Battered by high unemployment and record home foreclosures, most Americans seem to have lost faith in another fundamental part of their personal finances: Social Security.
A USA TODAY/Gallup Poll finds that a majority of retirees say they expect their current benefits to be cut, a dramatic increase in the number who hold that view. And a record six of 10 non-retirees predict Social Security won’t be able to pay them benefits when they stop working.
Skepticism is highest among the youngest workers: Three-fourths of those 18 to 34 don’t expect to get a Social Security check when they retire.
The public’s views are more dire than the calculations of Social Security’s trustees. Last year, they projected the system would begin running in the red in 2016, as the Baby Boom generation retired, and the trust fund would be exhausted in 2037.
The problem with the statement that the trust fund will be exhausted in 2037 is that that money has already been spent. All that’s there is IOUs from the
federal government. We’re really going to start running out of money in 2018…
The Government has a vested interest in lying as do the politicians. Why should they tell the taxpayer the truth. We only pay the bills after all.
If you listen carefully, you are beginning to hear politicians of both parties talks about “means testing” future Social Security benefits; i.e., you don’t get to collect them unless you “need” them, according to whatever formula the politicians devise.
Currently, some of you pay taxes twice on the dollars in your Social Security account. Once, when they are deducted from your paycheck, and a second time if you have “sufficient” outside income. I think it’s over $32,000 for MFJ tax status where the taxation of Social Security payments kicks in.
I predict that the political class may make 100% of Social Security benefits taxable at ordinary income rates sometime soon for those they designate as “rich.” This will be an interim step to only paying benefits to those who “need” them. It will be interesting to see what changes may be made in the payroll tax system when such a “needs” based payment system goes into effect.
I do find it rather irritating that politicians keep changing tax laws ex post facto, so you never can count on anything (except higher taxes :)) when doing your financial planning. Given the high profile case of George Steinbrenner, where his family will owe no federal estate taxes since he died in 2010, I also look for Congress to retroactively apply the estate tax to 2010, to make sure nobody gets away with paying no estate tax, if even for just a year. Maybe a lawyer out there could opine on whether such a retroactive tax law is legal.
At the risk of I don’t know what: the payroll tax is regressive by design. That was one of the compromises to get it passed back in 1935. It’s hard to see how we can continue to justify that one 75 years later in what is, after all, a far larger and far more affluent economy. Everybody loved voting increases to the program, and taking them, throughout the 1960s and 70s. I vividly remember my father remarking, back around 1985, that he would draw down his entire contribution to social security in the first year and a half that he collected benefits (BTW, he was a pension and trust officer so he knew whereof he spoke). Those days are long gone, of course, but they are part of the history of how we got where we are. Part of the confusion, of course, is our fundamental unwillingness to accept that it is — and always was — a pooled benefit program, not defined contribution. None of this is an excuse for mendacity. However if, as a citizenry, we refuse to think about commons problems as common, then we’re going to be served up lies.
And, while I’m at it, it was Bob Dole of all people who saw through the changes in the payroll taxes to create “the surplus” to resolve the crisis created in the 60s and 70s (that the surplus was used to fund deficits should not be charged to Dole’s account). That was over twenty-five years ago and we all lived. My point is that if we are willing to listen to pragmatic and effective legislators who are honest with us (Dole would be high on that list), then pragmatic solutions can be found.
I’m 51 – I expect there’s only a 50% chance of collecting benefits when (if?) I retire.
I’ve paid into Social Security at 71/2% for nearly a quarter of a century and at the full rate for nearly a quarter of the century. I fully expect to beginning collecting it in a month when I retire. If it fails, I will blame every politician who stole from the fund, every politician who wanted to “privatize” it, every politician who defended the asinine decision to excuse those earning a hell of a lot more money than most of us drones from paying SS on all their earnings. Breaking faith with those on Social Security I will regard as a betrayal and crime as great as treason.
There is also looming (nearly here, really) crisis in many states which
underfunded the pension plans for state, county, and
municipal “civil servants”. All these soon-to-retire civil servants
expect their legally-mandated pension funds to pay them what was
promised to them. The states will have no choice but to thrust their
hands into your pockets. So, if your Social Security pension check
gets taxed, it’ll be because our retired civil servants need to have
their cushy retirements funded by grabbing your money. Tough luck
for you ! Sorry, but your “golden years” will turn to dross.
Not only are politicians to blame, but we can also cast blame
on union organizations such as AFSCME (American Federation of
State, County, and Municipal Employees) who lobby at the
national, state, and local levels to have civil servants enjoy
platinum-plated retirement years.
ELF ALERT – The following is marginally related to this topic. Feel free to delete if such referencing is not within your rules.
A long article that brought clarity – to me at least – about how our political leaders make their decisions may be found at: http://spectator.org/archives/2010/07/16/americas-ruling-class-and-the/
We are three years from Social Security. We expected that we would not draw any in spite of paying. This appears not to be the case; we will collect. However, on the possibility, we accumulated substantial savings. Now we will pay tax on the SS and on the savings, at an increased rate because of the elimination of the tax cuts. Apparently in saving in order to take care of ourselves we were bad people and must be punished.
Younger people should expect that they will need to take care of themselves.
10, the galling thing is being taxed on money already taxed.
Anyone in the under 35 crowd like me, if they know anything about anything, does not expect to ever get a dime from social security. In fact, we will probably still be paying for the current Baby Boomer’s social security bills when we are retired.
Sad thing is, many of us in the 50+ crowd also assumed there would be no Social Security, so we dutifully saved and invested for retirement like the ant, not the grasshopper. However, pretty much all that is gone now, plus we face the government telling us every day we also will be responsible for bailing everyone else out who wasn’t fiscally responsible, people who bought houses they could in no way afford, used credit lines to buy their SUVS and flat screen TVs etc. I would suspect our group is among those that now are the most disgusted with our government and saying, NO MORE!!