Medicare and Social Security would be preserved for those currently receiving benefits or becoming eligible in the next 10 years (those 55 and older today). Both programs would be made permanently solvent. ...Ryan's plan would allow workers younger than 55 the choice of investing more than one-third of their current Social Security taxes in personal retirement accounts similar to the Thrift Savings Plan long available to, and immensely popular with, federal employees. This investment would be inheritable property, guaranteeing that individuals will never lose the ability to dispose of every dollar they put into these accounts.
Ryan would raise the retirement age. If, when Congress created Social Security in 1935, it had indexed the retirement age (then 65) to life expectancy, today the age would be in the mid-70s. The system was never intended to do what it is doing -- subsidizing retirements that extend from one-third to one-half of retirees' adult lives.
I certainly hope that Republicans in Congress get a chance to vote on this proposal. By the way, I am pretty sure that the numbers do not come close to working for Ryan's scheme. If you stop one-third of the FICA taxes going into the trust funds, you soon run out of money to pay current retirees. Also, by the way, investing one-third of your FICA is not going to support you for long in retirement. It is not that much money.
Raise retirement age to 70?
ReplyDeleteQuestion:At 70,how many years are left?
Answer:Not many
For those interested in learning more about the Trust Fund and the efforts in Congress to reduce SS benefits and/or privatize SS programs, Angy Bear blog features work and articles by Bruce Webb and others arguing both sides of the question. Of particular interest to people with an academic or intellectual interest in Social Insurance are the National Academy of Social Insurance and Bruce. Interesting stuff. Nancy Ortiz
ReplyDeleteThat's oversimplified.
ReplyDeleteI was born in 1982 and have enjoyed good health so far (knock wood!). I have many other "positive" actuarial characteristics: Always wear a seat belt, never drink, never smoke, etc.
My projected life expectancy is 90 YEARS. Barring a disabling or terminal illness that indicates I won't be making it that far, I *fully* intend to work beyond the age of 70.
Why? I've been consistently contributing to 401k's and IRA's since age 16... income has been steadily increasing... but who can sock away enough to cover a 20-year retirement?!
So I anticipate a need to keep working, if possible, to decrease my total withdrawals.
I'd imagine that Social Security needs the younger generation to retire later for a similar reason. Or, at least, that wouldn't be inconsistent with my own economic reality.
The full retirement age will probably be ratcheted upward periodically, in acknowledgement of just what our young worker above has described. If you want to retire early, do so on more of your own dime and less of the trust funds'. It's impossible to fund 25-35 years of full SSA benefits on 35-40 years of earnings.
ReplyDeleteA national TSP is a terrible idea. The main people to benefit would be upper middle class, when the whole idea of social welfare is to bring up the bottom. I wouldn't be surprised if the TSP went the way of 401k matching anyhow. The AFGE gets weaker every year.
ReplyDeleteAnd isn't there a limit to how long you get retirement benefits for? I could have sworn an SES told me that at some point...