Submitted by PM_Ur_Illiac_Furrows t3_11q7ed4 in dataisbeautiful
Comments
ButterflyCatastrophe t1_jc2ab4k wrote
It is because the Boomers are exiting the workforce that SS revenue falls relative to expenses, causing that peak in assets.
ktxhopem3276 t1_jc2g9mt wrote
they raised the age and the tax for boomers back in 1980. Since then, more income has gone to wealthy people over the payroll tax cap which has decreased the trust fund balance.
hiricinee t1_jc2tj02 wrote
I'm actually excited to break the payroll tax cap by a few k this year!
On that note, the point of the cap is to say "hey you've put enough into ss to save for retirement, keep the rest." Imo I'd rather they means tested the benefits than increase the cap.
ktxhopem3276 t1_jc2v2zj wrote
Wealthier people live longer and draw social security longer. The percent of gdp over the cap has increased since the 1980s even with the yearly increase in the cap. It’s also why there is a big jump from 24% to 32% in income taxes at $183,000 but that could be up to $200,000 using 401k deduction. The way I look at it is once you make that much money, you are probably lucky that whatever career path you picked is in demand. Democrats generally say they would create a donut hole by applying the tax on income over $250,000
hiricinee t1_jc2w8g3 wrote
Right now the cap on the payroll tax is at around 150, very much to the point if wealthy people are living longer than means testing the benefits would reduce payments to them more. Of course the problem with that is that there's a lot less rich people than poor ones.
Also almost all of these ideas go against the principle of ss, which was to be a government sponsored retirement program you paid into and got out once you retired. Basically all of the ideas to fix it completely neglect that (out of necessity.)
ktxhopem3276 t1_jc2x1pm wrote
Means testing is tricky because people will spend down savings faster to avoid it. The scary thing about means testing is it’s a slippery slope. We already have means testing sort of. When they added taxes on ss benefits in the 80s it was never inflation indexed. so now most people have to pay income tax on their benefits. Raising the cap brings in a lot more money than means testing according to the ssa analysis. Another possibility is to fix ss by shifting the medicare payroll tax to the ss trust fund so that ss is still a pay in to get benefits design. Medicare is only half funded by payroll taxes anyway and is mostly paid for by the general fund.
thunder-thumbs t1_jc31zod wrote
If you remove the cap and remove the max payment, then that principle is retained, though, isn’t it?
TracyMorganFreeman t1_jc48c0f wrote
How convenient that Congress makes 170 to 230K a year.
MainStreetRoad t1_jc4wjrm wrote
That’s a façade, congress makes MOST of their income via bribes.
TracyMorganFreeman t1_jc4x2rm wrote
You seem to be confusing campaign funding with income.
ktxhopem3276 t1_jc4y0oo wrote
If the campaign funds improve their chances of winning election,they personally benefit
TracyMorganFreeman t1_jc4yzhd wrote
The fact you don't pay payroll taxes on something that isn't payroll is the point.
ktxhopem3276 t1_jc4zvsa wrote
Obviously it was a joke. But not all bribes are in the form of campaign funds. Other bribes are the paid speeches and future employment offers
TracyMorganFreeman t1_jc50ty2 wrote
Which you till pay taxes on.
This, combined with the numerous bureaucrats and tech professionals who are their donors is why that donut hole was selected.
Ultimately it's telling they don't just try to lift the cap entirely.
ktxhopem3276 t1_jc51ag9 wrote
tech professionals that make more than $160,000 or less than $250,000 are big campaign donors?
GRANDxADMIRALxTHRAWN t1_jc5gi7b wrote
Nope, insider trading.
Double_Secret_ t1_jc3sg3c wrote
Can’t imagine the “means testing” will be low enough to off set the increase they’d get from lifting the cap, since no one feels like “oh, hey, that benefit I’ve paid into for years? Yeah, don’t care, I’ve got enough” unless they’re really rich.
I know plenty of people who could live without the benefit, but they’re going to be enraged if their benefits get cut.
[deleted] t1_jc3bdib wrote
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TracyMorganFreeman t1_jc486uk wrote
They do means test it. The rate of "return" is higher the lower your AIME.
ktxhopem3276 t1_jc4z44a wrote
Depends on life expectancy gender and spousal benefit
>The result in this study implies that the differential mortality between low earners and high earners reduce the progressivity of Social Security. Estimates show that, under current Social Security, the IRR (i.e., the rate of return of lifetime payroll taxes) for the 1930 cohort in the bottom income quintile is 1.67% compared with 2.28% for those in the top income quintile. This difference in IRR is widened for the 1960 cohort due to larger mortality differences—0.6% for the bottom income quintile compared with 2.46% for the top income quintile.
TracyMorganFreeman t1_jc4zhq8 wrote
Hmm, maybe forcing people to pay into a system they might not survive to benefit from was a bad idea.
ktxhopem3276 t1_jc502dh wrote
Earned income tax credit offsets that issue. Or are you making an argument to replace the flat payroll tax with a progressive tax ?
TracyMorganFreeman t1_jc525na wrote
I'm suggesting a system that is effectively a ponzi scheme probably isn't the most sustainable.
Then again other countries have higher retirement ages and much hire contribution rates for pensions(as in the 20+%, with Italy being at 33%), so maybe the problem is the US trying to get something from far less than other more sustainable systems.
ktxhopem3276 t1_jc53qnk wrote
Ponzi scheme implies hidden accounting. It’s transparent from the start that the first generation received a gift
TracyMorganFreeman t1_jc5arl1 wrote
No it doesn't. It implies that no real investment is made, and the returns to old investors are just the injection from new "investors"
ktxhopem3276 t1_jc5cwds wrote
Ponzi scheme is intentionally deceptive and illegal fraud. Social security is intentionally transparent about earlier generations getting a gift. Your making a false analogy.
TracyMorganFreeman t1_jc5elkn wrote
No need to be deceptive when you're forcing people to contribute, and the degree of contribution can be manipulated well after "investors" have committed to a particular contribution.
All you have to do is say it's for their own good.
The analogy is the way it's structured. Along that dimension of comparison it's perfectly apt.
Economic bubbles are a form of ponzi schemes too in the way they are structured.
Social security is a ponzi scheme in all the important ways that it make it so. They are unsustainable because they don't actually produce anything.
ktxhopem3276 t1_jc5g0af wrote
Forced participation or variations in benefits due to life expectancy isn’t deceptive. It’s a trade off made by society to give a gift to earlier generations. Calling it a Ponzi scheme is a rhetorical ploy to disparage something you don’t like for other reasons because you think people will believe your false analogy more than they will your real issue which is forced participation
TracyMorganFreeman t1_jc5jsil wrote
No, it's a ponzi scheme. Calling it a tradeoff by society doesn't preclude it from being a ponzi scheme.
If it took your money and actually invested it in something, then I wouldn't call it a ponzi scheme.
I take issue with forced participation, but that doesn't mean all forced participations are ponzi schemes.
Think of it this way: if it's not a ponzi scheme, then you wouldn't need to increase the rate or the cap to keep it solvent.
ktxhopem3276 t1_jc5kxbq wrote
> No, it's a ponzi scheme. Calling it a tradeoff by society doesn't preclude it from being a ponzi scheme.
But everybody knows why it made the trade off and it wasn’t intentionally deceptive
> If it took your money and actually invested it in something, then I wouldn't call it a ponzi scheme.
Is the intention of social security to invest money? Is it being intentionally deceptive paying out benefits from tax revenue?
> I take issue with forced participation, but that doesn't mean all forced participations are ponzi schemes.
Obviously. Ponzi schemes are fraudulent. Social security isn’t fraudulent
> Think of it this way: if it's not a ponzi scheme, then you wouldn't need to increase the rate or the cap to keep it solvent.
That’s not fraudulent.
TracyMorganFreeman t1_jc5r5pa wrote
>But everybody knows why it made the trade off and it wasn’t intentionally deceptive
No, it was sold as individual workers contributing to their retirement later on, which isn't how it works.
>Is the intention of social security to invest money? Is it being intentionally deceptive paying out benefits from tax revenue?
It's *not a progressive redistribution program either*.
>Obviously. Ponzi schemes are fraudulent. Social security isn’t fraudulent
That's a legal distinction, not a structural one.
>That’s not fraudulent.
Yeah it's just a ponzi scheme in all but name.
Do you not see how you are fixated on the part that isn't required of a ponzi scheme, and ignoring the very argument being made that it is structured by one? You are wishing to maintain a rhetorical air about it, and avoid the actual argument.
Economic bubbles aren't fraudulent either, but they're *also ponzi schemes*
ktxhopem3276 t1_jc6h5f2 wrote
> No, it was sold as individual workers contributing to their retirement later on, which isn't how it works.
I think it was obvious from the start the first generation of beneficiaries were gifted into the program
> It's not a progressive redistribution program either.
Not sure what you are getting at
>That's a legal distinction, not a structural one.
True but still a significant distinction rooted in transparency versus deception
> Yeah it's just a ponzi scheme in all but name.
That’s just lazy or dishonest
> Do you not see how you are fixated on the part that isn't required of a ponzi scheme, and ignoring the very argument being made that it is structured by one? You are wishing to maintain a rhetorical air about it, and avoid the actual argument.
You are wishing to portray a negative connotation with an unlawful deception to a transparent program with structural debt due to life expectancy and birth rates and immigration rates
> Economic bubbles aren't fraudulent either, but they're also ponzi schemes
They have similarities but that’s also a false analogy.
TracyMorganFreeman t1_jc6ns5k wrote
Analogies allow for differences.
Ponzi schemes are just as unsustainable even when transparent. It's just harder to get people to buy in.
Unless you force them to.
ktxhopem3276 t1_jc6ufka wrote
Depends on whether the differences are material to the conclusion. Drawing any inference from an analogy that cherry picks the similarities to infer a conclusion is a fallacy. I might entertain the analogy multilevel marketing is to pyramid scheme as social security is to ponzi scheme or Ponzi schemes are analogous to pyramid schemes because they are both fraudulent. But whether something is fraudulent hasn’t been proved, it’s a material difference that allows the analogy to be persuasively deceiving. I think you need to make the that argument forced participation or redistribution or insolvency is deceptive in order to support the analogy as a honest logical argument rather than a persuasion
TracyMorganFreeman t1_jc792om wrote
Which fallacy would that be?
It's not a material difference, because the problematic element I'm referring to is unsustainability, not whether it's fraudulent or not.
It's like saying "well the police unjustifiably killing someone isnt murder because they have qualified immunity and murder means an unlawful killing", completely ignoring what informs what the definition of murder is.
It's just sophistry.
ktxhopem3276 t1_jc7c9pf wrote
> Which fallacy would that be?
False analogy
> It's not a material difference, because the problematic element I'm referring to is unsustainability, not whether it's fraudulent or not.
Thats a reasonable argument on its own but that’s cherry picking one aspect and using the analogy to be lazy or worse persuasive. That’s assuming it was promised the tax or age would never change. It was designed from the beginning to benefit earlier generations. I think the forced participation argument is a better leg to stand on than sustainability for the analogy due to the debatable justification of government confiscation
> It's like saying "well the police unjustifiably killing someone isnt murder because they have qualified immunity and murder means an unlawful killing", completely ignoring what informs what the definition of murder is.
Qualified immunity is civil liability. But regarding the point of the analogy, I’m not asserting that something being legal or illegal is the only consideration. I’m more simply asserting using an analogy with something that is illegal is lazy or dishonest. Generally I find analogies lazy and more often dishonest on purpose. Especially in the area of law they are very tricky and mainly used when the law is unclear
TracyMorganFreeman t1_jc7dxxx wrote
Except it isn't a false analogy simply because it doesn't have all the qualities of a Ponzi scheme.
Thinking analogies are lazy is misunderstanding their purpose. Analogies are the very means of illustrating a concept by means of comparison.
Ponzi schemes are inherently unsustainable, but they're not inherently forced.
I can have objectives to it on forced participation grounds too, but I wouldn't call it a ponzi scheme to do so.
ktxhopem3276 t1_jc7h8pn wrote
> Except it isn't a false analogy simply because it doesn't have all the qualities of a Ponzi scheme.
I agree
> Thinking analogies are lazy is misunderstanding their purpose. Analogies are the very means of illustrating a concept by means of comparison.
I find them lazy when used in debate bc they are usually used to over simplify differences .
> Ponzi schemes are inherently unsustainable, but they're not inherently forced.
I think whether social security is sustainable or not is the question that has to be agreed upon or else we are at an impass.
> I can have objectives to it on forced participation grounds too, but I wouldn't call it a ponzi scheme to do so.
I agree but that wasn’t my point. My point was if social security has questionable legality, it is less misleading to use an analogy to other illegal topics even if the reason they should be illegal is different
TracyMorganFreeman t1_jc7i5b1 wrote
People arguing the police murder innocent civilians all the time. They are using the word murder by analogy.
The same goes for theft when tax dollars aren't used for what people want them to.
[deleted] t1_jc7jid1 wrote
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ktxhopem3276 t1_jc7jmiq wrote
Because they want to persuade people to believe the actions are illegal. So my question is are you making the argument that social security is illegal bc it is unsustainable? Because it is strongly implied by asserting the analogy to Ponzi scheme just like murder and theft
TracyMorganFreeman t1_jc7kcnp wrote
No they want to persuade people it's immoral because murder is.
I'm making the argument that SS is inherently flawed for the same reason Ponzi schemes are: they're structured in an unsustainable way.
ktxhopem3276 t1_jc7l92c wrote
That’s fair but ambiguous to me. how am I supposed to know if they are inferring immoral or illegal. But it begs the question, is it unsustainable by design. It was designed from the beginning for the tax rate to slowly increase over time as needed based on life expectancy and birth rates. The initial tax rate was only 1%. Birth rates were declining in the 1930s.
TracyMorganFreeman t1_jc7ms2k wrote
They're saying it's murder by analogy.
Murder is the immoral killing of someone, and are implying it should be illegal.
It was not designed for the tax rate to slowly increase over time.
ktxhopem3276 t1_jc7pp3d wrote
> They're saying it's murder by analogy. Murder is the immoral killing of someone, and are implying it should be illegal.
I find that deceptive because not all killing of innocent people is murder. Depends on intent.
> It was not designed for the tax rate to slowly increase over time.
That could be inferred from its design. Tax rate has changed 20 times already to account for life expectancy and birth rate.
TracyMorganFreeman t1_jc7wxye wrote
No, all killing of innocent people is murder.
There are degrees of murder, but involuntary manslaughter is both illegal and immoral.
To say it's inferred by design is to say it's designed to be flawed.
ktxhopem3276 t1_jc8112u wrote
> No, all killing of innocent people is murder.
Imprecise and ambiguous use of words
>There are degrees of murder, but involuntary manslaughter is both illegal and immoral.
Is manslaughter murder? It might depend on context.
> Homicide occurs when a person kills another person.[1] A homicide requires only a volitional act or omission that causes the death of another, and thus a homicide may result from accidental, reckless, or negligent acts even if there is no intent to cause harm
> Murder is the unlawful killing of another human without justification or valid excuse, especially the unlawful killing of another human with malice aforethought
> Manslaughter is a common law legal term for homicide considered by law as less culpable than murder. The distinction between murder and manslaughter is sometimes said to have first been made by the ancient Athenian lawmaker Draco in the 7th century BC.[1]
> To say it's inferred by design is to say it's designed to be flawed.
Laws are subject to modification. Nobody would have assumed social security law as written in 1935 would not need to be updated as life expectancy and birth rates fluctuated. The 1935 law didn’t have any adjustment for inflation until COLA were added in 1975. I think that is going to be a fundamental disagreement between us which is fine. There is value in nailing down the exact and precise disagreement.
TracyMorganFreeman t1_jc482hr wrote
The cap has been increased several times.
ktxhopem3276 t1_jc4yl9g wrote
peter303_ t1_jc5g3o2 wrote
Millennials are not reproducing. So there will be too few people to pay for their retirement in 2050s. Boomers did reproduce.
ThePurpleDuckling t1_jc1qp8l wrote
This is rather interesting. It makes all the talk about it failing seem a bit trivial.
mikevago t1_jc25ick wrote
If anyone's talking about Social Security failing, it's because they want to shake confidence in the system so they can carve it up somehow. The Social Security trust fund is one of the biggest piles of money on Earth, so a lot of Republicans look at it the way Wile E. Coyote looks at the Road Runner.
detox665 t1_jc2z4vr wrote
One small detail that gets overlooked is that the fund is empty. All of the money put into it was exchanged for IOUs from Congress and then spent. It wasn't invested. It was spent.
The only way turn those IOUs back into cash are to tax current and future taxpayers to raise the money.
Pushing total tax rates to over 50% might not be a great plan if we want to have a growing economy.
thunder-thumbs t1_jc33f9m wrote
That’s part of the messaging meant to shake confidence. That messaging had its peak when GWB was trying to introduce private accounts, back when SS was about to dip into those reserves. Lots of rhetoric about how those reserves didn’t exist, and why we therefore urgently needed those private accounts now.
The fund is very much real; its value is backed by the most stable investment that exists. It’s empty only in the same way that your “mortgage” or “rent” account is empty, if it is paid out of an account that other expenses come out of too.
TinKicker t1_jc3mfnu wrote
SVB has entered the chat.
TracyMorganFreeman t1_jc48mom wrote
I mean Sweden privatized its SS back in the 90s too.
detox665 t1_jc3fld4 wrote
The bonds that the trust fund holds are a unique series issued to the trust fund. You cannot buy them anywhere else. Makes it easy to default on them without harming the value/credit associated with other US bond series.
"The full faith and credit of the United States" is valuable only for as long as we can levy sufficient taxes to cover our bills. After that point, very bad things start happening very quickly.
I've been advocating for privatization since the Reagan administration. As things stand right now, I and my cohort are about to take it in the shorts because propaganda beats facts.
windershinwishes t1_jc459n7 wrote
OK so just eliminate the income cap that the SS tax is applicable to. Or collect more from 401ks and IRAs.
Privatization of Social Security is non-sense. It would cease to be Social Security, as it would no longer provide a guaranteed income to all Americans.
TracyMorganFreeman t1_jc48qng wrote
Sweden privatized its social security decades ago.
windershinwishes t1_jc7tub6 wrote
Is a person in Sweden guaranteed a certain income from it upon retirement, regardless of how much they paid in?
TracyMorganFreeman t1_jc7x3bc wrote
Given that isn't the case for any retirement plan, SS included, no.
windershinwishes t1_jc80sns wrote
"Regardless" was a bit too broad, sure. So how about "even if it is much much more than they paid in?"
detox665 t1_jc6o2ts wrote
Eliminating the income cap will not generate enough revenue to cover the shortage. It isn't even close.
A privatized plan could still provide a minimum guaranteed income to all workers. (the "workers" part there is important, IMO).
If you take the FICA taxes that I generated (taken directly from my paycheck and my employer's "share"), and pretend that it was invested in a variety of index funds with a long-term growth of 5% (actual long-term growth is closer to 7%), I should have a bit over a million dollars at retirement age (+/-65). That includes the various "crashes" that have happened over the years.
If my retirement income is kept to less than long-term growth, I would have roughly $50k per year. Right now I'm projected to get $20-$25k depending on when the "haircut" hits and I have to work until almost 68.
Make it so half of any unused funds go back to the feds to cover those with lower lifetime earnings.
Even a person that works for nearly the minimum wage can generate $500-700k of retirement. But we can sweeten that a little from the government.
In the case of people with significant old-age issues (i.e. dementia) there is a pile of money that can be used for their care. That reduces the amount of money that the government must pay.
Social security as currently established is a Ponzi scheme. Sweden has privatized successfully as has Columbia. The only thing Social Security does well is to ensure that seniors are as equally poor as possible.
windershinwishes t1_jc7vq7r wrote
Calling SS a Ponzi scheme while calling for all of that money to instead be injected into the financial market to be managed by private bankers is just funny.
detox665 t1_jc8ofvd wrote
Private bankers have a better track record for fiscal responsibility that congresscritters. I know that isn’t saying much but it is true.
The important thing is that the money be actually invested in something real and not just congress’s ability to tax future citizens.
[deleted] t1_jc3vau4 wrote
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TheBioethicist87 t1_jc2cxt3 wrote
IIRC the plurality of US debt is held be social security, so the people whining about the debt are creating 2 problems out of nothing.
NoPeach180 t1_jc2ky5a wrote
And not raising the debt limit means not paying the interest to social security funds and thus destroying it. I think some republicans see it getting two birds with one strike. Destroying the social security funds and wrecking up u.s. economy while democrats hold the white house. Perhaps getting some nice golden parachute from russian or chinese oligarchs.
TracyMorganFreeman t1_jc48t6s wrote
I think you're confusing unfunded liabilities with current debt.
TracyMorganFreeman t1_jc48ilu wrote
And yet there are hundreds of trillions of unfunded liabilities, and not just for SS.
The system needs reform, not kicking the can 2 generations down the road.
SsurebreC t1_jc8e40l wrote
Every single time I read "hundreds of trillions of unfunded liabilities", it's always a sum of these liabilities over decades.
Sure, that's a lot of money and the number can also be true. However, that's weighted against quadrillions of government income.
It's always used as a big scary number to make it seem like we need to fuck with future generations because they don't matter since they don't vote.
TracyMorganFreeman t1_jc8h6zf wrote
>Sure, that's a lot of money and the number can also be true. However,that's weighted against quadrillions of government income.
No it isn't. It's *unfunded* liabilities. It's taking into account current government income trends. It's speaking to insolvent programs for people *who current exist* for which there is no funding to speak of in the future.
SsurebreC t1_jc8kiry wrote
OK, say your income is one quadrillion dollars. Your liabilities are 900 trillion. You have 200 trillion in unfunded liabilities. Is it a scary number now?
You can't take into account current government income trends. We simply have no idea what the budget will be like in, say, 50 years. In addition, the number usually doesn't mention which programs and what levels they're currently funded or will be funded in the future and what is an actual liability. Case in point: Social Security is a liability - it's literally our money - but welfare is not because it's an optional social program.
TracyMorganFreeman t1_jc9d6gu wrote
Oh you can't predict it, but somehow you can assume the budget of the US government will be in the quadrillions?
Their predictions are impossible, but your handwaving is sufficient. Got it.
The assumption is current levels, and it is only liabilities, as in entitlements.
bostwickenator t1_jc1th2t wrote
That cost curve looks exponential.
ButterflyCatastrophe t1_jc2alfc wrote
Almost anything reported in dollars is going to lookbe exponential because of inflation and population growth.
warren_stupidity t1_jc2e3ky wrote
sure, as it is a population model. The boomer bulge is entering its dearth slope not coincidentally at the same time it is peaking at retirement. The point is that it corrects. All on its own, But we should abolish the cap on FICA taxes, put the full retirement age back to 65, use a better CPI index, COLA the earnings threshold for taxation that was set back in 1984, and increase the minimum benefits. And medicare needs to be rolled into a comprehensive universal health insurance system.
bostwickenator t1_jc2fnii wrote
Agreed. My point is anything tied to an exponential factor will eat anything not defined against the same. I am no expert here but I'd think legislation which sets non population based caps or doesn't compensate for inflation will be a problem.
w4ffl3 t1_jc2hcx1 wrote
The US isn't expected to grow any further in population so SS and similar funds have to deal with the disproportionate size of boomers and generations after them, but after that it won't be an issue without a significant demographic change
TracyMorganFreeman t1_jc49480 wrote
Solvency dwindles if you're going to expand benefits and lower the retirement age.
>use a better CPI index.
Redundancy aside, I don't know what that means.
FHubris t1_jc2p5p3 wrote
Warren gets it
Scary_Princess t1_jc3enw9 wrote
Exactly that cost curve is going to continue going up and the income isn’t going to trend the same way. Currently the fund is collecting 95% of what it needs to pay annually. If we run a 5% deficit against the trust, the trust will be emptied in 20 years. Because the of the difference between incoming money and outgoing benefits the trust is expected to be exhausted by 2033-2035.
It can be solved at anytime, but solutions today will be far less painful than solutions in 2032
ThePurpleDuckling t1_jc1tjws wrote
Sure. But the income is generally keeping pace.
twilliwilkinsonshire t1_jc3zwwo wrote
It has not for years, look closer at that chart.. the income has been steadily slower pace than cost since 2009.
BasilExposition75 t1_jc24hsd wrote
Well, considering those "assets" are really just IOUs from the taxpayer, who is already on the hook if SS goes belly up, I am not sure this graph is really a good interpretation of reality.
It isn't like they have a stock portfolio for this-- it is treasuries. The money has been spent already.
And look at when those assets were acquired. We just saw a huge bank fail because they were holding treasuries with low interest rates. With treasury rates around 4% or higher, we should probably discount some of that asset line.
warren_stupidity t1_jc2eclr wrote
They are 'IOUs' they same way a t-bill is an IOU.
BasilExposition75 t1_jc3jzs2 wrote
Yes. A T-Bill is an IOU. When it is the government that holds them, it is an "I Owe Myself".
If a company claimed their internals accounting were assets, they would be prosecuted for fraud.
ktxhopem3276 t1_jc2gwcg wrote
>Well, considering those "assets" are really just IOUs from the taxpayer, who is already on the hook if SS goes belly up, I am not sure this graph is really a good interpretation of reality. It isn't like they have a stock portfolio for this-- it is treasuries. The money has been spent already.
The trust fund will sell the bonds and someone else will buy them. Demand for us bonds is immense bc it is the exchange currency of the world.
> And look at when those assets were acquired. We just saw a huge bank fail because they were holding treasuries with low interest rates. With treasury rates around 4% or higher, we should probably discount some of that asset line.
The bank failed due to a run on deposits triggered by a concentrated customer base in ventures capital startups. Bonds only decrease in value if they are sold before maturity so the slow and predictable draw down of the trust fund is a non issue with regards to interest rate fluctuations
tristanjones t1_jc3bkn6 wrote
We know that by 2035 something will have to give. Everyone who is going to pay into it is born already, and we know who will be retiring and how long they will live on average between now and then.
Unless we drastically increase our young legal immigrant labor force, increase retirement age, reduce benefits, or add funds another way, that Asset Reserves line will start and exponential decline.
It isnt a trivial matter, but if we do something now, it may never be an issue. But it is a real and valid problem that is getting worse everyday.
twilliwilkinsonshire t1_jc40evw wrote
>legal
Correct, we need that tax revenue desperately. Demographics are destiny.
Bells_Ringing t1_jc4p540 wrote
Depends on how you interpret the facts. If nothing changes, all SS beneficiaries receive a 20-30% reduction in benefits when the funds are depleted. What republicans say is that the cuts are coming. We can either plan for them or it’s an across the board cut.
Obviously for political reasons, that turns into pushing granny off a cliff
PM_Ur_Illiac_Furrows OP t1_jc1milt wrote
Source: https://www.ssa.gov/oact/STATS/table4a3.html
Tool: Excel
ieremius22 t1_jc1y0bf wrote
Nice. Next steps might be to try and account for inflation by converting to 2020 dollars. 70 years of inflation can make a difference in perception.
qmanchoo t1_jc2f0r8 wrote
I would like to see this modeled out for the next 50 years given current workforce trends
psychorameses t1_jc3ao11 wrote
I'm confused. Is social security going broke or not?
tabrisangel t1_jc3jcmc wrote
Yes it has a depletion date in 2034.
Anyone here claiming social security is fine have truely zero idea what they are talking about. The numbers of today are very much not the numbers of 2035. It's one of those things where the graph doesn't look so bad until you forecast 10 years out.
It would take HUGE large changes today to add a few years to the depletion date.
breaditbans t1_jc57dmq wrote
Ten years ago the depletion date was 2025. I’ve tried to find the ever changing insolvency date. It moves back by a few years every few years. Nobody explains why or how.
Changes would have to be made to maintain benefits as they are currently described. But if no change to the law is made, benefits would decrease by ~20-25% compared to what was promised.
tabrisangel t1_jc8sitg wrote
That's just a lie and minimizing the problem.
Nowhere was it ever 2025 you'll need to link something serious.
It STARTS at 75% the first year, then goes lower and lower. It's not as if it will just stay at that figure when you forecast out to 2050 for example.
mynameismy111 t1_jc665j2 wrote
No, if we did nothing the payout would be 85 percent of expected in about 12 years then sit there as the demographics normalize, boomers temporarily drawing it down for next few decades, then levels out
Those who say ss is going broke r scam artists trying to privatize SS and lower taxes for the rich, and those who listen to them in the right wing world who parrot it
ltethe t1_jc2xch3 wrote
So back in the late 80s was Social Security just adding to the National Debt?
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breaditbans t1_jc58kpl wrote
They loaned the money to the federal govt, which means SSA is collecting interest on cash just sitting there.
The funny thing is there was a book (probably not the only one, but the one I remember) written in ~1994 talking about how SS would be gone just in time for my generation to collect it. (Born in 1976) And every time a Democrat has been elected since 1994, suddenly the Social Security and Medicare trust funds are pushed right to the top of every newspaper and news website. In 2009, they were saying Medicare will go bust in 2017 and SS in 2024. From 2016 to 2020, nobody talked about the solvency of these two programs. Now magically, Medicare and SS are on the brink of disaster again, but…not for another 12 years.
Folks, there is no disaster. The money is available. Do you want to know how I know that? It’s because old people vote. The money will always be found for old people because if it isn’t, the politicians get removed.
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InternationalBand494 t1_jc348gm wrote
So enough to last til my death. Well, that’s…good?
tabrisangel t1_jc3mkw4 wrote
Unless you're like 70 years old on reddit, you'll likely live past the depletion date.
InternationalBand494 t1_jc3pq3u wrote
You’re assuming I’m not in control of my expiration date
breaditbans t1_jc58qja wrote
They move back the depletion date every five years or so.
tabrisangel t1_jc8ryyw wrote
It's ONLY gotten sooner, not later.
vannoke t1_jc2kvgx wrote
Probably a dumb question here, but what's the source of the increased asset reserves since the late 80's? The gap in income vs. cost seems too low.
[deleted] t1_jc2vj6i wrote
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adampsyreal t1_jc3shi8 wrote
My social security plans ... in 20 years, my Bitcoin will fund my retirement.
VelcroSea t1_jc45c12 wrote
The devil.is in the details. Research 'assets' these are basically non interest bearing notes to the US government with no guarantees. This is part of what funds deficit government spending each year
ktxhopem3276 t1_jc4fpw8 wrote
They are a small part of the overall national debt . Not sure what you mean by not guaranteed but as the law stands they are.
MyGovExpert t1_jcwscwv wrote
New FREE resource available for all things SSA from a former SSA District Manager: https://www.youtube.com/@MyGovExpert
dabiggman t1_jc3ec54 wrote
What everyone fails to realize as they are arguing is that - multiple Presidents have used the SS Fund as their own personal piggy bank for projects. I believe it was Nixon that first took the lid off this (don't quote me) and made it so the government could take from this for other projects. If we put the lid back on, problem solved.
zanisnot t1_jc1zuvf wrote
Problem is population. When population growth goes flat or negative the truth of this program becomes evident. It’s like multilevel marketing.
retrovaporizer t1_jc21dr1 wrote
you make it sound like there arent ways to account/fix for that. you can increase revenue/taxes, reduce payouts a certain %, increase retirement age, etc. Of course none of those things are politically popular, but its fear mongering to suggest that SS is at risk of going insolvent. On the current trajectory without any changes the program can continue to pay out to retirees, just at reduced rates.
smurficus103 t1_jc2bgge wrote
I've had teachers in grade school talkin' about this since like 2002: there's going to a be a lot of retirees collecting and a lot less kids paying in than ever. Boomers that paid ss their whole life don't feel like their payments should be reduced. Their kids don't feel like they should pay disproportionately more. It's going to be a massive conflict.
Had the fed not used up s.s. as if it were just another federal tax, it would've been fine, i guess
ktxhopem3276 t1_jc2hl17 wrote
Lots of issue at play but there aren’t a lot more boomers than younger generations. Their were more boomers than previous generations which allowed boomers parents to get a gift. Add immigration and population affects are a wash. One issue is wealthy hoarding money above the payroll income tax cap more so than in the past
> Had the fed not used up s.s. as if it were just another federal tax, it would've been fine, i guess
That has zero affect in solvency. The IOUs are legally obligated to be paid back. This is a fake issue pushed by republicans. The government will find a new buyer of the debt when it comes time for ss trust fund to sell it
munchi333 t1_jc30opd wrote
You said it yourself though: fixing SS is extremely political unpopular.
You need to either reduce benefits or increase taxes. Neither are good options.
breaditbans t1_jc58x0b wrote
Or get more workers to pay in. Turns out, there are literally millions of people all over the world dying to get to the US and work.
retrovaporizer t1_jc33geq wrote
sure, but my bigger point is its not an "like an MLM marketing" scam, as the prior poster was suggesting
ktxhopem3276 t1_jc4fj3u wrote
Flat population growth is fine. Negative is a problem
MattChew160 t1_jc2fb8m wrote
Maybe if billionaires paid their fair share of 25%( or much much more )and not 0% to 3%, when we grow old we could buy our grandchildren useless junk they don't want. I thought old people would be pro old people expenditures.
skilliard7 t1_jc20y2j wrote
All we need to do is raise the retirement age form 67 to 70 to adjust for increases in life expectancy and lower birth rates.
ArrayGamer t1_jc29x6k wrote
Or get rid of the cap where you stop paying social security taxes on income over $160k. Seems preferable to making people work even longer in their later years
skilliard7 t1_jc2bde5 wrote
That would just make the problem worse because it would increase liabilities. The wealthy don't need social security.
The top marginal tax rate is already nearly 60% between federal and state. Higher taxes are not the answer.
ArrayGamer t1_jc2fxw4 wrote
Higher average income earners get relatively less back (double your salary and taxes paid doesn't double your benefits) so it shouldn't make the problem worse. Optionally, the cap could be removed to extend solvency while changing benefits to not increase for those earning over the current cap.
If none of this is to your satisfaction, an alternative of increasing social security taxes by ~3.4% would extend full solvency of the program to around the year 2100.
Also, who pays 60% taxes in the US? IIRC, the highest income percentiles tend to pay around 20-25% in effective federal income tax rate after accounting for deductions and other creative accounting. I doubt between social security taxes (capped to no longer have income taxes after $160k), state taxes etc, almost anybody pays nearly 60%. Removing the cap would make it so social security is no longer a regressive tax where higher earners pay a lower percentage of their income.
its_a_gibibyte t1_jc2a6av wrote
The US life expectancy has dropped back to what it was in 1996. Drug overdoses, COVID, suicide and the obesity epidemic have all wrecked havoc on our population.
jabonkagigi t1_jc2f33a wrote
Why don't we make the last day of work the day you die? That way we wouldn't even need SS. Why do the plebs even need rest and retirement? s/
agolec t1_jc3o8i1 wrote
We Logan's Run society now. Only instead of un-aliving you when you turn like, what it is? 28 or 30? They force you to stay alive x amount of years minimum.
InternationalBand494 t1_jc34c8g wrote
“Here’s a gold watch and now, turn around”
warren_stupidity t1_jc2egeh wrote
Why not 90?
skilliard7 t1_jc2g636 wrote
When social security was first created, the retirement age was later than the life expectancy. It was insurance against outliving your retirement savings, not intended as a primary retirement plan
ktxhopem3276 t1_jc2hwnf wrote
But the tax rate used to be a lot lower due to that. We raised the tax rate form 3% to 12% bc people wanted longer retirements. Also, infant mortality plays a big role in increased life expectancy but doesn’t effect retirement
warren_stupidity t1_jc3f0gf wrote
I’m so glad we improved the program back when we thought government ought to serve the people.
skilliard7 t1_jc3g8gy wrote
Being robbed of 12.4% of my income for a ponzi scheme that will be insolvent in 10 years seems like it's really serving me /s
ballisticmi6 t1_jc1x38i wrote
The boomers have timed it perfectly to coincide with their exit.