State of the Union Address

[Bubba]

Pride goeth before destruction, and an haughty spirit before a fall.

It's lost on me what the value prop is in cutting SS/Medicaid.

I remember when GWB tried to privatize SS, which I partially supported at the time. I'd rather the retirement piece of SS be managed by me, not the gov't. However, I've come to believe that, while it would work for me, the majority of people would invest the money poorly (or spend it) resulting in bigger issues for the elderly in our country.

100%

That's why it's called "Social" Security and not "Individual" Security.

Cutting SS and Medicare or privatizing them to mandate individual management would be an absolute disaster for this country.

Medicare should be left alone. It is not great insurance - you still need some type of supplemental coverage to avoid significant copays, etc., but it provides a base line of insurance to everyone over the age of 65 needs.

Social Security, on the other hand, could be modified and improved. Working people should be given the option to have 1% or 2% of their Social Security withholding placed in a separate account that is tied to the S&P, making it essentially an index fund. People would not have the ability to make stupid or risky investments but, rather, would simply ride the market over time much like many people do with their 401K or other investments.

[XtremeJibber2001]

Pride goeth before destruction, and an haughty spirit before a fall.

It's lost on me what the value prop is in cutting SS/Medicaid.

I remember when GWB tried to privatize SS, which I partially supported at the time. I'd rather the retirement piece of SS be managed by me, not the gov't. However, I've come to believe that, while it would work for me, the majority of people would invest the money poorly (or spend it) resulting in bigger issues for the elderly in our country.

100%

That's why it's called "Social" Security and not "Individual" Security.

Cutting SS and Medicare or privatizing them to mandate individual management would be an absolute disaster for this country.

Medicare should be left alone. It is not great insurance - you still need some type of supplemental coverage to avoid significant copays, etc., but it provides a base line of insurance to everyone over the age of 65 needs.

Social Security, on the other hand, could be modified and improved. Working people should be given the option to have 1% or 2% of their Social Security withholding placed in a separate account that is tied to the S&P, making it essentially an index fund. People would not have the ability to make stupid or risky investments but, rather, would simply ride the market over time much like many people do with their 401K or other investments.

I agree, Bubba. However, I also expect you'd have quite a few folks taken advantage of ... fund managers taking a cut for 'managing' their investments, loaded funds that provide institutions with a kickback of sorts, investing in aggressive index funds, etc.

Unless you're advocating for a 401k type program, where gov't is the 'fund manager', for US citizens where we're restricted to a pre-defined set of low cost funds. Could work, but I don't see it happening ... GOP can't even stop cutting off their nose to spite their face and Dems would never propose something like this.

[Bubba]

Pride goeth before destruction, and an haughty spirit before a fall.

It's lost on me what the value prop is in cutting SS/Medicaid.

I remember when GWB tried to privatize SS, which I partially supported at the time. I'd rather the retirement piece of SS be managed by me, not the gov't. However, I've come to believe that, while it would work for me, the majority of people would invest the money poorly (or spend it) resulting in bigger issues for the elderly in our country.

100%

That's why it's called "Social" Security and not "Individual" Security.

Cutting SS and Medicare or privatizing them to mandate individual management would be an absolute disaster for this country.

Medicare should be left alone. It is not great insurance - you still need some type of supplemental coverage to avoid significant copays, etc., but it provides a base line of insurance to everyone over the age of 65 needs.

Social Security, on the other hand, could be modified and improved. Working people should be given the option to have 1% or 2% of their Social Security withholding placed in a separate account that is tied to the S&P, making it essentially an index fund. People would not have the ability to make stupid or risky investments but, rather, would simply ride the market over time much like many people do with their 401K or other investments.

I agree, Bubba. However, I also expect you'd have quite a few folks taken advantage of ... fund managers taking a cut for 'managing' their investments, loaded funds that provide institutions with a kickback of sorts, investing in aggressive index funds, etc.

Unless you're advocating for a 401k type program, where gov't is the 'fund manager', for US citizens where we're restricted to a pre-defined set of low cost funds. Could work, but I don't see it happening ... GOP can't even stop cutting off their nose to spite their face and Dems would never propose something like this.

It would have to be managed in some way to limit investments to the S&P 500. The government could act as fund manager - only one option for investment - and no management fee. Furthermore, as a passive stockholder, the government would have to be prohibited from having any input (voting or otherwise) into S&P 500 company decisions.

[deadheadskier]

That's an interesting concept and one I'd support Bubba.

I just see so many people who are terrible with money that they unfortunately do need the government to manage it for them.

[easyrider16]

It would have to be managed in some way to limit investments to the S&P 500. The government could act as fund manager - only one option for investment - and no management fee. Furthermore, as a passive stockholder, the government would have to be prohibited from having any input (voting or otherwise) into S&P 500 company decisions.

You could also privatize management. Have a list of pre-approved, regulated fund managers that people can choose from, or set up a couple of quasi-government companies like Fannie Mae or Freddie Mac.

It's not going to work though. Any money you take out of SS and put into a private fund reduces the money available to pay people currently or soon-to-be on SS. You'd bankrupt the existing system faster, and that's what everyone is afraid of, so they won't let you touch it.

Of course the system is going bankrupt eventually, but they can continue to delay the inevitable by raising the retirement age, raising the tax rate, applying it to more of wealthy people's income, etc. I think most people my age and younger are just assuming that social security won't be part of our retirement income, and we're planning accordingly.

[XtremeJibber2001]

Of course the system is going bankrupt eventually, but they can continue to delay the inevitable by raising the retirement age, raising the tax rate, applying it to more of wealthy people's income, etc. I think most people my age and younger are just assuming that social security won't be part of our retirement income, and we're planning accordingly.

Folks need to start having more kids! My generation is not planning accordingly ... most are not saving nearly enough. My fear is those of us that were AAWs/PAWs will be taxed to pay for those that were UAWs.

The retirement age now is already too high. Hope we don't see it change.

[easyrider16]

Folks need to start having more kids! My generation is not planning accordingly ... most are not saving nearly enough. My fear is those of us that were AAWs/PAWs will be taxed to pay for those that were UAWs.

Maybe I should just speak for myself. I did not factor in Social Security when making my retirement plan because I'm skeptical that it's going to be there when I retire.

The retirement age now is already too high. Hope we don't see it change.

I don't see how it can possibly remain where it is, unless they cut somewhere else like adding a means test. That will probably be worse for you and me because we'd likely be means-tested out of the program. Alternatively, we could start allowing more immigration so the population grows, but there are probably too many nativists around for that to be a viable solution.

[Bubba]

It would have to be managed in some way to limit investments to the S&P 500. The government could act as fund manager - only one option for investment - and no management fee. Furthermore, as a passive stockholder, the government would have to be prohibited from having any input (voting or otherwise) into S&P 500 company decisions.

You could also privatize management. Have a list of pre-approved, regulated fund managers that people can choose from, or set up a couple of quasi-government companies like Fannie Mae or Freddie Mac.

It's not going to work though. Any money you take out of SS and put into a private fund reduces the money available to pay people currently or soon-to-be on SS. You'd bankrupt the existing system faster, and that's what everyone is afraid of, so they won't let you touch it.

Of course the system is going bankrupt eventually, but they can continue to delay the inevitable by raising the retirement age, raising the tax rate, applying it to more of wealthy people's income, etc. I think most people my age and younger are just assuming that social security won't be part of our retirement income, and we're planning accordingly.

I’ll bet an actuary could calculate the age that would allow people to start setting aside a percentage and still keep tha system going for those closer to retirement. Furthermore, my idea assumes that anyone taking the set-aside option would receive less in guaranteed SS benefits.

[Mister Moose]

Alternatively, we could start allowing more immigration so the population grows, but there are probably too many nativists around for that to be a viable solution.

So your idea to fix a partial Ponzi scheme is to make it a larger Ponzi scheme...

What could go wrong?

[deadheadskier]

Alternatively, we could start allowing more immigration so the population grows, but there are probably too many nativists around for that to be a viable solution.

So your idea to fix a partial Ponzi scheme is to make it a larger Ponzi scheme...

What could go wrong?

We have an aging population and a declining birth rate. Much more immigration is needed for many reasons and the benefits to SS would be a side benefit.

[easyrider16]

Alternatively, we could start allowing more immigration so the population grows, but there are probably too many nativists around for that to be a viable solution.

So your idea to fix a partial Ponzi scheme is to make it a larger Ponzi scheme...

What could go wrong?

It's not a ponzi scheme. That's just something conservatives like to say because it makes a good sound bite. Social security works very similarly to many private insurance programs. One of the primary reasons the program is in danger now is the pool is too small to support the benefit due to population decline.

As deadhead pointed out, there are more benefits for increasing immigration, not least of which is we are in a very tight labor market and we actually need more people here. The only argument I've heard for not increasing immigration is an irrational nativism, which unfortunately there is a lot of in this country.

[Bubba]

Alternatively, we could start allowing more immigration so the population grows, but there are probably too many nativists around for that to be a viable solution.

So your idea to fix a partial Ponzi scheme is to make it a larger Ponzi scheme...

What could go wrong?

It's not a ponzi scheme. That's just something conservatives like to say because it makes a good sound bite. Social security works very similarly to many private insurance programs. One of the primary reasons the program is in danger now is the pool is too small to support the benefit due to population decline.

As deadhead pointed out, there are more benefits for increasing immigration, not least of which is we are in a very tight labor market and we actually need more people here. The only argument I've heard for not increasing immigration is an irrational nativism, which unfortunately there is a lot of in this country.

There are many reasons beyond a shrinking labor pool. When SS was begun in the 1930s life expectancy was less than 65. Today it’s well into the 70s and longer. Back then there were 7 workers for each beneficiary. Today it’s far less. Survivor benefits were rightly expanded to include husbands by court decision. Other benefits have expanded as well. The SS tax has grown along with benefits but obviously not enough to keep the program solvent in the future based on actuarial tables. Ponzi scheme? No, but we need to do something sooner rather than later.

[easyrider16]

There are many reasons beyond a shrinking labor pool. When SS was begun in the 1930s life expectancy was less than 65. Today it’s well into the 70s and longer. Back then there were 7 workers for each beneficiary. Today it’s far less. Survivor benefits were rightly expanded to include husbands by court decision. Other benefits have expanded as well. The SS tax has grown along with benefits but obviously not enough to keep the program solvent in the future based on actuarial tables. Ponzi scheme? No, but we need to do something sooner rather than later.

Agreed on all points. The pool is too small to support the currently defined benefits. Either we need to increase the pool or decrease benefits. Increasing the pool would mean either increasing the numbers paying into the pool or increasing taxes. Decreasing benefits could be done by raising retirement age or a means test.

Personally, I am skeptical that we have the political will to do what is necessary to save social security. I think the path of least resistance is going to be to cut benefits for people who aren't collecting yet, and that's probably going to mean a higher retirement age for people like me. Thus, why I'm not factoring it in to my retirement, because I'm not sure when if ever I will be able to collect SS benefits.

[Dickc]

There are many reasons beyond a shrinking labor pool. When SS was begun in the 1930s life expectancy was less than 65. Today it’s well into the 70s and longer. Back then there were 7 workers for each beneficiary. Today it’s far less. Survivor benefits were rightly expanded to include husbands by court decision. Other benefits have expanded as well. The SS tax has grown along with benefits but obviously not enough to keep the program solvent in the future based on actuarial tables. Ponzi scheme? No, but we need to do something sooner rather than later.

Agreed on all points. The pool is too small to support the currently defined benefits. Either we need to increase the pool or decrease benefits. Increasing the pool would mean either increasing the numbers paying into the pool or increasing taxes. Decreasing benefits could be done by raising retirement age or a means test.

Personally, I am skeptical that we have the political will to do what is necessary to save social security. I think the path of least resistance is going to be to cut benefits for people who aren't collecting yet, and that's probably going to mean a higher retirement age for people like me. Thus, why I'm not factoring it in to my retirement, because I'm not sure when if ever I will be able to collect SS benefits.

Its too late for me and my wife, we are already retired. If they DO raise the retirement age, it would need to be on people who are not retiring in the next five or more years, so that all but means we go insolvent unless more money comes in. If they do raise the age, they also need to raise the early retirement age as that was not done in the 80's when the current ages were set up.

One thing I have mentioned before is that currently there is a cut off on taxes paid to SS if your job based income is above $147,000 (2022 number, it went up for 2023). I think we should keep that, BUT once you hit that $147,000 X2 ($294,000), then the taxes should start again. These taxes should NOT make you eligible for more benefits, but should simply be a "contribution" to others to keep the system solvent. I believe that the corporation paying you also gets a break at that 147K level in that their 7.65% goes away too. That limit should go away, and ALL salary monies paid should have that company paid FICA tax on it for every dollar they pay you.

[Bubba]

Sanders, Warren introduce bill to increase Social Security benefits and extend solvency

https://vermontbiz.com/news/2023/februa ... and-extend