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Fixing Social Security

By Jennie L. Phipps · Bankrate.com
Monday, April 18, 2011
Posted: 4 pm ET

I mailed off my income tax payment this morning. Because I'm self-employed, I also have to pay a substantial amount of Social Security taxes -- the worker's and the employer's shares. It's always a big ouch in April when I write the check and settle up. I never feel more ready to embrace retirement than I do when faced with an ugly tax bill, a real punishment for working.

Last week, on the cusp of the income tax deadline, three senators jointly proposed raising the retirement age to 70 and the early retirement age to 64. The plan also would decrease benefits slightly for higher-earning people. The result, say Sens. Lindsey Graham, R-S.C., Rand Paul, R-Ky., and Mike Lee, R-Utah, makes Social Security able to pay its obligations through 2080 without raising taxes.

People currently older than 56 wouldn't be affected, but that means a substantial majority of baby boomers would be. If this proposal sticks, they'll have to factor that into their retirement planning at the last minute.

When I've reported here on proposals to raise Social Security's age of eligibility, the reaction has been negative -- more than 200 people grumbled about this similar proposal from the American Enterprise Institute, a conservative think tank. Many who posted said that raising the Social Security minimum age punishes people who do physical work for a living and whose bodies wear out more quickly. No question about it -- that's a legitimate and widespread concern.

But today as I recover from the annual taxing ritual, I'm also particularly sympathetic with the senators' reluctance to raise taxes. We shouldn't punish people for working hard and earning a good living. That's not fair, either.

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8 Comments
buzzy landry
April 25, 2011 at 6:50 am

Just in the paper the other day it came to my knowledge that over half of the people that draw on the SS system are under 62 and they draw for the rest of there live for various reasons. Why do they always want to cut the people off that have paid into a system for all there life and never received anything. Their were 2.7 million people applied for SS last year from being 62 or older and 3.2 people got SS just from disability. Hey folks, something is very wrong with this.

Jackie
April 19, 2011 at 3:12 pm

It's very simple. Raise the FICA tax cap to cover a higher portion of wages. As it is now, people only pay Social Security taxes up to $106,800 of their income...how is that fair? Polls show this solution, by far, is the only plan a majority of Americans will embrace.

Homeless
April 19, 2011 at 11:25 am

I am normally not for taxing the welthy more just because they are wealthy. This is the one situation where I falter. I don't feel that people with higher earning should pay a higher percentage, but I do not think there should be a cap on the earnings that require SS payments. Keep it at the current 4% but lose the cap. This is one place where I feel it's not only on the younger workers, but ALSO the LOWER EARNING workers backs that these boomers and older generations are stealing from.

Chris Saia
April 19, 2011 at 8:53 am

Responding the the blog regarding "her and her hubby" and the math they did together - - - - You just don't get it. the private annuity is lower because it can borrower from the younger generation to pay the older generation. Put another way, the social security payment that you will get is higher because you will be borrowing (stealing is more accurate as the older generation has no intention of paying back) from the younger generation.

Wake Up and let's have this generational war!

Cee
April 19, 2011 at 8:47 am

There are several inequities in SS that are little known and should cause an uproar to be fixed.

These include the ability of a widow(er) to draw on their deceased spouses account at age 60 (50 if disabled); (s)he can then draw on own account at a later age. When a worker cannot draw until 62 at the earliest, why should a non-worker draw earlier?

An individual is not required by law to support a step-child or grandchild however, in some cases these relationships qualify for dependent death and retirement benefits. The only logical reason a person does not adopt a child is that there is financial benefit in not doing so or that the biological parent is involved in the child's life (and should be financially supporting the child). When an individual cannot legally be required to support another, why is should the taxpayers via Social Security?

A deceased workers parents may be able to draw on their child's account. This is most often the case when a child sponsors his older immigrant parents' permanent residency. It is quite possible that the parents could draw for over 30 years until their death. This draw can begin at age 62 even though normal retirement age is 66 or 67. Why should older workers be supporting foreign nationals who choose to move to the US?

It is possible for a worker, spouse, multiple ex-spouses, children, step-children, grandchildren, and parents all be drawing benefits on that worker's Social Security record. Is it any wonder that it is going broke!

The spouse of a deceased worker caring for children receives benefits until the youngest child is 16. When the majority of parents of children under the age of 5 are in the workforce, it is absurd to think that the spouse of a deceased worker should be granted a pass to eat bon-bons on the work of other parents of far younger children who are working in many cases because the FICA taxes are such a great part of their taxation.

Not only should the qualifying quarters for full benefits be increased from the current 40 but also a worker and the worker alone should be able to draw on his own record with the exception of death benefits to their children.

Societal norms have changed and so should Social Security.

FRED
April 19, 2011 at 6:34 am

S.S. is solvent for 27 years.. Tweak it, don't change the age!!! Rein in the payments to people who don't need it..

Joe
April 19, 2011 at 12:17 am

u see the population of the United states is getting larger! The baby boomers are fixing too retire! Lower the retirement age too 62! raise the cap from 106,000 too 200,000 dollars! This way we give the xy generation the chance too work! also there are 78 million boomers, which each had approximately 2.5 children So i am guessing there are 150 million of them! Unemployment solved down below 3%! The older generation most move over so the younger generation can take our place in the work force! This generation is suppose too be smarter than we are so let them work make money and live!