With the depletion of its trust funds a decade away, most of Congress finds it easier to spend $183 billion to buy votes of government pensioners than prevent an immediate 23% cut in benefits.
In the investment business we are seeing couples retire in their late 60's with $7,000 or more per month! That seems like a lot of money.
People pay into it and when they don't think they are getting it they yell "I paid my whole life for that, I had better get it!" What the politicians don't communicate to them is that SS is an "insurance program," Not a retirement program. It is called the "Old-Age, Survivors, and Disability Insurance (OASDI) program." Insurance, not a retirement plan!
What I am getting at is "means testing." People going into retirement with a certain amount, maybe 500k per year of retirement income don't need the insurance. They are able to avoid the tragedy of being broke in their old age. The insurance is for low income people who never learned how to become middle or high income people. You have to have those people or we would have no janitors, or unskilled labor jobs. The need the insurance.
It works like this: You own house for 40 years and pay fire insurance on it the entire time. It never burns down. Do you get your money back? No. SS is the same. They just need to communicate it to taxpayers. Create recognition and some perks for those who don't use the system, like free national parks passes or whatever. They need to make it clear at the beginning that if you are lucky enough to get rich, you have helped the country. Working that out would be tough but doable.
Finally, the life expectancy for people when SS started was about 65. So half of the people back then were "too dead to get it." Average life expectancy now is more like 75. We need to start reducing it to match reality. A 40 year old may have to wait until 72. A 50 yr old until 69, a 25 year old until 75, etc. 25 year old almost always tell you "it won't be there when they are old," due to dumbing down the news on SS. Tweaking the ages makes sense to people. "Grandfather in" at first those who are 59 or over. Make 58 yr old wait one more year, and do the math down the line. Politicians are chicken. You see what Trump did to DeSantis early on? DeSantis was for this age rearrangement and Trump claimed he was "trying to take your social security." And it was effective while being a total lie.
I appreciate and agree with much of this. When Congress inevitably wakes up to patch the system, means-testing will be a significant component. It is inevitable. What that looks like remains hazy and controversial but inevitable, along with gradually upping the retirement age to 70 for people now under 55, and further tweaks to annual increases. Social Security was supposed to be an income transfer program, not a "welfare program," but that is about to change.
This is a very well written and researched look at legislation that is designed to undo one of the key provisions of the 1983 Social Security Reform Act. I am a federal retiree having worked for 23+ years in Congress. I would benefit from this new law (though not a huge amount). But I think you are right and this new proposal should not pass. The collapse of Social Security is less than a decade away. Since the OMB and CBO score budgets ten years out, it will be interesting to see if they show the trust fund collapse in the next budget reports.
In the investment business we are seeing couples retire in their late 60's with $7,000 or more per month! That seems like a lot of money.
People pay into it and when they don't think they are getting it they yell "I paid my whole life for that, I had better get it!" What the politicians don't communicate to them is that SS is an "insurance program," Not a retirement program. It is called the "Old-Age, Survivors, and Disability Insurance (OASDI) program." Insurance, not a retirement plan!
What I am getting at is "means testing." People going into retirement with a certain amount, maybe 500k per year of retirement income don't need the insurance. They are able to avoid the tragedy of being broke in their old age. The insurance is for low income people who never learned how to become middle or high income people. You have to have those people or we would have no janitors, or unskilled labor jobs. The need the insurance.
It works like this: You own house for 40 years and pay fire insurance on it the entire time. It never burns down. Do you get your money back? No. SS is the same. They just need to communicate it to taxpayers. Create recognition and some perks for those who don't use the system, like free national parks passes or whatever. They need to make it clear at the beginning that if you are lucky enough to get rich, you have helped the country. Working that out would be tough but doable.
Finally, the life expectancy for people when SS started was about 65. So half of the people back then were "too dead to get it." Average life expectancy now is more like 75. We need to start reducing it to match reality. A 40 year old may have to wait until 72. A 50 yr old until 69, a 25 year old until 75, etc. 25 year old almost always tell you "it won't be there when they are old," due to dumbing down the news on SS. Tweaking the ages makes sense to people. "Grandfather in" at first those who are 59 or over. Make 58 yr old wait one more year, and do the math down the line. Politicians are chicken. You see what Trump did to DeSantis early on? DeSantis was for this age rearrangement and Trump claimed he was "trying to take your social security." And it was effective while being a total lie.
I appreciate and agree with much of this. When Congress inevitably wakes up to patch the system, means-testing will be a significant component. It is inevitable. What that looks like remains hazy and controversial but inevitable, along with gradually upping the retirement age to 70 for people now under 55, and further tweaks to annual increases. Social Security was supposed to be an income transfer program, not a "welfare program," but that is about to change.
This is a very well written and researched look at legislation that is designed to undo one of the key provisions of the 1983 Social Security Reform Act. I am a federal retiree having worked for 23+ years in Congress. I would benefit from this new law (though not a huge amount). But I think you are right and this new proposal should not pass. The collapse of Social Security is less than a decade away. Since the OMB and CBO score budgets ten years out, it will be interesting to see if they show the trust fund collapse in the next budget reports.
The collapse of SS has been 10 years away for 40 years. Never underestimate the power of AARP and other senior activists groups.