Here's how you fix Social Security

[CTLawGuy]

The only way to reasonably ensure the long term stability of Social Security is to find a way to keep its outlays consistent over time as well as its intake.

We know that a few things are true:

1. People are living longer and healthier
2. The ratio of workers to retirees is shrinking

How do you do shore it up for the long term>:

Raise payroll taxes?

Won't work. It'll help in the short term by putting more revenue into the system, but as the two above trends continue in the long term, you'll have to keep raising taxes and raising taxes to keep afloat, until you've taken everything from workers.

Reduce benefits?

Won't work either. As you have more and more retirees over time, you'll have to keep reducing and reducing to cover everyone, until the benefits are just gone.

Expand the tax base?

this means raising the taxable amount of money from its current cap of about $80,000. It'll have the same long term effect as raising the tax rate, except it'll take longer for the system to collapse, as you run out of base to expand to.


The only way I see to fix social security for the long term is to adjust the retirement age. This is not just randomly raising the age, this is something at least quasi scientific.

What you do is index the retirement age to be a certain percentage of the average life expectancy. And you start for people born the year that this plan is enacted. It is unfair to hold back benefits for people who are currently working and planning to retire at 65. People born today will expect a different retirement age and will adjust their plans accordingly.

For each person born in a specfic year, there is a stable retirement age. However, people born in different years can have different reitrement ages. The logic is, as people live longer, they are healthier and can work longer (which I understand may not always be true).

The longer the life expectancy is, the greater the number of living retirees there will be. If the retirement age goes up as the life expectancy goes up, itll maintain a reasonably constant number of beneficiaries over time, and therefore a stable level of outlays over time, no matter how long people live.

Also, when the retirement age goes up, it will increase the number of people still working and paying into the system.


I realize that this is not a perfect solution. But its the best I can think of. Everyone who is working now would keep the same retirement age, but people born today and in the future will be able to plan for a later retirement age and will hopefully be healthier and more able for a longer time.

[gmoney]

1. raise the "cap" on income for withholding Social Sec/Medicare

The current cap is like $87K. Just raise that cap to $200,000 or so, and you'll increase revenues by a significant percentage (50%?)

[CTLawGuy]

2. will that be viable in 200 years?

NT

[NuttyFluffers]

4. obviously not, because of inflation.

hence you raise the cap again accordingly.

tah-dah! that was easy!

[CTLawGuy]

5. not quite

in 200 years people could be living an average of 120 years.

Also, as inflation raises the nominal wages of everyone, it will also raise the nominal costs of living for everyone. So any help you get from inflation will be eaten up by the greater needs of the retirees.

If the age stays 65, and people start living til 120, there won't be enough workers to cover all the retirees who will be around, and then you have a problem that raising the tax base or inflation will not fix.

[gmoney]

13. Amazing that people believe there will be anything left in 25 years

The way Bush is running things, we'll be lucky to last 25 MONTHS without total economic collapse and/or full on thermonuclear war... I'm not being glib. "Thunderdome" here we come.

It's asinine that Bush is going to be able to sell privatizing Social Security as a solution to a problem that's more than 50 years out while we completely sell out the present to make it happen...

[Delphinus]

21. I'm 46

and not planning on SS for anything. I don't have faith in the system. That's why it's important to love the work you do.

My real thought is they're planning a massive "die-off" for the folks in this country.

[NuttyFluffers]

19. it'd be nice if people live an average 120 years...

but to be perfectly honest with you, i don't think our nation will make another 200. without that it doesn't matter what happens to caps on SS, it's all gone then.

if age and currency both inflate, then yes, both caps should be adjusted accordingly. but it is easier to manage the currency inflation one first, and deal with the age inflation one last. in fact i would say it is high time to raise cap due to currency inflation; and along with strict protection measures to prevent federal tampering, SS could survive well into another 100 years.

now 200 years? i'm sure an age cap might be needed, but there are so many factors between then and now, one shouldn't lock their thinking. precise prognostication that far into the future is generally a waste of time -- a good mental exercise, but a waste of time. we can both indulge, but i find there's bigger things on our political plates at the moment than imaginary scenarios 200 years from now.

there's something now that we can do to "save" SS (though all it really needs is to be left alone from congressional tampering for a while), and adjusting for inflation is a good solid plan. not overwhelming, not drastic, easily justified, easily implemented, and more important, quite effective in it's own right. sure the powerful will bitch and moan, but the powerful always bitch and moan, always, to the point of gutting the nation that supports them before they high tail it outta there. an effective leader needs to know when to ignore them.

[CTLawGuy]

35. the reason I like my plan

is because it will keep SS solvent PERMANENTLY, without having to keep going back and tinkering with it, becuase if you have a hostile government (ie today) they could monkey with the program. If the program can run itself and regulate itself based on life expectancy, then you can just let it work, even 200 years into the future and 500 years into the future.

[NuttyFluffers]

50. nothing's permanent :) if only stuff were.

i understand you, you want to use a floating cap tied to a percent ratio. as the range grows or shrinks the cap is floated accordingly to the percent ratio.

that's nice, a good idea, and could just as easily be applied to currency as it could to age (because periods of deflation are not unheard of). though, unfortunately, neither plans will go through in the next four years. i'd encourage the currency floating cap first, though. easier to use and less drastic, IMO. but we have really big problems ahead of us, especially poor old SS. i don't think it will survive the tampering of this administration these next four years.

c'est la vie. good ideas can't make it to the power broker table in this age.

[Hippo_Tron]

46. I don't think that people want to live 120 years...

There's a certain point where the quality of life will just suck too much.

[still_one]

3. The best way to fix social security is

to prevent congress from borrowing from it, and paying the fund back what they have already borrowed

[baldguy]

20. With interest

[podnoi]

39. Best way - Means Testing ................

Pretty simple. Means test the system. This is not a savings account anymore but a social program. We take money out of the youngs paychecks to redistribute to the elderly, many who are well off. Call it what it is and make it do what it really needs to do, only help those who need it.
Viola, problem solved.

[Chicago Democrat]

6. Leave it alone... or else

loose your majority...

please privatize


remember, anything that is done in law can be undone in time

[Lydia Leftcoast]

7. What you haven't considered

A manual laborer is ready for retirement much earlier than say, a college professor. Every college has professors who were forced to retire at 70 but who have honorary offices at the college and keep up their research into their eighties or even longer. You wouldn't find many eighty-year-olds who could put in a full day in construction work or mining.

[CTLawGuy]

8. you're right

that means that either the construction worker is going to have to take that fact into account and privately fund an early retirement, or the system could have an early retirement age for people in those type of jobs.

This is one reason why my solution is not perfect.

However, how can you be sure that in the far future an 80 year old will not be stronger and healthier due to advances in medical science?

[amazona]

24. yeah well a lot of those profs SHOULD have been retired

I studied physics, and the productive/creative life of a physicist is very short, although they can keep teaching for awhile longer -- but mostly if you haven't made an important discovery by age 27 in physics or math then your brain is "set" and you are not going to be able to.

We had a prof in my department who was tenured, so nothing could be done, and he refused to retire, because he was in his 50s, but his brain had been so scrambled by his work with radiation (or so they said, I've always wondered if he had some undiagnosed degenerative disease) that he really was barely able to get up and get dressed in the morning. Much less teach. It was awful. Having a conversation with him was a real effort because so much of his brain had gone. So they assigned him to teach freshmen...truly I don't think we need assume that all college professors can out-last all construction workers. Sadly, a significant number of people in all professions will start seeing age-related mental decline in their 50s.

Of course it just adds insult to injury if a job is also tough on the physical structure.

I just don't see retirement age being practical much higher than the current age of 67. If an individual can still make a contribution AND still wants to work past that age, it's one thing, but the idea of raising the age for everyone will create plenty of misery to go around from what I've seen.

[CTLawGuy]

37. oh I agree

no one actually working today would have a higher retirement age. In the future, it can be reasonably hoped that as we move into the farther future, medical science will allow people to be healthier and stronger for longer.

[napi21]

9. They already did raise the retirement age to a degree.

I don't recall the exact numbers, but I can tell you that my husband was born in 1942 and he isn't eligible to retire with full benefits until age 66 yrs and 7 months. I believe the top age bracket is now 67. I can see perhaps raising that top incrementally over the future years, and that would help, but one of the biggest problems I see is when they put SS into the general fund, and just spend it and put in IOU's.

The current fix shrub is bantying around is a form of privitization. I don't disagree with the investment idea, but his approach is wrong. I say invest the SS funds in the market, but at the Fed level. If they are really right, that the current rate of return is 1%, then take all the $$ owed by the Fed in IOU's, and the current contributions, and invest them in the market to get an average of 5% or 6%, and DON'T TOUCH IT! That was, the SS fund would be solvent, and the individuals wouldn't have to take the risk. If this is such a great idea, do it at the top.

[Yupster]

27. That would be good if

the money existed, but it doesn't. The surplus money is gone, vanished, a dead parrot. You can't invest hat ain't there.

[LiberalFighter]

38. 1942 is 65 years and 10 months

[SheilaT]

10. Back when social security

was started, most people (somewhere more than half) were dead by age 65. That's one of the reasons they picked that age.

Which means that the retirement age would need to be around 80 right now to make sure a goodly number of people wouldn't live long enough to collect.

I do agree that continuing to raise the retirement age slowly can help, but it's also true that it's not as easy to remain in a physically demanding job as in one less so.

[CTLawGuy]

11. thats not the point

the point is not to screw people out of benefits, the point is to keep the outlays of Social Security CONSTANT. the only way to do that is to try to keep a constant retiree population.

[SheilaT]

12. I understand.

But back when it got started, while I don't think there was an intention of screwing people out of getting benefits, there was a clear understanding on those that set the retirement age at 65, that a lot of people who were paying in, wouldn't get much in the way of benefits.

I also believe that for the first forty years or so, widows got a greatly reduced benefit compared to now. As I recall, that changed in the 1970's with the feminist movement.

[greenohio]

14. The biggest problem is the birth rate, not the life expectancy.

When the program began there was 40 some workers per retiree. Now there are 3 workers per retiree. In forty years there will be two. When that ratio hits 1 to 1 or less, no fiddling around the edges will save it. It won't happen to us, probably our great grand children, or great great grand children.

[CTLawGuy]

15. but wouldnt a higher birth rate

also produce more workers and also more money going into the system? The central problem is people are living much longer than in the 1930's.

[greenohio]

16. Exactly, the birthrate has gone down.

It needs to go up and produce more workers. Of course I guess there could be population problems then. But whenever there is a contraction in the birthrate, there is going to be a problem.

[Cronus Protagonist]

17. I have it on very good authority that it's not broken

Since the premise is false, the discussion is purley hypothetical.




http://brainbuttons.com/home.asp?stashid=13
Buttons for brainy people - educate your local freepers today!

[tx_dem41]

22. Finally some sanity. The program is solvent until 2042 presently.

That is cited in this article.

http://www.truthout.org/docs_04/120404L.shtml

One way we could show how solvent it is, is to take SS off the budget, and actually have a TRUST FUND for a change. Remember Gore's Lock Box? You people did actually vote for him, didn't you?

[Yupster]

29. But there's no money to put in the lockbox

The hunjhdreds of billions the article assumes will help the system after 2018 is gone. It's been spent by congress. Mssiles are expensive things. What good is a lock box if there's no money to put into it?

[tx_dem41]

31. You take it OFF BUDGET today!

If the Democrat party is complicit in touching promised benefits that I have been paying into for 25 years (and I realize this is an insurance plan NOT a retirement plan...I have one of those on my own thank you very much), I will never vote Democrat again (3rd party here I come!).

Are you for forced privatization?

[Yupster]

42. Privatization is no good

there's just not any way to pay for it.

There also is no plan for "forced privatization" All proposals I've seen would be voluntary. You could stay in old system if wanted to.

[Hippo_Tron]

47. That's the first step, there WILL be privatization if dubya has his way

The GOP is ruining social programs in hopes of privitizing them in the future.

[tx_dem41]

48. The proposals I have seen are at least 2 % no choice. n/t

And of course there is no way to pay for the transition to privatization with costs ranging up to 2 trillion over 10 years.

And I know that there is no trust fund.

It seems your choice is to kill the program now. Totally. Is that correct? If that is your choice, we will see the overthrow of the government.

[Yupster]

28. Demographics is destiny

If people live longer and don't retire later it has to be a problem either now or eventually.

There are many articles around saying all is fine. They all take for granted that the money owed into the trust fund will be paid back which is a joke since it doesn't exist.

I can say my retirement is fine as long as my brother in law pays back the $ 10,000 he borrowed 40 years ago with compounded interest. But since my brother-in-law took the money to Vegas and bet it on an inside straight draw, I'm not getting it back. Still, if I put the money into my calculations it makes me feel better.

[greenohio]

34. You are correct!

We currently have a system that always assumes that the working class is big enough to support the retired class. That assumption, depending on birthrates and life expectancy, leads to problems. I suggest we look at the Swedish model.

[greenohio]

33. SSA is THE authority, and it says its broken.

http://www.ssa.gov/qa.htm

[LOCxHippy]

18. A topical cartoon...

http://cagle.slate.msn.com/politicalcartoons/PCcartoons/ramirez.asp Dec 2,2004

I think retirees living well on healthy pensions and/or income from investments totaling a certain amount should be exempt from collecting SS. Perhaps they could literally get back what they paid, and that's it! It's practically fraudulent that these people even take the money. Also, it could be made voluntary, not automatic.
One thing that deeply bothers me is that with the continued raising of the retirement age, Americans will no longer have a retirement when they are fit enough to travel or do what you are supposed to retire to! Already, older people are being forced to go back to work with the cost of health care and just living. This seems so unfair to work all your life and then have to keep on working when you should be reaping some kind of benefits from working all those years.This must be the only country that has so little respect and concern for it's Seniors.

[Blue Wally]

26. If you "means test" SS benefits.....

you will quickly lose consensus for the program as it will be seen to be a "welfare" program.

[amazona]

23. they ALREADY raised the retirement age...next?

The retirement age has been raised, although the benefits of Social Security are, in the end, pretty negligible if you don't live long enough to retire.

Since retirement age has been raised -- and some time ago, so we should really be aware of it by now -- then why don't we just acknowledge that instead of having old people on the job blocking young and middle-aged people's chances of advancement until they are too old to enjoy or perform -- then why don't we acknowledge that we just need to lift the cap on earnings? People with a low income (me} pay a higher percentage of earned income than people with a high income (annual incomes over $80K) -- this is unfair on the face of it.

[bemildred]

25. Screw the corporations and the wealthy.

They made their money on my labor. Now let them pay for my
retirement. All this other blather is beside the point. If there
are hundreds of billions of dollars to pay for this boondoggle in
Iraq, there is also plenty of money to pay for the benefits I've
been paying for and promised all my life.

[Yupster]

30. There's no money to pay for Iraq

It's being borrowed.

[tx_dem41]

36. Look, you're a deficit hawk and more power to you....

but, you do not balance the budget by breaking your promises. If you did, why would anyone ever buy Treasury bonds? This is a basic trust issue.

Overall, does the SS system need reform. Yes, of course, in the long run.

[Yupster]

43. well that reform

is going to break a promise then.

[tx_dem41]

44. And it will break everyone that votes for it. n/t

[bemildred]

49. Fine, then borrow the money for SSI instead.

But really, you talk about money like it was real, it's little
electronic bits in a computer, they can make as much as they want,
and in fact they do. They "borrowed" the money I paid into SSI too,
all of my life, now they owe me. What do you call it when somebody
tries to welsh on a commitment? Fraud is what you call it. Why is
buying a bunch of dumb-ass bombs and shit to deter non-existent threats
more important than taking care of our own people? Frankly, if this
nation does not start to take better care of it's human capital, and
soon, it's going straight down the crapper, and the fuckwits in
Washington and the corporate suites are delusional if they think they
will not be dragged along down the crapper for the ride.

[sadiesworld]

32. Until the stolen SS funds are returned..

further discussion is premature.

[oneold1-4u]

40. Yup, and in the bank vault

They(government) always look for a dollar that isn't being spent tomorrow and find something to spend it on today! Every gov. fund and tax is being searched for more money to plunder.

[quaker bill]

41. Means test benefits and remove the cap on taxation

If the point is to provide "security" then why spend benefits on those with a secure retirement or large estate?

The whole point of the program is to provide a certain minimum standard of income for those too old to continue working as well as benefits to the widowed and orphaned.

Means testing can assure that the money is spent on those who need it.

The program was never intended to be a retirement plan. The intent was to create a backup insurance policy should your other plans fail.

This is exactly why the program should never be invested in equities. The reason is simple, the plan is there as a backup should your 401K or other personal investments fail. Having your own plan and the backup plan invested in equities means that both could fail at the same time.

[Yupster]

45. and one more suggestion

force the people who have opted out of the system to come back in.

Just bringing the teachers back in would save billions each year. What makes them so priviledged anyway to not pay FICA? It should be a program for all of us, not all of us except teachers in 12 states.