Social Security

Easy Solutions To Fixing Social Security😎

In response to this article in the New York Times, We’re Living Longer. That’s Great, Except for Social Security a reader wrote this:

NOV. 24, 2015

To the Editor:

“Living Longer Is Great, Except for Social Security” (The Upshot, Nov. 17) suggests that there is no good solution to the “problem” of people living longer.

First, not everyone is living longer. Indeed, in your pages recently you can find evidence that the poorer and less educated among us are seeing their lives actually shortened, especially white men.

Second, the solution to ensuring Social Security’s solvency seems clear: Increase or eliminate the cap so that people earning more than $118,500 will continue to pay FICA taxes, and change the index for inflation for Social Security recipients to one that more accurately reflects what seniors pay for: medication, insurance, food, transportation and so on.

WENDY BECK
San Francisco

There you go, simple solutions for a complex problem … and from San Francisco no less … who knew?

Eliminating the cap does not solve the solvency problem plus what she doesn’t say is to make a major inroad on the solvency issue means eliminating the wage cap, but freezing the benefit at the current level. In other words, pay more and get less, but you get a warm feeling because you are paying for someone elses retirement … which by the way, was not the intent of Social Security. And, changing the COLA index may well add to the trust funds deficit. The naive left strikes again!

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Categories: Social Security

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3 replies »

  1. “In other words, pay more and get less” You have said in other posts senior’s have not paid for the benefits that they are receiving. You can’t have it both ways. The tax has to be raised to cover current and future benefits. What is wrong with that? The people paying Social Security taxes today will get a benefit when they reach retirement age in the future. I do believe future benefits should only be raised the same as the COLA current retirees receive. Lifting the cap and raising the tax just the inflation rate each year would do it The current system only collects tax on 82% of the wage base. A person making $250,000
    only pays a 2.9 Social Security tax, but will receive the max benefit. The Social Security tax has not been raised since 1990. If it had been raised the same as the COLA since 1991 it would be 11.77% today, more in line with the benefit that the retiree receives.

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    • A person earning $250,000 pays tax up to the limit of wage base and gets a benefit on that limit the same as a person earning $120,000 which of course generates a benefit which is far less as a percentage of income. Actually the SS formula is skewed to provide a higher benefit to lower income people.

      As things stand now without changes, those paying taxes today will get only 75% of the benefit they actually earned.

      The tax rate should be increased periodically to keep pace with the liabilities and promised benefits. That’s what Congress does not do.

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      • The higher earner will get a much bigger check and if he has a wife that never worked she will get 50% of his benefit, equal to more than the average social security benefit. If they both live into their 80s they will do so much better than lower income people. The SS system was set up to help the lower income worker, because of low pay and less benefits than the higher income worker. But, I believe the top earners come out way better in the long run. Max annual benefit with spouse at age 62 = $32,805, at full retirement age = $47,934, at age 70 = $63,018, 15 years = $945,270 That makes my family annual benefit of $13,200, 15 years = $198,000 look quite small. In reality the system pays out more in actual dollars to the higher income earners who do not need the money as much as the lower income earners. Yes I know the high earners pay more into the system, but it does not effect their standard of living as much. They could afford to take a 25% cut, more than the lower income worker. But I do not believe the cuts will happen, Congress may wait until the last minute, but they will have to fix it by raising taxes or borrowing.

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