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(MSN)   Just because people are living longer does not mean raising the Social Security's 'full retirement age' is a good idea   ( msn.com) divider line
    More: Obvious, Retirement, retirement age, average retirement age, benefit cut, Social Security, average retirement ages, employer-provided retirement plan, monthly benefit cut  
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1006 clicks; posted to Business » on 18 May 2017 at 8:20 AM (26 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



43 Comments     (+0 »)
 
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2017-05-18 08:13:58 AM  
You really think your company wants to keep their oldest people just a few more years? Do you want to work with them just a few more years? Do they want to be there just a few more years?
 
2017-05-18 08:18:35 AM  
The average lifespan is increasing because fewer people are dying in childhood, not because people are dying so much later.
 
2017-05-18 08:29:44 AM  
It wouldn't make much difference, TBH. This would be pretty much the only way anyone under 50 sees any of the $$$ we've thrown into that hole over the years.
 
2017-05-18 08:46:45 AM  

EvilEgg: The average lifespan is increasing because fewer people are dying in childhood, not because people are dying so much later.


4.bp.blogspot.comView Full Size
 
2017-05-18 08:52:07 AM  
well, why are lower earners retiring earlier?

1)  they are broke and will take whatever they can get to survive
2)  worked physically hard jobs and are worn out so they can no longer work
3)  financially uneducated to understand the benefits of retiring later

probably some of all 3.  people on average are living longer so they will collect more total money over the course of their lifetime even if they start collecting at 62 with a benefits cut.  how much is moving it 1 more year going to cost someone who retires as early as they can?  an additional 5% per year?  full retirement age is already shifting from 65 to 67.  even if they shift it 0.5 years for every 2 years of increased longevity SS still ends up paying more out over a lifetime

but if you think you're only going to live to 75 or 80 it's pretty useless to wait until 70 to claim benefits anyway
 
2017-05-18 08:54:24 AM  

Dead for Tax Reasons: well, why are lower earners retiring earlier?

1)  they are broke and will take whatever they can get to survive
2)  worked physically hard jobs and are worn out so they can no longer work
3)  financially uneducated to understand the benefits of retiring later


Retiring earlier than high earners, or retiring earlier than lower earners did in years past?

If the latter, #2 is out. Manual labor has always looked like manual labor.
 
2017-05-18 08:57:50 AM  

This text is now purple: Dead for Tax Reasons: well, why are lower earners retiring earlier?

1)  they are broke and will take whatever they can get to survive
2)  worked physically hard jobs and are worn out so they can no longer work
3)  financially uneducated to understand the benefits of retiring later

Retiring earlier than high earners, or retiring earlier than lower earners did in years past?

If the latter, #2 is out. Manual labor has always looked like manual labor.


unless disabled, they can't go lower than 62
 
2017-05-18 09:19:28 AM  

Dead for Tax Reasons: This text is now purple: Dead for Tax Reasons: well, why are lower earners retiring earlier?

1)  they are broke and will take whatever they can get to survive
2)  worked physically hard jobs and are worn out so they can no longer work
3)  financially uneducated to understand the benefits of retiring later

Retiring earlier than high earners, or retiring earlier than lower earners did in years past?

If the latter, #2 is out. Manual labor has always looked like manual labor.

unless disabled, they can't go lower than 62


Widows can claim at 60.
 
2017-05-18 09:20:55 AM  

BMFPitt: EvilEgg: The average lifespan is increasing because fewer people are dying in childhood, not because people are dying so much later.

[4.bp.blogspot.com image 850x615]


So according to that graph, men should have an earlier retirement age than women.
 
2017-05-18 09:41:01 AM  
The plan is to keep raising the age to collect full benefits to the point that almost everyone dies before they can collect, despite paying into the fund their entire lives. That way Congress has a nice fat pool of money to keep 'borrowing' from any time we need a new aircraft carrier instead of selling more T-bills to the Chinese.

Social Security is the poster child for everything wrong with "socialism" in the US, and is the big reason why most Americans dont want to get involved with things like socialized healthcare. Do you want your healthcare managed by the government the way Social Security has been for the last 50+ years, or would you rather have some sort of control over it at the expense of paying ridiculous amounts of money for private healthcare?
 
2017-05-18 09:50:07 AM  

HempHead: Dead for Tax Reasons: This text is now purple: Dead for Tax Reasons: well, why are lower earners retiring earlier?

1)  they are broke and will take whatever they can get to survive
2)  worked physically hard jobs and are worn out so they can no longer work
3)  financially uneducated to understand the benefits of retiring later

Retiring earlier than high earners, or retiring earlier than lower earners did in years past?

If the latter, #2 is out. Manual labor has always looked like manual labor.

unless disabled, they can't go lower than 62

Widows can claim at 60.


yes, but that's not claiming one's own benefits (but that could be used to delay claiming on their own work record)

and they will get an even further reduction in benefits for being 2 years earlier (compounded if the deceased spouse retired early)
 
2017-05-18 10:04:37 AM  

This text is now purple: Dead for Tax Reasons: well, why are lower earners retiring earlier?

1)  they are broke and will take whatever they can get to survive
2)  worked physically hard jobs and are worn out so they can no longer work
3)  financially uneducated to understand the benefits of retiring later

Retiring earlier than high earners, or retiring earlier than lower earners did in years past?

If the latter, #2 is out. Manual labor has always looked like manual labor.


According to TFA it is retiring earlier than people with higher incomes.
 
2017-05-18 10:12:38 AM  

BMFPitt: EvilEgg: The average lifespan is increasing because fewer people are dying in childhood, not because people are dying so much later.

[4.bp.blogspot.com image 850x615]


Yep it isn't all. It is roughly half and half. Average life expectancy at birth has increased by ten years while life expectancy at 65 has increased by five.

But the bigger question is the health of these people. Are they physically able to continue working? How much of the additional life expectancy is because medical care keeps them alive but not in great condition?
 
2017-05-18 10:33:43 AM  
Life expectancy increases are strongly correlated with greater income.

img.fark.netView Full Size


img.fark.netView Full Size


In other words, raising the retirement age condemns the non-affluent to working literally until they die.
 
2017-05-18 10:34:55 AM  
Can we all just stop pretending this isn't about "what makes sense for the recipients" and more about "How can we balance the impending hemmoraging that will drain the SSI's piggybank?"

Pushing back retirement is one of the levers they can pull that can balance the inflow/outflow of Social Security all while the Boomers can keep sucking on bank account that they didn't fund totally.
 
2017-05-18 10:35:52 AM  

Dead for Tax Reasons: HempHead: Dead for Tax Reasons: This text is now purple: Dead for Tax Reasons: well, why are lower earners retiring earlier?

1)  they are broke and will take whatever they can get to survive
2)  worked physically hard jobs and are worn out so they can no longer work
3)  financially uneducated to understand the benefits of retiring later

Retiring earlier than high earners, or retiring earlier than lower earners did in years past?

If the latter, #2 is out. Manual labor has always looked like manual labor.

unless disabled, they can't go lower than 62

Widows can claim at 60.

yes, but that's not claiming one's own benefits (but that could be used to delay claiming on their own work record)

and they will get an even further reduction in benefits for being 2 years earlier (compounded if the deceased spouse retired early)


That's the thing about spouses getting SS. It is their benefit.

You can have 2 widows that never paid into SS claiming on the same husband.
 
2017-05-18 10:51:35 AM  
We should be lowering the retirement age not raising it. Although it is not entirely fair because there is a cap on benefits we should remove the cap on FICA taxes. Maybe tapper it  off for upper middle classes types and fully restore after a certain very high level of income.
 
2017-05-18 11:25:09 AM  
Splinthar:

Can we all just stop pretending this isn't about "what makes sense for the recipients" and more about "How can we balance the impending hemmoraging that will drain the SSI's piggybank?"
One could argue that not bankrupting the program "makes sense for the recipients, but I think I get your point.

Pushing back retirement is one of the levers they can pull that can balance the inflow/outflow of Social Security
Yes, but I hope it's one of the last levers pulled.  Raise the cap, and making other forms of income subject to FICA taxes, then we'll see.

all while the Boomers can keep sucking on bank account that they didn't fund totally.
There are plenty of tail end boomers that will pay in more than they collect, this statement is false.  I'm one of them, and I'm okay with that.
 
2017-05-18 11:27:03 AM  
I'd love to retire at 60... I wouldn't even need Social Security to do so.  The problem is health insurance... until the politicians stop their circle jerk and finally come up with a sustainable workable solution its just not going to happen for me (I am currently 56).
 
2017-05-18 11:43:11 AM  
Just shut it down and disband it.
 
2017-05-18 11:53:57 AM  

HempHead: BMFPitt: EvilEgg: The average lifespan is increasing because fewer people are dying in childhood, not because people are dying so much later.

[4.bp.blogspot.com image 850x615]

So according to that graph, men should have an earlier retirement age than women.


No, because of pay gap.  Punish men for earning more.
 
2017-05-18 11:57:29 AM  

Dick Gozinya: That way Congress has a nice fat pool of money to keep 'borrowing' from any time we need a new aircraft carrier instead of selling more T-bills to the Chinese.


Social Security stopped running a surplus 8 years ago.
 
2017-05-18 12:08:37 PM  

mrlewish: HempHead: BMFPitt: EvilEgg: The average lifespan is increasing because fewer people are dying in childhood, not because people are dying so much later.

[4.bp.blogspot.com image 850x615]

So according to that graph, men should have an earlier retirement age than women.

No, because of pay gap.  Punish men for earning more.


Earning more money means paying more into SS.
 
2017-05-18 02:39:36 PM  

HempHead: Earning more money means paying more into SS.


And decades of wage stagnation means contributions are falling behind real world needs.

Dick Gozinya: Do you want your healthcare managed by the government the way Social Security has been for the last 50+ years


The checks go out on time and everybody gets a COLA that more than tracks inflation. The people are happy with that.
 
2017-05-18 03:36:02 PM  

Zeb Hesselgresser: Splinthar:

Can we all just stop pretending this isn't about "what makes sense for the recipients" and more about "How can we balance the impending hemmoraging that will drain the SSI's piggybank?"
One could argue that not bankrupting the program "makes sense for the recipients, but I think I get your point.

There are obviously multiple classes of recipients my point was this generally is about cutting off the arm to save the body, we are on the same page.


Pushing back retirement is one of the levers they can pull that can balance the inflow/outflow of Social Security
Yes, but I hope it's one of the last levers pulled.  Raise the cap, and making other forms of income subject to FICA taxes, then we'll see.

I defy you to show a case where one of the levers you just mentioned has been entertained before the one I mentioned.  I agree they exist but recently the political expediency of using the "Retirement Age" lever has shown it is easier.  It is always easy to pull a lever that has been pulled before.

all while the Boomers can keep sucking on bank account that they didn't fund totally.
There are plenty of tail end boomers that will pay in more than they collect, this statement is false.  I'm one of them, and I'm okay with that.

Plenty is a generous term, plenty implies that there would be enough to balance it.  I would rather say "There exists a group of boomers (because boomers are actually two generations squished together) who are paying into social security equitable or more than they stand to receive."
But we both know there aren't enough of said boomers and all the follow-on generations will see much lower entitlement pay-outs due to the siphoning out the older and median aged boomers are starting now.


Yes you are less of the problem than other boomers but when it comes to any entitlement program on the books today the younger you are the more you are subsidizing (In total economic terms) another generation, mostly the ones that came before.  I mean that as "You will end up paying in more than you get in time stabilized value."  Which really sucks especially since all the economic news show that mobility, and inequality continue to get worse.

You are not the worst boomer but defending the Boomers on entitlements is a losing proposition.
 
2017-05-18 05:05:04 PM  

DrewCurtisJr: Although it is not entirely fair because there is a cap on benefits we should remove the cap on FICA taxes.


The cap on benefits is only there because the formula for benefits is calculated based on contributions.

Remove the cap on taxes and the maximum benefit will scale upwards with a very good chance that it will result in SS funding getting WORSE. How? Look at all the statistics about how high-earners live longer. Sure, they'll pay more during their lifetime, but then they'll live long enough to draw more in payments. If that formula scales up to the point where some high-earning retirees are getting something like $25,000 monthly SS benefit checks, how big do you think the outrage will be?
 
2017-05-18 05:06:18 PM  

Best Princess Celestia: Just shut it down and disband it.


I'm OK with that so long as I get reimbursed all of my contributions, with interest, and get to roll them into my TSP.
 
2017-05-18 05:40:37 PM  
According to Robert Reich, The Social Security Fund would be immediately solvent if we changed the maximum taxable annual income limit up to $180,000. But surely we can't tax the rich any more. It will hurt their feelings.
 
2017-05-18 06:06:21 PM  

Dick Gozinya: selling more T-bills to the Chinese.


Without looking it up, how much US Treasury debt do you think is owned by the Chinese?
 
2017-05-18 07:10:56 PM  

mrmopar5287: DrewCurtisJr: Although it is not entirely fair because there is a cap on benefits we should remove the cap on FICA taxes.

The cap on benefits is only there because the formula for benefits is calculated based on contributions.

Remove the cap on taxes and the maximum benefit will scale upwards with a very good chance that it will result in SS funding getting WORSE. How? Look at all the statistics about how high-earners live longer. Sure, they'll pay more during their lifetime, but then they'll live long enough to draw more in payments. If that formula scales up to the point where some high-earning retirees are getting something like $25,000 monthly SS benefit checks, how big do you think the outrage will be?


Or they could just put a cap on it.
 
2017-05-18 11:08:24 PM  

dywed88: Or they could just put a cap on it.


What you are saying is that you want a cap for withholdings removed, but a cap on benefits?

Do you comprehend what that means?
 
2017-05-18 11:38:45 PM  

mrmopar5287: dywed88: Or they could just put a cap on it.

What you are saying is that you want a cap for withholdings removed, but a cap on benefits?

Do you comprehend what that means?


That there would be no cap on contributions and a cap on benefits?

May not go that far, but it is a pretty simple concept and easy to do.
 
2017-05-18 11:43:05 PM  

dywed88: That there would be no cap on contributions and a cap on benefits?


You'd essentially be telling people that they're paying into something that they can never draw a benefit from.
 
2017-05-18 11:48:30 PM  
Why wouldn't they be able to draw a benefit?
 
2017-05-19 06:53:10 AM  

mrmopar5287: dywed88: That there would be no cap on contributions and a cap on benefits?

You'd essentially be telling people that they're paying into something that they can never draw a benefit from.


You only pay Social Security taxes on the first $127,200 of your earnings. I believe dywed is suggesting that this amount be raised or eliminated, while the payouts for the richest would not be raised. They would still collect benefits, but the change would mean the rich would subsidize the retirement of the average person by paying more than they ever collect.

I'm more comfortable with that course of action than the other two on the table - cutting benefits to everyone or raising the retirement age further. Those options both would both affect the poor and middle class, who not only depend on SS more, but tend not to live as long as the richest among us. The rich are doing very well for themselves as the link below will show. Have a look at the first graph in the article and note that the bottom 60% of Americans have seen little income increase in the past 50 years while the richest have had their incomes double, all adjusted for inflation. They SHOULD be paying more.

https://www.advisorperspectives.com/dshort/updates/2016/09/15/u-s-hou​s​ehold-incomes-a-49-year-perspective
 
2017-05-19 07:05:45 AM  
Splinthar:

After a little research, I concede that you are mostly right.  I honestly thought there were more untaxed earnings out there. 86% is pretty good. Time for FICA taxes on other income.

Major Findings

The tax max has been in place since Social Security's founding, but
Congress has modified it over time to address several policy goals,
such as improving system financing and maintaining meaningful benefits
for middle and higher earners.
Although the nominal value of the tax max has grown from $3,000 in
1937 to $106,800 today, in inflation-adjusted dollars the tax max
declined from 1937 until the late 1960s, and then grew once it was
indexed to wage growth in 1975. In wage-adjusted dollars, the tax max
has remained roughly constant since the mid-1980s.
The percentage of workers with earnings above the tax max ("above-max
earners") fell from 15 percent in 1975 to about 6 percent in 1983 and
has remained at that level since.
Historically, an average of roughly 83 percent of covered earnings
have been subject to the payroll tax. In 1983, this figure reached 90
percent, but it has declined since then. As of 2010, about 86 percent
of covered earnings fall under the tax max.
The percentage of earnings covered by the tax max has fallen since the
early 1980s because earnings among above-max earners have grown faster
than earnings among the rest of the working population.

https://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html
 
2017-05-19 08:29:07 AM  

dywed88: Why wouldn't they be able to draw a benefit?


Because you want to cap benefits. There will be a point where some people are paying withholdings that will never give them a benefit, and that's very questionable policy.
 
2017-05-19 09:55:31 AM  

mrmopar5287: DrewCurtisJr: Although it is not entirely fair because there is a cap on benefits we should remove the cap on FICA taxes.


The cap on benefits is only there because the formula for benefits is calculated based on contributions.


Yes, that's why I said it wasn't entirely fair since there is a max cap on payouts. But they could count the credits of the very high earning years toward your total contributions in case you have a few years of very high earning and for what ever reason have modest earning over the rest of your career.

And if you have very high earning throughout all your career you probably won't be dependent on social security and can count the loss of benefits as another one of the social safety net programs that you pay taxes for but never need to use.
 
2017-05-19 10:53:31 AM  

EvilEgg: The average lifespan is increasing because fewer people are dying in childhood, not because people are dying so much later.


It's both.  Yes, the death rate has dropped for the earliest age brackets--but is has dropped for all of the age brackets.

Things that used to be fatal in childhood don't have to be fatal anymore.  Things that used to be fatal in adulthood don't have to be fatal anymore.
 
2017-05-19 10:56:45 AM  

mrmopar5287: dywed88: Why wouldn't they be able to draw a benefit?

Because you want to cap benefits. There will be a point where some people are paying withholdings that will never give them a benefit, and that's very questionable policy.


They will still get benefits. They may even get benefits from the high income years.

Also you can run into that situation today as it only considers 35 years of contributions. If you work and pay into SS from the age of 20 to 65 you don't get credit for a decade of contributions.
 
2017-05-19 01:26:21 PM  

Zeb Hesselgresser: Splinthar:

After a little research, I concede that you are mostly right.  I honestly thought there were more untaxed earnings out there. 86% is pretty good. Time for FICA taxes on other income.

Major Findings

The tax max has been in place since Social Security's founding, but
Congress has modified it over time to address several policy goals,
such as improving system financing and maintaining meaningful benefits
for middle and higher earners.
Although the nominal value of the tax max has grown from $3,000 in
1937 to $106,800 today, in inflation-adjusted dollars the tax max
declined from 1937 until the late 1960s, and then grew once it was
indexed to wage growth in 1975. In wage-adjusted dollars, the tax max
has remained roughly constant since the mid-1980s.
The percentage of workers with earnings above the tax max ("above-max
earners") fell from 15 percent in 1975 to about 6 percent in 1983 and
has remained at that level since.
Historically, an average of roughly 83 percent of covered earnings
have been subject to the payroll tax. In 1983, this figure reached 90
percent, but it has declined since then. As of 2010, about 86 percent
of covered earnings fall under the tax max.
The percentage of earnings covered by the tax max has fallen since the
early 1980s because earnings among above-max earners have grown faster
than earnings among the rest of the working population.

https://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html


Glad we could come to an agreement.  Look I would love for there to be other options but as a nihilist I know that we are all just meat flailing about for the simplest way forward.  Unfortunately that means bad things for the meat in the cheap seats since forever.
 
2017-05-19 05:33:35 PM  

dywed88: Also you can run into that situation today as it only considers 35 years of contributions. If you work and pay into SS from the age of 20 to 65 you don't get credit for a decade of contributions.


You get credit in that your benefits are calculated from your highest earning years. Typically those are your middle and last earning years, but maybe not for some. So by working more than 35 years you are widening the pool of creditable years to draw on for calculating benefits.
 
2017-05-19 06:15:51 PM  

mrmopar5287: dywed88: Also you can run into that situation today as it only considers 35 years of contributions. If you work and pay into SS from the age of 20 to 65 you don't get credit for a decade of contributions.

You get credit in that your benefits are calculated from your highest earning years. Typically those are your middle and last earning years, but maybe not for some. So by working more than 35 years you are widening the pool of creditable years to draw on for calculating benefits.


You still end up with people paying in funds for which they get no benefit. The same as if the cap on contributions was raised but benefits and the income to max them were not.

And if the system is still based on average wages subject to social security you may benefit from those high income years offsetting low income years.

And my larger point is simply that there isn't really any reason stopping the cap from being raised except politics. Such a system can be pretty easily set up.

Personally I would look to something like adding another bend point at the current limit and increasing the wage cap to $200,000 or something like that (I haven't done any math to determines the ideal amounts) rather than just capping benefits and uncapping contributions, but it is an option.
 
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