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Old 10-11-2011, 06:45 AM
Location: Forests of Maine
27,193 posts, read 42,342,735 times
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Originally Posted by Escort Rider View Post
... The 40 quarters is the minimum pay-in of premiums in order to collect retirement benefits. To say anything is "fully funded" after 40 quarters is extremely misleading. "Minimally funded" would be more like it, as 40 quarters equals ten years, and they average our top 35 years of earnings to apply the benefit formulas. A person with only 40 quarters is not going to have a very big Soc. Sec. retirement benefit because that person will have 25 zeros to average in with the 10 years of premium payments.
Everything about SS gets simplified in the terms that most people use to discuss SS.

My employer paid into my SS account 5 quarters each year. So to assume that 40 quarters equals 10 years is misleading.

In 1995 I had to assist some people dealing with SS paperwork [specifically they were opting out], at that time I picked up one of their manuals. I still have it. The formula they were using at that time, was looking at your income over a period of 40 quarters. At that time, if you paid into SS for 80 quarters the first 40 would no longer count in your formula. They were 'lost' to the general pool.

The formula has since changed. Now it is 35 years, and not how much you paid in during those 140 quarters, but rather how much you earned during those 140 quarters.

In both cases, if the money was left alone and invested in government bonds. There would always be enough in it to pay every worker his/her pension. A baby-boom would not have had any effect.
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Old 10-11-2011, 08:30 AM
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First, you are correct that what I call the "tail end" of the Baby Boom, should not be considered part of the Baby Boom. My spouse and I were born in 1961 and 1962, and while the early Baby Boomers got lots of jobs and increasing prosperity, it was the EXACT opposite for us. There has been NO prosperity for my age group, and with wages stagnated since the late 1970s, our ENTIRE work lives have been defined by Recessions and unemployment. We got the "backlash" to all the good deals that the early Baby Boomers got.
Not everyone in your age group shares your dire view of the world. DW and I were born in 59' and 60' and despite some challenges think we got a pretty good deal overall. Its my children and the Millenial Generation I worry about the most.

As to Social Security and Medicare, in 1983 the tax rates for these were massively increased to pay for the eventual retirement of the Baby Boom. We were the first to pay for BOTH current retirees, and a "Trust Fund" for our own retirement. Naturally, my spouse and I graduated college in 1983, starting our work careers to the new high tax rates.
Those rates were modestly increased. With the demographic changes occurring in this country it was a necessity. I graduated law school in 84', so I went through the same thing and barely noticed it.

We were promised that the "Trust Fund" would not be raided. It was in a "Lock Box" and couldn't possibly be spent by politicians. It would be there for us -- we could TRUST our leaders in Washington. Right? Wrong. It took only a few years before Washington started STEALING the excess money collected under Social Security, and spending it on foolishness like foreign wars. All the way up until 2009, the last year the SS system had a surplus, every single penny that would have gone in the Trust Fund was spent on other things (in effect, making deficits look far smaller than they actually were).
The money wasn't stolen it was borrowed and government bonds were given in return. The reason savings bonds pay such a low rate of interest is because even foreigners believe there is next to a zero chance of the money not being paid back. We can get into an argument over whether the government should have been allowed to borrow that money, but its fait accompli. All the King's Horses and All the King's Men can't change it. All we can do it try to adjust government finances to meet obligations.

Even today, politicians refer to the "$2.6 Trillion Social Security Trust Fund" and claim the system won't be bankrupt until 2035 or so--at least when they want to kick the can down the road. And it would be true would be true IF THEY HADN'T ALREADY SPENT THE $2.6 TRILLION. But they did spend it. It's gone. And in 2010, Social Security for the first time gave out more money in benefits than it collected in taxes. Even the government office of Management and Budget admits there is no SS Trust Fund to tap:
With the blip caused by the huge Baby Boom Generation it was only a matter of time before social security started paying out more than it takes in. Any actuary or statistician could have told you that.

"These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense.... They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures." Social Security Trust Fund - Wikipedia, the free encyclopedia
Taxes will have to be raised again eventually to meet social security obligations. Its unfortunate, but the problem isn't stealing by your government. Its simple demographic changes that have resulted in a much smaller number of employed people supporting a much larger number of retired people. Some people seem unable to understand that 2 + 2 does not equal 8.

Politicians will try to argue that it DOESN'T MATTER that the Trust Fund money was spent--that it is an obligation of the government, and that makes it 100% insured and reliable. However, our government simply has no money to meet those obligations, and the economy and workforce are no longer prosperous and growing. The government CANNOT simply increase taxes to pay these liabilities. You can't get blood from a stone.
What do you mean you can't increase taxes? Here's how you do it. A representative proposes a bill in Congress. Congress votes for the change. The bill is sent to the President. He signs the bill into law. There are plenty of people who can afford a tax increase in this country. I don't want one, but the truth is that I could afford it. So could millions of other Americans.

Already my age group doesn't get to collect SS until age 67; heavens knows what it will be when we get close (the majority of those now retired, retired at age 62). In short, Social Security and Medicare WILL collapse when a significant number of Baby Boomers hit the system. Our government has been so incredibly fiscally irresponsible, for so long, that it has ZERO capability of dealing with that crisis. What will happen will be a domino effect, with Medicare going bankrupt, then Social Security, then the overwhelming weight of government debt will swamp the economy, and EVERY system we have will fail at once.
The problem will eventually be resolved. It maybe necessary for recipients to take a 5% or 10% cut in benefits. Some tax increase may be necessary. It maybe necessary to "means test" benefits (although I fear this turns it into a welfare program). The greater problem is Medicare. I don't see any easy solutions for that problem. Particularly, when so many people are unwilling to impose caps and limits on what medical providers, hospitals, and the pharmaceutical industry can charge. That would be a good starting point.

A final note on workers per SS retiree: "In 1950, each retiree's Social Security benefit was paid for by 16 U.S. workers. According to new data from the U.S. Bureau of Labor Statistics, there are now only 1.75 full-time private sector workers for each person that is receiving Social Security benefits in the United States."
You've just explained the real problem with social security. Its not a conspiracy by big government to destroy the elderly and spend their money. Its a demographic problem. Small families long ago, replaced big families. Longevity has increased for everyone including the oldest people in this country. The task of seeing that everyone gets benefits has become more "Herculean" as time goes on.

Its a problem that's fixable. It won't be fixed by whining, by pointing the finger at others, and by being unwilling to undergo any sacrifice at all.
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Old 10-11-2011, 08:49 AM
Location: Salisbury,NC
4,897 posts, read 2,214,077 times
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SS will be able to handle the boomers and the next Generations to follow. Demographics will be the savior. Gen X is actually smaller in size while Gen Y is larger. Saw lower needs for school sizes in 90's due to small birth rates. Birth rates in the area I am in now are higher then in 90's so school needs and jobs will be needed to improve as us boomers start to get out of the way.
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Old 10-11-2011, 12:25 PM
9,619 posts, read 20,032,535 times
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I am planning on working another 10 years or so but will get social security of around $2300/mo starting this year. My ex wife made a claim on my account and has been getting $1600 or so for about 4 years and she will live to 100. So I am not as dissatisfied with social security as the average person. Of course, we were all screwed, just not as badly as the next generation.

Speaking of which, there are a number of strategies to increase social security benefits. The most important one is divorce. A couple where the husband paid in the maximum can get close to $4000/mo if divorced. Since HHS does not investigate the living arrangements of divorced couples, expect to see enormous numbers of people claiming divorced spouse benefits. Divorce also resolved the Spousal Improverishment issues for the community spouse of Medicaid recipients. Basically, the wife must lose all of her assets down to $1500 before the husband in a nursing home can qualify for a Medicaid paid bed. Divorce solves that one too.

Second, there is something called the earned income credit. Basically, the credit is up to $8000 or so on earned income. the offset is the self employment tax. But, the little noticed fact is that that the earned income creates covered quarters for social security benefits. Anyone with a dependent child at home should get miscellaneous BS income from their family for watching the dog or watering the lawn, pay it back for rent and food, get the credit and the covered quarters.

Leave my tip in the jar.

Last edited by Wilson513; 10-11-2011 at 12:36 PM..
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Old 10-11-2011, 01:21 PM
Location: Baltimore, MD
3,449 posts, read 3,305,878 times
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Originally Posted by Wilson513 View Post
I am planning on working another 10 years or so but will get social security of around $2300/mo starting this year. My ex wife made a claim on my account and has been getting $1600 or so for about 4 years and she will live to 100. <snip>

Unless your wife reached full retirement age AND your benefit at full retirement age would be $3200/mth, this makes no sense. According to SSA, the current maximum monthly benefit is $2,366. Are you saying that you would receive $3200/mth if you waited to draw your benefit at age 66?

Speaking of which, there are a number of strategies to increase social security benefits. The most important one is divorce. A couple where the husband paid in the maximum can get close to $4000/mo if divorced. Since HHS does not investigate the living arrangements of divorced couples, expect to see enormous numbers of people claiming divorced spouse benefits.

This also makes no sense. An ex-spouse's benefit is no greater than a current spouse's benefit.
Please explain.
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Old 10-11-2011, 01:36 PM
9,619 posts, read 20,032,535 times
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I agree, I was looking at a divorced spouse benefit for an un-retired spouse. And, the ex wife is actually getting 1100/mo not 1600 per month. Sorry.
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Old 10-11-2011, 02:40 PM
27,577 posts, read 29,731,020 times
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Originally Posted by lenora View Post
Please explain.
The maximum current benefit at age 70 is a lot more. I understand your question to the poster and wonder the same things you are.
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