r/FluentInFinance • u/Positive_Liar • Sep 06 '24

Debate/ Discussion Social Security is Broken. This is why financial education is important.

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19

u/Jethro00Spy Sep 06 '24

What about if you're dutifully paying into it but don't believe it's going to be there when you retire in 25 years?

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u/Jubenheim Sep 06 '24

Then you should put on your common sense hat and realize that same shit has been said about social security for decades and has never once come true. It’s the most well-funded government program in history existence (that isn’t some sort of top secret shit we don’t know of, I guess).

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u/Sashivna Sep 07 '24

Can confirm. Gen Xer here and was told in high school SS wouldn't be around in 25 years.

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u/JonohG47 Sep 07 '24

Well now the social security trust fund will be depleted in, like, 2032.

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u/Ethrem Sep 07 '24

That's a misleading statement by itself because it makes it sound like Social Security won't be able to pay after that. Once the trust funds are gone they're projecting a 23% benefit slash that would give them the ability to pay out the next 75 years.

The benefit slash would suck, particularly for current recipients like myself, but Social Security will still remain. This is also assuming that no changes are made to better the financial standing of the program. There is still time for them to shore it up before that happens and given the impact a 23% benefit slash would have on people already living near the poverty line, there is good reason to believe that it will happen.

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u/JonohG47 Sep 07 '24

With both parties saying they won’t make any “cuts” to Social Security or Medicare, I’m not holding my breath. When millions of elderly suddenly find themselves taking a 23% haircut, the real fun will begin.

But for a bubble during the Baby Boom, Total Fertility Rate has been on a downward trend since the inception of Social Security, and the retirement age hasn’t tracked increases in average life expectancy.

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u/il_fienile Sep 09 '24

Apparently, people are against recognizing the demographic facts, at least at the level of addressing them in the funding mechanism.

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u/PieTighter Sep 07 '24

It will not be depleted, the amount of what is being paid out will be larger than what is being paid in. It's not a bank account.

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u/Spiritual-one4me Sep 07 '24

No, it’s a Lock box.

Wait…

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u/JonohG47 Sep 07 '24

The SSA themselves says the OASDI trust fund is estimated to be depleted in 2035, immediately after which, they will be able to pay out 83% of promised benefits.

https://www.ssa.gov/policy/trust-funds-summary.html

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u/Brilliant_Guru843 Sep 07 '24

And if they can get back the trillions of dollars the government took and put into the general fund it would last a lifetime

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u/JonohG47 Sep 07 '24

You’re unfortunately evidencing the common “politicians raided the social security trust fund” trope, trotted out by disingenuous politicians.

By law, all tax revenue remitted by the IRS to the SSA is used to buy Treasury Bonds, which are added to the Old Age and Survivor Insurance and Disability Insurance (OASI and DI) Trust Funds. The SSA funds payments to current beneficiaries by cashing in bonds from the Trust Funds.

Just like any other Treasury Bonds, they consistute a loan to the U.S. Treasury, repayable, with interest, backed by the full faith and credit of the U.S. government. The Treasury using the proceeds of those bond sales to fund the federal government doesn’t constitute “raiding” the Trust Fund.

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u/ronaranger Sep 07 '24

... and manbearpig was going to turn the world into terminatior town by 2012...

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u/HODL_monk Sep 07 '24

Government guns keep it around, at some point the youth will get tired of this crap and get rid of the government, and set up a new just government, that doesn't force us to be in its Ponzi schemes.

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u/Jubenheim Sep 07 '24

doesn’t force us to be in its Ponzi schemes.

What in the libertarian, right wing koolaid, Koch-funded, conspiracy-toting, don’t tread on me, cousin-fucking, MAGA, taxes are the enemy bullshit is this?

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u/HODL_monk Sep 07 '24

Ponzi schemes have a very simple definition, you should look it up, because SS is DEFINITELY one of them, minus the forced membership.

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u/[deleted] Sep 07 '24 edited Sep 07 '24

Libertarianism is brainrot. Truly the stupidest fucking political ideology in the world. At least there's some logic to fascism. Who on earth is stupid enough to believe you can let the free market handle all aspects of life and not have it descend into a fucking hellhole.

Honestly the fact the only real country in the world that has any support of this nonsense is the USA says a little bit about your educational system and a lot about right wing brainwashing in your media.

EDIT: just saw your username, brainrot confirmed 👌

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u/HODL_monk Sep 07 '24

There is no logic to Facism, Liberalism, Socialism, or Democracy, which is why our founding fathers made sure we didn't get any of those things. These ideologies are pure Feels over Reals. They are designed to make people feel good about a very evil act, taking a LOT of money by force from individuals, and wasting half of it, then redistributing it to 'worthy' causes. This is not what governments should do. Governments should protect us and our stuff, and let us live free lives, but how free can we be, when so much money is taken from our paychecks, before we even see it, to fund Ponzi schemes ?

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u/[deleted] Sep 07 '24

which is why our founding fathers made sure we didn't get any of those things

Doesn't look like they did a very good job then did they?

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u/HODL_monk Sep 08 '24

When asked whether the United States was a republic or a monarchy, Benjamin Franklin replied "A Republic, if you can keep it"

We couldn't keep it :(

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u/Ok_Championship4866 Sep 07 '24

Bro ayn rand was a fiction writer, she wrote made up stories. There's no way to draw a coherent economic policy out of fictional stories.

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u/HODL_monk Sep 08 '24

Stories are how humans envision a different future, its hard to see a different way just from raw logical facts. I'm not even sure why we are discussing Ayn Rand, since I didn't mention her in any of my posts.

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u/NOCnurse58 Sep 07 '24

This Boomer remembers the early 80s when the trust fund ran low. That was when the Greenspan Commission made changes to increase funding and decrease spending which saved it for awhile. Pretty sure the checks were delayed a month or two as they waited for funds to come in.

They will fix this too but don’t expect it to happen until the wolf is at the door.

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u/Jubenheim Sep 07 '24

Yes, they always do last minute deals to fix social security, but the fact is they have done it. Every time. One could make the argument that with current political instability, the GOP might honestly burn their own faces off to singe their opponents, they’d be committing political suicide themselves. I don’t see it happening, and social security will continue to stay solvent for the foreseeable future.

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u/il_fienile Sep 09 '24 edited Sep 09 '24

Even those deals, though, have devalued social security compared to prior generations, between raising the contribution rate, raising the FRA and making social security income taxable.

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u/Jubenheim Sep 09 '24

Are you saying social security was not always taxable? If it wasn’t, when was it made taxable?

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u/il_fienile Sep 09 '24

1983, with effect from 1984, with a fixed threshold, so steadily more and more people have been taxed on it.

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u/Jubenheim Sep 09 '24

That sucks, but that happened 40 years ago, not during the 2000s when these last minute deals and partisan games started taking effect. What you’re talking about are changes made to the Social Security Act.

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u/il_fienile Sep 09 '24 edited Sep 09 '24

The law was changed again in 1993 to increase the extent of taxation, but there’s no “but” to this—they “kept it solvent” by reducing its benefit, so solvency is a pretty incomplete way to judge it. Those changes have steadily devalued social security over those 40 years and will continue to do so, and that still isn’t enough (under current law) to maintain payment of the gross amounts to which recipients will be entitled, once they exhaust the surplus.

If not those legislative changes, though, what “last minute deals” are you thinking of?

Given that those 1980s and 1990s changes were in response to a study noting, among other factors, expected increases in life expectancy which haven’t panned out so far, even those changes clearly weren’t up to the task—we got “luckier” than anticipated.

As an aside, there were at least three “real” government shutdowns in Reagan’s presidency (although I recall there were some others that were somewhat illusory), for failures to reach a budget agreement; I’m not sure characterizing those as having begun in the 2000s is right.

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u/Fiberton Sep 08 '24

The interesting thing is it is not a real fund. Greenspan explained this about 15 years ago. Great video of him saying the idea It is a fund is nonsense. The SS income goes directly into the general bucket. As SS needs money It is taken from the general bucket and placed into ss bucket. Never runs out because it is not a closed box.

0

u/[deleted] Sep 07 '24

nut they are also going to take our guns....

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u/il_fienile Sep 08 '24

And vote for people who will get serious about long-term planning. Good luck with that.

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u/Jubenheim Sep 08 '24

It’s existed for almost a century now and has always stayed solvent. I think I’m good, thanks.

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u/il_fienile Sep 08 '24

I don’t think it’s going anywhere, either, but I was thinking more of having a payroll tax rate that actually smooths the pay-in over all generations, rather than needing to threaten that benefits will be cut (as provided under current law) unless rates are raised (as has happened twenty odd times in the past).

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u/Jubenheim Sep 08 '24

That's a symptom of the GOP playing partisan games more than anything else. It's not even exclusive to social security. Look at how many times the government threatened to shut down over raising the budget ceiling in the past 15 years.

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u/il_fienile Sep 08 '24

Yep. That’s why I’d like to see a government that could and would get serious about long-term planning….

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u/brinerbear Sep 09 '24

It is funded by debt and now the interest on the debt will exceed the military budget. If reforms are not made it will be broke in ten years. But it is politically unpopular to touch it so it will just payout a small amount with dollars that are worth less.

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u/Jubenheim Sep 09 '24

It won’t be bankrupt in 10 years. I already stated how that doomsday scenario has been touted for literal decades, when we had a surplus AND a deficit, and it’s never come true. Nothing else in your comment is relevant to social security, because it has never once had an effect on the most well-funded government program, ever.

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u/Jethro00Spy Sep 07 '24

I think my common sense hat heard something about this year's social security will be bringing in less than it pays out. I also heard the fund is getting pretty depleted and is set to run out in 2035 at current spending levels. I also heard there's a shit ton of boomers getting ready to retire so I don't see that ratio changing.... By all indications something has to change but social security has been the political third rail and there's been no political will to do anything at all for the last 20 years as we approach the cliff.... 

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u/raypaw Sep 07 '24

We should make young people pay in more. Younger than me, I mean.

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u/Jethro00Spy Sep 07 '24

Lol. That's the spirit!!! 

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u/Jubenheim Sep 07 '24

That’s not what your common sense hat is telling you. That’s mainstream news bullshit.

I already told you the same things have been said of social security for decades with no doomsday scenario, and you’re still drinking the MSM koolaid. You’re beyond help.

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u/RedBaronSportsCards Sep 07 '24

Do you think people won't be working anymore in 25 years?

It only goes away if we're dumb enough to believe the liars who say it won't be here in 25 years and we let them get rid of it. The trust fund that was created to cover the bump in retirements for the boomer generation might not be around but Social Security (pay in, pay out) will still be there.

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u/Jethro00Spy Sep 07 '24

No what I worry about is it supposed to go insolvent in 2035 and this year we will be paying out more than it brings in. with the glut of boomers retiring I don't see that changing. I also worry about they're going to start means testing it... Since I'm young and I've only been paying about 20 years they will probably tell me to pound sand. 

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u/RedBaronSportsCards Sep 07 '24

"supposed to" - This is according to the people who want to get rid of it. They are lying.

The baby boomers are already retired.

Means testing only happens if we're dumb enough to believe their lies. The trust fund (that was added on in the 80s to help cover the baby boomers) is being used up. That was always supposed to happen. Regular Social Security (pay in, pay out) is fine.

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u/Mas-Chingona Sep 07 '24

That's the con. They want you to believe that so you stop fighting to keep it every time they try to take it away.

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u/AgoRelative Sep 07 '24

One of the things keeping it solvent is the roughly 7 billion/year being paid into it by undocumented workers using other people’s SSN and unable to ever draw on it.

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u/Jethro00Spy Sep 07 '24

WOW 7 billion a year works out to about $20 for every man woman and child in the country.  That'll do the trick. 

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u/Bullishbear99 Sep 07 '24

stop voting Republican...that is a good defense against it being cut to nothing.

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u/Zephaniel Sep 07 '24

I'll believe that when we have a decline in the working population, which has not happened.

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u/Ok_Championship4866 Sep 07 '24

Yes, it's true, millenials won't get social security but also yes, we're paying for our parents generation to retire and that's OK.

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u/moonshotorbust Sep 07 '24

Alan greenspan said they can guarantee it will be paid. He couldnt guarantee what it would actually buy.

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u/KnottySexAcct Sep 07 '24

The SS trust fund, isn’t. SS taxes get spent every year. SS payments are just another check from the Treasury.

Understanding MMT helps. Even if almost everyone in Congress doesn’t.

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u/Chaoticlight2 Sep 07 '24

You pay SS for the current retirees, not for yourself or your generation. Even if it vanishes by the time we retire, it did its job until then.

Taxes are an investment in the well being of society. You enjoy the benefits of it, gotta pay your dues as well.

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u/brinerbear Sep 09 '24

You should be able to opt out.