tag:blogger.com,1999:blog-7334408760351487944.comments2023-11-12T06:43:00.060-05:00Notes on Social Security ReformAndrew G. Biggshttp://www.blogger.com/profile/16617460431856611873noreply@blogger.comBlogger2168125tag:blogger.com,1999:blog-7334408760351487944.post-71534227683505290382020-12-31T16:51:38.029-05:002020-12-31T16:51:38.029-05:00I'm not sure I'd agree with you on Feldste...I'm not sure I'd agree with you on Feldstein's conclusion. Yes, personal savings aren't offset dollar for dollar against accrued Social Security benefits. In particular, low earners don't appear to respond much to changes to Social Security benefits. But middle and upper income earners do appear to respond, offsetting much of Social Security wealth with lower personal savings. I could cite a number of studies, but Bill Gale's for the US finds significant savings offsets of personal savings against DB pension wealth; Rohwedder and Atanasio find significant offsets for the UK, and Lachowska and Myck on pension reforms in Poland. Andrew G. Biggshttps://www.blogger.com/profile/16617460431856611873noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-59624716066044349322020-12-31T15:00:30.405-05:002020-12-31T15:00:30.405-05:00Martin Feldstein argued that Social Security cut s...Martin Feldstein argued that Social Security cut saving and private investment in half. But that argument has been debunked. With the world awash in savings, it's hard to claim that Social Security imposes some kind of zero-sum burden on the rest of the economy. When the IRS deducts $900 billion from individual accounts for FICA taxes and deposits $900 billion in the accounts of Social Security beneficiaries, the banking system still has the same amount of deposits. Your position neglects the value of future retirement benefits to current workers (it lets them allocate more to equities, e.g.), discounts the relief that current workers get from having to fund their parents' retirements, and ignores the contribution of Social Security benefits to banks' ability to lend. <br />Anonymoushttps://www.blogger.com/profile/00742803137197001543noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-17822304498291588452020-10-19T23:03:37.091-04:002020-10-19T23:03:37.091-04:00Take from current workers and give to current bene...Take from current workers and give to current beneficiaries is a tried and true method to ruin. Does it make a difference if the program is broken in 2031, 2040 or even 2065? If you cannot pay scheduled programs for all, then the program is broken beyond repair.<br /><br />How many decades are we going to throw good money into programs that are terrible?<br /><br />When you take from people, you limit their ability to utilize funds today in an efficient manner.<br /><br />SS and Medicare took funds from workers and gave them to elderly. This boosted spending by elderly, increasing the economies growth, but at the expense of future years. If you do not invest current resources today to build the future services and products of tomorrow, you will lower the current workers future standard of living.<br /><br />This really must end. A. J. Altmeyer said it very well in 1943 and 1944 when he testified before congress. Future generations will pay far more for their benefits than they are worth.<br /><br />Ponzi scheme by any other name is still a ponzi scheme.<br /><br />www.justsayno.50megs.com/ss.htmlWilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-63471010922898768372020-05-13T00:36:26.955-04:002020-05-13T00:36:26.955-04:00Social Security takes the first dollar and keeps w...Social Security takes the first dollar and keeps workers from using it efficiently when the most need capital; education, starting out after leaving home, buying items for an apartment or home, etc. This leads to borrowing at far higher rates than that paid to the Social Security Trust fund.<br /><br />What makes this even worse is that for those born after 1985, the best they can do is 29 cents in SS-OASI benefits for each combined employee/employer payroll tax credited at the US Treasury rate.<br /><br />So why does it make sense to earn zero or even a negative return from SS-OASI while paying on a car loan, mortgage, college, etc?<br /><br />Again it is inefficient use of capital. What makes it worse, SS-OASI states that starting in 2035 they can pay but 75% of benefits. If course if they cannot pay full benefits, they cannot pay COLA.<br /><br />Every time the payroll tax went up, savings went down and more workers were disenfranchised from participating in the growing US economy.<br /><br />Repeal Social Security and kick the addiction!<br /><br />www/justsayno.50megs.com/ss.htmlWilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-67901862165543246962020-05-02T09:12:46.334-04:002020-05-02T09:12:46.334-04:00"The dollar “bend points” in the benefit form..."The dollar “bend points” in the benefit formula<br />are also adjusted by the AWI (but up to age 62 rather than age 60). For the 1960 birth cohort, the bend point values used to calculate their benefits will reflect the growth of the AWI between 2018 and 2020."<br /><br />This is a good trick in that the SSA will not have the wage data yet. <br /><br />Those born in 1960 can take early retirement as of 1/1/2022. The data for year 2020 will not be available yet to determine the wage growth. That is the reason for the two year lag.<br /><br />Of course the bend points identify 2020, but it actually data from 2018. You can verify this by looking at the rate of change over years between AWI and the bend points.<br /><br />A 15% drop in the AWI will produce nearly and identical 15% decrease in cohort benefits.<br /><br />Bend Points are smaller values rounded to whole dollars. Therefore they are less accurate. While the AWI are larger values rounded to whole dollars.<br /><br />AWI Year AWI change Bend Point Year bend point<br /> <br />1986 2.97% 1988 2.90%<br />1987 6.38% 1989 6.27%<br />1988 4.93% 1990 5.01%<br />1989 3.96% 1991 3.93%<br />1990 4.62% 1992 4.59%<br />1991 3.73% 1993 3.62%<br />1992 5.15% 1994 5.24%<br />1993 0.86% 1995 0.95%<br />1994 2.68% 1996 2.58%<br />1995 4.01% 1997 4.12%<br />1996 4.89% 1998 4.84%<br />1997 5.84% 1999 5.87%<br />1998 5.23% 2000 5.15%<br />1999 5.57% 2001 5.65%<br />2000 5.53% 2002 5.53%<br />2001 2.39% 2003 2.36%<br />2002 1.00% 2004 0.99%<br />2003 2.44% 2005 2.45%<br />2004 4.65% 2006 4.63%<br />2005 3.66% 2007 3.66%<br />2006 4.60% 2008 4.56%<br />2007 4.54% 2009 4.64%<br />2008 2.30% 2010 2.28%<br />2009 -1.51% 2011 -1.58%<br />2010 2.36% 2012 2.40%<br />2011 3.13% 2013 3.13%<br />2012 3.12% 2014 3.16%<br />2013 1.28% 2015 1.23%<br />2014 3.55% 2016 3.63%<br />2015 3.48% 2017 3.39%<br />2016 1.13% 2018 1.13%<br />2017 3.45% 2019 3.46%<br />2018 3.62% 2020 3.67%<br /><br />WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-19057995716936832762020-04-22T14:48:10.122-04:002020-04-22T14:48:10.122-04:00This is a very interesting and informative blog. I...<br />This is a very interesting and informative blog. It's really useful blog. I really loved reading your blog. <a href="https://seekingalpha.com/user/51504096/comments" rel="nofollow">haute her <br /><br />tips for natural health face</a><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-81848306663543706562020-04-21T00:00:32.784-04:002020-04-21T00:00:32.784-04:00Just plain ignorant. SS-OASI has not put a single...Just plain ignorant. SS-OASI has not put a single penny of payroll taxes into the trust fund since 2010 and this proposal wants money from the General Fund which has a debt now of $25 Trillion + as the money press goes Brrrrrrrrrrrrrrr.<br /><br />Repeal the Social Security Act and kick this addiction to government hand out and ponzi schemes.<br /><br />Just wait for the big surprise for those who turn 62 in 2022 who were born in 1960. Better hold onto your pants. The initial SS-OASI benefit is not going to be higher or even the same as the cohort's born in 1959 whose replacement index is calculated using the SSA average wage in 2019.<br /><br />The coronavirus is going to reduce the SSA average wage this year by a lot. So far 25 million unemployed and the number will grow. Many want to go back to work, which will spread the virus more. We have not reached the peak.<br /><br />China shut everything down, nobody allowed to leave their homes. It took 78 days from the peak before China began opening up [their net rate of change was under .1%]. The US peaked on March 20,2020 as a whole, but there are still spikes occurring in local areas. We are still seeing a net increase of 3.3% increase in new cases.<br /><br />In the past 10 world pandemics, there has always been a second peak. We have more travel than at any time.<br /><br />Those initial SS-OASI benefits for those born in 1960 will be far lower than those born in 1959.WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-74052677126963445272019-09-23T09:28:36.142-04:002019-09-23T09:28:36.142-04:00"Recommendation #3: Automatically Enroll Work...<b><i>"Recommendation #3: Automatically Enroll Workers into a “Supplemental Retirement Account” (SRA) on top of Social Security, with the Choice to Opt Out."</i></b><br /><br />This is not the best way to build wealth. The best way is to pay down debt first. Creating wealth is what is needed, not one side of ones finances that has debt and assets - it is a zero sum game.<br /><br />Get rid of the debt first and you will have the ability to create wealth in the future.WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-24300414898844941872019-09-23T09:26:01.684-04:002019-09-23T09:26:01.684-04:00"Unfortunately, Social Security is running la...<b><i>"Unfortunately, Social Security is running large and rising deficits, which increase federal debt and leave the program on course to exhaust its trust fund reserves by 2035. "</i></b><br /><br />I have read many lies about SS over the decades, but this sis the single largest lie. <br /><br />Fact one, Social Security by law cannot borrow money. Therefore it cannot add to the National Debt.<br /><br />Fact wo, Social Security by law can only spend those funds it controls; Trust Fund, Dedicated Social Security taxes: OASI 10.6% and DI 1.8%.<br /><br />Fact three, Social Security is running a negative cash flow since 2010. Not a single penny of SSO-ASI payroll tax has been deposited in the SS-OASI trust fund. This means every single worker since 2010 has had any of their payroll tax deposited in the trust fund.<br /><br />Fact four, Social Security does not add to the national debt when it submits any of if is ~$2.8 Trillion Special US Treasury Notes Redeemable on demand. The US Treasury borrows money on the open market and in exchange for this new debt swaps SS-OASI' loaned money to the National Treasury creating a zero sum increase/decrease in the national debt. The only thing that happens is the ownership of US National Debt. No different than refinancing a mortgage with another lender.<br /><br />This is simply another way to increase the many myths behind social security so that some will be fooled and support this changed when in fact it does absolutely nothing.WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-25236798770407613692019-09-14T13:27:34.216-04:002019-09-14T13:27:34.216-04:00Lots of data, but really little to know backup of ...Lots of data, but really little to know backup of it.<br /><br />Adjusted by inflation, but benefits are calculated based on indexed wages. No US Treasury Rate paid on Trust fund for those periods of time were used. In simple terms the value of 1950, 1950, 1960 and later cohorts are not actually analyzed.<br /><br />You cannot simply subtract two exponential equations linearly.<br /><br />2034 is the wrong year for the trust fund exhaustion date. YEarly wage growth will not be 6% + until 2034. Even if this were the case, future benefits would also grow at 6% yearly. Pretty tough for the Trust fund to keep up when the the rate paid to the trust fund is around 4%. Add that not a single penny of new payroll tax revenue has been added to the OASI trust fund since 2010.<br /><br />SS Trustees in 2083 projected 2060. A few years later it was 2029, then 2041 and back to 2031 and now 2034. The trustees keep changing the assumptions which changes everything. I use a 21 year moving average (US Treasury RAte, wage growth, inflation) and it seems to be the best at projecting past reality with present.WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-11085440322239767052019-06-11T23:57:00.190-04:002019-06-11T23:57:00.190-04:00Social Security since it began collecting payroll ...Social Security since it began collecting payroll taxes in 1937 has never once ran an actuarial surplus. Every single year SS-OASI has been in operation has added to the unfunded liability.<br /><br />Now 82 years later some still think of saving Social Security. My question is simple who are you saving it for? Millennials do not want it, Generation z does not want it.<br /><br />To me the only people who want to save this hunk of junk are those who were snookered and failed while they were working to do something about it. However, they buried their heads in the sand and tunde out all those who attempted to educate people on how Social Security works.<br /><br />In is a ponzi scheme.<br />Women are having fewer babies.<br /><br />Abortion had killed of tens of millions of potential workers today<br /><br />The worker to retiree ratio has been falling since the year SS-OASI began in 11937.<br /><br />Payroll taxes began rising in 1950 and still at 10.6% for OASI it is not enough and over just 75 years is nearly 2.5 percentage points too low.<br /><br />The base was at 125% of the US Average Wage and now is over 200% and OASI is still drowning.<br /><br />Social Security is not going BROKE, it is BROKE,<br /><br />I sincerely wish I had been wrong about this, but since 1973 I have been right.WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-43780015078512919122019-04-17T21:34:37.459-04:002019-04-17T21:34:37.459-04:00Replacement rate is one thing. Payable benefit are...Replacement rate is one thing. Payable benefit are an entirely different animal. Now what is the cost of those replacement rates at 10.6% SS-OASI tax rate based on US Treasury Rates?<br /><br />You can calculate and have a high replacement rate, but the true test is cost rate and their corresponding replacement rat. Or another way to look at it is based on the replacement rate what is the actuarial cost rate?<br /><br />WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-51458077458240681202019-03-29T07:41:34.836-04:002019-03-29T07:41:34.836-04:00The flaw here is that (a) they assume that pension...The flaw here is that (a) they assume that pension plans are funded. I think things are getting better, but the S&P top 200 companies have a shortfall that is roughly 20% of marketcap. (b) What are the assumptions the cost of of job mobility. My best raise at a company was about 8%. When I left jobs my raise was closer to 30-40%. <br /><br /><br />JoeTheEconomisthttps://www.blogger.com/profile/15000542138416955049noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-78912179846958332682019-02-19T11:28:08.837-05:002019-02-19T11:28:08.837-05:00John Larson Proposal (no relation to me, I am Lars...John Larson Proposal (no relation to me, I am Larsen). This is my preliminary finding.<br /><br />The basics:<br />Raise the OASI-DI tax from 12.4% to 14.7, phased in 2020 and 2043 at 0.1% per year.<br /><br />Combine the OASI and DI trust funds and manage the programs as one entity. My computer model does not handle the SS-DI program. I evaluated this proposal; <br />1. Prorate the increase to the payroll tax between OASI and DI.<br />2. The increase is 2.3%. Change the current 10.6% OASI tax to 12.9%.<br /><br />Tax wages above $400K at OSI-DI, not indexed! The current base-cap would continue to be indexed until it reaches $400K. <br /><br />New benefit for the $400K. New PIA with a 2% replacement rate for this newly taxed wages.<br /><br />Increase the current 1stt bend replacement rate from 90% to 93%.<br /><br />Change COLA determination from CPI-W to CPI-E.<br /><br />Section 104 - Replace the current-law thresholds for federal income taxation of OASDI benefits with a single set of thresholds at $50,000 for single filers and $100,000 for joint filers for taxation of up to 85 percent of OASDI benefits, effective for tax year 2020.<br /> <br />The proposal does not work as reported. I did not use the 4% Wage Growth the SS used. I used the annual rate of change between 1999 and 2019 which was 3.07%. Many would think this would result is lower SS payroll tax revenue and it does. However, the US Treasury rate for ten year is not yet 3%. When the US Treasury Rate or for that matter the return on the trust fund is less than the SSA Wage Growth, the ability for the trust fund to pay future benefits diminishes - No different than your bank account earning 1% while inflation is 2.5%. Wage Growth determines the future SS-OASI benefit of every worker up to age 60 and then it ceases.<br /><br />The tax on benefits-claw back of benefits currently claws back 5.08% of benefits. The tax was implemented in 1984 and clawed back 1.78%. The $25k and $32K exemptions were not indexed. Raising them to $50K and $100K will reduce the claw back significantly for decades to come.<br /><br />Based on past wage growth the $400K cap will not be reached until 2056 whereas the proposal scored by the SS is reached early in the 2040's. They use a 4% rate of growth. This of course would make SS worse off due to higher growth in benefits versus growth in the trust fund.<br /><br />The change in the fits bend replacement rate will in effect raise all benefits immediately by 1% on average. The new higher benefit for minimum benefits is an added cost I did not look at.<br /><br />In year 2080 I find SS-OASI alone will be $10Trillion in the red. A far different value than the SS.<br /><br />I call this plan too little, too late.<br /><br />The single largest difference appears to be that SS assumes the 78% payable benefit in 2034 does not decrease over time. A graph from a SS report done a few years ago shows the payable benefit for SS at 60% by 2060. This is a far cry from the current projection.<br /><br />The 125 cafeteria plans (employee healthcare cost, HSA's) have exempted from 14.5% to as much as 17.2% of total wages from SS Taxation. Currently 84.6% of wall wages are taxed by Social Security or are exempt from taxation due to 125 cafeteria plans. The most wages with no cap that COULD be taxed by SS is an additional 15.4%.<br /><br />Removing the cap and taxing the remaining 15.4% of wages would increase SS revenues by 15.4 divided by 84.6 = 18.2%. Increasing the payroll tax from 12.4% to 14.7% is a large tax and adding more wages to be taxed does add a large amount to SS revenue. However, it is insufficient to cover the 40% in 2060. <br /><br />This is all before taking in the cost of reducing the claw back-taxes on SS benefits and increased benefits do to the new replacement rate of 93% from 90%, higher minimum SS benefit, higher COLA.<br /><br />Did those who evaluate this proposal forget-ignore?<br />1. The 125 cafeteria plans?<br />2. Behavioral changes in how they earn wages, pay for 125 cafeteria plans?<br />3. Switch to a Roth IRA-401K versus traditional IRA-401K that is taxable when mandatory with-drawls are required?<br />WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-1232644148998831062018-10-24T22:26:46.199-04:002018-10-24T22:26:46.199-04:00Maybe it is time to repeal Social Security? Peopl...Maybe it is time to repeal Social Security? People drawing benefits complain it does not pay enough.<br /><br />Young workers say they are paying far more for their SS Benefits before any reform takes place.<br /><br />Under current law the SS benefit is getting smaller as the full effect of the 1983 "PATCH" is fully implemented.<br /><br />Do not forget the up to 85% of SS benefits being subjected to taxation which in the 12% tax bracket can claw back 10.2% of potential SS checks.<br /><br />So what is the basic concept of any reform of Social Security?<br /><br /><b>"It is an agreement that we make with ourselves that our kids will pay the taxes that we didn't, and will accept the benefit cuts that we will not even talk about.</b>WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-90328059884068742782018-10-20T15:20:33.005-04:002018-10-20T15:20:33.005-04:00"The deficit between Sept 30, 2018 and Sept 3..."The deficit between Sept 30, 2018 and Sept 30, 2018 was $1.271 Trillion"<br /><br />Typo <br /><br />Should have been<br />"The deficit between Sept 30, 2016 and Sept 30, 2018 was $1.271 Trillion.<br />WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-80884305460482425042018-10-19T23:21:02.002-04:002018-10-19T23:21:02.002-04:00What is left unsaid is what value would Social Sec...What is left unsaid is what value would Social Security play if the cost is three times the benefit? Would it not be better for the economy to focus on a means tested benefit and reduce taxes by 70 to 90% over three decades to phase out SS?<br /><br />Had we used the SS-OASI trust fund to fund a means tested benefit in 2002 as I suggested, we would be over half way through the transition to no more than a 1% payroll tax and a higher benefit. Those turning 66 this year (full retirement age) would have had 16 years to save their combined 10.6% payroll tax.<br /><br />The CBO report is not totally accurate either. If you think interest rates will remain low with $1.271 Trillion deficits, it is only go to rise faster and faster leading to very high inflation until the US will no longer be able to borrow any funds even at junk bond rates.<br /><br />Not only did social security not get better, it got dramatically worse over the past 16 years. The unfunded liability grew by over 8.98% annually between 2000 and 2016 while SS-OASI tax revenues grew by 3.02%. Do people really not see the problem?<br /><br />Now look at the growth in the national debt at an annual rate of 8.05% while GDP is 3.8%. Debt is growing nearly three times that of revenue. The deficit between Sept 30, 2018 and Sept 30, 2018 was $1.271 Trillion according to the US Treasury Site. Debt spending is included in GDP which is wrong. This $1.271 Trillion needs to be subtracted from GDP and the determine growth.<br /><br />8.05% - National Debt<br />3.78% - GDP (millions)<br />2.07% - Inflation (December)<br /><br />8.98% - SS Unfunded liability<br />4.95% - SSA Expenses (OASI)<br />3.28% - TOTAL WAGES (billions)<br />3.02% - SSA Payroll Revenue<br />2.74% - SSA Wage Index<br />2.06% - SSA COLA index<br />6.47% - SSA taxation of benefits (OASI)<br />WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-56510262178030150192018-10-17T00:21:02.689-04:002018-10-17T00:21:02.689-04:00Only one question, Who are you trying to save Soci...Only one question, Who are you trying to save Social Security For?<br /><br />I just completed an analysis of the Sam Johnson Social Security Reform Act 2016. Rather interesting;<br /><br />No increase in the payroll tax or base outside current law.<br />Change the replacement rates from 90%, 32% and 15% to 95%, 27.5% and 5%.<br />Change wage indexing to chained cpi indexing phased in starting 2022<br />raise the retirement age for those born 1961 and later by 3 months per year until it reaches 69<br /><br />phase out taxation of benefits starting in 2040 over ten years.<br /><br />Had this been fully implemented for those retiring in 2018, their initial SS-OASI benefit would be 41 to 42% lower if you made 90% of the SSA wage. Of course with chained cpi versus cpi, COLA would be about 25% lower each year. This is equivalent to reducing benefits up front by 10 to 13%.<br /><br />Does it work, yes? It works simply because the congress would legislate the reduction in benefits now so that 100% full scheduled benefits could then be said to be paid in the future.<br /><br />However, the end result is the same a doing nothing. It is no different than moving the deck chairs on the SS Titanic from starboard to port side in an attempt to raise the starboard side a bit further reducing the water pressure on the leak and slowing the flooding.<br /><br />Now many plans call for raising the tax and base, but adding more money to fund the same scheduled benefit reduces the ROR to the same as the do nothing plan.<br /><br />"<b>It is an agreement that we make with ourselves that our kids will pay the taxes that we didn't, and will accept the benefit cuts that we will not even talk about.</b>"<br /><br />Used with permission of another,more skilful with words than I.WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-6270028608224711062018-07-23T22:37:34.923-04:002018-07-23T22:37:34.923-04:00Raising the retirement age and changing the benefi...Raising the retirement age and changing the benefit formula for those not fully insured means that any changes to SS will fall on those seen to be less desirable and deserving of being included those who are desirable and deserving (buy votes).<br /><br />The legacy debt is increasing every year. Two decades ago few if anyone besides me spoke about it. The $12 Trillion I used in 2002 was laughed at. Today I say it is $35 Trillion just for the OASI program. Recent studies on this website identified nearly $27 Trillion in present value unfunded liabilities.<br /><br />In ten more years SS-OASI will no longer being increasing benefits by COLA. I also believe that 2028 will be the first year there will be no trust fund to make up any shortfall in payroll taxes or taxes on benefits.<br /><br />Hang on to your wallets, the elderly are going to be screaming bloody loud for their benefits they think they have earned and paid for. The problem is had they paid for their benefits, then we would not be here today trying to figure out how to fix this Ponzi Scheme gone amuck.WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-80841820624758172592018-04-14T21:39:06.657-04:002018-04-14T21:39:06.657-04:00"The output of this tool can be easily update..."The output of this tool can be easily updated each time a Social Security Trustee’s Report is released and can serve as the basis for a discussion of various approaches for improving Social Security’s finances with a clear view of the financial shortfall’s origin."<br /><br />I would like to see how they back into SSA's SS model from the little data provided? SSA's model is for the most part linear while a dynamic SS-OASI model is non linear; Change SSA wage index by a different rate and every initial birth cohort's benefits are now different. Change COLA and again the size of the change affects cohorts differently as they age.<br /><br /><i>"For each birth cohort, the tool requires two values: 1) the net present value of the cohort’s contributions to Social Security through the payroll tax; and 2) the net present value of the cohort’s Social Security benefits. Social Security provides projections of both contributions and benefits paid, but it does not provide these data by birth cohort. Cohort data could be calculated with individual data on earnings and benefits paid, but that information is difficult to access and thus hard to use to update calculations regularly. </i><br /><br />As I read further on page 9, the study took the approach I did back in the late 80's.<br /><br /><i>"The major point is that under current law, although more recent birth cohorts’ have tended to have negative or zero net transfers, these alone have not been enough to offset the Legacy Debt."</i><br /><br />Here is where I disagree with them. The SS-OASI program has been in negative cash flow. They end with the birth Cohort 2001 which all fall into the negative cash flow - they have a 100% loss today.<br /><br />I found the paper and excel spreadsheet interesting.WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-6039302161192186432018-03-07T10:34:05.738-05:002018-03-07T10:34:05.738-05:00The link provided routes through the AEI server, w...The link provided routes through the AEI server, which is why it's not accessible. The paper is available to the public via SSRN and also the University of Michigan -- here's the link to the paper on the UM site:<br />https://deepblue.lib.umich.edu/handle/2027.42/142369Anonymoushttps://www.blogger.com/profile/18191885783153165026noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-74835720081798166902018-03-06T00:42:20.205-05:002018-03-06T00:42:20.205-05:00If a link is not accessible to the public to view ...If a link is not accessible to the public to view and the premise behind it is hidden from view, then why post the link?WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-72424932792107085182018-01-27T00:24:17.426-05:002018-01-27T00:24:17.426-05:00No mention of the lower payroll taxes prior to 198...No mention of the lower payroll taxes prior to 1983 which gives a boost to saving, paying down debt and building wealth.<br /><br />A higher percentage of millennials went to college => higher demand => higher student loan debt, lower savings due to not working and the fact that only about 22% of all positions require a degree adds to lower wealth.<br /><br />The only thing I see questionable is the life span. These numbers seem to contradict the SSA period cohort life tables.WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-38495273618323635612018-01-13T12:21:24.004-05:002018-01-13T12:21:24.004-05:00"But I don’t totally agree with its conclusio...<i>"But I don’t totally agree with its conclusion. Yes, it used to be the case that retirees received an incredible deal from Social Security, receiving far more in benefits than they paid in taxes. But for people retiring today, expected lifetime benefits are about equal to lifetime taxes, meaning that they’re neither big winners nor big losers."</i><br /><br />The difference between my grandparents payment of SS taxes and benefits are huge. My dad paid $21,700 in taxes and his employer paid the same. He retired at age 62 and lived to age 86. The problem with my dad's payments and most of his cohort was that he paid 2/3 rds of the payroll tax in the last seven years he worked. He also maxed out his wages as did many of his cohort.<br /><br />At the time of his retirement, based on the US Treasury rates paid to SS on the trust fund, his theoretical balance (employee & employer) payroll tax was just under $85K. Based on his benefit,he recouped every penny within eight years, then there is mom, a nonworking spouse who also collected 50% of my dad's benefit which made the payback years more like 5.<br /><br />To say <b>"people retiring today, expected lifetime benefits are about equal to lifetime taxes, meaning that they’re neither big winners nor big losers."</b>is just uninformed or did the calculation wrong or is use <b>"actual"</b> versus <b>"buying dollars/real dollars"</b>. Monetary expansion of the dollar has reduced its buying power.<br /><br />Yes, it may be true that if I paid in $250K in payroll taxes and my benefit is $20K a year, I would draw more in dollars out, but the last dollar out is not even close to the first dollar in.<br /><br />So if we truly are getting the same <b>"expected lifetime benefits are about equal to lifetime taxes"</b> then why is there a financial shortfall with Social Security? If we are all paying the same amount for our benefits and we are all getting the same amount of benefits, then why is there a $13 Trillion 75 year horizon and a $35 Trillion+ total unfunded liability?<br /><br />Ida May Fuller received every penny she and her employer paid in in 2.05 months. Her cohort life expectancy was a good 14 years.WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-14590085408569095842018-01-12T20:47:02.356-05:002018-01-12T20:47:02.356-05:00"The share of workers’ taxable earnings neede...<i>"The share of workers’ taxable earnings needed to fund Social Security will grow from its current 13.7 percent (roughly what we’re already paying in payroll tax) to 17.0 percent in 2038, but it will start to decline after that—as the Boomers die off and the relatively smaller Generation X predominates—until 2051, when Millennials start to retire. But paying for even the larger Millennial generation at that point will not present as severe a challenge as the Boomers do.</i>"<br /><br />This is a myth. Due to the continued zero population growth "2.1 births per woman", the worker to beneficiary ratio will continue to decrease until the millennial generation has passed at which time the ratio will be the lowest of any generation and equilibrium has been reached. The ratio will not increase once the millennial generation is gone. This is a mathematical impossibility unless the life expectancy is dramatically reduced.<br /><br />The article is much like the Wall Street Editorial of the 90's titled "To My Fellow Greedy Geezers."<br /><br />Like all ponzi schemes, there is no solution to make everyone who lost money whole. The sooner a ponzi scheme is stopped the fewer the injured parties. WilliamLarsenhttps://www.blogger.com/profile/00226403551284640494noreply@blogger.com