Liberal Fallacies: Protecting Social Security from its ‘Friends’
Re-posted from New Deal 2.0 with permission from the author
Liberal Fallacies: Protecting Social Security from its ‘Friends’
by L. Randall Wray
Liberal attacks on Social Security are the unkindest cut of all.
The Center for American Progress’s Matt Miller has argued that liberals can learn a valuable lesson from NY Governor Andrew Cuomo’s proposed budget. With his state facing a fiscal crisis, the Governor has proposed to cap growth of state spending on the Medicaid program. Miller has argued that we should follow his example and apply a similar cap to Social Security spending.
Briefly, New York’s Medicaid spending was slated to grow by 13%, much faster than the overall inflation rate. Governor Cuomo has proposed to ignore funding formulas and to limit growth to 6%. Miller wants liberals to follow that example by changing Social Security’s formula used to adjust benefits.
Miller rightly notices that Social Security expenditures are also projected to grow faster than inflation. Of course, some of that is due to our aging society, with more retirees to support. But funding formulas for Social Security also contribute to growth of individual benefits beyond cost of living adjustments. In other words, Social Security expenditures in real terms (after inflation) increase faster than growth of the retired population, meaning that the benefits received in the future by a retiree will be higher in real terms than they are today.
Here’s why. In the 1970s it was recognized that if real living standards rise over time (due to growing productivity of workers), then Social Security retirement benefits would fall behind even if they are adjusted for inflation. Suppose you retired today at age 65 and were fortunate enough to live another 25 years to the ripe old age of 90. Let us say you retire at the typical benefit of $18,000 paid to one who has earned a medium wage pre-retirement. If that benefit is adjusted every year to account for inflation, when you die in 2036 you will still be able to buy the same consumer basket in your last year of life (assuming the COLA adjustments accurately reflect inflation — something that is not really true). But over that 25-year period you will watch as the average American living standard rises relative to your own. You will become relatively impoverished.
Over a period that long, it is likely that living standards will have increased substantially; over the course of US history they have typically doubled each generation. You will have fallen far behind in relative terms — from a not-so-comfortable living standard ($18,000 is by no means extravagant today) to a living standard that is half as good in relative terms.
For comparison purposes, based on current formulas, your Social Security retirement is projected to grow in real terms from that $18,000 now to $24,000 in 2030 and to $29,000 in 2050 (should you be so lucky to live to the age of 104!). Your living standard will grow by 60% as it keeps pace with the growth of American workers’ living standards. In relative terms, you do not fall behind. If everyone else is driving flying saucers to Venetian vacations, you’ll be able to do the same.
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There are of course two objections. First, we do not know how much living standards will rise. It will depend on growth of labor productivity. But by linking growth of Social Security benefits to real wage growth we are ensuring that no matter how much productivity grows (whether it is zero or 400 percent), seniors will get their share.
Second, one could argue that in absolute terms, seniors are no worse off if we limit benefit growth to cover inflation. They’ll probably still live better in America than they would in India, after all.
But one thing we do know is that well-being depends more on relative comparisons than on absolute terms. Relative poverty is more detrimental to one’s physical, psychological, and emotional health than is absolute poverty. At first that might sound counterintuitive, but researchers from many disciplines have consistently found this to be true. It is relative poverty that isolates an individual, that reduces her ability to participate fully in society. So while it is commonplace to note that America’s poor are rich by Indian standards, that comparison is irrelevant.
Miller’s justification for elimination of the real living standard adjustment is based on two fallacies.
First, he argues that financing growth of Social Security benefits will “crowd out” all the other liberal priorities. The federal government simply will not be able to “afford” the costs of “guaranteeing great teachers for poor children, universal preschool, repairs for America’s crumbling roads and sewer” if we let living standards of seniors rise.
Second, he refers to growing numbers of retired baby boomers as the cause of the problem. It is a little publicized fact that when the intergenerational warriors trot out their “unfunded entitlements” that supposedly total tens of trillions of dollars, the shortfall is entirely due to the projected deficits in the long distant future after all baby boomers are dead and buried. The projected date of Armageddon, when Social Security first starts to run deficits (that is, when its total revenues fall short of its benefit payments) changes from year-to-year as assumptions change based on recent economic performance. But typically that date is sometime in the 2040s.
Think about it. The babyboomers will be closing in on the century mark by then. Yes, a few of them might make it. But most of us partied way too hard in the 1960s and 1970s. Heck, we were surprised to make it to the 1980s.
I do not have the space to go through all the reasons why the very long-term (75 years and beyond) projections of Social Security’s finances show growing budget deficits — but it mostly comes down to implausibly pessimistic and inconsistent assumptions about economic variables. In any case, it turns out that the projected financial shortfall amounts to about 2% of GDP per year after 2040 or so. In other words, if we find a way to shift 2% more of GDP annually toward Social Security’s funding over the next 30 years, the “looming financial crisis” disappears. By the way, we achieved a greater shift than that between 1960 and the 1990s. Only an ideologue could trump that up to a crisis.
But forget the finances. What really matters is growth of our nation’s ability to take care of the young, the workers, and the aged. Will we be able to produce enough goods and services to provide a rising living standard to all (supplemented by imports — if the rest of the world continues to prefer to “consume” green paper money over their own output, a topic for another day)? On all plausible projections the answer is a resounding “yes”. Indeed, even the pessimistic projections made by the Social Security Trustees shows rising living standards for all even as we age as a society.
That makes sense. The average worker in 1965 supported more dependents (young plus old) than workers are ever projected to support again. Why is that? Elementary: the parents of baby boomers supported 3.7 kids; the flip side of an aging society is that workers today and into the future are supporting more old people but fewer kids. It’s a tradeoff. We may not like it, but the alternatives are unpleasant: euthanasia for the elderly or very much higher birthrates. Far better to accept the aging society and to continue to ramp up productivity so that we can provide for them.
Indeed, it is precisely that productivity growth that drives the growth of real benefits that Miller wants to cut! If we don’t get rising productivity, we don’t get rising real benefits. Miller is focused on something that is not an issue, and has created a “solution” for something that is not a problem.
L. Randall Wray is Professor of Economics at the University of Missouri-Kansas City.
I thought the average wage was used to adjust an individual’s average earnings until the year the person turns 60. After that, you just get COLA (starting at age 62). So the hypothetical person retiring at 65 would not get any additional adjustment due to average wage increases. Right?
No, adjustments continue for as long as the individual either works and after s/he retires. Also, there are annual adjustments to add any subsequent earnings to the lifetime total earnings used to compute the benefit. Specific reason for this is to provide both an incentive for those who continue to work at low wages/part time and to give people credit on any reduction factor on their checks caused by early retirement. Very fair system.
Nancy Mike B
I think you may both be right. But I am not sure. Someone with more time than I have should look it up for us.
In any case, stopping the wage adjustment at age 60 is not a big problem. The wage adjustment will work essentially as “interest” over the 35 or 40 years the person has been contributing to his Social Security. That’s going to overwhelm any additional wage adjustment for the next two or five years. How much difference it makes over a twenty year life expectancy in retirement may be another question.
I am not convinced of the “unfairness” of using the wage adjustment only to cover the working years, and relying on COLA during retirement. One thing you need to keep in mind is that increasing benefits will require increasing the “tax.” There is a point where the balance between “current spending” and “retirement spending” is, if not optimal, at least “reasonable.”
Please be very careful. I agree with Wray. I don’t think he is arguing here to keep the wage adjustment throughout retirement, but merely to keep it as it now is… which is to say… we need to increase the payroll tax one half of one tenth of one percent each year to preserve the current balance between a workers current needs and his needs in retirement, given that he is likely to live longer in retirement, and will want to continue the same standard of living relative to his neighbors.
I’ll ask my main computations man back at my old shop and get back to you all. NancyO
One way to do a bit of means testing is as follows: Recall that there are bend points in the Social Security Benefit formula. Take all income above the second bend point where the benefit percentage goes from 32 to 15 percent, and only index it by CPI not by wage growth. Now as the bend points go up during a working life the amounts below would be re-indexed by wage growth. Note that if you run the numbers at the 749/month bend point the benefit is 674, at the 4517/month bend point the benefit is 1879 and at the max of 106800 the max benefit is 2547. So it would only be the higher earner who suffers here.
Things we could afford 50 years ago are now apparently quite beyond our means; per capita GDP doubles and we’re told that we can’t afford to retire, we can’t afford schools, medical care is out of the question, etc etc.
All of this is consistent with a crony capitalist world where 90% of the nation’s wealth is controlled by those at the very top of the pyramid.
Initial benefits are indexed to AWI (average wage index) every year. 2010 may be the only year where that is not an increase. That is true whether you start taking benefits at 62 or at 70. That is one reason why people like Biggs really do believe it is a good thing to encourage people to work longer (indepent of actually rasing the NRA (normal retirement age)).
One you start taking benefits they are indexed by inflation (one measure of it). Wray’s article uses wording that obscures those details. The parenthetical “should you be so lucky to live to the age of 104!” is confusing and suggests that Wray may not have fully understood it.
Another arguemt by assertion!
CoRev –
Don’t be an ass. Look at the attack on schools, and teachers, specifically in Wisconsin.
It now takes a two-earner family to achieve the standard of living of a single earner family in my parent’s generation. Or in my – and your generation.
Health care costs are dramatically above inflation, and the single biggest driver of financial dislocation in our society.
The comment about wealth is spot on.
Just because 89 didn’t includes links to data sources, it doesn’t mean he is spouting some fatuous opinion.
If you don’t know the truth of these things, you are just putting your ignorance on display.
It’s not arguing by assertion if a list of facts is easily verifiable by anyone willing to actually go look for – – what is it now . . . oh yeah! FACTS AND DATA.
Please learn what a naked assertion is before you go accusing anyone of employing it.
http://www.freethoughtpedia.com/wiki/Logical_Fallacies_by_Todangst#Naked_Assertions_and_Related_Fallacies
Cheers!
JzB
I started receiving benefits a little less than two years ago, shortly after I retired.
There has been no increase in that time. I toyed with the idea of collecting at the full benefit age – i think it’s 66 and change. The break even point I calculated was about 13 years in the future. Life is too damned uncertain to wait 13 years – age 75.
BTW – – I have to believe SS money, like food stamps, has a high multiplier and gets spent quick, and is therefore highly stimulative. I’ve NEVER seen that mentioned anywhere. My SS dollars get back into the economy immediately.
Cheers!
JzB
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It now takes a two-earner family to achieve the standard of living of a single earner family in my parent’s generation. Or in my – and your generation.
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http://agonist.org/ian_welsh/20060623/the_great_long_suck
Cheers back at cha! But, Mike put those rules up here for a reason. Because you believe 89 doesn’t make it true. BTW, thanks for the link, even though it is a side issue. T’was easy, yeah?
89, I like this chart, but not for what you probably think. It makes a great deal of sense when we apply two other factors: 1) average for each category and 2) average education level achieved for each category.
When we see those factores applied the story is obvious, but I can not find that chart any more.
89, I like this chart, but not for what you probably think. It makes a great deal of sense when we apply two other factors: 1) average age for each category and 2) average education level achieved for each category.
When we see those factors applied the story is obvious, but I can not find that chart any more.
Here’s what SSA says about using AWI (http://www.socialsecurity.gov/OACT/COLA/AWI.html):
“For retirement, eligibility is at age 62. If a person reaches age 62 in 2011, for example, then 2011 is the person’s year of eligibility. We always index an individual’s earnings to the average wage level two years prior to the year of first eligibility.”
They also show some examples that show wage adjustments ending at age 60.
I would re-phrase to achieve the current vision of what a generation ago standard of living was. 40 years ago, most houses in the northern half of the country did not have a/c. Did not have a dishwasher, and were much smaller more than one bathroom was just coming in. Teenagers did not have cars, etc. Of course no one had a home computer, and telephones were just being introduced in color, before then they were like model Ts you could have any color you liked as long as it was black. Long distance calls were a rare luxury, airplane travel was also rare. One of the things that has happened is that our perception of how folks lived 40 years ago is not totally accurate.
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When we see those factors applied the story is obvious, but I can not find that chart any more.
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A new study of admissions at 30 highly selective colleges found that legacy applicants get a big advantage over those with no family connections to the institution — but the benefit is far greater for those with a parent who earned an undergraduate degree at the college than for those with other family connections.
According to the study, by Michael Hurwitz, a doctoral student at the Harvard Graduate School of Education, applicants to a parent’s alma mater had, on average, seven times the odds of admission of nonlegacy applicants. Those whose parents did graduate work there or who had a grandparent, sibling, uncle or aunt who attended the college were, by comparison, only twice as likely to be admitted.
Legacy admissions have become an increasingly touchy issue for colleges. Admissions officers mostly play down the impact of legacy status. But a growing body of research shows that family connections count for a lot — and Mr. Hurwitz’s study found a larger impact than previous studies
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http://www.nytimes.com/2011/01/09/education/09legacies.html
89, you quoted me, but the remainder of your comment seemed not to apply. Wazzup?
Lyle, Yup! Standard of living (SOL) has changed and become more costly. Dunno, though, if we can readily compare the rates of gain between SOL and family incomes. someone must have done it, just don’t know where.
Lots of people in the top 1% come from priveleged backgrounds; Paris Hilton and George W Bush come to mind..
These people have good educations because they’re rich; they’re not rich because they’re educated.
“I have to believe SS money, like food stamps, has a high multiplier”
I agree. That is why sending money to SS recipients when your COLA was zero made sense as part of a stimulus package even though it did not make sense as an inflation measure.
Huh. Yet, if you are going to live long enough, it can be shown that there is an advantage to not taking your benefits right away. (I will have to read that again, perhaps the reasoning is not what I understood.) (There are people who like to do that kind of analysis even though so many people choose early retirement for perfectly good reasons.)
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I would re-phrase to achieve the current vision of what a generation ago standard of living was.
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You’re describing the early 60’s when women stayed home and had time to wash dishes and shuttle kids around.
By the time Reagan came into office women were moving into the workforce so they needed dishwashers and teenagers had to have cars since mom’s taxi wasn’t available.
Of course mom’s wages helped pay for this as well as the A/C and larger houses.
The bump in HH income was due to mom’s participation in the labor market, not because labor was participating in the growth of per capita gdp which was largely captured by capital, not labor.
http://agonist.org/files/active/0/average%20hourly%20wages%20goods%20producing%20post%20war%201982%20dollars.gif
89, ahh, a backdoor class warfare comment. But with just a little imagaination, you can see what will happen to the classes below that 1%. As we age we make more. As we get better educated we maek even more, all the while there is a biologic winnowing by capability. Except for your nasty, and eevviill rich. Y’ano that 99.x%
Actually its simple math, take say starting at 62 and say 66. In each case calculate the total amount recieved until the amounts are equal, that is the breakeven point. So if you don’t live to the breakeven point, then you get more total money starting early, whereas if you live past the breakeven point you get more total money starting late.
The longer you receive benes the higher the total paid to you is. There is a comp you can do to figure the break even point. But there is no table or comp program to tell you how long you’re going to live. My advice was always practical–take the money and run. But, CPA types and actuaries would disagree with me. But, I have interviewed too many people who died before they got their first checks and av. processing time for retirement was something like 20 calendar days then. Now, the whole process is much faster, but it’s still something to think about. NO
The chart is unreadably tiny. When expanded, it becomes a big blurr.
JzB
89, ahh, a backdoor class warfare comment. But with just a little imagaination, you can see what will happen to the classes below that 1%, Y’ano that 99.x%. As we age we make more. As we get better educated we make even more, all the while there is a biologic winnowing by capability. Except for your nasty, and eevviill rich.
89, I think you are describing the law of supply and demand. More workers, slower wage increases, couple that with the demand for more benefits, and wages continue to be slower.
I don’t pretend to know the numbers, but clearly they had wage impacts.
When planning for retirement the financial advisor almost always recommended taking SS benefits at the earliest possible date. I don’t know if it was much more than personal preference.
NO, describes my MIL.
Lyle
why rube goldberg something that already works fine. if you raise the payroll tax forty cents per week per year, Social Security is solvent forever. the high earners already get less for their money than the low earners. why stick them in the eye?
thanks jazz
coRev does not actually know what “argument by assertion” means. it’s just something he heard on a blog somewhere and it sounded impressive, so he will use it, a lot, for a while. until a new jingle sticks in his brain.
Better level of conversation folks….some slips, but better. Thanks.
CoRev
yeah, there is some correlation. but you ignore one huge point. earning capacity reflects how well you fit the current economic paradigm. a little climate change and strong backs will count for more than doing good meetings.
yeah, Lyle, a color telephone really improves my standard of living. so does the neighbor’s teenager’s car.
i don’t have a dishwasher, seem to live with the drudgery okay.
but here’s a clue for you, 40 year ago my kids were almost grown. but i am not so old i have forgot what it was like. we lived better. kids didn’t have computers or i phones, but they had fun outside.
what the hell does standard of living mean if people can’t afford it?
CoRev
yes indeed. more workers, lower wages. the secret of the ownership class.
“benefits” may actually be an increase in standard of living, if you think the ability to retire before you are senile is an improvement in standard of living. no reason to discuss whether being able to afford a doctor counts as an improved standard of living.
do you just like the sound of words?
Arne
yes you get a few more dollars a month if you put off retirement. but some of us think life is more important than a few dollars a month. if you love your work, go for it. most people do not.
Arne
the actuaries have set the benefit levels at different ages of retirement so there is no actuarial benefit one way or the other. retire early, get a smaller monthly pension.
of course if you knew how long you were going to live you could calculate your best deal. but you don’t. that’s the whole point.
Smart financial advisor. As the pilots say there is nothing more useless than altitude above you or runway behind you. Take the money now. If you live past the “break even point” you will have your memories, and after a certain age those ski vacations don’t mean as much as they used to,
You’ve got a computation man right here, NancyO!
Coberly pretty much nails it. You’re both correct. A beneficiary’s Eligibility Year determines the Wage base for indexing the initial Primary Insurance Amount (derived from Average Indexed Monthly Earnings or AIME). Your earnings for, say, 1978 are basically multiplied by average wage growth from 1978 until age 60 at which point your PIAs are adjusted by COLAs.
After age 60 a beneficiary’s PIA can still increase based on the wages earned the prior year. This is because the beneficiary’s high 35 years have increased, but the Aime is still indexed to the ELY, so you no longer get the benefit of those earnings being indexed to average yearly wage growth.
This is why many beneficiaries saw a COLA increase for their December 2008 checks and another increase for their January 2009 benefits due. Their PIA was recomputed due to earnings from the prior year.
I don’t think so, CoRev, when looking at the data. Median hourly wages grew rapidly during the years that baby boomers were entering the workforce in huge numbers. Workforce age, education, and growth rates cannot explain median hourly wage growth (pre-1973) or stagnation (post-1973). The median income of US households has grown since 1973 because women gradually joined the workforce and have been slowly closing the gender hourly wage gap. But the income of an average family with one wage-earner in 1973 roughly compares to today’s version.
Wray says:
if we find a way to shift 2% more of GDP annually toward Social Security’s funding over the next 30 years, the “looming financial crisis” disappears.
Only 2% of GDP? You guys are on a different planet. That is a massive amount. It would be a huge tax increase. When are you going to get it? That is simply not in the cards. Stop asking for it, stop wishing for it. This is dead on arrival.
There is no fix on SS that starts with tax increases. Come up with a new, more realistic plan. Please.
Regarding the age at which to first start collecting one’s SS benefits, it is also necessary to take into account whether or not you are still working, or at least earning, a salary. I believe up to 85% of one’s SS benefits becomes taxable at one’s highest marginal percentage if that person is still earning over $35,000. The 13 year period to make up for the lost four years of monthly benefits is almost certainly reduced by the tax bite noted. I’ll not admit to when my eligibility starts. It’s too depressing as it is too close at hand.
A political statement, not a budgetary statement.
The math is still workable even with part time pay of some kind, which I think is most common for people I know…the golf everyday retirement is silly unless you really love golf…I know one person who does, but then he gives lessons for a fee, so does not count.
No one has forwarded the billion dollars for the SS solvency campaign for a minor tax increase….yet the rhetoric is beginning to change, and will continue to change despite my plea for a billion going unanswered. You are describing a political fight Bruce, not a fiscal one. And it is gaining momentum. NASI proposed a lot of fiscal choices.
I suspect people do what the big money players do…hide the money, expense it as second best, pay it to family, and trust it.
Krsating
only two percent of gdp to pay for the basic living expenses of one third of the adult population to live six years longer on average than the last time the tax rate was set?
two percent of your income that you get back when you retire?
i am trying not to call you a moron, but i can’t think of another way to put it.
A “fix” for social security, that fixes it entirely, is a tax increase of one half of one tenth of one percent per year. The Congressional Budget Office says so. Coberly says so. Krasting goes back to his bottle.
jack
don’t be depressed. you’d be surprised how good life can be when you don’t have to worry about making enough to live on every day.
it’s the whole reason people invented saving for retirement. it’s part of the reason FDR invented Social Security for those unable to save enough or protect themselves from inflation and market losses. the big reason, of course, was that those people had to stop working anyway… too old to work. no one would hire them… and slowly starving to death wasn’t all that much fun for even the rich to watch. and the work houses were never a money making idea.
Dan
this old man… doesn’t play games with Uncle Sam. I make a little money. I report it.
One of the Big Evils that we have taught ourselves over the years is the Money is Everything.
Those people who calculate to the penny the way to “maximize” their SS benefit… have entirely lost sight of the reason to live.
It does not matter at the end of the last day how much money you made, or have in the bank. Even your heirs won’t care that much. They sure won’t care about you if its the money their heart is set on.
Dan, I think Buff’s SSTF Treasuries sequestration issue is what will drive the politics of a small SS increase.
Sorry for you Coberly. Tax increase are not in the cards. Look what is going on around you. The budget from Obama creates a 1.6T defict this year. There is nothing left but to put entiltements back on the table. Medicare, Medicaid and SS have to be changed. And they will.
Jac, there’s a little know secret thar nancyO, Dale, I and several others don’t want you guys to know. If you have planned well, retirement is good, BUT, growing older can suck. Like everything in life some are luckier than others.
Ah, ooh the aches and pains get worse every day!
Jack, there’s a little know secret thar NancyO, Dale, I and several others don’t want you guys to know. If you have planned well, retirement is good, BUT, growing older can suck. Like everything in life some are luckier on health and finances than others.
Ah, ooh the aches and pains get worse every day!
Ibid, Dale!
Krasting
whatever the criminals in Washing are doing, a one half of one tenth of one percent increase in the SS tax each year fixes it forever.
but the tax increase does not need to go on forever. it will stop when the total increase reaches about 2% for each the employer and the employee, who will have more than twice as much AFTER the tax then as they have now, and the worker will get his money back as it pays for his retirement.
yes, 2% of a big number is a big number. but each person’s share of it, when there are 200 million tax payers, is a small number.
CoRev
can’t imagine why you think I don’t want you to know that. Growing older is not for sissies.
That’s why it’s nice to save up for retirement. You won’t like working until your boss can’t suck any more juice out of you. SS provides you a way to save for retirement “in case all else fails.”
Fellas, It’s not the financial issue that’s got me……(the right word excapes me. It’s the continuing decrepidation of the body. Nothing seems to work quite as well, and I’m having a particular issue with visual acuity beyond the usual aging process. of course the extra 20-30 lbs that seem to have suddenly appeared aren’t doing my joints any good.
Lyle, I think you have tapped into the basic elements of the “Leninist Strategy”. Right now the top delivers about 20% and the bottom about 80% (I think). Most people near the top weren’t people making way, way over the SS cap but were people near or at the cap a good deal of their lives. In short, many of your “high earners” were way below Obama’s $250,000 earner. But pulling the upper bend point down to 15 or 10% will certainly increase the “it’s my money” crowd as many in the salaried professional class start resenting their bad bargain (perceived, even if mythical, ROI).
“The math is still workable even with part time pay of some kind,”
Well I thought that I understood the taxation issue for those who still earn a “full” income while receiving SS benefits. However, after looking at several explanations of how the calculation is done my head is spinning. The words provisional amount, additional amount, base amount all come into play and the only sure thing that I can discern is that up to 85% of the SS benefit might be taxable after a complicated calculation involving the three amounts noted. Net result? I’m waiting til 66. Not 2066, but Jack 66.
Dale,
I’ve made it clear to my kids that I’m making every effort to spend what there is while I’m alive, including gifts to them and theirs from time to time. I’d rather give it now and see a smile than think that the smile may be there when I’ve just kicked off. Of course the calculation required in order to spend to zero at the end is a little tricky. I’ve not figured out how to accurately calculate the end and I’m glad of that.
Anna Lee
someone who earns near the cap most of their life gets a real return of about 2% on their “investment” in Social Security. This translates into about a 5% nominal return. And this is without counting its value as insurance.
Of course when you sell the building after having paid fire insurance on it for forty years without a fire, you tend to discount the value of insurance. That’s why it’s hard enough to persuade the high earners that they have got a fair return, when after all they could have gotten a 10% return in the stock market… their broker told them so.
At least the way things are we can argue truthfully that they are getting a fair deal. Play games with the payout formula, or raise the cap, and we couldn’t. One more reason to wish our friends were smarter. They keep suggesting we turn SS into what our enemies say it already is.
jack
if its still possible for you, find a way to get some exercise that you like. it is the best medicine there is for most of what ails you at least in the early parts of the ageing process. if you sit at a desk all day you are killing yourself.
i had a “sudden” 30 lbs appear. and symptoms that might have been diabetes. scared me enough to go to the gym (not exercise that i enjoy) and change some of my eating habits. turned out not to be hard at all, and the 30 lbs went away in a year. now i can get some of the exercise i do enjoy.
and yes, those typos (mine) are a sign of an aging brain. still, we gotta keep fighting.
sounds sane to me. i have spent myself broke a couple of times helping out the kids. somehow i always come out ahead. lillies of the field and all.
jack
i don’t understand the details myself. But I retired at 52, not 62, because i thought i had just enough money to get by. I am so glad I did. My mother waited until she was 65 in order to get the higher monthly. She was dead by 66.
Unless you really like your work, it’s probably not the best plan to try to maximize your earnings at the cost of the time you have left.
JzB–About 10 years ago in SSA, the multiplier they told us in the trenches about was 7 turnovers per dollar before it returned to the Treasury as revenue. Depending on where you live, SS and other pension payments can make up a big chunk of the local domestic product. In periods of high unemployment, that chunk is much bigger.
One effect of the SS program I seldom see mentioned is that it provides a cash float in the domestic economy which is absolutely reliable without fail every month. And, of course, it is a source of reliable income in times of instability in the stock/bond market. So, not a bad system from these perspectives. No one that I have read about yet has proposed an SS substitute that does this as well or at all, come to that. But, to hear Ryan tell it, he didn’t need his SS monthly surviving child’s benefit when his father died. So, everybody else doesn’t either. NancyO
Hey, I have so far escaped being anyone’s MIL. I’m just your friendly, past life linebacker little old lady with a white picket fence. NancyO
We should start a thread having to do with factors influencing the decision to retire, or simply stop working. There is nothing I can offer as a good reason to work other than self support. My wife isn’t planning to retire til 2013. What would I do if I were not working before that? I’d probably get into too much trouble if left to my own devices. As much as I enjoy hanging at the various jazz venues in NYC, its a bit too expensive to hit the clubs more than 3-4 times in a month.
Work for Angry Bear?
Yeah, that’s where the BIG BUCKS are!!!!
Jack
i wasn’t clear that you were planning to continue working while collecting SS. that may not be such a good idea. as you have noted,you end up paying taxes on it, whereas if you wait until you need it,its free and clear and there’s more of it.
but if its a question of working vs not working, i vote for not working. unless you love your job.
Rdan,
Don’t think that that hasn’t crossed my mind. I keep telling myself that I can’t retire because I don’t want to give up a pretty decent income resulting from work that I’m not in love with, but is pretty easy to accomplish after years of practice. Do bloggers actually earn money for what they do? My son writes for a living, but it is apparent that that that income stream is frequently interrupted by a fickle audience. Send me a note describing what good I might be able to do for AB. Keep in mind that my wife has often implied that I’m good for nothing. I think she was joking, I nope.
Well Arianna Huffington does, but zi don’t think her employees earn any more than elsewhere, and many worked for free.
Some econ bloggers can by promoting their business through the blog, book sales on occasion, and if the volume is right some real money on ads (millions of pageviews). Some now write for mainstream…but I can’t imagine there is ‘money’ for the time spent except for a few.
Sounds like real retirement activity to me. I don’t play either golf nor tennis so if I’m not working at all I would have time on my hands. I’ll have to try my hand at a post, as soon as I can come up with a good topic that is original and hasn’t already been written to death like deficit reduction. Something along the lines of “There Is Nothiing Humane About Human Behavior.” Or, “The Presence of Man Proves the Absence of God.” Or, “Religious Egotism: Man Is In God’s Image.” And among one of my favorite ideas, “Message to Robespierre: Help!”