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Idea for saving Social Security

By Jennie L. Phipps · Bankrate.com
Monday, February 4, 2013
Posted: 3 pm ET

As Congress struggles with ways to manage the rising cost of Social Security without cutting payments that are vital to millions, some people are offering suggestions that sound like they might be worth a second look.

Try this on for size: Would you delay claiming Social Security -- saving the federal government money in the process -- if it meant Uncle Sam would give you a cash bonus? The bonus would be equal to the amount that your Social Security payment would increase by delayed claiming -- about 8 percent of your potential payment for every year you delay.

Economic theorists at the University of Pennsylvania Wharton School of Business, who came up with this idea, calculated that workers given the chance to receive their delayed retirement credit as a lump-sum payment would, on average, delay their retirement for a year and a half to two years. This raises the probability that people younger than 60 would work beyond the normal retirement age from 29 percent to 86 percent, and it ups the likelihood 60-year-olds would work beyond 65 from 4 percent to 49 percent.

The report says this plan is a good deal for Social Security because it continues to collect wage taxes and can delay paying a participant's benefit for however many additional years he chooses to work. It is a good retirement planning deal for recipients because it front-loads payments during the early years of retirement when most people need more money. Participants also could invest this lump sum and potentially build a bigger nest egg for their later years or leave it to their heirs.

What do you think? Would you vote for making a partial lump-sum payment a Social Security option?

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301 Comments
Dee H.
February 10, 2013 at 3:43 pm

To Dave - thanks but I "just" made a comment seconds prior to the followup that I just made. It was either too long (I don't think that it was any longer than yours), or someone didn't like what I said about this administration having no budget and people and their votes. No one really wants to hear the truth.

Dave
February 10, 2013 at 3:03 pm

To Dee H-If you click on "older comments" on the bottom of the page, you have more comments (4 or 5 pages back)

Dee H.
February 10, 2013 at 1:19 pm

Why was my first comment not posted? I suppose that it made too much sense.

Dee H.
February 10, 2013 at 1:17 pm

and...get rid of PERS like others have said and make it so that every public employee is in the ss system only. You can't have people legislating regarding social security when "they" don't have any skin in the game.

Dave
February 10, 2013 at 11:25 am

Sure John. Forget about saving & investing for yourself. Have other people pay for you. Many of you want to raise the SS limit. Let's just tax the job creators to death. The true backbone of this Country are the business Owners. It’s very simple. If you pay taxes, you are either an employer or an employee. As an employer, I’m subject to all of the same taxes that my employees pay, plus more. I know what you’re thinking (that you pay taxes to). Yes you do, but where do they come from?
-You wouldn’t pay any Federal taxes, if your employer didn’t create a job for you.
-You wouldn’t pay any State taxes, if your employer didn’t create a job for you.
-You wouldn’t pay any County, Township, or City taxes, if your employer didn’t create a job for you (then where would your Fire, Police or any other Local service come from?).
-If it wasn’t for an Employer creating jobs, our Government wouldn’t have any money for Social Security, Medicare or Medicaid. If it wasn’t for businesses, we wouldn’t have all of these programs.
-Oh ya. Those roads & bridges that Obama has talked about, they are paid by income taxes (from income due to a job created by an employer) and by road taxes on gasoline & tolls. This money originates from a job, supplied by an employer.
-Unless you employees are counterfeiting money, every dollar you have originates from an employer. I dare you to prove me wrong. Tomorrow morning, go to work & quit. Your employer will still be in business, but once your unemployment runs out (which is paid by your employer) where will your money come from. Of course there are government programs of which all of the tax money originates from a business).
A successful small businessperson will have to pay 40% in Fed taxes, both sides of the SS tax which is 12.4% (plus Med/Medicare), plus their State, county & City tax which in some States is 10-13%. OVER 60%! Then if they die with too much money, you Liberals steal another 40% of the remaining 40% (and some of you want to raise it to 55%)! There comes a time when it is not only THEFT, but stupid. Obama is right. The rich don't need the money. So they don't need to expand their business, buy another business, or even keep their business going. Where are your jobs going to come from when you persuade the business Owners to quit or to at least “not expand”? I’m 55. I’ve been saving & investing since I was 10. In 2009 my retired GM employee brother-in-law said “why can’t the rich just pay more”? I know that you don’t want to hear my whole response, but how ironic that we were still driving our 1998 Oldsmobile as our main vehicle (cost $26,000.00 brand new) and he had a policy of buying a new car every three years. Now he wanted to steal my savings & profit on my investments by raising my taxes.

I feel that in four years I’ll have enough to be financially secure. Then my decision will be to keep working or quit. I could keep working, but by the time I pay my Fed (average 31%),State,local (4%) & both sides of the SS & Medicare/Medicaid (15.3%) tax I’m over 49%. Then if I die with too much, my Family will lose another 40% + in inheritance taxes (you people will probably lower the exemption to $1,000,000). So I can keep working (for money I won’t need) or I can quit, lay off my 12 employees and sit on the beach & drink some rum. Hmmmmm. Anyone want to party? Raise my taxes more, & I’ll quit sooner!!!!!!!!!!

dwb
February 09, 2013 at 11:18 pm

Its amazing that the Internet news always tries to scare Americans about the predicted "dwindle" of the Social Security Program funds. The money we give away to other nations that never return to us alone would secure the SS monies needed. Remember these monies go to workers who worked all their lives in this country to make it the greatest country in the world, a country EVERYOnE continually tries to come to, and this money also goes to families of soldiers who lost their lives in almost every country in the world to protect THAT country.

George
February 09, 2013 at 9:47 pm

There would be no problem if they took all the government unions that have their own pension and medical plans and roll them all into Social Security and Medicare.

SSI and Medicare are good enough for us but not for them.

Ken
February 09, 2013 at 7:27 pm

This is similar to the DROP program that local and state employees have in Florida. After a certain period of employment (retirement eligible) the employees can elect to go into the DROP program and work up to 5 additional years. Their pension starts when they enter DROP and is paid into a fund with a guaranteed return. The amount of their monthly pension payments is capped at the level earned when they enter DROP. At the end of the 5 years (or sooner if they elect to leave earlier) the lump sum (accumulated in the fund) is paid to the retiree and their pension payments are sent to the retiree.

John
February 09, 2013 at 7:11 pm

My thought is do remove the max on social security wages just like medicare and exempt the first 50K from the social security taxes for both the employer and employee, so the back bone of this country will be able to stop the recession.

Maxine Sevin
February 09, 2013 at 7:00 pm

They took ssi and paid for the nam war, has not to my knowledge ever put back in. And only god know's how much was stole from it all these year's. make all use same pension's, benifits so there money in congress and other branches pay in to ssi. lots of business wait for years to sign up , pay less than five year's. guess what when they are now old enough to retire. you got it first stop is ssi office. i am going to be 83 next month, month after my husband died , his employer LTV took $458.00 from his pension , left me $90.00 a month toput with my small ssi check. no wonder people are feed up with goverment. Maxine