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Newly retired couples may lose $16,900/year in Social Security in 2033

usatoday.com

31–40 of 76 posts

Re: Newly retired couples may lose $16,900/year in Social Security in 2033

#31

Earlier quoted context omitted.

If nothing is done it’s a mathematical fact. The problem is that there are no plans to do anything yet, each administration and congress seeing it as too politically volatile to deal with, which means we will have a last minute suboptimal solution. Obviously there are solutions. Maybe if America survives that long we might see one implemented.

The hole can be filled overnight by just raising the retirement age. And if you normalize for longer lifespans, it's perfectly reasonable.

People are living longer sure, but are they fit for work longer?

Or just living longer with dementia and stuff?

Re: Newly retired couples may lose $16,900/year in Social Security in 2033

#32

Yes, and the sky may fall tomorrow. The longer I live the more I read these sensationalist headlines designed to gin up angst and antagonize people's peace of mind. Social Security's solvency has been the subject of much debate, but clearer heads point toward a graduation of the current system to include higher earners. That will accommodate the large aging population's demand. Case closed, easy peasy lemon squeezy.

Famously, America has shown to be exceptionally skilled at getting the rich to help pay for society they sit on top of.

Re: Newly retired couples may lose $16,900/year in Social Security in 2033

#33

Yes, and the sky may fall tomorrow. The longer I live the more I read these sensationalist headlines designed to gin up angst and antagonize people's peace of mind. Social Security's solvency has been the subject of much debate, but clearer heads point toward a graduation of the current system to include higher earners. That will accommodate the large aging population's demand. Case closed, easy peasy lemon squeezy.

Famously, America has shown to be exceptionally skilled at getting the rich to help pay for society they sit on top of.

It's hard to tell whether this is sarcastic, because like the safety of nuclear energy, it's literally true but few people believe it.

Re: Newly retired couples may lose $16,900/year in Social Security in 2033

#34
post #18

Can someone explain the legal structures in place in the US that make Social Security "run out"? Because it just sounds like deliberate indirection put in place by the government to cut funding for pensions? In Australia, we have a universal, means-tested pension funded through consolidated revenue (i.e taxes). The pension can't "run out", because it is just a law that says that the government will pay you $X after y…

Social Security will not run out. It simply won't be taxing current workers enough to pay current retirees. This demographic problem was easily foreseen which is why there is a trust fund to "run out" to begin with. For quite some time social security operated in a surplus since there were many workers per retiree collecting benefits. Now we are around 3:1 workers:retirees and expected to drop to something like 2.2:1.

Where this gets confusing is that most folks seem to have the mental model that Social Security is a pension or some weird retirement account. It is not.

Social Security is simply a pay as you go means tested welfare program. It just means tests in a strange way. If you ended social security taxes today, the trust would run out in a few months and there would be $0 to pay retirees. It's current workers paying for current retirees. Social Security is simply an income tax like any other, but it's separated and marketed the way it is to purposefully make people think it's "their money" and make repealing it politically impossible.

It's just a means tested entitlement program funded by current tax receipts dressed up in fancy marketing. It functions much more similarly to SNAP (food aid) than it does a pension.

Re: Newly retired couples may lose $16,900/year in Social Security in 2033

#35
post #34
post #18

Can someone explain the legal structures in place in the US that make Social Security "run out"? Because it just sounds like deliberate indirection put in place by the government to cut funding for pensions? In Australia, we have a universal, means-tested pension funded through consolidated revenue (i.e taxes). The pension can't "run out", because it is just a law that says that the government will pay you $X after y…

Social Security will not run out. It simply won't be taxing current workers enough to pay current retirees. This demographic problem was easily foreseen which is why there is a trust fund to "run out" to begin with. For quite some time social security operated in a surplus since there were many workers per retiree collecting benefits. Now we are around 3:1 workers:retirees and expected to drop to something like 2.2:1…

Is there any entitlements program that's not politically impossible to repeal?

Taking away "free stuff", especially once people have come to rely on it, is a political nightmare no matter the structure.

Re: Newly retired couples may lose $16,900/year in Social Security in 2033

#36
post #34

Earlier quoted context omitted.

Social Security will not run out. It simply won't be taxing current workers enough to pay current retirees. This demographic problem was easily foreseen which is why there is a trust fund to "run out" to begin with. For quite some time social security operated in a surplus since there were many workers per retiree collecting benefits. Now we are around 3:1 workers:retirees and expected to drop to something like 2.2:1…

Is there any entitlements program that's not politically impossible to repeal? Taking away "free stuff", especially once people have come to rely on it, is a political nightmare no matter the structure.

As we saw with the whole DOGE fiasco, a substantial portion of the population would love to tear down current entitlement programs.

Social Security is (or was?) unique in that it was politically untouchable by either side of the aisle. No one was telling anyone they were running for office to cut social security benefits. Plenty run to say they will cut welfare spending.

Re: Newly retired couples may lose $16,900/year in Social Security in 2033

#37
post #18

Can someone explain the legal structures in place in the US that make Social Security "run out"? Because it just sounds like deliberate indirection put in place by the government to cut funding for pensions? In Australia, we have a universal, means-tested pension funded through consolidated revenue (i.e taxes). The pension can't "run out", because it is just a law that says that the government will pay you $X after y…

Social security can 'run out', because it's setup with separate accounting. It's sort of designed that current year social security taxes pay for current year benefits ... in the 70s and 80s increases in taxes and decreases in benefits lead to a surplus of taxes collected which was held under the social security account. Since about 2009, income and costs have been pretty close and since about 2017, costs have consistently been more than income. 'social security runs out' when the accumulated funds have all been paid out.

If there's no other action, current law says benefits will be cut so that benefit payments don't exceed the tax income.

Closing social security off to new workers doesn't help, because current workers pay the bulk of current benefits.

There needs to either be additional funding (from general taxes or a rise in social security taxes) or a reduction in benefits. But nobody wants to do either of those, so chances are we'll get the default option.

On the plus side, I was a teen in the 1990s and my high school economics class suggested social security might not be wholy reliable, so we should separately save for retirement on our own. I estimate we'll have had at least 30 years of warning when benefits are cut, but likely many will still be taken by surprise, or will not have been able to prepare despite foreknowledge.

Re: Newly retired couples may lose $16,900/year in Social Security in 2033

#38

I've known I can't really rely on Social Security to exist when I retire, in any notable form, but man, this is so dark. And it's just a start. (Edit: I'm not certain either way! But it seems like too great a risk to rely on. And the prognosis seems not great! I have heard for decades needs serious help, and nothing seems to change. More broadly, with a few exceptions, I've seen overwhelmingly obstructionism and dest…

Honestly, the reporting has looked the same around this since the 1980s. I've read books from them referencing how Social Security was going to be bankrupt by the 90s, or the 2000s. The fact is that older people vote way more than younger people, so it stays funded; we will at worst pay for some of it out of income taxes.

The date was always in the 2030-2040 range since I started reading about it in the 90's. At my first job I planned my retirement around the trust fund running out by the time I retired, and benefits being cut passively via cost of living not matching inflation.

This is largely due to congress actually taking action in the early 80's, which pushed this date back to the current 2030ish estimate. As the date draws nearer, it gets more refined. If they had not taken action, those previous articles would have been correct.

If congress had done their jobs and done another round of reformation 20 years later in around 2003 we would not be having this discussion now. The date would have either been pushed back or eliminated. It was exceedingly clear what was going to happen back then if no action was taken, and those workers simply did not vote for folks who were going to raise taxes (or reduce benefits) for them. Collectively speaking they would rather have their children pay instead.

From my standpoint the reporting has been very consistent on the subject. It's pretty easy math to report on.

Re: Newly retired couples may lose $16,900/year in Social Security in 2033

#39

I wish i could just opt out of social security and invest the money myself. I'd pay the long term cap gains tax if this was an option, and I'd come out way ahead. The federal government can only mishandle money. Maybe we need two systems: 1. You may move to be a certified responsible saver. You inherit all risk. But you opt out of the taxes. You must prove retirements assets are being contributed to. 2. Mandatory sav…

Social security was created so that money collected day one could be distributed day one. Allowing people to opt out and invest the money is incompatible with the model as a whole.

It's like asking if you can save today's extra heartbeats for when you're older.

Re: Newly retired couples may lose $16,900/year in Social Security in 2033

#40
post #29
post #20

Earlier quoted context omitted.

Social security is funded through payroll taxes on employees and emloyers. The "run out" is in the sense of the amount of money going out exceeds that coming in and the saved funds have been depleted. In this sense, it can "run out" that the savings are depleted and the plan is cash flow negative.

The narrative and word choices are deliberate. Republicans want to get rid of Social Security. So the narrative is Social Security is fundamentally broken, and it can be silently ended through passive negligence without having to take responsibility for ending a popular entitlement. No matter that it was created with the expectation that Congress would periodically adjust the retirement age to keep it solvent, and th…

I don't quite understand what you mean the narrative here -- cash flow going negative is a fact. Attempts to discuss the COLA issues in 1970s-1980s [1] have failed. Attempts in the early aughts to divert funds by Bush Jr. [2] (long before I could even vote) were rejected in part because of skepticism stock returns would not perform well. And even today where we have additional tax breaks for seniors under the OBBA.

This has been a long running "heads we win tails you lose" with the older generations toying with the future dating back ~50+ years. Statements about "poor houses" don't mean very much when even uncapping the tax on wages for social security would only close ~61% of the gap [3]. Cuts are coming.

[1] See for example this hill (https://thehill.com/opinion/finance/4258578-the-day-the-soci...) article discussing he issue [2] https://www.brookings.edu/articles/bushs-shaky-retirement-pl... [3] https://www.crfb.org/socialsecurityreformer/

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