Social Security and Medicare

[Hobbitess Senior Member Find all posts View Profile Close Hobbitess]

that may have happened to those that are 20-40 years older than I, but it certainly will not be the case for my generation. The Ponzi scheme was set up to be over-weighted to those that were in the program early, at the expense of the younger generation.

It sort of made sense when they set it up, because the population was expanding, meaning the younger generation was supporting a smaller older generation. They mistook a short-term trend for permanent reality. OTOH, everywhere they've set up that sort of government-controlled generational shift, the birth rate has dropped considerable, so maybe it's more than they didn't figure the impact that shift would have. Still, prior to 2009, the U.S. rate seemed to have stabilized at a higher level than most of Europe's. Since 2009 the U.S. rate has dropped again. Might go back up again, who knows?

You're right that many people currently receiving Social Security paid as much or more than they'll likely take out; Medicare is the one where people are drawing much more than they put in. The problem there is that there isn't a larger younger population coming along to deal with that difference, the way there was with SS. Obama's solution is the Affordable Care Act, which is supposed to keep Medicare "strong and solvent -- today and tomorrow." Time will tell. Europe's a decade or so ahead of us in terms of the population imbalance, so we've got a window to the future that they didn't have.

Then again, there have been "social security is doomed!" rumblings since the 1970s, to the point where my parents were wondering if it'd still be there when they retired, and it's still fully functional. Doomsayers can see what's going wrong better than imagine solutions. Government-run Ponzi schemes work fine as long as there are enough people to keep them going, and as long as the younger generation believes in them.

[BoardGirl Senior Member Find all posts View Profile Close BoardGirl]

It sort of made sense when they set it up, because the population was expanding, meaning the younger generation was supporting a smaller older generation. They mistook a short-term trend for permanent reality. OTOH, everywhere they've set up that sort of government-controlled generational shift, the birth rate has dropped considerable, so maybe it's more than they didn't figure the impact that shift would have. Still, prior to 2009, the U.S. rate seemed to have stabilized at a higher level than most of Europe's. Since 2009 the U.S. rate has dropped again. Might go back up again, who knows?

You're right that many people currently receiving Social Security paid as much or more than they'll likely take out; Medicare is the one where people are drawing much more than they put in. The problem there is that there isn't a larger younger population coming along to deal with that difference, the way there was with SS. Obama's solution is the Affordable Care Act, which is supposed to keep Medicare "strong and solvent -- today and tomorrow." Time will tell. Europe's a decade or so ahead of us in terms of the population imbalance, so we've got a window to the future that they didn't have.

Then again, there have been "social security is doomed!" rumblings since the 1970s, to the point where my parents were wondering if it'd still be there when they retired, and it's still fully functional. Doomsayers can see what's going wrong better than imagine solutions. Government-run Ponzi schemes work fine as long as there are enough people to keep them going, and as long as the younger generation believes in them.

It ends up being a matter of wages. Consider Todays graduate vs when you or I graduated, and you will find their starting salaries to be Much Higher than ours were. 2% of 100k is well more than 2% of 10k. We don't so much need the bodies as we need the wages since medicare tax doesn't end at such n such salary level like ss tax does.

[PigsDad Senior Member Find all posts View Profile Close PigsDad]

Then again, there have been "social security is doomed!" rumblings since the 1970s, to the point where my parents were wondering if it'd still be there when they retired, and it's still fully functional.

I'm sure SS wil be around for me to collect, but I do think there has been a gradual decline in benefits. For example, SS benefits are now taxed for some people, retirement age has increased for full benefits, and the cost of living increase formula has been tweaked to not fully represent true inflation, IMO. A combination of reduced benefits and/or increased SS tax rate in the future will keep the program floating, but it definitely will not be as good of a deal as the earlier generations received.

Kurt

[tonyg Goomba & Super Moderator Find all posts View Profile Close tonyg]

There is a formula for the taxability of SS benefits received and it's based on income and it has been around for quite a while, but I'm not sure when it started. Here is a link to last year's worksheet: http://www.irs.gov/publications/p915...blink100097874
As usual, it is more complicated than it should be.

[Hobbitess Senior Member Find all posts View Profile Close Hobbitess]

It ends up being a matter of wages.

True, in the sense that a smaller, more productive workforce could take up the slack, and that principle is certainly part of the reason Social Security is in good shape; per worker, my parents' generation was much more monetarily productive than their parents' generation.

Consider Todays graduate vs when you or I graduated, and you will find their starting salaries to be Much Higher than ours were.

I dunno. The average college grad in the early 1980s got a starting wage of about $27,000; inflation calculators put that at $76,600 today. The average starting wage for a college graduate in 2013 was $44,900 -- or up to $61,900 for engineers. And college grads now are in much deeper debt than college grads when I went. I paid for my college as I went; took less than 20 hours a week at minimum wage, and I was earning more than that. Now it takes 35 hours a week at minimum wage to pay as you go. The average graduate today has a $35,200 debt; when I went, the average wasn't quite a tenth of that.

It's hard to compare different generations -- kids now have access to technology I didn't, but OTOH in the past thirty years, college costs have jumped more than 1000 percent, health costs 700 percent, and inflation "only" 300 percent, or at least those were the numbers bandied about in the 2012 elections. I'm pretty sure college is not ten times better than it was thirty years ago, but maybe with the various advances, health care is seven times better? Got me.

[BoardGirl Senior Member Find all posts View Profile Close BoardGirl]

True, in the sense that a smaller, more productive workforce could take up the slack, and that principle is certainly part of the reason Social Security is in good shape; per worker, my parents' generation was much more monetarily productive than their parents' generation.



I dunno. The average college grad in the early 1980s got a starting wage of about $27,000; inflation calculators put that at $76,600 today. The average starting wage for a college graduate in 2013 was $44,900 -- or up to $61,900 for engineers. And college grads now are in much deeper debt than college grads when I went. I paid for my college as I went; took less than 20 hours a week at minimum wage, and I was earning more than that. Now it takes 35 hours a week at minimum wage to pay as you go. The average graduate today has a $35,200 debt; when I went, the average wasn't quite a tenth of that.

It's hard to compare different generations -- kids now have access to technology I didn't, but OTOH in the past thirty years, college costs have jumped more than 1000 percent, health costs 700 percent, and inflation "only" 300 percent, or at least those were the numbers bandied about in the 2012 elections. I'm pretty sure college is not ten times better than it was thirty years ago, but maybe with the various advances, health care is seven times better? Got me.

Yeah, just a crackpot theory of mine.

But regardless of college debt (mine was well more than a 10th of that 35k, graduated 88, worked full time while in school full time but $3.35 / hr didn't quite get it done) they will have jobs from which these 'fees' are extracted. they have no choice. Their disposable income is after tax so they just have to manage their debt and live frugally until it's dispensed with, like those of us that went before did. I didn't have a brand new car until I was in my mid 30s but so many run right out and buy themselves a pricey 'gift' and then want to complain about loans ... they did that to themselves.

Today we have more women in the workforce while my mother quit when she got married, most women did. There are so many factors that it is a crap shoot formula. Any of us could roll the dice and be right.

The bottom line for me, tho, is that early on I expected there would be no SS for me, so I had better save save save, and now that I'm pretty sure I'll get something from SS, I'm still going to save save save. I'm not one to get too caught up in 'oh no, ss is taxable' as it's income, so what if a bit is extracted off the top? that's how it works here, every time I receive income. why would I get a pass just for being older? Oh, wait, I would get a pass if older and not well off.

[Hobbitess Senior Member Find all posts View Profile Close Hobbitess]

I'm not one to get too caught up in 'oh no, ss is taxable' as it's income, so what if a bit is extracted off the top? that's how it works here, every time I receive income. why would I get a pass just for being older?

Yeah, I don't have a problem with SS being taxable either. My mom is so funny about that -- for years, she complained about SS because she felt they could do better investing the money themselves and she resented having it pulled from their pay checks. Now that they're both retired and on SS, she's mad about the fact that they're getting back the money they put in, because she thinks it's stupid to be paying people who don't need it when the government's so deeply in debt!

[BoardGirl Senior Member Find all posts View Profile Close BoardGirl]

Yeah, I don't have a problem with SS being taxable either. My mom is so funny about that -- for years, she complained about SS because she felt they could do better investing the money themselves and she resented having it pulled from their pay checks. Now that they're both retired and on SS, she's mad about the fact that they're getting back the money they put in, because she thinks it's stupid to be paying people who don't need it when the government's so deeply in debt!

Well, she could suspend payments so the govt could keep it??

My mother is also weird on IRA money - but I have to pay taxes on it! I have run the numbers on my own 401k, which is about 20 yrs old now, and determined that only 1/4 came From Me. How can I possibly complain when 3/4 of it came thru employer kick-ins and time value of compounding? Paying taxes on "found money" is absolutely not a problem for me.

[Hobbitess Senior Member Find all posts View Profile Close Hobbitess]

Well, she could suspend payments so the govt could keep it??

I dunno, I'll ask her. But the real issue may be that dad's not on the same page about that.

[Marti Super Moderator Find all posts View Profile Close Marti]

Default Will Hurt Americans on Social Security & Medicare

In the event of a default the US government will have no choice but to delay Social Security checks. How will this effect your Medicare Health Benefits?

[Marti Super Moderator Find all posts View Profile Close Marti]

Will this affect Medicare?


MIA - Health Insurance - Affordable Care Act

The Maryland Insurance Administration says carriers have notified the state that they plan to discontinue non grandfathered individual health benefit plans affecting more than 73,000 members in Maryland next year.

Individual health insurance policies are being canceled for millions of people nationwide who buy individual insurance policies as federal health care reform requires plans to cover certain benefits.

Policies are being discontinued because they don't meet the higher benefit requirements of the Affordable Care Act.

[tonyg Goomba & Super Moderator Find all posts View Profile Close tonyg]

Should this thread go down the political road, it will be closed and actions may be taken against the perpetrators.

[Hobbitess Senior Member Find all posts View Profile Close Hobbitess]

Policies are being discontinued because they don't meet the higher benefit requirements of the Affordable Care Act.

I have heard that a fair percentage of people whose plans have been cancelled end up on medicare, but I would think it's too early to really tell yet. I also don't know how that info was collected.

Part of the ACA is cutting back funds to medicare, so it'll definitely have some impact.

[M. Henley Class President Find all posts View Profile Close M. Henley]

Uh Oh

Better watch out for JLB. He hasn't posted lately, so he may be about to erupt!

Should this thread go down the political road, it will be closed and actions may be taken against the perpetrators.