Social Security

[CBB_Fan]

Sam Johnson (R-Texas) has introduced a bill to the House to significantly cut Social Security benefits. The easiest to digest provision is raising the age from 67 to 69 and reducing benefits to families of disabled and retired workers.

The estimate is that every group except those making around $12,280 in 2016 who have worked for 30 years would see large cuts, and younger people will be especially hard hit seeing benefits cut approximately in half. An "average" worker making $50,000 would see checks shrink by 10-35%.

Thoughts?

[wufan]

I haven't seen it. Is it actual cuts (it sounds like it) or is it a reduction in increases? Something's got to happen eventually. I'm not sure if this is what it needs to be, but raising the age seems like a necessity.

[wufan]

Here's Sam Johnson's version: http://samjohnson.house.gov/news/doc...umentID=398516

I'm sure it is somewhere between his version and the Huffington Posts version.

[wufan]

Looks like it's a decrease in increases mainly that hits the high income earners mainly and the middle income earners some. The low earners that stayed in the work force will see an increase in benefits vs the current system.

[WuDrWu]

It's not enough, but it would be a step in the right direction.

I want it to hurt me before I ask my children or grandchildren to pay.

Is there any chance that in my lifetime people will stop referring to decreasing future increases as "cuts"?

[WuDrWu]

The easiest to digest provision is raising the age from 67 to 69 and reducing benefits to families of disabled and retired workers.

I'm sure it's me and my poor reading comprehension, but where does it say it's reducing benefits to families of disabled workers, unless those people are high income earners?

[1972Shocker]

I think extending the age for full benefits needs to happen. I think some kind of means testing will become necessary as well. We already have means testing of sorts with Medicare as receipients with higher incomes pay substantially higher premiums for the Medicare Part B coverages. Since it is withheld from their Social Security benefits many othem don't pay much attention to it or even realize it.

[ShockTalk]

I think extending the age for full benefits needs to happen. I think some kind of means testing will become necessary as well. We already have means testing of sorts with Medicare as receipients with higher incomes pay substantially higher premiums for the Medicare Part B coverages. Since it is withheld from their Social Security benefits many othem don't pay much attention to it or even realize it.

I've always believed that SS should be considered a welfare program and treated as such by the government, and not a retirement plan or major supplement to one's retirement needs. The problem is the government turned it into a retirement program over many years instead of keeping it as a bare subsistence program. Due to this, too many people are relying on SS far too strongly for their retirement.

Add to this, many turning 50-55 and older are being closed out of the work force or reduce to much lesser employment. Employers rehire them as contract workers getting out of providing benefits which the workers now must provide for themselves for the same pay or less. Employers say their job is being eliminated, but in fact, is simply being renamed and/or combined with other duties who they hire younger workers to do for less wages. The long time employees became too expensive to keep around. Of course, some work is simply sent outside the US.

Another hurtle they face is finding new relevant employment. Relevant being similar job level and pay. So they try to find lesser work and are told they are over qualified for that job (nice phrasing for "you're too old").

Many may had hoped on retiring at 65. Even if they were planning to not rely on SS, the question is, can many find good enough jobs to pay their bills, much less set aside $s for retirement (assuming they're not having to dip into their own retirement $s to make ends meet). Can they even find reasonable work at 60-70 that will allow them to set aside funds for retirement? And now we're talking pushing full retirement for SS back further.

Myself and wife were self employed most our life, so we didn't face this, but I know many who are facing these problems. If you're going to monkey around with SS, maybe you should be sure that there is ample quality employment for those 55 and up rather than making them more dependent on SS in the future and holding that full retirement stick farther out in front of them. End rant.

[Aargh]

I don't see how SS can be considered a welfare program. The government took money from me for 40 years with the promise of giving it back when I was older.

Now, some want to redefine that as welfare? If I had been able to keep what was taken from me, I don't know if I could have done as well as what I'm getting now, but if the government had invested my money instead of Congress spending it, there wouldn't be a question today of whether SS is welfare.

In 1999, I was the business analyst for a software company. Requirements for my job were 10 years experience in accounting, 5 years programming experience, and 2 years experience in SQL. My wife was the manager of the computer department at a bank. Between January and May of 2000, the software I was working with was sold to a company in England, and the bank outsourced their computer work to a company in Kansas City. Our income dropped to $0.

We were both too old and/or incredibly overqualified for any jobs we could reasonably apply for. That moved me from looking at things from a middle class viewpoint to an "OMG, where is the next meal coming from" viewpoint. Now, there's talk of messing with Social Security, which doesn't provide the money to cover my "survival" monthly expenses, but I'm able to handle that with the current situation.

Mess with my Social Security and I will not only vote against any in Congress who want to do that, I will devote my life to getting others to do the same.

Until life screws you over with things totally out of your control, I doubt your ability to understand things from the wrong end of the financial spectrum.

[wufan]

I'm not sure that @ShockTalk: or @Aargh: are addressing the good or bad of the current bill proposal. Why do you like/dislike it? Status quo isn't going to get it done.

[ShockTalk]

I should have expanded my first sentence to read: I've always believed that SS should be considered the welfare program it started out to be and to be treated as such by the government, and not a retirement plan or major supplement to one's retirement needs.

This has been a long, festering problem. I remember old Sen. Peppers and his co-hearts getting re-elected time and time again by "improving" SS. All those improvements did was make the urgency for people to prepare for themselves for their future slowly disappear. A June 2015 Government Accountability Office analysis found that that average Americans between the ages of 55 and 64 have accrued about $104,000 in retirement savings.* That's not retirement savings! That's an emergency fund.

What if you lost your job, needed major renovations to your home? Does the average American have the ability to not dip into what they have earmarked for retirement. That nice pension program you had that was to provide a big portion of your income in 10-15 years basically disappeared when you were replaced by cheaper labor abroad or by some 25-30 year old here. $500,000 at a conservative return of 5% will get you $25,000 a year and you can't dip into that principal for emergencies or a new car or your return will be less. I believe the average income in America is around $50,000 (assuming household).

The poor management and mismanagement of SS funds has just added to the problem. Most people (right or wrong no longer matters) have become dependent on getting SS at an age they planned on. Pushing the "full retirement" age out further just makes the situation worse for many older Americans who are still in the work force, earning less than they use to.

I don't have the answers, except to tell anyone under 45 to not plan on seeing a nickel of SS retirement funds and if you do not do it yourself (saving for retirement) don't plan on anyone bailing your ass out later. On a national level, we need to find a way to encourage (or discourage sending jobs elsewhere) more quality jobs with more diversity in those job markets. Anything our government does today, needs to also have our children and grand-children's future strongly in mind.

I'm pretty pessimistic these days. What I see is a people and it's government heading more socialistic (in a bad way), away from what this country was founded on. Capitalism is becoming exactly the "bad word" socialists say it is, when it does not need to be that way. You will always have leaders and followers, but neither need to be a bad thing.

Since I don't explain myself very well, should probably just stop here and not dig a deeper hole.

Read more: The Average Retirement Savings by Age for 2016 | Investopedia http://www.investopedia.com/articles...#ixzz4SYRgjkvv

[Jamar Howard 4 President]

Mess with my Social Security and I will not only vote against any in Congress who want to do that, I will devote my life to getting others to do the same.

Sam Johnson's plan makes no change to the Full Retirement Age for anyone currently 55 or older. Current age 49 to 55 see a phase in change. Age 48 and younger see FRA increased from 67 to 69.

Sam's plan is actually considered aggressive in this regard. Most plans I've seen don't start impacting anyone unless they are much younger... 20's and 30's mostly.

@Aargh:, I know you were talking about more than just FRA, but I'm pointing out this specific example because it bugs the crap out of me. Nobody has yet proposed changing FRA for anyone who is retiring in the next decade. I think modifying FRA for those who are still 20 years away from it is perfectly reasonable.

[Jamar Howard 4 President]

I also agree with @ShockTalk: that we need to return to a more welfare-like system of Social Security, rather than a system of "forced retirement savings" for even the wealthy. It boggles my mind that a family who makes the 2016 equivalent of 200k per year averaged over multiple decades should be giving the government money in order to get it back later. Tax that family a small amount to help families who made less during their careers retire with dignity, and otherwise, just leave the high income family alone. At the very least, give that family the option to opt out and do their savings on their own.

[shox1989]

Here's Sam Johnson's version: http://samjohnson.house.gov/news/doc...umentID=398516

I'm sure it is somewhere between his version and the Huffington Posts version.

I didn't see many details in that link. At least not ones I could understand. About the only thing I could tell for sure that the plan does is delays the age to receive benefits for those currently under the age of 55.

[shox1989]

I also agree with @ShockTalk that we need to return to a more welfare-like system of Social Security, rather than a system of "forced retirement savings" for even the wealthy. It boggles my mind that a family who makes the 2016 equivalent of 200k per year averaged over multiple decades should be giving the government money in order to get it back later. Tax that family a small amount to help families who made less during their careers retire with dignity, and otherwise, just leave the high income family alone. At the very least, give that family the option to opt out and do their savings on their own.

This makes sense to me. Just tax the rich to help the less well off retire in dignity and then leave them alone to retire however they want to.