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Thread: 2014 Social Security Trustees Report

  1. #21
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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by Slyfox696 View Post
    Nonsense. If the Trust Fund were to run out in 2033, we could still pay over 75% of the benefits under current law. Hell, it was only in the last few years (when the economy turned bad) when the Trust Fund actually began paying out, after decades of taking in more than was spent on benefits.

    We have 20 years to raise SS taxes to the point where we again take in as much as we take out. Like I said, I'm not really that alarmed.

    Source: http://fas.org/sgp/crs/misc/RL33514.pdf
    Since you are OK with 75%. Just cut it to 82% today. You will save 7%.

    Quote Originally Posted by Slyfox696 View Post

    We have 20 years to raise SS taxes to the point where we again take in as much as we take out. Like I said, I'm not really that alarmed.
    That is like someone who falls out a 20 story window saying I am not alarmed because I don't have a ground problem for another 19 floors.

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by nic11 View Post
    Right, and before a single retiree misses a check the appropriate measures will be made.

    Think about what the political disaster there would be to those in power at the time.


    David Cay Johnston:

    With the coming bulge in retirees, Social Security will start to pay out more than it takes in 2021, according to projections in the latest annual report. Under current law the program would be able to pay only about three-quarters of promised benefits starting in 2033. But that scenario can easily be avoided through a combination of four policy changes that would ensure full benefits continue to be paid, though I fear Congress will continue to do nothing.

    One would be restoring the Reagan standard that 90 percent of wages are covered by the Social Security tax, which now applies to only 83 percent of wages. If we went back to the Reagan standard, the Social Security tax would apply to close to $200,000 of wages this year instead of $110,100.

    Two would be raising the Social Security tax rate by two percentage points. That tax hike could be smaller or even avoided if, three, we reignited the growth in wages. Median wages have fallen in 2010 back to the level of 1999. And, four, it would help just as much if we created millions more jobs, which since 2000 have grown at only a fifth the rate of population increases.


    Social Security is not going broke | David Cay Johnston
    Even when his writing is timely - and here it isn't - the man is not terribly reliable. The demographics of the 3rd rail are crumbling. 5 years ago a near majority of people expected to be completely unaffected by the crisis forming in SS. Just 5 years later a majority of voting aged Americans expect to retire after the trust fund is exhausted. 5 years ago few voters would be affected. Today that changing rapidly.

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by azgreg View Post
    My thoughts come from the idea that politicians are more interested in votes than governing. I'm one of those 50 year olds you are talking about and since I see what's happening I have taken my retirement into my own hands. I will not need my SS benefits to get by. If they are there than nice, but I'm not counting on it.
    I don't disagree with you at all. I think at some point politicians realize that the votes are in reform rather than ignoring the problem. You are in the minority. Generational savings studies show that we have a decreasing level of preparedness for retirement.

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by JoeTheEconomist View Post
    Since you are OK with 75%. Just cut it to 82% today. You will save 7%.
    No, I'm just not freaking out about it. You and I have discussed this already.

    That is like someone who falls out a 20 story window saying I am not alarmed because I don't have a ground problem for another 19 floors.
    No, it's not even close because the person knows at the bottom of the next 19 floors is the very end. In 20 years, Social Security will not be at its end. Why you continue to try and push this false narrative, when you clearly know better, is beyond my understanding.

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by JoeTheEconomist View Post
    The Trustees have released their report the summary is found here : News, the full report is found here : The 2014 OASDI Trustees Report

    The focus continues to be on the length of the fuse ("The projected point at which the combined trust fund reserves will become depleted, if Congress does not act before then, comes in 2033") rather than the size of the bomb which is found on .... page 192. The unfunded obligation grew to $24.9 trillion in present value. Or in Trustee speak : " If the assumptions, methods, and starting values had not changed, moving the valuation date forward by 1 year would have increased the unfunded obligation by about $0.9 trillion, to $24.0 trillion. The net effects of changes in assumptions, methods, law, and starting values increased the infinite horizon unfunded obligation by an additional $0.9 trillion, to $24.9 trillion in present value."

    The highlights : the system's shortfall grew by more than the system collected SOLELY because of the change in year.

    Today more than 50% of the public expects to retire after the Trust Fund is exhausted.

    Someone retiring today at normal retirement age has a longer life expectancy than Social Security expects to pay scheduled benefits.
    That's not true. There is a growing disparity in life expectancy between the haves and the have-nots. Yes, conservatives say we need to raise the retirement age to 67 on janitors because lawyers are living longer.

    Moreover, even if the trust fund reserves are depleted in 2033, SSA will still be able to pay about 2/3 of the benefits. But the solutions are what really doesn't make sense, which is to cut benefits now so we won't have to cut them in the future.
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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by Slyfox696 View Post
    Um, what math? I gave you the math. What math are you talking about?
    So why would I look at the math, if you admit you're not sure what the math is?

    20 years is plenty of time when you understand how Social Security works. Congress could pass a law tomorrow which would make the Trust Fund solvent for the next ~75 years, which shows you how little of a problem this truly is, as long as Congress does their job. And since Social Security is a pay as you go system, there really isn't much of a danger for the next 15+ years.

    If you are not interested that is fine too. But then, I don't understand why you posted at all. The fact that payments are already coming out of taxes, the size of these payments will grow steadily till they reach 77% of social security payments (in addition to the contributions being made to the program by the insured) and will then reduce payments to the recipients is non ground for complacency. Do you have any comprehension of what the implications are for an economy that is already heavily in debt and is running a deficit of the size we are? Such equanimity might have been acceptable before 2007, though even then it would have shown a very low understanding of the dynamics involved. But now it is irresponsible. Absolute irresponsibility.

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    Re: 2014 Social Security Trustees Report

    Bah, Its a simple fix for the government. Just have them infuse the trust fund with more money. I'm sure they can get a loan for it from China. They know we're good for it!
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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by joG View Post
    If you are not interested that is fine too. But then, I don't understand why you posted at all.
    Because people have absolutely no idea how Social Security works and become alarmists for no reason. So I try to shoot down the false sense of danger.

    The fact that payments are already coming out of taxes
    Like they always have. That's exactly how the system is set up.

    the size of these payments will grow steadily till they reach 77% of social security payments (in addition to the contributions being made to the program by the insured)
    What? This sentence of yours makes absolutely no sense. Who is the "insured"?

    and will then reduce payments to the recipients is non ground for complacency.
    Maybe you don't understand. We can pay full benefits from Social Security for the next 20 years, without having to do ANYTHING (theoretically, since the economy is never completely stable and prone to positive and negative swings). 20 years, full payment, no problem.

    We have 20 years to figure out and pass a law which allows us to meet the full financial obligation. Congress could pass a law tomorrow and by Friday we could have SS payed for for the next ~75 years. And even if no law is EVER passed, we STILL can afford to pay out over 75% of benefits as defined under law.

    Yeah, it would suck for those receiving SS to only get 77% of what is legally promised to them under law, but it's not like they are going to get nothing. Social Security is a pay as you go system. There will never be a time where people aren't getting paid anything.

    Do you have any comprehension of what the implications are for an economy that is already heavily in debt and is running a deficit of the size we are?
    Do you have any idea what you are talking about? How does debt/deficit have anything to do with Social Security, when Social Security can ONLY be funded, under current law, by payroll taxes?

    Such equanimity might have been acceptable before 2007, though even then it would have shown a very low understanding of the dynamics involved. But now it is irresponsible. Absolute irresponsibility.
    No, what's irresponsible is how some Chicken Littles run around claiming the sky is falling and do not seem to understand what the acorn really is.

    I'll try one more time to explain it to you, because I do not get the feeling you truly understand how Social Security works.

    1. Current workers pay payroll taxes. These taxes are set aside specifically, and only, for Social Security.
    2. Social Security payments are made from today's employees' payroll taxes.
    2a. For example, if I'm working and you're drawing SS, the tax I pay in my next check theoretically goes straight to you.
    3. The excess of payroll taxes paid went into the Trust Fund. For simplicity's sake, the Trust Fund does NOT pay Social Security benefits unless the amount of taxes is not enough to cover the amount of benefits.
    4. We are currently in a situation where taxes to not make enough to pay out benefits, so we are now tapping into the Trust Fund after the decades of overpayments which were made.
    5. We have enough in the Trust Fund to supplement current worker taxes to pay full benefits for the next 20 years.
    6. If no law is changed, if the economy does not go through a prosperous period or anything which affects how long we can make payments, then those collecting Social Security will STILL receive over 75% of the benefits owed to them. The amount SS collects in taxes will be enough to still payout 75% of benefits on time.
    7. Since the Trust Fund is ONLY used to supplement payroll taxes, any law passed which brings the amount collected in payroll taxes even with the amount paid in benefits means the Trust Fund will no longer be drained.


    This is why having 20 years to do something about it really isn't something to become alarmed over. If we passed a law changing Social Security now or passed one in ten years, it will have absolutely no change in reality.

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    Re: 2014 Social Security Trustees Report

    I seem to remember back in the mid 70's we were told that the SS fund would be completely depleted by the mid 90's. Didn't happen. If it was a real problem, why didn't the politicians deal with it at that time. The short answer is the SS is a campaign talking point for both sides. The main problem is the American people took money out of the fund and replaced it with IOU's via the politicians. Now it's time to replace those IOU's with real money. If we keep re-electing the same politicians over and over the problems will never be fixed.
    I confess, I did it, I let the dogs out.

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by Slyfox696 View Post
    6. If no law is changed, if the economy does not go through a prosperous period or anything which affects how long we can make payments, then those collecting Social Security will STILL receive over 75% of the benefits owed to them. The amount SS collects in taxes will be enough to still payout 75% of benefits on time.
    As an economist I was most interested in the economics of Pension schemes. The exact details are important for precise predictions. That is why I pointed out that I knew those for two countries and had only cursorily looked at the US system. In looking at it, the dynamic was such, that I saw no reason to think it would work better that the other systems I know well.

    The System will cause massive problems within a relatively short period. Anyone that has ever had to do with national accounts and growth will see this in minute. Whether the initial crunch is because this or that part of it breaks and how or the insured just lose there payments is a different story and uninteresting to me at this point. But I did look briefly at the official ssa link and found this sentence that makes your assertion look very optimistic, indeed:
    "In the annual Trustees Report, projections are made under three alternative sets of economic and demographic assumptions. Under one of these sets (labeled "Low Cost") the trust funds remain solvent for the next 75 years. Under the other two sets (the "Intermediate" and "High Cost"), the trust funds become depleted within the next 20 years. The intermediate assumptions reflect the Trustees' best estimate of future experience."

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