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Social Insecurity? Most Liked Hot Conversation

Just as I approach the magic retirement age of 65, possible changes to social security are all over the news. Okay, I’m a boomer, and my retirement age has been raised to 66. I’m not complaining about that. What has me concerned is the possibility of cuts in benefits to retired people, in the form of reduced cost of living increases.

What is wrong with taxing upper income levels to produce more revenue for social security benefits for everyone? According to the AARP, social security will be able to pay full benefits for everyone for the next twenty-five years.  The average retirement benefit is about $1,200 per month.  And we are seriously considering reducing that amount?

For middle income seniors, social security provides 54% of their income. Social security did not cause the deficit and should not be used to reduce it. Earnings above a certain level, currently about $106,000, are not subject to the social security payroll tax. I say, raise the cap. The current 12.4 percent tax is split between the employee and employer. Why not require those making up to $200,000 to pay the tax? Heck, why have a cap at all?

Twelve percent of a million dollars is – wait for it – $120,000. Multiply that by the number of millionaires in this country – 8.4 million – and voila! Social Security solvency.

It’s not that complicated. Social Security is not the problem.

 

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Posted in news, Off Kilter, other topics, work & money.

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18 Responses

  1. ThurmanLady ThurmanLady says

    I believe that Social Security, along with many other “programs,” is the problem.  So is the government playing “Robin Hood” by taxing the “rich” (by whose definition?) to give to the poor (which isn’t just the poor at all).  More than half of Americans pay no income tax.  Many get “back” much more than they even pay in.  And then we seem to think it’s okay to raise the tax that less than half of this country pays?  And, in the same breath, we wonder what happened to jobs?
     
    It does need to be fixed, as does a lot of other spending being done in Washington.  I just don’t consider it a bit fair to make a very small amount of taxpayers take on the burden.
     
    We can look at it this way.  I lost my job quite a while ago.  I now have zero income.  Since, I assume, you have more income than that, you should send me half.  That way I don’t have to continue to try to find work.  After all, you’re richer than I am.  Sound fair? ♥

    0 like

    • aznikki aznikki says

      TL if you have zero income, how do you pay for food, taxes on your property, utilities, gas for your SUV, dog food etc….?  Do you have a sugar daddy or are you getting help from the government?
       
      Just curious….

      1 like

      • ThurmanLady ThurmanLady says

        AZ, thanks for caring.  At this point, the answer is “all of the above.”  Well, except the Sugar Daddy.  And, my “Dora” is off the road because I couldn’t pay the insurance.  I’m borrowing a friend’s car once in a while for necessary things and living on mostly nothing and am behind in a lot of things, including my taxes.  There is nowhere else to go but up… I hope. ♥

        0 like

  2. Dallas Lady Dallas Lady says

    Lets get seriously real about this.  No one wants THEIR benefits/entitlement to be cut.  Everyone wants YOURS to be cut.  NO ONE wsants to pay more taxes themselves.  EVERYONE wants YOU to pay more taxes.

    EVERYONE wants to claim someone else is the problem.

    EVERYONE needs to look in the mirror to see the problem.

    We have to cut spending–all of it.  We have to increases taxes on everyone.  You do realize that over 50% of Americans don’t even pay federal income tax, dont you?   

    The whole equation is insanity.  Insanity is doing the same thing repeatedly and expecting a different outcome.

    We all need to expect to pay more and get less.

    Get used to it.

    3 like

  3. Dallas Lady Dallas Lady says

    Lets start with where the tax revenues in the USA come from. FIT is the single largest source of revenue for the federal government…..45.3% of all revenue comes from FIT . After that: Social Security, unemploment, medicare etc make up 33.9%–which by the way, is NOT solely individual tax payers…… the employers also fund a good percentage of that–probably about 50%. Finally, corporate income taxes are 14.4%. Theremaining amount is miscellaneous exise taxces (gasoline taxes, gift taxes, duty fees, etc.)

    Somewhere around 40% of Americans don’t even pay FIT after all the rebates and tax credits. But the very rich already today pay a disproportionate about of the total tax bill. The following article “Guess Who Really pays the Taxes” is pretty clear.

    http://www.american.com/archive/2007/november-december-magazine-contents/guess-who-really-pays-the-taxes

    The latest data show that a big portion of the federal income tax burden is shoul­dered by a small group of the very richest Americans. The wealthiest 1 percent of the population earn 19 per­cent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes.

    Want to remove the cap on SS and other payroll taxes? FINE. Then remove the cap paid OUT as well to be fair about it.

    4 like

    • Generic Image idosew says

      As to who pays the FDIC and unemployment taxes, it is really you. When a company makes it’s budget they count all of this as cost to employ a worker. What happens is you get paid less that you see than you would if these taxes did not get collected. 

      The amount a company can use for it’s payroll is what causes hiring. That amount is known only after profit from sales are know. It means if sales are good the money needed to make payroll is there. Sales or demand always has to come first.

      Right now we, as a country, are asking for the money our companies paid into the unemployment tax. The percent paid by any company is never enough to cover recessions so state and federal governments also pay in from general funds.

      As to who pays the taxes: it is, of the whole amount the middle class of the total amount just by the number of them.

      As for the rich, who they are is related to where they live. If you live in NYC it takes lots more money than it does to live in small town SC, where I live.

      Our one size fits all thinking about who is poor or middle class or rich is very flawed. 

      We could means test SS but who’s means would you use. It is too complicated to do it by cost to live per area. Some would be in a bad way, some would be better off than now.

      No matter what congress does some will pay more and all will get less. We really are in trouble but we also have a heart. This is just a tough spot.

            

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  4. lindawis lindawis says

    I consider it fair to leave the benefits of people receiving an average of $1200 per month on social security alone, and to require those making over $100,000 per year, and their employers, to pay 6% of all their earnings into the social security trust fund. Also, your point about removing the cap paid out is a good one: let’s remove the cap on the amount of retirement benefits for the high end wage earners. I don’t think they are depending on social security to fund their retirements.

    2 like

  5. Dallas Lady Dallas Lady says

    Whether they are depending on social security to fund their retirements is irrelevant.  If they pay in to something, then they have every right or expectation to receive out commensurate with waht they put in. 

    If you want them to pay the full percentage of pay in, then their ability to take OUT should increase proportionately to what they put in.  They are already taxed unfairly and in a very skewed manner through FIT. 

    The reality is it is their money, they earned it (or inherited) it, and no one else should be entitiled to what someone else earned.  But as Adrian Rogers once famously said, we have half the people thinking the other half should pay for them…….and half the people not getting to keep what they earned. 

    The US government is a pension with an army.  Forget who said that, but they were spot on.

    0 like

  6. Adoptsalot Adoptsalot says

    … What has me concerned is the possibility of cuts in benefits to retired people, in the form of reduced cost of living increases.
    What is wrong with taxing upper income levels to produce more revenue for social security benefits for everyone? According to the AARP, social security will be able to pay full benefits for everyone for the next twenty-five years. …

    Yes, BUT, ‘paying Full benefits’ does not include a COLA (Cost of Living Adjustment added in the 70′s, during a period of high inflation). 

    The biggest problem with SS Solvency is  when Washington determines they want to ‘give more to us seniors’ they never raised the amount being paid into the system. When they added dependents no increase. When they added disability, no increase. When they allowed multiple spouses, no increase, when they added COLA, no increase.   That  kind of Math Does Not Work. 

    Look at the COLA payouts over the years, Without increases to the funding, where in blue blazes should the money come from?   We all know how to balance our checkbooks, and this would never work in our homes. 

    (I am not even trying to address taxing someone else so that we can have a COLA- I am not sure why anyone would want to pay for that for us right now, especially when so many are struggleing themselves)
    Automatic benefit increases, also known as cost-of-living adjustments or COLAs, have been in effect since 1975.
    The 1975-82 COLAs were effective with Social Security benefits payable for June (received by beneficiaries in July) in each of those years; thereafter COLAs have been effective with benefits payable for December (received by beneficiaries in January). COLAs received in 1975-2010 are shown below.

    Automatic Cost-Of-Living Adjustments

    July 1975 — 8.0%
    July 1976 — 6.4%
    July 1977 — 5.9%
    July 1978 — 6.5%
    July 1979 — 9.9%
    July 1980 — 14.3%
    July 1981 — 11.2%
    July 1982 — 7.4%
    January 1984 — 3.5%
    January 1985 — 3.5%
    January 1986 — 3.1%
    January 1987 — 1.3%
    January 1988 — 4.2%
    January 1989 — 4.0%
    January 1990 — 4.7%
    January 1991 — 5.4%
    January 1992 — 3.7%
    January 1993 — 3.0%
     
    January 1994 — 2.6%
    January 1995 — 2.8%
    January 1996 — 2.6%
    January 1997 — 2.9%
    January 1998 — 2.1%
    January 1999 — 1.3%
    January 2000 — 2.5%(1)
    January 2001 — 3.5%
    January 2002 — 2.6%
    January 2003 — 1.4%
    January 2004 — 2.1%
    January 2005 — 2.7%
    January 2006 — 4.1%
    January 2007 — 3.3%
    January 2008 — 2.3%
    January 2009 — 5.8%
    January 2010 — 0.0%
    January 2011 — 0.0%

    (1) The COLA for December 1999 was originally determined as 2.4 percent based on CPIs published by the Bureau of Labor Statistics. Pursuant to Public Law 106-554, however, this COLA is effectively now 2.5 percent.

    The first automatic COLA, for June 1975, was based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the second quarter of 1974 to the first quarter of 1975.
    The 1976-82 COLAs were based on increases in the CPI-W from the first quarter of the prior year to the corresponding quarter of the current year in which the COLA became effective.
    After 1982, COLAs have been based on increases in the CPI-W from the third quarter of the prior year to the corresponding quarter of the current year in which the COLA became effective. 

    Just looking at it From a financial perspective, (don’t shoot the messenger ) I wouldn’t be surprised if COLAs went away. 

    There are some hard choices coming if we want to remain a solvent nation. 

    Personally, I could buy into the lower flat tax with no exemptions or credits or subsides- as long as everybody AND every corporation has to pay up.

    1 like

    • Olga Olga says

      Thanks for all the information. I too am in favor of a simpler, alternative tax system. Maybe it’s just me, but I think that the biggest reason we won’t ever get that type of tax system is that there are too many tax lawyers out there who would be out of job. The ’legal’ lobby has a great deal of power in DC, especially with Democrats.

      1 like

  7. ThurmanLady ThurmanLady says

    Maybe the simple answer to SS is to give each of us back exactly what we’ve paid in – now – and let us invest it for our own future instead of relying on government?  Especially a government that threatens those checks when he doesn’t get his debt ceiling raised? ♥

    0 like

  8. aznikki aznikki says

    TL how much did you pay for SS? (just YOU).  Let’s assume it’s $20,000.  You get 20,000 today.  You pay your debts, finish your cabin so you don’t freeze to death in the winter, you now have $15,000 left (probably less). Since you still don’t have a job, you’ll need to keep money to live on for say..one year.  You are now down to less than $10,000.  OK you invest it for your future. Unless you can find work pretty damn quick you’ll have to start tapping your investment.  You find a job…great.  Now you had better start putting about $1,000 away each month  unless you plan on working until you’re in your nineties. In order to put $1,000 away each month you will need a high paying job which you are unlikely to find in your neck of the woods.

    You need to be realistic TL!  Most Americans would be as you are, totally destitute if they didn’t have SS.  On the other hand, if SS is cut off for future generations (anyone 18 and older) and if they get a certain amount witheld from their pay check each mont to be invested for the future, how many would invest it?  When they reach SS age most people would have little or no savings and then what happens?  You have millions of people with no income…pretty dreadful picture.

    6 like

    • ThurmanLady ThurmanLady says

      I think you missed the sarcastic font… I know you’re right in a way, but if money taken out of checks was required to go into a savings (like a 401k) rather than handled (and spent) by the government I think we would all be better off.  While I don’t like the idea of “government mandates” we already have them with SS.  Why not be able to put money in the hands of those who don’t spend it irresponsibly on stupid programs and re-distributions?  In a 401k we know our money is there; in government run SS, we know it’s not and that our kids, grandkids and great grandkids will be paying for it. ♥

      0 like

      • pennylane100 pennylane100 says

        You say that you know that your money is always there is your 401K plan.   However, this money, unlike social security, is subject to the market ups and downs.   If the market crashes, and if we do not solve the debt ceiling crises, this may happen, your 401K may lose money, possibly a lot of money.   When big companies like Enron, go out of business, 401K plans are definitely affected.   Unfortunately for some people, their savings were wiped out completely.   The fact that they should have diversified is a lesson learned too late.
        It is hard for me to understand why you, an unemployed woman who by her own description is broke, would knock government programs.   If you have a medical emergency while uninsured, you can still get care.   That is paid for by tax payers.   If you become incapacitated, the social security that you paid for will take care of you and medicare will pay your medical expenses.   This will be there for you for the rest of your life.   I have not read of any 401K plan that offers such protection.
        You complained about a few people are paying most of the tax burden.   Have you considered that it is because it is a few people have all the money.  Look at the change in wealth distribution in this country.   Do you know what it is and how it affects you, the wealth that is being accumulated by the top five or ten percent should horrify you,  You should. as an unemployed, broke citizen be lot more worried about that than are other working class people paying their fair share.
        Did you complain when you learned that many companies such as Exon and GE who make billions in profits, not only NOT ONLY DO NOT PAY INCOME TAX, THEY GET BILLIONS OF TAX DOLLARS BACK EACH YEAR.   They should be one ones you should talk to about job creation.
        The real irony is that even as we hand these people billions every year, they do not spend it on job creation, they use it to help elect people like Paul Ryan who  wants to take away your medicare, turn pension funding over to private industry to further rip you off and if the market crashes, will walk away with your life savings and no safety net for your senior years.
        The the sad thing is that you seem so uninformed about how little help you will get as you get older from anything or anyone except through government programs.   Social security does not currently contribute one dime to the deficit.   However, the welfare and medical care costs that you may need if you do not find another job are tax payer funded and you should start blaming the real culprits for the unemployment  crises.   The tax dodging corporations who ship our jobs overseas to save money,

        7 like

  9. ThurmanLady ThurmanLady says

    Pennylane100,

    Yes, the 401k is subject to the stock market; but the stock market could be a bit more stable if the country was. All I was getting at is that it isn’t robbed; it is our money and it doesn’t depend on future generations to pay for it.

    I’m not against some government programs. I believe there is a need for a temporary safety net, some long-term help, etc. I am against a lot of where government sends taxpayer money: things like genital washing in Africa, teaching Chinese prostitutes about drinking responsibly on the job, etc., etc., etc. There is a whole horrible list of what taxpayer money goes for and it’s sickening.

    Who accumulates wealth and how, unless it’s stolen, doesn’t bother me. I’m smart enough to know that there are a whole lot of smarter and more ambitious people than I happen to be. There are people with much more education, much more talent and they deserve whatever they can earn. The Hollywood crowd or big sports stars make a lot more money than I’ll ever see; we pay to watch them. Are we supposed to be jealous of those things? Or of the children wealthy people leave their money to? “Wealth distribution?” Way too many seem to think it should be wealth redistribution. That’s just too socialistic for me.

    I believe that if everyone paid their fair share of taxes, instead of “punishing” the rich for simply having more, we’d be much better off as a nation. That’s rather like I said above: if you make more money than I do, should I figure that you should give me enough of yours to make what both of us have equal? If we each, from the richest to the poorest, have a stake in this country don’t you think people would care a bit more?

    Yes, I’ve complained about corporations not paying their share as well. That’s the reason I support some sort of fair tax where everyone – individuals and companies alike – pays a percentage with no loopholes. Not only would that get taxes from GE (who, we know, has an “in” with the current administration) but it would, again, give everyone a real stake in what goes on. How easy is it for more than half of this country to basically do nothing, not pay and often get even more in return. And, for what? Sooner or later the very small percentage that supports this country may just get fed up with it.

    As far as job creation, we all know that the government does not create jobs. What they create is an atmosphere for job creation. Take states with high corporate taxes and lots of unions and then compare them to states with lower taxes and right-to-work status. See the difference? Some states drive companies right out with taxation. States, like Texas, actually draws in lots of jobs. There is a correlation between taxation and jobs, much as Washington would like to deny it. Raising taxes and/or the debt ceiling and spending on a Federal level is going to do nothing to create that job making atmosphere and will likely send this country on a downhill spiral even faster than it’s been going – which is pretty darned fast.

    Paul Ryan isn’t taking away Medicare; he’s actually addressing the problems with it and other “entitlements” while the Democrats aren’t even trying, except to pass the problems on to our children and grandchildren. Republicans have worked on budgets; the Democrats haven’t even done one for 800+ days. And, the president’s budget? All votes were “no.” How’s that for the real party of “no?”

    I’m definitely not uninformed. I may be differently informed because I’m not afraid to read both sides of what’s going on. The difference is that I tend to think logically (well, most of the time) and logic tells me that we cannot continue on the path we are on and expect everything to be just fine for us, not to mention those children and grandchildren. How sad is it when we don’t seem to care what we leave to future generations? Isn’t it about time to take responsibility for our own mess instead? ♥

    1 like

  10. Generic Image Angel says

    I paid into SS for years and I sure don’t get any benefit from it.  Because I didn’t have enough ‘credits’ or ‘points’ or whatever they call them, the last 10 years I worked, I can’t collect SS.  They only count the LAST 10 years you work, NOT all the years you work.  So what’s happened to all the SS tax that was taken out of my pay checks for all those other years???? I had to apply for SSI and I get less than $700 a month. Try living on that!!  Give me a break!

    No COLA for two years but our illustrious elected officials get their cost of living every year. SS is not the problem, our elected officials are the problem but as long as they get what they want, they don’t give a rats behind about the rest of us. Especially the senior citizens and the Veterans.

    I say the government should have to pay back all the money they’ve stolen from OUR SS. SS was never to be touched for anything other than its original intent.

    0 like

    • Adoptsalot Adoptsalot says

      If you paid in to SS for 10 years- that’s 40 credits (quarters), you get a SS benefit.  A small one, but a benefit none the less.   If you are not able to collect benefits, then you did not work and pay into the system for 40 quarters or 10 years.

      It has nothing to do with ‘the last 10 years’ you worked.
      DIRECT FROM SS:

      Q. Are my benefits figured on my last five years of earnings?
      A. No. Retirement benefit calculations are based on your average earnings during a lifetime of work under the Social Security system. For most current and future retirees, we will average your 35 highest years of earnings. Years in which you have low earnings or no earnings may be counted to bring the total years of earnings up to 35.

      Q. I stopped work at the end of last year at age 52. I don’t expect to work again before I start my Social Security benefits when I turn 62. Will I still get the same benefit amount you showed for age 62 on the Social Security Statement you sent me?
      A. Probably not. When we averaged out your 35 highest years of earnings to estimate your benefits on your Statement, we assumed you would continue to work up to age 62, making the same earnings you made last year. If, instead, you have $0 earnings each year over the next 10 years, your average earnings will probably be less and so will your benefit.

      Q. Will my retirement pension from my job reduce the amount of my Social Security benefit?
      A. If your pension is from work where you also paid Social Security taxes, it will NOT affect your Social Security benefit.        However, pensions based on work that is not covered by Social Security (for example, the federal civil service and some state, local, or foreign government systems) probably will reduce the amount of your Social Security benefit.

      Supplemental Security Income (SSI) is a Federal income supplement program funded by general tax revenues (not Social Security taxes):

      It is designed to help aged, blind, and disabled people, who have little or no income; and

      It provides cash to meet basic needs for food, clothing, and shelter.

      The bottom line is you seem to be complaining/rabble rousing about a program you don’t understand  and never qualified for?

      You don’t seem very appreciative that taxpayers are bailing you out.       You don’t have to live on SSI.     You can give it back.     Taxpayers would thank you.

      Millions of seniors, who did pay into SS and ARE collecting a benefit that they earned, are very grateful it is there and supplimenting their retirement.  In fact, SS estimates over 12 Million Americans will stay out of the poverty level because of their SS benefits. 

      To me, that makes it a rip-roaring success no matter what our individual complaints about it might be.

      2 like

    • pennylane100 pennylane100 says

      All those years you say you were paying into social security with nothing in return, you have completely ignored the fact that had you become incapacitated during those years, you would have been eligible for disability payments and medical care.   That part of the insurance program has helped millions of families over the years.   Secondly, if you have children, they would have been provided  for financially and given free medicare in the event of your death while you were paying in.
       
      You say you are getting $700 per month based on what you have paid in.   That some represents an average of your life time earnings.   If you live for twenty years on social security that will be around 168,000 total.   You will also be to enroll in medicare which will give you medical for life.   The cost of around $100 per month.   Just try to get a private insurance policy for a person sixty five or older, usually with some existing preconditions.   I doubt your $700 SSI payment would cover it, if you could get one at all.
       
      When you are in your late fifties, you get a letter forecasting your pension based on past payments to SSI.   So it could have not been a a complete shock that you would end up with 700 per month.  Why did you not start a 401K to subsidize this.
       
      All in all, SSI is a bargain and keeps millions of people out of poverty, it is a program that serves people  all their working lives.   However, it is based on PLUS MEDICARE is is more valuable than just saving yourself for retirement.
       
      Other countries give a minimum amount of pension and health care regardless of the amount paid in, that is called  socialism, and the only time  anyone here does not think that is a dirty word is when they are in a situation like you,   Facing a future with no earning capacity and very little money.   It is a system that I have always believed in but not many Americans share this point of view.
       
      Regarding the behavior of our leaders who give themselves raises while denying COLA for seniors, you blame the people you voted into office, not the system.

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