Young Workers are Better Off with Social Security Benefit Cuts…
…than they are with payroll tax increases. That’s the conclusion of a new National Center for Policy Analysis study:
Retaining the current benefit structure will require an immediate and permanent increase in the Social Security payroll tax of 3.3 percentage points. In contrast, a long-run balanced budget for Social Security could also be achieved by retaining the current tax rate, but making the following two benefit reforms.
- Gradually raising the retirement age for workers who become eligible for benefits in 2023 and after.
- Making the benefit formula less generous for higher earning workers through progressive price indexing.
What difference do these changes make?
- With the baseline program, average-earning men born in 1985 will have to pay 13.5 percent of their lifetime income in taxes and receive benefits equal to 9.6 percent of their income.
- However, the same workers in the reformed program would pay a lower tax rate of 10.2 percent to receive reformed benefits of 8.2 percent.
“With the baseline program, average-earning men born in 1985 will have to pay 13.5 percent of their lifetime income in taxes and receive benefits equal to 9.6 percent of their income.”
It’s SUCH a scam. And this is such a compelling, easy-to-grasp stat. Wish the GOP would hammer this point home and really explain why this system is unsustainable.
How do we keep the governments hands out of our pocket though?
By marching on washington
And not only do they get far less than they put in, what we do get back will be devalued from FED induced inflation. So they take $1.20 from you while your working, and give you $1.00 when you retire, but that dollar can only buy 50 cents of goods, if you’re lucky. What a deal!
“Retaining the current benefit structure will require an immediate and permanent increase in the Social Security payroll tax of 3.3 percentage points.”
We have known this for years though, and no efforts have been made to the current structure.
“With the baseline program, average-earning men born in 1985 will have to pay 13.5 percent of their lifetime income in taxes and receive benefits equal to 9.6 percent of their income. However, the same workers in the reformed program would pay a lower tax rate of 10.2 percent to receive reformed benefits of 8.2 percent.”
Well,if we consider this country as an integral, why can’t we find a balance of payments?
There is no balance, it shifts from one side to the other rapidly.
The absence of bipartisanship
“Gradually raising the retirement age for workers who become eligible for benefits in 2023 and after.
Making the benefit formula less generous for higher earning workers through progressive price indexing.”
We needed to push this through way sooner.
congress is afraid to touch it though because the political implications.
Yes, the old people kinda like their social security.
Well, they did pay into the program when they were our age.
With the baseline program, average-earning men born in 1985 will have to pay 13.5 percent of their lifetime income in taxes and receive benefits equal to 9.6 percent of their income.
However, the same workers in the reformed program would pay a lower tax rate of 10.2 percent to receive reformed benefits of 8.2 percent.
This needs to happen
Start lobbying
Maybe we can start a group together
How about eliminating the SS Disability Benefits, which have nothing to do with retirement? How about killing the SS Spousal Benefit that allows up to 5 never-employed spouses and ex-spouses to cash in on an SS contributor’s account? How about eliminating a SS benefits for the kids of a contributor, which amount to 75% if his benefits if he’s dead?
Any single, non-breeder who participates willingly in SS is a fool. I have calculated that a young man who put his monthly contributions in an S&P index fund instead of FICA taxes would turn 67 a multimillionaire in no need of a paltry $2300 per month.
I’m opposed to means-tested Social Security benefits. There’s already a means-tested program called SSI, paid for out of the general fund.
For the rest, it’s generally fairer to reduce benefits than to increase taxes. This is because of the time lag between paying in and drawing out. If you increase taxes, there will be a group of retirees who receive the extra benefit but didn’t pay the higher tax rate. Reducing benefits results in a closer match between what an age cohort paid in and what it receives.
The fairest thing is to reduce COLAs.
Most people pay the payroll tax on all of their income. to fix Social Security we simply need to have all people pay the payroll tax on all their income instead of capping it. Then no means testing are needed and it will remain solvent. We need to support our seniors.
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I’ll never understand why they don’t raise the minimum retirement age by one year per decade.