Funding Social Security Is a Lot Cheaper Than Coddling Rich Retirees

[turbinetree]

Our government spends a fortune helping those who need it least.
MICHAEL MECHANIC
Senior Editor


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On Thursday, the Social Security Administration announced its largest cost of living adjustment for beneficiaries in four decades, an inflation-driven raise of 8.7 percent that will take effect in January 2023. That increase matches the average annual COLA from 1975 through 1982, an era of recessions and high inflation. Annual Social Security raises declined after that year. From 1996 through 2021, they averaged 2.3 percent, and were zero in some years. The 2021 raise was substantially higher: 5.9 percent.

The new increase in benefits will be pricey. On the other hand, the cost to taxpayers of the entire Social Security program pales in comparison with the cost of federal subsidies for rich Americans enrolled in private or supplemental retirement plans, such as individual retirement accounts (IRAs). According to Federal Reserve data from 2019, only 31 percent of households from the poorest half of the wealth spectrum contributed to such a plan, while 91 percent of households in the top wealth decile did.

This suggests that low-wealth retirees rely heavily or exclusively on Social Security, but all US workers get to collect benefits starting at age 62. As of last month, nearly 66 million Americans, rich and poor alike, were getting monthly checks. Most are retirees, but there are also spouses, disabled workers, survivors of deceased workers, and dependent children. The largest and best-compensated group, the retired workers, averaged $1,674 a month, or about $20,000 per year.

https://www.motherjones.com/politics/2022/10/social-security-cola-increase-inflation-subsidies-retirement-rich/

[Samrob]

1. Don't even get me started...nt

[snowybirdie]

2. Oh Lord

Just what we need right now. Let's get the retirees fighting each other!

[ProudMNDemocrat]

3. ELIMINATE the Gross Earned Income cap.

Those making $5,000,000 annually should be subject to Social Security taxes as those making $50,000 annually. THAT solves the funding issue of Social Security and makes it solvent for 100 years with benefits expansion.

Republicans OPPOSE that! For the rich earners NEED all of their money and then some!

[fescuerescue]

4. Maybe.

The issue is that high earnings, i.e. $5m a yea, is rarely W2 income.

I think back to the CEO at my old company, which was extremely pro-employee btw. He easily made $50 million a year, but according to SEC filings, only about $400,000 of that was W2 earnings. The rest was stock options, dividends and other means.

I suspect that lifting the cap would help, but no where near as much as is imagined. Especially since ultra high earners usually have the power tol shift their income away from W2.

[Progressive dog]

5. The funding of social security

is designed to make it difficult to de-fund social security. There is even a social security trust fund, backed by special US government bonds. The "taxpayers" should not get to cheat those on social security out of the income (adjusted for inflation) they have earned and paid for. Inflation will increase the government income from taxation if salaries keep pace with inflation.
There is no reason for the author to complain that the government defers taxes on some small part of incomes for individual pensions. Group pensions are also tax free for both employees and employers until paid. Why should individual pensions be taxed until paid?

[Genki Hikari]

6. Social Security isn't tax free.

So we're dinging the poorest people while, yet again, letting wealthier people with group pension plans get more money tax-free Is your argument that it's okay to tax unAmericans more than we do wealthier people because...?

Oh yeah--because it's okay to take a dump on the poor. We can never, ever do anything that hurts the well-to-do. Why, it's downright unAmerican to be poor, so you deserve to be treated like crap for it, amirite?

Tell you what--let's tax those "tax-free" pension-plan retirees who can afford to take a small hit on their retirement income, and make SS tax-free for those who rely solely on it.

Sounds right to me.

[Progressive dog]

7. Social security is tax free up to

file a federal tax return as an "individual" and your combined income* is

between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $34,000, up to 85 percent of your benefits may be taxable.

file a joint return, and you and your spouse have a combined income* that is

between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $44,000, up to 85 percent of your benefits may be taxable.

No part of a pension or IRA is tax free except Roth where contributions are taxed. On normal IRA's there is a minimum percent withdrawal after 70 1/2 years. The only exceptions are Roth IRAs which are funded from already taxed income.