Social Security

Why Obama's Social Security Proposal Would Screw Over Millennials

Expanding a retirement program that's not fiscally solvent is no way to treat the young.

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Social Security
Credit: Zimmytws | Dreamstime.com

With blatant disregard for any type of basic math, President Obama recently called for an increase to Social Security benefits. Millennials, who pay into Social Security without realistic expectations of receiving their promised benefits, should be furious that neither the president nor the presidential candidates will tell the truth about Social Security's broken finances.

As President Obama argued in his June 1 speech in Elkhart, Indiana, "We can't afford to weaken Social Security. We should be strengthening Social Security. And not only do we need to strengthen its long-term health, it's time we finally made Social Security more generous, and increased its benefits so that today's retirees and future generations get the dignified retirement that they've earned."

There are two main problems with these claims. First, unless Americans are fine with possibly paying a 31 percent payroll tax (up from 15 percent today), entitlement programs cannot afford to maintain their current course—much less be expanded. Second, retirees receive far more than they pay in from the program commonly known as the "third rail" of American politics.

President Obama was light on the details of his proposed expansion. But one can assume that he is lining up to support the policy views of Democratic contenders Hillary Clinton and Bernie Sanders. Clinton wants to expand Social Security, while Sanders calls it "the most successful government program in our nation's history."

House Republicans, namely House Budget Chairman Tom Price, are making serious efforts to straighten out American's broken entitlement systems. Unfortunately, likely Republican presidential candidate Donald Trump promises he "will not cut" Social Security. Trump has promised to fully fund the program through higher GDP growth. But even if GDP growth magically shot up to 60 percent above the current long-term estimate (2.1 percent), the program will still end up insolvent.

Social Security remains popular—especially among seniors—but no level of public support changes the reality that the program is unfair to millennials. If nothing changes, Americans who retire after 2035 (the year the Social Security Old Age Survivors Insurance Trust Fund is projected to be depleted) will only receive about three-quarters of their promised benefits.

On the topic of promises, the myth that entitlements are "earned benefits" is one political talking point that simply refuses to die. Typical retirees, especially older ones, are receiving far more in benefits than what they contributed. For example, according to the Urban Institute, a married one-earner couple with average earnings that reached retirement age in 2000 is expected to receive back more than twice what they paid in. A similar couple that turned 65 in 1980 received 4.3 times what they paid in taxes. And those lucky couples in the same earnings situation that retired in 1960 received Social Security benefits that were over nearly 12 times their contribution levels.

It is true that Social Security payments provide the majority of cash income for 65 percent of seniors. But this statistic uses the wrong metric and obscures the troubling truth about the program. Of course retirees, who are by definition not working, have low cash incomes.

Additionally, Social Security does not just take from the young to give to the old—it steals from the poor to give to the wealthy. In 2011 (the most recent Census data available), the average wealth for a household headed by someone 65 years or older was 26 times the wealth of the average household headed by an adult under the age of 35. In 2009, during the depths of the recession, older households had 50 times the wealth of younger households. Some argue that this disparity in wealth makes sense. After all, older Americans have had the chance to work longer and accumulate more savings. However, back in 1984 this ratio was 10:1.

Since many seniors do not plan on moving out of their homes, perhaps it makes sense to exclude home equity from this comparison. But even after removing home equity, in 2011 the median net worth of households headed by an adult under the age of 35 was $4,151. In that same year, excluding home equity, the median net worth of households headed by someone 65 years and over was $27,322. This number for recent retirees (65 to 69 years old) was $43,921, more than 10 times what young households have.

President Obama had previously supported modest downward adjustments to Social Security benefit growth as part of a so-called "grand bargain" to reform America's finances. Common-sense solutions—such as using an updated inflation adjustment that is widely accepted as more accurate rather than the outdated model that overstates inflation—are apparently now off the table. It makes no sense to expand Social Security benefits faster than the increase in cost of living when the program is in such dire straits.

The truth is that seniors are getting a sweetheart deal that they simply did not pay for—and this imbalance places a major fiscal burden on younger Americans. It is long past time politicians stopped making Americans false, unfunded promises, and quit pushing the costs of their irresponsibility on to the next generation.

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  1. “so that … future generations get the dignified retirement that they’ve earned.”

    *** facepalm ***

    1. Alpo, it’s what seniors crave!

      1. Does it have electrolytes?

        1. Not sure.

        2. Well, you could supplement Alpo with powdered Gatorade for the electrolytes…

    2. “Awards first! achievements later”
      /Millenial Motto

      1. “Screw our children”

        /Baby Boomer Motto

        1. Yeah. Like the Greatest Generation screwed us.

  2. I’m beginning to come around the idea that Social Security doesn’t have “broken finances”– in that SS is no more “broken” than anything else the government does.

    The government takes in money. It spends money. The money it spends is orders of magnitude higher than the the money it takes in. This is an indisputable fact.

    SS is paid out of the general fund. The SS that gets taken out of your paycheck is an income tax structured as a kind of retirement-prepayment system which gives it the social fig leaf of being a ‘funded program’. It’s not and it never has been.

    It’s simple, no one pays enough taxes to sustain the spending of the federal government. No one, not the 1%, not the 99%, not the homeless guy on the corner.

    1. What if we put the SS money into a special, oh, call it a “lockbox”, and ….

      1. By golly, I believe you’re on to something!

        1. It’s a novel idea, but I desperately wish he’d finish the thought.

          1. … auction it off to the highest bidder!

          2. Borrow it all and leave a pile of IOUs?

            1. That’s from Dumb and Dumber. No, we’ll have to come up with something better than that.

              1. “Go ahead and add it up. Every cent’s accounted for. Look, see this, that’s a car. 275 thou. Might want to hand on to that one.”

          3. 1. Steal socks
            2. ????
            3. Get rich

      2. We will make a list of our clients, and how much money each of them has given us to invest. We will keep this list in a safe place. If we have time, we will make a copy of the list, in case something happens to the first list….Don’t leave the client’s money lying around. Keep it in a safe place. For example: where we keep the list.

      3. And if Social Security is running a surplus, we can just spend that money now on other stuff, and put good-as-gold government Treasury debt into that lock box, to cover Social Security when the surplus disappears, as it did two years ago!

    2. It is classic mission creep. It would be hard enough to keep it solvent if they had just kept a program for old people. But they didn’t do that. First, they gave it to orphans, then to the disabled and now to God knows who else. Before they start talking about raising taxes and cutting benefits to people who have paid in, they should reduce the program back to what it was intended to be. That won’t totally solve the problem but it would be a good start.

      1. God knows who else = lots of people pretending to be disabled and unable to work.

        1. Europe and the USA already have a basic income experiment. Its SSI-disability.

          My landlord was “disabled” and yet could re-roof and re-wire his rental property.

          1. I was talking to a guy at a convenience store the other day and he was telling me that he was now on disability so he did not have to work anymore. He looked fine and animated when talking about leaving now to go fishing. He was probably in his 50s. If he can run around smiling and laughing and going fishing I don’t see why he cannot do some kind of work and not take taxpayers money. Disability and SNAP have exploded the last 7 years, we are headed to more of a social democracy like Europe but we cannot police the world and pay for every need of the citizens both.

      2. Orphans costing too much these days?

    3. The money it spends is orders of magnitude higher than the the money it takes in. This is an indisputable fact.

      Don’t use terms like “order of magnitude” if you don’t have any clue what they mean

      1. Or words like “indisputable” or “fact”.

  3. “it steals from the poor to give to the wealthy. ”

    I, and a lot of retirees I know, are collecting far less in social security than we (and our employers) put in during 40+ year careers when you compare the s.s. benefits to what the same money would have grown to if just invested in the S&P 500. Therefore, if the average s.s. recipient is getting “more than he/she paid in”, then it must be the
    poor (in terms of lifetime wages) who are stealing from those fortunate enough to have max’d out contributions during their careers.

    1. Depending on how much you earned/paid in, it’s possible you could live long enough to drawing more than you put in. However, it’s irrelevant. SS isn’t just for retirees. SS is now used for all manner of wealth transfer payments to people who have never put anything in, never will put anything in, and are decades under the Social Security retirement age.

      1. And don’t forget the spouse multiplier.

    2. Not really. The lost earnings from the money not having been invested are exactly that. Lost. No one got those earnings and we’re all poorer for it. You may feel like you’re getting less than you paid in, but assume you’ll live to life expectancy for your age and then do the calculation. You’ll find that you end up getting back almost double what you “contributed” in inflation adjusted dollars. Remember you keep getting that check until you die, not until your “contribution” is used up. Finally, the “lifetime wages” poor tend to die younger for a variety of reasons associated with quality of life. This reduces their total SS benefit.

      1. Inflation adjusted dollars is much less than hypothetical index fund returns.

    3. Most folks don’t know how that social security benefit is calculated in tiers, so here goes:

      1. The benefit’s first tier is 90% of the first $856/month of average, inflation-adjusted earnings over the best 35 years of the beneficiary’s work history.
      2. The benefit’s second tier is 32% of next $4300/month.
      3. The benefit’s third tier is 15% of the next $4700/month.

      Assuming the beneficiary worked at least 30 years, there is a special minimum benefit of $830/month. The average benefit paid is $1341/month. The maximum benefit at normal retirement age (66 currently) runs a little over twice that amount, $2600. But the guy who gets $2600/mo had to pay over $600,000 in constant dollars (employee+employer, adjusted for inflation, but not the time value of money) over his 35 year career to get that benefit whereas the guy who gets the average $1341/mo “only” paid about $170,000. The guy who gets the minimum benefit paid very little since he got it virtually all his FICA tax back via the earned-income tax credit.

      It should be clear that, despite protestations by both liberals and libertarians about the regressive nature of the FICA tax, the social security benefit has huge income redistribution effects that benefit lower income people at the expense of more affluent people.

      1. The more affluent guy who gets the the $2600/mo social security maximum could buy a private annuity today that will provide about $3500/mo with the $600,000 he kicked into the system over 35 years. If he had put his FICA taxes in a private annuity over the 35 years instead, the monthly check would be much, much larger than that.

        1. There you go with facts again, killjoy

        2. Thanks, Chipper.

      2. HuffPo ran a story about this today. Essentially they were pissed it took the President this long to get this done. I figure if the millennials cant police their own then they deserve to agitate a more progressive agenda and live with the consequences.

        By the time these idiots realize how fucked they are they will be looking at retirement and I’ll be happy to still have a heartbeat.

    4. The mistake, creech, is to believe that past contributions have anything to do with current outlays.

      That money is gone, baby, gone. All the money sent to SocSec recipients this year was either taxed or borrowed this year. Every. Single. Penny.

      By age cohort, this means the relatively poor are paying the relatively well off to do nothing. For great social justice.

      1. This point can’t be made enough. That money was already spent on stuff for creech and his cohort. Stuff like wars and bureaucracies and highways. Now that creech and his cohort have all their wars, bureaucracies and highways they also want to get their money back. The only way to get the money back is to borrow it or tax the current working class.

        1. Since I’ve voted Libertarian since 1972, don’t tar me with that brush. I’m well aware the money’s been spent. The voters (my parents generation) laughed at Goldwater’s modest reforms in 1964. All I’m saying is that my “contributions” during my career would have produced a shit pile more money in 2016 and thrown off as dividends or an annuity far more than my monthly s.s. benefit.

    5. Exactly. I checked on my husband’s Social Security status recently, as he can take full SS next year. Aside from the expected ineptitude of their counting his 2014 and forward income at 0, I noted that he has contributed nearly 100K, with of course matching 100K from employers. (and he is not even maxed out, just middle of the road) We’d actually be far better off if that money had gone into an S&P 500 401K, since we’d have in excess of 2 million to work with. I note that the article mentions single worker/dual recipients, but I bet that our situation is closer to reality for my generation. I have about 15 years of lesser and part time work paid in, but will have a solid 15 years once I finish my degree, so Social Security will not really be paying out two for one, as they did in older generations.

    6. Wrong.
      1. The poor live shorter lives and collect less.
      2. The wealthy pay a lower percentage because of the income cap (luckily for me).
      3. The SS tax is paid by young working people with very little net worth, to old non-working people with significantly higher net worth (thanks to no means testing).

  4. “With blatant disregard for any type of basic math, President Obama recently called for an increase to Social Security benefits.”

    So he’s well in tune with his audience?

    1. The upside to America’s functional illiteracy is that you can talk about their innumeracy to their face.

      1. “‘Innumeracy’, my ass!”

      2. that’s funny!

  5. “We need to increase taxes such that today’s earners, tending to be younger families with less income and savings, can pay an even greater share of their wages to older and much wealthier retirees.”

    Moral imperative my ass.

  6. And not only do we need to strengthen its long-term health, it’s time we finally made Social Security more generous…

    Leftist logic at it’s finest!

    1. It’s very easy to be generous with other peoples’ money. I’m sure today’s retirees are just fine with the payroll tax doubling for today’s workers.

  7. With blatant disregard for any type of basic math, President Obama recently called for an increase to Social Security benefits.

    Hey. Exponentials are not “basic math”!

    If they were, then people who want government to act strongly to prevent climate change would have a clue how much richer our grandchildren will be than we are and the massive opportunity cost that taxing cheap energy represents.

  8. “it’s time we finally made Social Security more generous”

    “It’s time we finally fixed our broken tax code.”

    “It’s time we finally cured cancer.”

    “It’s time we finally solved the Palestinian Problem.”

    ….

    1. “Well, if we can put a man on the moon…”

      1. “… then we can put a man *with cancer* on the moon!”

    2. It’s time we finally closed Gitmo.
      It’s time we finally ended our wars in the Middle East.
      It’s time we finally rolled back the war on drugs.
      It’s time we finally reformed our law enforcement systems.
      It’s time we finally improved the healthcare/health insurance systems.

      1. All of those are transfer payment schemes. Why would he want to end them?

    3. Hey, Joe Biden can’t do everything at once.

  9. But even after removing home equity, in 2011 the median net worth of households headed by an adult under the age of 35 was $4,151. In that same year, excluding home equity, the median net worth of households headed by someone 65 years and over was $27,322. This number for recent retirees (65 to 69 years old) was $43,921, more than 10 times what young households have.

    Is the Median net worth of Americans really this low? Are we using “net worth” in a different way than I do?

    1. Does it include retirement savings?

      1. I dunno. If I balance out my home equity with what I still owe on the property, add up all my retirement accounts, savings, (throw in a little for current earning/cash flow), personal property (including a paid off vehicle) I come in WAY WAY more than a net worth of $43,000 and I’m solidly lower middle class.

        1. Ditto just for my 401K but I’m hearing a lot of people don’t even save.

          1. Perhaps some sort of system is in order where we force people to save by taking something out of their paycheck, and then the government giving it back to you at retirement.

            1. Nah, the taxpayers would see right through that.

            2. I think you’re on to something. We could have everyone’s 401K contributions be a purchase of new 50-year Treasuries.

      1. I owe $0 and I have a good chunk saved for retirement. Only I don’t “own” a home so of course everyone calls me financially irresponsible.

        1. they’re just jealous that you don’t have yard work.

        2. Where is your tent located?

      2. well, the mortgage should be more than zeroed out by their house

    2. I’m surprised it’s as high as that, between college loans and underemployment.

    3. Yes it is.

      Also, why would you exclude home equity. Everybody’s got to live somewhere. Old people who own their own home aren’t paying rent, have the option to rent parts of their house for extra income and have the option of selling their house and moving into something less expensive, pocketing the difference. Young people who are renting an apartment don’t have those options. Home equity is absolutely part of your net worth. You just have to adjust it for swings in the housing market…

      1. I think that home equity should always be counted, but there are probably reasonable ways to ‘discount’ it because, as you say, everyone’s got to live somewhere. But since all domiciles aren’t equal, the home equity you have should be counted in some way. And yes, it might even be a negative if your the equity is way below market for what you’d need in your next living situation. But even if I reduce my home equity to $0, I come in way higher than $43k, and I’m 10,000 miles away from being ‘wealthy’, at least as it’s commonly defined.

      2. Even if you own a home free and clear of a mortgage, you still have to pay the gov and the insurance companies. On my house in a nice neighborhood in Huntsville, AL, it still costs me 350 a month without any mortgage payments. That is really low – btw – because property taxes in AL are ridiculously low.

      3. I think the problem with home equity is that if you still have a mortgage that equity is in actuality still a liability. That is to say, until the day you sell and realize the financial gain you are on the hook for a large sum of money. The housing bubble illustrates my point.

    4. Yep, it really is. Median Joe Six-Pack is generally carrying five-figure debts (student / car / credit card) for a good portion of his life that offset any 401k contributions and so on to get back to zero.

      I find this topic fascinating, but I try not to offer value judgments on this trend because it’s hard to talk about my own situation without sounding like a wealthy, arrogant dick who looks down on Joe.

      1. Why not? Joe looks down on you.

    5. It must have been more before the abysmal Obama economy. Anyone else have to deal with late in life periods of unemployment as entire sectors of the economy tanked? I know many people who depleted their retirement savings.

  10. Obama is a clever operator: he knows that his recommendations not only will not but cannot be taken seriously as policy, but the GOP will have to challenge them anyway as a matter of course. In the end, Social Security is made no more insolvent than it already is, and it’s certainly not cut back in the slightest, and he gives Republicans a black eye for having opposed another free cookies program when in reality basic arithmetic reality is the mitigating factor.

    1. For that matter, it’s a black eye specifically with Republicans’ most loyal and predictable voters, old people, who are EXTREMELY unconservative (as a bloc, I’m sure some are good people) when it’s their benefits on the line.

    2. Perhaps but seeing that Trump is the GOP nom., I see him going further then Obama. Soc Security payments just got 10 times higher, the checks are going to be yuge. If the GOP congressional members are smart they will keep their mouths shut about this during the election other then to pay kind lip service to soc sec. and then kill any increases after the election.

  11. Look, it sounds nice and generous, and Obama is a lameduck with only a few months left with the shiny title of POTUS. No one cares about the practicality of his statement. I doubt even one person in his administration has run any numbers over this.

    1. He is a masterful troll. He achieved zilch in terms of anything meaningful or positive or lasting other than expanding bureaucracy (a positive in the minds of progressives only), and yet he parades about as though he really is a messianic figure who revived liberalism and beat back the tides of darkness. The umbrage he takes with Congressional Republicans for stymieing his vision of national utopia through works and transfer programs has to be just immolating.

  12. Hey it may not make economic sense, but it makes moral, social and political sense. Also fairness. Something about social justice too.

    1. Especially since Obama, when asked to explain this move, can make the ludicrous claim that when he did this SS was just fine and dandy, and obviously, whomever followed him is the reason SS is now broke and dead…

    2. Throwing infants off tall buildings may not make physical sense, but it makes moral, social, and political sense to continue trying in our effort to defy the cruel laws of gravity.

    3. +1 Governor Moonbeam


  13. There are two main problems with these claims. First, unless Americans are fine with possibly paying a 31 percent payroll tax (up from 15 percent today), entitlement programs cannot afford to maintain their current course?much less be expanded.

    Not that I’m a big fan of paying higher FICA, but yes, by not raising the FICA cap, you can raise what everyone pays.
    But raising the FICA cap from $118k to let’s say $1mm without increasing benefits would reduce the FICA rate for all.
    There’s already no cap on Medicare.

    1. And that will be precisely how they’ll propose to pay for it. Sure it will cause a depression. But, the public can’t be counted on to put two and two together.

      1. I doubt a depression would break out over raising the CAP and lowering the overall FICA rate.

        What they should get rid of all-together is the Employer Portion of FICA. Just have the worker pay the entire FICA with pre-tax dollars.

        1. Except lowering the rate is going to mean not getting the money to pay those increased benefits. And yeah, you will be looking at massive increase in marginal rates for a lot of higher end earners. You’d be looking, for a lot of these taxpayers at a 10-15% increase in their tax bill.

        2. Then you’re an idiot. Raising taxes in a bad economy creates a depression. see Obamacare.

    2. “But raising the FICA cap from $118k to let’s say $1mm without increasing benefits would…”

      Screw over higher income people even more than Social Security does now.

      The existing benefit formula is equivalent to a steeply progressive income tax in that it gives lower income people a higher payout relative to what they paid in than it does for higher income people and people with non social security income over a certain income have part of the benefit taken back by having to pay federal income taxes on up to 85% of it.

      1. Feature, not bug, etc

    3. I guess here’s someone who isn’t aware that when the government is allowed to increase taxes, it simply feels free to INCREASE the amount of programs they are going to float. We can NEVER concede to another increase in taxes. It simply gives them more room for new ideas to spend the money on. This has ALWAYS been the case. All taxes are used for is to be votes to retain power. ANY increase in tax only increases their power. They will NOT use it for what they say they are using it for. Failing to see the government as racketeers is what causes people to actually make concessions in increasing taxes.

      My wife and I pay ~48% of our income in taxes already, and we’re not near the $250K definition of “rich”. I simply can add all the hidden taxes and fees. And I’m not even counting the new ACA mandates nor regulation/rigged markets from which I have to buy artificially inflated goods from.

      In short, FUCK INCREASING OASDI. Again, it will be used for new influence buying and even if it WAS put toward closing the underfunded defined benefits as currently defined, it will only scratch the surface.

  14. Typical retirees, especially older ones, are receiving far more in benefits than what they contributed.

    While this is nominally true, it’s far from the entire story. Yes, retirees get back twice what they paid in. But, investments are supposed to earn money. And double your investment from a payment stream over 40 years is a terrible return on investment.

    The thing about Social Security is that it’s able to screw over both the tax payers and the recipients.

    1. Investments means profits, and every SJW knows profits are ebil!

    2. And don’t forget that if you die early (say like black males tend to do) none of the money you “invested” in SS goes to your estate. This takes “screwed” to a whole new level.

  15. Sanders calls it “the most successful government program in our nation’s history.”

    Unfortunately, he’s right. It has grown such that it pretty much encompasses every single person in the entire nation.

    And, you whippersnappers out there, I’m here to tell you that every single geezer counts on getting his share of the loot, and that will include you when you approach geezerhood. Too bad there won’t be anything left for you … now, get back to work … you’re spending too much time surfing the web, and somebody has to pay for my social security check

    1. As long as the federal government exists, there will ALWAYS be something for you. Again, the idea that SS won’t be “there” for young people is like saying because we’re $19 trillion in debt, there won’t be anything “there” for the Navy.

      Everything is in peril of not being “there” if we don’t get our debt under control.

    2. Sure it’s successful. It’s only had to be fixed 40 times in the past because the math never works out.

  16. 1) I am so fucking sick of people taking the narrative from the Boomers to the Millennials. There’s a Gen-X/Y IN BETWEEN, and if the narrative is allowed to be Boomer to Millennial, we GenX/Y are going to end up being the suckers getting the shit end of the Ponzi scheme collapse.

    Not only should Social Security NOT BE increased, it should be held to the initial standard to which it was implemented AND the Boomer entitlements need to be firewalled to the Boomer generation. TRILLIONS have been borrowed to gin up the economy, those TRILLIONS are now sitting in retirement accounts and assets of the Boomers. NOW saying they are entitled to TRILLIONS more on the backs of GenX/Y (and millennials) is criminal. I concede that there’s a portion of the debt that is the result of paying out benefits to pre-Boomer generations, and that should be borne rateably over the Boomers, GenX/Y and millennials.

    2) It is absolutely breath taking the level of arrogance displayed by these politicians. We are at a critical juncture as to reconcile the tens of TRILLIONS we already have, and they are SHILLING for even more. It is unconscionable. It IS CRIMINAL. Yet, where’s the Republican attack on this sheer stupidity? None. And they are STUMPED that they’ve been TRUMPED. Fuck ’em all.

    1. There’s a Gen-X/Y IN BETWEEN

      But Gen-X was so famously apathetic that even Gen X couldn’t give a shit about Gen-X. Why would anyone else?

      1. God, I wish millenials didn’t care so much about everything.

    2. we GenX/Y are going to end up being the suckers getting the shit end of the Ponzi scheme collapse.

      Yes. Yes, we are.

    3. Take it back to the status quo ex ante 1975, when Social Security started automatic annual cost-of-living increases, but allow the cap to grow with urban salary and wage rates.

    4. Gen Y=Millenials.

  17. SS is like a giant Madoff scheme, except instead of the victims demanding justice, they demand the scammer be made emperor for life and anyone who disagrees is portrayed as a cold-blooded murderer of the elderly.

    “You don’t want to line my coffers with your hard-earned cash? WHY DO YOU HATE OLD PEOPLE?!?”

    1. Madoff never threatened his investors with violence and imprisonment if they failed to make investments according to his schedule.

  18. There are two things in SocSec’s future, guaranteed:

    (1) The cap on taxable wages will be raised and eventually eliminated.

    (2) Lower, hard caps on benefits will be instituted.

    Guaranteed.

    1. 3) Benefits on affluent beneficiaries receive will be largely taxed away in some roundabout way that not one taxpayer in a hundred will understand.

      Not guaranteed, but likely: There will be a roundabout way to tax Roth IRAs received by social security beneficiaries. E.g., deeming Roth IRA distributions as made even if not actually made and including it as income for purposes of determining the tax on social security benefits. The Democrats and their minions at the IRS can be very creative when they are in power.

    2. You didn’t earn THAT retirement. You only earned the retirement we allow you to have.

  19. I was already aware of everything written in this article, but there’s a certain fury generated by seeing it all encapsulated so neatly.

    All the garbage about insolvency is kind of silly given that the whole government is insolvent. They’ll eventually stop hand-wringing over the fund running out and just fund it out of an unrelated fund, like they’ve been doing in reverse for years. More debt, more interest payments for the future generation. They call that Tuesday. It’s just a stupid mobilization trick to get out voters to vote for the guy who pinky swears hardest that s/he loves old people.

  20. They’ll just create the money they need and the benefit checks won’t buy anything.

  21. It’ll eventually be fixed. It’s just a matter of whose generation’s votes they don’t need.

    1. But the problem is that as there are more and more older, non-working voters, there will also be more and more older, non-working people demanding social security. That is, this will not eventually fix itself through a change in voter demographics, it will fix itself when it runs into hard fiscal limits.

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  24. by the time it’s an issue they won’t be kids anymore. problem solved.

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  26. what a punk editorial this…..just remove the cap on the payroll and then cut back on SS disability…there are lots of cheaters…I should know…I used to work for SS disability appeals….problem solved…stupid punk reason.com writers..

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  28. what part of social security ever made sense to anyone? was it always just a population growth backed ponzi scheme?

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  30. Everybody wants more money in retirement so I am sure millions and millions will smile at Obama for this crazy increase in an ailing program’s benefits. One thing about this article is that he talks about how much more money seniors have than the under 35s but did not take into account that a lot of these older people have inherited from their parents and this will happen to the under 35s as they age also.

  31. Second, retirees receive far more than they pay in from the program commonly known as the “third rail” of American politics.

    With any real retirement investment, I’d be extremely upset if I did not receive far more than I paid in. That’s the whole point of investing. Unfortunately, as we all know, our social security payments are not invested.

    …in 2011 the median net worth of households headed by an adult under the age of 35 was $4,151. In that same year, excluding home equity, the median net worth of households headed by someone 65 years and over was $27,322. This number for recent retirees (65 to 69 years old) was $43,921, more than 10 times what young households have.

    To be fair, $43,921 is a pretty crappy net worth after a lifetime of work, and the net worth of even affluent younger people is reduced by the debt they willingly take on to have the lifestyle they want: home mortgages, car payments, credit card debt, etc. You can be earning a $100k/year, living comfortably, and have a net worth below 0. In other words, “net worth” is a figure that’s pretty unimportant in your 30s, and massively important in your 60s.

  32. Warning millennials that “Social Security is stealing from you!” will have zero effect on them. Most of them aren’t making money or are just plain unemployed. These kids are ALREADY taking things from taxpayers. Many of them are on uncle Bernie’s socialism train and will tax the living crap out of the productive members of society to fund their free college programs.

    We’re the only people in this country can discern the hard math in these unsustainable entitlement programs. For the rest of the country it’s a moral imperative to protect them from any cuts and modifications. When confronted with the math, they blurt out something like “We’re spending all this money on wars and missiles”.

    When Jerry Brown jacked up the min wage of the state he famously said something to the effect of “this might not make sense, but it’s for economic justice.” And that’s it. We could go broke and see our freedoms fall but if it was for some vague sense of justice and equality it would all be worth it. I think “All for Social Justice” should be written on America’s tombstone when the country kicks the bucket.

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  35. RE: Why Obama’s Social Security Proposal Would Screw Over Millennials
    Expanding a retirement program that’s not fiscally solvent is no way to treat the young.

    Here’s an idea.
    Let’s treat everyone like an adult and let them choose their own retirement program (and make it tax free) and keep Big Government out of our financial affairs.
    No, that can’t be right.
    Big Government was made specifically to butt into our affairs and tell all the little people what to do and when to do it.
    That’s what nanny states do.
    Where was my brain at?

    1. Offer a buyout to retiring boomers of money paid in by selves and employers with a reasonable rate of return, to be paid off in federal lands out West, with accompanying mineral, oil and gas rights. If it were first come, first served I’d have my husband take it in a heartbeat. Let those of us 50 and younger (or 40) opt out of the system entirely and pay into a 401K system with the FICA taxes. People over 50 make the choice, traditional SS or buyout when they reach 66 or 67. Too bad Republicans opposed a reform partially like this in 05, when Bush proposed it and they controlled both houses of Congress.

      Separate SSI entirely from Social Security, since it is welfare for those who did not pay in. Keep SSDI for the actually disabled workers, but ramp up fraud investigation and remove all addiction related claims.

  36. Just increase retirement age. Problem solved.

  37. unless Americans are fine with possibly paying a 31 percent payroll tax (up from 15 percent today), entitlement programs cannot afford to maintain their current course?much less be expanded.

    So we only need to increase SS taxes by 16 percent, and everything will be fine! — millennial math

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