly held debt to finance additional spending today. If additional spending authority leads to more federal borrowing at some time in the future, that borrowing will add to debt held by the public when that spending occurs.

As the 1938 Advisory Council on Social Security wrote in the passage quoted above, “The fulfillment of the promises made to the wage earners included in the old age insurance system depends upon, more than anything else, the financial integrity of the Government.” Protecting Social Security therefore requires not only assuring that the program itself is adequately financed but also putting the overall federal budget on a sustainable long-term course.
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Old 09-22-2017, 05:45 PM
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this hits public pensions, too, but I'm putting it here:

http://www.investors.com/politics/co...t-funding-gap/

Quote:
The 'Retirement Savings Gap' Is Really A Government Funding Gap
ANDREW G. B
IGGS7:50 AM ET

Americans are scared about their future retirement security. Politicians have promised to fix this "retirement crisis" through a combination of expanded Social Security benefits and new retirement plans set up by state governments. But what if our governments are themselves the biggest contributors to this "retirement savings gap"?

That's a question I explore in a new study comparing retirement saving by American households with government funding of the various retirement plans Americans depend upon. The best estimates show that underfunded retirement benefits are overwhelmingly a problem caused by government, not undersaving by individuals.

A variety of studies have found that U.S. households aren't saving enough for retirement, but those studies vary dramatically in their estimates of how big the shortfall may be. The most pessimistic of them, published by the National Institute for Retirement Security — an industry group funded by the defined-benefit pensions industry — finds that 84% of American households are falling short of reasonable retirement savings targets, and that total household undersaving may reach $14 trillion.

By contrast, several academic studies find that only 25% to 30% of households are undersaving for retirement. Moreover, shortfalls for those undersaving households are relatively modest. I estimate that these academic studies would find a household savings gap of less than $1 trillion, which is small compared to total private retirement savings of about $18 trillion and accrued Social Security benefits of $30 trillion.

But before concluding that government needs to take a bigger role, we should also look at how well governments fund their own retirement plans. These include everything from Social Security to federal employee and military pensions, to state and local government plans.

Almost no pensions at any level of government are fully funded, and estimates of total funding shortfalls for government-run plans range from a low of $14.3 trillion to a high of $26.1 trillion. The higher estimates are generated by economists who seek to more accurately measure the benefit liabilities of public sector pensions.

.....
In government, by contrast, the incentives are in the wrong direction. When government retirement plans are underfunded, politicians can keep current taxes low while handing the bill to future generations. And of course future generations don't vote in today's elections. This explains why Congress has done nothing to fix Social Security, despite knowing since the late 1980s that the program needs reforms.

Incentives also explain why state and local government pensions use accounting methods that are at odds with international standards and which economists almost universally believe substantially understate the funding gaps for these plans. By lowballing pension liabilities, state and local governments dramatically reduce their current contributions, while leaving trillions in pension costs for future taxpayers.

And that's not only true in the United States. A recent study by the World Economic Forum examined retirement savings shortfalls in different countries. For the United States, the WEF concluded that 85% of the retirement savings shortfall is in government plans, with corporate plans making up 2% and households the remaining 13%. In the United Kingdom, 74% of the retirement saving gap is attributable to government underfunding, while in Canada, government's share is 93%. There was only one country studied — India — where the household retirement saving gap exceeded the government's funding shortfall.

It's human nature to promise things without wanting to pay for them, and politicians are nothing if not human. Barring a change to human nature, retirement policy needs to build on what's working while avoiding the pitfalls of the past.

That means further improvements to 401(k) plans, in particular policies to increase auto-enrollment and expand coverage by small businesses. But it also means we should be very skeptical about expanding Social Security.

When you're already over $10 trillion in the hole, it's time to stop digging.


Biggs's study:
https://www.mercatus.org/publication...rnment-sectors
https://www.mercatus.org/system/file...ercatus-v1.pdf


Quote:
Public Retirement Program Funding

In spite of public attention and sporadic reform efforts since the late 1980s, Social Security remains underfunded.

As of 2016, Social Security Administration actuaries, using economic and demographic assumptions from Social Security’s trustees, projected a 75-year funding shortfall of $11.4 trillion in present value.
The Congressional Budget Office, using somewhat different assumptions, projected a 75-year funding shortfall estimated by the author at about $18.9 trillion.
Public employee pensions include both defined benefit pensions and 401(k)-style defined contribution plans. Defined contribution plans cannot have obligations in excess of their assets, but many defined benefit plans are dramatically underfunded.

Defined benefit pensions for civilian federal employees face a funding shortfall of approximately $800 billion.
Another federal program, the Military Retirement System, faces a funding shortfall of about $868 billion.
The Governmental Accounting Standards Board estimates that state and local defined benefit pensions have unfunded liabilities of about $1.2 trillion. But measuring these pensions’ liabilities using the same discount rates that private sector pensions must use suggests that the plans are actually underfunded by $3.4 trillion, and some estimates suggest they are underfunded by as much as $5.5 trillion.
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Old 09-27-2017, 01:50 PM
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TAXES

http://www.washingtonexaminer.com/ma...rticle/2634947

Quote:
Massie wants to eliminate taxes on Social Security income

Spoiler:
Rep. Thomas Massie says it's one of the most popular bills he's ever sponsored: a proposal enticingly named the "Senior Citizens Tax Elimination Act" that would end taxes on Social Security income.

Many older Americans are shocked, the Kentucky Republican says, to learn they pay federal income tax twice: once as workers on pay diverted into the Social Security system and again after receiving retirement checks. His bill would eliminate income tax on the payout.

Originally, Social Security benefits weren't taxed. Worker contributions were. But faced with potential insolvency, Congress voted in 1983 to begin taxing the benefits of a small number of higher-income earners and recycle that money into the Social Security trust fund.

Initially, only 10 percent of people receiving Social Security income were above the threshold — $25,000 for individuals, $32,000 for couples — to pay taxes on up to half of their benefits.

But over time, inflation has led to more and more people having to pay taxes.

About 42 percent of Social Security recipients paid income taxes on some of their benefits in 2016, according to Social Security Administration spokeswoman Nicole Tiggemann, a increase of 2 percentage points from 2015.

Rather than raise the threshold to account for the declining value of money caused by inflation, Congress in 1993 added a second threshold — $34,000 for individuals, $44,000 for couples — requiring retirees to pay taxes on up to 85 percent of their benefits, rather than the initial 50 percent.

"This has been constructed kind of to be a Ponzi scheme. They are scraping money off the payments to make other payments," Massie told the Washington Examiner. He said eventually most retirees will be hit by what he considers a crafty benefit reduction.

Taxes on the benefits contributed $33 billion in 2016 into the Old-Age, Survivors, and Disability Insurance Trust Funds, according to the Social Security Administration. It's a small but significant amount, supplementing $836 billion in net contributions and $88 billion in interest.

Massie said he's heard concern that eliminating benefit taxation would make Social Security unable to pay its bills. But he points out that the bill would appropriate Treasury Department funds "equal to the reduction" to go into Social Security to compensate for the reduced tax haul. The bill also says that new appropriation cannot be offset with tax increases.

Undoing the tax on Social Security benefits isn't a new idea. It was previously championed by libertarian Rep. Ron Paul of Texas, who left office in 2013.

"It's always gotten a fair number of cosponsors but it has never really moved anywhere, and the problem with it is the typical D.C. mentality, that it would deprive the government of too much revenue," said Norman Singleton, Paul's former legislative director.

"Nobody's going to come out opposed to lowering taxes on senior citizens, they just quietly push this to the side," said Singleton, who is now president of the Campaign for Liberty.

Massie admits the bill faces an uphill battle. He said, however, that one potential opportunity is attaching it to a larger tax reform bill, which President Trump requested that lawmakers draft with simplification as a primary goal.

In the meantime, Massie said, he sees the bill as "blowing the whistle" as he works to build momentum.

"Most people don't even know this happens," he said. "When they passed it there weren't many squeaky wheels. I'm working to mobilize the growing constituency that is taxed twice on Social Security."


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Old 10-03-2017, 01:50 PM
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https://www.usatoday.com/story/money...ken/106069262/

Quote:
10 stats that show why Social Security is broken
Current and future retirees could be in for a rude awakening.



Spoiler:
Put plainly, Social Security is the most important social program for seniors in this country.

Without the guaranteed monthly income Social Security provides, poverty levels among seniors would spike from 8.8% to more than 40%, according to a study by the Center on Budget and Policy Priorities (CBPP). That's how important Social Security is.

Unfortunately, this financial foundation for seniors is crumbling before our eyes. A recently released report from the Social Security Board of Trustees suggests that in less than two decades' time, the program we know today could undergo major changes, all of which would seem to be bad news for current and future retirees. Should Congress fail to make any changes to Social Security, up to a 23% across-the-board cut in benefits could be headed seniors' way by 2034, per the report.

What exactly is wrong with Social Security? The following 10 stats help explain why this 82-year-old program is now broken.


1. The worker-to-beneficiary ratio could fall 21% by 2035

The worker-to-beneficiary ratio is set to fall from 2.8-to-1 in 2017 to 2.2-to-1 by 2035, according to data from the Social Security Administration (SSA) -- that's a 21% decline. This drop owes directly to the fact that more than 10,000 baby boomers are retiring from the workforce every day, and there are simply not enough new workers to take their place. That means the program will soon be paying out more money to retired beneficiaries than it brings in through the payroll tax paid by workers. The current number of workers simply won't be able to support the ballooning number of eligible retirees.

2. The average U.S. life expectancy has risen by 18 years since the program was created

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3. Life expectancies among the wealthiest 20% are 12.7 years higher than those in the lowest quintile

[quintile was measured for men age 41 - 51 in from 1930 and 1960 birth cohorts http://www.nber.org/papers/w23329 ]
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4. 62% rely on Social Security for at least half of their income

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5. Americans' personal saving rate is just 3.5%

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6. The program will lose $88.4 billion in annual income by 2034

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7. A budgetary shortfall of $12.5 trillion through 2091

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8. A 2.83% long-term actuarial deficit

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9. Medical care inflation outpaced Social Security's cost-of-living adjustment in 33 of the past 35 years

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10. 34 years have passed since any major legislative changes


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