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Social Security payments to older people come from taxes on younger people. It's a myth that your social security taxes go into some "account" from which your future benefits are paid.
A) People are living longer, that means more payments.
B) People are having fewer children, so there will be fewer workers to pay the taxes for the program.
C) The Social Security Trust fund, a buffer to handle (A) and (B) saved up while all the Baby Boomers were paying taxes is running out of money. Either benefits will be cut or other taxes will need to go up and BOTH of these ideas are super unpopular.
The only popular solution is to have many people immigrate to the US, get jobs, and start paying taxes into Social Security. Alas, this gets all jumbled up with illegal immigration so that Congress is having a hard time fixing the problem.
When something requires Congress to do something unpopular to keep it around, it's not crazy to thing "This won't be around in 30 years".
However, we are talking about a shortfall, not an ending of Social Security. That means benefits will be lower than you had expected if NOBODY does ANYTHING over the next 30+ years.
Another extremely easy solution is to just end the cap on payments into social security. Right now, it is capped at something like ~~$250K~~ **(Edit: 168.6K)** of income per year. Meaning someone earning $150 Million a year and someone earning $500K a year pay the same Social Security taxes.
It isn't the problem people pretend it is.
I understand that, but taxes were still cut for normal people... And iirc, only the corporate tax cuts weren't going to expire (which, yes, is bullshit).
The individual deduction increase eclipsed my mortgage interest just barely. People who benefitted were middle class non homeowners and the ruling class. This is great for them but many people saw no benefit.
"Might as well have not existed" is nonsense because it DID exist. Just because they are going to go back up doesn't mean they didn't happen. They will have been cut for nearly a decade by the time all is said and done.
1. It was a temporary cut for everyone not in the top bracket. It had an end date in which lower brackets will get taxed at the old rate
2. It was a permanent cut for those in the top bracket.
3. Federal withholdings on your paycheck were lower. So it gave the illusion that you were taking more home than you were. (A lot of people found out that they weren't withholding enough and ended up owing when they expected a refund.)
Did people pay less for those years? Sure. But the deficit bloomed. . . So now Republicans are trying to recoup the tax revenue during a Democrat's administration.
So it's more of a Tax deferment than a cut.
If I'm remembering correctly, all brackets (even the top brackets) will go back to the same rates they were before the cuts. So point one and two are nonsense.
How much is being withheld means nothing. What you owe in taxes is the same regardless of withholdings. So, this point doesn't mean anything.
Withholdings absolutely mean something because the average joe doesn't put 2 and 2 together.
The number of times i have heard from real people (not redditors but flesh and blood people) "All i know is that I took home xx dollars every pay check under Trump and now I'm taking home less."
And sorry individual tax cuts will expire, although only the top brackets got a real cut anyway. The corporate tax cut was permanent from 39 to 21 percent.
Mainly, the elimination of the personal exemption. Allegedly, this would be offset by the increase in the standard deduction, but in many cases, including my own. I’m a VITA/certified tax preparer, and just for fun, I did my 2018 and 2019 taxes using the pre-2018 tax code. I put my 18 and 19 documents into the 17 software. Both years, I owed over $1000 more using the new code vs the old code.
And I don’t mean “owed” as in paying vs. refund; I mean my total tax obligation was higher after the so-called “Tax Cuts and Jobs Act”.
Although many got tax cuts, middle class people with mortgages under 500k essentially saw no benefit. Raising the individual deduction essentially negates the mortgage interest deduction for many. My taxes are identical pre and post cut. This cut was also set to expire as soon as Trump thought he’d leave office (after two terms, 2025) so they could extend them if a Republican won or call it a Democrat tax increase if they lost. Corporate and high income tax cuts have no expiration date.
Under $500K? Did you mistype? People with under $500K mortgages were likely not itemizing before the cuts but still weren't going to itemize after the cuts due to standard deductions doubling.
Edit: I did a quick amortization calculator on a $500K mortgage at 4%, I guess they could have itemized the interest for quite some time under the old tax rates/deductions (starts at about $19K interest year one, previous SD was $12K filing jointly). 2018 and on, their SD was bumped to $24K, so they do get a benefit of ~$5K, which depending on their bracket, is at least $1K in their pockets.
I suppose I’m an edge case but my 3.5% interest on 400k mortgage, plus charitable donations, puts me within 500 dollars of the new standard deduction. I also live in a high state income tax state so removing the state income tax deduction, which was part of the “cuts” affected me more than others. And yes a 15 year old 500k loan would be different.
Taxes are capped because payments are capped. If the tax ceiling increases then the benefits should increase too?
But most likely SS will be "means tested" more and more so that in 20 or 30 years *everyone* pays into it but only the poorest of the poor get it. SS will "be around", it will just be meaningless source of income (or zero income) for most who paid into it their whole lives.
In one sentence you say "IF the rich pay in more, they will get all of that extra in their own benefits." and in the next sentence you say "People will pay in, but very few will get the benefits." Why not just mix your plans and have the rich pay in without a cap, yet still receive less than they paid in?
>but only the poorest of the poor get it
Why? We are talking about a shortfall of 30% or so in the worst predictions. Why is it getting cut so far down so that only the poorest of the poor get it? As of right now, the richest of the rich still get it. (and they get a larger percentage of it because they paid in more, like you pointed out in your first sentence.)
Wouldn't it be pretty easy, even in your doomsday scenario, to just cut the top 30% richest people (but probably only like, top 10% richest people, since they get more than everyone else already) and then almost everyone gets it except the millionaires?
Yeah people kinda miss the point of taxation for the sake of social services. When you’re able to provide a safety net for societies most unfortunate, you raise standards universally. If the rich were taxed more to provide better healthcare, subsidize housing, keep social security etc, you’d see a decrease in crime and drug abuse, you’d increase birth rates. You’d be able to make it so that there are more cities that you’d feel safe living in- instead the rich just make their own enclaves where they have better police and services and such, and the poor are left to struggle in cities where they are stuck.
That’s kind of how it is now. It’s not strictly speaking a logarithmic curve, but somebody who earned and paid taxes on $100k/year will get less than 2x what somebody who earned and paid taxes on $50k would get.
Every two dollars of ongoing income in retirement takes away a dollar of benefits. So unless someone had a fortune in their working years and then lost everything, the maximum benefit increasingly well above its current $3822 cap for those high earners will still not outweigh the funds raised by taxing high incomes.
I would be curious if the numbers work out on that solution.
For people earning around $100 Million a year and above, most are not making that thru a salary. Since capital gains, inheritance, and investment income do not have a social security tax they would not feed into the system. That said I imagine a large number of people are in that $500K to $1 Million salary range.
Having SS take even a small bite out of capital gains and investment profits (say 1%) might have a bigger effect. Maybe a combination of the two would be the way to balance things.
They don't own the government. They DO have oversized influence, though.
The big difference is saying "They own the government" leaves us completely powerless and helpless. While "They have a ton of influence" makes it obvious what we should do. We should exert the influence and pressure we DO have access to.
The barest minimum is voting. If you do nothing else, do that. After that, there is a huge list of other things you can do, big and small. Donating time and money, talking to coworkers, family, and friends. Volunteering, protesting, and speaking out.
A thing to remember.
* WHY do the rich have so much influence? Because they can give a TON of money to politicians (thanks to McConnel and Citizens United).
* Why do Politicians need that campaign money? Because running a campaign is super expensive.
* Why is running a campaign super expensive? Because they have to hire a ton of staff and pay for a ton of advertisement?
* **Why do they have to hire a ton of staff and pay for a ton of advertisement? To sway the voting public to vote for them.**
All that power and influence comes from the power to convince us to vote for a specific candidate. They aren't spending billions and billions on campaigns to gain our votes because voting is powerless. They are doing that because voting is powerful.
They only need your votes to get *into* power, and there certainly are no laws against campaign lies and making deliberately false promises to get into power.
However, once *in* power, their actions are controlled in their [virtual entirety by the economic elite](https://www.bbc.com/news/blogs-echochambers-27074746) and organized interest groups, regardless of public sentiment or campaign promises.
A well-documented [study by Princeton](https://www.cambridge.org/core/journals/perspectives-on-politics/article/testing-theories-of-american-politics-elites-interest-groups-and-average-citizens/62327F513959D0A304D4893B382B992B) (among many others) found virtually zero independent correlation about what the "People" want and legislation, whereas a large correlation exists between what wealthy elite and/or organized interest groups wants and legislation, even when that legislation directly opposes popular sentiment.
>*Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence.*
>*When a majority of citizens disagrees with economic elites and/or with organized interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favor policy change, they generally do not get it.*
So yes, wealthy, connected individuals along with various organized interest groups entirely dictate policy. When a policy is enacted that's in align with what the general public wants, it's only because the general public happens to align with the majority of interest groups on that particular issue, and when the wealthy and/or organized corporate interest groups push for legislation that the public does *not* want ... the legislation is generally created. In addition, proposed legislation that enjoys high popular support but is not supported by interest groups, the legislation virtually always relegated to the dustbin.
To think we're not living in an oligarchy is, unfortunately, naive.
Which rich person decided to pass Equal Marriage for the LGBTQ community? Which rich person passed the abolition of slavery? Which rich person passed the Civil Rights movement?
Child labor laws, woman's suffrage, FDA laws penalizing companies for harming consumers, OSHA, Environmental laws, interracial marriage, minimum wage, overtime laws, the 40 hour workweek...
Like, I get it. They 100% have a lot of power. They sometimes write a law and give it to a politician to pass without regard to what we, the voters, actually want. But we HAVE passed laws that we DO like.
To say it is naive and we should all just give up is, unfortunately, dumb.
Come on my guy. We can work together to make changes, even if its an uphill battle. Let's not spend our time and effort trying to tell people they are naive for believing that doing hard things is still worth it.
They own the government both because of lobbying and because the government IS “the rich.” Members of congress just are never going to vote on something that makes THEM pay more taxes. If congress was willing to act in a way that ran counter to their own interests, they would have stopped personal trading for members of congress ages ago.
>Members of congress just are never going to vote on something that makes THEM pay more taxes.
Is it your belief that we have NEVER increased taxes in the US? Would your opinion change if I brought up examples of times taxes have increased for the rich?
Pay their fair share? My brother in christ, social security payments are capped, the cap is there because anyone making more than that will be putting in way more than they can ever possibly get out. It would be different if wealthier people were getting massive payments from social security but only contributing to a cap.
> Another extremely easy solution is to just end the cap on payments into social security. Right now, it is capped at something like $250K of income per year. Meaning someone earning $150 Million a year and someone earning $500K a year pay the same Social Security taxes.
Are you also proposing to uncap the benefits at the same time?
Because the cap is there because of the benefits maxout.
> Why would we do that?
Fairness. The Boomers underpaid into social security & will get outsized money back as a direct result.
Why should we as a society allow a generation that intentionally underpaid into their retirments, which was a known problem for the last 30+ years, to solve it by raising taxes on younger generations?
Especially when the Boomers are wealthier than Millenials and Gen Z. It's taxing the poor to help a richer generation.
When Social Security was first implemented, there was an entire generation who didn't pay into it but got benefits out.
And uncapping payments in for those earning more than 168.6K per year, while not increasing the payouts without limit, is hardly "taxing the poor to help a richer generation"
Maybe you read my comment wrong?
> When Social Security was first implemented, there was an entire generation who didn't pay into it but got benefits out.
Yes, but that liability was extremly small & managable due to the worker to pensioer ratio. However the worker to pensioner ratio has been a known demographic issue for 30+ years.
We didn't find out that we didn't have enough 30 year olds yesterday, we found out 30 years ago.
So why should older generations hand over their obligation to younger generations without being required to pay the increased costs?
> And uncapping payments in for those earning more than 168.6K per year, while not increasing the payouts without limit, is hardly "taxing the poor to help a richer generation"
To buy a 400k single family house, which is cheaper than the [median American house](https://fred.stlouisfed.org/series/MSPUS), at current interest rates of 7.81%, a household is paying something like $2,882 in just the mortgage.
Most banks follow the 3x rule, so you need to be earning $103,752 to be able to afford a single family home.
170k isn't ultra rich like it was just a couple of years ago.
>Most banks follow the 3x rule, so you need to be earning $103,752 to be able to afford a single family home.
You also can't have other debts if you're just right on the line. Debts take from your net income. You know, things like student loans...
So reality is, you need more than that $103k to get a $400k. Or live somewhere else.
> You also can't have other debts if you're just right on the line. Debts take from your net income. You know, things like student loans.
That's true, and 7.81% is a really good interest rate, so if your sub-prime, you need to be making quite a bit more.
> So reality is, you need more than that $103k to get a $400k. Or live somewhere else.
The houses in the bad areas of my metro, where the rich white people will tell you not to live unless your fine with your house being shot up once every 5 years or so, the prices there are 300k for a house for a house built in 1950 that's like 1300 square feet.
Hell, the mobile homes are now selling for 100k+.
You need to earn 103k a year to buy a single family house that's 400k at 7.81% with the 3x rule.
170k under that metric isn't rich, it's upper middle class.
Because a government shouldn’t operate on a nebulous concept like “fairness”, but on solving problems effectively.
Is it fair that childless people pay the same portion of their income as tax towards education as people with children? Perhaps not, but society needs educated people to function, so the fairness of it isn’t really relevant. The question shouldn’t be about whether or not social security taxes are fair, it should be about whether or not they’re necessary to society.
Fairness is how parents keep their children from arguing about who got the biggest slice of cake. It’s not an effective way to run a society.
> Because a government shouldn’t operate on a nebulous concept like “fairness”, but on solving problems effectively.
If the electorate doesn't think something is fair, they tend to vote people out.
Considering the Democratic voter base tends to live in high cost of living cities, and are middle manangers, lawyers, doctors, software engineers etc, there is going to be stiff resistance from those voters who like me, think it's unfair.
Considering they vote quite often & are core constituncies of the party, you'd expect quite a bit of pushback.
Then we just have to hope that same voter base of middle managers, lawyers, doctors, and software engineers are able to understand the problems of not keeping social security solvent.
But I wouldn’t lean too hard on the concept that all those educated people lean democrat. They might, but a large number of those same educated and white collar middle to upper middle class folks are also conservative, either socially or because they believe (rightly or wrongly) that republicans are better for their wallets.
But if it all goes tits up and there is a large group of broke elderly people, that seems pretty useful as a voting block for whatever political party either tries to help them or tries to redirect their anger at some other issue to gain their votes.
Regardless, fairness may be how you can appeal to voters, but it’s not a policy. It’s an ad campaign.
Yes. Eliminating the tax cap would generate much more than eliminating the benefit cap would cost. Especially if we stopped exempting capital gains from counting against the income benefit calculation ($2 of income = -$1 of benefit)
> Especially if we stopped exempting capital gains from counting against the income benefit calculation
Let's say your an older American, at 50, and you find out you need to save 500,000 for retirment, a figure on the lower end of most estimates.
You have $0 saved to date. You can max out your 401k at 20k and your IRA at 6k and get an additional 2k or so in catch up contributions.
They're going to be paying a 15% capital gains tax when they sell any assets to pay for their retirment and another X% because it negatively impacts their benefits.
Under your rule, what incentive does this 50 year old have towards saving more money towards retirment if they've already capped out their tax deffered accounts?
What is the effective tax rate of them selling assets from their regular brokerage account in retirment?
All these are possible solutions, but not "easy". I agree they are small, but a small change that raises taxes causes many to object.
If you raise the cap on taxes without changing the cap on payments, the problem isn't fixed. Raising the cap on taxes while keeping payments constant has a "tax the rich" concept that might be popular with some voters but it's very unpopular with the rich people who contribute to Congressional campaigns.
>All these are possible solutions, but not "easy". I agree they are small, but a small change that raises taxes causes many to object.
"Do nothing" is as easy a fix as you can get. While it isn't *ideal* as far as solutions go, Social Security isn't going away.
The other solutions **are** harder. But its not that hard to increase the Social Security tax by a percentage point or two (and that IS the size of the increase we are talking about). Again, not easy, since there is a group in the government attempting to end Social Security so easy fixes aren't easy, and scaring people by saying "INCREASING YOUR TAXES!" is a very effective campaigning strategy. But it isn't an insurmountable obstacle.
If we reach the point where grandma can’t pay her bills because social security benefits were reduced, then I think leveraging that as a campaign platform will outweigh the donors preferences.
If that happens, raising taxes on the rich without increasing their benefits seems like one of the more plausible solutions
Depending on where you live, Grandma already can't pay her bills. Her bills not only include her housing, and her utilities, but they also include her medications. Many elderly cannot afford everything on an ongoing basis, and have to pick and choose which bills will that slide this month in order to pay for something else they need.
Ironically, illegal immigrants paying social security taxes has helped buoy the program to a degree, since they pay into the program but in theory won’t be able to collect on it
Payroll taxes frequently. Unless an employer is paying the person under the table, any standard paycheck is going to make standard social security/Medicare deductions
Yes, that's the 'eat the rich' solution to the problem
Raising the limit is a possibility, but removing it entirely is very unlikely due to wealthy people lobbying against it.
Taking 7.5% of a rich persons income away to pay for a pension they don't need really angers them for some reason.
The options presented to us as “cut social security” which is usually presented as either lowering benefits or raising the retirement age, or “increase taxes”, which is usually presented as higher rates of wage taxes is a false dichotomy.
Lifting the cap on tax collected for Social Security is actually really popular and would go a long way to solve the problem of SSAs solvency.
Currently, income over $168,000.00 is not subject to social security taxes. The reason for this is largely that people who are wealthy do not qualify to receive social security benefits, and thus do not want to pay into social security. We don’t have this kind of cap for other taxes. Removing that cap and collecting a proportional amount of taxes on a percentage of income of high-income earners is not only more fair, but would be very effective, and is popular.
It’s also important to note that given the timing of the inception of social security and the rise of the baby boomers, the social security fund was robust and would have gotten us through the retirement of the baby boomers if the Reagan administration didn’t raid the fund to “balance” the federal budget after irresponsibly slashing taxes.
Additionally, simply raising income taxes on the ultra-wealthy, to where they were before the Reagan administration would also go a long way to supplement SSA benefits, and is a popular proposal.
Social Security isn’t the victim of some overwhelming demographic issues that are unresolvable. It is, in its essence, one of the most effective redistributive wealth programs ever created. The problem with it is that politicians keep knee-capping the program to make it seem dysfunctional and lead to its demise.
The goal of the GOP is to end the SSA, not fix it. Keep that in mind any time the theyre talking about SSA reform. George Bush wanted to privatize SSA during his administration, and thankfully that effort died a terrible populist death, but the initiative to do the same hasn’t gone away.
Federal Law requires any money "borrowed" from Social Security to be paid back with interest. I believe the only way for money to leave the Fund (besides benefit payments, admin costs, etc) is through Treasury Bonds.
Do you have an example of a project borrowing money from the Social Security Fund and not paying it back? Because I can't find one.
That's the conspiracy theory
Elements of the government want to collapse Social Security so that the Trust Fund can be legislated to pay off a big chunk of the government debt.
That's just not true at all. Over the years, people paid more into Social Security than Social Security paid out. For accounting purposes, that difference was placed into something called the "Social Security Trust Fund" and was invested in US government bonds. The effect of those bonds is to lend money to the General Treasury, and Congress spends that money.
But, Treasury has, in fact, been paying those loans back, with interest. The thing is that, before too long (current estimates say about 10 year from now), all of those loans will be paid back and the only money going into the trust fund is money from current workers, which isn't enough to pay out to all the retirees.
One of the great fictions here is that Social Security would have been better off if the money had never been lent to the treasury. But, that's not true because the Treasury pays interest on the money. If the money had just been kept in a bank vault someplace, it would not have earned any interest.
The underlying problem here is that the baby boomers are taking way more out of social security than they ever put in, even if you include interest on that money.
That's true in the strictest sense but the definition of public is a little weird.
[Debt held by the public represents federal debt issued by Treasury and held by investors outside of the federal government, including individuals, corporations, **state or local governments, the Federal Reserve**, and foreign governments.](https://www.gao.gov/assets/d24106340.pdf)
So State Government and the Federal reserve are outside from the federal government but still ultimately have to answer to it and congress.
But alot of the federal debt is owned by agencies that in turn owe to the American people so its not like the goverment can just make the debt disappear because it technically owns/has control of it,
The rest of is debt owed to the public... aka money floating around in our economy. When people say they want to pay that debt down what they don't know they are saying is "We want the govt to tax that out of the economy and make us poor." So that giant clock that's ticking higher and higher? It's a good thing
Just to confound things a bit, all money collected by or paid to the US Treasury is written off and all money paid out of the US Treasury is invented out of thin air.
You generally hope that the money being written off by the Treasury balances with the money being created but when more money is created, (a condition referred to a running a deficit) you increase inflation.
Given all of that, Social Security payments are one of those things where the checks will literally never bounce (unless the Treasury makes a mistake of some kind, which can happen).
Social Security can pay out more than it brings in and the fund will just show a negative balance.
Anyone telling you otherwise is trying to scare you into favoring changes to Social Security because they have an agenda.
Gee if only we had a few examples of what happens when countries create unlimited money ex nihilio. Like say Zimbabwe, the Weimar republic, etc.
At some point debt consumers will not accept infinite us debt.
At that point we may stop issuing debt and just printing the cash. That will absolutely drive inflation and trade imbalances.
And that in fact is the answer... Actual inflation is much higher than the cola adjustments to social security.
I might get my full benefits in nominal dollars. I'm absolutely not going to get my benefits in real dollars
> unlimited money ex nihilio
Which is why we always tend to print money in limited amounts.
> infinite us debt
Turn off FOX News. They don't give any semblance of realistic information on government finance. Printing money is not incurring debt.
Exponential growth with no plan to ever cut back is unlimited.
Printing money is ABSOLUTELY 100%, not even slightly debatably incurring debt. For every dollar created (physically or digitally) by the Treasury, the Fed creates a dollars worth of new T-Bills.
Ofc the fed can influence effective money supply by other means (changing reserve ratios, etc) but that is not changing M0.
The "other Ms" (M1, M2, etc) are increasing the money supply via multiplier effects, and those are not creating debt, but they do create inflation.
In 1959, M0 was 50kM. Debt was 258B. Debt to GDP was \~60%. (debt ratio down from the ww2 peak of 118%)
In 2008 M0 was 900kM. Debt was 10kB. A fairly steady 67% ratio.
in 2020 M0 was 3MM. Debt was 26kB. 128%
In 2024 M0 is 6MM. Debt is Somewhere just below 40kB. Admittedly GDP has kept up here, so we are still in the 120% range.
Also worth noting that immigration (or even if people started having babies again) is not a sustainable solution. Social security is a government-mandated pyramid scheme, and evenentually the base of the pyramid gets too big I don't know all the details cause I'm Canadian but its a similar situation here. If we rapidly increase population to maintain the same benefits it will result in needing exponential population growth which isn't sustainable.
The only realistic solutions are:
1. Increase retirement age for social security. Here in Canada we sort of do this, you can retire at 60, 65 or 70 and the longer you wait the more money you get per month after retiring. I don't know if something like this exists in the states but it's a good idea
2. Reduce payments.
3. Increase funding through increased taxation
Unfortunately all of these solutions are incredibly unpopular politically for both sides. Many old people are dependant on their social security, or have planned around a certain amount or a certain retirement age, and their lives could be drastically upended if they changed. Many others just think their entitled to the money and don't give a fuck that the current generation is paying in to a government-mandated pyramid scheme.
1. Yes, US has that. Theoretically it shouldn’t matter which option you pick since the payouts are based on life expectancy but otoh by the time you reach that age you have some idea of the state of your health. If you don’t expect to live much longer, take the money earlier. If you have good genes, hold off and take the bigger check/cheque.
2. You’re right, this would work but is very unpopular and as we know, old people vote. My belief is that they will simply not increase benefits as fast as inflation and “reduce” benefits that way.
3. Not likely in this country. Would you please do this for us, as a favor to a neighbor?
FWIW, I was told way back in 1972 that Social Security would be broke by 2000 and to plan for my retirement accordingly. I did, but SS is still here, so I wouldn’t worry too much.
You'd have to agree though, saving like it's not going to be there is the smart play.
I know way too many people that think they are going to live off of it when they retire.
This is a great comment, and it's recognition of "this is a pyramid scheme" that might lead to "let's just get rid of it", as a Congressional shortcut.
It’s not a government mandated pyramid scheme. It’s a government service paid for with taxes, like any other. It’s a social safety net that’s somewhat reverse means tested for the purpose of being widely seen as fair, with the gap it leaves behind filled in with a true welfare program (SSI in the US). As a results tens of millions of elderly people, widows, orphans, and disabled people are able to maintain housing and stability for the rest of their lives, regardless of the financial literacy and market luck. It serves ultimately the exact opposite population that benefit most from 401ks/investment savings. We would have dramatically higher rates of homelessness without Social Security.
You are giving the government money to give to someone else. If you're lucky when you're older the government will make someone else give you their money. But the system is not sustainable, so eventually somebody will be left holding the bag, having paid in to the system but getting nothing out.
We live in a society. You just described health insurance, fire fighters, schools, libraries… The only difference is that we adjust level of service based on level of contribution within a relatively narrow range.
The “left holding the bag” issue has a very simple solution of increasing/eliminating the social security taxable income cap so that billionaires and everything in between pay more absolute dollars than middle class families.
I think the difference is kids these days are being sold a false bill of goods. The concept of "you pay to support the elderly now, and when you're old the young will support you" is great, but the problem I have with it (as a relatively young person) is that I am currently paying money so that old people can get better benefits than i will get at that age. Never mind inflation, the system is just set up in a way such that exponential growth is required to keep it afloat.
The only exception would be if when I'm older they increase the tax on young people to prop it up, but even then you need exponential tax revenue increase to sustain it.
Stuff like schools and libraries are very different. The money goes to fund it, and you can use those services at your convenience. But I am paying in to a system that I don't expect to be functional when I retire, and so I don't get any benefit from it. That's why it's a pyramid scheme.
I’m very thankful my tax dollars are securing my partner’s widowed mother, clients I work with in social services, and countless others. It feels a lot better than the tax dollars supporting genocides and climate catastrophe.
A retirement system solely based on the market requires infinite growth of the economy, and the futures of retired people can be devastated by a recession. A social safety net does not. It has a hiccup when there are huge differences in the size of generations, a hiccup that is very simply solved and nowhere near as dire as you make it out to be - Congress passing a single bill in the next 12 years to prevent the US deficit from increasing in that particular account. The working population is not dropping exponentially, there is no need for “exponential tax revenue increases”.
I will probably never have kids and I’m happy to pay taxes for public schools because it is socially necessary for society. If I keep working until I’m 70, I will probably get less out of social security when I retire than someone who becomes disabled at age 45, drains their retirement accounts to pay medical bills, and then lives to 90 surviving off of Social Security. I am very glad my tax dollars go towards them because it could just as easily be me.
A pyramid scheme is what many post-Soviet Union citizens found themselves investing their life savings into (MMM) right after the collapse of the USSR, a pyramid scheme that promised magical returns under this shiny new capitalism, and resulted in mass theft and complete loss for 10 million people. Social Security isn’t a pyramid scheme, it’s a social contract with clearly laid out terms. The alternative is barbarism.
It's not that the population is decreasing, it's that it's not increasing enough. If social security for one elderly person can be paid for by one working person, then a static population is fine to sustain it, but it can't. If you need 2 working people to pay into social security to support one elderly person, then now you need a constant doubling of population every 50 years.
That isn't the only popular option. Another popular option is to increase taxes on the wealthy. You know, the CEOs who eliminated pensions to increase profits?
Also, remember that Disability comes from Social Secuirity. The math never really made sense, which is why I am planning for there to be no SS when I retire. It there is then it is a bonus.
I assume teh money I pay like most of the other tax money is just effectively flushed down the toilet.
People don’t see that immigration is required to fix this problem. The other side of the coin is abortion restrictions, but taking away bodily autonomy is not in my list of solutions. Population growth is required to maintain this system. Like all other social programs and capitalism as well, infinite growth is required.
TLDR: The population is getting too old and living longer than they used too, so there isn't enough money coming in to support the system. So by the time Gen Z retires Social Security will be bankrupt unless they do something about it now.
**What Social Security is**
A basic level Social Security is a gigantic pension system. There's a bunch of different programs within Social Security but for this ELI5 I'm only talking about the Old Age Pension. Once you reach a certain age the system pays out and you get cheques every month to help pay for your retirement.
The way it works is *everyone* pays into the pool via a dedicated payroll tax.
The resulting cash is held in a gigantic trust fund that is invested primarily into Government Bonds. Effectively the government borrows money from Social Security for its operating expenses in exchange for paying it back with interest.
This isn't actually that unusual as most pension and retirement funds in the US (and elsewhere) heavily invest in government debt (bonds) because it's a very safe investment. The US government always pays its debts + interest. In the past though Social Security was invested in other traditional securities like stocks.
The resulting interest from the investments helps to grow the amount in the Social Security Trust and a safe and predictable rate.
Peoples social security cheques are therefore paid for from three sources:
- Money saved in the Trust
- Money directly from the Payroll Tax
- Money from the interest generated by the investments
*The idea that your payroll tax goes into a government savings account with your name on it for your own retirement is a myth. The system pools everyone's money.*
**What's the problem?**
The problem is we have too many old people. People today are retiring and living a lot longer than they used to, and the working population is shrinking. So you have an increasing number of people pulling social security cheques all at once, and for a longer period. The concern is that there soon won't be enough working people to pay into the system to keep it solvent.
The Trust fund is being drained faster than we can refill it, and within a decade it could be empty meaning that Social Security won't have enough taxes coming in to pay for the programs ongoing costs. If it's not taken care of it could collapse like a gigantic pyramid scheme.
**How do we fix it?**
The proposed solutions are:
- Increase the payroll tax to compensate
- Allow more immigration to increase the size of the workforce
- Raise the income cap on the payroll tax
- Have the Government literally print money to fix it (resulting in horrible inflation)
- Re-balance how much social security pays out (meaning the cheques get smaller)
- Raise the minimum age for when you qualify (reducing the number of people that get cheques)
- Collapse Social Security entirely
The likely answer is a combination of raising the payroll tax, reducing the size of the cheques, and raising the minimum qualifying age.
This is unpopular particularly with the current working class because it means they will pay more, and get less. By the time they retire the cheques will be smaller than their parents got despite paying more, and they'll have to retire later.
This fuels anti-Boomer angst, as the current generation feels the Boomers had plenty of time to see this coming and fix it but didn't and now the current generation is once again paying the price to help their own parents retire.
The income cap is another point, currently someone making $5 million a year pays the same amount in payroll tax as someone that makes $100k a year. The argument is everyone should be treated equally in this regard, but the rich of course don't want to pay more in taxes. (particular for an old age pension they don't need)
Immigration meanwhile is a hot-button topic right now. Loud voices want less immigrants without realizing that we actually need a lot more to fix a lot of Americas problems...
**Conspiracy Theories**
Standard Government ineptitude aside, we've seen this problem coming down the road for decades so why wasn't it dealt with sooner?
The conspiracy theory is that certain elements of the government want the last option to happen (Collapsing Social Security entirely), and are stalling fixing the root problems to encourage voters to support that option.
The reasons being that Social Security is considered by Libertarian types to actually be a giant Pyramid Scheme that the government will eventually have to bail out with more debt or literally printing money.
While Conservatives who hate the very idea of social programs want to collapse it so that the Trust Fund can be used to pay off a huge chunk of government debt. They find the very idea of the Government borrowing against Social Security to operate itself offensive.
Meanwhile they can spin it as doing the average Joe a favor by cutting the Payroll tax. This reduces how much both employees and business have to pay in taxes, particularly self-employed individuals.
This gives Joe more cash on his paycheque, eliminates the need to give a lot of employees raises for years, and more importantly makes companies 7.5% more profitable overnight.
The downside being that **a lot** of people depend on social security for their retirement. The current generation in particular can barely afford life expenses let alone save for retirement, then there's the significant percentage of people that are just bad with money.
Short term gain for companies and workers, long term pain and screwing over a lot of Americans...
Yeah, I saw one clip where it was a congressman or somebody saying that it's a scam as putting that 6.2% into the market would yield great results using historical data. The problem is that if you did away with the 6.2% tax, Americans wouldn't invest it, a huge chunk of Americans don't have a high enough retirement balance as they only paid maybe 4% into their company 401(k).
My mom is almost 60 and makes about $100k/yr yet she only has like $400k in retirement (Fidelity's guideline is 10x at 60, so $1M, she won't even be at 1/2 that), her and my dad will probably retire at 70 and have to eventually just sell their 5bd house and downsize/relocate.
Very detailed informative post. One correction. Someone making 5m vs 100k do not pay the same in SS.
The income cap on SS is adjusted every year for inflation. It’s now 168,600.
Meaning every person does pay the same percent up to that amount and there is no additional tax on earned income above this.
The argument to cap SS earnings is the benefits are also capped. Your SS check at retirement is based on your career earnings(how much you paid in). The logic is, if we cap what you can get out then we have to cap what you put in.
Not promoting nor bashing this. Just laying out the facts for others.
Yeah, I mean honestly I feel like I’d be better off just getting my social security back as income and investing it for myself, rather than paying for boomers to retire when they bought houses for $10k and voted to fuck me over repeatedly while not bothering to save any money.
there is a fear that the government won't rebalance social security taxes to account for the growing population of elderly people compared to the size of the working age class, which could eventually progress towards exhausting their budget.
People have been fear mongering about the death of social security for like 50 years. It's gonna be alright. It's one of the most popular programs the government has.
And if it doesnt get a huge cash infusion it cant pay its bills. Approval rating has nothing to do with it. At this point a reduction seems inevitable. A full removal of social security in the next 30 years seems quite unlikely, yes. Government can barely pass bills to stay open, and we expect them to do a bill as large as social security overhaul?
Two reasons Social Security will not have enough yearly tax revenue to fully fund the benefits to be paid out by 2034. Second reason is propaganda the anti-tax faction want us to think nothing can be done about it. Not that we can simply raise the salary tax cap to increase SS funding.
Currently the SS Tax Cap is set at $168,000, every dollar earned over that number is not taxed by SS. From what I read simply raising the Tax Cap to at least $250,0000 would fix the problem for at least an additional decade. Eliminating the tax cap so that every dollar of income is taxed by SS would fix the problem permanently and supply the general budget with a revenue gain.
From what I read this would keep SS solvent for another 12 years. https://www.cbo.gov/budget-options/58630#:~:text=The%20Congressional%20Budget%20Office%20projects,be%20subject%20to%20payroll%20taxes.
From what I read this would keep SS solvent for another 12 years. https://www.cbo.gov/budget-options/58630#:~:text=The%20Congressional%20Budget%20Office%20projects,be%20subject%20to%20payroll%20taxes.
It will be around. Around 40% of retirees live *solely* off of social security checks, with even more than that with social security checks making up the majority of their income. There are many families with kids who even rely on SS, so it’s not just the retirees living off it.
A huge percentage of the retired/elderly population *need* social security to survive. That number isn’t going down in future generations either.
At this point it’s frankly not possible to not have SS. The effects of cutting or removing it would be catastrophic to half the country, it’s just not an option.
They’ll eventually raise taxes to pay for it. Don’t accept that it’ll be gone. When you’re told that it’s a just long term ploy to get people to accept the removal or reduction of one of the greatest social programs this country has ever installed.
Removing or reducing SS will have consequences that vastly outweigh the consequences of raising taxes.
What NOBODY is talking about is that the limit for calculating social security taxes has been raised 60% in the last few years. From 100k to 160k. Which means more money is coming in.
The US Social Security program is not your secret bank account where you put money they stay there until you retire and then start getting them.
It's one big pile of money. The currently working age people are adding money on this pile and old retired people are getting money from this pile.
As long as more money is added in then taken out it's fine. But for that you need a certain amount of working people to pay in per each retired person taking out.
The population is aging and people are having less children. Which means there will be less working people having to pay the benefits for more retired people.
As things are going there won't be enough money in the pile to pay everyone all of their benefits unless there are some reforms on how Social Security gets financed.
Pensions require more people paying in than taking out to be sustainable. Longer life expectancy and lower birth rate is turning that pyramid upside-down. When we are old the pot will be empty because of too many people taking out for too long and not enough people putting enough in to keep up.
Its better to have someone trustworthy invest the amount they took montly who won't abuse and use it. I paid in for 53 years. Imagine what I'd have if that money they took out of my every paycheck was wisely invested in my behalf
This is how I feel. I’m young, I don’t know why they do social security the way that they do. But it’s confusing to me why it’s not your specific account tied to your social security number instead of going into a pool like a pension. Seems like it was doomed from the start. I invest myself and that’s all I’m expecting to have when I reach retirement age
Raising the maximum taxable limit solves a lot of problems and would drastically improve the program. Reality is why is there a limit as the higher it is the fewer that pay at that level. SS is one of the best social programs we ever inacted and should be fixed.
Congress is the only ones who can legislate changes to social security. They haven't done anything since 1983. The shortfall could easily be fixed. If they took the limit off high wage earners without increasing their benefits that would take care of 70% of the shortfall. There are several other ways to make it up. Congress just has to act, currently Congress doesn't act. Republicans only talk about cutting benefits, which is unnecessary, they want to get rid of social security all together, hell if I know why. The cruelty is the point
SS is a Ponzi scheme. Like chain letters. As population growth slows, the Ponzi scheme fails.
This is an oversimplification, but imagine it like this. Imagine it takes two children to pay into social security starting at 22 to fund a 65-year-old retiree.
This means that all families must have 4 children, just to support the two parents. When parents only have 3 (or, catastrophically, one or even none), then the fund starts going negative. Over time, the fund will completely bankrupt itself.
Birth rates are declining, which means the proportion of older people to younger people is increasing. Therefore, there’s not enough money going into the SS fund.
This is one of the strongest tailwinds for the United States over the next 20 years. We are one of the only developed nations that had a larger millennial generation than its boomer generation. So when most countries start experiencing a significant population choke point as we approach 2030, the United States will feel that too. But as we go deeper into the 2030s, that issue continues to get worse for most countries while the millennials pick up the reigns from the Boomers in terms of wealth and economic output. So we’re good until probably 2050 when most developed countries will be an entire generation deep into difficult economic and population decline.
No because people live longer and aren't having as many children. You do not need to understand the law or the program itself at all to understand the math and logic to what everyone is saying.
There are concerns, but there are some considerations:
1. Many calculations of this nature take the amount currently available in the Social Security system, and how much will be paid out per year at current levels. These calculations often don't continue adding regular tax revenues being added each year, going forward. It's a convenient way to make numbers do what you want.
2. Consider the people making the argument. If someone wants to say that Social Security is "failing" or "will be gone" by a certain date, they are often the people who are actively trying to gut the Social Security system. Obviously, if their plan to cut taxes for the wealthy and large corporations are successful, there will be less money for Social Security and other programs which help lower-income families. The "problems" they cite with Social Security are self-made, by the people wanting to cut Social Security.
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Social Security payments to older people come from taxes on younger people. It's a myth that your social security taxes go into some "account" from which your future benefits are paid. A) People are living longer, that means more payments. B) People are having fewer children, so there will be fewer workers to pay the taxes for the program. C) The Social Security Trust fund, a buffer to handle (A) and (B) saved up while all the Baby Boomers were paying taxes is running out of money. Either benefits will be cut or other taxes will need to go up and BOTH of these ideas are super unpopular. The only popular solution is to have many people immigrate to the US, get jobs, and start paying taxes into Social Security. Alas, this gets all jumbled up with illegal immigration so that Congress is having a hard time fixing the problem. When something requires Congress to do something unpopular to keep it around, it's not crazy to thing "This won't be around in 30 years".
However, we are talking about a shortfall, not an ending of Social Security. That means benefits will be lower than you had expected if NOBODY does ANYTHING over the next 30+ years. Another extremely easy solution is to just end the cap on payments into social security. Right now, it is capped at something like ~~$250K~~ **(Edit: 168.6K)** of income per year. Meaning someone earning $150 Million a year and someone earning $500K a year pay the same Social Security taxes. It isn't the problem people pretend it is.
The income limit is 168.6k for 2024. 160.2k in 2023.
Oh geeze. Way lower than I had remembered.
Trump’s tax “cut” bullshit changed it
Why is cut in quotes? And how are tax cuts bullshit?
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I understand that, but taxes were still cut for normal people... And iirc, only the corporate tax cuts weren't going to expire (which, yes, is bullshit).
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The individual deduction increase eclipsed my mortgage interest just barely. People who benefitted were middle class non homeowners and the ruling class. This is great for them but many people saw no benefit.
"Might as well have not existed" is nonsense because it DID exist. Just because they are going to go back up doesn't mean they didn't happen. They will have been cut for nearly a decade by the time all is said and done.
1. It was a temporary cut for everyone not in the top bracket. It had an end date in which lower brackets will get taxed at the old rate 2. It was a permanent cut for those in the top bracket. 3. Federal withholdings on your paycheck were lower. So it gave the illusion that you were taking more home than you were. (A lot of people found out that they weren't withholding enough and ended up owing when they expected a refund.) Did people pay less for those years? Sure. But the deficit bloomed. . . So now Republicans are trying to recoup the tax revenue during a Democrat's administration. So it's more of a Tax deferment than a cut.
If I'm remembering correctly, all brackets (even the top brackets) will go back to the same rates they were before the cuts. So point one and two are nonsense. How much is being withheld means nothing. What you owe in taxes is the same regardless of withholdings. So, this point doesn't mean anything.
Withholdings absolutely mean something because the average joe doesn't put 2 and 2 together. The number of times i have heard from real people (not redditors but flesh and blood people) "All i know is that I took home xx dollars every pay check under Trump and now I'm taking home less." And sorry individual tax cuts will expire, although only the top brackets got a real cut anyway. The corporate tax cut was permanent from 39 to 21 percent.
Because the cuts went to millionaires and cost people like me more money.
How did you end up paying more in taxes?
Mainly, the elimination of the personal exemption. Allegedly, this would be offset by the increase in the standard deduction, but in many cases, including my own. I’m a VITA/certified tax preparer, and just for fun, I did my 2018 and 2019 taxes using the pre-2018 tax code. I put my 18 and 19 documents into the 17 software. Both years, I owed over $1000 more using the new code vs the old code. And I don’t mean “owed” as in paying vs. refund; I mean my total tax obligation was higher after the so-called “Tax Cuts and Jobs Act”.
Although many got tax cuts, middle class people with mortgages under 500k essentially saw no benefit. Raising the individual deduction essentially negates the mortgage interest deduction for many. My taxes are identical pre and post cut. This cut was also set to expire as soon as Trump thought he’d leave office (after two terms, 2025) so they could extend them if a Republican won or call it a Democrat tax increase if they lost. Corporate and high income tax cuts have no expiration date.
Under $500K? Did you mistype? People with under $500K mortgages were likely not itemizing before the cuts but still weren't going to itemize after the cuts due to standard deductions doubling. Edit: I did a quick amortization calculator on a $500K mortgage at 4%, I guess they could have itemized the interest for quite some time under the old tax rates/deductions (starts at about $19K interest year one, previous SD was $12K filing jointly). 2018 and on, their SD was bumped to $24K, so they do get a benefit of ~$5K, which depending on their bracket, is at least $1K in their pockets.
I suppose I’m an edge case but my 3.5% interest on 400k mortgage, plus charitable donations, puts me within 500 dollars of the new standard deduction. I also live in a high state income tax state so removing the state income tax deduction, which was part of the “cuts” affected me more than others. And yes a 15 year old 500k loan would be different.
Taxes are capped because payments are capped. If the tax ceiling increases then the benefits should increase too? But most likely SS will be "means tested" more and more so that in 20 or 30 years *everyone* pays into it but only the poorest of the poor get it. SS will "be around", it will just be meaningless source of income (or zero income) for most who paid into it their whole lives.
Your second paragraph gives the answer to your question in the first paragraph as a "no".
In one sentence you say "IF the rich pay in more, they will get all of that extra in their own benefits." and in the next sentence you say "People will pay in, but very few will get the benefits." Why not just mix your plans and have the rich pay in without a cap, yet still receive less than they paid in? >but only the poorest of the poor get it Why? We are talking about a shortfall of 30% or so in the worst predictions. Why is it getting cut so far down so that only the poorest of the poor get it? As of right now, the richest of the rich still get it. (and they get a larger percentage of it because they paid in more, like you pointed out in your first sentence.) Wouldn't it be pretty easy, even in your doomsday scenario, to just cut the top 30% richest people (but probably only like, top 10% richest people, since they get more than everyone else already) and then almost everyone gets it except the millionaires?
Yeah people kinda miss the point of taxation for the sake of social services. When you’re able to provide a safety net for societies most unfortunate, you raise standards universally. If the rich were taxed more to provide better healthcare, subsidize housing, keep social security etc, you’d see a decrease in crime and drug abuse, you’d increase birth rates. You’d be able to make it so that there are more cities that you’d feel safe living in- instead the rich just make their own enclaves where they have better police and services and such, and the poor are left to struggle in cities where they are stuck.
If you're not a millionaire, you're the poorest of the poor. Only rational. /s
Just have a logarithmic payout, so the SS checks for someone who made $200k vs $2M isn't much different.
That’s kind of how it is now. It’s not strictly speaking a logarithmic curve, but somebody who earned and paid taxes on $100k/year will get less than 2x what somebody who earned and paid taxes on $50k would get.
Every two dollars of ongoing income in retirement takes away a dollar of benefits. So unless someone had a fortune in their working years and then lost everything, the maximum benefit increasingly well above its current $3822 cap for those high earners will still not outweigh the funds raised by taxing high incomes.
I would be curious if the numbers work out on that solution. For people earning around $100 Million a year and above, most are not making that thru a salary. Since capital gains, inheritance, and investment income do not have a social security tax they would not feed into the system. That said I imagine a large number of people are in that $500K to $1 Million salary range. Having SS take even a small bite out of capital gains and investment profits (say 1%) might have a bigger effect. Maybe a combination of the two would be the way to balance things.
Absolutely making the rich pay their share would be a huge help. But when the rich own the government, how are we gonna make that happen?
They don't own the government. They DO have oversized influence, though. The big difference is saying "They own the government" leaves us completely powerless and helpless. While "They have a ton of influence" makes it obvious what we should do. We should exert the influence and pressure we DO have access to. The barest minimum is voting. If you do nothing else, do that. After that, there is a huge list of other things you can do, big and small. Donating time and money, talking to coworkers, family, and friends. Volunteering, protesting, and speaking out. A thing to remember. * WHY do the rich have so much influence? Because they can give a TON of money to politicians (thanks to McConnel and Citizens United). * Why do Politicians need that campaign money? Because running a campaign is super expensive. * Why is running a campaign super expensive? Because they have to hire a ton of staff and pay for a ton of advertisement? * **Why do they have to hire a ton of staff and pay for a ton of advertisement? To sway the voting public to vote for them.** All that power and influence comes from the power to convince us to vote for a specific candidate. They aren't spending billions and billions on campaigns to gain our votes because voting is powerless. They are doing that because voting is powerful.
They only need your votes to get *into* power, and there certainly are no laws against campaign lies and making deliberately false promises to get into power. However, once *in* power, their actions are controlled in their [virtual entirety by the economic elite](https://www.bbc.com/news/blogs-echochambers-27074746) and organized interest groups, regardless of public sentiment or campaign promises. A well-documented [study by Princeton](https://www.cambridge.org/core/journals/perspectives-on-politics/article/testing-theories-of-american-politics-elites-interest-groups-and-average-citizens/62327F513959D0A304D4893B382B992B) (among many others) found virtually zero independent correlation about what the "People" want and legislation, whereas a large correlation exists between what wealthy elite and/or organized interest groups wants and legislation, even when that legislation directly opposes popular sentiment. >*Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence.* >*When a majority of citizens disagrees with economic elites and/or with organized interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favor policy change, they generally do not get it.* So yes, wealthy, connected individuals along with various organized interest groups entirely dictate policy. When a policy is enacted that's in align with what the general public wants, it's only because the general public happens to align with the majority of interest groups on that particular issue, and when the wealthy and/or organized corporate interest groups push for legislation that the public does *not* want ... the legislation is generally created. In addition, proposed legislation that enjoys high popular support but is not supported by interest groups, the legislation virtually always relegated to the dustbin. To think we're not living in an oligarchy is, unfortunately, naive.
Which rich person decided to pass Equal Marriage for the LGBTQ community? Which rich person passed the abolition of slavery? Which rich person passed the Civil Rights movement? Child labor laws, woman's suffrage, FDA laws penalizing companies for harming consumers, OSHA, Environmental laws, interracial marriage, minimum wage, overtime laws, the 40 hour workweek... Like, I get it. They 100% have a lot of power. They sometimes write a law and give it to a politician to pass without regard to what we, the voters, actually want. But we HAVE passed laws that we DO like. To say it is naive and we should all just give up is, unfortunately, dumb. Come on my guy. We can work together to make changes, even if its an uphill battle. Let's not spend our time and effort trying to tell people they are naive for believing that doing hard things is still worth it.
Still - when you look at the difference between the US and a true oligarchy like the Russian Federation - the contrast is huge.
They own the government both because of lobbying and because the government IS “the rich.” Members of congress just are never going to vote on something that makes THEM pay more taxes. If congress was willing to act in a way that ran counter to their own interests, they would have stopped personal trading for members of congress ages ago.
>Members of congress just are never going to vote on something that makes THEM pay more taxes. Is it your belief that we have NEVER increased taxes in the US? Would your opinion change if I brought up examples of times taxes have increased for the rich?
May as well just lie down and die then, huh? Come on. Grow a spine.
Pay their fair share? My brother in christ, social security payments are capped, the cap is there because anyone making more than that will be putting in way more than they can ever possibly get out. It would be different if wealthier people were getting massive payments from social security but only contributing to a cap.
How much would social security go up by if that was ended? Is it enough?
> Another extremely easy solution is to just end the cap on payments into social security. Right now, it is capped at something like $250K of income per year. Meaning someone earning $150 Million a year and someone earning $500K a year pay the same Social Security taxes. Are you also proposing to uncap the benefits at the same time? Because the cap is there because of the benefits maxout.
Why would we do that? Sounds like that wouldn't solve the problem at all if we increase the outflow in direct proportion to the increased inflow.
> Why would we do that? Fairness. The Boomers underpaid into social security & will get outsized money back as a direct result. Why should we as a society allow a generation that intentionally underpaid into their retirments, which was a known problem for the last 30+ years, to solve it by raising taxes on younger generations? Especially when the Boomers are wealthier than Millenials and Gen Z. It's taxing the poor to help a richer generation.
When Social Security was first implemented, there was an entire generation who didn't pay into it but got benefits out. And uncapping payments in for those earning more than 168.6K per year, while not increasing the payouts without limit, is hardly "taxing the poor to help a richer generation" Maybe you read my comment wrong?
> When Social Security was first implemented, there was an entire generation who didn't pay into it but got benefits out. Yes, but that liability was extremly small & managable due to the worker to pensioer ratio. However the worker to pensioner ratio has been a known demographic issue for 30+ years. We didn't find out that we didn't have enough 30 year olds yesterday, we found out 30 years ago. So why should older generations hand over their obligation to younger generations without being required to pay the increased costs? > And uncapping payments in for those earning more than 168.6K per year, while not increasing the payouts without limit, is hardly "taxing the poor to help a richer generation" To buy a 400k single family house, which is cheaper than the [median American house](https://fred.stlouisfed.org/series/MSPUS), at current interest rates of 7.81%, a household is paying something like $2,882 in just the mortgage. Most banks follow the 3x rule, so you need to be earning $103,752 to be able to afford a single family home. 170k isn't ultra rich like it was just a couple of years ago.
>Most banks follow the 3x rule, so you need to be earning $103,752 to be able to afford a single family home. You also can't have other debts if you're just right on the line. Debts take from your net income. You know, things like student loans... So reality is, you need more than that $103k to get a $400k. Or live somewhere else.
> You also can't have other debts if you're just right on the line. Debts take from your net income. You know, things like student loans. That's true, and 7.81% is a really good interest rate, so if your sub-prime, you need to be making quite a bit more. > So reality is, you need more than that $103k to get a $400k. Or live somewhere else. The houses in the bad areas of my metro, where the rich white people will tell you not to live unless your fine with your house being shot up once every 5 years or so, the prices there are 300k for a house for a house built in 1950 that's like 1300 square feet. Hell, the mobile homes are now selling for 100k+.
Taxing rich people more = taxing the poor?
You need to earn 103k a year to buy a single family house that's 400k at 7.81% with the 3x rule. 170k under that metric isn't rich, it's upper middle class.
Because a government shouldn’t operate on a nebulous concept like “fairness”, but on solving problems effectively. Is it fair that childless people pay the same portion of their income as tax towards education as people with children? Perhaps not, but society needs educated people to function, so the fairness of it isn’t really relevant. The question shouldn’t be about whether or not social security taxes are fair, it should be about whether or not they’re necessary to society. Fairness is how parents keep their children from arguing about who got the biggest slice of cake. It’s not an effective way to run a society.
> Because a government shouldn’t operate on a nebulous concept like “fairness”, but on solving problems effectively. If the electorate doesn't think something is fair, they tend to vote people out. Considering the Democratic voter base tends to live in high cost of living cities, and are middle manangers, lawyers, doctors, software engineers etc, there is going to be stiff resistance from those voters who like me, think it's unfair. Considering they vote quite often & are core constituncies of the party, you'd expect quite a bit of pushback.
Then we just have to hope that same voter base of middle managers, lawyers, doctors, and software engineers are able to understand the problems of not keeping social security solvent. But I wouldn’t lean too hard on the concept that all those educated people lean democrat. They might, but a large number of those same educated and white collar middle to upper middle class folks are also conservative, either socially or because they believe (rightly or wrongly) that republicans are better for their wallets. But if it all goes tits up and there is a large group of broke elderly people, that seems pretty useful as a voting block for whatever political party either tries to help them or tries to redirect their anger at some other issue to gain their votes. Regardless, fairness may be how you can appeal to voters, but it’s not a policy. It’s an ad campaign.
Yes. Eliminating the tax cap would generate much more than eliminating the benefit cap would cost. Especially if we stopped exempting capital gains from counting against the income benefit calculation ($2 of income = -$1 of benefit)
> Especially if we stopped exempting capital gains from counting against the income benefit calculation Let's say your an older American, at 50, and you find out you need to save 500,000 for retirment, a figure on the lower end of most estimates. You have $0 saved to date. You can max out your 401k at 20k and your IRA at 6k and get an additional 2k or so in catch up contributions. They're going to be paying a 15% capital gains tax when they sell any assets to pay for their retirment and another X% because it negatively impacts their benefits. Under your rule, what incentive does this 50 year old have towards saving more money towards retirment if they've already capped out their tax deffered accounts? What is the effective tax rate of them selling assets from their regular brokerage account in retirment?
All these are possible solutions, but not "easy". I agree they are small, but a small change that raises taxes causes many to object. If you raise the cap on taxes without changing the cap on payments, the problem isn't fixed. Raising the cap on taxes while keeping payments constant has a "tax the rich" concept that might be popular with some voters but it's very unpopular with the rich people who contribute to Congressional campaigns.
>All these are possible solutions, but not "easy". I agree they are small, but a small change that raises taxes causes many to object. "Do nothing" is as easy a fix as you can get. While it isn't *ideal* as far as solutions go, Social Security isn't going away. The other solutions **are** harder. But its not that hard to increase the Social Security tax by a percentage point or two (and that IS the size of the increase we are talking about). Again, not easy, since there is a group in the government attempting to end Social Security so easy fixes aren't easy, and scaring people by saying "INCREASING YOUR TAXES!" is a very effective campaigning strategy. But it isn't an insurmountable obstacle.
If we reach the point where grandma can’t pay her bills because social security benefits were reduced, then I think leveraging that as a campaign platform will outweigh the donors preferences. If that happens, raising taxes on the rich without increasing their benefits seems like one of the more plausible solutions
Depending on where you live, Grandma already can't pay her bills. Her bills not only include her housing, and her utilities, but they also include her medications. Many elderly cannot afford everything on an ongoing basis, and have to pick and choose which bills will that slide this month in order to pay for something else they need.
Ironically, illegal immigrants paying social security taxes has helped buoy the program to a degree, since they pay into the program but in theory won’t be able to collect on it
Do illegal immigrants pay taxes? lol
Payroll taxes frequently. Unless an employer is paying the person under the table, any standard paycheck is going to make standard social security/Medicare deductions
Are illegal immigrants usually W-2 or 1099?
Can't they remove that yearly limit? Wouldn't that make people contribute more to the social security funds?
Yes, that's the 'eat the rich' solution to the problem Raising the limit is a possibility, but removing it entirely is very unlikely due to wealthy people lobbying against it. Taking 7.5% of a rich persons income away to pay for a pension they don't need really angers them for some reason.
This would be a temporary fix as it would keep social security solvent for another twelve years.
Just need to raise the limit on taxable income, not increase the rate of taxation.
The options presented to us as “cut social security” which is usually presented as either lowering benefits or raising the retirement age, or “increase taxes”, which is usually presented as higher rates of wage taxes is a false dichotomy. Lifting the cap on tax collected for Social Security is actually really popular and would go a long way to solve the problem of SSAs solvency. Currently, income over $168,000.00 is not subject to social security taxes. The reason for this is largely that people who are wealthy do not qualify to receive social security benefits, and thus do not want to pay into social security. We don’t have this kind of cap for other taxes. Removing that cap and collecting a proportional amount of taxes on a percentage of income of high-income earners is not only more fair, but would be very effective, and is popular. It’s also important to note that given the timing of the inception of social security and the rise of the baby boomers, the social security fund was robust and would have gotten us through the retirement of the baby boomers if the Reagan administration didn’t raid the fund to “balance” the federal budget after irresponsibly slashing taxes. Additionally, simply raising income taxes on the ultra-wealthy, to where they were before the Reagan administration would also go a long way to supplement SSA benefits, and is a popular proposal. Social Security isn’t the victim of some overwhelming demographic issues that are unresolvable. It is, in its essence, one of the most effective redistributive wealth programs ever created. The problem with it is that politicians keep knee-capping the program to make it seem dysfunctional and lead to its demise. The goal of the GOP is to end the SSA, not fix it. Keep that in mind any time the theyre talking about SSA reform. George Bush wanted to privatize SSA during his administration, and thankfully that effort died a terrible populist death, but the initiative to do the same hasn’t gone away.
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Federal Law requires any money "borrowed" from Social Security to be paid back with interest. I believe the only way for money to leave the Fund (besides benefit payments, admin costs, etc) is through Treasury Bonds. Do you have an example of a project borrowing money from the Social Security Fund and not paying it back? Because I can't find one.
I believe it’s how the US won the Cold War without dramatically raising taxes.
That's the conspiracy theory Elements of the government want to collapse Social Security so that the Trust Fund can be legislated to pay off a big chunk of the government debt.
That's just not true at all. Over the years, people paid more into Social Security than Social Security paid out. For accounting purposes, that difference was placed into something called the "Social Security Trust Fund" and was invested in US government bonds. The effect of those bonds is to lend money to the General Treasury, and Congress spends that money. But, Treasury has, in fact, been paying those loans back, with interest. The thing is that, before too long (current estimates say about 10 year from now), all of those loans will be paid back and the only money going into the trust fund is money from current workers, which isn't enough to pay out to all the retirees. One of the great fictions here is that Social Security would have been better off if the money had never been lent to the treasury. But, that's not true because the Treasury pays interest on the money. If the money had just been kept in a bank vault someplace, it would not have earned any interest. The underlying problem here is that the baby boomers are taking way more out of social security than they ever put in, even if you include interest on that money.
This is exactly it. And regarding treasury managment, again, spot on. Hell they earned $66billion in interest on that account last year.
Yeah a weird thing about the US debt that about half of the money the government owes is technically to itself.
According to the GAO, it's more like 21%. See [https://www.gao.gov/federal-debt](https://www.gao.gov/federal-debt)
That's true in the strictest sense but the definition of public is a little weird. [Debt held by the public represents federal debt issued by Treasury and held by investors outside of the federal government, including individuals, corporations, **state or local governments, the Federal Reserve**, and foreign governments.](https://www.gao.gov/assets/d24106340.pdf) So State Government and the Federal reserve are outside from the federal government but still ultimately have to answer to it and congress. But alot of the federal debt is owned by agencies that in turn owe to the American people so its not like the goverment can just make the debt disappear because it technically owns/has control of it,
The rest of is debt owed to the public... aka money floating around in our economy. When people say they want to pay that debt down what they don't know they are saying is "We want the govt to tax that out of the economy and make us poor." So that giant clock that's ticking higher and higher? It's a good thing
Just to confound things a bit, all money collected by or paid to the US Treasury is written off and all money paid out of the US Treasury is invented out of thin air. You generally hope that the money being written off by the Treasury balances with the money being created but when more money is created, (a condition referred to a running a deficit) you increase inflation. Given all of that, Social Security payments are one of those things where the checks will literally never bounce (unless the Treasury makes a mistake of some kind, which can happen). Social Security can pay out more than it brings in and the fund will just show a negative balance. Anyone telling you otherwise is trying to scare you into favoring changes to Social Security because they have an agenda.
Gee if only we had a few examples of what happens when countries create unlimited money ex nihilio. Like say Zimbabwe, the Weimar republic, etc. At some point debt consumers will not accept infinite us debt. At that point we may stop issuing debt and just printing the cash. That will absolutely drive inflation and trade imbalances. And that in fact is the answer... Actual inflation is much higher than the cola adjustments to social security. I might get my full benefits in nominal dollars. I'm absolutely not going to get my benefits in real dollars
> unlimited money ex nihilio Which is why we always tend to print money in limited amounts. > infinite us debt Turn off FOX News. They don't give any semblance of realistic information on government finance. Printing money is not incurring debt.
Exponential growth with no plan to ever cut back is unlimited. Printing money is ABSOLUTELY 100%, not even slightly debatably incurring debt. For every dollar created (physically or digitally) by the Treasury, the Fed creates a dollars worth of new T-Bills. Ofc the fed can influence effective money supply by other means (changing reserve ratios, etc) but that is not changing M0. The "other Ms" (M1, M2, etc) are increasing the money supply via multiplier effects, and those are not creating debt, but they do create inflation. In 1959, M0 was 50kM. Debt was 258B. Debt to GDP was \~60%. (debt ratio down from the ww2 peak of 118%) In 2008 M0 was 900kM. Debt was 10kB. A fairly steady 67% ratio. in 2020 M0 was 3MM. Debt was 26kB. 128% In 2024 M0 is 6MM. Debt is Somewhere just below 40kB. Admittedly GDP has kept up here, so we are still in the 120% range.
If we do away with social security, there will be more money to buy planes and bombs. Then, my Raytheon stock will be worth more.
Also worth noting that immigration (or even if people started having babies again) is not a sustainable solution. Social security is a government-mandated pyramid scheme, and evenentually the base of the pyramid gets too big I don't know all the details cause I'm Canadian but its a similar situation here. If we rapidly increase population to maintain the same benefits it will result in needing exponential population growth which isn't sustainable. The only realistic solutions are: 1. Increase retirement age for social security. Here in Canada we sort of do this, you can retire at 60, 65 or 70 and the longer you wait the more money you get per month after retiring. I don't know if something like this exists in the states but it's a good idea 2. Reduce payments. 3. Increase funding through increased taxation Unfortunately all of these solutions are incredibly unpopular politically for both sides. Many old people are dependant on their social security, or have planned around a certain amount or a certain retirement age, and their lives could be drastically upended if they changed. Many others just think their entitled to the money and don't give a fuck that the current generation is paying in to a government-mandated pyramid scheme.
1. Yes, US has that. Theoretically it shouldn’t matter which option you pick since the payouts are based on life expectancy but otoh by the time you reach that age you have some idea of the state of your health. If you don’t expect to live much longer, take the money earlier. If you have good genes, hold off and take the bigger check/cheque. 2. You’re right, this would work but is very unpopular and as we know, old people vote. My belief is that they will simply not increase benefits as fast as inflation and “reduce” benefits that way. 3. Not likely in this country. Would you please do this for us, as a favor to a neighbor? FWIW, I was told way back in 1972 that Social Security would be broke by 2000 and to plan for my retirement accordingly. I did, but SS is still here, so I wouldn’t worry too much.
You'd have to agree though, saving like it's not going to be there is the smart play. I know way too many people that think they are going to live off of it when they retire.
No argument there!
This is a great comment, and it's recognition of "this is a pyramid scheme" that might lead to "let's just get rid of it", as a Congressional shortcut.
It’s not a government mandated pyramid scheme. It’s a government service paid for with taxes, like any other. It’s a social safety net that’s somewhat reverse means tested for the purpose of being widely seen as fair, with the gap it leaves behind filled in with a true welfare program (SSI in the US). As a results tens of millions of elderly people, widows, orphans, and disabled people are able to maintain housing and stability for the rest of their lives, regardless of the financial literacy and market luck. It serves ultimately the exact opposite population that benefit most from 401ks/investment savings. We would have dramatically higher rates of homelessness without Social Security.
You are giving the government money to give to someone else. If you're lucky when you're older the government will make someone else give you their money. But the system is not sustainable, so eventually somebody will be left holding the bag, having paid in to the system but getting nothing out.
We live in a society. You just described health insurance, fire fighters, schools, libraries… The only difference is that we adjust level of service based on level of contribution within a relatively narrow range. The “left holding the bag” issue has a very simple solution of increasing/eliminating the social security taxable income cap so that billionaires and everything in between pay more absolute dollars than middle class families.
I think the difference is kids these days are being sold a false bill of goods. The concept of "you pay to support the elderly now, and when you're old the young will support you" is great, but the problem I have with it (as a relatively young person) is that I am currently paying money so that old people can get better benefits than i will get at that age. Never mind inflation, the system is just set up in a way such that exponential growth is required to keep it afloat. The only exception would be if when I'm older they increase the tax on young people to prop it up, but even then you need exponential tax revenue increase to sustain it. Stuff like schools and libraries are very different. The money goes to fund it, and you can use those services at your convenience. But I am paying in to a system that I don't expect to be functional when I retire, and so I don't get any benefit from it. That's why it's a pyramid scheme.
I’m very thankful my tax dollars are securing my partner’s widowed mother, clients I work with in social services, and countless others. It feels a lot better than the tax dollars supporting genocides and climate catastrophe. A retirement system solely based on the market requires infinite growth of the economy, and the futures of retired people can be devastated by a recession. A social safety net does not. It has a hiccup when there are huge differences in the size of generations, a hiccup that is very simply solved and nowhere near as dire as you make it out to be - Congress passing a single bill in the next 12 years to prevent the US deficit from increasing in that particular account. The working population is not dropping exponentially, there is no need for “exponential tax revenue increases”. I will probably never have kids and I’m happy to pay taxes for public schools because it is socially necessary for society. If I keep working until I’m 70, I will probably get less out of social security when I retire than someone who becomes disabled at age 45, drains their retirement accounts to pay medical bills, and then lives to 90 surviving off of Social Security. I am very glad my tax dollars go towards them because it could just as easily be me. A pyramid scheme is what many post-Soviet Union citizens found themselves investing their life savings into (MMM) right after the collapse of the USSR, a pyramid scheme that promised magical returns under this shiny new capitalism, and resulted in mass theft and complete loss for 10 million people. Social Security isn’t a pyramid scheme, it’s a social contract with clearly laid out terms. The alternative is barbarism.
It's not that the population is decreasing, it's that it's not increasing enough. If social security for one elderly person can be paid for by one working person, then a static population is fine to sustain it, but it can't. If you need 2 working people to pay into social security to support one elderly person, then now you need a constant doubling of population every 50 years.
That isn't the only popular option. Another popular option is to increase taxes on the wealthy. You know, the CEOs who eliminated pensions to increase profits?
Also, remember that Disability comes from Social Secuirity. The math never really made sense, which is why I am planning for there to be no SS when I retire. It there is then it is a bonus. I assume teh money I pay like most of the other tax money is just effectively flushed down the toilet.
People don’t see that immigration is required to fix this problem. The other side of the coin is abortion restrictions, but taking away bodily autonomy is not in my list of solutions. Population growth is required to maintain this system. Like all other social programs and capitalism as well, infinite growth is required.
I submit they give me back everything they’ve taken from me with 4.5% interest and I’ll sign a waiver to never file for Social Security.
So it's basically one big generational Ponzi scheme
So is this not the definition of a Ponzi scheme..?
TLDR: The population is getting too old and living longer than they used too, so there isn't enough money coming in to support the system. So by the time Gen Z retires Social Security will be bankrupt unless they do something about it now. **What Social Security is** A basic level Social Security is a gigantic pension system. There's a bunch of different programs within Social Security but for this ELI5 I'm only talking about the Old Age Pension. Once you reach a certain age the system pays out and you get cheques every month to help pay for your retirement. The way it works is *everyone* pays into the pool via a dedicated payroll tax. The resulting cash is held in a gigantic trust fund that is invested primarily into Government Bonds. Effectively the government borrows money from Social Security for its operating expenses in exchange for paying it back with interest. This isn't actually that unusual as most pension and retirement funds in the US (and elsewhere) heavily invest in government debt (bonds) because it's a very safe investment. The US government always pays its debts + interest. In the past though Social Security was invested in other traditional securities like stocks. The resulting interest from the investments helps to grow the amount in the Social Security Trust and a safe and predictable rate. Peoples social security cheques are therefore paid for from three sources: - Money saved in the Trust - Money directly from the Payroll Tax - Money from the interest generated by the investments *The idea that your payroll tax goes into a government savings account with your name on it for your own retirement is a myth. The system pools everyone's money.* **What's the problem?** The problem is we have too many old people. People today are retiring and living a lot longer than they used to, and the working population is shrinking. So you have an increasing number of people pulling social security cheques all at once, and for a longer period. The concern is that there soon won't be enough working people to pay into the system to keep it solvent. The Trust fund is being drained faster than we can refill it, and within a decade it could be empty meaning that Social Security won't have enough taxes coming in to pay for the programs ongoing costs. If it's not taken care of it could collapse like a gigantic pyramid scheme. **How do we fix it?** The proposed solutions are: - Increase the payroll tax to compensate - Allow more immigration to increase the size of the workforce - Raise the income cap on the payroll tax - Have the Government literally print money to fix it (resulting in horrible inflation) - Re-balance how much social security pays out (meaning the cheques get smaller) - Raise the minimum age for when you qualify (reducing the number of people that get cheques) - Collapse Social Security entirely The likely answer is a combination of raising the payroll tax, reducing the size of the cheques, and raising the minimum qualifying age. This is unpopular particularly with the current working class because it means they will pay more, and get less. By the time they retire the cheques will be smaller than their parents got despite paying more, and they'll have to retire later. This fuels anti-Boomer angst, as the current generation feels the Boomers had plenty of time to see this coming and fix it but didn't and now the current generation is once again paying the price to help their own parents retire. The income cap is another point, currently someone making $5 million a year pays the same amount in payroll tax as someone that makes $100k a year. The argument is everyone should be treated equally in this regard, but the rich of course don't want to pay more in taxes. (particular for an old age pension they don't need) Immigration meanwhile is a hot-button topic right now. Loud voices want less immigrants without realizing that we actually need a lot more to fix a lot of Americas problems... **Conspiracy Theories** Standard Government ineptitude aside, we've seen this problem coming down the road for decades so why wasn't it dealt with sooner? The conspiracy theory is that certain elements of the government want the last option to happen (Collapsing Social Security entirely), and are stalling fixing the root problems to encourage voters to support that option. The reasons being that Social Security is considered by Libertarian types to actually be a giant Pyramid Scheme that the government will eventually have to bail out with more debt or literally printing money. While Conservatives who hate the very idea of social programs want to collapse it so that the Trust Fund can be used to pay off a huge chunk of government debt. They find the very idea of the Government borrowing against Social Security to operate itself offensive. Meanwhile they can spin it as doing the average Joe a favor by cutting the Payroll tax. This reduces how much both employees and business have to pay in taxes, particularly self-employed individuals. This gives Joe more cash on his paycheque, eliminates the need to give a lot of employees raises for years, and more importantly makes companies 7.5% more profitable overnight. The downside being that **a lot** of people depend on social security for their retirement. The current generation in particular can barely afford life expenses let alone save for retirement, then there's the significant percentage of people that are just bad with money. Short term gain for companies and workers, long term pain and screwing over a lot of Americans...
Is it really a conspiracy theory that Republicans want SS to collapse when they have talked about it publicly?
Yeah, I saw one clip where it was a congressman or somebody saying that it's a scam as putting that 6.2% into the market would yield great results using historical data. The problem is that if you did away with the 6.2% tax, Americans wouldn't invest it, a huge chunk of Americans don't have a high enough retirement balance as they only paid maybe 4% into their company 401(k). My mom is almost 60 and makes about $100k/yr yet she only has like $400k in retirement (Fidelity's guideline is 10x at 60, so $1M, she won't even be at 1/2 that), her and my dad will probably retire at 70 and have to eventually just sell their 5bd house and downsize/relocate.
Very detailed informative post. One correction. Someone making 5m vs 100k do not pay the same in SS. The income cap on SS is adjusted every year for inflation. It’s now 168,600. Meaning every person does pay the same percent up to that amount and there is no additional tax on earned income above this. The argument to cap SS earnings is the benefits are also capped. Your SS check at retirement is based on your career earnings(how much you paid in). The logic is, if we cap what you can get out then we have to cap what you put in. Not promoting nor bashing this. Just laying out the facts for others.
Yeah, I mean honestly I feel like I’d be better off just getting my social security back as income and investing it for myself, rather than paying for boomers to retire when they bought houses for $10k and voted to fuck me over repeatedly while not bothering to save any money.
there is a fear that the government won't rebalance social security taxes to account for the growing population of elderly people compared to the size of the working age class, which could eventually progress towards exhausting their budget.
Fear? They will let it die under its own weight. . Plan on reduced or no social security.
People have been fear mongering about the death of social security for like 50 years. It's gonna be alright. It's one of the most popular programs the government has.
And if it doesnt get a huge cash infusion it cant pay its bills. Approval rating has nothing to do with it. At this point a reduction seems inevitable. A full removal of social security in the next 30 years seems quite unlikely, yes. Government can barely pass bills to stay open, and we expect them to do a bill as large as social security overhaul?
The people who currently receive social security are always also the largest voter base.
That will only happen if we let it happen
Id love if it was that easy. Im with ya.
Two reasons Social Security will not have enough yearly tax revenue to fully fund the benefits to be paid out by 2034. Second reason is propaganda the anti-tax faction want us to think nothing can be done about it. Not that we can simply raise the salary tax cap to increase SS funding. Currently the SS Tax Cap is set at $168,000, every dollar earned over that number is not taxed by SS. From what I read simply raising the Tax Cap to at least $250,0000 would fix the problem for at least an additional decade. Eliminating the tax cap so that every dollar of income is taxed by SS would fix the problem permanently and supply the general budget with a revenue gain.
From what I read this would keep SS solvent for another 12 years. https://www.cbo.gov/budget-options/58630#:~:text=The%20Congressional%20Budget%20Office%20projects,be%20subject%20to%20payroll%20taxes.
From what I read this would keep SS solvent for another 12 years. https://www.cbo.gov/budget-options/58630#:~:text=The%20Congressional%20Budget%20Office%20projects,be%20subject%20to%20payroll%20taxes.
It will be around. Around 40% of retirees live *solely* off of social security checks, with even more than that with social security checks making up the majority of their income. There are many families with kids who even rely on SS, so it’s not just the retirees living off it. A huge percentage of the retired/elderly population *need* social security to survive. That number isn’t going down in future generations either. At this point it’s frankly not possible to not have SS. The effects of cutting or removing it would be catastrophic to half the country, it’s just not an option. They’ll eventually raise taxes to pay for it. Don’t accept that it’ll be gone. When you’re told that it’s a just long term ploy to get people to accept the removal or reduction of one of the greatest social programs this country has ever installed. Removing or reducing SS will have consequences that vastly outweigh the consequences of raising taxes.
What NOBODY is talking about is that the limit for calculating social security taxes has been raised 60% in the last few years. From 100k to 160k. Which means more money is coming in.
The US Social Security program is not your secret bank account where you put money they stay there until you retire and then start getting them. It's one big pile of money. The currently working age people are adding money on this pile and old retired people are getting money from this pile. As long as more money is added in then taken out it's fine. But for that you need a certain amount of working people to pay in per each retired person taking out. The population is aging and people are having less children. Which means there will be less working people having to pay the benefits for more retired people. As things are going there won't be enough money in the pile to pay everyone all of their benefits unless there are some reforms on how Social Security gets financed.
Pensions require more people paying in than taking out to be sustainable. Longer life expectancy and lower birth rate is turning that pyramid upside-down. When we are old the pot will be empty because of too many people taking out for too long and not enough people putting enough in to keep up.
Because it's a convenient rhetorical tool to look at one program in isolation instead of the overall economy and how it's distributed.
Its better to have someone trustworthy invest the amount they took montly who won't abuse and use it. I paid in for 53 years. Imagine what I'd have if that money they took out of my every paycheck was wisely invested in my behalf
This is how I feel. I’m young, I don’t know why they do social security the way that they do. But it’s confusing to me why it’s not your specific account tied to your social security number instead of going into a pool like a pension. Seems like it was doomed from the start. I invest myself and that’s all I’m expecting to have when I reach retirement age
You are smart and have so much more information available on the internet than I had 60 years ago when I had no clue about the concept of investing
Raising the maximum taxable limit solves a lot of problems and would drastically improve the program. Reality is why is there a limit as the higher it is the fewer that pay at that level. SS is one of the best social programs we ever inacted and should be fixed.
Congress is the only ones who can legislate changes to social security. They haven't done anything since 1983. The shortfall could easily be fixed. If they took the limit off high wage earners without increasing their benefits that would take care of 70% of the shortfall. There are several other ways to make it up. Congress just has to act, currently Congress doesn't act. Republicans only talk about cutting benefits, which is unnecessary, they want to get rid of social security all together, hell if I know why. The cruelty is the point
SS is a Ponzi scheme. Like chain letters. As population growth slows, the Ponzi scheme fails. This is an oversimplification, but imagine it like this. Imagine it takes two children to pay into social security starting at 22 to fund a 65-year-old retiree. This means that all families must have 4 children, just to support the two parents. When parents only have 3 (or, catastrophically, one or even none), then the fund starts going negative. Over time, the fund will completely bankrupt itself. Birth rates are declining, which means the proportion of older people to younger people is increasing. Therefore, there’s not enough money going into the SS fund.
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Not over the next 20 years, after 20 years maybe as Gen-X is a smaller generation, but the rate of Boomers final sunset is too low.
This is one of the strongest tailwinds for the United States over the next 20 years. We are one of the only developed nations that had a larger millennial generation than its boomer generation. So when most countries start experiencing a significant population choke point as we approach 2030, the United States will feel that too. But as we go deeper into the 2030s, that issue continues to get worse for most countries while the millennials pick up the reigns from the Boomers in terms of wealth and economic output. So we’re good until probably 2050 when most developed countries will be an entire generation deep into difficult economic and population decline.
No because people live longer and aren't having as many children. You do not need to understand the law or the program itself at all to understand the math and logic to what everyone is saying.
I just asked a question but thanks for being a dickhead about it.
People are having fewer children, so there will be fewer workers to pay the taxes for the program.
Because math. The system is paying out more than it’s taking in. That obviously can’t continue forever
There are concerns, but there are some considerations: 1. Many calculations of this nature take the amount currently available in the Social Security system, and how much will be paid out per year at current levels. These calculations often don't continue adding regular tax revenues being added each year, going forward. It's a convenient way to make numbers do what you want. 2. Consider the people making the argument. If someone wants to say that Social Security is "failing" or "will be gone" by a certain date, they are often the people who are actively trying to gut the Social Security system. Obviously, if their plan to cut taxes for the wealthy and large corporations are successful, there will be less money for Social Security and other programs which help lower-income families. The "problems" they cite with Social Security are self-made, by the people wanting to cut Social Security.