Government

Yes, Social Security needs fixing … and that’s in addition to the fiscal problems and it has nothing to do with Ryan or Trump. 

Despite the headline, which the authors apparently couldn’t resist, this story has nothing to do with Trump. It has to do with the costly and unfair provisions contained in the Social Security law. Over many decades Congress has tinkered with the Social Security law making it both complicated and unfair

Source: How Senior Daddies — Like Donald Trump — Are Eligible — ProPublica

Then there’s the Agatha Christie Benefit: Some divorced people get a bonus from Social Security only if their former spouse dies.

And the Serial Spouse Bonus: If someone has had, say, three spouses, each might get the same full spousal and survivor benefits available to the one lifetime spouse of another worker — provided that each marriage lasted at least 10 years. If a marriage lasts nine years and 364 days, the spouse gets zippo.

The Equal Earner Penalty means that a couple with two people each earning $40,000 gets about $100,000 less in lifetime benefits than a couple with one spouse earning $80,000 and the other earning nothing. This happens even though both couples and their employers pay identical Social Security taxes.

Many if not most of these inequities would be illegal in private retirement plans.

Or how about the:

I’ll marry you someday bonus: Generally, you must be married for one year before you can get spouse’s benefits. However, if you are the parent of your spouse’s child, the one-year rule does not apply. Let’s see; pay for one pension during working years and at the last minute get a 50% bonus pension and a 100% bonus survivor benefit.

And they go on and on. No wonder the Social Security Trust is headed toward insolvency.

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3 replies »

  1. Fairness? There is no requirement that the program be fair. There is no requirement that the program be equitable. There is no requirement that the program be logical. And, importantly, there is no requirement that the program be reliable, solvent and sustainable.

    This is a program initially designed in 1935, which has been adjusted and updated from time to time to buy votes. It is not a contract. It is not a pension scheme. It is not insurance. So, comparisons to contracts, pensions and insurance are stupid and without value.

    Most important, remember, Congress could change everything tomorrow, including eliminating the entire system.

    Your fix is someone else’s rip-off!

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    • Jack, you are spot on.
      We all know the only fix to SS if you want to keep the benefit train moving is to raise the SS tax. There will be no cuts, maybe some small adjustments to COLAs. Or, come up with an additional tax to fund the projected shortages.
      I like the idea of a 1% tax on all financial transactions, that way the whole economy supports the system.

      My wife and I just received our first SS benefit checks at age 62. With my wife’s SS benefit of 35% of my FRA it puts us at $1288 per month. $100 more per month than my FRA at 66 and 4 months. I will get everything that was paid in SS taxes back in just 32 months. I am saving the government about $75,000 by starting my benefit at 62, if I live to 85. I do not know where the money is going to come from to pay all the baby boomers benefits. I would hate to see the national debt at 40 trillion plus in 2040, but that looks like it is where the politicians are driving the train.

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      • You aren’t saving the government a penny. The government has no money, it has other Americans taxes. And you are not saving the Social Security Trust either. The funding is based on a 70 year old retirement age. Starting early requires an actuarial adjustment to make the cost neutral. There is no need to change the funding method, just be honest and adjust the current tax method so that is always covers the projected liabilities.

        Like

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