Social Security offends me

[Syrinx]

No, not the idea of a federal pension for seniors. I'm fully in favor of that.

It's the way that the accounting works that pisses the shit out of me.

It's that there's a cap on the amount of income that is taxed for social security. I may not be spot-on on this number, but I think it's something like the first $106,800 that is taxed by social security. Anything above that number is left alone.

And secondly, people that need more help get less help. That's what really pisses me off.

Using the Social Security Administration's own "quick calculator," I see that someone that was born in 1950 that makes $20,000 annually, can expect to see $620 per month from social security. A person of the same age that makes $140,000 a year can count on about $1,800 per month, almost triple.

This is crazy stuff.

Why do we have a social welfare program that pays more money to retired executives than to retired dish washers? It doesn't make any sense to me.

[RC]

1. They contributed more. That is why they get more.

Social Security was set as a retirement program, not a social welfare program.

[Syrinx]

2. it doesn't make sense

For the government to pay more to rich people than to poor people. I would think, as Democrats, we could agree on that.

[BzaDem]

3. You are misconstruing the type of program Social Security is.

It is a social insurance program. You contribute, and then you get back later. That is the reason it is politically popular and politically sustainable. The more you contribute, the more you get back. You seem to want the opposite: the more you contribute, the LESS you get back. I can assure you -- if your plan ever came into being, no one would want to contribute, and eventually the people will elect politicians to make it so you don't need to contribute (ending the program as we know it).

You have a vision of Social Security as a pure benefits program, with an unrelated payroll tax. But that is not what Social Security is, and it is not what Social Security has ever been.

[Syrinx]

4. maybe what you say is true

But it just illustrates how awful our government is. It seems everything is slanted toward the wealthy. If you have a lot of money, we'll give you more. If you are poor, well you're out of luck. Go sleep on the asphalt. I wish we had a real people's party.

[Scuba]

5. Now you've gotten to the real issue....

...someone asked recently if it was offensive that athletes and movie stars made so much money. My reply was no, it is offensive that the poor make so little money.

Social Security is what is it. That doesn't negate the need for taking care of those neediest among us.

Interesting that Democrats main problem with Social Security is that it is not an adequate safety net, while Republicans big problem is that they're not getting a cut off the top.

[aquart]

8. They are getting a cut off the top.

After a certain amount, they don't put more in no matter how much they make. We have to lift the cap. Not only to protect Social Security, but because our rich are becoming bizarre.

Think of increased taxation of the wealthy as a form of intervention.

No man should be so rich he has nothing left to buy but his government.

[Scuba]

10. But they want more. Even Bush's gurus said privatizing would....

...result in 5% management fees, whereas the fees now are less than 0.9%.

[Caliman73]

34. Great line at the end...

Is that original? I love it and agree totally.

[BzaDem]

6. The alternative is ZERO help for ANY seniors. Do you know how FDR got it passed?

It was passed in the first place because FDR got a national consensus for his program. He got a national political consensus because it was a social insurance program (as distinct from a pure social welfare program).

That is, instead of putting your money into a savings account or the stock market, you could put it with the government, such that when you were ready to retire, you could get your money back.

If the program were set up like the way you wanted, no one would want to contribute, since they would lose the money they contributed. The program would never have passed. Social Security would have been like Single Payer (in the sense that people talk about it a lot, argue for it a lot, etc etc etc, but it would never have actually happened and would never happen).

You could argue that a program where you put money in and get money out is "slanted toward the wealthy," but the people generally do not think so. Social Security has an incredible amount of support nationwide, and most of the people that approve of it are decidedly not wealthy. Your "people's party" would be a goal without a constituency.

This isn't to say it isn't a good idea to give more money to the less fortunate -- far from it. I (and most everyone here) would support more aid to the poor. I'm just talking about why Social Security was passed and still exists, from a political perspective. Programs that are ideal (or even close to ideal) are programs that are talked about for decades but never actually get enacted and have no hope of being enacted (such as Single Payer).

[Gaedel]

7. Social security

Over most people's income range, social security follows a straight line of increase where the monthly check is proportionate to your average income. At the bottom end there is a hiccup so that you get a certain minimum regardless of how low your wages were (so long as you had thirty-five years of wages) while at the top end there is a maximum represented by the social security cutoff. Your income other than social security can also determine how much of your social security benefit is taxable so that if you have other retirement income (pension, interest, stock dividends) your SS benefit may be fully taxable while if you do not have other income, your social security benefit may be tax free.

[Statistical]

15. There is a line but it isn't straight. More like curved.

70% of the first $761 in monthly wages (average inflation adjusted).
32% of the next $3801 in monthly wages.
15% of wages >$4562 in monthly wages.

[bighart]

9. The government doesn't "give" you anything, they repay you

what you payed in.

[eridani]

12. The benefits calculation program already favot5 low earners

Proportionally to what they pay in, they get more out. It could be adjusted to favor them more.

[deaniac21]

32. Give?

[eridani]

11. The initial benefits formula could be adjusted to favor lower income people more that it does now

Also, I have no problem with a cap on yearly benefit levels. However, the basic fact about Social Security is that it is insurance--you pay into it, therefore you get paid out of it.

If you total your car, does your insurance company look at your savings and refuse to pay if they think you have enough to buy a new car without their help? Of course not.

[Yupster]

28. The bendpoint formula for payouts

is incredibly progressive as you see by your own example.

The person who pays seven times more into the system only gets three times more out of the system. That's because the bendpoint formula favors the lower paid worker.

You want it to be even more progressive? That's fine, but it already is very progressive the way it is.

[Statistical]

13. SS favors lower income. Rich get back a lower % of what they contribute they get back less.

"Why do we have a social welfare program"

It ISN'T a welfare program.

It would be like saying:
If a rich persons purchases $1 mil in life insurance (and pays higher premiums) and a middle class persons purchase $250K in life insurance it "offends" me that the life insurance program pays the rich person's family 5x as much.

http://ssa.gov/pubs/10070.html

SS returns:
70% of first $761 (in average inflated adjusted wages)
32% of wages between $761 and $4562
15% of wages over $4462 (up to the cap w/ currently is $8900)

Someone who makes say 1000 a month gets income replacement equal to about 60% of their wages.
Someone who makes say $5000 a month gets income replacement equal to about 38% of their wages.

[dkf]

14. If it were a true retirement system it would be 5x not 3x the amount.

That is why social security is NOT a retirement system and why privitization would be a boon to higher income workers who could get more than 15% for amounts above $55,032 a year.

Multiply the first $761 in Step 4
Multiply the amount in Step 4 over $761 and less than or equal to $4,586 by 32%. .
Multiply the amount in Step 4 over $4,586 by 15%. .

http://ssa.gov/pubs/10070.html#estimate

[GoCubsGo]

19. Exactly. And, it wasn't meant to be a retirement system.

It's social insurance, not a retirement plan. That's what so many people don't understand. It was, and still is, a social net meant to keep senior citizens, widows, and fatherless children from living in abject poverty. Nothing more. The big mistake people make is comparing it with a pension system. Apples and oranges.

This whole privatization crap isn't about higher income recipients making more money. Odds are, they already have some sort of pension or 401K. And,they can already invest other funds on their own. It's about corporations sucking away even more of our tax dollars by making EVERYONE invest in private stocks. Just like their conversion of pensions into 401Ks. Remember how those were sold as being so much better than a pension? Look how well that is working. Just one more example of corporations taking over our government.

[dkf]

20. Yet the cut in payments by raising the retirement age is just as significant as the fluctuations in

the stock market.

[madokie]

16. Because they can get away with it is why

Nothing fair about it. We all pay, up to the breaking point, the same percentage, some jobs pay more so they pay more but it still cost the same for anyone of us to live when we get to that SS age. I think its sucks to high heaven that the rich boys get more than the low man on the totem pole. After all it takes all of us doing our jobs to make this big machine called government work to begin with. hell if we were all rich then who'd do the fucking dishes, I ask?

[hayu_lol]

18. Don't forget that SS is more than just a retirement...

program. There are survivor's benefits to help young families stay together following the death of a working parent...and then the disability pension which does the same.

[madokie]

30. No forgetting here

SS is the one of the best social programs if not the best that any one has come up with.

[dkf]

17. You are the first person to identify it as a welfare program.

And that is correct in that it does redistribute from the young to the old and from the wealthy to the poor. At least you recognize it as such, but you want it to be more slanted.

What you don't take into account is that a person in a high cost of living area needs to make more and needs to get more social security to be in the same situation as someone who made less in a lower COLA area. I hate to see what your ideas would do to people in my state.

[Gaedel]

21. In theory.......

It does not distribute from the young to the old.

In theory, the old worked when they were young and they (and their employers) gave money to the government which the government wisely invested (in government bonds) and now is returning the proceeds (contributions and interest) to the workers in their old age.

In fact, the money the young are now paying in is being used to pay the older retirees, so it is a transfer from the young to the old (and gives some element of truth to the conservatives saying it is a "Ponzi Scheme").

[dkf]

23. No...social security is a pass through system which runs from workers to retirees

Only the surplus, the amount that was received but not paid out to retirees, exists as a funky type of non negotiable government bond.

[Hannah Bell]

39. it's not a ponzi scheme. young workers funding older workers' retirement has nothing to do with

ponzi schemes.

[Hannah Bell]

38. it's not a welfare program.

[sinkingfeeling]

22. Give me a break! Social Security benefits are based upon contribution. Same calculation applies

to all. If it were based on anything else, it would never have passed as it would have been reduced to a 'welfare' program and that was not the intention of SS. I think it's a pretty good deal if somebody making 1/7 of the amount of somebody else and thereby paying in much less, can receive a benefit of more than 34% of what the other person's benefit.
Also somebody born in 1950 has not reached full Social Security retirement age, which would be age 66.

[uncommon]

24. Did you adjust for inflation? Mine came out to over $5K a month after

adjusting for inflation.

Also, Social Security isn't exactly a welfare program - it's a social safety net. So it does make sense that those who paid into it will get more out of it.

(Edited to add: I am 29 so I am much further away from retirement than someone born in 1950.)

[Gaedel]

26. The problem is.....

Your calculation is not based on your highest earning year, it is based on your high thirty-five years earnings (unadjusted for inflation).

There is a table for people retiring today who have always paid the maximum into social security their entire working lives and how much their benefit would be.

[Statistical]

29. Not true. They are indexed for inflation.

It is based on the AVERAGE of the top 35 years BUT those yearly amounts ARE adjusted for inflation.

So to put a one sentence summary:
"You monthly social security benefit is based on the inflation adjusted average monthly income for the top 35 wage years".

http://ssa.gov/pubs/10070.html

You will notice that each year's wages are subject to an inflation factor.
So for example the inflation factor for 1960 is 10.32. So earning $10K in 1960 is equivalent to earning $100,320 in 2010.

So someone who earned $10K in 1960 and $100,320 in 2010 would get "wage credit" of $100,320 for both years.

Calculating your SS benefit is rather straightforward.
1) you record all your wages for top 35 earning years (if you work >35 years you get to pick top 35 but get no other benefit)
2) you multiply each year by an inflation factor to get them all equivelent in current year dollars (retirement year dollars).
3) you determine the average monthly wage for top 35 years by taking total wages and dividing by 420.

4) you monthly check is based on a % of the average monthly wage (very important number to know).
90% for first $761
32% for next $4095
15% for anything over $4856

This gives you your monthly benefit amount for year 1 it will NEVER CHANGE IN REAL (inflation adjusted) terms. So once you have your year 1 benefit amount it will ONLY rise by the amount of inflation. 3% inflation = 3% increase in check. 0% inflation = 0% increase in check. 2% DEFLATION = same check (however it will take more inflation in future to get check increase).

Another way to look at it.
Say you start working on Jan 1, 2011 and have a salary of $60,000. Every year you get a wage increase (on Jan 1) equal to inflation (CPI) of previous year. However you never get promoted or get any merit raises (raises other than inflation). Each year you nominal salary amount will change ($60K first year, $62K next year, $168K by year 35) however for SS purposes each year is worth exactly the same ($168K in 2046 dollars). For SS purposes you earned $168K inflation adjusted each year for 35 years.

[uncommon]

31. It based it on what I made this year, adjusting for normal salary increases over time.

Why should it be based on someone's highest earning year? I think an average of 35 years is pretty generous.

[kentuck]

25. Just call it a tax...

and make it needs based, with the same schedule as today. Tax everyone and those seniors with over 100K in income would not be eligible.

[Statistical]

27. Yeah and it will then be as popular as welfare.

Benefits will continue to decline and eventually it will die.

Social security has the almost "magical" property of being universally popular. Some gnashing of teeth by tea party aside it is popular with liberals & conservatives. It is popular with rich, middle class, and poor. It is popular in every demographic except the very young.

Even people who say "it likely won't be around when I need it" are unwilling to advocate ending it when pushed (likely because some part of them wants it to be around).

No SS works just fine. It provides a much higher ROI for the poor than it does the rich. Even the rich like the fallback of SS. Many people are rich and end up poor due to bad deicisions, fraud, illnesses, etc. For someone w/ $20 million in the bank SS is still a "helps you sleep at night" fallback plan.

[county worker]

33. I have been paying into social security since 1964 when I got my first job out of high school.

That's a few months over 46 years. I've earned enough points to collect social security at full benefits in about a year and a half. I will be getting a little over $1,800 a month. I plan to keep working until I am 70 and invest the social security. I will have to pay income tax on 85% of it but that is my retirement plan. I will also get a pension of about $1,000 a month when I turn 70.

Now I don't feel I should retire and live in poverty as the OP suggests just because I did what I could to put myself in the position I am in and he thinks it is unfair to him!

[Syrinx]

35. what in the world are you talking about?

Where did I suggest you "retire and live in poverty?" And where did I say anything about it being unfair to "me?"

I simply think it is insane and immoral that those who need more, get less. And those who need less, get more.

Sometimes, I don't recognize this place anymore.

[Nye Bevan]

36. You still really don't get it, do you?

DUers like Statistical and dkf have taken the time in this thread to explain in detail how Social Security really *is* progressive. Your own example bears this out; someone paying 5 times the contributions only receives 3 times the benefit. Low earners are much more favored by the Social Security system than higher earners, yet you still claim the system is "insane and immoral". The quickest way to destroy Social Security as we know it would be to change it from a retirement plan to a welfare scheme.

[Syrinx]

37. I wouldn't use the word "scheme" to describe Social Security

I would call it a program.

And no matter how some of you refuse to believe it, Social Security is a social welfare program.

I simply think we should make it more progressive.

Is that so bad?

I think progressives should push a little harder.

Let's fight a little harder.

Billionaires, or even millionaires, should not receive social security. That check is like lint to them. Give the money to the people that need it.

I'm not religious, but act more like Christ, dammit. :)

[BzaDem]

40. Just because you say it is a social welfare program doesn't mean it actually operates as such

It is a social insurance program. You pay in, you get out. That is what it actually is, regardless of what you or anyone else says on a message board. The payout is somewhat progressive relative to what you put in, but the more you pay in, the more you get out.

You act like your posts just call for it to be more progressive. But that is not the full extent of what you are calling for. You are saying that people who contributed less should get MORE than people who contributed more. Not just more than they are getting now (which I think everyone here would agree with), but more than people who contributed twice as much or three times as much.

That would end political support for the program as it exists. People who make more would elect people to remove their requirement to contribute at all. If FDR proposed the program as you would like it, it would have never been enacted.

[Nye Bevan]

41. Another DUer who gets it.... thank you (nt)