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I feel like I am in ranter’s heaven. There is so much to rant about, the choices are confusing. I’ll skip the political scene.
Still there are dangerous drivers who ignore the rules -and common sense- of the road. There are those who insist on parking next to your car – sometimes making it nearly impossible to open your door- when there are 100 empty spaces a few feet away. Then there are the shopping cart inconsiderates who leave their cart in the parking lot, even handicapped spaces, because they are too lazy to put the carts where they belong.
While high on my list, they do not compare with the folks who you present with facts on a subject and their response is “that’s your opinion.” No it’s not my opinion, it is a fact.
Social Security is my favorite subject when it comes to ignorance and my opinion. The other day I was in a Threads “discussion” where I explained the income taxes paid on SS benefits go into the SS and Medicare trusts- $50.7 billion to Social Security alone.
The other guy insisted SS benefits should be income tax free because his FICA taxes over the years had paid for HIS benefits. My reply – that was not true – was met with “that’s your opinion.”
A women said SS was a scam because the government hadn’t contributed its share – let that sink in.
Another insisted the problem is that they didn’t factor in the people who die before collecting anything. Yup, the actuaries aren’t aware of mortality risks, that must be the problem. Ye gads.
Did you know FDR didn’t intend for Social Security to last beyond the Great Depression? Some people believe that. Probably the same folks who believe income taxes are illegal and voluntary.
Others don’t believe that nearly all beneficiaries collect in benefits more than the total they paid in FICA in five to six years of starting to collect benefits. I did the calculation using my earnings record and the benefit Connie and I collect each month. We’ve been collecting since 2008 and our payments long ago exceeded both my and my employers taxes paid. Connie receives a spousal benefit. What about the worker receiving a benefit along with his wife and ex-wife on his earnings record?
If beneficiaries paid for their benefits, how is it payments continue for life, exceeding all their working year taxes paid. Don’t bother using logic in an explanation, it’s only your opinion. SS is far more than individual retirement benefits too.
My all time favorite anti-fact position is that all would be well if only Congress had not “stolen” the SS money and spent it on other things. It wouldn’t and it didn’t.
SS funding has been basically the same since the beginning. Excess revenue was invested in special interest paying treasury bonds. Having sold those bonds, government uses the money as general revenue just as if we or Japan purchased a treasury bond. Of course it’s intra-government accounting, but that doesn’t change the facts. The last 2024 Trustee report shows that interest income was $66.9 billion. In 2020 it was $80.8 billion.
These days there is no excess revenue, interest income is declining and bonds are being redeemed to pay benefits. Hence, when they are all redeemed and interest income is zero, incoming FICA taxes and income taxes paid will only pay 80-83% of earned benefits. Make benefit payments tax-free and the situation is worse – fact – not my opinion 😎
There is one thing about Social Security where I admit my opinion surpasses facts – sort of – that’s the folks who insist they would be better off financially if they had the taxes to invested on their own. In a perfect life for 40 years that may be possible. If you escaped every vicissitude of life along they way and were disciplined that may be possible. In the real world, nope, it won’t happen. That’s my opinion of course.
Fact: my and my wife’s entire working lives we’ve paid in to support other people on SS.
Opinion? We should be entitled to collect SS when we retire.
Fact: the current federal administration is trying to dismantle SS.
We need to accept this last point is a fact.
Explain to us what “facts” you are talking about because the administration has clearly stated numerous times that they are not touching anyone’s SS now or in the future. They are only targeting the massive SS fraud which has been in the system for decades and no one has ever addressed. All taxpayers and honest SS recipients should be applauding this. These are the facts.
There is no massive fraud. Data file errors perhaps, but not massive fraud.
So you agree that the administration is trying to dismantle SS?
The current administration is trying to make the US into Russia, or N Korea, so an egomaniac can get the reverence he needs
It will be there for you.
Dick, a couple of questions for you.
I would like to get more ejumacated about how SS funding happens. I understand about the revenue streams from FICA taxes on individual incomes and SS benefit taxes, but the trust funds process makes my head spin (and the posts here were confusing without context). Is there a place to read how this process works – something with visuals and clear/accessible language?
Also, you mentioned that you calculated how you have received more in benefits than you paid in FICA taxes using your earnings record. How did you calculate your FICA taxes on those earnings without having pay stubs or income tax records? Is that available from logging in ssa.gov?
The easiest way to see the funding sources is to look at the Trustee revenue statement which each item is listed.
Page 14
https://www.ssa.gov/oact/TR/2024/tr2024.pdf
Yes. What you paid for SS and Medicare is listed in ssa.gov
If you sign into your SS account, you can see your and your employers taxes paid by each year paid. Mine went back to 1959.
Since Medicare tax is not capped you can see your total earnings too at that point.
Good points, but Roosevelt I believe was intent on making sure Social Security could not be taken away ever. He certainly expected Social Security to last being a legacy from his presidency.
He also wanted to keep the funding as far away from politicians as possible. That’s why it’s self-funding and not part of general revenue or the budget process. But as we can see, even the simple task of adjusting funding to pay benefits can’t be non-political.
Social Security benefits were tax free until 1983 when they became up to 50% taxable. Then in 1993, they became taxable up to 85%. So I can understand those that feel the current tax rate is high, especially in an environment where senior citizens are fighting inflation and ever increasing taxes at the state and local level. Property taxes have become a huge burden to those who have long paid off their homes. I would support a rollback to tax free or 50%, along with either a higher payroll tax or increasing the maximum income that is taxable.
For those of you who wish to see a little revenge on those who don’t return their shopping carts to the pens, look up the YouTube channel Cart Narcs. It’s quite humorous.
to solve the cart problem shop at Aldis put a quarter in take get quarter back when return……….also you will a few bucks………haha
RDQ you are obviously knowledgeable about this. What do you think would fix the SS problem other than continuing to tax SS benefits?
Maybe increase the income limits so that higher earners still pay in
Several organizations have put out proposals to address the issues. Here’s one from the Committee for a Responsible Federal Budget that includes an interactive tool to explore the options.
The Reformer: An Interactive Tool to Fix Social Security
The Government Accounting Office Put out a good report on options in August 2024
There Are Options for Reforming Social Security, But Action is Needed Now | U.S. GAO
A little time with Google will find many more.
There are several combinations of relatively minor changes relating to FICA tax rate on employees and employers, taxable wages, COLA application, taxing cafeteria benefits and having new state employees join the system. Continuing to income tax certain SS benefits does not help solve the problem, just removing the taxes makes it worse.
Today a dozen people refused to believe the income taxes paid on SS benefits are revenue to SS and Medicare trusts AFTER I posted a copy of Trustee Report Revenue page showing the income identified as Taxes on Benefits. A very sad state of affairs indeed. 🥲
Well, that report could have come from anywhere, right?
No, it cannot. Just like there cannot be alternate facts.
It never ends.
Yesterday I was explaining how not applying income taxes to SS benefits would harm both SS and Medicare. I was told income taxes don’t fund either program and I should know what I’m talking about before posting.
Another person posted it was all the fault of Reagan who stole the SS funds. 😎
I bet these same people thought the 1/6 insurrection was a friendly tourist visit, and that a certain person won the 2020 election.
There’s a tendency on all topics to believe what you find out, when it aligns with what you thought before gaining new information. It seems to not matter what the topic is. So you’re not fighting with people about facts, you’re fighting with people to try to change their beliefs about the world (how they fit it all together).
Personal experience, don’t try to win the argument. Just provide a link, in case they want to see where you’re getting your info from. Then people have a choice and can encounter things in a non-confrontational way that can lead to a change in thinking.
I agree but when faced with facts, it’s hard to believe people simply reject them in favor of what they want to believe.
That started when a certain someone came up with the term ‘fake news’, which then bred the ‘alternate facts’ mentality
It’s called “confirmation bias” when people will only believe what confirms their own bias.
I find it perplexing and frustrating, yes, but hard to believe?
An honest person with an opinion who encounters new information ought to be able to change that opinion if warranted. Somehow that is perceived today as a sign of weakness, as “flip flopping”. I read once that one of the most difficult things for someone to do is to admit he was wrong. And even more difficult is to admit he was fooled.
The rub is figuring out when you’re the honest person and when you’re maybe not as honest as you could be. We’re nowhere near as truthful with ourselves as we think As for other people, not much you can do. Someone already said it here, you can lead a horse to water…
I agree it is often easier said than done.
Some well known people have never ever admitted to being wrong. It is always someone else’s fault. You do not have to look very far
That seems more true now than ever. Many seem to prefer to believe their plight is someone else’s fault, which explains why scapegoating has been a popular tool used by certain leaders over the ages.
I think that it’s when faced with having to re-think an entire way of understanding things people just sort of shut down
Exactly. Confirmation bias is real.
very wise insight and attitude
“With malice toward none, with charity for all,
… to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.”
Abraham Lincoln
Americans are financially illiterate that’s why we are in the mess we are in.
People, not Americans.
If the average American Citizen, completely financially illiterate and ignorant of most financial matters, “managed their own investments” using the money paid into FICA, they would reach age 62 with nothing Invested and still expect the government to support them.
The thought of most people I have met during my lifetime managing their own money is farcical. BTW…my first two careers were in financial services and my last career I was a college professor, teaching insurance planning, financial planning, and retirement planning!
As to shopping carts…I always return the carts, and usually some dimwit has put the small baskets in the same stall as the full size baskets, so I feel the need to rearranging them, and shoving all of the same kind inside one another, to minimize the space taken. It just something I have to do! Ha!
“Then there are the shopping cart inconsiderates….” Some days when I am less considerate to others I’ll grab that cart as they leave it and take it to the stall. As I grab it I’ll say “It’s OK because when I get to your age I’ll probably do the same.” This gets a rise no matter what the age of the “offender”.
I think I’m going to steal that!
A part of the problem is repeating what we read on social media. I even fall into that trap from time to time. It’s been said that if we repeat something often enough it will be taken to be fact. The internet is one big echo chamber and even the MSM is rife with inaccuracies. Add to that the favorite ploys of politicians to get votes. These include (1) Fear and (2) Empty promises. Politicians do this because it works. Some of this stuff even gets repeated during Congressional Hearings. Then it is copied in stone!
Thanks for your above post Richard.
Besides the misinformation that you rightfully continue to focus on I have two other concerns that I think about a lot in planning about my own social security benefits in relation my overall financial planning.
First is the certainty of death and the likely financial impact on my surviving spouse if I am the first to go. I am strongly considering building a TIPS ladder ( of approximately 10 years) inside my wife’s Roth to replace her projected cash flow in an amount of her approximate social security benefit to replace that cash flow in the event I am the first to die. If my spouse dies first I am her current primary beneficiary so this plan covers both of us regardless of which one of us dies first.
Second is the currently mandated 20% to 25% reduction in our overall social security benefits that is projected to occur in 2033 to 2035 when the SS trust fund is expected to be fully depleted. I am also thinking about earmarking a good part of our retirement savings to cash flow the projected decrease in our social security benefits should the projected decreased social security benefit becomes an actual decrease. My current thinking is similar to the first issue but changing out using a broad based world equity index fund like Vanguard’s VTWAX instead of TIPS as the investment vehicle. The difference in my thinking between the two issues relates to the certainty of the first which I control vs. the uncertainty of the second which I have no control over. Also the expected length of planning for a joint life span is higher than the life span for either of us individually so 10 years is not enough time in my thinking for my second concern which I guess is more like 20 years for us.
I would be interested in hearing your and others thinking on these two concerns and what planning and actions, if any, you are taking or considering. I am about 7 years younger than you and my wife is about four years younger than me and those are different factors to consider in my planning vs. yours. Other factors to consider?
Thanks, Bill
I would be stunned if Congress voted to reduce benefits for current SS recipients. That would be political suicide. Congress is all about getting re-elected. Everything else comes after that. And every senior in the U.S. would attempt to vote them out for reducing SS benefits.
But, as the math indicates, something will need to be done. As with every other major problem confronting this country, our government will wait until the last minute to address it.
John, I agree with your point that voting for a social security reduction in benefits would be political suicide. My understanding is that no one has to cast such a vote as the reduction is already mandated in law. Congress has a history of sitting on their hands in my opinion.
I have read a 2015, decade old, long and interesting (to me) legal analysis on this topic. I do not think anything of substance has been accomplished on the problem in the 10 years since it was written.
https://www.everycrsreport.com/reports/RL32822.html
A part of the conclusion of the analysis follows:
The Trustees of the Old Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund have projected that these funds on a combined basis will be exhausted (i.e., unable to pay full benefits on time) in 2033. The Social Security Administration would not be able to pay beneficiaries full benefits at that time because the Social Security Act states that benefits shall be paid only from the Social Security Trust Funds. Social Security Administration officials are bound by the Antideficiency Act, which prohibits paying amounts that exceed the amount available in the source of funds available to pay them.
And thus I do not worry not that congress will do something, my worry is that they will do nothing.
Best, Bill
I don’t think saying my hands were tied would help those in office. Especially if as I expect pulling that much out of the economy could be disastrous. Reduce housing demand, reduce market demand, compare it to the housing melt down, that was mainly about abstract valuations and credit. Now compare that as an idea to suddenly having those fewer billions flowing thru the economy.
One word, ugly.
In our case I have life insurance-group and other paid up that will provide several years of expenses to Connie. In addition non quailed investments generate monthly income that offsets most of my net SS. She receives 50% of my pension and, of course the balance in my IRA.
I am not actually concerned about reductions in SS. I can’t see it happening.
My favorite story about opinion versus facts was when I and a person from accounting were arguing about the proper accounting of my revenue. We met with the CFO to resolve the issue. I explained my position on the matter, supported by sound mathematics. The accounting person said, “Well, that is your opinion”.
The CFO laughed and said, “It may be Jerry’s opinion, but it is supported by mathematical facts”.
We have a large group of people today that believe everything is relative and that there are no absolute truths. Dick, this may be an opportunity for another rant.
You are on a roll Dick!
I fully agree with your opinion about not letting people manage their SS funds. Some would be very disciplined and do a good job. But many would squander it long before retirement.
SS is not perfect, but it has served the American people well over the years.
I love this rant!
Yes, most of my conversations around Social Security, or Medicare, end with one or both of: “You are an elite boomer” or “You have TDS”.
I finally realized keeping my mouth shut is the best approach.
Probably right. My concern is people bathed in misinformation support or push for harmful policies such as tax-free Social Security benefits.
Old adage: you can lead a horse to water but you can’t make them drink. You fought the good fight, now relax, Dick. You seem to thrive on pontificating but not good for blood pressure. 🤗
Perhaps this is part of the stasis in DC on social security? What do you think?
That’s been a long time. Congress has been urged to take action by the trustees over ten years.
Mr. Quinn: I am glad you’re willing to lead the charge against all those false claims! There are too many who believe steadfastly in one or more of the scenarios you provided. Great article (and rant)!
I fear though it’s a losing battle. I’ve been trying to stop the Congress stole the SS money thing for at least ten years. It’s still believed and shared on social media every day.
The “Congress stole the SS money” is so much easier to understand than trying to understand the intricacies of accounting. Which is a real shame as it really isn’t all that complicated. When SS taxes exceeded SS costs Congress used the excess funds to pay for other government expense and thus artificially held down other tax rates (think income taxes) and public borrowing. Now that SS taxes are less than SS expenses Congress is funding that portion of SS costs that exceeds SS taxes from other taxes and public borrowing. The trust funds and special issue treasury bonds are just the bookkeeping system that tracks this flow of money back and forth.
Not accurate at all. Congress issued treasury debt to the SS trust. If it hadn’t done that it would have had to issue debt to other investors to fund the government. That’s why we have a $2 trillion deficit. As I explained, it is the same idea as you buying a savings bond.
Congress is not funding SS from other taxes and borrowing which is why the trust is being depleted. It is illegal to fund SS with general revenue and we need to keep it that way.
Which is why some are concerned by what will happen in 2033 or so when the trust fund is depleted. At that time benefits will be supported solely by SS revenue collected, unless congress does something. That revenue will be insufficient. BTW, I generally avoid discussing SS with anyone for a variety of reasons. The fact is, there are issues with the fund’s ability to payout stipulated benefits in the future. That’s well known. Beyond discussing how to fix this is in my opinion a complete waste of time.
You are correct that Congress issued special issue treasury debt to the SS trust. But you forgot the rest of the story. Congress then spent those funds on non-SS items. If Congress had not borrowed this money from the SS trust they would have had to raise taxes or issued treasury debt to the public to fund this spending. You seem to get this part, but not the next part of the story.
Now that SS taxes don’t cover all of SS expenses Congress is paying off the special issue treasury debt held by the SS trust. The funds to pay off that debt comes from taxes other than SS and from public borrowing. If you don’t believe that, then please tell me where Congress is getting the funds from to payoff this special issue treasury debt?
Also, reading this again, what else would you have had them do with the funds? They were in fact cash at one point, because that’s how taxes are paid, which was then invested (the SS trust fund is legally obligated to do) in US government bonds specifically for the exclusive use of the SS trust. To invest in anything else, including leaving it in cash, would be considered very irresponsible. So I ask again, what would you have them do? Yes, bonds are buying debt. Yes, that’s paid back with revenue generally derived from taxpayer money. If you own government or municipal bonds, TIPS, etc etc, you’re sucking up tax dollars, too. Does that magically make those bonds bad? You’re just making a disingenuous argument here
No, these bonds are not bad and I never said that they were. The big lie is that “Congress stole the SS money.” The truth is that Congress spent excess SS revenues on non-SS expenditures and will send money, along with interest, back to the SS trust fund from general revenues when the trust fund needs the funds. Whether this plan was good or bad is not for me to decide. But these facts are just that. This is how it works and what has and is happening.
All borrowing is spent on whatever Congress chooses. The fact they borrowed from SS and used the proceeds on other than SS is irrelevant. What is relevant is the billions in interest added to the trust and the fact the bonds can be redeemed.
I just cashed 30 year old savings bonds including interest. I have the cash, but I don’t know or care what the government did with my investment 30 years ago.
Except for the fact they are accounting transactions, it is the same with SS treasury bonds – loan money, collect interest, get your investment back.
No negative impact on SS.
deleted
Wow this post even comes with a live demonstration of what you put up with 🤦💥🧱
If you believe as Mr. Quinn does, then please explain just how the special issue treasury debt in the SS trust fund is paid off. Where does the money to make those payments to the trust fund come from?
Part of the deficit spending. No doubt other bonds are sold to other investors to make the transfer to SS trust.
If the treasury hadn’t issued bonds to SS it would have issued them elsewhere to fund the government. If SS had not used the bonds it would have lost income and what is or shoukd be the safest investment in the world.
And no, investing in the stock market is not as safe and it would not have made SS trust fully solvent either. Go to the CRFB SS solvency estimator.
The courtesy of reply would be appreciated.
As I said the funds to redeem the SS binds come from other borrowing since we are running a $2 trillion deficit. It should come from taxes, but it can’t now can it? Everything the government does comes from taxes. To me the fact SS trust invested in bonds does not mean it is funded by general revenue and taxes.As I said if the interest was not paid to SS it would be paid elsewhere.
Thanks for your answer. When money comes out of the general fund for anything it is impossible to determine which income source to the general fund provided that money. It could be money raised via public borrowing, or it could be general tax revenue. But whatever revenue source actually provides the money to transfer to SS, I agree with you that it increases the need for public borrowing.
The money to pay the interest on the SS bonds and to pay off the SS bonds comes from general revenue and taxes. You know this. Passing that money through the bookkeeping process of the bonds and the trust fund doesn’t change that simple fact. Of course, feel free to ignore that simple fact.
Who said anything about investing in the stock market? I sure didn’t.
Since we seem to be in agreement that money for the interest on and redemptions of the SS treasury bonds comes from public issue bonds and other sources of income to the general fund, just what did you find “Not accurate at all” in my original post?
They’re called bonds. They’re special issue because they only are available to the SS trust fund, not to anyone else. Also where do you think your municipal and government bond payments come from? From taxpayers, duh!
They are special because they can’t decline in value as other bonds can.
So now the light appears to have come on. Yes, general revenues do in fact pay social security benefits via the mechanism of these special treasury bonds.
Interest payments on ann investment are not transfer of general revenue to the trust in my view.
Directly from the Social Security Association website:
“The Social Security trust funds hold money not needed in the current year to pay benefits and administrative costs and, by law, invest it in special Treasury bonds that are guaranteed by the U.S. Government. A market rate of interest is paid to the trust funds on the bonds they hold, and when those bonds reach maturity or are needed to pay benefits, the Treasury redeems them.” (My emphasis)
Here’s the link if you’d like to read the short description of how the trusts work
Exactly. The Treasury pays off the special Treasury bonds and they do that with general revenue … thus when SS costs exceed SS taxes then general revenue pays off these special Treasury bonds so that SS can pay benefits….and that is exactly what I said in my original post.
So what you mean to tell me is that I just typed all those responses for absolutely nothing, huh…? 😮💨
I hope not. Hopefully you have a better understanding of how the money flows back and forth between the SS trust funds and the general fund.
You obviously enjoy beating your head against a brick wall!
But Kathy, it feels so good when we stop. ☺
You know I think you are right, but I am making progress. I blocked two people on Facebook who were beyond obnoxious displaying their lack of knowledge.
Richard, I was perfectly happy living underneath my rock, but now you have to come back around and confuse the crap out of me with facts.
A woman whose tax I was preparing explained to me that the funding crisis was a scam because of all the old people who died from Covid. When I uttered the word “actuary”, it was clear she had not a clue of its meaning.
And that shopping cart thing really does —- me off.
I’ll extend the shopping cart thing. Some folks just get their carts “close” to the shopping cart corral. I roll my cart to the corral and then push my cart into the one in front to collapse the space and maximize the number of carts that can be stored in the corral. If possible, I push to collapse all that are there. Over time, I’ve noticed that both of my sons do the same thing – – – perhaps one of my odd habits that they picked up.
Not an odd habit – a charitable one. I believe that setting a good example is the best tool for passing on our values.
I once witnessed someone just pushing a cart toward a corral and missing completely. It rolled down the parking lot at a good speed straight into the side of a car driving by.
My theory is the folks who can’t take time to walk the cart to where it belongs are in a hurry to get to the gym to exercise. 🏃🏻♂️🏃🏽♀️➡️🏃🏼
Ha ha! Well, I drive to my gym to work out and when I get there I take the elevator up two flights! I laugh at myself sometimes….
This is a pet peeve to me also. I usually will grab the cart and put it where it needs to be. Hopefully, I can set an example for others if they see me doing that.
And the folks whose job it is to round up the carts notice and appreciate what you’re doing.
Unfortunately, it is not just about social security where many ignore the truth. As Kahneman wrote about us story telling primates,
Our comforting conviction that the world makes sense rests on a secure foundation: Our almost unlimited ability to ignore our ignorance. Flawed stories of the past shape our views of the world and our expectations for the future. Narrative fallacies arise inevitably from our continuous attempt to make sense of the world. The explanatory stories that people find compelling are simple; are concrete rather than abstract; assign a larger role to talent, stupidity, and intentions than to luck; and focus on a few striking events that happened rather than on the countless events that failed to happen.
Unless one is willing to discipline their thinking, we all will be victims of such faulty thinking.
Dick you really know your FACTS.
Years ago I ran a taxpayer’s association in my town as the property tax rate was in the top 5 in the state. I was on the town budget committee, and knew the budgetary facts inside and out. At town meetings (for those of you who don’t know in many towns in NH the town and school district presents a budget which can be modified, and then has to be approved by the voters). I would presents facts on multiple warrant articles (sections of the budget which again could be modified by the voters and then approved).
My presentation on different warrant articles provided both facts and opinions. While people would often disagree with my stance of the article, not once did anyone challenge my facts because they knew I did my homework.
PS after moving to a new town nearly 9 years ago that had a tax rate about 1/3 lower than my old town I vowed to remain anonymous until my current total taxes exceeded my old. The current property tax total is still $2K less, so I’m not going to complain, ever. After all I’ve calculated that I’ve saved nearly $30K in property taxes since we moved.
A real world, first class rant.