All good and mostly accurate comments...as usual. Here's how I try to explain to folks how Social Security affects the deficit/debt.I hope I'm accurate. During the first 90 nyears or so more money was coming into the trust fund than going out. Congress said that excess money had to be invested in a special treasury security. Had FICA taxes or other rule changes kept up with the outflow ( money needed to pay benefits), the social security trust would have just kept on buying these treasuries with the excess.The mere purchasing of any treasury security adds to the debt year by year. Then demographics changed about 5 years ago and and the trust fund started cashing in those treasuries to pay benefits. I've gotten a couple different figures but I think the U.S. treasury is having to sell about $100 billion in NEW treasuries to pay off the treasuries Soc Sec is cashing in as of late. So, technically, one type of treasury is coming off the books and is being replaced by another to pay it. Net affect is zero on the debt. If our budget was balanced prior to this event, our debt remains the same. The problem is that the $100 billion was being used to pay for other things because our budget is not balanced. Therefore, debt is really going up $100 billion due to the Social Security situation. Can some of you sharpies out there tell me if I mistated it? Thanks
Dan, does your 5 year CD ladder reflect increasing yield in each year CD? In other words, is it based on an upwards sloping yield curve? Unless you got your CDs through a brokerage search, I've found most banks are paying more for shorter term CDs than 5 year CDs. I did my fixed income ladder using Target Date bond ETFs which all seem to have the traditional upward sloping yield in each increasing year with my 5 year ETF at around 5%. The investments are all in investment grade bonds and virtually eliminate interest risk if held to the target date. This gives me more of the traditional advantage of always getting the most yield out of my longest year ETF. My overall yield is around 4.75% and will gradually increase assuming interest rates don't change and I reinvest each maturing ETF in a 5 year target date.
Me, too, Harold. I like that idea. For one, you can still get 3.5% on your cash. For two, I don't particularly like reinvesting dividends right now at market highs. Building up a little cash feels good and gives you some dry powder to buy on a future dip.
I think that's worth a discussion but, truthfully, if one has income of say $250,000 seems like some gradual phase out could start at that point. I don't like "cliffs" but gradual could work. For the record I don't like taxes but Social Security is so important to this country we have to agree to do what is necessary to save it. I write my congressman regularly to get off his butt and fix it.
There's already an element of means testing in the program vis a vis how SS is taxed. And , as to Medicare, same thing for IRMAA. I'm not sure about your comment the rich aren't taking it. Have you actually seen any stats on how many?And, I'm not talking about just billionaires. Anyone making, say $250,000, in retirement really doesn't need SS or at least all of it. As to not earning it, how does that happen? At some point, the very wealthy don't earn it in the sense of their pay no longer includes wages for FICA but on the way up they were certainly drawing a wage subject to FICA. FDR's original program was not meant to be a welfare program but times change over the years and I believe too many of our safety net programs go to people that aren't really that bad off....thus these programs are all eating money we don't have. Once the trust fund runs out don't be surprised when congress makes up the shortfall with general revenue which, in effect, then makes it a welfare program anyway.
Well, you could but that just moves existing money around which, in total, is already way less than needed. We flat out need to raise more money for Social Security. A combination of three things would help a lot: 1. raise the FICA tax. 2. Raise covered compensation for tax purposes (like Medicare). 3.Introduce means testing for the very high income fokls receiving Social Security who really don't need it.
Frankly, there are all sorts of things that can be done/negotiated to help. Just heard that they have moved up the timing on the depletion of the trust fund. I think the American people would support shoring up Soc Sec and it's disgusting our polticians don't even talk about it.
Comments
All good and mostly accurate comments...as usual. Here's how I try to explain to folks how Social Security affects the deficit/debt.I hope I'm accurate. During the first 90 nyears or so more money was coming into the trust fund than going out. Congress said that excess money had to be invested in a special treasury security. Had FICA taxes or other rule changes kept up with the outflow ( money needed to pay benefits), the social security trust would have just kept on buying these treasuries with the excess.The mere purchasing of any treasury security adds to the debt year by year. Then demographics changed about 5 years ago and and the trust fund started cashing in those treasuries to pay benefits. I've gotten a couple different figures but I think the U.S. treasury is having to sell about $100 billion in NEW treasuries to pay off the treasuries Soc Sec is cashing in as of late. So, technically, one type of treasury is coming off the books and is being replaced by another to pay it. Net affect is zero on the debt. If our budget was balanced prior to this event, our debt remains the same. The problem is that the $100 billion was being used to pay for other things because our budget is not balanced. Therefore, debt is really going up $100 billion due to the Social Security situation. Can some of you sharpies out there tell me if I mistated it? Thanks
Post: The Federal Debt and Social Security Payments
Link to comment from August 22, 2026
Seniors turn out to vote in much greater numbers than the young.Politicians take care of them.
Post: Income taxes on retirees with Social Security
Link to comment from August 15, 2026
Dan, does your 5 year CD ladder reflect increasing yield in each year CD? In other words, is it based on an upwards sloping yield curve? Unless you got your CDs through a brokerage search, I've found most banks are paying more for shorter term CDs than 5 year CDs. I did my fixed income ladder using Target Date bond ETFs which all seem to have the traditional upward sloping yield in each increasing year with my 5 year ETF at around 5%. The investments are all in investment grade bonds and virtually eliminate interest risk if held to the target date. This gives me more of the traditional advantage of always getting the most yield out of my longest year ETF. My overall yield is around 4.75% and will gradually increase assuming interest rates don't change and I reinvest each maturing ETF in a 5 year target date.
Post: Taking a Loss?
Link to comment from August 1, 2026
John, that is very informative. Thanks for sharing your perspective on this. I was one of those not looking at this correctly but now I am. Cheers
Post: Widow Tax
Link to comment from July 25, 2026
And, an assumption the insurance company stays solvent.
Post: Automatic Income stream? How important to you?
Link to comment from June 27, 2026
Me, too, Harold. I like that idea. For one, you can still get 3.5% on your cash. For two, I don't particularly like reinvesting dividends right now at market highs. Building up a little cash feels good and gives you some dry powder to buy on a future dip.
Post: When to Leave Your Portfolio Alone
Link to comment from June 27, 2026
Agree, Dan. I'm willing to step up, too.
Post: Just the facts about Social Security
Link to comment from June 14, 2026
I think that's worth a discussion but, truthfully, if one has income of say $250,000 seems like some gradual phase out could start at that point. I don't like "cliffs" but gradual could work. For the record I don't like taxes but Social Security is so important to this country we have to agree to do what is necessary to save it. I write my congressman regularly to get off his butt and fix it.
Post: Just the facts about Social Security
Link to comment from June 14, 2026
There's already an element of means testing in the program vis a vis how SS is taxed. And , as to Medicare, same thing for IRMAA. I'm not sure about your comment the rich aren't taking it. Have you actually seen any stats on how many?And, I'm not talking about just billionaires. Anyone making, say $250,000, in retirement really doesn't need SS or at least all of it. As to not earning it, how does that happen? At some point, the very wealthy don't earn it in the sense of their pay no longer includes wages for FICA but on the way up they were certainly drawing a wage subject to FICA. FDR's original program was not meant to be a welfare program but times change over the years and I believe too many of our safety net programs go to people that aren't really that bad off....thus these programs are all eating money we don't have. Once the trust fund runs out don't be surprised when congress makes up the shortfall with general revenue which, in effect, then makes it a welfare program anyway.
Post: Just the facts about Social Security
Link to comment from June 14, 2026
Well, you could but that just moves existing money around which, in total, is already way less than needed. We flat out need to raise more money for Social Security. A combination of three things would help a lot: 1. raise the FICA tax. 2. Raise covered compensation for tax purposes (like Medicare). 3.Introduce means testing for the very high income fokls receiving Social Security who really don't need it. Frankly, there are all sorts of things that can be done/negotiated to help. Just heard that they have moved up the timing on the depletion of the trust fund. I think the American people would support shoring up Soc Sec and it's disgusting our polticians don't even talk about it.
Post: Just the facts about Social Security
Link to comment from June 13, 2026