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Means testing as a way to keep Social Security solvent has been suggested time and again and my fear is that this will be instituted. Mostly it will be an asset test but it may also take into account income over the years and what the government expects you should have saved and what you should get. Do you think means testing is fair to people who have payed into the system yet get nothing in return but instead they socialize others who may have not necessarily worked hard to further themselves.
First, a vocabulary correction: In both the poll and the OP, the word "socialize" was used where the context clearly calls for "subsidize".
You appear not to know that higher wage earners already subsidize lower wage earners. The formulas used to calculate Social Security retirement benefits return to the lower wage earners a greater precentage of their earnings in the form of benefits than they do to higher wage earners. Any further and additional means testing would increase this subsidy, of course.
You raise an issue of fundamental fairness, with which I agree for the most part. However, it is very important, one way or another, to avoid having large numbers of totally destitute seniors out there, many of whom are too old to have the option of returning to work as a personal solution.
Social security is already essentially a means-test on a sliding scale as Escort pointed out.
For example using: Estimated Social Security Benefit
$10,000 = $725
$20,000 = $991
$40,000 = $1525
$60,000 = $2019
$80,000 = $2269
$100,000 = $2519
$113,700+ = $2645
If the people making $100k got the same paid in to paid out ratio as those making $20k, they'd be getting twice as much out. It's really a question of how much should they be subsidizing lower income people.
The ideal solution for me would be to allow everyone to opt out going forward. You'd still get some benefit from what you accrued while paying in -- basically whatever you'd get if you simply stopped working today and took social security at whatever age you took it. You'd also have to pay in the amount normally used for the wealth transfer, disability, and survivor benefits schemes. So for someone making $100k, they'd pay in roughly half of the normal amount. The problem is the nanny state mentality. It'd probably be necessary to require everyone to pay in on the first $40k of their income and then anything over the $40k you could opt out on and only pay the non-pension portions.
Unfortunately, that's not possible. Since it's a PAYGO system that also happens to be severely underfunded and headed for insolvency in 20 years, that would just exasperate the problem. While persons such as myself would be taking out less money in the 2050s, we'd be paying in less now. And since social security will be insolvent as is by 2033 that's obviously not going to work.
What needs to be done is get rid of the payroll tax cut (which is probably happening). After that, there needs to be another 1.9% increase in the 12.4% social security tax to balance social security. I'd say a 50/50 approach. Raise payroll taxes by .95% and cut spending on all social security benefits above the poverty level by whatever is necessary to balance it. It's an everyone pays solution. Not a tax the rich, not a put it on the backs of your grandchildren, not a put push Grandma out with the iceberg solution. Once it's balanced, maybe we can revisit partial privatization without scuttling the system in doing so.
In some countries, like the UK, you can opt out of social security payments as long as your payment then goes into a private retirement fund for yourself.
The payroll tax cut was a dumb idea. Hardly anybody noticed it and it just made the situation worse.
Social Security is a red herring. The current Federal debt and deficit of the United States have nothing -- zero -- to do with Social Security. Social Security has large reserves, and has run in the black for many years in the recent past.
Unfortunately, right-wing zealots have linked together the issues of SS and debt/deficit through manipulative linguistics much as they linked Sadam Hussein and the terrorist attacks on September 11.
Our Federal debt and deficit are the result of irresponsible tax cuts, unfunded wars, a gigantic military budget, and stupendous government bailouts of various private enterprises. First, we need to clean this up. After that, we need to work on Medicare and Medicaid, both of which (along with private health care funding in general) are in serious trouble as a result of the dysfunctional way that our health system has evolved. Only after these problems are fixed do we need to devote any attention at all to Social Security.
Social Security is a form of insurance, into which the beneficiaries have paid premiums.
A parallel form of means testing would be, if you have comprehensive insurance on your car and you have a claim, the insurance company doesn't pay you if you can afford to fix it yourself. Or if you have health insurance and go to the doctor, your insurance doesn't pay if you can afford to pay yourself.
The reason Social Security has lasted so long is because it is (like the US Constitution) fair and honest and efficient and does what it was supposed to do, to the benefit of the commonweal. In principle, it is above reproach, no matter how loudly the greedy and ignorant scream about it.
You do have a point, but I don't think means-testing it the correct approach. If any adjustments are to be made, the first should be to cap the benefits. Exactly the people who earned enough that they should have made retirement allowances for themselves, are receiving way too much SS benefits ($30K per year) for the basic sustenance SS was designed to afford. The cap should be about half that, which is quite enough for a working-class retiree to live on. The retired millionaires are the ones getting $30K.
Social Security is a red herring. The current Federal debt and deficit of the United States have nothing -- zero -- to do with Social Security. Social Security has large reserves, and has run in the black for many years in the recent past.
...
You are separating SS from the rest of the federal government which the politicians stopped doing many years ago.
SS outgo currently exceeds income and the reserves are all invested in 'special-income' treasuries so every month the federal government must borrow or print to fund SS payments. The folly even goes so far as to pay SS interest payments from the treasury but these also are funded by borrowing/printing.
Since the US government (SS included) spends 50% more than income all expenditures add to the debt and only semantics make it less so.
From the official SS site:
'Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that these expenditures will remain greater than non-interest income throughout the 75-year projection period. The deficit of non-interest income relative to expenditures was about $49 billion in 2010 and $45 billion in 2011, and the Trustees project that it will average about $66 billion between 2012 and 2018 before rising steeply as the economy slows after the recovery is complete and the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Redemption of trust fund assets from the General Fund of the Treasury will provide the resources needed to offset the annual cash-flow deficits.'
^^ Not at all. Everyone knew about outgo exceeding income when SS was altered in the 1980s. This is why the trust fund was established by law, with the full faith and credit of the Federal Govt, with the express purpose of funding SS. We are now using it for its intended purpose, although this may or may not be only a temporary situation driven by the downturn of the economy.
More importantly, however, your analysis overlooks the fundamental problem. Independent of any consideration of SS or Medicare, the federal budget is a disaster, right now, right now, with something like $3.50 borrowed of every $10 spent. Right now, SS is an insignificant factor in the deficit, and not a factor at all in the debt. Unless this fundamental breakdown is fixed right now by increasing taxes, reigning in military spending, and desisting from private-sector bailouts, we are in very serious trouble. Once this situation is righted, we can work on the long-term sustainability of Medicare, Medicaid, and private healthcare. After that, sometime within the next 20 years (as opposed to right now, which is needed for the aforementioned problems with the general budget) we can work on SS. But if we do not fix the gross imbalance in the general budget, independent of SS, we cannot climb out of our present hole.
^^ I'd be all for this approach, too, provided that it applies only to people in New Jersey
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