Social Security to See Payout Exceed Pay-In This Year

[mrjarrell]

They're taking in less than they're paying out. Get ready for some payroll withholding increases in order to "save" SS. The time is far past when this vampiric program should have been canceled. Now it needs a new infusion of your blood to keep it alive.

From The NY Times

The bursting of the real estate bubble and the ensuing recession have hurt jobs, home prices and now Social Security. This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.
Stephen C. Goss, chief actuary of the Social Security Administration, said that while the Congressional projection would probably be borne out, the change would have no effect on benefits in 2010 and retirees would keep receiving their checks as usual.
The problem, he said, is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.

Read the rest at the source and BOHICA.

 

[Expat]

Not just increasing payroll taxes, I would look for some means testing. Why should people that already have so much get even more given to them, when there are some that have so little that are in need....

 

[smokingman]

WAIT!!.....I know how to fix it!! Just call our friend Ben and have him print enough money to cover the cost for the next 100 years! Oh,but give the money to the banks,so they can loan it back to Ben and earn some interest.

ps.Do not worry your kids can pay for it!(never mind inflation...the fed has it "under control".

 

[mrjarrell]

WAIT!!.....I know how to fix it!! Just call our friend Ben and have him print enough money to cover the cost for the next 100 years! Oh,but give the money to the banks,so they can loan it back to Ben and earn some interest.

ps.Do not worry your kids can pay for it!(never mind inflation...the fed has it "under control".

That was mentioned in the article. We'd best hope that's a road these cretins avoid.

 

[model67a]

social security

If the polititians would have kept their hands off of it there would have been all that money the baby boomers paid in setting there collecting interest. Compounded it could have been perpetual. But as always the government had to get control of it.

 

[Hoosier Gun Coat]

Not just increasing payroll taxes, I would look for some means testing. Why should people that already have so much get even more given to them, when there are some that have so little that are in need....

People who have paid into it should receive it no matter how much they have or have made. You shouldn't be penalized for being successful. What gets me are the ones who are collecting SS benefits who have NEVER paid into the system. From what I've heard, the spouse can claim 1/2 of what the other spouse draws even if they've never paid into the system. The system needs to be overhauled and available to those who have paid into it.

 

[Expat]

You shouldn't be penalized for being successful.

that's just crazy talk... where the heck do you think you are living?

 

[5.56'aholic]

we knew this day was coming 10 years ago, after our elected officials had been raiding the cookie jar meant for social security for their pet projects/welfare society.

 

[antsi]

People who have paid into it should receive it no matter how much they have or have made. You shouldn't be penalized for being successful. What gets me are the ones who are collecting SS benefits who have NEVER paid into the system. From what I've heard, the spouse can claim 1/2 of what the other spouse draws even if they've never paid into the system. The system needs to be overhauled and available to those who have paid into it.

The problem with the "I paid into the system" line of thinking is that hardly anyone has paid in enough to finance their own retirement. The people who are retiring now paid enough for about 1/7 of the average retirement benefit (workers outnumbering retirees by about 7 to 1 for most of their working years).

Now all those people who paid in enough to finance 1/7 of a retirement income want to draw out a full retirement income. The math does not add up, because the ranks of the retired are growing and the ranks of the working are shrinking.

we knew this day was coming 10 years ago, after our elected officials had been raiding the cookie jar meant for social security for their pet projects/welfare society.

This is a problem, but it isn't the greatest contributor. Even if all that money had been left alone and was still sitting there, it wouldn't be enough to pay for the wave of retirees coming at us now. The real bulk of the problem is simple demographics:

THEN
retired at 65, lived an average of 4 years then died
cost of living was low
cost of health care was low
about 7 workers paying into the system for every retired person

NOW
retiring at 65, projected to live an average of 15-20 years
cost of living is high and rising
cost of health care is high and rising
about 3 workers paying into the system for every 2 retired people

If the people saying "I paid in, now pay me back" had been paying enough to finance their own retirements, they would have been paying 2-3x more SS taxes all their working lives than they actually did.

 

[dross]

The problem with the "I paid into the system" line of thinking is that hardly anyone has paid in enough to finance their own retirement. The people who are retiring now paid enough for about 1/7 of the average retirement benefit (workers outnumbering retirees by about 7 to 1 for most of their working years).

Now all those people who paid in enough to finance 1/7 of a retirement income want to draw out a full retirement income. The math does not add up, because the ranks of the retired are growing and the ranks of the working are shrinking.



This is a problem, but it isn't the greatest contributor. Even if all that money had been left alone and was still sitting there, it wouldn't be enough to pay for the wave of retirees coming at us now. The real bulk of the problem is simple demographics:

THEN
retired at 65, lived an average of 4 years then died
cost of living was low
cost of health care was low
about 7 workers paying into the system for every retired person

NOW
retiring at 65, projected to live an average of 15-20 years
cost of living is high and rising
cost of health care is high and rising
about 3 workers paying into the system for every 2 retired people

If the people saying "I paid in, now pay me back" had been paying enough to finance their own retirements, they would have been paying 2-3x more SS taxes all their working lives than they actually did.

What you're saying is true, but if that were our only problem, SS wouldn't be in nearly as big trouble right now as it is. Just forget about whether people have financed their own retirement or not.

Here's what's been happening:

All the money that has been paid in to the system has been spent. For years, the current retirees were supported by the current payroll taxes collected, plus there's been a surplus each year that is then spent by the general fund.

The thing that marks this year is that now the SS program will be spending more in a year than it takes in in a year. That means it will add to the deficit and the debt.

If they hadn't spent the surplus every year, sure there would still be a problem coming in the future. The difference is that the problem is right here right now, instead of years in the future.

 

[antsi]

What you're saying is true, but if that were our only problem, SS wouldn't be in nearly as big trouble right now as it is. Just forget about whether people have financed their own retirement or not.

Here's what's been happening:

All the money that has been paid in to the system has been spent. For years, the current retirees were supported by the current payroll taxes collected, plus there's been a surplus each year that is then spent by the general fund.

The thing that marks this year is that now the SS program will be spending more in a year than it takes in in a year. That means it will add to the deficit and the debt.

If they hadn't spent the surplus every year, sure there would still be a problem coming in the future. The difference is that the problem is right here right now, instead of years in the future.

Yes, that is a big part of it too.

If they had kept the SS surpluses in the past and invested them, we would still have a fiscal catastrophe on the horizon. It would just be on the distant horizon, rather than starting us in the face right now.

 

[level.eleven]

3 words.

Value
Added
Tax

Book it.

 

[mrjarrell]

We really don't need a VAT, but we're likely to get one with the current crowd up there. Talk about seeing costs go up. I've lived under VAT in a couple of countries and buying was unpleasant.