Retirement Blog

Finance Blogs » Retirement » Fighting over Social Security

Fighting over Social Security

By Jennie L. Phipps · Bankrate.com
Sunday, January 30, 2011
Posted: 10 am ET

The future of retirement and retirement planning hangs on figuring out what we're going to do about Social Security.

I have a 31-year-old son who made me and his father itchy at a recent family dinner because he went off on a tangent about the unfairness of Social Security, raising the ire and the voices of the Social Security recipients at the table, and leaving the rest of us scrambling for a topic that would move the conversation elsewhere.

My guess is that in the next few years, we're not the only family that is going to have this kind of discussion. Social Security has the potential to pit younger generations who are being asked to pay into a strapped system against older recipients and contributors who want what they see as their due, no matter what.

Gary Hoover, professor of economics at the University of Alabama and an expert on the intersection of politics and government finance, says flatly that the baby boomer generation will fight "tooth and claw" to protect Social Security. He says, "I don't see this voting block as willing to compromise at all on this issue."

Hoover believes that the only two segments of the national budget that can be trimmed enough to have an impact on the current deficit are Social Security and defense. When push comes to shove -- by 2037 -- he sees cuts to Social Security as much less likely than cuts to defense.

"In the end, we won't get serious about reforming Social Security until there is an absolute crisis," he says. "Then there will be Draconian measures."

Of course, conversation and compromise make far more sense. But just like it is at my family dinner table, changing the subject and serving the pie and coffee is much easier than confrontation.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
14 Comments
J. Lambert
March 04, 2011 at 10:11 pm

The bottom line is that SS has to bring in more money or reduce the amount it pays out. Either way will be a tough battle. It seems reasonable to me that the ones paying into SS now will expect to receive more per month than I am, therefore they should be willing to put more in now, say 1 percent more now and the in 5 years recalculate to see if another increase is needed. Another thing that would help would be to remove the cap completely where everyone would pay into SS all year and not just the lower wage earners who dont reach the cap. Most important would to pay back the money borrowed from SS fund and leave it alone for what it was designed for.

Johan
February 19, 2011 at 9:32 pm

Social security should have been an HANDS OFF slush fund for the MOB of gangsters in DC.

Akklia
February 02, 2011 at 5:40 am

Social Security is slated to run out of funds right when I am supposed to retire (I expect my retirement age to be raised to at least 68). I may be a Stay At Home Parent, right now, but I put in twenty years of work and Social Security withholdings.

Where did this money go and why wasn't it invested or used properly. If we can bailout banks with taxpayer money, why can't we bailout our very retirement funds with our money.....again...
Hey,,,,,,,,,wait a minute........

Okay, I want my money back.

Allen W. Smith, Ph.D.
February 01, 2011 at 12:04 am

Don’t Blame the Baby Boomers!!!

I am not a member of the baby-boom generation, but I empathize and sympathize with them as they continue to be targeted by politicians of all stripes. I was especially troubled recently when even President Obama cited the retirement of the baby boomers as one of the Social Security problems.

In 1982, the Greenspan Commission saw the forthcoming retirement of the baby boomers as a threat to Social Security’s future solvency. It was decided that, in order to avoid the problem, the baby boomers should be treated differently from any other previous generation. In addition to paying for the cost of the Social Security benefits of the generation that preceded them, as all previous generations had been required to do, it was decided that the baby boomers should also be required to prepay the cost of most of their own benefits. These recommendations were enacted into law as part of the 1983 Social Security amendments, and a hefty increase in the payroll tax was implemented. As a result:

1. The baby boomers have paid more Social Security taxes than any other generation.

2. The $2.5 trillion in surplus Social Security revenue, generated by the 1983 payroll tax hike, is enough money to pay full Social Security benefits, until at least 2037 when the oldest baby boomers will be 91 years old, and the youngest boomers would be 73 years old. Minor tweaks in the Social Security program, such as raising the cap on earnings subject to the payroll tax, would enable the payment of full benefits for decades after the youngest of the baby boomers have died.

3. The 1983 Social Security amendments have worked just as they were supposed to work, and there is no solvency problem with the Social Security program.

How could this be? The news is full of coverage about economic and financial crises. Isn’t Social Security a part of that bigger problem? No, it is not. Social Security is funded exclusively from its own payroll tax. And that tax has generated a $2.5 trillion surplus over the past 27 years.

The short answer is that crooked politicians from both political parties have violated federal law and the trust of the American people by channeling all of the $2.5 trillion in Social Security surplus revenue into the general revenue fund and spent the money to fund tax cuts, wars, and other government programs. Whether the money was borrowed or stolen is a matter of opinion. But the fact that the money is gone and the trust fund is empty of any real assets is an indisputable fact. In order for Social Security to be able to pay full benefits until 2037, it must get its money back, and the government has made no provisions for repayment. I think it is a safe bet that many of those crooked politicians have no intention of paying the money back. That is why they are trying to use back door approaches to get the government to renege on its debt to Social Security. THE MONEY MUST BE REPAID!

Allen W. Smith, Ph.D.
Professor of Economics, Emeritus
Eastern Illinois University

CVPRIMERICA
January 31, 2011 at 11:26 pm

As I’m reading these comments, I remember my elementary students. Their world’s inexperience, masked by bias TV and very limited family interaction, since their parents always where denied opportunities to a fair education and decent compensated jobs that permit enough time to share with their children, forced me to set aside time, day after day, to help them develop critical thinking skills and common sense. Something that I hope today it is not one of their needs. I did it, despite that the subjects programs, ill intended, normally lacked those essential capabilities.
Ignorance and lack of critical thinking skills is quiet common in our country, the lack of understanding how the social-economical thread works, lead many to become selfish xenophobic individuals that still suppose that the world begins in the south border and ends in Canada. I am American and capitalist as the most, but I know that if I want to enjoy what I struggle for more than 40 years, in peace, I should support all the social responsibility that the government and every private American enterprise is indebted.
The Congress must know that there is a binding contract between anyone working and contributing for decades to SS and the Federal Government. It must pay as agreed. If they want to change that contract they must have to, they are obligated to do it with, the new ones, the ones coming into the work force
We all need to understand that others need to be fairly educated and have decent job opportunities, that is not socialism, that is liberty and justice for all
Please, let’s stop being naïve; we are all immigrants, besides Native Americans. Everyone earlier or later came from other countries and those that claim and complain of cost of the illegal immigrants, etc, it is a fact, that the famous General Fund that Sanshaw mentioned, also has 7800 billion US dollars, never claimed by their legal owners that happen to be known as “illegal aliens”.

Bill Giordano
January 31, 2011 at 12:37 pm

I'm closing in on 40 and have been paying into social security for the last 18 years. Part of the problem with SS is that it was originally designed for a different time and a different purpose. It was designed and instituted during the Great Depression, as a temporary measure to help older folks make ends meet. And, it just so happens that it worked extrememly well. Why? Because the average life expectancy during the GD was less than 65, and you had 16 people paying in for every one person taking out. Fast forward to today - average life expectancy for men is 78 and for women 81. And there are 3 people paying in for every one person taking out.

In short, Social Security needs a redesign and less government involvement. It needs to be run more like a Yale or Harvard Endowment, and less like a big government program. Better yet, let financial companies design SS products using government parameters. A redesign won't work for older baby boomers - they are simply too close to retirement. But, it would work for younger segments of the population, like me, who want the security of a pension with the opportunity to have my money earn more for me. It's time to apply the same American innovation to Social Security that we apply to everything else.

Ruthann Burke
January 31, 2011 at 10:59 am

I have worked since my 16th birthday and paid into social security all my life. Now in 4 years I will be ready to retire and yes, I expect it to be in there after 46 years of paying into the government, I believe that I should be able to get something out. My problem is with people who are on drugs and get SSI. and they never put into it. Or the people who never work because they can't cope with working and are getting SSI. Or the politicians!!! If they serve 2-4 years working for the government (1) they don't have to pay into Social Security(2)and when they are voted out of office they still recieve full pay Social Security without paying into it. (3) they vote themselves raises. Now what kind of Government is that...That is not "By the people-for the people" It should be if you don't pay in or work for it, you don't get it. I think it is time that we stop helping all around the world (most of them don't want our help just our money) and start helping at home here in the USA..In this country we have Illegal alliens recieving SS benifits and Welfare..How can this be? Us Baby Boomers have paid into it all of our lives and yes we deserve it to be there when we are ready to retire.

End the Ponzi Scheme
January 31, 2011 at 9:48 am

The fact that you were uneasy about the comments means that there was at least some truth in the argument.

Social Insecurity is an absolute mess. Failure to plan, then an expectation that someone else will bail you out will guarantee the bankruptcy of the country. Borrowing on a personal and government level must ultimately stop, and those that planned ahead are already being demonized as greedy. If I was greedy, I'd be out blowing all of my money now, not saving some to provide for my family in the future. Why is it suddenly evil to provide for future generations? I'm years from grandkids, but I'm already planning for them.

Why would anyone think the Ponzi Scheme is a retirement plan and willingly put any money there?

sanshaw
January 31, 2011 at 9:10 am

The government has been putting Social Security funds in the General Fund for years, it has never set the money in a separate trust fund to earn interest, otherwise the fund would be worth trillions of dollars. No one asked the question of the Government as to what the worth of the fund would be if it had been properly managed and put in its' own account.

Everyone thinks this money was set in an accound that the governemt could not touch. Unfortunately Congress does not explain that when money is put in the General Fund it can be used for anything the government wants. Of course when it comes to having to pay up they are now claiming that the fund will be running a deficit.

The Government should be truthful about how that money was used, it never earned a penny, and as far as I know that 7.7 percent you and every other working person in this nation are paying, is still going in the General fund, not earning a dime.

I am really concerned that the general public is not asking the question, where this money put and why was it not invested?

R. Kimberly
January 30, 2011 at 4:18 pm

Want to fix Social Security? Make the Thieves in Washington stop stealing from it! Make those that "Borrowed" from it pay it back!!! Borrow means to pay back! Not one of the politicians who "Borrowed" from Social Security, have ever paid one cent back! They had no plan, and no intention of paying it back. Ever since Nixon "Borrowed" from it, to help pay for the Viet Nam War, it has become a privatge slush fund for the politicians. Every one of them that "Borrowed" from Social Scurity is a Thief! They are not on it, and couldn't care less about those who are. Stop them from stealing from it, put them on it, and stop them from writing their own ticket. They work for us, not themselves! Vote them all out, and start new. Set term limits, on all of them. Put them on SS ! No giving themselves raises. It must be voted on by the citizens of the U.S. . Make them buy their own health care like we do. Open up the state lines, and let Insurance companies compete across state lines! The American people better wake ups soon, or Socialism will be the law.