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So, to be clear, Social Security's excess cash may very well be depleted in less than two decades. But this isn't the same as saying, "Social Security will run out of cash." Even if the program doesn't have a red cent in excess cash, it can still continue divvying out a benefit check to eligible recipients, thanks to its two sources of recurring revenue.
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The first is Social Security's payroll tax, a 12.4% tax on earned income between $0.01 and $128,400, as of 2018. As long as Americans keep working and Congress doesn't remove the payroll tax as a source of revenue, the payroll tax will remain the program's heavy hitter, so to speak. In 2017, the payroll tax generated $873.6 billion of the $996.6 billion collected.
The second recurring source of revenue is the taxation of benefits. Signed into law in 1983 and implemented in 1984, the taxation of benefits allows recipients earning above certain thresholds – adjusted gross income plus one-half benefits above $25,000 for individuals and $32,000 for couples filing jointly – to have a portion of their Social Security benefits taxed at federal ordinary income-tax rates. In 2017, the taxation of benefits led to $37.9 billion being collected.
As long as these two sources of revenue remain intact, there will always be money for the Social Security Administration to disburse to eligible beneficiaries. The program simply can't run out of cash... ever. This doesn't mean payouts aren't subject to potential reductions over time – but it does suggest that Social Security won't go bankrupt.
Interesting article that illustrates how social security can still survive the upcoming baby boomer retirement. But I think the point should still be that millennials shouldn't depend on SS to save them.
Interesting article that illustrates how social security can still survive the upcoming baby boomer retirement. But I think the point should still be that millennials shouldn't depend on SS to save them.
I don't think SS "saves" anyone. Even when my parents collected, living on SS has never been champagne and caviar.
Wasn't it simply designed to keep you out of eating from a trash can? and only that? somewhere along the line people starting thinking it was supposed to be some thing to live out "golden years".
Whats the maximum amount you can get now? 30K a year? that is not what I would call living la vida loca or even living vida.
the point should be driven home for everyone at any age.
I don't think SS "saves" anyone. Even when my parents collected, living on SS has never been champagne and caviar.
Wasn't it simply designed to keep you out of eating from a trash can? and only that? somewhere along the line people starting thinking it was supposed to be some thing to live out "golden years".
Whats the maximum amount you can get now? 30K a year? that is not what I would call living la vida loca or even living vida.
the point should be driven home for everyone at any age.
About $40k for maximum now. Plus as part of a couple, it could be more. If you don’t have mortgage, it’s doable to live a decent life on SS. It’s be like $70K for my household in today’s dollar. Not luxury budget, but not cat food eating category either.
I don't think SS "saves" anyone. Even when my parents collected, living on SS has never been champagne and caviar.
Wasn't it simply designed to keep you out of eating from a trash can? and only that? somewhere along the line people starting thinking it was supposed to be some thing to live out "golden years".
Whats the maximum amount you can get now? 30K a year? that is not what I would call living la vida loca or even living vida.
I think Social Security saves a LOT of people. While the estimated average amount of Social Security received per month is $1404 for 'all retired workers' in 2018, some people receive $1800 or $2000 or $2400 (or more).
Especially in low cost of living areas, Social Security makes a large difference. It's just that fewer people who fall into that category post in this Retirement Forum or fewer talk about falling into the category where it makes a large difference to them in those terms.
(The maximum monthly Social Security benefit payment for a person retiring in 2018 at full retirement age is $2,788 or $33,456 per year. However, the maximum allowable benefit amount is only payable to those who had the maximum taxable earnings for at least 35 working years.) https://www.investopedia.com/ask/ans...nt-benefit.asp
And as quoted in the thread called 'Poor senior citizens' "21% of married Social Security recipients and 43% of single recipients aged 65+ depend on Social Security for 90% or more of their income." (Social Security Administration [SSA], 2016) https://www.ncoa.org/news/resources-...ecurity-facts/
One can read that Social Security saves a lot of people in many articles and interviews.
Last edited by matisse12; 11-09-2018 at 04:03 PM..
There is no hoard of cash in a SS trust fund. The Fed govt is 20 Billion dollars in debt. Back during the LBJ administration, SS and the Fed. Budget were combined, so whatever the news tells you about a SS trust fund is a lie. Its only an acconting trick. The whole Fed govt and SS are 20 Billion in debt.
There is no hoard of cash in a SS trust fund. The Fed govt is 20 Billion dollars in debt. Back during the LBJ administration, SS and the Fed. Budget were combined, so whatever the news tells you about a SS trust fund is a lie. Its only an acconting trick. The whole Fed govt and SS are 20 Billion in debt.
I think it is way more debt than that. But the SS fund is covered by federal bonds and they are paid on demand as the money is needed. They have always been paid. The accounting "trick" is keeping track of the balance. The time at which the SSA no longer has a reserve (in ~15 years more or less depending on a bunch of factors) is when the federal government has paid back every cent of money borrowed from SSA with interest. At that point, as the USA Today article says, the SSA will only have the current year's revenue because all of the surplus from all of the years there was a surplus will have been spent by the SSA to pay benefits and by no one else for any other purpose. The raiding of the SSA fund is a myth. It is true that there are better investments than bonds and maybe the money could have earned more interest while there was a surplus so that there would be a surplus longer. It is not true that any of the money collected for SS was spent on anything besides SS. Borrowing and repaying in full is not an accounting trick.
Last edited by ReachTheBeach; 11-09-2018 at 06:44 PM..
Whats the maximum amount you can get now? 30K a year? that is not what I would call living la vida loca or even living vida.
the point should be driven home for everyone at any age.
$30,000 a year in Social Security benefits sounds like a dream to younger to middle aged people, especially when many are thinking the Social Security they are now contributing will be drained. And that is the demographic that doesn't have the representation looking out for them to make sure they aren't taken advantage of.
About half of the boomer generation is eligible for SS benefits, though many have not started collecting. In 20 years the youngest will be 74. It is estimated that benefits will be 75% of promised amount if Congress does nothing. Nobody expects that, they will take action shortly before then. The most obvious reform would be to eliminate the wage cap. That plus a slight increase in the rate and a small reduction in benefits would secure the system. What the Congress of 2038 will do is anyone's guess.
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