Retirement Blog

Finance Blogs » Retirement Blog » Taking aim at Social Security

Taking aim at Social Security

By Jennie L. Phipps ·
Wednesday, November 7, 2012
Posted: 5 pm ET

Now that the election is decided, President Barack Obama and Congress are faced with the fiscal cliff. Social Security, which accounts for 20 percent of the U.S. budget, is the big target on the edge of that cliff.

The program's defenders are lining up to do battle.

Social Security Works, a coalition that urges increases in the program and fights cuts, has launched what it calls The Lame Duck Whip Count, which is keeping track of how members of Congress stand on cuts to Social Security, Medicare and Medicaid.

The number of members of the Republican-controlled House of Representatives who support this stance is unclear, but so far, nearly 30 mostly Democratic senators are on the Whip Count no-cuts list. At an early morning, post-election news conference calling for a quick fiscal cliff fix, Senate Majority Leader Harry Reid said, "We are not going to mess with Social Security."

Vermont Sen. Bernie Sanders, an Independent, is circulating an online petition at that calls for no benefit cuts to Social Security, Medicare and Medicaid. He already has nearly 100,000 electronic signatures -- and his effort has only just begun.

Social Security actuaries conclude that if we don't do something to control the cost of Social Security, by 2033, the program will only be collecting enough money to pay 75 percent of benefits owed. It may not look like it, but the political will to fix this problem is actually increasing, says Alison Borland, vice president of retirement solutions and strategies at human resources consultancy Aon Hewitt. But Borland doesn't see the fixes affecting people living in retirement or nearing it.

"There are easier things to stomach that impact people who are retiring 20, 30 or 40 years from now," she says.

She thinks that tax-saving tweaks to retirement savings plans such as IRAs and 401(k)s are more likely. Those changes could include eliminating some of the tax-deferred retirement plans, leaving only some version of a 401(k), probably a Roth 401(k) because it pushes the tax savings down the road. She also believes that it is likely that high-income earners will lose the ability to deduct much of their retirement savings.

In return, she predicts retirement planning will become more flexible with savers able to invest in a wider variety of options. "I think there is broad appreciation and recognition that retirement security is incredibly important, and you can expect the trade-off to any cuts to be a focus on getting more results from our investments," she says.

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.
John Calin
November 09, 2012 at 6:48 pm

Rase the tax 1 or 2% on the people that are working in the USA so there Parents can retier. There is problem

John Calin
November 09, 2012 at 6:35 pm

I belive that the money going to retirement for the people of USA
shoud not be touch that is ther money not the world or goverment
use. We have work 30-35-40 years to be able to retier and live
and enjoy our life with our familys (kids Grand kids). what is the problem with the USA. We paid taxa,went to war and what are
we going to get for this (O) Guite giveing awary our money to other contries. Also the money,s the goverment took and never gave back shoud be paid back with interest to us the prople of the USA. HAVE A GREAT DAY

Russell Satterthwait
November 09, 2012 at 5:47 pm

What ever happened to that bipartisan CBO study made some years back? It concluded that if a private pension system had been constructed in 1935, in your name, the government would only require that your pension would be invested in what I would call the triangle of risky, somewhat risky and conservative low-risk investments within the same Security and Exchange Systems requirements that apply ,say, to insurance companies. Then FICA deductions would be gradually reduced over time as seniors under the old system passed on. The constantly increasing and unfair deductions from younger peoples salarys would not constantly peck away at their "american dream". Despite the remaining years of the Depression, World War Two and all subsequent wars, recessions, and whatnots,the report concluded that the average social security recipient would be receiving three times as much income. Income that had been earned through their own private investments, not by constantly shaking down the young.Such things as choosing between food and medicine would not have occurred in recent years.

There would be some risk, but life will never be risk -free.Wars usually are short and economic expansions tend to last longer than recessions and therein I believe lay the rational for the CBO's law of averages

Linda Carter
November 09, 2012 at 3:37 pm

Every President we've had since Social Security was iniated has taken funds out of SS for other uses. Look it up, FDR had an atomic bomb built with SS moneys..Evidently no polititian through history felt like SS was the peoples money, they did with it what they chose. Of course if the politicians had their money taken from their paycheck and put in a fund to collect later, they most likely wouls have been wiser, you think.

November 09, 2012 at 12:20 pm

i agree with cutting federal and state govt benefits. also let them pay for their own health care....

November 09, 2012 at 10:55 am

Tom Molitor; We are our own enemies.

November 09, 2012 at 10:52 am

The problem I see coming with 'private retirement accounts' as well as 'private accounts for medical needs' is government raiding. We are all aware that millions of Americans from all walks of life have some sort of tax issues. Not filing, not paying etc. The penalties and interest on money legitimately and erroneously owed can and does build up quickly. If and when citizens are forced to take responsibility for their retirement years and if those citizens have any unpaid tax issues, the governments, state and federal will swoop in and seize those accounts, leaving the folks high and dry in their senior years. Whether they're guilty themselves of not attending to business or the victims of their spouses irresponsibility. At least with Social Security, as it stands, the feds can only gloom onto 15%

November 09, 2012 at 10:50 am

Social Security is not an "ENTITLEMENT" as the President of the United States refers. I paid into Social Security for over 40 years so that I would not have to worry about my future. I live on my Social Security. Barry (our Presidents real name) went to school on Foreign Aid, used several Social Security numbers, took advantage of every opportunity in this country that was available to him. Now he wants to bring us all down to live as Socialists, while he lives like a King and will continue to live like a King long after he has left office (he now has $90 million to retire with! How dare he take everything from us!

Randall Waldheim
November 09, 2012 at 10:44 am

I have another idea. Every American citizen has to serve a two year obligation to the country. Be it in the military or serving either local, state or federal government. Just like jury duty. You would be paid for your two years of service, but no retirement benefits. I do not believe you need to be a lawyer to know right from wrong. We would keep the Supreme Court Justices. That is all the lawyers we would need to decide if everyday people in Congress and the Senate are making Constitutional decisions, just as they do anyway. The President 's term would still remain the same and all positions would still be filled via an election, but just not by a career politician. Well, lawyers are also citizens, they also need to serve, just not as a career. The only problem with my idea is we would be overrun with ambulance chasers!

I agree with someone else's comment I read. Just give me back MY money that I have put into Social Security for over the past 40 years, and with the same interest that the IRS charges. The reason it is call an entitlement is that is just what it is. YOU ARE ENTITLED TO THE MONEY BECAUSE IT IS YOURS.

tom molitor
November 09, 2012 at 10:41 am

...lets's start with cutting back and also eliminating useless benefits and ridiculous benefits that congress and government employees receive...then eliminate giving money outside america, especially to our ememies....