Social Security Fixes

Talk to anybody under 50 about Social Security and you get an eye roll. Most people believe that Social Security will be bankrupt by the time that they are eligible. Time to write that cookbook about making meals with cat food.

On Sunday, The New York Times asked six experts to examine several potential fixes for Social Security. Their ideas include:

  • Increase taxes on higher incomes. Right now, Oprah and Bill Gates only pay $6,622 per year. That’s because earnings above $106,800 are not taxed. I think that Oprah could spend a little less on her pampered pooches and a little more on old people.
  • Increase incentives for people to work after retirement.
  • Don't let people receive social security at 62.
  • Improve health care for the elderly, so they have fewer expenses.
  • Legalize illegal immigrants, so they can pay into the system.

I employed a lot of restraint to keep from writing my own snarky solutions for Social Security.

48 thoughts on “Social Security Fixes

  1. Wouldn’t it make more sense, instead of raising taxes on Bill Gates, to reduce his social security benefits? Was means-testing benefits on the New York Times list?
    P.S. Most of Bill Gates’s wealth is in the form of unrealized appreciation in Microsoft, which isn’t subject to tax anyway.

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  2. As for the illegal immigrants, right now they have to get a fake SS card to work, except at the kinds of jobs that don’t pay any taxes at all. They pay in, but cannot collect.
    (I think the NYT doesn’t want means-test benefits because they think that would somehow do more to destroy the fiction that most people get what they pay than raising the amount of income taxed.)

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  3. ” That’s because earnings above $106,800 are not taxed. I think that Oprah could spend a little less on her pampered pooches and a little more on old people.”
    Why do I get the feeling that these taxes will apply to me eventually? You know what they say. First they came for Oprah, and I said nothing, because I’m not a new-Agey multimillionaire (and anyway, her accountants and lawyers will keep her tax bill from budging one dime). Then they came for the doctors and lawyers, but I said nothing, because I’m not a doctor or lawyer. Then they came for me, and since I didn’t have a whole law office and firm of accountants working round the clock, they sheared me like a sheep. (Apologies to Pastor Niemoller.)
    “Improve health care for the elderly, so they have fewer expenses.”
    I thought Medicare was doing great with providing health care to the elderly (at least that’s what we heard during the health care debate).
    Seriously, though, I like the two items from the list about encouraging people to work longer.

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  4. First, they came for the Crocs and I said nothing because those really look funny on an adult. Then the came for the Birkenstock sandals and I said nothing because I’m not a hippy. Then they loafers and….

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  5. Most people believe that Social Security will be bankrupt by the time that they are eligible.
    Do “most people” really think that? I ask, because if so they are probably ill-informed.
    http://leiterreports.typepad.com/blog/2010/07/social-security-reality-check.html
    Amy P- is there any reason why, if you’re making a lot of money, increased payroll deductions shouldn’t apply to you? I have to admit I have a hard time understanding why that would be the case.

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  6. Matt, what is the reason why increased payroll deductions should apply to me (or Amy P.) in order to keep paying Social Security to Warren Buffett? Other than, as MH suggests, the maintenance of political fictions, i.e., keeping people ill-informed.

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  7. At some people, you just look at the number of workers projected per retired person and realize that at some healthy people are going to have to keep working longer. All the other solutions are stop gap.

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  8. “Amy P- is there any reason why, if you’re making a lot of money, increased payroll deductions shouldn’t apply to you?”
    Because it is at least in theory an insurance program, so the pay-in is supposed to be at least somewhat connected to the pay-out. If we’re going to cut that tie (or drop that polite fiction), maybe it would make more sense to just forget the whole idea of payroll taxes for social security and just handle the thing via federal income tax. Since living into one’s mid-60s is no longer a risk to be insured against but a near certainty, maybe that is the right way to go.
    “Legalize illegal immigrants, so they can pay into the system.”
    What MH said, plus I would add that illegal immigrants are usually at an income level where their benefits would eventually need to be subsidized by higher earners (although I suppose that since high earners are notoriously dependent on illegal immigrants for baby care, house cleaning, yard work, etc. it makes some sort of sense to single high earners out for special treatment here). Figuring out how to create or attract more high earners (and higher tax payers) to live in the US is much more to the point than expecting that currently undocumented dish washers and motel maids will save Social Security.

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  9. OK Laura, as you’ve pointed out previously, you scored high in math, right? Then you should instantly realize that legalizing immigrants to pay for the system is a mathematical formula for, by dint of the inevitable math of it all, the eventual importation of the entire population of planet Earth within our borders solely to pay for the SS costs paid to retirees. This is because todays LARGER cohort (which is why we’re importing them in the 1st place, right?) of workers will inevitably become tomorrows retirees, requiring an EVEN LARGER cohort of imported workers to pay for THEM. And when THAT larger cohort retires, and EVEN LARGER one must be imported, n’cest-ce pas? And on it goes…with increasingly EVER LARGER cohorts imported with each successive wave of retirement cohorts, (each one larger than the previous)–hence the inevitable march to absorb the world’s entire population. This is the inevitable internal logic of ALL Ponzi schemes…
    And that the most extreme liberals in Congress (like David Obey) oppose means-testing like Dracula avoids the Cross, is because it would reveal SS to be what it really IS–Charity/Welfare. The ONLY reason SS has survived so far is the middle and upper classes believe that SS is as much theirs as anyone else’s. Once means-testing is introduced and SS becomes just another “Welfare” burden to the well off, political support will drop like a stone.
    Bob,Edwards, of NPR fame, and a native of Louisville, once described that city as “Neither especially southern, nor especially mid-western–but especially neither.” Likewise, SS is neither especially a retirement
    system, nor especially an insurance scheme–but especially neither. Rather, it is a POLITICAL
    scheme to buy social peace devised in desperation by an FDR who feared Huey Long and his “share the wealth” program in the up-coming 36 election. The math and economics upon which it is based doom it to failure. It has only lasted this long because its architects disguised it so well and the Govt–unlike pvt ponzi schemes–had the power to go back and ask the original marks to pony up more money, i.e., raise their taxes time and again.

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  10. Rather, it is a POLITICAL scheme to buy social peace
    So is the criminal justice system. The point is to keep the political schemes reasonable on economic grounds.

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  11. Yes, MH, but the general public hasn’t bought into the necessity for maintaining a justice system based upon being sold an outright lie. One-third of all SSI disability recipients have never paid a dimes worth into the system. How much longer the public will buy the lie that everybody contributes and gets back only their just desserts is the el primo question. Once they realize that it is just another version of welfare political support for the “economics” of it all will evaporate. Why do you think, in testimony before Congress, one of the SS actuaries described the formula by which money is internally transferred from the well off (who can retire at only 40% pre-retirement base-line) to the lowest wage earners (who can retire at 70% of
    previous income) as “fairly opaque?”

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  12. “Most people believe that Social Security will be bankrupt by the time that they are eligible.”
    that’s because they’ve been systematically lied to. Please don’t help the liars. The actuaries who in fact run SS don’t think there is a problem. I trust them over the politicians. See item number 10 and its citations at the
    link.
    Paul Krugman gives a good summary of the state of the fight.

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  13. One-third of all SSI disability recipients have never paid a dimes worth into the system.
    SSI is welfare. It is administered through Social Security, but the money comes from the general fund. Since the feds already have one bureaucracy to determine disability, it makes sense to avoid duplication. I am not aware of anybody who deals with these issues and confuses it with SSDI, the actual disability insurance portion of Social Security. SSDI is on relatively sound footing.
    SSDI requires a work history (on the books) and actually pays enough money to live in some parts of the country. SSI doesn’t pay enough to survive without food stamps, Section 8 housing, and probably private charity.
    (Should I capitalize something in there so you get it more easily?)
    It does not bother me in the least to be supporting the retirement of the lowest wage earners. They are almost exclusively working at physical tasks of the sort that you really shouldn’t have to do past 65. I am not happy about paying for a 63 year old dentist to be able to take-up full time golfing three years earlier than he would have been able to otherwise. Or, giving an extra $1,200/month to a seventy year old public sector retiree drawing $4,000/month in pension.
    Your objections to Social Security seem confused, beside the point, and the rhetorical equivalent of bran flakes in castor oil.

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  14. “SSDI, the actual disability insurance portion of Social Security. SSDI is on relatively sound footing.”
    Note that SSDI is actually insurance in the traditional sense of the word–a pooling of resources to deal with the genuinely unexpected.

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  15. that’s because they’ve been systematically lied to.
    It isn’t a lie, it just is based on the people in charge being able to formulate a very specific question that gives a falsely comfortable answer.
    Based on the “trust fund,” which is taxes that have to be paid by the same people as are paying into Social Security, Social Security works. The distinction about which type of taxes paid doesn’t matter nearly as much as to somebody who isn’t in government or getting an SS check.
    Also, Medicare is a benefit package that goes to the same people (mostly) as get Social Security. It is in worse shape than Social Security and the trends are horrible. You can run the numbers so that “Social Security” is in good shape. You cannot run the numbers so that money spent supporting the elderly does not look like it is going to crush the ability of the younger people to raise kids and wear shoes at the same time.

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  16. that’s because they’ve been systematically lied to.
    I wouldn’t call it ‘lied to’ just because people don’t understand the details exactly. “Social Security” is solvent with its trust fund, but the fund is debt that has to be paid by the same people as are paying SS taxes. It is still fewer workers supporting more retirees.
    And Medicare is in horrible shape. If the question is, “Is Social Security solvent for the next 30 years?” the answer is “Yes.” If the question is, “Will we be able to continue funding support for the elderly as we have in the past without crushing the ability of younger people to raise their kids?” the answer is a pretty clear “No.”

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  17. ” I am not happy about paying for a 63 year old dentist to be able to take-up full time golfing three years earlier than he would have been able to otherwise. ”
    Yeah. But, how many of the retirees are 62 are in non-physical work? I’d like to see that statistic. I do see people retiring at 62, from, say being a call center manager, or a mid-level stockbroker, or bank manager. And, they do it because not only can they collect social security, but because investment earnings are treated differently than work for the purposes of taxation.
    That’s the issue that bothers me about SS taxes (as well as the cap, which makes the tax regressive, since it is a tax, and there is no relationship between what you paid in and what you take out).
    Would changing the income cap have any effect on Gates & Buffet, anyway? Do they even draw “wages” at all? My guess is most of their earnings are capitol gains & dividends, already taxed at very low rates (and with no social security). It’s those basketball players, lawyers and doctors, and other high *wage* earners who would end up paying more taxes.

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  18. But that 63 year old dentist and 70 year old retiree only willingly paid into the system because they thought their contributions were to be put aside (as opposed to the reality of being instantly transferred to todays retirees) such that they were dedicated *exclusively* for their own retirement. YOU may not be happy about paying that dentist but I’m sure he’d say that it’s none of your damn business–that it’s HIS money–NOT yours–and that both you and others should have absolutely no say in the matter. Now, of course, in this we both know that he is sadly misguided–that he has no legal claim to future payouts; that his payouts/future “welfare” are/is totally dependent upon the “kindness of strangers” in that Congress can abrogate SS’s so-called “contractual obligations” at the drop of a hat, legally-speaking. But I’ll bet your hypothetical dentist doesn’t view the program that way–nor, I would wager with you, do the vast majority of those who pay (or have paid) into the system. And of course, the fact that precisely because the general public has been lied to about the true nature/construct of SS is the reason Congress is between a rock and a hard place. SS is financially unsustainable, and, while Congress has the legal right to make any changes they want, it is constrained by the expectations of the public–expectations that have been fueled by a successive body of
    lies over the years. The public believes it has both a moral and legal (however misguided) right to their SS payouts in retirement. The realization that they are totally at the mercy of the good opinion of people like you, MH, is not going to sit well.
    And while it may not bother YOU in the least to subsidize low wage earners, most would say “speak for yourself” and keep your hands off “my money.” My point, MH, is if you think the moral basis for such income transfers (i.e., welfare/charity) so strong
    why disguise them within the SS system? Shouldn’t they be voted on by the people on their own merits in the light of day? Of course, we both know what the general public’s answer to that would be, don’t we, MH?–which is why the income transfers (taking money out of the pockets of those who actually earned it and giving it to those who, in point of fact, didn’t) are hidden from sight (“slightly opaque”) within the SS system in the first place, isn’t it?
    (Now, you might say in reply that these low income wage earners morally “deserve” these transfer payments, i.e., somebody elses money–and I might even philosophically agree with you–but lets not kid ourselves: “Deserve it” they might. “Earn it,” they did not.)

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  19. That thinking, after the bailout made it clear that the whole “contracts” thing didn’t really apply when it hurt the rich, is pretty much why I quit the Republicans.

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  20. But the “rich” on Wall Street are all Democrats, MH, or had that escaped your notice? Just follow the campaign contributions..

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  21. “Most people believe that Social Security will be bankrupt by the time that they are eligible.”
    that’s because they’ve been systematically lied to. Please don’t help the liars. The actuaries who in fact run SS don’t think there is a problem. I trust them over the politicians. See item number 10 and its citations at the
    link.

    Here’s an exercise for anyone who puts such incredible faith in projections — research for how long the 1983 “fixes” to SS were projected to keep the system solvent for.
    And even if we take the projections in your own link as gospel, SS is expected to go insolvent by the time I am 59! But people my age are k-k-k-krazy to question whether SS will be solvent by the time they are 65?

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  22. “And even if we take the projections in your own link as gospel…”
    I finally got over there and had a look at point #10, and I think Siobhan is being way too generous. Here’s a quote:
    “Social Security’s costs will grow in coming years as members of the large Baby Boom generation (those born between 1946 and 1964) move into their retirement years. Since the mid-1980s, however, Social Security has collected more in taxes and other income each year than it pays out in benefits and has amassed a trust fund of $2.6 trillion. The trust fund will enable Social Security to keep paying full benefits through 2037 without any changes in the program, according to Social Security’s trustees, even though it starts paying out more in benefits than it receives in annual tax revenue before then.”
    That’s quite the bookkeeping sleight of hand, right there. The authors are treating the “Social Security trust fund” as if it were an actual real world entity, rather than a gargantuan pile of IOUs written by one branch of the government to another branch.
    Am I wrong on this? It just feels really weird to read the paragraph I quoted. How stupid do they think we are?

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  23. Great comments, btw. I’m pretty much with MH on this one.
    Let’s just assume, for the moment, that Social Security is in trouble. Doug K, thanks for your links. It isn’t in trouble at the level of NJ pensions, but it isn’t healthy.
    I could be persuaded to get rid of social security all together and to increase the welfare pot. Bill Gates doesn’t need welfare. Middle class families that have access to 401K plans and pensions can do without social security. A guy who spent most of his life making driveways is going to need help. I’m happy to help him out. We don’t need old people eating catfood.
    But, politically, it won’t fly. There’s the old distinction between the deserving poor and the undeserving poor. Most people will agree that the driveway guy should be taken care, so he gets the “good” welfare that isn’t called welfare. The unwed, urban, minority mother isn’t considered as deserving, so she had to get the “bad” welfare and is treated with disdain for taking the money.

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  24. More and more people are agreeing with me since I’ve started using the phrase “bran flakes in castor oil.”

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  25. Middle class families that have access to 401K plans and pensions can do without social security.
    Yeah, but we have to be really, really careful about unintended consequences here. The bizarre income tax structure surrounding SS means we already have something that feels like means-tested SS to the recipient, even if the money they lose out on doesn’t get folded back into SS.
    What is the benefit to the lower- or middle-class family to go without vacations, summer camps for the kids, new clothes, etc. that they can technically afford to save up their $500k in retirement, only to find that what seems like a ton of money and a lifetime of sacrifice only generates $20k/year of income in responsible retirement spend down mode, and leaves 85% of their SS now taxable?
    This is when people bluster and say, “Well, I would never think that way!” and point out how $20k/year plus mostly taxed SS is much more than they’d get with tax-free SS alone, which it is. But how do people on the margin think, when their beloved daughter is begging to finally, just this year, get new clothes from Abercrombie instead of Walmart?
    It’s hard for me to see a scenario in which we’re not either setting the means-testing high enough that the body count is so low no real money is saved, or we set the bar low enough that there’s a huge disincentive to save anything for retirement unless you’re sure it’ll be a very well-off one.

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  26. “It’s hard for me to see a scenario in which we’re not either setting the means-testing high enough that the body count is so low no real money is saved, or we set the bar low enough that there’s a huge disincentive to save anything for retirement unless you’re sure it’ll be a very well-off one.”
    That’s why I don’t think means testing will work — except as a feel-good measure to exclude the very wealthy, for whom the SS benefit really is an irrelevant proportion of their retirement earnings.
    My fixes are to 1) raise the retirement age and 2) raise the income cap. 3) change the tax treatment of earned (wages) v un-earned (investment) income. It doesn’t make sense to me that Buffett might colelct some 25K in SS benefits. But it makes less sense to me that we tax his 1M income at 15% and the basketball players 1 M earnings at 35%. I’d rather let him keep collecting the 25K and get the 200K in currently favorably taxes income.

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  27. I think you could save quite a bit going with a means test that barely hits the $20k/year retirement-fund people. Aside from the upper middle class and actual rich, I think means testing woudd be far more likely to hit public sector retirees getting a defined pension.

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  28. 3) change the tax treatment of earned (wages) v un-earned (investment) income.
    They’d better phase that in slowly or the stock market would drop so much that today’s 80 year-old millionaires will be tomorrow’s 81 year-old social security-dependent elderly. This time is probably as good as any to remove the capital gains exemption on selling your house, as almost nobody has any capital gains.

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  29. For all the people advocating a higher retirement age, how do you propose to deal with age discrimination in the job market—meaning, older people being laid off and finding it difficult (if not impossible) to get hired? Especially older people in jobs that require physical labor (not everyone has a plush, sit-down office job)? Or older people who have health issues that don’t rise to the level of disability, but are enough to prevent being hired?
    Suicide mills, a la Soylent Green?

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  30. For all the people advocating a higher retirement age, how do you propose to deal with age discrimination in the job market
    All canes come with swords inside.

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  31. “Or older people who have health issues that don’t rise to the level of disability, but are enough to prevent being hired?”
    I agree that this is an issue and I don’t have a solution. What happens to people like this now, the 55 year old, who can’t find a job and has injuries or discomfort that don’t qualify as a disability? (I’m not being facetious — what do these people do now?).
    We’d be extending that period of time (and compounding it with the higher likelihood that people are developing soft signs of age-related disabilities that impair their ability to work).
    I think that the longer life expectancy is truly also accompanied by longer health expectancy (people are able to work longer into old age, as well as simply live longer into old age). But, there’s no simple correlation between the two — people could be living longer without being able to work longer.

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  32. There are, of course, many people who are thirty and have health issues that prevent them from getting a job or make it difficult to work. And plenty of very young people who have a life expectancy of only a few years. They have to undergo tests and court proceedings to establish disability. There is no magic age that solves the problem of hiring discrimination and difficulty working. But, you’ve certainly got many fewer people with physical jobs and many more people healthy at older ages than in the past. You can shift-up the retirement age without making the system more onerous than in the past.

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  33. “What happens to people like this now, the 55 year old, who can’t find a job and has injuries or discomfort that don’t qualify as a disability?”
    I think they do find their way onto disability sooner or later. Presumably a later SS age would mean more people going on disability, but you’d still manage to capture a lot of white collar workers, as well as people in less physically-demanding blue collar jobs. Also, a less physically demanding second career would be a good paradigm to work on. My dad worked in the woods with a chain saw into his mid-30s, but eventually moved on to other stuff. He had a lot of education to fall back on, but I note that a former logger cousin of ours without those advantages followed a similar pattern at the same age–he left the woods and became a prison guard, doing a little bit of cattle ranching in his off hours, as is typical of my family. If our cousin follows family tradition, he’ll eventually retire from his prison job but keep on ranching until his dying day.
    “There are, of course, many people who are thirty and have health issues that prevent them from getting a job or make it difficult to work.”
    Right, as well as those cases of people whose life ambition is to go on disability as soon as possible, no matter how pitiful the level of existence it offers, because in their world, that’s the equivalent of winning the lottery. I know a fair number of people in the first (legitimate) category. There are also a lot of marginal cases. I have a young relative with a combination of ADHD and short-term memory loss from head injuries. She’s a cute 20-something and completely able-bodied. On the one hand, she’s had a recent track record of only being able to hold down jobs 2, 3, or 4 days at a time before wandering off or being fired. I’d hate for her to just settle down with a monthly check, because she’s so young and there may be more she can do with her life. For her in particular, I’d like to see a more fine-grained approach, with more emphasis on rehabilitation and rewards for achieving simple tasks (showing up to appointments on time, going to see her therapist, taking a class), which may be something that we need to arrange in-family. In general, both for retirement and for disability, I’d like to see incentive structures for working more and planning better. As dave s. would say, you get more of what you pay for.

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  34. “Suicide mills, a la Soylent Green?” “All canes come with swords inside.” OK, that’s the kind of snark that came to my head when I wrote this post.
    For all the people advocating a higher retirement age, how do you propose to deal with age discrimination in the job market. Law suits. Age discrimination is a separate problem that should be dealt with. Early retirement isn’t the answer.
    You know public sector workers in New Jersey can retire with a full pension at age 55?

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  35. The notion that 401ks and 503bs aren’t subject to the same pressures that Social Security are and that these are somehow safer than social security is equally bad math. As baby boomers retire and need to convert their holdings into cash, stocks prices will go down unless more buyers can be found for stocks.
    And a lot of those upper class folks who thought they wouldn’t need social security or would just use it for trips are now relying on it. This is my mom’s cohort and these folks (who paid in much more than they will probably get out) but many of them have been wiped out financially by ponzi schemes (often fifth hand, although some were Madoff investors) and real estate collapse. Without social security they’d be moving in with their kids (who you, might have noticed, are already financially stressed?). It sure as hell is insurance, it’s not like life insurance. It’s like the old fashioned life insurance. Everybody who pays in collects eventually.
    My snarky fixes. 1) Free cigarettes once you hit 55. 2) Zoning prohibitions on dialysis centers that make it impossible to build them. 3) Carousel! (I can’t believe I’m first to make a Logan’s Run joke!)

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  36. (I’m not being facetious — what do these people do now?)
    The lucky ones are married and thus have spouses to support them. The single ones…judging from the folks I see hanging around at the neighborhood soup kitchen and the city’s homeless shelters—they are lucky to find a place to sleep at night (“overflow” shelters only operate during the winter months). No, seriously. The chronic homeless population in my city is over 50.
    But, you’ve certainly got many fewer people with physical jobs and many more people healthy at older ages than in the past.
    There are still plenty of physical jobs; most of them correlate pretty neatly with “jobs with no pension” and “jobs that don’t pay enough for someone to save for retirement after meeting basic needs”. Think about: the women cleaning hotel rooms, janitorial staff in large office buildings, LPNs and other medical support staff (also RNs at smaller facilities—they do physical work), the street maintenance crew in your city, building trades workers, waitstaff in restaurants, mechanics, warehouse workers, electrical line workers, oil riggers….the jobs that are “invisible”.
    Most of those people are nonunion. They don’t make much money. They don’t have benefits. All they have is their ability to do their job, and when that is gone, it’s all over. Game over. Everything they’ve earned up until that time is *poof, gone in a cloud of bankruptcy smoke.
    In the IBEW (my union), full retirement doesn’t come until age 62. You can retire before then at a reduced amount. At my age, I won’t be able to collect SS until age 70 (I was born in ’67). I will be fortunate indeed if I can find an employer willing to hire me ten years from now, let alone twenty. Women are already behind the eight-ball in terms of contractor longevity. (see: Susan Eisenberg, “We’ll Call You If We Need You”.)
    Look, I’m not opposed to saving for retirement. I’ve been doing that for a long time. I save 10% of my income, and have for years. The problem is, I’ve had bouts of on-again, off-again employment. I’ve also had a few years when I couldn’t put money into my 401k, because every single drop had to go towards my premature daughter’s medical bills.
    So, at 43, I have almost $70,000 saved up for retirement (the market hasn’t been good to my 401k). Even if I have full employment for the next twenty years, I’m not going to hit that $500,000 mark that was cited above as a baseline for a modest retirement. I’m not going to be anywhere within breathing distance of that. So, if my pension fund goes belly-up, I’m screwed. I’m screwed despite a lifetime of doing the right thing and playing by the rules and saving and living frugally and all that.
    We still have a system that is geared toward the assumption that everyone is either married, or has lots of children that can pitch in and financially support them. That isn’t the case anymore.
    It is the case that we live longer; it isn’t necessarily with the (relative) health of youth. Certainly not with the kind of health that eases employers’ minds. Age discrimination is a huge issue in the trades; older workers are laid off in a way that isn’t “actionable”—all an employer has to say is, “hey…work got slow!” Case closed. Or…what of the older worker who can lift 40 lbs, but can’t lift 70 anymore since the knee operation? An employer has the legal right not to hire that person. Lawsuits aren’t an answer.
    We need the limit on taxable income for SS abolished, not raised. Get rid of the limit entirely.
    Question: why are police and firefighters considered jobs that deserve and early retirement, because those jobs are “hard”, but other hard physical laborers are supposed to work until we drop dead?

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  37. You know public sector workers in New Jersey can retire with a full pension at age 55?
    Here in Illinois, it’s the “rule of 85”—your age plus the number of years worked. So, while some people can retire at 55, there aren’t many of them. There are plenty of politicians on both sides of the fence claiming that the state pensions are what is making the state broke, but the average state pension is around $20,000—that’s a pretty modest amount to live on. Less than 1% of Illinois state retirees have a pension of over $100,000.

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  38. (I can’t believe I’m first to make a Logan’s Run joke!)
    Good one! I thought about it, but I’m so used to hanging out on blogs where I’m 15-20 years older than everyone else I passed on a Logan’s Run reference.

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  39. “…many of them have been wiped out financially by ponzi schemes (often fifth hand, although some were Madoff investors) and real estate collapse.”
    Wiped out by the real estate collapse? How exactly? I’m not very sympathetic if we’re talking about people who thought that they could sell their houses to people in my generation and retire on the proceeds.
    To be fair, I think that this is one of the untold stories behind the tech bubble and the housing bubble–people saw retirement looming and started biting at anything that looked good.

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  40. Lawsuits aren’t an answer.
    There isn’t a perfect answer, but lawsuits and retirement ages set higher for those in good health seems a better answer than giving money to everybody based on the distance from their birthday.
    Removing the income limit would save SS for some years, but not Medicare. (It doesn’t help that every projection I see seems to show the whole thing going blamo right when I hit 70.)
    or has lots of children that can pitch in and financially support them.
    The same problem, writ large, hits entitlements for the elderly at a societal level. Today, there are just over 3.3 workers per retiree and it is heading to 2 workers per retiree. Baring international transfers, which are going to have to be a net outflow to pay off foreign creditors*, this means that each worker will have to fund one other person (1/2 an elderly person and 1/2 a child**).
    That would include not just SS and Medicare, but also public sector pensions and private sector pensions (since those have to be paid out of the income of some investment).
    I have no idea what will happen in this situation, but it doesn’t take a seer to see that the trend lines don’t continue.
    *Unless we mug weaker countries.
    **Figuring a child has to be supported for 20 years, or half a typical working life.

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  41. The problem with setting a means test for a certain HOUSEHOLD income is that you’re essentially rewarding women who choose not to work but to play tennis instead — and giving them the social security contributions that I put into the system because I chose to see less of my kids and to work. So Susie Creamcheese gets more time with her kids and I get to fund her old age (not her retirement, since she never worked.) Is the intent to drive women out of the workforce — because you’re setting it up to do exactly that. If raising my earnings takes my money away (and yes, it’s mine. I earned it), then I’m not going to work. That simple.

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  42. The rich on Wall Street are pretty Democratic. Jamie Dimon, for instance, is a big Democratic supporter. So was Robert Rubin. If memory serves, Goldman Sachs employees were the single largest group of Obama donors.
    What’s funny to me is that both parties have millions of supporters who have convinced themselves that the other party is the party of the “rich” and are full of passionate intensity about how their party is the party of the little guy. What dupes. Those guys at Goldman pay for results.

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  43. giving money to everybody based on the distance from their birthday.
    We wouldn’t have to do that. Just make the retirement age based on the physicality of the job. Sedentary jobs get a high retirement age, physically demanding jobs that break down the human body over a lifetime of work get a much lower retirement age. Again, no one is arguing that cops and firefighters should be working on up to age 70 or beyond; why shouldn’t other physical laborers have the same consideration?
    The problem with setting a means test for a certain HOUSEHOLD income is that you’re essentially rewarding women who choose not to work but to play tennis instead
    I’m not following you. If the women are really “playing tennis” or engaging in other leisure instead of working, then that particular household wouldn’t qualify under the means test—that household would be considered wealthy enough to not need assistance. So, your tax dollars wouldn’t be going toward the country-club set. Those tax dollars might be going to support a family who had to have a member drop out of the workforce until their children went to school because they couldn’t afford daycare—but that could be resolved by a national daycare system that everyone would have access to—you wouldn’t have to use it, but if you need it, it’s there.
    With that said, I hope you’re also as angry about the men (Johnny Creamcheese?) who choose to not work because they’re working on the Great American Novel (translation: power-drinking through the day and watching television while ranting about the demise of western civilization).
    The bottom line is that we have very real limitations on the age at which we can continue to work. Those limitations could be extended somewhat by hard pushes on employers to keep older workers on….but then, how to make room for the younger workers? In my trade, part of the reason for lowering the age of full retirement (it used to be 65, now it’s 62) isn’t just because employers don’t want/wouldn’t hire older workers, but also to make room for younger people who would otherwise leave the trade if they couldn’t work for the majority of the year.
    The real bottom line is that most people aren’t earning enough money to cover their basic needs, plus health care, plus college tuition for their kids (necessary for a non-poverty-wage job), plus retirement savings.

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  44. “The problem with setting a means test for a certain HOUSEHOLD income is that you’re essentially rewarding women who choose not to work but to play tennis instead — and giving them the social security contributions that I put into the system because I chose to see less of my kids and to work. So Susie Creamcheese gets more time with her kids and I get to fund her old age (not her retirement, since she never worked.) Is the intent to drive women out of the workforce — because you’re setting it up to do exactly that. If raising my earnings takes my money away (and yes, it’s mine. I earned it), then I’m not going to work. That simple.”
    And of course the same thing applies on the individual level. We want people to feel like working later pays, that they aren’t just paying taxes and getting penalties.
    Speaking of marginal tax rates, I was asking my husband about something similar last night. The kiddies are both theoretically in full day school now, although since C did miss 35 days of school last year (nearly all due to illness) I’m playing this thing by ear. Anyway, I’ve picked up one babysittee for a couple hours a week at home. It’s a couple I know, I don’t have to buy anything, I don’t have to get new clothes, there’s no transportation involved, I can do it if my kids are home, etc. There may be extra hours involved if the baby is sick and can’t go to his daycare. I asked for $11 an hour and got it (locally, I think college girls want $10 an hour for babysitting). Anyway, I was asking my husband how much of this we get to keep after taxes. He figured 75%. That’s exactly what I needed to hear. Knowing that, I’m going to exert myself a lot harder to find gigs than I would if I knew that the number was closer to 50 or 60 percent.
    La Lubu,
    I’m not sure police and firefighters are a good example. With local governments in so much pain, I’m not sure they’re going to be writing such generous contracts any more.

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  45. I’m not sure they’re going to be writing such generous contracts any more.
    But what are the alternatives? Keeping older people in physical jobs that their body is saying “no” to? Forced layoffs upon reaching a certain age (without the ability to collect pension money until a much older age)? Paying more money in workmen’s comp as older on-the-job bodies are more prone to injury?
    It wasn’t generosity that caused that retirement age to be written into those contracts—it was cost containment. The realization that past a certain age, it was cheaper for those people to retire.
    Question: other than college campuses, where else can you find people still working on into their seventies and beyond (and I’m talking career, not “Wal-Mart greeter”)? I can’t say that I see that in my life. I rarely see anyone on any job that is older than my father. Frankly, I think there are very few careers that can accommodate the slowdown in body and mind that comes with age.
    And again….what about the younger workers, the ones who are supposed to be building their careers and saving for the future? What happens to the whole shebang when people can’t get their first job (and start paying into the system) until their mid-thirties or beyond?
    We’re in a depression right now, with double-digit unemployment. Unemployment that has hit (pre-retirement) older workers especially hard. Preventing them from collecting SS while at the same time they are de-facto unable to get employment that pays as well as SS benefits….That’s going to get ugly.

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