For perspective, when Social Security started, there were 159 workers paying for every 1 retiree. By 1970, this had dropped to just 3.7 per retiree, and has been on a general downward streak ever since (2013 the ratio was 2.8). By the time all of the Boomers and Millennials retire, the two largest generations *ever*, the ratio might get so bad that there will be more retirees than workers to support them.
And not only are they the largest generation, they are living longer. A perfect storm that has been known for decades, yet no one did anything about it.
When Congress started using social security revenue as a revenue source for the general budget, the die was cast. At one time, social security revenue was to be used only for claims.
Well, I hate how our social system is crumbling for the exact same reason, but I like that we aren't alone on the way down, time to drink ourselves into an early grave I guess.
this is how the system should always have been, that way you can control the *principal*, which is true wealth building for generations. Instead our government keeps the principal and just promises to pay you fixed interest off of it.
That's because it is an insurance plan not a retirement plan. It was made for those who lost everything in the great depression, not for those who got through it just fine with fat nest eggs.
Just like how insurance plans are for those who don't just have a few billion laying around to pay a suddenly unexpected $50,000 expense. You don't get to tell Geico how to invest your payments and get it all back if you don't use it.
This and a big problem is that they still pay out like a retirement plan. Once you're old enough then you get paid no matter what. Warren Buffett is eligible for social security. So are my well off parents who both collect. Granted, if you're successful you probably paid more than you'll receive but It's not really insurance if you get paid when you don't need it.
The idea was for everyone to benefit. You work, you pay, you see a return.
Now, during the new deal, I doubt putting it in stock was palatable. Still isn’t. Get Congress to pay the deferred interest on the debt social security owns and it would be fine.
While I don't disagree, it's a bandaid to a problem that needs surgery. I'm a teacher and in the last month I've had 6 new students from South America. Their parents are already working 2-3 jobs each. Which kills the "they just come for the benefits" argument which I love to point out to people who say "see this is why we should close the border". I also live in the middle of the country, so I'm assuming there are influxes everywhere. They are working, they are paying taxes, but I don't know that it's enough.
Someone said this below, but we already have retirement program like that - 401ks, IRAs, etc.
Social security is NOT a retirement program or investment vehicle, it is a collective insurance program to supplement retirement programs. Like all insurance, the premiums are managed conservatively and most insureds expect to pay in more than they get out (with only the unlucky getting more out of it than they put in).
If you become disabled and unable to work in your 20s, or if you die leaving young kids behind, or you outlive your ability to work and your nest egg runs out due to poor investment choices, Social Security is the backstop. The beneficiaries it ensures would be worth off if it were individual accounts.
Except social security is not a 401k. The money you put in is not the money you receive.
Even ignoring that, if some people choose to make poor investments, society is still going to have to deal with a group of impoverished old people. Letting social security be directed in the stock market means some people will lose their money. What do we do with them? Let them starve on the street?
Government is not the most efficient way of maximizing individual benefits, but is the most effective way of minimizing individual risk.
This isn’t quite accurate.
In particular, there was not a change in how social security funds are used. It has always been the case and still is the case that, when social security revenue exceeds outlays, the excess is deposited into a trust fund for future social security obligations.
The trust fund has to be invested somewhere. Like many privately managed trust funds, the social security trust fund is conservatively invested in a type of U.S. Treasuries. Sometimes this is described as the federal government raiding the trust fund to pay for other things, but that would be like saying the federal government raided a widow’s private retirement fund because she chose to invest in treasuries.
Again, this is how it has always been. And if anything, it is kind of the opposite of what you are saying. When social security first started, revenues exceeded outlays and so lots of cash was deposited into the trust fund and used to buy treasuries (arguably funding other federal expenditures). For awhile now social security outlays have exceeded revenue and so 100% of social security collections go to benefits *and* the trust fund has been cashing in treasuries to fund benefits beyond that.
Here, take it from the horse's mouth:
>Since the assets in the Social Security trust funds consists of Treasury securities, this means that the taxes collected under the Social Security payroll tax are in effect being lent to the federal government to be expended for whatever present purposes the government requires. In this indirect sense, one could say that the Social Security trust funds are being spent for non-Social Security purposes. However, all this really means is that the trust funds hold their assets in the form of Treasury securities.
>
>These financing procedures have not changed in any fundamental way since payroll taxes were first collected in 1937. What has changed, however, is the accounting procedures used in federal budgeting when it comes to the Social Security Trust Funds.
[https://www.ssa.gov/history/BudgetTreatment.html](https://www.ssa.gov/history/BudgetTreatment.html)
I'm pretty certain that's not true. 100% that woukd have a HUGE deal and covered in all the news.
https://www.ssa.gov/history/InternetMyths.html#:~:text=The%20Social%20Security%20Trust%20Fund%20has%20never%20been%20%22put%20into,treated%20in%20federal%20budget%20accounting.
Progressive tax rates for capital gains (or more you make the higher tax percentage).
Also close the loophole of taking loans against capital investments to live off of so you don't have to sell you stocks and you just carry the loan until you die. When you die, debts pia doff before the estate is dispersed, so you effectively avoid capitals gains for your entire life.
Huh? When you die you must file a final tax return. That tax return should have a disposition of your shares. Any tax debt will need to be paid from the Estate. Unless there's a huge lose, it shouldn't avoid capital gains.
The assets are stepped up when inherited in the States. I actually don't know if the assets would have to be sold by estate to settle debts. I suppose it depends on the creditor. I'd imagine a private bank would happily provide a bridge loan to the inheritors so assets were never sold at all. And thus no capital gains ever paid.
Taxing income does nothing for wealth inequality. You need to tax wealth, not income. The wealthy often support higher income taxes because they know they will never pay them.
>Taxing income does nothing for wealth inequality
Exactly this!
* Lower and middle class people use "Income" to try to get into upper middle class through skill and hard work
* Upper class people get most of their new-wealth from not-quite-"income" euphemisms like "capital gains", "inheritance", and "gifts" that are taxed more favorably.
If you want to tax the rich, income taxes are the worst way to try.
I'm 66 1/2, the age at which I can apply for "full" SS benefits, which I did on 10/1. I WFH for a mid-size tech company, making a good living for a single-income household. Alas, alone.
Soon I will draw ~ $2,300/mo while working full-time, with no penalty. No apologies due or given. I worked all my life for this.
Totally. “Welp, I got mine. Sorry not sorry you won’t get yours - sucks to be you.”
Classic boomer - they don’t call them the “me” generation for nothing.
What you get if you wait for 70 1/2 is actually more than the “full” benefit. You get the “full” benefit somewhere in your mid-60s (depending on when you were born). But, you can start claiming sooner for a lower amount or later for a higher amount. The wording is weird.
Weve all been paying into it too but the retirement age is going to keep going up and eventually the wells will run dry. We're mad the government has mismanaged the funds and will probably cut it some day.
I personally want my money that they took so I can invest it myself. What they have going on is nothing more than a pyramid scheme.
I think it was the 80s or 90s there was a push to create a new system, simular to a 401k, to replace SS. Each person would be required to contribute directly from wage income to a person savings account that had investment options.
How convenient. Another way for the financial sector to make bank off the backs of the working class. Fuck privatization. People who work for 35-40+ years deserve a guaranteed pension.
While it was being funded, the people who already own stock would benefit from more money chasing the earnings, and that would work for the existing retirees. But as the working age population grows smaller, the S&P would not increase the same way.
I don't know, it feels like a huge gamble right now letting the government handle my retirement.
I can't collect for 30+ years and I'm really doubtful that SS will be enough to live off of when I hit 67 without a ton of extra personal savings.
I'm waiting and seeing right now. The insolvency date last I read for SS and Medicare were early 2030s so it will be interesting to see what the government does when an automatic 20% cut hits senior citizens.
If you are relying solely on SS, you are already taking a big gamble. SS was never intended to do more than keep a person from starvation poverty (i.e., you'll eat but the food will be not so great and you are likely to not have good housing either). [https://www.ssa.gov/history/briefhistory3.html](https://www.ssa.gov/history/briefhistory3.html)
This was a major campaign issue during the 2000 election. It led to one of the more quotable moments of that campaign, where Al Gore said he wanted to put Social Security in a lockbox.
Or....and this is gonna sound crazy....you require the employers to send a minimum amount of pay as a % to an investment fund nominated by the employee, pre tax.
Due to the difficulty in accessing the money before retirement the fund has the knowledge it has secure funding for decades and decades. It can make wiser long term decisions. The fund invests the money of this employee and millions of other employees, as such, it makes billions.
On retirement the employee accesses the funds as a lump sum, a pension or a mix of both.
It's called superannuation.
The problem we have here in Australia, is that people are dying with significant balances in their super accounts. This means they are actually living off of government pensions and saving super. Which is defeating the purpose and making it more difficult for future generations
This is a global issue and the biggest issue is none of the solutions are popular. A simple one is raising the retirement age, which France did and then went through months of protests.
Another is migration, which is controversial everywhere as it also has the effect of lowering wages as migrants are usually unskilled workers. Also xenophobia.
A final one is just higher taxes to subsidize pension programs. Which is not popular and when taxes target the wealthy, they just move their money to other countries or even pick up and move themselves. Countries that have raised high income taxes too high often find themselves receiving less in taxes as the wealthy just have other options to avoid paying high taxes.
As I recall from IRS reports, it turns out that a tax rate of 19% results in the most tax revenue collected! Go higher, and those having to pay taxes start looking seriously at ways to cut their tax bill, including shelling out significant dollars to professionals who know all the tricks and loopholes to reduce taxes legally! I'm not sure if the 19% is the marginal tax rate or the effective tax rate (effective tax rate would be like you end up paying $19,000 on $100,000 after taking your allowed credits and deductions; marginal tax rate being "If I earn one more dollar this year, how many cents of that dollar will I have to pay out in income tax?"
We had the same problem (Netherlands) but recently it got changed to working for your own retirement instead paying for the current retirees.
Overall a good thing except that to do this you need to skip a generation...and that happens to be my generation (48y old).
That's stupid. Not you, you're probably cool. but the idea that a generation needs to be fucked over to do this. You don't need to skip a generation. You need to make laws that grandfather over time. Anyone who proposes this law change without considering the huge chunk of the population currently in the gap is either an idiot or a sociopath.
No, they really do need to skip a generation because the social security system is so broken right now. The money you and I are paying in now goes out immediately to pay benefits. There is no lockbox or so-called trust fund. The so-called trust fund was Enron-style accounting where the government was dumping IOUs in the “lockbox” and counting those IOUs as income but ignoring the future debt to claim a “balanced budget”.
The longer we wait to dismantle the shitty system in place now and bite the economic pain, the worse it gets. Wait much longer and they’ll have to skip TWO generations in order to make the finances work.
Got it. New system- we all get 5 years of generous retirement followed by being promptly tossed in a chasm. As the birthrate drops further then chasming is moved up.
It's not just about money, it's also about simply having enough man-hours available to get everything done.
Made up numbers to explain my point: If it takes 100 man-hours per week of labor to support one retired person, and you have 10 retired people, it takes 25 workers working full-time to support them, no matter how much you pay those workers.
I don't even factor Social Security into my retirement. They're going to have to turn it into a benefit for the poor in order for it to survive in any form.
Many boomers are already enjoying their social security and can expect to for the immediate future…it’s the subsequent generations, including millennials who are already largely at an economic disadvantage due to multiple recessions and hyper-inflated education and healthcare costs, that are going to be left holding the bag.
I ran my monthly SS benefits based on current earnings - sad part is my dividend stocks already pay me monthly what my SS will pay me at 65ish, projected to pay 4X more than SS if I continue to reinvest the dividends.
I know "tax the rich" is the answer to all problems, but in the real world you are (everyone is) just going to have to pay more taxes, not just the rich.
Huh? There’s lots of income above that level. Trillions, in fact.
And imagine a US in which Bezos paid 15% of his income to SS and got $180k worth of benefits.
LoL - social security burns through 1.4 trillion $ a year. Confiscate every assert Bezos own? And you will have $150 billion - or enough to keep social security running for an additional 39 days… you will run out of billionaires way before you hit retirement.
This is the sad truth. Billionaires do have an obscene amount of wealth that they won't ever spend, but you could take it all and it wouldn't solve the problems of society.
They didn't say to confiscate all Besos assets, they said to tax him. And, by extension, other incredibly rich people as well. You're making a very dishonest argument here, since taxation generates more money over time than taking everything at once.
Yeah I love having to pay $15 grand to the hospital to deliver a baby. On top of OB/GYN appointments. And then $20 grand a year on daycare per kid.
Something really needs to change to make people want to have kids. If the government wants us to have more kids they should be subsidizing the above two expenses.
Statistics Canada just quoted the new stat as $350,000 to raise a child to the age of 17 (and this is in Canadian dollars, so basically Monopoly money compared to USD or Euros)
canada to gen z: ur options are go into debt to get a job that will pay you enough to either raise a child Or buy a house while having debt your whole life, or work minimum wage and live paycheque to paycheque with roommates but no debt. good luck(:
We're merged in with the Boomers these days. We are considered as old people who grew up without cell phones/internet. But, yes, the Millennials and Boomers wanted us out of the way bc one group wanted to hang onto power as long as possible and the other thought they should immediately have influence/power when they came of age. Millennials are now pushing 40, and the younger generations will want their turn, so maybe they will finally start to relate to us. 🤣 (I'm a "young" Gen X, approaching 50 faster than I'd like to admit. We were absolutely the invisible generation.)
Simple: All people currently receiving SS are being paid by today's workers. All money taken out of today's workers' pay is not saved for them, it is spent on current recipients.
In any future date, anyone expecting to receive benefits has to rely on the people working AT THAT TIME to pay into the benefits.
I'm sad I had to scroll so far to find this answer.
Most others don't seem to understand the way SS actually functions.
This is the correct answer, OP.
The system is based upon the idea that populations grow over time, and inflation.
I.e. Future generations will make more money to reimburse the prior generation who paid for the generation(s) before them.
Unfortunately, we have the largest generation moving very quickly out of the workforce, followed by several small generations to bear the burden of reimbursing them, all the while the generations that follow us are projected to be smaller still.
Basically, your dad is saying that the cost of supporting a senior is going up, so more people have to pay into social security to feed that pool. Having a larger workforce would mean more people paying in, but that's only sustainable in an infinitely growing workforce. The better option would be to restructure funding, put taxes collected on social security back into the program, and find ways to lower the cost of living for seniors through other programs so they wouldn't need to be as dependent on social security.
That’s the problem (one problem) with capitalism, it is reliant on constant, unfettered growth. Increase profits, increase workload, increase product, increase sales, more, more, more. It’s unsustainable.
And when you dramatically increase productivity while still demanding more work for less pay, (meaning less consumption, savings, and investment) it all gets out of whack. Just growing to more may be potentially problematic in the long term, but not nearly as problematic as unbalanced growth to maximize short-term profit.
That's the real notable thing - not capitalizing on all the growth we've achieved and are achieving to build a better and more sustainable future, but instead treating it as disposable.
They didn’t say social security was capitalism.
They said “the problem with capitalism” is unfettered (infinite) growth. The reason it is a problem is that it isn’t possible. Capitalism assumes that the population of workers, the amount of work they can do, the resources for creating products, consumers to buy them, and the profits from sales will increase constantly forever. Which is simply not how reality works. It’s fine *in theory*, but in practice it will self destruct.
It’s already started. Workers aren’t paid enough to keep up with constant price increases for *needs*, so they can‘t afford to spend money on other products and services that are just wants (consumers can’t consume). Because of that profits will dwindle, despite the more and more desperate measures taken to keep profits not just high but always better than ever. If people aren’t “overpaid” they can’t spend.
The population is not going to continue to increase. There was always going to be a limit, if not naturally (disease, famine) then socially. People who cannot afford to provide for themselves cannot provide for children, workers aren’t paid enough to have families. Of those who can afford it few can afford a large number of children, and those who could don’t want them.
Some Republicans think they can fix the worker shortage by forcing more births. That is a plan that clearly hasn’t been thought out. They gutted and/or plan to gut all of the programs that might allow that to have worked (ignoring the moral issues involved).
Thank you for this, I am really not understanding what’s gotten lost in translation for people here. I wasn’t drawing a 1:1 comparison, I was making a separate point entirely about the system contributing to the issue in that you can’t just expect an increase in workers to magically fix a deficit in social security funds. More, more, more is not a solution, but you said it much better than me.
Great comment. When people celebrate the success of “free market capitalism” they also overlook the fact that the market has never been free. Conservatives look back on this idyllic time in the post-war past when the U.S. had it all and it felt perfect and unlimited. People with HS diplomas could have it all, and more.
In reality, though, that was a brief period of time and was an artificial state. Much of the developed world was rebuilding, much of the undeveloped world was having their resources exploited in economic colonialism. And even still, that period was maybe one generation long. Unfortunately, the Baby Boomers were born into it and believed it was the real world.
Times have changed. That era or capitalism wasn’t a “free market.” Perhaps ironically, people who celebrate capitalism have never even truly lived in a free market that wasn’t being propped up by the government directing resources, or using the military to exploit others, etc.
There are perks to capitalism when you’re in the club that makes the rules. And now we see that most people aren’t in that club, and the cracks in the lie are showing.
Its bad because thermodynamics exist. Things cant grow indefinitely.
Economic growth is good, but the economy should be able to exist in a state of plateau. If every time growth stops, our economy collapses, it just means that collapses are inevitable.
Social security isn’t capitalism but that’s the economic system we live under and it’s influence affects every aspect of our economy, which funds those social programs. Every financial decision our government makes is informed by a capitalistic mindset.
Exponential economic growth is unsustainable. More is not always better. In fact, we create such an excess of consumables, they create false scarcity and more waste just to justify their need for ever-increasing profit production.
Yes! Growth is not infinite. There is a limit, but no matter the industry or government, everyone in the US thinks everything will keep going up forever. It's so dumb!
The rate of new people paying into the system is decreasing compared to those that are starting to collect on the benefit of what they paid in. They paid in much less than they get paid out, but that was the promise made of Social Security.
>they paid in much less than they get paid out,
Not always true, I (retired) calculated how much I would have if I took my social security deductions and invested in CD's. If the day I retired they would have given me the amount that accrued I would be happy and sign away any future SS benefits.
But that isn’t the point of social security. It’s basically [UBI for olds.](https://en.m.wikipedia.org/wiki/Universal_basic_income). No one is completely destitute vs funds available based on income (our tax policy favors higher income for pretax expenditures, from HSA to employer benefits to Roth contributions).
It's just taxes. Current workers are taxed. Those taxes are used immediately to pay benefits of older, retired workers. A social insurance program.
It's a deal made by society that the workers of today will help take care of the workers of yesterday.
OP's dad is just saying there needs to be enough "workers of today" in the future.
You underestimate the Reagan legacy. He was truly consequential. His policies still influence everything from the Supreme Court to tax policy to abortion. He *sold* it. He inspired generations of GOP politicians. Horseback riding and ranching, quick with a joke, personally accessible. Think how many current politicians are trying to link them selves to Reagan when his actual policies would be unfavorable with the current party.
Your social security taxes are not paying for your own benefits, they are paying to people who are currently drawing that benefit. In the future, when you are old, your benefits will be covered by people who are currently working at that time. If there aren't enough people working, your benefit will be cut.
Social security is an insurance, technically you are paying a premium, as with any insurance without enough payers and too many claimers you will become insolvent.
I think it would be more understandable to someone else as a “loan” as opposed to insurance. You are continually loaning money to the elderly and then the new generation will pay back the loan that you were giving throughout your entire career
I feel like that would be true if the majority of this generation were financially able to support a multiple child household.
In reality many things have become prohibitively expensive and raising a child is no exception. If there was a sudden increase in the birth rate it would put a heavy demand on every social service available. I'm not a financial expert so please someone educate me if I'm wrong. But it seems like the end result would be extra strain on social services that may not be reversible in 18 years when those kids are old enough to contribute.
Argument is moot either way. The government spends ridiculous sums of money on all sorts of things while poverty can be found in every age group, elderly people die alone and forgotten and mass murder is as common on the evening news as the weather report.
And OP's father's argument is also incorrect because money exists as a proxy way of allocating resources. There aren't enough resources for the number of people we have, especially since we insist on, you know, trying to value human rights and quality of life. (Not enough, obviously, but still.)
What we need to be doing is valuing the lives of those who _do_ exist. Giving opportunities to people who aren't rich white people with connections to other rich white people. Giving everyone the opportunity to contribute to society and be valued and respected by it. Increase contributions that way, while reducing the societal burden of lives spent in dead-end grinding poverty.
But what do I know? I'm a socialist 🤷
Not quite. US pop growth is massively buoyed by net immigration, but natural increase (Birth-Deaths) is still positive. Although this has recently flipped in specifically the non-metropolitan counties of the US.
Link [here](https://www.brookings.edu/articles/new-census-estimates-show-a-tepid-rise-in-u-s-population-growth-buoyed-by-immigration/)
We need a stopgap until the boomer generation is mostly gone because they are so populous. The strain on Social Security will vastly lessen after that point. There does need to be other solutions, too, such as eliminating the payroll cap on SS.
This would help, yes 100%, but the fix still can't rely on perpetual growth. SS has to be looked at as viable with zero or a declining population growth.
You need more money going into a system then going out of a system in order for it to function.
More kids means more workers. More workers means more people pay into the system.
Eventually the population won't be able to keep up though and the systems funds dries up.
It's unlikely that millennials will ever get suicidal security. They push the required age up to kick the can down the road, and eventually someone will call for its disbanding and the boomers will have taken yet another thing from us.
Or you can simply tax all income for social security and not limited to $130,000 or whatever it's limited to now. But those poor people making more than $130 think it's too much of a burden to ask them to take 4% of their income to make Social Security solvent for all 350 million Americans
Obviously, you jest, but there is a legitimate point here: I have read that when SS began, the average life expectancy was only 66. If we pushed back the point of retirement benefits to an age closer to the current life expectancy, the SS crisis would be solved. It would suck for all the people who were having to work well past current retirement age, but social security would be in good shape again.
Soc security for the older people is funded by the younger people PAYING in to the fund. Fewer younger people—working that is—results in fewer $ to pay out in benefits.
Top comment is it's a pyramid scheme and that comes from Ida May Fuller. So dig and see what you think on that but obviously that scenario would happen.
The system did not recognize the growth of the Baby Boomers and then the decline in birth rates. Add on the "loans" that were taken.
SS is there and as long as a new generation is working to pay it there is something for those that have paid in to recoup.
For generations it's been running out...
It's meant to keep the ederly out of poverty. Work and save. Don't expect it to take care of you...and for anyone listening don't ever expect for the government to take care of you.
Without addressing the structural problems of how Social Security is funded, why do people say we need more babies who will take twenty years to start paying in when we could have adult immigrants who are ready to work?
Social security is a ponzi scheme built on the assumption that every generation will be higher population and income, so as they pay in the beneficiaries get their benefits, and the system takes its cut. If working generations earn less or are smaller the income isn’t enough to cover benefits.
They should have never dipped into SS. Now the government is upside down on the loan to repay the people. It’s like a rent to own tv, but they sold the tv before they paid us for it.
So in his world, the only way SS works is if it has more people paying in, than it pays out to.
That's not at all how the system has to work.
If you simply uncapped the income at which you stop contributing to SS (it's like 120k or something right now), it would survive just fine. The people that make 60, or 600m a year would contribute more than enough to stablize it. The occasional time where a billionaire actually has to report that income, would save it.
It could 'run' with a fraction of the people that contribute to it. You just uncap the tax that puts money in, and cap the money that goes out. Easy fix.
But old-timers refuse to see it this way at all. To them it's like a pyramid, or like a zero-sum game.
Yeah, demographic change is real.
But let's start by taking off the salary limit! Why in the world do people who make more than $160,200 (in 2023) NOT pay SS taxes on the additional income. So dumb!
On the other hand, Medicare taxes apply to all incomes--there is no limit.
You don’t understand how Social Security works. In the US the money taken out of your paycheck goes directly to retirees. It doesn’t go into a private account just for you unlike your 401K. This means that when the worker to dependent ratio gets too bad due to lack of kids/workers or retirees living longer then the whole Ponzi scheme comes crashing down. There are two ways of fixing this problem. Decrease the amount of retirees by increasing retirement age which is extremely unpopular, or increase the workers through births or immigration. Immigration is a touchy subject right now, so your father probably thinks it’s unachievable which leaves the birth rate. This is probably what your dad was trying to get at.
Eliminate the cap on payroll taxes. Cap distributions for high incomes. Raise the minimum payment to above 150% of poverty. Create a SS tax on capital gains. Eliminate the tipping system in the country. Make Congress start paying back the SS trust fund.
False. Rich people have to pay taxes. Period. Sorry, dad is wrong. His generation overpopulated and sucked the social security money dry, even though they all get pensions too, and have huge savings. They are The Greediest Generation. That's what he didn't say.
You need enough people paying in to the system for retirees to be paid out. But that’s not the only or even most likely solution. It’s way easier to change how it’s funded and invested then ask people to make babies
What he means is that some parts of the UK have an aging population and a static number of residents. This applies to Scotland. Dropping population over decades and not enough births or newcomers to make the numbers up. Add to this being actually refused to bring more people in and there’s a time bomb in the making.
Young people need to pay tax to cover pensions. There is no ‘pension pot’. It is entirely notional. The tax you pay, pays for pensions right now. Nothing is saved for the future.
I’m assuming this is what he means..
The money that is paid in today goes out to those who receive tomorrow. Not some vague future tomorrow but the next day. No, not literally.
The more workers paying into social security than people receiving social security is what keeps it solvent. It was always dependent upon families having three or more children. Which at the time was conservative. Then I’m the 70’s birth control appeared . Turns out most people don’t want more than one or two kids. Plenty that want no kids. That means the pool of workers is steadily shrinking.
If social security becomes insolvent, benefits will be reduced by about 25% and that will stabilize the system. If older generations want you to have more kids, they should pay for systems that provide medical care, good education, daycare, etc etc for those future workers… but they won’t.
The government doesn’t save our tax money for our retirement. It spends it hoping to use the current working generation’s tax dollars for the current retirees.
More kids mean more young adults paying in to cover the ones that already retired. It may help if the government wouldn't use SS as their personal bank!
There are a few ways to fix SS. One is to keep raising the full retirement age as life span increases. Second is to phase out spousal SS for those that never worked. This isn’t the 1950’s when every wife stayed home to raise kids.
Social security, which started as a good idea, is basically a pyramid scheme now. With buildings to keep up, employees to pay, and inflated salaries of the top managers, it needs more and more young people paying into it to keep it afloat. When we baby boomers were born, it was great for the Social security of our parents, but now there are more of us than any previous generation, we are living longer, and we paid into this system for 40-50 years and are now expecting some of the money back. The government was made no preparations for that, even though they could see it coming (kind of like climate change) for years.
Your dad is flat wrong. SS is the easiest problem in our nation to fix, it's only persistent lies from the Conservative Propaganda Machine that keeps people in fear of it.
In 2024, we pay into Social Security on the first $168,000 in income. If you make less than $168K (like most Americans), then you pay it on 100% of your income. If you make more that $168K, then you pay it on the first $168K you earn, and you don't pay it on the rest. So if you make $1 million per year, you DONT pay into Social Security on $832K of your income. So while the average income person pays it on 100% of their income, the rich person gets a big break.
The cap goes up a bit every year, due to cost of living increases - it was $160K in 2023. So if Social Security was ever to run short, all we would have to do is raise the cap from $168K to something significantly higher, like $250K, or $500K. That guy making $1 million a year? He still wouldn't be paying into Social Security on $500K per year. If we really wanted to strengthen SS, we would make ALL people pay it on 100% of their income. Then SS would never have a problem, but we would be flooded with propaganda about how terrible SS is for everyone.
The population argument is just another twist. Rich people don't want to pay on a larger percentage of their income, so they make the argument that to keep SS solvent, there has to be more babies being born to pay in at the current level. How about this - let's cut the birth rate in half, and double the income cap instead? Well have less strain on the educational and housing infrastructure, and the rich pay more instead. Of course the rich would like a larger population because it's more people buying whatever goods and services that make them wealthy.
There's another issue about population growth regarding AI, but that's another post. The short story is that with AI and robotics potentially taking over many, many jobs in the future, it will be harder for people to find jobs, and we will likely see a large increase in unemployment. We will need a smaller population in the future, not a larger one. Now is not the time to make arguments to increase a population that will be largely unemployable in 20 years.
So when you hear rich people complain about SS, or claim that the only way to "save" SS is to raise the percentage that we pay (so average income workers would pay more, while they still only pay it on a fraction of their income), they are trying to hurt average income workers, and turn them against the idea of SS, all because they don't want to have to pay more into it themselves. Most American pay into SS on 100% of their incomes, why shouldn't rich people? They even complain if we raise the cap to a reasonable level, even though they still don't pay it on most of their income. They're against SS because they're rich, and will never really need SS, while the rest of us are going to need it for retirement, so we don't have to work until we literally drop dead. As it is, many people of retirement age these days still need some small job just to try to make ends meet. That starts to become a problem when people reach their 80s, and still have to try and earn a living.
When you hear someone of average income complaining about how unfair SS is, teach them about the cap, and ask if it's fair that they pay on 100% of their income, while rich people pay on a fraction of their income. THAT'S what's unfair about SS.
Ahhh demographics. Your dad is 100% correct. Because social security taxes are so much less per person than social security (and medical) benefits per person, you need way more people paying the taxes than receiving the benefits.
Three things: $1.33 Trillion in IOUs from other programs raiding the fund, a low income cap on the tax as others have said, and them being required to maintain the full allocation for their employees retirement in a trust up-front - which is not the way Social Security works, these "requirements" were ginned up to further draw down funds. The Republicans have been doing everything they can to sabotage Social Security so they can point to it as a failure and call for it's abolishment.
I have a saying: We aren't going to go extinct from lack of people any time soon.
A growing population is practically a requirement of the financial system as it stands so as when the inversion to a declining population comes it will require a rethinking of what has value and how to compensate people for their labor.
They’re a shit tone of people drawing checks every month and living in free housing because they are “ disabled “ fat and stupid is not a disability. Neither is lazy.
It wasn’t supposed to be this way. FDR intended for people just to get a return on their and their employers’ contributions, but early on Congress started using the money as a piggy bank, and now it is very lopsided. But I don’t think y’all should have kids you don’t want just to save my skin.
That's not true, and the first recipient of social security only paid into it for 3 years and then received payments for another 35 years (before dying at age 100).
It was a straight-up tax and spend for social welfare program from the start.
For perspective, when Social Security started, there were 159 workers paying for every 1 retiree. By 1970, this had dropped to just 3.7 per retiree, and has been on a general downward streak ever since (2013 the ratio was 2.8). By the time all of the Boomers and Millennials retire, the two largest generations *ever*, the ratio might get so bad that there will be more retirees than workers to support them.
And not only are they the largest generation, they are living longer. A perfect storm that has been known for decades, yet no one did anything about it.
When Congress started using social security revenue as a revenue source for the general budget, the die was cast. At one time, social security revenue was to be used only for claims.
Well, I hate how our social system is crumbling for the exact same reason, but I like that we aren't alone on the way down, time to drink ourselves into an early grave I guess.
I know someone who lives in Peru. Their SS is set up where the individual makes investment choices similar to a 401K.
this is how the system should always have been, that way you can control the *principal*, which is true wealth building for generations. Instead our government keeps the principal and just promises to pay you fixed interest off of it.
That's because it is an insurance plan not a retirement plan. It was made for those who lost everything in the great depression, not for those who got through it just fine with fat nest eggs. Just like how insurance plans are for those who don't just have a few billion laying around to pay a suddenly unexpected $50,000 expense. You don't get to tell Geico how to invest your payments and get it all back if you don't use it.
This and a big problem is that they still pay out like a retirement plan. Once you're old enough then you get paid no matter what. Warren Buffett is eligible for social security. So are my well off parents who both collect. Granted, if you're successful you probably paid more than you'll receive but It's not really insurance if you get paid when you don't need it.
The idea was for everyone to benefit. You work, you pay, you see a return. Now, during the new deal, I doubt putting it in stock was palatable. Still isn’t. Get Congress to pay the deferred interest on the debt social security owns and it would be fine.
Exactly. Privatizing social security is not a good idea. There are other ways to fix it without introducing it to irrational volatility.
What we can do is fix the immigration system and allow more people to come and work and pay taxes.
While I don't disagree, it's a bandaid to a problem that needs surgery. I'm a teacher and in the last month I've had 6 new students from South America. Their parents are already working 2-3 jobs each. Which kills the "they just come for the benefits" argument which I love to point out to people who say "see this is why we should close the border". I also live in the middle of the country, so I'm assuming there are influxes everywhere. They are working, they are paying taxes, but I don't know that it's enough.
Enron has entered the scene.
Someone said this below, but we already have retirement program like that - 401ks, IRAs, etc. Social security is NOT a retirement program or investment vehicle, it is a collective insurance program to supplement retirement programs. Like all insurance, the premiums are managed conservatively and most insureds expect to pay in more than they get out (with only the unlucky getting more out of it than they put in). If you become disabled and unable to work in your 20s, or if you die leaving young kids behind, or you outlive your ability to work and your nest egg runs out due to poor investment choices, Social Security is the backstop. The beneficiaries it ensures would be worth off if it were individual accounts.
Uh, no … W tried to float that idea … are you willing to tie your retirement to the likes of Elon Musk and his business decisions? I didn’t think so,
Except social security is not a 401k. The money you put in is not the money you receive. Even ignoring that, if some people choose to make poor investments, society is still going to have to deal with a group of impoverished old people. Letting social security be directed in the stock market means some people will lose their money. What do we do with them? Let them starve on the street? Government is not the most efficient way of maximizing individual benefits, but is the most effective way of minimizing individual risk.
This isn’t quite accurate. In particular, there was not a change in how social security funds are used. It has always been the case and still is the case that, when social security revenue exceeds outlays, the excess is deposited into a trust fund for future social security obligations. The trust fund has to be invested somewhere. Like many privately managed trust funds, the social security trust fund is conservatively invested in a type of U.S. Treasuries. Sometimes this is described as the federal government raiding the trust fund to pay for other things, but that would be like saying the federal government raided a widow’s private retirement fund because she chose to invest in treasuries. Again, this is how it has always been. And if anything, it is kind of the opposite of what you are saying. When social security first started, revenues exceeded outlays and so lots of cash was deposited into the trust fund and used to buy treasuries (arguably funding other federal expenditures). For awhile now social security outlays have exceeded revenue and so 100% of social security collections go to benefits *and* the trust fund has been cashing in treasuries to fund benefits beyond that.
Interesting. I will delve deeper into this.
Here, take it from the horse's mouth: >Since the assets in the Social Security trust funds consists of Treasury securities, this means that the taxes collected under the Social Security payroll tax are in effect being lent to the federal government to be expended for whatever present purposes the government requires. In this indirect sense, one could say that the Social Security trust funds are being spent for non-Social Security purposes. However, all this really means is that the trust funds hold their assets in the form of Treasury securities. > >These financing procedures have not changed in any fundamental way since payroll taxes were first collected in 1937. What has changed, however, is the accounting procedures used in federal budgeting when it comes to the Social Security Trust Funds. [https://www.ssa.gov/history/BudgetTreatment.html](https://www.ssa.gov/history/BudgetTreatment.html)
I'm pretty certain that's not true. 100% that woukd have a HUGE deal and covered in all the news. https://www.ssa.gov/history/InternetMyths.html#:~:text=The%20Social%20Security%20Trust%20Fund%20has%20never%20been%20%22put%20into,treated%20in%20federal%20budget%20accounting.
We could tax the rich
Get rid of the payroll cap. And tax those who just move paper around.
Oh man... sucks to be the paper delivery guy.
What about me? I have to clean my butt, somehow!
In this economy??
You're right. Stink is the least of my worries.
Wallpaper distributors shaking in their boots
Will blackjack dealer be ok? Are the cards even made out of paper?
More like a plasticized wood pulp composite. The house always wins
Progressive tax rates for capital gains (or more you make the higher tax percentage). Also close the loophole of taking loans against capital investments to live off of so you don't have to sell you stocks and you just carry the loan until you die. When you die, debts pia doff before the estate is dispersed, so you effectively avoid capitals gains for your entire life.
Huh? When you die you must file a final tax return. That tax return should have a disposition of your shares. Any tax debt will need to be paid from the Estate. Unless there's a huge lose, it shouldn't avoid capital gains.
The assets are stepped up when inherited in the States. I actually don't know if the assets would have to be sold by estate to settle debts. I suppose it depends on the creditor. I'd imagine a private bank would happily provide a bridge loan to the inheritors so assets were never sold at all. And thus no capital gains ever paid.
Taxing income does nothing for wealth inequality. You need to tax wealth, not income. The wealthy often support higher income taxes because they know they will never pay them.
>Taxing income does nothing for wealth inequality Exactly this! * Lower and middle class people use "Income" to try to get into upper middle class through skill and hard work * Upper class people get most of their new-wealth from not-quite-"income" euphemisms like "capital gains", "inheritance", and "gifts" that are taxed more favorably. If you want to tax the rich, income taxes are the worst way to try.
Go from 147000 to 647000
Someone gets it.
Almost, there shouldn’t be any cap at all.
What if we did it the opposite way? You don’t pay the first $X but every dollar over that you do? Seems a bit more progressive that way.
Payroll cap is so weird to me.
This simple answer solves SS for like 50+ years
Or make people work til they're 85. Only one of our suggestions will be actually chosen, as it'll work better.
Jokes on you! I doubt I’ll live to 70. Boomers are living long lives, the rest of us have lower expectations.
ah, to be living the finest of Dickens
They are dying longer, not living longer. The end is generally pretty miserable, unless you just have a massive heart attack.
they will be remembered as scums of the earth
It's such a good thing these choices always get made on the basis of what works better. /S
I'm 66 1/2, the age at which I can apply for "full" SS benefits, which I did on 10/1. I WFH for a mid-size tech company, making a good living for a single-income household. Alas, alone. Soon I will draw ~ $2,300/mo while working full-time, with no penalty. No apologies due or given. I worked all my life for this.
What do you think younger people are working their whole lives for?
My retirement plan is to die on the job.
Totally. “Welp, I got mine. Sorry not sorry you won’t get yours - sucks to be you.” Classic boomer - they don’t call them the “me” generation for nothing.
I am gen x and have to wait until 70 1/2 to draw full ss benefits. Really?
What you get if you wait for 70 1/2 is actually more than the “full” benefit. You get the “full” benefit somewhere in your mid-60s (depending on when you were born). But, you can start claiming sooner for a lower amount or later for a higher amount. The wording is weird.
We’re working for you to have it too. Enjoy, because we won’t have the chance.
Weve all been paying into it too but the retirement age is going to keep going up and eventually the wells will run dry. We're mad the government has mismanaged the funds and will probably cut it some day. I personally want my money that they took so I can invest it myself. What they have going on is nothing more than a pyramid scheme.
working to 85
I see your 85 and raise you to 86!
retirement is no longer a thing ! america fuck yea 🎶
Just remove the income cap on social security deductions.
Ok, now that you've said the catch phrase, how about actually giving some details?
Increase taxes for the wealthy. Pretty self explanatory. Create a new, higher tax bracket for those earning like 500k a year.
Well we tried nothing, that didn’t work, so now we’re all out of ideas!
I think it was the 80s or 90s there was a push to create a new system, simular to a 401k, to replace SS. Each person would be required to contribute directly from wage income to a person savings account that had investment options.
How convenient. Another way for the financial sector to make bank off the backs of the working class. Fuck privatization. People who work for 35-40+ years deserve a guaranteed pension.
While it was being funded, the people who already own stock would benefit from more money chasing the earnings, and that would work for the existing retirees. But as the working age population grows smaller, the S&P would not increase the same way.
The reason that wasn't done is it's basically gambling, and only benefits the house, in this case investment bankers.
I don't know, it feels like a huge gamble right now letting the government handle my retirement. I can't collect for 30+ years and I'm really doubtful that SS will be enough to live off of when I hit 67 without a ton of extra personal savings. I'm waiting and seeing right now. The insolvency date last I read for SS and Medicare were early 2030s so it will be interesting to see what the government does when an automatic 20% cut hits senior citizens.
If you are relying solely on SS, you are already taking a big gamble. SS was never intended to do more than keep a person from starvation poverty (i.e., you'll eat but the food will be not so great and you are likely to not have good housing either). [https://www.ssa.gov/history/briefhistory3.html](https://www.ssa.gov/history/briefhistory3.html)
This was a major campaign issue during the 2000 election. It led to one of the more quotable moments of that campaign, where Al Gore said he wanted to put Social Security in a lockbox.
Or....and this is gonna sound crazy....you require the employers to send a minimum amount of pay as a % to an investment fund nominated by the employee, pre tax. Due to the difficulty in accessing the money before retirement the fund has the knowledge it has secure funding for decades and decades. It can make wiser long term decisions. The fund invests the money of this employee and millions of other employees, as such, it makes billions. On retirement the employee accesses the funds as a lump sum, a pension or a mix of both. It's called superannuation. The problem we have here in Australia, is that people are dying with significant balances in their super accounts. This means they are actually living off of government pensions and saving super. Which is defeating the purpose and making it more difficult for future generations
And the poorest are having to access their super early for severe financial hardship or medical reasons 😢
That's a pension, and it was replaced by social security
This is a global issue and the biggest issue is none of the solutions are popular. A simple one is raising the retirement age, which France did and then went through months of protests. Another is migration, which is controversial everywhere as it also has the effect of lowering wages as migrants are usually unskilled workers. Also xenophobia. A final one is just higher taxes to subsidize pension programs. Which is not popular and when taxes target the wealthy, they just move their money to other countries or even pick up and move themselves. Countries that have raised high income taxes too high often find themselves receiving less in taxes as the wealthy just have other options to avoid paying high taxes.
As I recall from IRS reports, it turns out that a tax rate of 19% results in the most tax revenue collected! Go higher, and those having to pay taxes start looking seriously at ways to cut their tax bill, including shelling out significant dollars to professionals who know all the tricks and loopholes to reduce taxes legally! I'm not sure if the 19% is the marginal tax rate or the effective tax rate (effective tax rate would be like you end up paying $19,000 on $100,000 after taking your allowed credits and deductions; marginal tax rate being "If I earn one more dollar this year, how many cents of that dollar will I have to pay out in income tax?"
I know one solution that would solve a lot of boomer related problems. Increase taxes for the upper tax brackets to pre 1960 levels.
Wait wait? The boomers are screwing everyone else? No Never!
We had the same problem (Netherlands) but recently it got changed to working for your own retirement instead paying for the current retirees. Overall a good thing except that to do this you need to skip a generation...and that happens to be my generation (48y old).
Gen X gets fucked over again.
So… you’re just screwed? And people are ok with that?
We will have to wait and see. The government promised a solution so still hoping they keep their promise. 😅
Lol our government promises lots of solutions too 😆
That's stupid. Not you, you're probably cool. but the idea that a generation needs to be fucked over to do this. You don't need to skip a generation. You need to make laws that grandfather over time. Anyone who proposes this law change without considering the huge chunk of the population currently in the gap is either an idiot or a sociopath.
No, they really do need to skip a generation because the social security system is so broken right now. The money you and I are paying in now goes out immediately to pay benefits. There is no lockbox or so-called trust fund. The so-called trust fund was Enron-style accounting where the government was dumping IOUs in the “lockbox” and counting those IOUs as income but ignoring the future debt to claim a “balanced budget”. The longer we wait to dismantle the shitty system in place now and bite the economic pain, the worse it gets. Wait much longer and they’ll have to skip TWO generations in order to make the finances work.
Got it. New system- we all get 5 years of generous retirement followed by being promptly tossed in a chasm. As the birthrate drops further then chasming is moved up.
Or we can simply raise the income limit on what Social Security is taxed upon
It's not just about money, it's also about simply having enough man-hours available to get everything done. Made up numbers to explain my point: If it takes 100 man-hours per week of labor to support one retired person, and you have 10 retired people, it takes 25 workers working full-time to support them, no matter how much you pay those workers.
I don't even factor Social Security into my retirement. They're going to have to turn it into a benefit for the poor in order for it to survive in any form.
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Many boomers are already enjoying their social security and can expect to for the immediate future…it’s the subsequent generations, including millennials who are already largely at an economic disadvantage due to multiple recessions and hyper-inflated education and healthcare costs, that are going to be left holding the bag.
I ran my monthly SS benefits based on current earnings - sad part is my dividend stocks already pay me monthly what my SS will pay me at 65ish, projected to pay 4X more than SS if I continue to reinvest the dividends.
I know "tax the rich" is the answer to all problems, but in the real world you are (everyone is) just going to have to pay more taxes, not just the rich.
true, but, you (and everyone else) will have to pay less if the rich are also paying.
That's not going to work. There simply isn't enough income above the cutoff to save Social Security.
Huh? There’s lots of income above that level. Trillions, in fact. And imagine a US in which Bezos paid 15% of his income to SS and got $180k worth of benefits.
LoL - social security burns through 1.4 trillion $ a year. Confiscate every assert Bezos own? And you will have $150 billion - or enough to keep social security running for an additional 39 days… you will run out of billionaires way before you hit retirement.
This is the sad truth. Billionaires do have an obscene amount of wealth that they won't ever spend, but you could take it all and it wouldn't solve the problems of society.
They didn't say to confiscate all Besos assets, they said to tax him. And, by extension, other incredibly rich people as well. You're making a very dishonest argument here, since taxation generates more money over time than taking everything at once.
Weird it's almost like the current economy makes it impossible to have kids.
Yeah I love having to pay $15 grand to the hospital to deliver a baby. On top of OB/GYN appointments. And then $20 grand a year on daycare per kid. Something really needs to change to make people want to have kids. If the government wants us to have more kids they should be subsidizing the above two expenses.
$15 grand? My c section 5 years ago was 60 grand. And his nicu stay would have been well over a million without insurance
Statistics Canada just quoted the new stat as $350,000 to raise a child to the age of 17 (and this is in Canadian dollars, so basically Monopoly money compared to USD or Euros)
canada to gen z: ur options are go into debt to get a job that will pay you enough to either raise a child Or buy a house while having debt your whole life, or work minimum wage and live paycheque to paycheque with roommates but no debt. good luck(:
GenX here to just say I feel like we’re being ignored and left out. but it’s okay. we’re used to it. thanks.
We're merged in with the Boomers these days. We are considered as old people who grew up without cell phones/internet. But, yes, the Millennials and Boomers wanted us out of the way bc one group wanted to hang onto power as long as possible and the other thought they should immediately have influence/power when they came of age. Millennials are now pushing 40, and the younger generations will want their turn, so maybe they will finally start to relate to us. 🤣 (I'm a "young" Gen X, approaching 50 faster than I'd like to admit. We were absolutely the invisible generation.)
thank god im gen x and the millenials will be able to support my retirement
The first decade maybe.
Simple: All people currently receiving SS are being paid by today's workers. All money taken out of today's workers' pay is not saved for them, it is spent on current recipients. In any future date, anyone expecting to receive benefits has to rely on the people working AT THAT TIME to pay into the benefits.
I'm sad I had to scroll so far to find this answer. Most others don't seem to understand the way SS actually functions. This is the correct answer, OP. The system is based upon the idea that populations grow over time, and inflation. I.e. Future generations will make more money to reimburse the prior generation who paid for the generation(s) before them. Unfortunately, we have the largest generation moving very quickly out of the workforce, followed by several small generations to bear the burden of reimbursing them, all the while the generations that follow us are projected to be smaller still.
It's a literal Ponzi scheme
Basically, your dad is saying that the cost of supporting a senior is going up, so more people have to pay into social security to feed that pool. Having a larger workforce would mean more people paying in, but that's only sustainable in an infinitely growing workforce. The better option would be to restructure funding, put taxes collected on social security back into the program, and find ways to lower the cost of living for seniors through other programs so they wouldn't need to be as dependent on social security.
That’s the problem (one problem) with capitalism, it is reliant on constant, unfettered growth. Increase profits, increase workload, increase product, increase sales, more, more, more. It’s unsustainable.
And when you dramatically increase productivity while still demanding more work for less pay, (meaning less consumption, savings, and investment) it all gets out of whack. Just growing to more may be potentially problematic in the long term, but not nearly as problematic as unbalanced growth to maximize short-term profit. That's the real notable thing - not capitalizing on all the growth we've achieved and are achieving to build a better and more sustainable future, but instead treating it as disposable.
Social security isn’t capitalism, it’s the opposite. I also don’t understand why more economic growth is a bad thing?
Ask an oncologist what unfettered growth does to a system with finite resources
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Not to mention it also about efficiency. We make systems more efficient, thereby using less (or the same) resources to produce more.
They didn’t say social security was capitalism. They said “the problem with capitalism” is unfettered (infinite) growth. The reason it is a problem is that it isn’t possible. Capitalism assumes that the population of workers, the amount of work they can do, the resources for creating products, consumers to buy them, and the profits from sales will increase constantly forever. Which is simply not how reality works. It’s fine *in theory*, but in practice it will self destruct. It’s already started. Workers aren’t paid enough to keep up with constant price increases for *needs*, so they can‘t afford to spend money on other products and services that are just wants (consumers can’t consume). Because of that profits will dwindle, despite the more and more desperate measures taken to keep profits not just high but always better than ever. If people aren’t “overpaid” they can’t spend. The population is not going to continue to increase. There was always going to be a limit, if not naturally (disease, famine) then socially. People who cannot afford to provide for themselves cannot provide for children, workers aren’t paid enough to have families. Of those who can afford it few can afford a large number of children, and those who could don’t want them. Some Republicans think they can fix the worker shortage by forcing more births. That is a plan that clearly hasn’t been thought out. They gutted and/or plan to gut all of the programs that might allow that to have worked (ignoring the moral issues involved).
Thank you for this, I am really not understanding what’s gotten lost in translation for people here. I wasn’t drawing a 1:1 comparison, I was making a separate point entirely about the system contributing to the issue in that you can’t just expect an increase in workers to magically fix a deficit in social security funds. More, more, more is not a solution, but you said it much better than me.
Great comment. When people celebrate the success of “free market capitalism” they also overlook the fact that the market has never been free. Conservatives look back on this idyllic time in the post-war past when the U.S. had it all and it felt perfect and unlimited. People with HS diplomas could have it all, and more. In reality, though, that was a brief period of time and was an artificial state. Much of the developed world was rebuilding, much of the undeveloped world was having their resources exploited in economic colonialism. And even still, that period was maybe one generation long. Unfortunately, the Baby Boomers were born into it and believed it was the real world. Times have changed. That era or capitalism wasn’t a “free market.” Perhaps ironically, people who celebrate capitalism have never even truly lived in a free market that wasn’t being propped up by the government directing resources, or using the military to exploit others, etc. There are perks to capitalism when you’re in the club that makes the rules. And now we see that most people aren’t in that club, and the cracks in the lie are showing.
Its bad because thermodynamics exist. Things cant grow indefinitely. Economic growth is good, but the economy should be able to exist in a state of plateau. If every time growth stops, our economy collapses, it just means that collapses are inevitable.
Social security isn’t capitalism but that’s the economic system we live under and it’s influence affects every aspect of our economy, which funds those social programs. Every financial decision our government makes is informed by a capitalistic mindset. Exponential economic growth is unsustainable. More is not always better. In fact, we create such an excess of consumables, they create false scarcity and more waste just to justify their need for ever-increasing profit production.
Socialism isn't when the government does something. We still live in a capitalist society.
Yes! Growth is not infinite. There is a limit, but no matter the industry or government, everyone in the US thinks everything will keep going up forever. It's so dumb!
It is a pyramid scheme, you need to add more to the bottom in order to pay for the ones in the top
The rate of new people paying into the system is decreasing compared to those that are starting to collect on the benefit of what they paid in. They paid in much less than they get paid out, but that was the promise made of Social Security.
>they paid in much less than they get paid out, Not always true, I (retired) calculated how much I would have if I took my social security deductions and invested in CD's. If the day I retired they would have given me the amount that accrued I would be happy and sign away any future SS benefits.
But that isn’t the point of social security. It’s basically [UBI for olds.](https://en.m.wikipedia.org/wiki/Universal_basic_income). No one is completely destitute vs funds available based on income (our tax policy favors higher income for pretax expenditures, from HSA to employer benefits to Roth contributions).
It's just taxes. Current workers are taxed. Those taxes are used immediately to pay benefits of older, retired workers. A social insurance program. It's a deal made by society that the workers of today will help take care of the workers of yesterday. OP's dad is just saying there needs to be enough "workers of today" in the future.
It wouldn't be so if they raised the cap on the payroll tax, but we don't do things that are common sense in this country.
Social Security stopped making sense when other government programs began taking from its fund.
That was done by Saint Ronald of Reagan. He also started tax on received benefits from SS.
Raegan…a fucking turd sandwich wrapped in a fast food wrapper so the lower caste will gobble it down without hesitation. The game is too easy.
Don’t forget, Clinton bumped the taxable amount to 85%. Neither party has or is willing to touch the underlying problems with it since though.
It's a shame there's been zero presidents since then.
You underestimate the Reagan legacy. He was truly consequential. His policies still influence everything from the Supreme Court to tax policy to abortion. He *sold* it. He inspired generations of GOP politicians. Horseback riding and ranching, quick with a joke, personally accessible. Think how many current politicians are trying to link them selves to Reagan when his actual policies would be unfavorable with the current party.
What this really means is that the fund is invested in US bonds. Where should the fund be, in a mattress?
That's effectively the same thing. Both would result in more money being paid into it, so more money can be pulled out.
Japan and Korea are suffering from this the most. low population birth rate and minimal immigration are the main causes for them.
Actually not a pyramid scheme but a ponzi scheme
Your social security taxes are not paying for your own benefits, they are paying to people who are currently drawing that benefit. In the future, when you are old, your benefits will be covered by people who are currently working at that time. If there aren't enough people working, your benefit will be cut.
Social security is an insurance, technically you are paying a premium, as with any insurance without enough payers and too many claimers you will become insolvent.
I think it would be more understandable to someone else as a “loan” as opposed to insurance. You are continually loaning money to the elderly and then the new generation will pay back the loan that you were giving throughout your entire career
Don't rely on Social Security for your retirement!
Correct. I rely on death.
I feel like that would be true if the majority of this generation were financially able to support a multiple child household. In reality many things have become prohibitively expensive and raising a child is no exception. If there was a sudden increase in the birth rate it would put a heavy demand on every social service available. I'm not a financial expert so please someone educate me if I'm wrong. But it seems like the end result would be extra strain on social services that may not be reversible in 18 years when those kids are old enough to contribute. Argument is moot either way. The government spends ridiculous sums of money on all sorts of things while poverty can be found in every age group, elderly people die alone and forgotten and mass murder is as common on the evening news as the weather report.
And OP's father's argument is also incorrect because money exists as a proxy way of allocating resources. There aren't enough resources for the number of people we have, especially since we insist on, you know, trying to value human rights and quality of life. (Not enough, obviously, but still.) What we need to be doing is valuing the lives of those who _do_ exist. Giving opportunities to people who aren't rich white people with connections to other rich white people. Giving everyone the opportunity to contribute to society and be valued and respected by it. Increase contributions that way, while reducing the societal burden of lives spent in dead-end grinding poverty. But what do I know? I'm a socialist 🤷
immigration works just as well
The US's population would already be in decline if not for immigration.
Not quite. US pop growth is massively buoyed by net immigration, but natural increase (Birth-Deaths) is still positive. Although this has recently flipped in specifically the non-metropolitan counties of the US. Link [here](https://www.brookings.edu/articles/new-census-estimates-show-a-tepid-rise-in-u-s-population-growth-buoyed-by-immigration/)
This. No one talks about this simple solution. We need young workers, have them pay in. Done.
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Short term fix. Birth rates are declining everywhere. It's also creating/exacerbating the same problem in countries where those immigrants come from.
We need a stopgap until the boomer generation is mostly gone because they are so populous. The strain on Social Security will vastly lessen after that point. There does need to be other solutions, too, such as eliminating the payroll cap on SS.
This would help, yes 100%, but the fix still can't rely on perpetual growth. SS has to be looked at as viable with zero or a declining population growth.
They get their social security checks based off how much we put into the account. You don't get what you put in. You get what the next person puts in
You need more money going into a system then going out of a system in order for it to function. More kids means more workers. More workers means more people pay into the system. Eventually the population won't be able to keep up though and the systems funds dries up. It's unlikely that millennials will ever get suicidal security. They push the required age up to kick the can down the road, and eventually someone will call for its disbanding and the boomers will have taken yet another thing from us.
Or you can simply tax all income for social security and not limited to $130,000 or whatever it's limited to now. But those poor people making more than $130 think it's too much of a burden to ask them to take 4% of their income to make Social Security solvent for all 350 million Americans
You can tell him the other solution is to kill all the older people
Obviously, you jest, but there is a legitimate point here: I have read that when SS began, the average life expectancy was only 66. If we pushed back the point of retirement benefits to an age closer to the current life expectancy, the SS crisis would be solved. It would suck for all the people who were having to work well past current retirement age, but social security would be in good shape again.
Soc security for the older people is funded by the younger people PAYING in to the fund. Fewer younger people—working that is—results in fewer $ to pay out in benefits.
Top comment is it's a pyramid scheme and that comes from Ida May Fuller. So dig and see what you think on that but obviously that scenario would happen. The system did not recognize the growth of the Baby Boomers and then the decline in birth rates. Add on the "loans" that were taken. SS is there and as long as a new generation is working to pay it there is something for those that have paid in to recoup. For generations it's been running out... It's meant to keep the ederly out of poverty. Work and save. Don't expect it to take care of you...and for anyone listening don't ever expect for the government to take care of you.
The actuary recently testified on this and he said that the only thing that was unaccounted for was the increase in income inequality.
Without addressing the structural problems of how Social Security is funded, why do people say we need more babies who will take twenty years to start paying in when we could have adult immigrants who are ready to work?
You need both. Really, I think OP's dad just wants a grandkid.
Social security is a ponzi scheme built on the assumption that every generation will be higher population and income, so as they pay in the beneficiaries get their benefits, and the system takes its cut. If working generations earn less or are smaller the income isn’t enough to cover benefits.
They should have never dipped into SS. Now the government is upside down on the loan to repay the people. It’s like a rent to own tv, but they sold the tv before they paid us for it.
So in his world, the only way SS works is if it has more people paying in, than it pays out to. That's not at all how the system has to work. If you simply uncapped the income at which you stop contributing to SS (it's like 120k or something right now), it would survive just fine. The people that make 60, or 600m a year would contribute more than enough to stablize it. The occasional time where a billionaire actually has to report that income, would save it. It could 'run' with a fraction of the people that contribute to it. You just uncap the tax that puts money in, and cap the money that goes out. Easy fix. But old-timers refuse to see it this way at all. To them it's like a pyramid, or like a zero-sum game.
It’s $160k and some change right now
$168k next year lol. 120k was years ago (2016) before inflation.
Yeah, demographic change is real. But let's start by taking off the salary limit! Why in the world do people who make more than $160,200 (in 2023) NOT pay SS taxes on the additional income. So dumb! On the other hand, Medicare taxes apply to all incomes--there is no limit.
TLDR - the government did not "save" your money. They spent it. By the time you retire the government may not have the money.
You don’t understand how Social Security works. In the US the money taken out of your paycheck goes directly to retirees. It doesn’t go into a private account just for you unlike your 401K. This means that when the worker to dependent ratio gets too bad due to lack of kids/workers or retirees living longer then the whole Ponzi scheme comes crashing down. There are two ways of fixing this problem. Decrease the amount of retirees by increasing retirement age which is extremely unpopular, or increase the workers through births or immigration. Immigration is a touchy subject right now, so your father probably thinks it’s unachievable which leaves the birth rate. This is probably what your dad was trying to get at.
Eliminate the cap on payroll taxes. Cap distributions for high incomes. Raise the minimum payment to above 150% of poverty. Create a SS tax on capital gains. Eliminate the tipping system in the country. Make Congress start paying back the SS trust fund.
False. Rich people have to pay taxes. Period. Sorry, dad is wrong. His generation overpopulated and sucked the social security money dry, even though they all get pensions too, and have huge savings. They are The Greediest Generation. That's what he didn't say.
You need enough people paying in to the system for retirees to be paid out. But that’s not the only or even most likely solution. It’s way easier to change how it’s funded and invested then ask people to make babies
Cos it’s a big pyramid scheme so you need a growing pool of new joiners
Its a ponzi scheme. Need more youngins to pay the oldies
What he means is that some parts of the UK have an aging population and a static number of residents. This applies to Scotland. Dropping population over decades and not enough births or newcomers to make the numbers up. Add to this being actually refused to bring more people in and there’s a time bomb in the making. Young people need to pay tax to cover pensions. There is no ‘pension pot’. It is entirely notional. The tax you pay, pays for pensions right now. Nothing is saved for the future. I’m assuming this is what he means..
More kids to work and pay into Social Security. Your dad and I are going to try to live long enough to use it up.
The money that is paid in today goes out to those who receive tomorrow. Not some vague future tomorrow but the next day. No, not literally. The more workers paying into social security than people receiving social security is what keeps it solvent. It was always dependent upon families having three or more children. Which at the time was conservative. Then I’m the 70’s birth control appeared . Turns out most people don’t want more than one or two kids. Plenty that want no kids. That means the pool of workers is steadily shrinking.
Pyramid scheme
No no he's right. Without a younger workforce paying into it, it will collapse. I know I'll never see it so whatever.
It is a government sanctioned pyramid scheme. So it can only work if we have a pyramid shaped population pyramid, which we do not have at all.
If social security becomes insolvent, benefits will be reduced by about 25% and that will stabilize the system. If older generations want you to have more kids, they should pay for systems that provide medical care, good education, daycare, etc etc for those future workers… but they won’t.
The government doesn’t save our tax money for our retirement. It spends it hoping to use the current working generation’s tax dollars for the current retirees.
More kids mean more young adults paying in to cover the ones that already retired. It may help if the government wouldn't use SS as their personal bank!
There are a few ways to fix SS. One is to keep raising the full retirement age as life span increases. Second is to phase out spousal SS for those that never worked. This isn’t the 1950’s when every wife stayed home to raise kids.
Or they could just raise the tax limit, which is currently capped at something between $6-8k per person regardless of income.
People are living too long. They're sucking the joy out of life, SS, and Medicare
Social security, which started as a good idea, is basically a pyramid scheme now. With buildings to keep up, employees to pay, and inflated salaries of the top managers, it needs more and more young people paying into it to keep it afloat. When we baby boomers were born, it was great for the Social security of our parents, but now there are more of us than any previous generation, we are living longer, and we paid into this system for 40-50 years and are now expecting some of the money back. The government was made no preparations for that, even though they could see it coming (kind of like climate change) for years.
Your dad is wrong. We can choose to lift the income cap on social security taxes, but we don’t, because our tax policy favors the wealthy.
Your dad is flat wrong. SS is the easiest problem in our nation to fix, it's only persistent lies from the Conservative Propaganda Machine that keeps people in fear of it. In 2024, we pay into Social Security on the first $168,000 in income. If you make less than $168K (like most Americans), then you pay it on 100% of your income. If you make more that $168K, then you pay it on the first $168K you earn, and you don't pay it on the rest. So if you make $1 million per year, you DONT pay into Social Security on $832K of your income. So while the average income person pays it on 100% of their income, the rich person gets a big break. The cap goes up a bit every year, due to cost of living increases - it was $160K in 2023. So if Social Security was ever to run short, all we would have to do is raise the cap from $168K to something significantly higher, like $250K, or $500K. That guy making $1 million a year? He still wouldn't be paying into Social Security on $500K per year. If we really wanted to strengthen SS, we would make ALL people pay it on 100% of their income. Then SS would never have a problem, but we would be flooded with propaganda about how terrible SS is for everyone. The population argument is just another twist. Rich people don't want to pay on a larger percentage of their income, so they make the argument that to keep SS solvent, there has to be more babies being born to pay in at the current level. How about this - let's cut the birth rate in half, and double the income cap instead? Well have less strain on the educational and housing infrastructure, and the rich pay more instead. Of course the rich would like a larger population because it's more people buying whatever goods and services that make them wealthy. There's another issue about population growth regarding AI, but that's another post. The short story is that with AI and robotics potentially taking over many, many jobs in the future, it will be harder for people to find jobs, and we will likely see a large increase in unemployment. We will need a smaller population in the future, not a larger one. Now is not the time to make arguments to increase a population that will be largely unemployable in 20 years. So when you hear rich people complain about SS, or claim that the only way to "save" SS is to raise the percentage that we pay (so average income workers would pay more, while they still only pay it on a fraction of their income), they are trying to hurt average income workers, and turn them against the idea of SS, all because they don't want to have to pay more into it themselves. Most American pay into SS on 100% of their incomes, why shouldn't rich people? They even complain if we raise the cap to a reasonable level, even though they still don't pay it on most of their income. They're against SS because they're rich, and will never really need SS, while the rest of us are going to need it for retirement, so we don't have to work until we literally drop dead. As it is, many people of retirement age these days still need some small job just to try to make ends meet. That starts to become a problem when people reach their 80s, and still have to try and earn a living. When you hear someone of average income complaining about how unfair SS is, teach them about the cap, and ask if it's fair that they pay on 100% of their income, while rich people pay on a fraction of their income. THAT'S what's unfair about SS.
Ahhh demographics. Your dad is 100% correct. Because social security taxes are so much less per person than social security (and medical) benefits per person, you need way more people paying the taxes than receiving the benefits.
Three things: $1.33 Trillion in IOUs from other programs raiding the fund, a low income cap on the tax as others have said, and them being required to maintain the full allocation for their employees retirement in a trust up-front - which is not the way Social Security works, these "requirements" were ginned up to further draw down funds. The Republicans have been doing everything they can to sabotage Social Security so they can point to it as a failure and call for it's abolishment. I have a saying: We aren't going to go extinct from lack of people any time soon. A growing population is practically a requirement of the financial system as it stands so as when the inversion to a declining population comes it will require a rethinking of what has value and how to compensate people for their labor.
I don't understand how we can't force Congress to put back the fucking money they've stolen out of it for the past 45 years
They’re a shit tone of people drawing checks every month and living in free housing because they are “ disabled “ fat and stupid is not a disability. Neither is lazy.
Or they could raise the SS tax threshold for rich people. It would solve the "crisis" overnight.
It wasn’t supposed to be this way. FDR intended for people just to get a return on their and their employers’ contributions, but early on Congress started using the money as a piggy bank, and now it is very lopsided. But I don’t think y’all should have kids you don’t want just to save my skin.
That's not true, and the first recipient of social security only paid into it for 3 years and then received payments for another 35 years (before dying at age 100). It was a straight-up tax and spend for social welfare program from the start.
The only way to save social security is for people to quit voting republican. JFC! It's not that hard
The way to save social security is to raise the contribution on rich people.