Social Security

Social Security really is important- but how much more are seniors entitled to-and who should pay more?

The recently announced 0.3% COLA for Social Security has again triggered calls for higher benefits, for more money for our seniors, we are entitled is the rallying cry.

Why do we seniors deserve more and who do we expect to pay for it?

Worthless bonds? You mean like all the debt held by foreign investors?

Worthless bonds? You mean like all the debt held by foreign investors?

The calls for higher benefits are frequently based on inaccurate information. Many, perhaps most, Americans and especially seniors do not understand how SS works and often simply reject the facts. This is clearly evident from these sample Facebook posts.

According to a AARP article, about 1 in 3 elderly Social Security recipients relies on Social Security for 90 percent or more of their income and, on average, more than half rely on it for 50 percent or more of their income.

 

General funds cannot be used for Social Security

General funds cannot be used for Social Security

This is sad and really sad. What happened since 1935 when the new Social Security insurance program was supposed to provide a minimum degree of security?  Well for many people it appears that’s what it does. Social Security fulfilled its promise but in too many cases, workers did not accept their responsibility.

There are three basic problems we face (1) assuring that Social Security is not only solvent but sustainable, (2) coping with the cries for higher benefits for existing beneficiaries and (3) determining the right goals for Social Security for younger generations (who do not have pensions even at the modest level of current seniors, are not savers and who in many cases will have dependent children in college as they reach traditional retirement age).

While politicians call for higher contributions from the so-called wealthy we also expect millennials to save more for their future. Higher income Americans cannot accomplish all three of the above goals alone.

Nobody stole Social Security money

Nobody stole Social Security money

How much more are we willing to take from the working generations to give to those now collecting Social Security? What are the consequences of this kind of income shift?

We can’t focus on the seniors of today at the expense of younger Americans who will face even more difficult retirement challenges in the future.

Duly noting the unfortunate exceptions, after living ones life as you see fit for 40-45 years, why are you entitled to anything more from society, especially the younger Americans still making their way? It is unrealistic to ignore the consequences of taking from one generation to give to another.

Many of the comments from seniors suggest that “unnecessary” federal spending be redirected to them in the form of higher COLAs because they earned it. What about all the needs of the rest of society that wants a chance to reach retirement in a reasonable financial state?

Since 2010 Social Security has paid out more than it receives in taxes

Since 2010 Social Security has paid out more than it receives in taxes

Seniors should keep a few things in mind.

 πŸ€” you had your shot at life and planning for retirement πŸ€” nobody stole any Social Security money and you are not going to lose your benefits πŸ€” you did not pay for all your benefits and certainly not COLAs πŸ€” you get back all the Social Security taxes you paid over your working life in a few years following the start of your benefits, even quicker if a non-working spouse also collects benefitsπŸ€” the Social Security trust investments in Treasury bonds earn billions of dollars in interest each year that is currently used to pay benefits.

Full disclosure; I am 73 years old and have collected SS since I was 66. My wife and I have collected in benefits every penny contributed in payroll tauxes. I am more fortunate than most. I also have a pension and during more than fifty years of working I traded a lot of “want” spending for savings. I am also fortunate not to have experienced any significant events in life beyond my control that could destroy fiscal security.

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7 replies »

  1. Several years ago our local paper published a letter to the editor from a woman complaining that there was no increase in the COLA for Social Security that year. She said, “We NEED that raise.”

    Come to find out she and her retired pharmacist husband have a lovely home on the waters of the Puget Sound, a home worth well above the average home price for the area. Well, I guess she and her husband needed that increase in social security to pay for her high real estate tax on her waterfront home.

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  2. Dick, you used the right word in your question/challenge:

    Social Security really is important- but how much more are seniors ENTITLED to-and who should pay more?

    ENTITLED – that’s the whole point. Almost all of the comments you posted from individuals disappointed with their .3% COLA have at least a partial theme that people think they EARNED these benefits, that they PAID FOR these benefits.

    So, until we come clean with all Americans that there is no deep pocket here, that we can’t send the bill for the cost of COLA to the French or someone else, then, by definition, AMERICANS are the only source for taxes to fund these benefits.

    It is precisely because all prior Congress’ DELIBERATELY spent the wealth of future generations, long before they went out to earn it, spent it to buy votes TODAY in the form of benefits people never funded that we find ourselves in the position reflected in your post.

    You keep telling people the truth. You need to keep doing so for another 80 years, shouting down Nancy Pelosi, Harry Reed, Hillary Clinton and Donald Trump as well as hundreds of other so-called political “leaders”. People aren’t listening because they have been lied to for over 80 years – where Congress and other government officials, and weenies we have had for president, such as FDR, Johnson, and Bush II, each of whom massively expanded entitlements but funded them, financed the improvements, from earnings and wealth to be earned by FUTURE generations of workers, people who, at the time, WEREN’T VOTERS at the time the weenie political idiots made the promises.

    So, no, never would these cowards propose a system that was sustainable. They know Americans want the best benefits YOUR money will buy.

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  3. You mention that Social Security recipients had a chance to save, the price of a car today was the price of a house then and our incomes were considerably less making our Social Security benefits less than those retiring today, so in order to keep up with the costs here, I have had to liquidate my stocks, and other items in order to be able to continue to live in the community. When we were younger we were able to cut our lawns, repair our cars, and not use so many Specialists or meds, all of which cost extra money that the younger generation doesn’t have to deal with (paying people to do the things we once were able to do). Groceries are sky high and homeowners, and car insurance continue to go up, then there are house repairs, have any of you tried to fix a leaky faucet when it starts dripping – most senior women don’t know how and have to call repair men to fix it. When we ask for the announced over 65 with no accidents with our insurances, they tell us they don’t have that policy nor do they have insurance to drive a car for pleasure only, it includes work, school and pleasure all in one category which makes it impossible to save any dollars in insurances.Then the HOA’s want you to do what? When the bylaws say they can’t force you to spend money, so how can one plant grass, weed, etc without spending money! (You try to find a place near Houston without an HOA) Now Medicare will increase from $104.90 which automatically comes out of our checks before we even see them deposited, so any increase in Social Security will be nil. When encouraged to try to remain in the community it is very discouraging when all these expenses have to be added to our budgets in order to live, and a vacation – what is that? Where is the “extra” to be able to take one. Our daily living expenses cost so much to continue to live in the community that a vacation is not possible, So, you tell me how someone is supposed to survive on the little increase that is not an increase once Medicare comes out which is an insult to our intelligence and would like to see Congress live on what we receive and have to experience the “lack of” with no money in our pockets.

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    • You miss the point I fear. Saving and investing over a lifetime means the value of that grows over time and you are also able to save more. Social Security was never meant to live on, but a basic amount. Why is anyone trying to live on Social Security surprised that it is very hard to do?

      The fact you are selling stocks to live on is not bad thing. Isn’t that what they were for?

      I bought my house 45 years ago for $59,000 and today it would sell for $550,000. Everything goes up over time including the value of investments.

      The point is that past generations and current workers are making a big mistake looking to Social Security as a primary income source.

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      • Good Point. Our young folks do not save a thing. I want it now! Why wait we can always put on the plastic card and pay on time. Problem is the wants keep growing and before you know it they owe more than they can pay. I continue to get calls from my discover card that I can negotiate a lower interest rate. Continue to tell them I could care less about their % rate as I never spend more than I can pay off at the end of the month.
        Our first house was bought 49 years ago for $24K, sold for $165K, bought our next for $180K and sold 10 years ago for $500K. I only purchased a home I could afford. Every time I got a raise during my 43 years at my firm (yup I was a fossil) I would increase my 401K contribution. If I didn’t see it in the paycheck I would not spend it. Really it is easy if you stay within your means. Granted there are some that do not have a 401K but most get raises and they need to designate a portion to a savings plan of some sort. There is a future and one needs to prepare for it. That is one reason I retired at 60 and living comfortably in Florida. Yes not Income Tax in Florida. Hooray!!!!

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    • Besides the misbelief that social security was to provide a full retirement benefit, I can’t believe that someone who lived through the 14% inflation rate of 1980 did not know that the cost of living only goes up and does not magically stop at 60. The cumulative rate of inflation for the last 50 years is 645.1%. One would need to save 6.5x the amount of money they were spending when they first start working to maintain the same standard of living in retirement.

      Amazing enough, if you save 10% of your earnings from 1985 until now in a retirement fund, you’ll have that money. At least that is what my 401K has after 31 years. It is one thing that financial advisers got right in the 1980’s.

      With the low rate of returns, I would save 15% today.

      http://www.usinflationcalculator.com/.

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