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It's hard to tell from your comment whether you know that Social Security retirement benefits are already means-tested in two significant ways:
1. The formulas which determine our benefit amounts are weighted heavily towards returning a greater percentage of low income wages as opposed to high income wages. This is not a negligible difference.
2. There is no federal income tax on Social Security benefits for the poor. If one's income is all, or mostly from SS, there is no federal taxation. But if one has a substantial amount of other income, then up to 85% of SS benefits are subject to federal taxation. That is not negligible either, depending on one's tax bracket.
If people advocate means testing beyond that which already exists, they should refer to it as further (or additional) means-testing.
This bears repeating because the ignorance is strong in this thread
Low income people get back far more than their employers and they contributed in Social Security.
High income people would need to live to 100+ to get back what they and their employers paid into the system.
Wealthy people have 85% of their Social Security check taxed already. Social Security is already means-tested. Doing more than that is kind of pointless since there are so few truly rich retirees.
When I run my spreadsheet, my max Social Security check I start collecting at age 70 is going to be my dominant source of income. If you cut that or start taxing the hell out of it as regular income, I suffer real hardship. I'm not going to be eating dog food but it would pretty much chop out any discretionary spending.
For retired folks..probably income other than SS that puts them at poverty level.
You see no one ever defined "rich" for retired folks.
So you're saying that "doing it right" contributing to your 401-K for your work career so you can retire without eating dog food makes you rich? Then you've just created an enormous disincentive for anyone to save. This is already a chronic problem in the US. So we should all just spend it as we make it and let the government take care of us when we can no longer work. Nice going, Komrade.
Means testing is a load of BS because there were people that made more money than my parents that now in retirement are pretty broke. My folks drove their cars for years and didn't eat out. We didn't wear designer clothes, we grew food in our garden and clipped coupons and so forth. They now live a pretty comfortable retirement.
To come along after the fact and tell someone they don't get it because they lived with less before is patently unfair.
Lastly, means testing on people collecting SS is a tiny portion of the issue and is actuarially immaterial. It does make for a good class-warfare bit of political theatre to show some billionaire that collects SS....but in reality that's not where the system has gotten into trouble.
Collecting on the total paycheck but capping benefits would have a larger but still teeny-tiny impact.
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?
Secession would be a viable option.
Quote:
Originally Posted by Escort Rider
When considering "what if" scenarios in the political arena, it is important to distinguish hot air expended to court a particular constituency from things which actually have a chance of passing. Cuts to Social Security payments have zero chance of passing Congress.
Phased in reductions through changes in the formula are most likely possibility. Such changes would affect those born after 1964 or possibly later.
Politically...
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
Quote:
Originally Posted by Woof
I think cutting SS checks through means testing wouldn't be such a bad idea at all. Rich people don't need that piddling little amount.
Social Security is already means-tested.
Read this post to clear up your misconceptions:
Quote:
Originally Posted by Escort Rider
It's hard to tell from your comment whether you know that Social Security retirement benefits are already means-tested in two significant ways:
1. The formulas which determine our benefit amounts are weighted heavily towards returning a greater percentage of low income wages as opposed to high income wages. This is not a negligible difference.
2. There is no federal income tax on Social Security benefits for the poor. If one's income is all, or mostly from SS, there is no federal taxation. But if one has a substantial amount of other income, then up to 85% of SS benefits are subject to federal taxation. That is not negligible either, depending on one's tax bracket.
If people advocate means testing beyond that which already exists, they should refer to it as further (or additional) means-testing.
That should take care of that.
Quote:
Originally Posted by Bluff_Dweller
It is my belief that I was means tested in 1995 when I applied at age of 62 for my SS benefits as my dad died at 64 after collecting for less than two years.
Unless you feel that $68 per month is adequate compensation for my 39 years of withholding. I am rich according to some posters on here from my $1550.00 per month teachers pension. So my point is that means testing has been on going for a long time. IMHO
The operand here is "Teachers Pension."
Most State government employees, teachers, emergency services and police did not pay into Social Security at one time in the past.
Means-testing...
Please, anyone, correct me if I am wrong, but none of the Social Security changes I have read about that have been proposed by politicians would affect anyone now over the age of 57 or so.
Agree with general comments on means-testing. Can't go low enough down the economic scale to make a dent in real issue. Could politicians decide to do "means-testing" lite (i.e. retirement income over $500,000 exempts), maybe, but it will be all theater if they do, and therefore not likely to impact but a handful of high profile cases.
The road map already exists on SS: it is a combination of a number of things- a) redefine inflation calculation, b) change FRA and c) raise cap on salaries.
As always, the problem isn't SS. It is MEDICARE. There the solutions appear to be intractable. I continue to hope that in the future SS will be sufficient to cover Medicare contributions. Anything else is gravy...
So you're saying that "doing it right" contributing to your 401-K for your work career so you can retire without eating dog food makes you rich? Then you've just created an enormous disincentive for anyone to save. This is already a chronic problem in the US. So we should all just spend it as we make it and let the government take care of us when we can no longer work. Nice going, Komrade.
Hey..I'm on your side. I lived under my means and saved for retirement.
I have a pension, a 401K, a Roth and future SS.
If anything, because I did "right", I'll be cut off completely from SS and considered "rich".
Not sure why you think replacing the non negotiable Treasuries with any other "regular" Treasury bond or note would make a difference. In fact, I've never understood the whole foaming-at-the-mouth diatribes about Congress stealing Social Security money and replacing it with IOUs. If cash was sitting in a vault instead of these so-called IOUs, the situation would be exactly the same with respect to Social Security's future shortfall.
I'll try to explain it.
The 1935 Social Security Act quite clearly states that any excess funds shall be converted to special treasury notes. In 1935, that was literally the 2nd [Series] Liberty Bonds. In other words the excess cash was handed over to the Treasury Secretary who issued special treasury securities in the name of the Social Security Administration and then put the cash in the General Fund. You can read that here...
Social Security Act of 1935
TITLE II-FEDERAL OLD-AGE BENEFITS
OLD-AGE RESERVE ACCOUNT
Section 201. (a) There is hereby created an account in the Treasury of the United States to be known as the Old-Age Reserve Account hereinafter in this title called the Account. There is hereby authorized to be appropriated to the Account for each fiscal year, beginning with the fiscal year ending June 30, 1937, an amount sufficient as an annual premium to provide for the payments required under this title, such amount to be determined on a reserve basis in accordance with accepted actuarial principles, and based upon such tables of mortality as the Secretary of the Treasury shall from time to time adopt, and upon an interest rate of 3 per centum per annum compounded annually. The Secretary of the Treasury shall submit annually to the Bureau of the Budget an estimate of the appropriations to be made to the Account.
(b) It shall be the duty of the Secretary of the Treasury to invest such portion of the amounts credited to the Account as is not, in his judgment, required to meet current withdrawals. Such investment may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (1) on original issue at par, or (2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under the Second Liberty Bond Act, as amended, are hereby extended to authorize the issuance at par of special obligations exclusively to the Account. Such special obligations shall bear interest at the rate of 3 per centum per annum. Obligations other than such special obligations may be acquired for the Account only on such terms as to provide an investment yield of not less than 3 per centum per annum.
(c) Any obligations acquired by the Account (except special obligations issued exclusively to the Account) may be sold at the market price, and such special obligations may be redeemed at par plus accrued interest.
(d) The interest on, and the proceeds from the sale or redemption of, any obligations held in the Account shall be credited to and form a part of the Account.
(e) All amounts credited to the Account shall be available for making payments required under this title.
(f) The Secretary of the Treasury shall include in his annual report the actuarial status of the Account.
As soon as the SS month income shows a surplus Congress will move it to the General Fund and replace that money with non negotiable Treasuries just like they have done in the past.
You haven't fixed anything.
That's what the law requires.
There is no mechanism in the law that allows for the federal government to maintain any type of "cash" savings accounts.
Agree with general comments on means-testing. Can't go low enough down the economic scale to make a dent in real issue. Could politicians decide to do "means-testing" lite (i.e. retirement income over $500,000 exempts), maybe, but it will be all theater if they do, and therefore not likely to impact but a handful of high profile cases.
The road map already exists on SS: it is a combination of a number of things- a) redefine inflation calculation, b) change FRA and c) raise cap on salaries.
As always, the problem isn't SS. It is MEDICARE. There the solutions appear to be intractable. I continue to hope that in the future SS will be sufficient to cover Medicare contributions. Anything else is gravy...
The cap was raised this year to a little over $118K/year.
FRA is already at 67. You have people getting layed off in their 50's today and can't find work never mind expecting them to work until 67 or older. That's one reason SSDI is running a deficit.
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