Major Social Security trust funds could be tapped out by 2033: CBO

That has been the issue. The way the law is set up, the payout is proportional to the contribution. That's why it caps out, because there is a max benefit set . The law would need to be changed in order to set a max benefit, yet still collect SS taxes over the income amount that correlates to the max payout. Frankly, this is the ONLY example of "tax the rich" I would support. SS and Medicare are too crucial to our citizens (whatever one thinks about the wisdom of the program and its expansions originally). You could do it in a way that lowers the SS tax percentage once your income hits that limit (maybe to 2% of income above the max benefit cap) and include other types of income besides wages. I do not agree with raising the retirement ages any further because there are too many people doing jobs that take a physical toll, and we NEED people doing these jobs, and they should not be expected to shift their career in their sixties and seventies.

 

Good point! Raising the caps mean that higher income people will get higher social security benefits when they retire, which means...problem not solved.

 

It doesn't mean that. It only means they have to pay payroll tax out of a larger percentage of their income. Right now the cap is $160,200. Ten years ago it was $113,700, and 20 yrs ago it was $87,000, so its not like its not adjusted every year, because it is.

 

I don't object to the cap going up to keep up with inflation, but many in this thread have advocated getting rid of the caps all together to save the program. It won't do that because Social Security benefits are calculated based on your income that is taxed as FICA. For example:



Someone making $400,000 a year in 2023 only pays Social Security tax of 6.2% up to the 2023 cap of 160,000. But if you take the limits off the cap they will be paying 6.2 on the full $400,000. "Yeah!" the left says, "that'll git 'em." The problem with that is when they retire, their benefits will be based on how much was taxed, so they will get a much larger benefit than they would with the limited cap, so there goes saving the program.

 

What's that go to do Social Security?

 

Nice to see we can agree on something.

 

you have to put the money into the economy somehow

 

I have not heard of no-cap bill/proposal, but you are wrong about the pay-outs, because they are not based on how much you have paid. They max payout is $2,572 / month if you retire at 62, and $3,627 if you wait until 67, and about $4,500 if you wait until 70. Higher income people will have funded their max payment point in their late 30s or early 40s, and they continue to pay even though it won't increase their benefits.

 

And the max payouts are based on...

 

When you have paid a certain amount, which higher earners do, it is based on a flat dollar amount. It will not increase after that. As I said many people reach that point when they hit 40 and they would be paid the same if they never put in another penny, or if they continued to pay until they are 70. How do you not know this?

 

It's why pyramid schemes never work.

 

Why is there always an ulterior motive?

 

Which has zero to do with Social Security. Please stay on topic.

 

I don't know this because that's not correct! That's not how SS benefits are calculated. There are max payouts but they are adjusted every year and would be adjusted even more if the cap was lifted.

 

There is quite literally no difference.

The money contributed today, is paying for those that contributed before whose money paid for retirees when they worked.

At some point, the scheme always results in the newest layer being failing to sustain the pyramid.

That's exactly what's happening.

 

Except that this is being driven by actuarial data with the payout modeled on the income. It is a self correcting model. The only way it could "fail" is if the
current set of contributors all dropped dead at the same instant. Even that wouldn't do it since their contributions up to the point they dropped dead
were already collected and their would be no future liability. (Remember, they all dropped dead at the same instant).

 

I noticed that someone brought up the date of 2019, from the 1990s, when the SS fund would run dry. That didn't happen, so they must be doing something to change that over time to fix it. Or else the SS insolvency problem really isn't a problem at all and is just false propaganda of those who want to privatize it.

 

Democrats won't do anything about raising the Social Security cap because they have arbitrarily chosen $400,000 as the cap for who's rich and who is poor. Remember Biden saying that nobody under the income of $400,000 would see any tax increases under him?

 

Privatization has already begun. Medicare, which is the Social Security health insurance product, has the option to be privatized by purchasing a Medicare Advantage plan run by a private health insurance company rather than choosing plain old Medicare. I've found it to be a good value.

 

The cap is adjusted every year, and the pay-out is adjusted to inflation, and it has nothing to do with how much you pay in once you reach the limit. Even id the cap was increased 25%, it would not mean they'd have to adjust pay-out by that much.

The cap is $160 000 and it is adjusted every year.

 

The Social Security cap may be $160,000, but raising it would affect the under $400,000 club.

 

It is adjusted every year (it has doubled in last 20 yrs), and obviously it would affect the $160K and up club.

 

No new tax is imposed whether you raise the contribution cap. The tax is essentially being extended further. It has been that way for a while. In the prior days, the cap was $1000 per annum, then it was raised to $3000 per annum, and in the 1980s, it was raised to its current format now with each year having a COLA adjustment. But the rate stays the same. All we are doing is extending the rate of tax indefinitely instead of using COLA adjustments every year.

 

And when it is raised next year to say $165000 for instance because of COLA adjustment, isn't that also affecting the under $400k club too?

 

A Medicare Advantage Plan is simply a supplement on what Medicare does not cover, among other things. Originally, Medicare does not cover prescription medicines and does not cover OTC medicines. Some Medicare Advantage Plans do that with a Part D supplement. And then you have Medigap Medicare insurance which is more of the same except that it is more of a FOS or PPO, with some HMOs. But Medicare Advantage plans are usually HMOs with very few PPOs or FOS plans.