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Social Security To Go Bust By 2030: CBO

MrVicchio said:
You can't get under my skin. While people like you giggle it's people like my kids that will have to clean up the failure of your generations mess in 20 years. Here's hoping it's sooner, just so you can "enjoy" the repercussions of your laughs.
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Don't worry, now that marijuana is becoming legal, perhaps your children will become stoners. Look on the bright side, once weed is legal in Texas, perhaps you and your children can open a dispensary there in San Antonio. God knows you have enough smokers there to prosper.
 
mtm1963 said:
the trust fund exist on paper but there is NO money in it.

benefits are paid from the SS tax on everyone's pay check.
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Technically those are TBills which have to be repayed by the general govt (via income taxes or borrowing (more tbills)) Easy solution would be to simply raise the tax rate so that FICA tax revenue meets current benefit costs. But assuming you have to keep raising it, itll just collapse some day.
 
Remove the upper cap.

Freeze benefit pay outs save for inflation, and disallow benefit pay outs to be changed in the future in any manner but across the board (IE no increasing pay out for those on the lower end but not on the higher)

Increase the age anyone under 55 today can start recieving social security by 5 years (So 67 you can start taking it out early, 71 you can go in full).

SS Tax revenue can ONLY be spent on SS Benefits, and MUST be spent on SS Benefits until the remaining revenue or benefits is reduced to $0, whatever comes first. If the revenuefrom the SS Tax in a given year exceeds the total cost of SS Benefits in said year, the difference is placed within a trust. Said trust can ONLY be tapped into as a means of covering a short fall in a year where the SS Tax revenue is less than the SS Benefit payouts. General expenses can be used to pay SS Benefits only in a situation where all of the SS Tax reveue has been used AND the trust is empty, but additional payout is still needed.
 
jonny5 said:
Technically those are TBills which have to be repayed by the general govt (via income taxes or borrowing (more tbills)) Easy solution would be to simply raise the tax rate so that FICA tax revenue meets current benefit costs. But assuming you have to keep raising it, itll just collapse some day.
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every time the FICA tax has a surplus congress spends it on something else other then SS. what do you do about that?
 
Anthony60 said:
Well, you're one person that won't be collecting more than was put in. Somehow, I just think that's not the norm.
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It's not the norm, with increasing regularity.
 
Visbek said:
Part of life expectancy statistics is infant mortality. The rest, as the SSA points out, is life expectancy when you attain adulthood.

For men in 1940, if they made it to 21 their life expectancy was 53.9 years; by 1990, it was 72.3 years. For women, it's jumped from 60.6 years to 83.6 years.

For men in 1940, if they made it to 65 their life expectancy was another 12.7 years, and by 1990 it was 15.3 years. For women, 14.7 to 19.6. In addition, the percentage of the US population that is over 65 has grown, from 6.8% in 1940 to 12.4% in 2000. (Social Security History)

In 1900, people started work at about what age?



The average age of retirement has also apparently dropped. In 1940, it was 68; by 1995 it was 64.

retirement-age.png



And what about changes in the number of years worked, compared to the number of years in retirement? According to the BLS, it looks like this....

working.gif



Heritage has a pretty good article on this: Time to Raise Social Security


People are working less, retiring earlier, and living longer, at a time when there are fewer workers who have to support more retirees. I will gladly admit that simply stating "life expectancy" is a bit oversimplified, but the essence is correct. To suggest that the changes in life expectancy haven't contributed to the issues facing SS is slightly ridiculous.
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The cost has risen how much? 10 fold. The average worker now contributes more than he collects even with longer life expectancies. So raising life expectancy by definition cannot be contributing to the problem. People are only losing less on average.

"To suggest that the changes in life expectancy haven't contributed to the issues facing SS is slightly ridiculous. "

HL Mencken's quote was.... It is a great line for people who do not understand how the formulas work. They see more benefits paid, and assume that it must be a problem. The question isn't whether we are living longer but at what age. In any case of increasing life expectancy, it is nothing compared to the rise in costs. This noise is the sell side of people who are in retirement, and do not want to admit that there is a problem which they caused by poor voting. Poor voting is 99% of the problem. Life expectancy is round-off.
 
Zyphlin said:
Remove the upper cap.

Freeze benefit pay outs save for inflation, and disallow benefit pay outs to be changed in the future in any manner but across the board (IE no increasing pay out for those on the lower end but not on the higher)

Increase the age anyone under 55 today can start recieving social security by 5 years (So 67 you can start taking it out early, 71 you can go in full).

SS Tax revenue can ONLY be spent on SS Benefits, and MUST be spent on SS Benefits until the remaining revenue or benefits is reduced to $0, whatever comes first. If the revenuefrom the SS Tax in a given year exceeds the total cost of SS Benefits in said year, the difference is placed within a trust. Said trust can ONLY be tapped into as a means of covering a short fall in a year where the SS Tax revenue is less than the SS Benefit payouts. General expenses can be used to pay SS Benefits only in a situation where all of the SS Tax reveue has been used AND the trust is empty, but additional payout is still needed.
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Those over 55 need to share part of the burden of reform as well. Immediately implement COLA freezes and start phasing in the higher retirement age now. They should also have to cough up more for their subsidized Medicare premiums.
 
Zyphlin said:
Remove the upper cap. Freeze benefit pay outs save for inflation... etc
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Here ya go. Put in your choices, and see if it makes SS solvent for the next 75 years. Based on what you're saying, I don't think your plan does enough, but there are plenty of additional options.

The Reformer: An Interactive Tool to Fix Social Security


SS Tax revenue can ONLY be spent on SS Benefits...
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That only works when the annual revenues and outlays balance each other out, or produce a surplus.


If the revenuefrom the SS Tax in a given year exceeds the total cost of SS Benefits in said year, the difference is placed within a trust. Said trust can ONLY be tapped into as a means of covering a short fall in a year where the SS Tax revenue is less than the SS Benefit payouts.
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That's pretty much how it works now. The only difference is that the funds held in trust are converted into Treasury securities.


General expenses can be used to pay SS Benefits only in a situation where all of the SS Tax reveue has been used AND the trust is empty, but additional payout is still needed.
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Yes, that's where we are headed, some time around 2033, depending on many variables.
 
mtm1963 said:
every time the FICA tax has a surplus congress spends it on something else other then SS. what do you do about that?
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Yep, I can't believe people think there is a fund with the SS money in it.

It sill be far sooner than 2030 that congress will have to start borrowing money to pay SS benefits. The last estimate I remember was 2017, and that was before the few years they reduced SS insurance to 4.2%.
 
Winchester said:
Those over 55 need to share part of the burden of reform as well. Immediately implement COLA freezes and start phasing in the higher retirement age now. They should also have to cough up more for their subsidized Medicare premiums.
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They already implemented stupid changes in COLA a few years back.

I'm OK with the higher retirement age. Maybe something like you get 100% at 75 years of age, and 0.1% less for every month earlier you start collecting. Retiring at 65 makes it 88% of max.

Since people are living longer, they can work longer.
 
mtm1963 said:
every time the FICA tax has a surplus congress spends it on something else other then SS. what do you do about that?
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Dynamically adjust it so it only brings enough to pay out. Then you actually have a small reserve to cover swings. The last time the rate was adjusted was 1988 and things have changed.
 
JoeTheEconomist said:
The cost has risen how much? 10 fold. The average worker now contributes more than he collects even with longer life expectancies. So raising life expectancy by definition cannot be contributing to the problem....
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Good grief. Let's try this again.

When we look at life expectancy changes AFTER reaching adulthood, aka 21 years of age:

• People are living longer than in the recent past.
• People are living more years beyond age 65 than in the past.
• As a percentage of the population, more people are living beyond 65 than in the past.
• People are retiring earlier than in the recent past.
• People are working fewer years than in the past.
• The age of eligibility has barely budged, in fact it was reduced slightly
• Women have increasingly entered the labor force since the 1970s. While this means more contributions, it also means higher payouts -- especially since women's adult longevity has increased more than men's.

Separately, birth rates have fallen, so we have fewer contributors as a percentage of the population.

Result? You have fewer contributors trying to support more recipients, at the same per-capita benefits.

It would be mistaken to say that the increased adult longevity is the only factor. But it's equally mistaken to say that it has no effect whatsoever.


The question isn't whether we are living longer but at what age.
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I addressed that extensively in my post. Please try to actually read what I write next time.


In any case of increasing life expectancy, it is nothing compared to the rise in costs.
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And which "rise in costs" do you mean? Surely you can't mean COLA, since the payroll taxes have also kept pace with inflation, until a few years ago. Could it be that SS costs are rising because... more people are collecting Social Security for more years?
 
mtm1963 said:
the trust fund exist on paper but there is NO money in it.

benefits are paid from the SS tax on everyone's pay check.
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If that were true, benefits would have been automatically cut every year since 2009 when the revenue from "the SS tax on everyone's pay check" failed to cover the expense of everyone's benefits.
 
jonny5 said:
Dynamically adjust it so it only brings enough to pay out. Then you actually have a small reserve to cover swings. The last time the rate was adjusted was 1988 and things have changed.
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Well, my solution is this. Since the FICA is treated like a tax rather than insurance anyway, change it to a variable tax that everyone pays on every dollar, and make everyone see their actual contribution.

Not everyone is aware of this, but the employer matches our FICA. we pay 6.2% SS and 1.45% medicare for a total of 7.65%. It is 15.3% of our wages.

Here's how we do it:

Make a one time mandatory pay increase of all income wage earners of 7.65%, and the employers no longer match the money.

Eliminate FICA (SS & Medicare insurances) and replace it with a 14.21% Social tax.

For every $100 earned, FICA is $7.65 leaving the employee with $92.35. Now the employee earns $107.65, and the 14.21% tax is $15.30.

$107.65 - $15.30 brings us back to the original $92.35.

The biggest thing I like about this is every tax payer now has a dog in the fight when it comes to congress spending money. Their vote will be tempered by more, by how it affects they "social tax." When congress needs to spend more money for all these pet projects, the Social tax is increased. When congress starts spending less, and starts paying the debt down, the Social tax can be decreased. As it sits now, we have 47% of tax filers that don't care how tax rates effect others, because they either pay no taxes, or get other peoples money back in forms like earned income credit.
 
JoeTheEconomist said:
If that were true, benefits would have been automatically cut every year since 2009 when the revenue from "the SS tax on everyone's pay check" failed to cover the expense of everyone's benefits.
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The problem is that SS runs a surplus every year. Congress just spends it. When SS no longer has a surplus, it will contribute to deficits and debt even more than we already have.

In 2009, SS took in $807.49 billion and dished out $685.801 billion. This is a $121.689 million surplus. Not deficit. Who told you it was in deficit in 2009?


By the end of 2013, congress has spent the accumulated surplus the SS phantom fund has of $2.764431 Trillion.

http://www.ssa.gov/oact/STATS/table4a3.html

The surplus for 2013 was only $32 million.
 
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Lord of Planar said:
The problem is that SS runs a surplus every year. Congress just spends it. When SS no longer has a surplus, it will contribute to deficits and debt even more than we already have.

In 2009, SS took in $807.49 billion and dished out $685.801 billion. This is a $121.689 million surplus. Not deficit. Who told you it was in deficit in 2009?


By the end of 2013, congress has spent the accumulated surplus the SS phantom fund has of $2.764431 Trillion.

Trust Fund Data

The surplus for 2013 was only $32 million.
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There is a point where the discussion leaves the tracks. It is what Moynihan said. You can have your own opinions but not your own facts. Social Security taxes do not cover benefits. The revenue that you are quoting includes interest on the Trust Fund that you say doesn't exist. It started running deficits in 2010, generally speaking I say that it has not produced any revenue to borrow since 2009. That means it produced some excess cash to borrow in 2009, but not in 2010.

"When SS no longer has a surplus, it will contribute to deficits and debt even more than we already have."

This is factually not true. When SS no longer has a Trust Fund (surplus if you will), benefits are automatically cut. This is why people have a discussion about the size of the benefit cuts in 2033.
 
Lord of Planar said:
Well, my solution is this. Since the FICA is treated like a tax rather than insurance anyway, change it to a variable tax that everyone pays on every dollar, and make everyone see their actual contribution.

Not everyone is aware of this, but the employer matches our FICA. we pay 6.2% SS and 1.45% medicare for a total of 7.65%. It is 15.3% of our wages.

Here's how we do it:

Make a one time mandatory pay increase of all income wage earners of 7.65%, and the employers no longer match the money.

Eliminate FICA (SS & Medicare insurances) and replace it with a 14.21% Social tax.

For every $100 earned, FICA is $7.65 leaving the employee with $92.35. Now the employee earns $107.65, and the 14.21% tax is $15.30.

$107.65 - $15.30 brings us back to the original $92.35.

The biggest thing I like about this is every tax payer now has a dog in the fight when it comes to congress spending money. Their vote will be tempered by more, by how it affects they "social tax." When congress needs to spend more money for all these pet projects, the Social tax is increased. When congress starts spending less, and starts paying the debt down, the Social tax can be decreased. As it sits now, we have 47% of tax filers that don't care how tax rates effect others, because they either pay no taxes, or get other peoples money back in forms like earned income credit.
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You lost me at mandatory pay increase. Two wrongs dont make a right. But I agree with the fundamental idea of getting rid of employer contribution to make it more transparent (though that would do away with passing that cost on to the general populace, something democrats like). The rest is just solving different issues than the basic revenue problem.
 
haymarket said:
Which is why we must take action to
1 - pop the cap on FICA contribution so that ALL 100% of earners pay FICA on all 100% of their earnings just like 93% of earners do today
2 - freeze benefit levels with a possible modest inflation increase

Studies and experts have demonstrated that if you do these two things, you solve over 80% of this financial problem.
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WOW! we might be in agreement here (stranger things have happened)... Do you "pop the cap" on the employee side only? Also Add to the list tighter scrutiny of disability benefits.
 
JoeTheEconomist said:
If that were true, benefits would have been automatically cut every year since 2009 when the revenue from "the SS tax on everyone's pay check" failed to cover the expense of everyone's benefits.
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your statement is not true.

evidently do you not understand the trust fund is full of IOU's? there is NO cash in the trust fund. ZERO nada nothing!!
 
mtm1963 said:
your statement is not true.

evidently do you not understand the trust fund is full of IOU's? there is NO cash in the trust fund. ZERO nada nothing!!
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The inability of people to understand anything but the most literal definitions saddens me sometimes.

The Trust Fund is full of "IOUs", but that doesn't mean there isn't money there. It's no different from when you put your money in the bank and the bank then loans it out to people wanting to start a business. This isn't even basics of accounting, it's just basics.

There is a Trust Fund. To put it in terms you might understand, there is a positive bank balance. Saying anything else is simply wrong.
 
Slyfox696 said:
The inability of people to understand anything but the most literal definitions saddens me sometimes.

The Trust Fund is full of "IOUs", but that doesn't mean there isn't money there. It's no different from when you put your money in the bank and the bank then loans it out to people wanting to start a business. This isn't even basics of accounting, it's just basics.

There is a Trust Fund. To put it in terms you might understand, there is a positive bank balance. Saying anything else is simply wrong.
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However the elephant in the room is how are we going to pay back said IOUs without massive income tax increases and/or a scorched earth policy towards government spending?
 
Slyfox696 said:
The inability of people to understand anything but the most literal definitions saddens me sometimes.

The Trust Fund is full of "IOUs", but that doesn't mean there isn't money there. It's no different from when you put your money in the bank and the bank then loans it out to people wanting to start a business. This isn't even basics of accounting, it's just basics.

There is a Trust Fund. To put it in terms you might understand, there is a positive bank balance. Saying anything else is simply wrong.
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there is trust fund full of borrowed money.
 
Winchester said:
However the elephant in the room is how are we going to pay back said IOUs
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The way we've always done it? You do realize (in simple terms, at least) we pay back the IOUs every month, right?
mtm1963 said:
there is trust fund full of borrowed money.
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Uhh, no. That doesn't make sense at all. We borrow from the Trust Fund in order to protect it from falling victim to inflation. When it comes time to pay benefits, we pay back the Trust Fund (with interest, through payroll taxes) what we borrowed so we can then make payments.

Here's some basic info.

http://www.ssa.gov/oact/ProgData/fundFAQ.html#a0=2
 
Slyfox696 said:
The way we've always done it? You do realize (in simple terms, at least) we pay back the IOUs every month, right?
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Right by borrow more. Any day of reckoning in your future?
 
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