Ok, so I saw an article today that said that Social Security will be out of funds in the 2030s (When Social Security Runs Out: What the Program Will Look Like in 2035 (msn.com)). And this is happening while the American government does nothing about this and kicks the can down the road. So, is the government stupid? Fiscally irresponsible? And, is there no hope? Why not at all. The government is sly, like a fox. They know that the fix to Social Security is going to involve compromises, by both political parties, to create a solution that is bad and the American people won't accept it unless we're in the time of the crisis and the people feel like some pain is better than doing without. Yes, I think Social Security will survive. But, don't take that to mean you shouldn't try to prepare for benefit cuts and possibly the whole program disappearing. I know I'm thinking about it.
a new plan is to add a new 2% to the 90%/32%/15% in current law https://www.forbes.com/sites/ebauer...curity-cap-question-where-are-our-priorities/ "What’s more, the Social Security 2100 Act, H.R. 860, sponsored by Rep. John Larson of Connecticut with 208 Democratic co-sponsors, but lacking the bipartisan elements that would have allowed it to become law, had a similar provision: a surtax on wage income of over $400,000. That income would earn Social Security benefits at the rate of 2% (compared to 90%/32%/15% in current law) — a rate so small as to be of no significance at all." the current system works like this, the new plan would add on a 2% for anything over that up to the new cap, so cap the 15% at say 150k and any over that is 2% https://www.thebalance.com/social-security-benefits-calculation-guide-2388927 You take 90% of the first $906 of AIME. You take 32% of the next $5,785 of AIME. You take 15% of any amount over that $5,785. You total those three numbers.
It will just become another cumbersome income-based welfare program. Our parents have preached to us from birth to plan on social security not being there for us and have implored us from our first paychecks to save and invest and avoid debt whenever possible like the plague. They made us all open savings accounts with our first paychecks.
The Social Security Administration has been warning lawmakers for years that by around 2032 S.S. will have a short fall and cuts will be needed to fix it. They have said the sooner Congress does it the less cuts will be needed. But both sides have been putting it off, not wanting their side to be blamed.They said the biggest problem is, people are living much longer than S.S. was designed for and the population is having far fewer children to pay for it. One plan the Democrats might have and are working on, is by allowing millions of migrants in and make them citizens, allowing them to make up the short fall. That might be able to work if enough young people are included. If not it could put a even harder burden on Social Security.
That won’t fix it much as it’s an insurance like program and the more one pays in the more benefits they receive. It is balanced in favor of lower wage workers as they get a higher % of their contributions up to over 100% and at the top of the scale getting about 60% of theirs. The reason for the cap is that it also caps the benefit paid out. Raising the tax on people making certain incomes without raising their payout too makes it into a welfare plan.
With the attitudes of both the Left and Right on this, I think it's an inevitability that it's eventually going to crash. Both many on the Left and Right do not understand what it was originally supposed to do and how it was set up.
Republicans have been itching to dismantle SS for ages, based on the premise of people keeping more of their own money, or government being inept in administering the SS system. It always sounds like this: Imagine if you had put your SS contributions into the stock market at average 12% return, you'd have x-times the benefit you have today (x usually being highly exaggerated). In reality: 20-40% of retirees (depending on which source you believe) rely on SS for 90% of their income. 50% of retirees rely on SS for 50% of their income. The median retirement savings of people in their 60s is $172,000. This reality just shows that people are WOEFUL at saving for retirement. And this will only get worse once the last people with actual pensions die and, thus, are removed from the statistics. If you left it up to people to save for retirement, the truth is that a large percentage would be destitute in retirement. What would you then do with those people? Let them starve? Pay them welfare? Where would the welfare money come from? The funny thing is that many people who rely on SS as their only income are actually voting for Republicans, who want nothing more than to strip them of their only income, so the rich can save some more taxes. Me, I am happy that I pay SS taxes, so I know that people are covered in retirement and don't have to live on the street, even if they irresponsibly squandered their money on conspicuous consumption rather than saving for retirement. I am counting on SS to cover my basics in retirement, i.e. heating, gas bills, real estate tax, insurance etc. For the rest, I'll rely on my comparatively generous nest egg, which is making me financially independent even at the age of 56.
