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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Mon Jan 14, 2013 10:25 pm 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1977
Justus wrote:
N2Deep wrote:
We need to quit pushing out the retirement date.


"Raising the retirement age" is just a more politically acceptable way of saying "cutting benefits"

http://fair.org/extra-online-articles/the-raising-the-retirement-age-scam/

The article doesn't take into account that people are living longer and staying healthier into that old age. I'm older now than my grandparents were when they were providing childcare to me while both my parents were at work and I'm way more active than they were then. So what they're really trying to do when they raise the retirement age is saying "We want you to get as many years of benefits as your predecessors but unfortunately, you won't die on schedule. You keep living longer than they did. Now if you could die at the same age, we wouldn't have to push out the date."


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Tue Jan 15, 2013 8:13 am 

Joined: Mon Apr 25, 2011 7:37 am
Posts: 446
In principle I agree with you. People who fail to prepare should suffer the consequences of their choices. But in reality the consequences are old people begging in the streets and freezing to death. That's just not something this country will ever tolerate. So even if we got rid of SS it would not take long before there were some program to help the destitute.

Don't misunderstand my position here either. I think SS needs some major reform. But I just don't think it will happen. We'll muddle through until reform becomes impossible. There is another [url="http://finance.fortune.cnn.com/2013/01/14/vat-middle-class/?iid=HP_LN"]article[/url] floating around today that says pretty much the same thing. We have a wave of boomers retiring over the next couple of decades and most are counting on SS. The longer we wait the more difficult it is to cut benefits and the more politically impossible it becomes. So, the time for reform is now. But with the yahoos we have in Washington it's not going to happen. The republicans want to cut benefits and that is never a winning pitch. The democrats want to do nothing. What we really need to do is raise the contribution rates by about 2%, push out retirement dates by a couple of years, and other little tweaks to make the system stable for those coming 20+ years from now (including me). If folks have time to plan then it's not a big deal. But like everything else these guys have been failing at lately, the uncertainty is at the heart of the problem! They truly seem to not understand that. Once the politicians work out the policy issues the actuaries can make the system work.[/quote]

Ditto with this. Social Security is a safety net. It provides an income to old people, who (before it was around) may be on the streets. It pretty much funds itself, as long as some tweaks are made to it. It's a Win win. Many people for whatever reason, primarily because they never made a high income in the first place, have no other investments for retirement. My mother is in a funny situation, because she was a teacher in IL, was originally told she could not collect social security, even though she paid into it via other jobs prior to becoming a teacher. Now they have allowed her to collect 50% of her (now divorced) husbands*. If she didn't collect that (a whopping 550 a month) that is the difference between living in semi-dignity and living on the streets (or since she has living children, sleeping on my couch). N2deep, if you don't know of anyone personally who is in that situation, well your experience is different from the majority of Americans. *eta it's actually less than 50%, because they offset the amount she received as a pension from previously retiring as a teacher. (She then returned to work, because after 20+ years of working as a part time teacher working just below the hours of a full time teacher, a lump sum payment of 30K was not enough money to live on for the next 20 years).


Last edited by partgypsy1 on Tue Jan 15, 2013 8:53 am, edited 1 time in total.

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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Tue Jan 15, 2013 8:19 am 

Joined: Mon Apr 25, 2011 7:37 am
Posts: 446
If anyone has done any research in the number of people covered by private and state pensions, and how the number of people, and the amount of coverage keeps being reduced, (and how many employees, after paying years or decades of their share, could get screwed by company or state financial problems) highlights the issue that social security is needed now, more than ever. But the legislators need to realize this is an important issue, and even if it means raising rates (which they just did) or cutting benefits on a slope to keep Social Security solvent, they need to pull up their britches and do the job. And also STOP RAIDING the SS fund! It should not be touched.


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Tue Jan 15, 2013 11:54 am 

Joined: Thu Jun 23, 2011 3:24 pm
Posts: 87
DoingHomework wrote:
VinTek wrote:
Heck, even with 6.5% being collected from me, I still invested, because I don't want to rely on the government...


...I bet I know what you did with your 2% SS tax holiday. You invested it just like I did. That means we were not part of the stimulus the last couple of years.


Investing, being self-sufficient - I'm in favor!

I do think that investing money can still be stimulating to the economy (maybe not as stimulating as spending, but still increases economic activity). Unless you are hiding the $ under your mattress (not my definition of investing, but if we get deflation it might count...), your invested $ go someplace.

If that someplace where you invest does anything with the $, then your $ keep trading hands and (likely) contribute to economic activity. Yes, the velocity of invested dollars may be lower than that of spent dollars, but it's bigger than "1" in almost all cases (one exception: hiding-under-mattress).

I was surprised when my SIL said that most folks at her job were surprised by the back-to-prior FICA deduction in their paychecks. She works at a pretty good college - guess not everyone has been following the fiscal news as closely as our household.


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Wed Jan 16, 2013 9:34 am 

Joined: Sun Mar 04, 2012 9:15 pm
Posts: 28
Article author says Chained CPI method for COLA is a significant benefit cut.

http://blogs.marketwatch.com/encore/2013/01/16/be-honest-about-the-social-security-cola/


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Wed Jan 16, 2013 9:49 am 

Joined: Fri May 04, 2012 2:23 pm
Posts: 855
k11 wrote:
Article author says Chained CPI method for COLA is a significant benefit cut.

http://blogs.marketwatch.com/encore/2013/01/16/be-honest-about-the-social-security-cola/


and yet, it doesn't fix the problem.

_________________
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Fri Jan 18, 2013 9:58 am 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1977
Bichon Frise wrote:
k11 wrote:
Article author says Chained CPI method for COLA is a significant benefit cut.

http://blogs.marketwatch.com/encore/2013/01/16/be-honest-about-the-social-security-cola/


and yet, it doesn't fix the problem.

I don't think it's supposed to, by itself. I think it's only one element in a number of things that could be done to mitigate the issues. Other elements are means testing and raising eligibility age.


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Fri Jan 18, 2013 11:58 am 

Joined: Fri May 04, 2012 2:23 pm
Posts: 855
VinTek wrote:
Bichon Frise wrote:
k11 wrote:
Article author says Chained CPI method for COLA is a significant benefit cut.

http://blogs.marketwatch.com/encore/2013/01/16/be-honest-about-the-social-security-cola/


and yet, it doesn't fix the problem.

I don't think it's supposed to, by itself. I think it's only one element in a number of things that could be done to mitigate the issues. Other elements are means testing and raising eligibility age.


So, if it creates a significant cut in benefits, yet, according to SSA chief actuary it only increase the life of SS for 2 or 3 years, is it worth it? For the record, I don't think the cuts are as "significant" to seniors as the article makes it out to be. But, that is just pure speculation.

Mainly my comment was directed towards the individual who claimed eliminating or reducing the COLA was one of the path's to fixing the problem. My point is, tinkering with the COLA is not a significant "fix."

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Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Fri Jan 18, 2013 12:03 pm 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1977
Bichon Frise wrote:
VinTek wrote:
I don't think it's supposed to, by itself. I think it's only one element in a number of things that could be done to mitigate the issues. Other elements are means testing and raising eligibility age.


So, if it creates a significant cut in benefits, yet, according to SSA chief actuary it only increase the life of SS for 2 or 3 years, is it worth it? For the record, I don't think the cuts are as "significant" to seniors as the article makes it out to be. But, that is just pure speculation.

Mainly my comment was directed towards the individual who claimed eliminating or reducing the COLA was one of the path's to fixing the problem. My point is, tinkering with the COLA is not a significant "fix."

I think it's supposed to be part of a cumulative fix. None of those steps by themselves would fix the issue. But a change in the way COLA is calculated could be significant change over the long term. After all, around here we make a big deal if expenses on a fund are a percentage point lower than on another fund. That's because we're all aware of the cumulative effect of such costs.


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Fri Jan 18, 2013 12:40 pm 
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What annoys me is that I read an analysis a couple of years back that concluded that SS could be fixed with a 2% increase in the withholding tax. So why don't we just do it and get the problem behind us? I don't want to pay the extra tax any more than anyone else but at a time when we have a lot of actual pressing problems, why not just do this to right the ship and then figure out how to trim the system for optimal performance later? All this talk about changing COLA formulas and so forth are just games. I think we do need significant reform to the system, sooner rather than later, but that mean either cutting benefits or increasing taxes (or both). Anything else that enters teh discussion is just methodology.


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Fri Jan 18, 2013 1:43 pm 

Joined: Fri May 04, 2012 2:23 pm
Posts: 855
VinTek wrote:
I think it's supposed to be part of a cumulative fix. None of those steps by themselves would fix the issue. But a change in the way COLA is calculated could be significant change over the long term. After all, around here we make a big deal if expenses on a fund are a percentage point lower than on another fund. That's because we're all aware of the cumulative effect of such costs.


Perhaps it is. But, some fixes hurt more than others. Some hurt more, but fix the problem more. Some hurt more, but do very little to fix the problem. The COLA is the latter. So, is your argument to do ANYTHING which can help regardless of how little it helps and how much it affects those on the program?

DoingHomework wrote:
What annoys me is that I read an analysis a couple of years back that concluded that SS could be fixed with a 2% increase in the withholding tax. So why don't we just do it and get the problem behind us? I don't want to pay the extra tax any more than anyone else but at a time when we have a lot of actual pressing problems, why not just do this to right the ship and then figure out how to trim the system for optimal performance later? All this talk about changing COLA formulas and so forth are just games. I think we do need significant reform to the system, sooner rather than later, but that mean either cutting benefits or increasing taxes (or both). Anything else that enters teh discussion is just methodology.


Bold is mine. I agree that it is games. I also think while increasing the payroll tax would benefit the program the greatest, so would "steeper" bend points. The idea being, provide everyone a benefit which covers "Basics," but pay them marginally less above and beyond that.

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"If you only have 1 year to live, move to Penn...as it will seem like an eternity."


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Fri Jan 18, 2013 2:22 pm 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1977
Bichon Frise wrote:
VinTek wrote:
I think it's supposed to be part of a cumulative fix. None of those steps by themselves would fix the issue. But a change in the way COLA is calculated could be significant change over the long term. After all, around here we make a big deal if expenses on a fund are a percentage point lower than on another fund. That's because we're all aware of the cumulative effect of such costs.


Perhaps it is. But, some fixes hurt more than others. Some hurt more, but fix the problem more. Some hurt more, but do very little to fix the problem. The COLA is the latter. So, is your argument to do ANYTHING which can help regardless of how little it helps and how much it affects those on the program?

Not at all. What I'm suggesting is that we don't take anything off the table and that we consider how all the options work in concert.


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Fri Jan 18, 2013 2:49 pm 
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Bichon Frise wrote:
Bold is mine. I agree that it is games. I also think while increasing the payroll tax would benefit the program the greatest, so would "steeper" bend points. The idea being, provide everyone a benefit which covers "Basics," but pay them marginally less above and beyond that.


I agree. People like me and probably you who have paid in all ow our lives should get the benefits we've been promised. That's an issue of principle in my mind. But if I were told you get X starting when you are 70 with no COLA unless CPI inflation exceeds 7% and by the way X is only 75% of what we estimated you would get just 2 years ago...I'd have something to work with. As it is, although I actually believe I'll get substantially what has been estimated, I don't know that. I also don't know how to plan. If there are means tests how will they work? Assets? No, that's too hard to implement. 401(k) withdrawals? Then I want to minimize those. Taxable investment earnings? Then I want to minimize those after I start getting SS.

Anyway, you get the idea. Give us some certainty even if it is mildly painful.


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Fri Jan 18, 2013 3:06 pm 

Joined: Fri May 04, 2012 2:23 pm
Posts: 855
DoingHomework wrote:
Bichon Frise wrote:
Bold is mine. I agree that it is games. I also think while increasing the payroll tax would benefit the program the greatest, so would "steeper" bend points. The idea being, provide everyone a benefit which covers "Basics," but pay them marginally less above and beyond that.


I agree. People like me and probably you who have paid in all ow our lives should get the benefits we've been promised. That's an issue of principle in my mind. But if I were told you get X starting when you are 70 with no COLA unless CPI inflation exceeds 7% and by the way X is only 75% of what we estimated you would get just 2 years ago...I'd have something to work with. As it is, although I actually believe I'll get substantially what has been estimated, I don't know that. I also don't know how to plan. If there are means tests how will they work? Assets? No, that's too hard to implement. 401(k) withdrawals? Then I want to minimize those. Taxable investment earnings? Then I want to minimize those after I start getting SS.

Anyway, you get the idea. Give us some certainty even if it is mildly painful.


Again, Bold is mine. I'd just like to point out that this may not be as difficult as you think. The FAFSA form is one excellent example which takes into account assets and income. So, they have their model already.

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Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."


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 Post subject: Re: Smaller paychecks in 2013?
PostPosted: Fri Jan 18, 2013 4:14 pm 
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Bichon Frise wrote:
Again, Bold is mine. I'd just like to point out that this may not be as difficult as you think. The FAFSA form is one excellent example which takes into account assets and income. So, they have their model already.


There are too many ways to manipulate assets, legally. Equity can be stripped, irrevocable trusts can be set up, etc. Those would probably work for FAFSA as well but generally would not be worth it for that. But when considering 30 years of SS people would come up with lots of fancy schemes that would be very hard to attack. The laws to deal with those kinds of schemes would be so complex they could never get passed.


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