Gov. Nikki Haley right about raising retirement age for younger workers, but wrong about taking away [“limiting”] Social Security for rich

[Multicolored Lemur]

GOP's Haley Wants Social Security, Medicare Cuts for Next Gen

GOP presidential candidate Nikki Haley is proposing changes to Social Security and Medicare for younger generations.

gvwire.com

March 14, 2023:

‘ . . . To Haley, entitlement reform should also include a move “to limit the benefits for the wealthy,” . . . ’

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There’s a high-minded reason, that rich people have earned their Social Security benefits the same as everyone else. And then there’s a bare-bones political reason—

This one crusty ol’ southern Senator said, “A program for the poor is a poor program.” Meaning, if it’s viewed as just table scraps for the poor, you can be sloppy and not do a very good job. But if it’s viewed as for everyone, then it has political constituency, then up and down the line from members of Congress to front-line customer service, there is incentive to do a good job!

* I think this crusty ol’ Senator was Russell Long (D-Louisiana), but I’m not entirely sure

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And for richer taxpayers, 85% of Social Security monthly income is rolled in with other income and is fully taxable. Meaning, we probably should just stand pat in this regard.

 

[AgnosticBoy]

And for richer taxpayers, 85% of Social Security monthly income is rolled in with other income and is fully taxable. Meaning, we probably should just stand pat in this regard.

ARe you talking about those already receiving social security benefits (like retired people) or the amount of taxes that goes towards social security?

If the following is how it works, then I can agree with Nikki Haley's statement regarding lowering SSi for richer retired Americans:

You pay Social Security taxes based on your earnings, up to a certain amount. In 2023, that amount is $160,200.

Source: https://www.ssa.gov/pubs/EN-05-10024.pdf (pg. 3)

ANd I'm only saying that because rich people are paying less in social security taxes when it comes to their overall income. Or another way to put it, they get to hold on to more of their income (the more their income is above that $160,200 cap).

 

[Multicolored Lemur]

rich people are paying less in social security taxes

less as far as percentage of income. But in actual dollars, a rich person is paying the maximum amount.

 

[AgnosticBoy]

less as far as percentage of income. But in actual dollars, a rich person is paying the maximum amount.

Agreed.

Here are some interesting facts from the SSA that might provide some good context here:

Where does that social security tax go?

In 2023, when you work, about 85 cents of every Social Security tax dollar you pay goes to a trust fund that pays monthly benefits to current retirees and their families and to surviving spouses and children of workers who have died. About 15 cents goes to a trust fund that pays benefits to people with disabilities and their families. 4 From these trust funds, we also pay the costs of managing our programs. We’re one of the most efficient agencies in the federal government, and we’re working to make it better every day. Of each Social Security tax dollar you pay, we spend less than 1 penny to manage the program

Source: https://www.ssa.gov/pubs/EN-05-10024.pdf (pg. 3)

How much social security benefits does a person get?

As you work and pay taxes, you earn Social Security “credits.” In 2023, you earn 1 credit for each $1,640 in earnings — up to a maximum of 4 credits per year. The amount of money needed to earn 1 credit usually goes up every year. Most people need 40 credits (10 years of work) to qualify for benefits. Younger people need fewer credits to be eligible for disability benefits or for their family members to be eligible for survivors benefits when the worker dies.

Social Security benefits only replace some of your earnings when you retire, develop a qualifying disability, or die. We base your benefit payment on how much you earned during your working career. Higher lifetime earnings result in higher benefits. If there were some years when you didn’t work, or had low earnings, your benefit amount may be lower than if you worked steadily.

[emphasis added]
Source: https://www.ssa.gov/pubs/EN-05-10024.pdf (pg. 6)

 

[Multicolored Lemur]

Source: https://www.ssa.gov/pubs/EN-05-10024.pdf “ . . about 85 cents of every Social Security tax dollar you pay goes to a trust fund that pays monthly benefits to current retirees and their families and to surviving . .”

Okay, if I was in the United States Congress, I’d tell my fellow citizens, Social Security currently has current and future money projected for the next 12 years. So, it is serious.

One study found Social Security was on track for full benefits only for the next 10 years.

However, part of the reason is that we’re coming out of the Covid recession and Social Security uses conservative [cautious] numbers for future economic growth. So, please everyone don’t panic [I’d tell my fellow citizens] , but do take it seriously.

All the same, I’d be ready to support—

(1) Bumping up payroll tax,

(2) Bumping up the cap, and

(3) Ever so slightly bumping up the retirement age. This is the one I’d go slowly on and feel guilty about, basically because some people are in poor health and barely holding on until retirement age. Or maybe not even working, and holding on until retirement age.

[Social Security is currently set to become age 67 for people born in 1960 and later].

In 6 years, I’d raise this age 67 retirement age by one month. In 12 years, by two months. But not more than that, because this one heavily affects a subset.

And maybe

4) delay some COLA’s because this spreads the pain more evenly.

COLA means Cost Of Living Adjustment. This is how Social Security keeps up with inflation.

But too aggressive, because some people really are dependent on Social Security. And this is a time of medium inflation after all.

So, basically I’d put most of my chips [economically] on bumping up the tax and bumping up the cap. [politically of course is a different matter!]

In general— reasonable, non-crazy, non-abrupt changes. And if the economy grows faster than the conservative estimates [conservative in the non-political sense!], for example, they we might later lower the payroll tax and/or the cap. Yeah, a healthy economy can do that. More likely, since I only want to bump it up a modest amount, we’ll just ride with it.