Social Security - your thoughts?

#826
#826
volinbham said:
open social security site has BE around 81/82.

I go back and forth - don't need the money now but every time I see the CBO type stuff I think I better grab it while I can. I'm lucky enough to have a great pension so I don't really need the longevity insurance aspect of waiting.
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We can grab as much as possible as soon as possible but that wont stop those that advocate for taxing wealth from going after it later.

How does Swiss banking work. Or stashing cash in the Cayman Islands (which I’d never heard of before the Butcher brothers were caught stealing)? Bitcoin and other crypto had potential, but the government(s) has/have the means to track that wealth (unless you’re in a monarchy or a Rothschild, Soros, Etc).
 
#828
#828
Another issue with waiting to take SS is the tax burden paring with RMD from your retirement savings and the impact on Medicare premiums. I'm learning that it's increasingly about tax management as much as cash flow. I'm lucky that I'm in the group that doesn't see RMDs until 75 and still hoping that gets pushed back one more time before I get there.

Taxes and Foosball are the Devil
 
#831
#831
Ripping off the Band-Aid and fixing the whole system all at once won’t happen. I think that they will phase in the various adjustments over as many election cycles as possible.

Instead of taking a hit by cutting benefits immediately by a third:

The COLA will be trimmed.

The 6.2% x2 tax will be adjusted upward - phased in over several years.

The Full Retirement Age will creep up again from the current 67 into the 70s.

The early benefits amounts will be reduced.

Another COVID type of crises comes along to thin the population of beneficiaries.
 
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#834
#834
Removing the cap on taxable salaries won’t happen. They can’t piss off those people and get re-elected into their 80s.

It’s a regressive tax to fund basic welfare. The lowest paid workers pay a higher rate than the highest paid workers. But the benefits are reduced a bit for the highest paid workers through income taxes.

It’s disguised as a “retirement” benefit. It certainly is not a defined contribution plan but does share some elements of a defined benefits retirement plan (a traditional pension).
 
#835
#835
volinbham said:
right - it happens in the late 70s/early 80s for me and I'm above median salary contributions for my benefit amount.

the open social security calculator implies breakeven though doesn't specify it specifically.

for reference, the max benefit at 67 is 4200ish, mine would be 3800 at that age. Average is about 2200 at 67.
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Im fortunate to have been at/near the cap for a little bit now. If I continue that until 65, Ill have to live until 88 or so to "break even". And that is with conservative assumptions...
 
#836
#836
jmacvols1 said:
The Congressional Budget Office says to be prepared for Social Security check payments to be reduced in 6 years due to low funds

“It’ll be an immediate 7% payment cut in 2032, and then an average 28% benefit drop from 2033 onward”

You pay in your whole life and the government spends it and then tells you there is no money left

Congress is literally on record saying they spend out social security money straight from the social security fund

“A potential Social Security shakeup could impact your road to retirement. The nonpartisan Congressional Budget Office is projecting that the main Social Security trust fund is expected to run dry in 2032. The CBO saying retirees could see their monthly checks reduced in just six years time.”

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When did Urkel start doing the news?
 
#837
#837
jmacvols1 said:
2 problems;

When the Dems set op the SS law back in 1935 they required that surplus SS taxes collected (instead of being saved and invested) had to be loaned to the Treasury:

Grok: "The original 1935 Act created an "Old-Age Reserve Account" on the Treasury's books (not yet a formal trust fund). It required the Secretary of the Treasury to invest any portion of the credited amounts (from payroll taxes) not needed for current payments in interest-bearing obligations of the United States or in obligations guaranteed by the United States. This effectively meant surplus funds were used to purchase U.S. government securities, which loaned the money to the Treasury (and thus to the federal government) for general use, while the account earned interest.

In practice, this allowed the government to spend the surplus payroll taxes on other priorities while issuing special securities (or credits) to the Social Security account as a claim on future revenues. Official sources from the Social Security Administration describe it as the payroll taxes being "in effect... lent to the federal government."

SSA has collected about $2.9 trillion in surplus over the years and by law had to "loan" that money to the Treasury purchasing bonds while Congress spent that $209 trillion on items unrelated to social security. So the trust fund has nothing but bonds in it where the federal government effectively borrows the surplus to spend elsewhere, with the trust fund holding IOUs. SS would not be in the mess it is in if the SSA instead saved and invested that surplus instead of having to give it to Congress to spend. Now that they are having dip in the trust fund, Congress must borrow money today to pay back that surplus it spent years ago. (I made a post on this a few days ago, post #799)


The other problem, social security/medicare is insolvent is because most retirees get more in benefits than what they paid in taxes:

AI:
  • For a single man earning the average wage and retiring around 2020 at age 65: Lifetime benefits ≈ $640,000 vs. taxes paid ≈ $466,000–$470,000 (benefits exceed taxes by about 37%).
  • Average-earning couples retiring in recent or near-future years often receive 30–60% more in combined Social Security and Medicare benefits than taxes paid.
  • Lower-income workers see even higher ratios (e.g., benefits 2–3x taxes in some quintiles), while high earners approach a 1:1 ratio or less.
  • CBO projections for people born in the 1960s: Middle quintile gets about 50% more in lifetime benefits than contributions; lowest quintile gets nearly 3x; highest quintile gets roughly equal.
  • Long-Term Trend: By 2055, an average-earning dual-income couple is projected to receive nearly $2.5 million in benefits against $1.4 million in taxes.
  • Contributing Factors: This imbalance is driven by increased life expectancies, rising healthcare costs, and the progressive nature of the social security formula
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The numbers on higher lifetime benefits vs taxes paid in are useless without using the net present value of the taxes paid 40 years ago to today’s dollars. Using realistic math, and I’d guess one would have to live to 90+ to ever recover the current value of the SS taxes they paid over a lifetime.

As for the thoughts of cutting SS payments, that just screams political suicide to me. SS is the only thing keeping too many older folks from homelessness. It’s shocking how many people are existing on just SS and they will all show up to vote.

There’s a much more reasonable way to fix the funding versus cutting “earned benefits” and that is to eliminate all payments from SS to anyone who didn’t earn the benefit and treat it as a legit government forced poorly run pension program. Start with the biggest flaw of the spousal benefit (not the spousal death benefit).
 
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#841
#841
jmacvols1 said:
more corruption and foolishness of the social security system:

Social Security borrows money to re-pay borrowed money

1. What happens with the surplus tax money the SSA takes in;
  • For decades (roughly 1983–2020), Social Security collected more in payroll taxes than it paid out in benefits. These annual surpluses (hundreds of billions over time) were not set aside in a bank account or invested in stocks.
  • By law, the surpluses were lent to the U.S. Treasury (the "general fund" side of the government). In exchange, the Treasury issued special non-marketable Treasury bonds to the Social Security trust funds.
  • The Treasury then spent that cash on other government programs, tax cuts, wars, infrastructure, etc. In budget terms, the SS surpluses reduced the amount the government had to borrow from the public (investors, foreign governments, etc.) during those years.
So yes — the government effectively borrowed those excess payroll taxes from current and future Social Security participants. The Treasury gives the SSA bonds in place of the borrowed surplus taxes, so those bonds represent IOUs, money the gov't borrowed.

2. What happens now when SSA needs to "cash out" $50 billion in bonds (IOUs) in order to pay beneficiaries?
  • Social Security is now running annual cash deficits (benefits + admin costs > payroll taxes + other income). So for example, when SSA needs an extra $50 billion this year to pay beneficiaries...
  • The SSA redeems $50 billion worth of those special Treasury bonds from the trust fund.
  • The Treasury has to pay that $50 billion in real cash to SSA so benefits can be sent out.
  • Where does the Treasury get the cash?
    • It cannot just print it or pull it from a magic pile.
    • It draws from the general fund (all other federal revenues and borrowing).
    • But the general fund is deeply in the red — running trillion-dollar deficits every year (often $1.5–2 trillion+ recently).
    • So, to come up with the $50 billion (and everything else), the Treasury issues new Treasury bonds/securities and sells them to the public (investors, pension funds, China, etc.)...the Treasury has to borrow the $50 billion to pay back SSA for the $50 billion the SSA loaned to the Treasury years ago.
In short: The $50 billion going to Social Security is financed by new borrowing from the public.

3. The bottom line —
  • The government is using borrowed money (new debt sold to investors) to repay the old borrowed money (the payroll-tax surpluses it spent decades ago).
  • It's like taking out a new credit card to pay off the old one.
  • This doesn't "create" extra debt in the total federal debt sense (intragovernmental debt to SS goes down, debt held by the public goes up by roughly the same amount), but it does shift the burden onto future taxpayers and increases the publicly held national debt.
This is not some conspiracy — it's just how the unified federal budget works. Sources across the spectrum (Congressional Research Service, SSA itself, Center on Budget and Policy Priorities, Cato Institute, etc.) all describe it the same way.

The trust fund bonds are real legal obligations (IOUs) backed by the full faith and credit of the U.S. government — they've always been honored. But the cash to honor them ultimately comes from the same place as everything else when the government is running big deficits: new borrowing.

The $50 billion example is a perfect microcosm of the larger issue. When the trust funds are fully depleted (projected around 2034 under current law), the dynamic gets even starker — benefits would drop to ~75–80% of scheduled levels unless Congress acts, because there's no more bonds left to redeem. But the borrowing-to-pay-back-borrowing pattern has already been happening for several years.
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If you are actively for SS and don't support major restructuring you are actively hurting the next generation, including any kids or family you might have. There is zero excuse to keep the current model as is.
 
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#842
#842
LouderVol said:
If you are actively for SS and don't support major restructuring you are actively hurting the next generation, including any kids or family you might have. There is zero excuse to keep the current model as is.
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it definitely needs some kind of restructuring and I think part of that restructuring should include a gradual phasing out of social security where people can handle their own finances and not have the governments heavy hand in it.
 
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#843
#843
walkenvol said:
The numbers on higher lifetime benefits vs taxes paid in are useless without using the net present value of the taxes paid 40 years ago to today’s dollars. Using realistic math, and I’d guess one would have to live to 90+ to ever recover the current value of the SS taxes they paid over a lifetime.

As for the thoughts of cutting SS payments, that just screams political suicide to me. SS is the only thing keeping too many older folks from homelessness. It’s shocking how many people are existing on just SS and they will all show up to vote.

There’s a much more reasonable way to fix the funding versus cutting “earned benefits” and that is to eliminate all payments from SS to anyone who didn’t earn the benefit and treat it as a legit government forced poorly run pension program. Start with the biggest flaw of the spousal benefit (not the spousal death benefit).
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in post #699 I predicted what I think will happen. Current law says SSA can only operate on the social security taxes it collects.

My best guess as to what happens when SS has a shortfall in about 2033, Congress will NOT raise SS taxes nor cut benefits but Congress will enact new legislation to allow transfer of money from the general tax fund to cover the shortfall. And then Congress will have to borrow the money to put in the general tax fund so there will be sufficient money for the SSA to get to cover the shortfall thereby Congress will start adding 10's of trillions to the growing debt.
 
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#844
#844
jmacvols1 said:
in post #699 I predicted what I think will happen. Current law says SSA can only operate on the social security taxes it collects.

My best guess as to what happens when SS has a shortfall in about 2033, Congress will NOT raise SS taxes nor cut benefits but Congress will enact new legislation to allow transfer of money from the general tax fund to cover the shortfall. And then Congress will have to borrow the money to put in the general tax fund so there will be sufficient money for the SSA to get to cover the shortfall thereby Congress will start adding 10's of trillions to the growing debt.
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It's political suicide but the fairest way would be to lower the percentage for the first bend point. Those are the people who are "benefiting" from this wealth redistribution...
 
#845
#845
jmacvols1 said:
it definitely needs some kind of restructuring and I think part of that restructuring should include a gradual phasing out of social security where people can handle their own finances and not have the governments heavy hand in it.
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my strategy is an opt-out option that would shift the employee contribution into an individually held 401k-esque account while the employer contribution still goes to the public accounts. individuals who opt out can buy back in with some set terms.

I have paid in for 20 years, and would gladly abandon all of my contributions to date for an option like the above.
 
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#846
#846
Truths about social security.
--https://www.usatoday.com/story/money/personalfinance/retirement/2025/02/09/has-congress-stolen-trillions-social-security/77834452007/

--https://moneywise.com/news/economy/is-the-us-government-really-borrowing-from-social-security

--https://moneyinc.com/heres-how-much-money-has-congress-taken-from-social-security/
 
#847
#847
question: If I get a $2000 SS check what will happen to it in 2032 per the CBO, then what happens to it in 2033 and following years?



GROK: Let's break this down step by step for your specific example of a $2,000 monthly Social Security check (assuming this is your scheduled/full promised benefit amount under current law, before any adjustments for inflation or COLAs over time). These figures are based on the Congressional Budget Office's (CBO) February 2026 Budget and Economic Outlook, which projects the main Old-Age and Survivors Insurance (OASI) trust fund depleting in fiscal year 2032. Under current law, once the trust fund reserves are exhausted, the Social Security Administration can only pay out what comes in from ongoing payroll taxes and other revenue each year—no more borrowing from reserves.

The CBO provides an illustrative scenario (not the official baseline, which assumes full benefits continue to be paid somehow) showing what would happen if benefits are automatically reduced to match available funds. This is an across-the-board percentage cut applied uniformly to everyone's scheduled benefits.In 2032 (the year of depletion):
  • Benefits would be reduced by about 7% to align with incoming revenue (plus any tiny remaining reserves that year).
  • Your $2,000 scheduled check would drop to roughly $1,860 per month (a $140 reduction).
  • This is the immediate adjustment in the first year of shortfall.
In 2033 and following years (e.g., through at least 2036 in the CBO's example scenario):
  • The shortfall grows larger each year due to more retirees, longer lifespans, and demographic shifts—meaning incoming revenue covers an even smaller share of what full scheduled benefits would be.
  • The CBO describes an average reduction of about 28% per year from 2033 onward (in their illustrative period covering 2033–2036). This is the average over those years; the actual percentage cut would start around that level or slightly less in 2033 and deepen gradually (e.g., the gap widens to make later years worse than the average).
  • Using the 28% average figure: Your scheduled $2,000 check (adjusted for any future COLAs between now and then) would be reduced by about 28%, dropping to roughly $1,440 per month (a $560 reduction from scheduled).
  • Note: This is not 7% + 28% = 35% off your original amount. The 7% is a one-time initial cut in 2032, and then from 2033 on, the reduction is measured against what the full scheduled benefit would have been that year (including built-in annual COLAs for inflation). So it's a deeper, ongoing percentage shortfall relative to promises, not a compounding add-on from the prior year's cut.
In simple terms for your $2,000 example (ignoring future COLAs for simplicity, as they would scale both scheduled and payable amounts similarly):
  • 2032: ~$1,860 (7% cut from scheduled).
  • 2033 onward (average in CBO's early post-depletion years): ~$1,440 (28% cut from scheduled).
The cut is the same percentage for everyone—whether your check is $1,000, $2,000, or $4,000. It's prorated uniformly so total payments match total incoming funds. No special protection for smaller checks in this "do-nothing" scenario (though Congress could change that with reforms).

These are projections based on current trends and law—no action by Congress. In reality, lawmakers have addressed shortfalls before (like in 1983), and most experts expect some fix (e.g., raising payroll taxes, tweaking benefits, or adjusting eligibility) before automatic cuts hit this hard. But if nothing changes, this is the path the CBO illustrates.

For the most precise details, the CBO report mentions this in discussions around trust fund projections and Appendix C (or similar illustrative sections in their outlook). If you're planning ahead, consider modeling your own retirement with a potential 20–30% reduction in Social Security income as a conservative scenario.
 
#848
#848
LouderVol said:
my strategy is an opt-out option that would shift the employee contribution into an individually held 401k-esque account while the employer contribution still goes to the public accounts. individuals who opt out can buy back in with some set terms.

I have paid in for 20 years, and would gladly abandon all of my contributions to date for an option like the above.
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So you are saying you are willing to give up getting a social security check as long as the 6.2% tax you are paying starts going into your own private savings account?
 
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