As a Millenial who tries to not hot-take, I do expect to receive Social Security benefits. I'm not planning on it being a requirement to survive, but I am expecting it to be there in a nontrivial form. As is widely noted the trust funds will, at current projected rates of usage, be tapped in 2034, but projected income (hence the "further looting" part) covers around 75% of all benefits at that point.
Baby Boomers will be dying off at that point, which should reduce the stress on the system, and there are a number of fairly politically safe ways to improve the financial position of Social Security like removing the caps on income. Don't get me wrong, Social Security is not a great system in a lot of ways, but it's not gonna just disappear and there is a recovery point in there if we should choose to take it.
This was also the longtime belief of my parents, who both recently began collecting Social Security benefits. Social Security will only die if we let it be killed.
You will have Social Security. You just might receive something closer to the current level of social security benefits rather than a more generous package. Social Security benefits are indexed to median wages, which rise over time. If they just don't increase benefits so quickly system will be fine. Likewise, a hike in taxes which would still leave us one of the lower-taxed industrialized countries would do the trick.
A funny thing is that we have both fear of automation and fear of insolvent social security. If the economy gets more automated it will grow quickly, and it will be easy to tax the additional income to pay for social security---although we may have to use a value-added tax or a higher corporate tax rather than payroll taxes.
I'm not sure why millenials have to worry about it. Social Security is not an aquifer that will be tapped out by the time we get to it. It is a pay-as-you-go system. The current crunch is coming from having a large retiring generation (the baby boomers), supported by relatively smaller working generations. Millenials will not necessarily have the same problems (unless the elect to have even fewer kids than baby boomers did, which is a possibility).
> as a Millennial, I don't expect to ever see a cent of Social Security benefits.
Even if the Trust Fund is fully exhausted, beneficiaries will see a sizable fraction of full benefits from current payroll taxes.
The only way this doesn't happen is if the program is modified to affirmatively deny people already-earned benefits, which is probably less politically viable than fixes that would protect full benefits even with pessimistic projections.
Social security will always be around in one form or another. Despite the fact that many Americans detest the idea of a welfare state, we're still collectively bright enough to realize that you can't simply leave no options for the sick, poor, and disabled.
The better question to ask is whether you will be happy living out the twilight of your life on a government controlled amount of money. This amount will likely always gravitate toward the prevailing poverty line. Unlikely to lead to a truly comfortable existence. Definitely not enough to live in any high COL location. Average monthly benefit in 2017 was ~$1,300, and MAX was $2,687 [1]. ~$15-$30K will cover the basics in most lower COL parts of the country, but not much more.
Social security is eminently and easily fixable. It's just been obstructed for decades by people of bad faith who want to burn it, and the country, to the ground.
You'll receive social security. Benefits will be in tomorrow's inflated dollars but at today's amounts.
I've been predicting huge inflation for a long time for the simple reason that housing has inflated so much. Housing is so unreasonable and house prices are so sticky (people hate to take a loss and most are on loans) that the only reasonable way out of the housing affordability crisis is for the rest of the economy to inflate until house prices are reasonable again. This will also neatly "solve" the social security funding problem.
There are two problems with SS, one fixable, one less so. The hard to fix problem is slowing population growth. SS depends on young workers to fund the payments to retirees. But this is really only a problem if aggregate income growth declines with population growth, and it hasn't; the aggregate income of all Americans has quadrupled since 1982, the last time this shortfall occurred. The problem is that the vast majority of the income growth has been captured by a small portion of the population, who don't pay withholding taxes on it. If we had sane progressive tax policy in the US, the SS shortfall would evaporate.
The real problem is that the average income earner doesn't pay enough Social Security taxes to cover what they will receive in benefits: http://www.politifact.com/truth-o-meter/article/2013/feb/01/.... The system is set up so not only do the needy get a public subsidy, but most people do.
Caps on retirement taxes are not specific to the U.S. Germany and France, for example, have similar ceilings. Germany, for example, has a 19.6% payroll tax up to $80,000. The U.S. tax is 12.4% up to $127,000.
I said this above as well, but our latest DoD budget is $700,000,000,000.
I agree with the crux of your analysis. But I also think we literally can't afford to ignore how $700 billion contributes to a multitude of our problems.
We have the resources. What we lack are necessary priorities and the resolve to fix them.
The latest DoD budget is $700 billion. Russia's DoD budget is approx 10% of that. That's not a typo 10%. China might not be an ally - in the historical European sense - but given our symbiotic economic relationship it would like take quite a bit for a true military conflict to break out between the two countries.
Even if our DoD budget was 2x Russia's, the ~$550+ billion is still a lot of money. Money cant love, nor evidently priorities rooted in the 21st century.
I've fantasized about this as a solution before. If you tell the military that in 10 years you're cutting their budget to $250 billion and somehow manage to instill in them that a) you're serious and b) you will not repeal your decision, I have no doubt they would successfully adapt (just like every industry who complains about regulations have ultimately adapted).
I am curious, however, in HOW they would adapt.
I wouldn't want them to drop their research budget (much). Research is almost always good.
For one, you could discharge some of our 1.5 Million active troops [1]. I don't really know why we have that many. That'd measurably cut down on the second largest chunk of the budget (wages) [2].
The highest is 'Operations and Maintenance' and the third highest is 'Procurement'. With a reduction of manpower, they need to procure less. They can retire many assets. I would prefer they NOT sell them to more local police, but thats a different discussion. Procurement could be done MANY times smarter. The F35 is a disaster of design by committee and if each military branch had designed their own plane, I'm sure they'd each have gotten a better one. And, of course, with less money, they have more incentive to push back on the industrial part of the complex for more reasonable prices.
that's not wrong but for the sake of argument perhaps its better to look at the DoD budget through the political lens ... its a corrupt jobs program in which the government funnels money to a broad swath of American states and counties, mostly via defense contractors.
Yes its incredible dumb and inefficient but many millions of people earn their livelihood, healthcare and pensions by building useless bombs, so its hard (politically) to say we'll take that away to shore-up Social Security or whatever.
The fundamental/fucked-up thing is that if you cut the military budget it's not that soldiers stop getting recruited it's that tank/jet/boot/GPS/mre companies start firing people. The Military Industrial complex is a huge welfare/workfare program that no one in power is willing to cut. So until we can convince essentially EVERY voter (any party: libertarian, green, D or R) that it's okay to have a real safety net then politicians who campaign against the military budget are basically lost causes.
"This year, like last year, Social Security’s trustees said the program’s two trust funds would be depleted in 2034.
...
It should be stressed that the reports don’t indicate that benefits disappear in those years. After 2034, Social Security’s trustees said tax income would be sufficient to pay about three-quarters of retirees’ benefits." [1]
We can argue about how honest this is, but the claim is that it will still be there for Millennials. It seems feasible because by the time Millennials are 67, the bulge of babyboomers will be gone.
>>Income derived from Social Security is currently estimated to have reduced the poverty rate for Americans age 65 or older from about 40% to below 10%
When 40% (or an extra 30%) of a country ends up in poverty without it kind of does become a retirement program. Or at least an 'old-age' program.
One interesting side effect of this will be on the interest rate.
Social Security has been investing the surplus, most (or all?) in Treasury bonds. As outflows exceed income, they're going to have to sell bonds. That should drive prices down, and therefore interest rates up - to what degree, I don't know.
Why don't we focus on using government bulk and "peace"-time military support to provide some of the services that "social security" (tax the young now to support the retired now) provides; directly, instead of as money or vouchers?
Right now Social Security is paid for from it's own special tax. The idea then is that it isn't subject to yearly budget concerns, it just keeps ticking along regardless of congress' priorities.
If we start using the military, whether budget, personnel or infrastructure, then as soon as a war starts up or if we ever get a congress' that has the spine to cut back on military spending then those services get cut and we have to have a giant argument about how to replace them before settling on "do nothing and hope we get elected anyway".
Some comments by millenials say that they expect to receive SS benefits, but this is not a secure basis for financial planning. A person's retirement planning should be independent of any expected SS receipts and if you happen to receive SS then it's just a windfall.
Congress repealed the creation of the Independent Payment Advisory Board, that would cut the cost of Medicare without cutting service much. Thus Medicare costs are higher, thus spending exceeds income. Reinstate this board, as well as some other measures, and it will be back on target.
It is a manufactured problem. Anything benefiting the taxpayer like Social Security or schools is always being cut, while the funds to move the US embassy to Jerusalem or send the Navy to the South China Sea seems to be bottomless.
>Congress repealed the creation of the Independent Payment Advisory Board, that would cut the cost of Medicare without cutting service much.
Medicare services are already being rationed covertly via wait lists and via the increasing numbers of physicians who refuse to take Medicare or Medicaid.
The IPAB would most likely decrease access to services by cutting payments even further below market rates which would decrease supply of those services.
[+] [-] gringoDan|7 years ago|reply
[+] [-] encoderer|7 years ago|reply
- Remove the cap and tax income above $120k, just like medicare and income tax
- Increased tax rate, possibly just on payroll not income (the employer-paid portion)
- Limited forms of means-testing (Maybe, attenuated survivor benefits as your estate value clears a certain high mark like $3 million)
- Eliminate "early" retirement ages and force the "full" age
- Extending minimum retirement age to 70 and beyond
[+] [-] eropple|7 years ago|reply
Baby Boomers will be dying off at that point, which should reduce the stress on the system, and there are a number of fairly politically safe ways to improve the financial position of Social Security like removing the caps on income. Don't get me wrong, Social Security is not a great system in a lot of ways, but it's not gonna just disappear and there is a recovery point in there if we should choose to take it.
[+] [-] mullingitover|7 years ago|reply
[+] [-] kevinh|7 years ago|reply
[+] [-] lewis500|7 years ago|reply
A funny thing is that we have both fear of automation and fear of insolvent social security. If the economy gets more automated it will grow quickly, and it will be easy to tax the additional income to pay for social security---although we may have to use a value-added tax or a higher corporate tax rather than payroll taxes.
[+] [-] rayiner|7 years ago|reply
[+] [-] dragonwriter|7 years ago|reply
Even if the Trust Fund is fully exhausted, beneficiaries will see a sizable fraction of full benefits from current payroll taxes.
The only way this doesn't happen is if the program is modified to affirmatively deny people already-earned benefits, which is probably less politically viable than fixes that would protect full benefits even with pessimistic projections.
[+] [-] cnorgate|7 years ago|reply
The better question to ask is whether you will be happy living out the twilight of your life on a government controlled amount of money. This amount will likely always gravitate toward the prevailing poverty line. Unlikely to lead to a truly comfortable existence. Definitely not enough to live in any high COL location. Average monthly benefit in 2017 was ~$1,300, and MAX was $2,687 [1]. ~$15-$30K will cover the basics in most lower COL parts of the country, but not much more.
[1] http://time.com/money/4644332/maximum-social-security-benefi...
[+] [-] jhayward|7 years ago|reply
[+] [-] krapp|7 years ago|reply
Also get off my damn lawn you filthy heathen.
[+] [-] api|7 years ago|reply
I've been predicting huge inflation for a long time for the simple reason that housing has inflated so much. Housing is so unreasonable and house prices are so sticky (people hate to take a loss and most are on loans) that the only reasonable way out of the housing affordability crisis is for the rest of the economy to inflate until house prices are reasonable again. This will also neatly "solve" the social security funding problem.
[+] [-] vannevar|7 years ago|reply
[+] [-] rayiner|7 years ago|reply
Our tax policy is among the most progressive in the developed world: https://www.theatlantic.com/business/archive/2012/02/us-taxe....
The real problem is that the average income earner doesn't pay enough Social Security taxes to cover what they will receive in benefits: http://www.politifact.com/truth-o-meter/article/2013/feb/01/.... The system is set up so not only do the needy get a public subsidy, but most people do.
Caps on retirement taxes are not specific to the U.S. Germany and France, for example, have similar ceilings. Germany, for example, has a 19.6% payroll tax up to $80,000. The U.S. tax is 12.4% up to $127,000.
[+] [-] chiefalchemist|7 years ago|reply
I agree with the crux of your analysis. But I also think we literally can't afford to ignore how $700 billion contributes to a multitude of our problems.
[+] [-] chiefalchemist|7 years ago|reply
The latest DoD budget is $700 billion. Russia's DoD budget is approx 10% of that. That's not a typo 10%. China might not be an ally - in the historical European sense - but given our symbiotic economic relationship it would like take quite a bit for a true military conflict to break out between the two countries.
Even if our DoD budget was 2x Russia's, the ~$550+ billion is still a lot of money. Money cant love, nor evidently priorities rooted in the 21st century.
[+] [-] eximius|7 years ago|reply
I am curious, however, in HOW they would adapt.
I wouldn't want them to drop their research budget (much). Research is almost always good.
For one, you could discharge some of our 1.5 Million active troops [1]. I don't really know why we have that many. That'd measurably cut down on the second largest chunk of the budget (wages) [2].
The highest is 'Operations and Maintenance' and the third highest is 'Procurement'. With a reduction of manpower, they need to procure less. They can retire many assets. I would prefer they NOT sell them to more local police, but thats a different discussion. Procurement could be done MANY times smarter. The F35 is a disaster of design by committee and if each military branch had designed their own plane, I'm sure they'd each have gotten a better one. And, of course, with less money, they have more incentive to push back on the industrial part of the complex for more reasonable prices.
[1] - https://en.wikipedia.org/wiki/United_States_Armed_Forces#Per... [2] - https://en.wikipedia.org/wiki/File:USA_2010_Military_Budget_... (it's 2010, but the proportions should be similar)
[+] [-] jakelarkin|7 years ago|reply
Yes its incredible dumb and inefficient but many millions of people earn their livelihood, healthcare and pensions by building useless bombs, so its hard (politically) to say we'll take that away to shore-up Social Security or whatever.
[+] [-] Avshalom|7 years ago|reply
[+] [-] maerF0x0|7 years ago|reply
We can argue about how honest this is, but the claim is that it will still be there for Millennials. It seems feasible because by the time Millennials are 67, the bulge of babyboomers will be gone.
[1]: https://www.marketwatch.com/story/medicares-finances-are-get...
[+] [-] ghouse|7 years ago|reply
[+] [-] Avshalom|7 years ago|reply
When 40% (or an extra 30%) of a country ends up in poverty without it kind of does become a retirement program. Or at least an 'old-age' program.
[+] [-] dragonwriter|7 years ago|reply
[+] [-] AnimalMuppet|7 years ago|reply
Social Security has been investing the surplus, most (or all?) in Treasury bonds. As outflows exceed income, they're going to have to sell bonds. That should drive prices down, and therefore interest rates up - to what degree, I don't know.
[+] [-] mjevans|7 years ago|reply
[+] [-] Avshalom|7 years ago|reply
If we start using the military, whether budget, personnel or infrastructure, then as soon as a war starts up or if we ever get a congress' that has the spine to cut back on military spending then those services get cut and we have to have a giant argument about how to replace them before settling on "do nothing and hope we get elected anyway".
[+] [-] ahoy|7 years ago|reply
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] mcthorogood|7 years ago|reply
[+] [-] ams6110|7 years ago|reply
[+] [-] imbokodo|7 years ago|reply
It is a manufactured problem. Anything benefiting the taxpayer like Social Security or schools is always being cut, while the funds to move the US embassy to Jerusalem or send the Navy to the South China Sea seems to be bottomless.
[+] [-] assblaster|7 years ago|reply
Medicare services are already being rationed covertly via wait lists and via the increasing numbers of physicians who refuse to take Medicare or Medicaid.
The IPAB would most likely decrease access to services by cutting payments even further below market rates which would decrease supply of those services.