I find the 4 changes described in the CRFB exercise generally "acceptable", in light of the context. There will necessarily be some (significant) pain involved to fix the untenable status quo trajectory, so it's really just a problem of deciding "who" bears how much of that pain. Politicians want to bear as little of the pain as possible (in terms of electoral backlash), so they're delaying the legislative debate/ negotiations on this matter as long as possible - what a surprise! Which of course make the ultimate cost to taxpayers & beneficiaries of any solution more painful, even in inflation adjusted terms. ("A stitch in time saves nine...") It's not surprising that 3 of the 4 proposed changes address adding more revenue to the program, while only 1 (change #4) attempts to reduce SS benefit payments/ costs. I'd love to see the relative financial impact of each of these 4 changes. I suspect the 4 proposed changes described are listed in order of decreasing financial impact, which if true means the COLA payment reduction for high earnings (#4 above) is contributing the least to this "75-year solution". (BTW, did the 1983 legislative changes appear to deliver the expected solvency relief in years, based on the latest projections, or will it fall short in that regard?) Like Ray Dalio, Jeremy Grantham and MANY other smart people whose writings I find credible, I do believe we have a significant income/ wealth imbalance in this country as of June 2026. Which ultimately becomes very problematic even for the very wealthy...and weakens civil society (social order) which democracy depends upon. So I believe the financial solution to this math problem does need to ask relatively more of the very wealthy than it does of the "bottom 60%" (or whatever) of beneficiaries. I'm a capitalist to my core and believe in free enterprise/ limited government, but a healthy democracy requires a thriving middle class. The US is becoming a more polarized country economically - hence the "K-shaped recovery" explanation for our current economic metrics. It's a real thing! I have suggested modifications to 3 of the 4 changes above:
Split the 2% increase between employees & employers - not funded 100% by ERs. We need more jobs, not fewer!
Instead of eliminating the taxable wage cap, quadruple it. I suspect the $ difference of either of these scenarios vs just eliminating the cap altogether is not that significant, in the scheme of things. But I much prefer the optics (to the wealthy, not to lower earners) of there being an annual SS taxable wage tax cap of < $1M, which is symbolic. That would lessen the creative workarounds that high wage earners like pro athletes/ entertainers, corp exec's, etc will inevitably devise to get around any unlimited cap. (There's a fundamental reason the proposed "billionaire's tax" in CA, if passed, will never raise as much as projected. And the same principle applies here.) If I'm wrong about this, they can always come back in 10 years or so & incrementally eliminate the $1M (or whatever) taxable wage cap altogether, then...
I like the taxing Sec 125 benefits (medical premiums currently excluded from taxable income) the least of the 4 changes described , since healthcare is already unaffordable. Maybe limit this revenue increasing change only to the same group who will have their COLA adj's capped, per change #4.
Yes, both changes #3 & 4 are just another form of means testing. But note that the vast majority (> 90%?) of the "pain" to come from changes #1 - #3 above will be born by future retirees, not baby boomers (current retirees), or by their older adult children. Borne by our grandchildren, and their kids. So in that context, I would support an incremental increase in means testing...which our current system already incorporates in a number of ways.
I understood that Mark's loose quoting in this article of Jonathon ( "...there are really only twenty stories in personal finance..") was not necessarily meant to refer to a specific list. Having been a follower of JC (the writer!) for ~ 3 decades (been following the other JC for > twice that long!), the point that JC was making didn't require a list of what the "20" stories or principles were, about misaligned incentives in the financial services industry. Let the buyer beware!!It's an interesting challenge Mark makes here, and I thought briefly of the other (19? 25? 15? whatever! ) principles JC helped us all to understand so well. And the one that first came to my mind, because he spoke of it so often and so well, was the principle of hedonic adaptation, and why accumulating "more stuff" (including money, past a point) doesn't make us much happier. Diminishing returns, what really DOES make us happier, and all of that.If I was going to take up Mark's challenge and discuss another of JC's core principles at length, that's the one I might pick...unless someone else does so first! Which one seems the most relevant to YOU...?
Thanks for the article! A follow-up question: If my wife (who will be 65 in a few months from now) waits until HER FRA (of age 67), will her separate spousal benefit then be HIGHER than it otherwise would be if she instead claims her SS now - a few years earlier than her FRA? (I assume the answer to this question is Yes, notwithstanding your advice in this article for her not to wait PAST age 67 to do so!) I plan to wait until age 70 (~ 4 years from now) specifically to maximize her survivor benefit, assuming she will survive me. Thank you!
Comments
I find the 4 changes described in the CRFB exercise generally "acceptable", in light of the context. There will necessarily be some (significant) pain involved to fix the untenable status quo trajectory, so it's really just a problem of deciding "who" bears how much of that pain. Politicians want to bear as little of the pain as possible (in terms of electoral backlash), so they're delaying the legislative debate/ negotiations on this matter as long as possible - what a surprise! Which of course make the ultimate cost to taxpayers & beneficiaries of any solution more painful, even in inflation adjusted terms. ("A stitch in time saves nine...") It's not surprising that 3 of the 4 proposed changes address adding more revenue to the program, while only 1 (change #4) attempts to reduce SS benefit payments/ costs. I'd love to see the relative financial impact of each of these 4 changes. I suspect the 4 proposed changes described are listed in order of decreasing financial impact, which if true means the COLA payment reduction for high earnings (#4 above) is contributing the least to this "75-year solution". (BTW, did the 1983 legislative changes appear to deliver the expected solvency relief in years, based on the latest projections, or will it fall short in that regard?) Like Ray Dalio, Jeremy Grantham and MANY other smart people whose writings I find credible, I do believe we have a significant income/ wealth imbalance in this country as of June 2026. Which ultimately becomes very problematic even for the very wealthy...and weakens civil society (social order) which democracy depends upon. So I believe the financial solution to this math problem does need to ask relatively more of the very wealthy than it does of the "bottom 60%" (or whatever) of beneficiaries. I'm a capitalist to my core and believe in free enterprise/ limited government, but a healthy democracy requires a thriving middle class. The US is becoming a more polarized country economically - hence the "K-shaped recovery" explanation for our current economic metrics. It's a real thing! I have suggested modifications to 3 of the 4 changes above:
- Split the 2% increase between employees & employers - not funded 100% by ERs. We need more jobs, not fewer!
- Instead of eliminating the taxable wage cap, quadruple it. I suspect the $ difference of either of these scenarios vs just eliminating the cap altogether is not that significant, in the scheme of things. But I much prefer the optics (to the wealthy, not to lower earners) of there being an annual SS taxable wage tax cap of < $1M, which is symbolic. That would lessen the creative workarounds that high wage earners like pro athletes/ entertainers, corp exec's, etc will inevitably devise to get around any unlimited cap. (There's a fundamental reason the proposed "billionaire's tax" in CA, if passed, will never raise as much as projected. And the same principle applies here.) If I'm wrong about this, they can always come back in 10 years or so & incrementally eliminate the $1M (or whatever) taxable wage cap altogether, then...
- I like the taxing Sec 125 benefits (medical premiums currently excluded from taxable income) the least of the 4 changes described , since healthcare is already unaffordable. Maybe limit this revenue increasing change only to the same group who will have their COLA adj's capped, per change #4.
Yes, both changes #3 & 4 are just another form of means testing. But note that the vast majority (> 90%?) of the "pain" to come from changes #1 - #3 above will be born by future retirees, not baby boomers (current retirees), or by their older adult children. Borne by our grandchildren, and their kids. So in that context, I would support an incremental increase in means testing...which our current system already incorporates in a number of ways.Post: Fixing Social Security is not that hard, here’s how
Link to comment from June 14, 2026
Thanks for the link Mark...I guess there was an actual list. Glad to see that the one I referred to was actually on it! (#19.)
Post: Resist the Urge to Act
Link to comment from April 11, 2026
I understood that Mark's loose quoting in this article of Jonathon ( "... there are really only twenty stories in personal finance..") was not necessarily meant to refer to a specific list. Having been a follower of JC (the writer!) for ~ 3 decades (been following the other JC for > twice that long!), the point that JC was making didn't require a list of what the "20" stories or principles were, about misaligned incentives in the financial services industry. Let the buyer beware!! It's an interesting challenge Mark makes here, and I thought briefly of the other (19? 25? 15? whatever! ) principles JC helped us all to understand so well. And the one that first came to my mind, because he spoke of it so often and so well, was the principle of hedonic adaptation, and why accumulating "more stuff" (including money, past a point) doesn't make us much happier. Diminishing returns, what really DOES make us happier, and all of that. If I was going to take up Mark's challenge and discuss another of JC's core principles at length, that's the one I might pick...unless someone else does so first! Which one seems the most relevant to YOU...?
Post: Resist the Urge to Act
Link to comment from April 11, 2026
Thanks for the article! A follow-up question: If my wife (who will be 65 in a few months from now) waits until HER FRA (of age 67), will her separate spousal benefit then be HIGHER than it otherwise would be if she instead claims her SS now - a few years earlier than her FRA? (I assume the answer to this question is Yes, notwithstanding your advice in this article for her not to wait PAST age 67 to do so!) I plan to wait until age 70 (~ 4 years from now) specifically to maximize her survivor benefit, assuming she will survive me. Thank you!
Post: Social Security Spousal Benefits
Link to comment from March 28, 2026