Posted on 10/29/2015 6:55:32 PM PDT by SkyPilot
When Congress passed the Senior Citizens Freedom to Work Act in 2000, it introduced a new concept called “voluntary suspension†of benefits, allowing those who had already started Social Security benefits to stop their payments and earn delayed retirement credits. In the process, however, the new voluntary suspension rules unleashed several additional Social Security claiming strategies, including various “claim now, claim more later†tactics involving File-and-Suspend and Restricted Applications for spousal benefits.
Those may be going away. Under this week’s two-year budget agreement between Congressional leaders and the White House, Congress will close these loopholes in the Social Security rules. While it remains to be seen whether the agreement will become law in its current form, the new rules mean that anyone receiving spousal benefits under file-and-suspend would have them terminated next spring
The agreement actually extends the rules for deemed application, making it no longer be possible to file a restricted application for just spousal benefits. In addition, by also extending the “suspension†rules that stipulate that suspending an individual’s benefitsalso suspends any benefits to other people based on the same earnings record, Congress will negate the various “File and Suspend†strategies that permit spousal and dependent benefits to be paid while the primary earner still receives delayed retirement credits.
Perhaps the most notable aspect of this new Social Security crackdown, though, is the effective date. While the new limits to Restricted Application will not apply to anyone who is already age 62 or older in 2015, the new crackdown may suspend current spousal or dependent benefits in 6 months for those who are only receiving those benefits thanks to File-and-Suspend! In other words, those who already engaged in the File-and-Suspend strategy may find it terminated mid-stream, and no benefits will be payable until the individual...
(Excerpt) Read more at nasdaq.com ...
“...They cannot do what they want to do, constitutionally...”
But they do it anyway. They don’t care, and no one is stopping them. Or going to, at this rate.
how much money was actually spent on ex im bank?
Are we REALLY debating what can be done Constitutionally about a program that should NEVER exist per the same Constitution?
That’s like arguing in tax court that the 16th violates any number of Amendments and expecting the judge to go, “Oh!? You’re right. Case dismissed.”.
Hell, we already know they never do ANYTHING per the Constitution, and yet, every 2 years, people come out of the wood-work going, “Well, (s)he doesn’t adhere only 20%, so that’s better than XYZ.”
No, I’m not debating anything. Merely stating that they are lawless POSs who expect US to follow the law while giving us the finger in the process.
.
You do have a point.
“The only “promise of a later return” that you have is that a younger generation will be taxed to do the same for you.”
Thank you! I have rarely seen Social Security described as what it truly was established to be; which is a “pay it forward program to insure that the elderly and disabled would be sheltered if they had no other means of support when they became unable to work. It was an honorable concept on it’s face and still is to some extent. But no one seems to remember the premise of paying into a program to benefit the elderly while trusting in the hope that your own children and grandchildren will do the same for you. What once was a noble concept is now pretty much labeled “ponzie scheme” because of it’s mandatory “tax” if you will, to fund what once was the responsibility of families and; in instances where there was no family, the State.
It’s true that it’s turned into an unmanageable monster that must be whittled down. It got that way by politicians selling bigger and bigger benefits for votes and the American public lapping them up. But those who want to abolish it had better know what they are abolishing. They should get ready to go and collect their aging relatives, bring them home and prepare to care for them with their own funds until they die. It’s been done before by generations of Americans as a matter of morals and honor in caring for one’s own. I don’t see that kind of thing going over big in this day and time. With the sinister appearance of such things as “death panels” deciding what happens to the elderly; I’m afraid our present order of things would come up with a much more expedient way of whittling down the Social Security problem.
"Politics" and "matter of honor" are essentially the same thing.
I have to chuckle at the folks nearing Social Security who cry out for an end to government spending. Except on the Social Security they were promised.
I am sure they know the bad news:
Social Security is broke. It comes out of the general fund. The money is gone. There is no account with money in it for you.
The national debt—the money we are printing to pay for defense, social security, and every other program has to be paid with interest. We print the money to pay the interest.
I hear that most Americans only have $1,000 in savings.
If any of you are in that demographic. You should just go out and start walking. Get used to it. Because unless you go to live with your kids, that is what you will be doing on retirement.
They sure have.
My absurdity meter shattered at free cell phones.
Isn’t that the truth...
You got 2 out of 4 right.
However, if you really mean "broken", I'll agree with that.
Social Security doesn't want you to easily figure out how much you contributed, much less how much it would have grown if you had just put it into long-term US Treasury Bonds. They don't want you to think you might actually have a claim on a certain amount, or be able to compare the balance to the benefit they are promising.
I hate to break it to you, but Social Security NEVER claimed to be putting money aside for you.
It was originally an inter-generation income transfer scheme, and it still is. It will always be. Changing demographics and economics have made it unsustainable.
That's why countries like Australia, New Zealand, Chile, and Singapore have abandoned it for an asset-based program, with a safety net:
Sorry, my bad... I should have said "post #49":
http://www.freerepublic.com/focus/news/3354478/posts?page=49#49
1. Social Security is a net loser. If it were a business it would be in receivership or bankruptcy.
2. ALL of the money going into the Trust Fund is being used to buy US treasuries. There is nothing in the trust fund but IOUs. The money being used to pay your SS is coming out of that money and the general accounts. SS and other Civil Service Pension funds (like the post office) is being used to float the rest of the government.
3. There are not enough people younger than use to maintain the contributions because our parents lived 20 years longer than “they were supposed to.” By the time I reach SS age, at 70 (15 years from now) my TWO kids will be supporting my payments. And my payments are about twice what my parents got. Who is going to pay for my WIFE’s benefits—which are about the same size as mine? Who will pay those for 30 years?
4. Give me your name and address. I will be happy to send you a statement telling you that you have a billion dollars in the VT LT fund. Sure, I can see what I’ve paid in and what my benefits are supposed to be. But based on the inflation that will head this way in the next ten years, my benefit will be lucky to be worth 1/2 of what it says.
I think you and I are comparing differences without much distinction. Medicare is going to wipe out any surplus we can manufacture. The slightest increase in the cost of debt will take a huge chunk of any tax improvements made through raising or lowering taxes.
Here is what I think:
1. Stop the elimination of the SS tax at $118k. There were a few years in the early 2000’s where, with my bonus, I stopped paying social security taxes in MAY. Most years it was in September. It was my 1%’er version of a Christmas club. Tons of money will be gathered without so much pain. Perhaps split the burden with the employer half.
2. Index the start dates with an establish expected life expectancy that is tied to START Dates. Therefore the kids coming on know what their deal is—and it doesnt change as they grow old.
3. For folks with huge pensions, allow them to recoup or get a one time pay out for an adjusted SS allowance. Then they are cut off. It would be similar for anyone who leaves a company and is given the option of cashing in a pension. The present value would be less than the anticpated long term, “no-end-in-site” payouts.
4. Break out disability benefits to those who have not put into the system. I have been at the SS office and it is full of people on disability who are not even 30 yet. Whats up with that?
5. If necessary to make the payments, increase the tax—but only into a designated, self controlled, UST based account. You mention that it all goes there anyway...what the hell—put in two more percent that you get over the years.
6. Eliminate the tax free portion of the 401(k). I know this sounds crazy. But hear me out:
I think the 401(k) was the worst invention of the last forty years. It allows billions, probably trillions of dollars to be shoved into the markets with very little oversight from the owners. Most people have extreme expectations of what they are going to get from a 401(k). Those expectations are passed onto the mutual funds. Those expectations are passed onto the companies. Having worked in the boardroom from a couple of companies driven by the institutional holders I can assure you, expansion, growth, and employee decisions are all made based on the analysts review for the quarter ending in eight weeks. Its always eight weeks.
If you wonder why many other countries have longer term views, its because their culture is not driven by what happens in eight weeks.
How many people do you know who actually research and monitor what is in their 401K? They just keep pumping the money in there. The pumped money has inflated the stock market and put us in a crazy position where one bad quarter for a major company (Apple, Amazon, whomever...) is going to tank your retirement funds for decades.
If you tax it before it goes in and allow it to grow from there tax free...you will front load the collection of money, the compounding will still take place, and perhaps—just perhaps—people will pay a little more attention to what they are doing to their kids.
Those are some back of the envelope thoughts. I am interested in what others think. Because, we can all see this train coming. Its just a matter of sucking up the pain now.
Social Security needs to be totally eliminated. It’s a bureaucratic nightmare.
True enough. Social Security doesn't meet the Federal Government's own requirements for pension funds.
2. ALL of the money going into the Trust Fund is being used to buy US treasuries. There is nothing in the trust fund but IOUs. The money being used to pay your SS is coming out of that money and the general accounts. SS and other Civil Service Pension funds (like the post office) is being used to float the rest of the government.
That's true, but US Treasuries were considered the safest investment in the world, until recently (thanks to Obama). The question I'd ask: where else would you invest it? The reality is that Congress would have never allowed the SSA to invest it for value or safety: there would have been all kinds of earmarks or prohibitions. It would have been crony capitalism at its worst.
3. There are not enough people younger than use to maintain the contributions because our parents lived 20 years longer than “they were supposed to.†By the time I reach SS age, at 70 (15 years from now) my TWO kids will be supporting my payments. And my payments are about twice what my parents got. Who is going to pay for my WIFE’s benefits—which are about the same size as mine? Who will pay those for 30 years?
Your kids, or someone else's. As I posted earlier: it's unsustainable without a significant benefit cut or tax increase, RIGHT NOW.
4. Give me your name and address. I will be happy to send you a statement telling you that you have a billion dollars in the VT LT fund. Sure, I can see what I’ve paid in and what my benefits are supposed to be. But based on the inflation that will head this way in the next ten years, my benefit will be lucky to be worth 1/2 of what it says.
Thanks, but I'll pass. It will be fictional, just like the Social Security statement. :-)
1. Stop the elimination of the SS tax at $118k. There were a few years in the early 2000’s where, with my bonus, I stopped paying social security taxes in MAY. Most years it was in September. It was my 1%’er version of a Christmas club. Tons of money will be gathered without so much pain. Perhaps split the burden with the employer half.
Doesn't help as much as you think. The reason is there just isn't enough additional wage income that would be subject to the payroll tax. Social Security has actually evaluated your proposal:
That last statement means that the higher income people will also get more benefits. But, it's a relatively small additional amount because the benefit calculation is skewed to penalize higher incomes.
It postpones the inevitable for a little longer (until about 2065), but it doesn't solve the problem.
There's also this alternative:
It still doesn't fix the problem. It's better, but the Trust Fund is exhausted about 2080 -- and after that the cost still exceeds the tax income.
At this point, I'll pause to point out these models are using the "intermediate" demographic and economic assumptions. Historically, they have been far too optimistic, so I wouldn't put too much stock in the absolute result. But, it's useful for comparison.
2. Index the start dates with an establish expected life expectancy that is tied to START Dates. Therefore the kids coming on know what their deal is—and it doesnt change as they grow old.
I agree with this, but frankly it hasn't changed for the last 30 years. So, people have had plenty of time to prepare.
3. For folks with huge pensions, allow them to recoup or get a one time pay out for an adjusted SS allowance. Then they are cut off. It would be similar for anyone who leaves a company and is given the option of cashing in a pension. The present value would be less than the anticpated long term, “no-end-in-site†payouts.
This would be great, but I think you under-estimate the net present value of future Social Security benefits. The SSA estimated it to be about $27 trillion in July, 2015. That would more than double the national debt.
4. Break out disability benefits to those who have not put into the system. I have been at the SS office and it is full of people on disability who are not even 30 yet. Whats up with that?
It's called "buying votes".
5. If necessary to make the payments, increase the tax—but only into a designated, self controlled, UST based account. You mention that it all goes there anyway...what the hell—put in two more percent that you get over the years.
The problem is that taxes must be increased that much just to be able to continue paying the benefits currently authorized by law.
There is no money going INTO the Trust Fund any longer. We passed that point in 2010, and in 2014 withdrawals exceeded the interest income. So, the Trust Fund balance is going down.
So, if you lock up that money in a "personal account", there still won't be enough to pay benefits to current recipients.
6. Eliminate the tax free portion of the 401(k). I know this sounds crazy.
It's not crazy. What you are describing is essentially the Roth 401(k), or Roth IRA -- because the earnings will be tax free. But, I don't see the government expanding that, because they will lose far too much tax revenue.
They did that by merely passing the illegal law/program/etc. in the FIRST place.
It’s not like, unless they REALLY rock-the-boat, anyone in D.C./etc. goes to JAIL for doing the same (another finger to the masses).
“..I hate to break it to you, but Social Security NEVER claimed to be putting money aside for you...”
No need for sarcasm. Same team here. It was just my phrasing.
“..originally an inter-generation income transfer scheme, and it still is. It will always be. ...”
For sure. Ponzi scheme. And they got away with it.
“...another finger to the masses...”
You got that right, friend. That’s all we can expect out of them.
Back then, it was the "progressive" thing to do.
Demographic and economic trends made it appear it would work: populations would keep growing and average wages would keep rising.
Families used to have lots of kids in the hope that at least one would survive accidents and disease, and be successful enough to take care of the parents. Now, the improvement of health care and government old-age benefits no longer made that necessary.
The fertility rate crashed. It's about 1.9 per woman, now. Replacement rate is 2.1 (to account for the remaining mortality rates).
The only thing that keeps Social Security going is immigration. But, that isn't enough, especially when the excess labor is depressing wage growth.
Social Security was always doomed to fail. The problem is that no one wants to admit that it already has. There's no "will fail" -- we are well beyond the point of no return.
It's all over except for the shouting.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.