Part of the problem with Social Security and Medicare funds, it that workers wages have not kept up with inflation in the last 30 years and we have greater income inequality. Since both programs are funded by a 12.5% tax on income, when workers earn less, there is less collected. Sure, I think wealthy need to pay more taxes, but we also need to rebuild our middle class, and increase wages, so more goes into Medicare and Social Security. They are two of the most valued programs of the federal government. Every first world nation has a government program for healthcare and retirement. We can "afford" it a much or more than any other country In the world.
Don't kid yourself - the solution will ultimately include both higher taxes (an increase in the current cap, and perhaps higher FICA rates) and benefit reductions, likely through both increased FRA and "means-testing" of benefits. I would allow for an increase in the minimum benefits to deflect some of the inequities you mention, but anybody who thinks the retirement age won't be increased is just not being realistic. But as a former young person myself, I appreciate the reluctance to accept an increase in the retirement age as a sole solution.
You know, when they did that to me (and millions of others) back in 1983, I was very much of the same opinion - doubtful that it would benefit me, and skeptical about the future of the system. It all felt like it was a takeaway from my generation, and a "give" to older folks that hadn't put as much in. But it seems to me that taking the same approach now with a new generation (who IS living longer and has more options about working longer) just makes common sense. At least if THEY want anything to be around when they get to retirement (COVID definitely clipped the lifespan statistics, but mostly it seems to have taken older folks off the Social Security line...) Let's not stoke the generational fires unnecessarily - though EVERY time the government says they have a "solution" for any problem, I do tend to grab my wallet.
I question that narrative that the government of the US is "the problem". We wealthy are paying historically low taxes, and out of step with the rest of the developed world. We have growing income inequality which threatens the stability of our democracy. When you lose the middle class, democracy becomes fragile. Check out South America especially. The extremes turn on each other. We are more vulnerable to totalitarian leadership.
It would be one thing if all that money was even benefitting the ultra wealthy- but we have a growing suicide rate across the board. And because the wealthy have money to burn they are driving the inflation that is harming the rest of us. Making money more expensive to borrow as the Fed it trying, hurts the middle and lower income citizens, and shuts down innovation and the growth of healthy small businesses.
The "government" needs to be constantly evolving, and not every program is going to work out well. The US, even more than most countries, has become more diverse (both race/ethnic and religion) than any society yet created by humans. We have "financial instruments" that have evolved in the last 30 yrs that have LOTS of collateral damage and unintended consequences. They became possible because of deregulation- less government, not more. Our last Great Recession was due to the irresponsibility of the financial class. Same with the bitcoin bust. We NEED healthy regulations and institutions - and as someone who has lived in several other countries, and traveled extensively, I am PROUD of the American government. It is the best ever created. We must accept that change and evolution is the only constant, as there are so many moving parts, and we are changing as a society. A healthy appreciation that both private and public institutions have a role to play, and especially that our government is a blessing which has helped secure the common good, is essential going forward especially if we want to break the gridlock in congress. Both conservatives and progressives need to find the common ground. Both/ and, not either/or.
Hi, Nevin - as I note in the Morningstar column, they're not ALL living longer. Rising longevity as a rationale for higher FRAs doesn't really work for me because it's a blunt instrument that will be very damaging for lower-income workers, people of color and other who are not enjoying the average longevity gains (which also have gone into reverse of late, but we'll see where that goes).
I think you meant to say 2033, not 2023 in your opening paragraph.
You're correct! Good catch, thanks.
Part of the problem with Social Security and Medicare funds, it that workers wages have not kept up with inflation in the last 30 years and we have greater income inequality. Since both programs are funded by a 12.5% tax on income, when workers earn less, there is less collected. Sure, I think wealthy need to pay more taxes, but we also need to rebuild our middle class, and increase wages, so more goes into Medicare and Social Security. They are two of the most valued programs of the federal government. Every first world nation has a government program for healthcare and retirement. We can "afford" it a much or more than any other country In the world.
Don't kid yourself - the solution will ultimately include both higher taxes (an increase in the current cap, and perhaps higher FICA rates) and benefit reductions, likely through both increased FRA and "means-testing" of benefits. I would allow for an increase in the minimum benefits to deflect some of the inequities you mention, but anybody who thinks the retirement age won't be increased is just not being realistic. But as a former young person myself, I appreciate the reluctance to accept an increase in the retirement age as a sole solution.
You know, when they did that to me (and millions of others) back in 1983, I was very much of the same opinion - doubtful that it would benefit me, and skeptical about the future of the system. It all felt like it was a takeaway from my generation, and a "give" to older folks that hadn't put as much in. But it seems to me that taking the same approach now with a new generation (who IS living longer and has more options about working longer) just makes common sense. At least if THEY want anything to be around when they get to retirement (COVID definitely clipped the lifespan statistics, but mostly it seems to have taken older folks off the Social Security line...) Let's not stoke the generational fires unnecessarily - though EVERY time the government says they have a "solution" for any problem, I do tend to grab my wallet.
I question that narrative that the government of the US is "the problem". We wealthy are paying historically low taxes, and out of step with the rest of the developed world. We have growing income inequality which threatens the stability of our democracy. When you lose the middle class, democracy becomes fragile. Check out South America especially. The extremes turn on each other. We are more vulnerable to totalitarian leadership.
It would be one thing if all that money was even benefitting the ultra wealthy- but we have a growing suicide rate across the board. And because the wealthy have money to burn they are driving the inflation that is harming the rest of us. Making money more expensive to borrow as the Fed it trying, hurts the middle and lower income citizens, and shuts down innovation and the growth of healthy small businesses.
The "government" needs to be constantly evolving, and not every program is going to work out well. The US, even more than most countries, has become more diverse (both race/ethnic and religion) than any society yet created by humans. We have "financial instruments" that have evolved in the last 30 yrs that have LOTS of collateral damage and unintended consequences. They became possible because of deregulation- less government, not more. Our last Great Recession was due to the irresponsibility of the financial class. Same with the bitcoin bust. We NEED healthy regulations and institutions - and as someone who has lived in several other countries, and traveled extensively, I am PROUD of the American government. It is the best ever created. We must accept that change and evolution is the only constant, as there are so many moving parts, and we are changing as a society. A healthy appreciation that both private and public institutions have a role to play, and especially that our government is a blessing which has helped secure the common good, is essential going forward especially if we want to break the gridlock in congress. Both conservatives and progressives need to find the common ground. Both/ and, not either/or.
Hi, Nevin - as I note in the Morningstar column, they're not ALL living longer. Rising longevity as a rationale for higher FRAs doesn't really work for me because it's a blunt instrument that will be very damaging for lower-income workers, people of color and other who are not enjoying the average longevity gains (which also have gone into reverse of late, but we'll see where that goes).