Reduction in SS check, how can we prevent this from happening? (payments, salary)

[PCALMike]

Originally Posted by NYgal2NC

I am guessing this topic will get moved but since SS is an important part of retired peoples' income, I thought it would be appropriate to post it here.

The politicians are all chomping at the bit to reduce social security payments. I for one am opposed as I believe many retired people depend on their check to survive. What do we need to do to prevent this from happening?

Hello NYgal2NC.

The attacks on social security from so many politicians is a very worrying trend and as you rightly point out, it is a vital lifeline for millions of Americans. Too many politicians today are taking money from large and powerful corporations and Wall Street who cant wait to dismantle the current system of Social Security. Democratic presidential candidate Bernie Sanders does not and he has fought tooth and nail for the dignity and well-being of retired people for more than 40 years. The vast majority of Americans agree with the stance of Bernie Sanders on Social Security, according to polls. With Bernie Sanders in the White House, we know that we will have a man in charge that will do everything he can to not only defend Social Security, but to expand it, to make sure retired people who have worked their whole life is provided the dignity and peace of mind that they deserve.


https://www.youtube.com/watch?v=4w7NFTnLQt8

[PCALMike]

Originally Posted by HappyTexan

SS is going to be the hot button for the next President.

IMHO the most obvious solution is to tell Congress to pay back all that money they "borrowed" when the fund had monthly surpluses.

But that will never come to pass.

IMO, the solution proposed by presidential candidate Bernie Sanders is the best one.

Have a look here if you want to, HappyTexan:


https://www.youtube.com/watch?v=4qoAhovyAPs

[Petunia 100]

Originally Posted by Mircea

I'll show you how to do the math, so you don't get suckered by propaganda organizations.

SOI Tax Stats - SOI Bulletin: Spring 2015

Statistics of Income (SOI) Bulletin - Spring 2015 (entire publication in PDF)

Individual Income Tax Returns, Preliminary Data, 2013

That is the latest data.

Scroll down to Table 1. Individual Income Tax Returns, Tax Year 2012 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income

You're looking at 3 distinct income brackets from columns 6, 7 and 8:
(6) $100,000 under $200,000
(7) $200,000 under $250,000
(8) $250,000 or more


You need the total number of returns filed:


(6) $100,000 under $200,000 = 14,123,441
(7) $200,000 under $250,000 = 1,654,070
(8) $250,000 or more = 3,032,742

...and you need the total income reported:
(6) $100,000 under $200,000 = $1,610,920,079,000
(7) $200,000 under $250,000 = $297,831,541,000
(8) $250,000 or more = $1,281,411,930,000


We'll start with Column (8).

There are 3 Million (3,032,742) people who earned more than $250,000 annually totaling $1.28 TRILLION ($1,281,411,930,000)

$1,281,411,930,000 * 6.2% = $79,447,539,660


*That's the wrong answer.*

The Social Security Cap in 2013 was $113,700.

$113,700 * 3,032,742 = $344,822,765,400 * 6.2% = $21,379,011,454.8

The amount already paid has to be subtracted from the total amount:


$79,447,539,660 - $21,379,011,455 = $58,068,528,205 Net New FICA Employee Revenues


Now we do that for the $200,000 to $250,000 Crowd:

1,654,070 * 113,700 * 6.2 = $11,660,201,058 is what they already paid.

$297,831,541,000 * 6.2% = $18,465,555,542

$18,465,555,542 - $11,660,201,058 = $6,805,354,484 Net New Revenues

And now the $100,000 to $200,000 Crowd:


14,123,441 * $113,700 * 6.2 = $99,561,784,985 already paid.

$1,610,920,079,000 * 6.2% = $99,877,044,898

$99,877,044,898 - $99,561,784,985 = $315,259,913 Net New FICA Revenues


Now we add them together

$58,068,528,205
+$6,805,354,484
+ $315,259,913
----------------------
$65,189,142,602

That will pay for one month.

Add in the employers share and that will pay for 2 months total.

That's it.

If someone can explain how $130 Billion will cover a $750 Billion annual short-fall, go right ahead.

Of course, this is all for naught, since you won't actually collect $130 Billion annually, but you might see small businesses get slammed and a slight recession.

Mathematically....

Mircea

It looks as though you are forgetting that we don't need to find a way to fund 100% of benefits. The shortfall is not 100%.

[Larry Caldwell]

Originally Posted by grampaTom

Look for means testing to be a really hot topic of political discussion after this next presidential election. I have no idea where the 'cut-off' of assets will be before the SS checks start getting decreased but I think this will be one of the first cost cutting steps for SS. Probably also tightening up SSDI

We already have means testing, and have had for years. I have to give over a fifth (21.25%) of my SS back to the government because I have a pension and retirement savings.

[nightlysparrow]

Originally Posted by Larry Caldwell

We already have means testing, and have had for years. I have to give over a fifth (21.25%) of my SS back to the government because I have a pension and retirement savings.

Isn't SS looking only at earned income, income from investments and interest income---not savings?

So why couldn't someone have millions in a savings account--with today's interest earning only a few hundred a year--and as long as that was their only income, not have their SS taxed?

[Petunia 100]

Originally Posted by nightlysparrow

Isn't SS looking only at earned income, income from investments and interest income---not savings?

So why couldn't someone have millions in a savings account--with today's interest earning only a few hundred a year--and as long as that was their only income, not have their SS taxed?

They absolutely could, depending upon actual dollar amounts. You are quite right that assets do not enter the calculation at all, only income.

[HappyTexan]

Originally Posted by nightlysparrow

Isn't SS looking only at earned income, income from investments and interest income---not savings?

So why couldn't someone have millions in a savings account--with today's interest earning only a few hundred a year--and as long as that was their only income, not have their SS taxed?

A 401K, an IRA, a 504b, etc. are considered "retirement savings" and they will be taxed once you start withdrawing.

[Escort Rider]

Originally Posted by HappyTexan

A 401K, an IRA, a 504b, etc. are considered "retirement savings" and they will be taxed once you start withdrawing.

Obviously they will be taxed once withdrawals begin, but that is not what the discussion was about. It was about Social Security.

[texdav]

I also think those thinking US government will come to rescue need to remember other aging nations hold huge treasuries holdings they will be cashing in to support their own retirements. The recent housing crisis involved 10% of the 70% of homeowners to varying degrees from loss of home to being under water. The 30% loss in SS income will also have consequences to much more than those receiving SS. Employment; markets will all be effected. A person can lose say 30% in cuts then even more in market investments. Anyone retired who loss anything in last market crash a can tell to difference between recovering with what is left versus new money. Any laid off at older age can tell you the shock to any planning that causes. I really do not think we can prepare beyond extending it outward on numbers in boomers retiring. Three things: cuts; raising SS tax and extending retirement age is petty much it. Its the large numbers how begining to withdraw rather than putting in funding that is problem. There is no magic.

[HappyTexan]

Originally Posted by Escort Rider

Obviously they will be taxed once withdrawals begin, but that is not what the discussion was about. It was about Social Security.

And it would be counted for any additional means testing to reduce your SS payment even further than what taxes do.