Millions face shrinking Social Security payments

[OkeDoke]

http://news.yahoo.com/s/ap/20090823/ap_on_go_ot/us_social_security_smaller_checks

WASHINGTON – Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise. The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. That hasn't happened since automatic increases were adopted in 1975.

By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.

"I will promise you, they count on that COLA," said Barbara Kennelly, a former Democratic congresswoman from Connecticut who now heads the National Committee to Preserve Social Security and Medicare. "To some people, it might not be a big deal. But to seniors, especially with their health care costs, it is a big deal."

Cost of living adjustments are pegged to inflation, which has been negative this year, largely because energy prices are below 2008 levels.

Advocates say older people still face higher prices because they spend a disproportionate amount of their income on health care, where costs rise faster than inflation. Many also have suffered from declining home values and shrinking stock portfolios just as they are relying on those assets for income.

"For many elderly, they don't feel that inflation is low because their expenses are still going up," said David Certner, legislative policy director for AARP. "Anyone who has savings and investments has seen some serious losses."

About 50 million retired and disabled Americans receive Social Security benefits. The average monthly benefit for retirees is $1,153 this year. All beneficiaries received a 5.8 percent increase in January, the largest since 1982.

More than 32 million people are in the Medicare prescription drug program. Average monthly premiums are set to go from $28 this year to $30 next year, though they vary by plan. About 6 million people in the program have premiums deducted from their monthly Social Security payments, according to the Social Security Administration.

Millions of people with Medicare Part B coverage for doctors' visits also have their premiums deducted from Social Security payments. Part B premiums are expected to rise as well. But under the law, the increase cannot be larger than the increase in Social Security benefits for most recipients.

There is no such hold-harmless provision for drug premiums.

Kennelly's group wants Congress to increase Social Security benefits next year, even though the formula doesn't call for it. She would like to see either a 1 percent increase in monthly payments or a one-time payment of $150.

The cost of a one-time payment, a little less than $8 billion, could be covered by increasing the amount of income subjected to Social Security taxes, Kennelly said. Workers only pay Social Security taxes on the first $106,800 of income, a limit that rises each year with the average national wage.

But the limit only increases if monthly benefits increase.

Critics argue that Social Security recipients shouldn't get an increase when inflation is negative. They note that recipients got a big increase in January — after energy prices had started to fall. They also note that Social Security recipients received one-time $250 payments in the spring as part of the government's economic stimulus package.

Consumer prices are down from 2008 levels, giving Social Security recipients more purchasing power, even if their benefits stay the same, said Andrew G. Biggs, a resident scholar at the American Enterprise Institute, a Washington think tank.

"Seniors may perceive that they are being hurt because there is no COLA, but they are in fact not getting hurt," Biggs said. "Congress has to be able to tell people they are not getting everything they want."

Social Security is also facing long-term financial problems. The retirement program is projected to start paying out more money than it receives in 2016. Without changes, the retirement fund will be depleted in 2037, according to the Social Security trustees' annual report this year.

President Barack Obama has said he would like tackle Social Security next year, after Congress finishes work on health care, climate change and new financial regulations.

Lawmakers are preoccupied by health care, making it difficult to address other tough issues. Advocates for older people hope their efforts will get a boost in October, when the Social Security Administration officially announces that there will not be an increase in benefits next year.

"I think a lot of seniors do not know what's coming down the pike, and I believe that when they hear that, they're going to be upset," said Sen. Bernie Sanders, an independent from Vermont who is working on a proposal for one-time payments for Social Security recipients.

"It is my view that seniors are going to need help this year, and it would not be acceptable for Congress to simply turn its back," he said.

[mabby89]

Its not really a shrinkage, it is just not going up for the next two years. It may seem like a shrinkage if prices keep rising tho. Really sucks ass.

[stresseater]

Does anyone else smell a rat.
Cost of living adjustments are pegged to inflation, which has been negative this year, largely because energy prices are below 2008 levels. Advocates say older people still face higher prices because they spend a disproportionate amount of their income on health care, where costs rise faster than inflation. Hey guys if we don't pass a health care biil and soon these older people will be eating cat food because they have to pay for health care.

[gmyers]

I don't see how they can say inflation hasn't gone up. Everything has gone up here.

[Bahet]

So now seniors are in the same position as most of the rest of the population. I know of very few people who even kept their portfolios in the same range as they were 2 years ago. I know far more people making less this year than they did 2 years ago. College costs rise exponentially fast. If government taking care of people is a bad thing why doesn't that pertain to social security and medicare?

Don't get me wrong, I feel badly for them. My parents and grandma and ILs are all in that group. But, really, who isn't suffering in this economy? Is it really fair for everyone over the age of 62 to have the same lifestyle they did lastyear when the VAST majority of the under 62 crowd have had to downsize, sometimes drastically?

In AZ we lived in a city with a very large "active adult" community. The schools constantly got turned down for funding when it was voted on. Pretty much anything that didn't directly benefit the seniors was voted down - education, parks, etc. They had no sympathy for kids who had to share textbooks. My oldest's grade had 40 textbooks for every class except math. That meant that the nearly 200 6th graders had 40 books between them. If they had homework they could check out a textbook otherwise they finished in school. The seniors didn't care. Getting each child a textbook would have cost about $2/person in that city. So why should I care if they have to cut out a round of golf a week when they weren't even willing to give my child a decent education?

[gmyers]

Theres a difference in social security because people paid that out of their checks. They're not just giving them money they paid it in. And I do feel for them because a lot worked their whole lives and weren't able to put up money for retirement so they're living solely off their social security checks. My dad worked over forty years and didn't make enough to save for retirement he lived off $500 something a month social security . If it wasn't for family he wouldn't have been able to make it. So I don't begrudge them the little cost of living raises they get.

[Bahet]

Most anyone who collects social security based on retirement for over about 10 years gets back more than they paid in.

[SurferGirl]

Most anyone who collects social security based on retirement for over about 10 years gets back more than they paid in.

The people collecting social security now paid into it all their working lives.

[Bahet]

The people collecting social security now paid into it all their working lives.

Some did. Some were homemakers and paid little to nothing. The ones who did work for 40 years and retired still paid in less than they got out after they collect for a few years. Each month they get a far bigger check than they paid in 40 years ago. In fact, most people get an average monthly social security check that is equal to what they made in a month or more before taxes 40 years ago. In 2007 the average monthly social security check was $1007. In 1970 the average household income was $8730. At a 6.2% deduction for social security that means that in the entire year of 1970 the average household paid $541.26 into social security.

Yes, they paid into it all their lives. But they didn't pay in nearly as much as they get back. If I give you $1000/yr (double what they paid in in 1970) every year for 40 years will you then be willing to pay me $1000/month for the next 30 years? How about the next 20? In actuality, my numbers were wrong. The average senior collecting social security only needs to collect checks for about 5 years before they start getting back more than they paid in. And that is taking interest into account on that money.

[Vee030473]

In 1935, when the Social Security Act was passed, life expectancy was 63 years. Congress set the age at which benefits began at 65 in the full expectation that more than half the people would receive no benefits (because they would die before age 65). This is how an insurance plan works: a minority receives more than they paid in because a majority receives less than they paid in.

[SurferGirl]

If you will check the tables in this link you might realize that rates people have paid in over the years. http://www.ssa.gov/OACT/ProgData/taxRates.html
Housewives that collect social security collect it from their husband's earnings, while the husband is living they get a little extra and then she can collect from her husbands earnings after he dies. Sure the social security rates were much lower years ago but not many of those people are still living. Also factor into it that your employer matches what you pay in and if your self employed you pay the full amount the current rate is 15.3% for self employed individuals.
Just imagine how the money would have grown if it was set up in a savings account with compound interest. Interest used to be at a much higher rate than it is now.

[SurferGirl]

Now about the comment about the school books.
You lived in an area with a very large illegal immigrant population.
Your school was probably furnishing a free breakfast and a free lunch to many of the kids. I do think there is a need for giving these kids a balanced breakfast and lunch because if you will notice most families on food stamp programs don't buy healthy food. Mostly they buy soda and chips and everything made by Hostess then maybe a few packs of tortillas and a pack of ground beef and cheese and some beans. I've never seen any of them buy milk or orange juice or much fresh fruit or vegetables. I do realize the cheese counts as a dairy product but probably not the recommended amount a growing child needs.

Another thing about the text books. I think from some of your past comments that your kids are under 10 years old. Most schools send small children home with their homework printed out so they don't have to carry heavy text books in their backpacks.

[Bahet]

Now about the comment about the school books.
You lived in an area with a very large illegal immigrant population.
Your school was probably furnishing a free breakfast and a free lunch to many of the kids. I do think there is a need for giving these kids a balanced breakfast and lunch because if you will notice most families on food stamp programs don't buy healthy food. Mostly they buy soda and chips and everything made by Hostess then maybe a few packs of tortillas and a pack of ground beef and cheese and some beans. I've never seen any of them buy milk or orange juice or much fresh fruit or vegetables. I do realize the cheese counts as a dairy product but probably not the recommended amount a growing child needs.

Another thing about the text books. I think from some of your past comments that your kids are under 10 years old. Most schools send small children home with their homework printed out so they don't have to carry heavy text books in their backpacks.

Our school didn't have a large illegal population. Some schools in the district did, but our school was one of the "rich" schools. Still only 40 textbooks for 200 kids.

I also mentioned that my son was in 6th grade in that post. That was last year. My kids are 12 and 9 and going in 7th and 4th grades respectively.

Regarding the illegals, get them out. Get their kids out. There should be no such thing as an anchor baby. They do not deserve the rights of American citizens because they are not American citizens. They are criminals the same as the guy who shoplifts from Walmart.

[pepperpot]

Regarding the illegals, get them out. Get their kids out. There should be no such thing as an anchor baby. They do not deserve the rights of American citizens because they are not American citizens. They are criminals the same as the guy who shoplifts from Walmart.

:agree

[SurferGirl]

The children's parents are the criminals that break the law to get here and then steel identities. I still would never deny any child a balanced meal. It's not their fault.

[SurferGirl]

Some did. Some were homemakers and paid little to nothing. The ones who did work for 40 years and retired still paid in less than they got out after they collect for a few years. Each month they get a far bigger check than they paid in 40 years ago. In fact, most people get an average monthly social security check that is equal to what they made in a month or more before taxes 40 years ago. In 2007 the average monthly social security check was $1007. In 1970 the average household income was $8730. At a 6.2% deduction for social security that means that in the entire year of 1970 the average household paid $541.26 into social security.

Yes, they paid into it all their lives. But they didn't pay in nearly as much as they get back. If I give you $1000/yr (double what they paid in in 1970) every year for 40 years will you then be willing to pay me $1000/month for the next 30 years? How about the next 20? In actuality, my numbers were wrong. The average senior collecting social security only needs to collect checks for about 5 years before they start getting back more than they paid in. And that is taking interest into account on that money.

Most of the people collecting social security now are people who earned most of their money at at a much higher rate than 40 years ago. Most people who retired 40 years ago aren't worried about their golf game but are long gone.
My Dad recently retired at age 70 I don't think he ever took a full weeks vacation during his working life. He was self employed. Now they bought a small RV and will get a chance to travel all over our country. I think he deserves a chance to rest a little.

[nightrider127]

In AZ we lived in a city with a very large "active adult" community. The schools constantly got turned down for funding when it was voted on. Pretty much anything that didn't directly benefit the seniors was voted down - education, parks, etc. They had no sympathy for kids who had to share textbooks.

Bahet, that is terrible and I just want to say that it is greed in it's purest form. Shame on them for voting against kids but voting for unneeded goodies for themselves.

[Bahet]

Most of the people collecting social security now are people who earned most of their money at at a much higher rate than 40 years ago. Most people who retired 40 years ago aren't worried about their golf game but are long gone.
My Dad recently retired at age 70 I don't think he ever took a full weeks vacation during his working life. He was self employed. Now they bought a small RV and will get a chance to travel all over our country. I think he deserves a chance to rest a little.

40 years ago a now 70yo was 30 - prime working years. My 70yo dad joined the Navy at 18 so he started earning a taxable paycheck then. He retired when he was 58. The 1970s were the midpoint of his working career. I'm not talking about people who retired 40yrs ago, I'm talking about people who were working 40 years ago but are now retired.

[SurferGirl]

Many people earned less during their initial working years.
Think about how much people earned toward the end of their working life and the Social Security and Medicare taxes they paid in over their lives. That is why I used such a low figure in the example I gave awhile back.

You gave an example saying something about people who retired 40 years ago and most of them would be long gone by now. Then you used what wages were 40 years ago. Face up to facts that an older person that is now retiring earned much of his lifetime earnings at the current rate and paid social sec. and medicare at the current rate. Even if you are thinking of an average use a little common sense.

[Bahet]

Many people earned less during their initial working years.
Think about how much people earned toward the end of their working life and the Social Security and Medicare taxes they paid in over their lives. That is why I used such a low figure in the example I gave awhile back.

You gave an example saying something about people who retired 40 years ago and most of them would be long gone by now. Then you used what wages were 40 years ago. Face up to facts that an older person that is now retiring earned much of his lifetime earnings at the current rate and paid social sec. and medicare at the current rate. Even if you are thinking of an average use a little common sense.

¿usted entiende esto? Sorry but obviously English isn't your 1st language since no where did I use an example of someone who retired 40 years ago. I only talked about people earning money 40 years ago. For someone who is 70 that would have been about the midpoint of their career. Ok, it would have been closer to the beginning and wages do tend to increase. So let's move up 10 years. In 1980 a 70 yo person, let's call him Mr. Smith, would have been 40. With me so far? Not talking about someone who retired in 1980 but someone who is now 70 and was 40 in 1980 and still working.

In 1980 the average income was $19170. That meant Mr Smith paid $1188.54/yr into social security. You claim to be a former CPA so I'll assume you can do the math. So we now have someone who, assuming they remained at the average wage, paid $541.26 into SS (abbreviating social security) in 1970 and $1188.54 in 1980. Still with me? The person still isn't retired.

In 1990 the average wage was $30,056. Let's pretend Mr. Smith was making a much nicer living than average now. Let's say he was 50% above the average and made $45,000. Now he pays about $2800 into social security every year. From 1990 until 2000 median income only rose another $5000. Let's say Mr. Smith's income did too. So in 2000 he was making about $50,000 and paying about $3200 into social security each year. Ok, now it might get a little tricky. Try to keep up. I'll type slowly.

Mr Smith pays $541 in 1970, $1189 in 1980, $2800 in 1990, and $3200 in 2000. Add all those numbers up and you get $7730. Divide that by 4 (1970 - 2000, every 10 yr period) and you get $1932.50. That's the average annual amount Mr. Smith paid into social security during those 40 years. Now Mr Smith is retired and collecting about $1300/month in social security benefits (higher than average since his income was higher than average for 1/2 of his hypothetical career.)

$1932.5 * 40 = $77,300. That's the total amount Mr Smith has paid into social security. By getting a check for $1300 every month he will have gone through what he paid in within 5 years. Of course there are other points such as his employer contributing but that's the employer's money. If there was no social security the employer would have called that additional profit. Without social security, if Mr. Smith set aside that amount every month towards his retirement he would have used it all up in less than 5 years.

You don't really think that someone who worked for the past 40 years actually paid in more than they will get back do you? If so, it's you who needs to comprehend some facts and learn a bit of common sense. I can't believe a supposed accountant wouldn't be able to grasp that. I suppose if you are truly that far out of touch with reality I just wasted my time trying to explain the math. Eh, that's ok. I'm sure some of the non accountants out there will understand.

[whatever]

Most anyone who collects social security based on retirement for over about 10 years gets back more than they paid in.

Yep I agree. Or this maybe a little off topic nowadays it seems like you hear about sooo many people being on ssi for the oddest things. A learning disability? REALLY? Theres a need for that? In the winter I watch the court shows and you would see people on disability for those or other things that IMO should NOT prevent them from working. Esp. when they pretty much admit they work "under the table" for cash.
So I think SS is outdated in some instances. In needs to be readvised. Plus think about it right now there are probably more people on it than working with the way the economy is. Which is not a good stat.

[SurferGirl]

You also failed to use the chart that I provided a link to and you also didn't consider a self employed individual that pays both halves and not taking into account how much that money would have been worth if compound interest was applied. You also don't realize a person might have gotten paid more if their employer didn't have the additional payroll tax expense. Sure some people do live for many years after they retire but did you take into consideration how many only live a few years or die before retirement.

Stop blaming the seniors for the lack of school books in your school.
Everyone knows the schools will do the cuts to things the parents will notice and still continue wasteful spending. Schools wasted money even back when I was a kid and I grew up in Saratoga, Ca. Everyone voted for everything the schools asked for and most of the people who lived there and retired had to sell their homes because the property taxes are so extremely high.

[Bahet]

Oh, oh, I also forgot to take into account people named Joe who hit the Lotto twice and CEOs of fortune 500 companies and athletes who have careers that only span 5 years.

What part of "Average" didn't you understand? Compound interest won't add another 20 years either. I assumed you'd use some common sense and realize that. Obviously, I assumed wrong.

I will blame the seniors for the schools as well. I was active in both the school and politics. The seniors turned out in droves to vote down anything having to do with funding schools or parks or things like that. Oh, except a bit for a city owned golf course, they overwhelmingly approved that. I realize schools misspend their funds. Always have, always will. But when 200 kids have to share 40 books and one school in the district is talking about having to have some kids sit on the floor because there aren't enough chairs then something needs to be done. Providing textbooks is not wasteful spending. Unless, apparently, you don't have a child in that school.

[SurferGirl]

Over 10 million Americans are self employed.
Back in 1980 8 million Americans were self employed.

I don't think anyone could live on what people get on Social Security.
There are some on disability that shouldn't get it but the people who are truly disabled usually need to hire an attorney to get their benefits.
Also I think it's 3 years on disability before they are eligible for medicare.

[SurferGirl]

http://money.cnn.com/magazines/moneymag/bplive/2007/snapshots/PL0670280.html


CONTENDER
Saratoga, CA
Top 100 rank: N/A
Population: 29,600
Compare Saratoga to Top 10 Best Places

the average property tax is $6,528

I think most places average about 6,000 per student for education

[mabby89]

¿usted entiende esto? Sorry but obviously English isn't your 1st language since no where did I use an example of someone who retired 40 years ago. I only talked about people earning money 40 years ago. For someone who is 70 that would have been about the midpoint of their career. Ok, it would have been closer to the beginning and wages do tend to increase. So let's move up 10 years. In 1980 a 70 yo person, let's call him Mr. Smith, would have been 40. With me so far? Not talking about someone who retired in 1980 but someone who is now 70 and was 40 in 1980 and still working.

In 1980 the average income was $19170. That meant Mr Smith paid $1188.54/yr into social security. You claim to be a former CPA so I'll assume you can do the math. So we now have someone who, assuming they remained at the average wage, paid $541.26 into SS (abbreviating social security) in 1970 and $1188.54 in 1980. Still with me? The person still isn't retired.

In 1990 the average wage was $30,056. Let's pretend Mr. Smith was making a much nicer living than average now. Let's say he was 50% above the average and made $45,000. Now he pays about $2800 into social security every year. From 1990 until 2000 median income only rose another $5000. Let's say Mr. Smith's income did too. So in 2000 he was making about $50,000 and paying about $3200 into social security each year. Ok, now it might get a little tricky. Try to keep up. I'll type slowly.

Mr Smith pays $541 in 1970, $1189 in 1980, $2800 in 1990, and $3200 in 2000. Add all those numbers up and you get $7730. Divide that by 4 (1970 - 2000, every 10 yr period) and you get $1932.50. That's the average annual amount Mr. Smith paid into social security during those 40 years. Now Mr Smith is retired and collecting about $1300/month in social security benefits (higher than average since his income was higher than average for 1/2 of his hypothetical career.)

$1932.5 * 40 = $77,300. That's the total amount Mr Smith has paid into social security. By getting a check for $1300 every month he will have gone through what he paid in within 5 years. Of course there are other points such as his employer contributing but that's the employer's money. If there was no social security the employer would have called that additional profit. Without social security, if Mr. Smith set aside that amount every month towards his retirement he would have used it all up in less than 5 years.

You don't really think that someone who worked for the past 40 years actually paid in more than they will get back do you? If so, it's you who needs to comprehend some facts and learn a bit of common sense. I can't believe a supposed accountant wouldn't be able to grasp that. I suppose if you are truly that far out of touch with reality I just wasted my time trying to explain the math. Eh, that's ok. I'm sure some of the non accountants out there will understand.

In reference to the bolded text, I am not a CPA, but that made PERFECT sense. Thanks.

[krisharry]

Well, I will just say this. The current system is unsustainable over the long term. Unless changes are made to both soc.sec and med., there will come a time when the working population does not pay enough in to cover what goes out and the government will be unable to make up the difference. That time may be sooner than we think.

[pepperpot]

Well, I will just say this. The current system is unsustainable over the long term. Unless changes are made to both soc.sec and med., there will come a time when the working population does not pay enough in to cover what goes out and the government will be unable to make up the difference. That time may be sooner than we think.

I just see the government taking on more and more and giving out more and more.....this can't continue. Our thinking about how we live and being more responsible for ourselves needs to happen. And I mean everyone, especially those who are not working but expecting certain things as 'rights'.

[Bahet]

Over 10 million Americans are self employed.
Back in 1980 8 million Americans were self employed.


Yea, and? Are you saying that they will pay out more than they get back in social security? Do you understand the word average? It's a mathematical term. It means being ordinary, common, the middle between the extremes.

I didn't take the self employed into account. There are 10 million uninsured children in this country and you completely disregard them every time there's a discussion on health care. So I figure it must be a small enough percentage as to be statistically insignificant to you. Or is it only an insignificant number when were talking about poor people and those who had the audacity to be born, upon which time your concern for them completely ceases?

[krisharry]

I just see the government taking on more and more and giving out more and more.....this can't continue. Our thinking about how we live and being more responsible for ourselves needs to happen. And I mean everyone, especially those who are not working but expecting certain things as 'rights'.

I'm sure it will continue. But, not indefinitely. Something will have to give, everything has a breaking point. I just hope reform can happen before we get to that point.

[krisharry]

The children's parents are the criminals that break the law to get here and then steel identities. I still would never deny any child a balanced meal. It's not their fault.

Well, we can give them a hot meal and then ship the family back where they belong.

[Bahet]

Well, I will just say this. The current system is unsustainable over the long term. Unless changes are made to both soc.sec and med., there will come a time when the working population does not pay enough in to cover what goes out and the government will be unable to make up the difference. That time may be sooner than we think.


I just see the government taking on more and more and giving out more and more.....this can't continue. Our thinking about how we live and being more responsible for ourselves needs to happen. And I mean everyone, especially those who are not working but expecting certain things as 'rights'.

Thank you! These are exactly the points I'm trying to get through to SG. Seniors have no sympathy from me over their social security checks not increasing. Most of them are already living off taxpayer money and not what they paid in while they were working. That's our tax money. Then, while they are complaining about not getting increases in the checks that are coming from our taxes, the younger generations are taking pay cuts or losing their income entirely. You cannot fund more money for social security from the taxes of people who are making less and less. Either those who are working will have to pay more in taxes or the seniors are going to have to get less. Even keeping their checks the same for 2 years isn't going to help if incomes, and therefore tax revenue, keeps going down.

[pepperpot]

When social security was started it was earmarked for retirement....now that money that is being deducted from everyone is funding more than just 'retirees'.....that's a large portion of the problem. :agree

People who are senior citizens cannot just go out and get a job. People on welfare have that option and a lot more. It's a lot harder for a senior citizen to retrain themselves in another field, get someone to hire them and go back and forth to work everyday. They also deal with more physical ailments than a person 40 years younger, thus slowing them down and generally being 'less productive' in many areas.

The younger generations need to be more self sufficient and responsible for themselves thus easing the burden on the entire system. This notion that the government needs to help you raise your family must change.

[gmyers]

Will you feel the same way Bahet when you're older and living on social security? Maybe you're some of the lucky ones that were able to put up for retirement, but many weren't even though they worked constantly. When you're eligible for social security will you tell them no thanks I don't want to put a burden on the taxpayers. So you can keep mine. Somehow I doubt it.

[Bahet]

Will you feel the same way Bahet when you're older and living on social security? Maybe you're some of the lucky ones that were able to put up for retirement, but many weren't even though they worked constantly. When you're eligible for social security will you tell them no thanks I don't want to put a burden on the taxpayers. So you can keep mine. Somehow I doubt it.

Of course not. I already said I feel for them. I already said my parents, IL, and grandma are all in that group. I don't need to be retired and dependant on social security to empathize. My point is simply that in these extremely tough economic times they have no business complaining that they aren't getting a pay increase. Have I not been clear in saying that? Seriously, it seems that point is completely lost on some. I feel like I'm speaking with too many big words or something.

By the same token, if you lose your job and your insurance but don't qualify for medicaid will you still feel that there should be no option of health care for everyone? If you are eligible for Medicaid will you tell them "No thanks I don't want government funded health care." When you retire will you turn down Medicare?

[gmyers]

Of course not. I already said I feel for them. I already said my parents, IL, and grandma are all in that group. I don't need to be retired and dependant on social security to empathize. My point is simply that in these extremely tough economic times they have no business complaining that they aren't getting a pay increase. Have I not been clear in saying that? Seriously, it seems that point is completely lost on some. I feel like I'm speaking with too many big words or something.

By the same token, if you lose your job and your insurance but don't qualify for medicaid will you still feel that there should be no option of health care for everyone? If you are eligible for Medicaid will you tell them "No thanks I don't want government funded health care." When you retire will you turn down Medicare?

We don't have insurance and my husband is on disability for COPD and emphysema. He wont be eligible for medicare until next March. We've been waiting almost a year and five months to get medicare. We've been paying for everything out of our pocket. And no I wont turn it down because my husband worked over 44 years and paid into it so I feel like he deserves it now. But I also don't see anything wrong with people on social securty getting cost of living raises. Their living expenses are getting higher too, just like younger people that are working. The difference is younger people can get another job or raises in their jobs that older people can't. So I see nothing wrong with them getting a cost of living raise.

[Bahet]

Except, on average, the younger people that are working are getting pay cuts. So why should they pay more to fund pay increases for someone else when their own income is decreasing?

Let's put it another way, let's talk about people on welfare who lost their jobs and can't find work. Should the government take more money from the average working citizen's decreasing income to give more to someone sitting home on welfare? Yea yea, they are able bodied adults and can, ideally, get a job. But maybe they live in an area where there are absolutely no jobs. Maybe they have some relativly minor health problems but thatare substantial enough that they cannot stand for hours on end. Should their checks be increased while working people's are decreasing?

[gmyers]

I didn't see more money taken from our paycheck when they gave people a cost of living raise. It was usually the same amount taken out after they got a cost of living raise. I don't know where it comes from but I didn't see our earnings drop when they got one.

[Bahet]

I didn't see more money taken from our paycheck when they gave people a cost of living raise. It was usually the same amount taken out after they got a cost of living raise. I don't know where it comes from but I didn't see our earnings drop when they got one.

It comes from what you are supposed to get when you retire. Imagine social security as a large lake. On one end you have people adding water with eye droppers. On the other end you have people taking water out with buckets. The water level is going down. Now imagine that many of the people with eye droppers stopped adding water or are adding several drops less each time they add some. While that is going on down at the other end people are complaining that they want bigger buckets. Should they get them?

[gmyers]

I don't know. But how do they live on a certain amount when things go up drastically. And not everyone gets very much social security. I know a lot of people that only get five or six hundred a month and thats their sole income to live on. I don't know how they do it. They live way below the poverty level. So I can see them needing a cost of raise living nowadays with everything being so high.

[krisharry]

I don't know. But how do they live on a certain amount when things go up drastically. And not everyone gets very much social security. I know a lot of people that only get five or six hundred a month and thats their sole income to live on. I don't know how they do it. They live way below the poverty level. So I can see them needing a cost of raise living nowadays with everything being so high.

Look, It's not like I don't empathize w/seniors. My parents get soc.sec. And yes costs have gone up for everyone and in a perfect world a cola should be no problem. The point is the system is flawed, more and more is being drained out and less going in. It's only time before a breaking point is reached, then what? No one gets checks? Then what will happen? What I am saying is reform needs to be done now to avoid that very real possibility.

[Vee030473]

My parents receive $630 a month in SS. Since there will be no COLA for SS I will just send more money each month to them. I hope those than can afford to do that will do that for their parents. It is a flawed system,in 1935 the age of 65 was set to receive SS because life expectancy was 63;my parents are in their late 70's.

[SurferGirl]

What some fail to realize is that the matching funds your employer pays also is supposed to go into the social security fund. So by thinking that a person gets more out than what was put in is flawed unless you live much longer than the average. I think for those that were born in 1967 you have to be 67 years old to collect your full benefit amount.

I also think that Bahet's example was low. Most people get a raise every year and the percentage of social security increases. Example in 1970 the social security part was 4.2% in 1979 it went up to 5.08%. The current rate is 6.2%
and when you consider with medicare an employees half is 7.65% so with the employers matching contribution it is 15.3%.
I don't have time right now to figure out the benefit amount for the low rate Bahet gave but I think it's off.

[Bahet]

*sigh* I didn't figure low. I realize most people get raises every year. If you read my post you'll notice I started figuring someone who is 70 now and for heir 40 years of work I started them at 1970 wages, not 1960 which is more in line with when they would have entered the workforce. I actually figured high and if you do the math (or read my post) you'll see that I figured social security at 6.2% in 1970 and other years. I weighed heavily on the side of a better than average income earner while still giving them barely better than average social security income. Seriously, it's not even 5 years beyond retirement age when someone reaches the break even point from what they put in to what they get out. Throw in employer contributions and interest and you are still talking about getting back far more than was put in for you.

Medicare is not social security. Two very separate and distinct things. Please, do some research or at least be logical. It doesn't take a genius to realize that someone who pays in an average of $2000/yr for 40 years is going to get back more than they pay in if they are retired for half that time (20 years for the mathematically challenged) while receiving $1300/month during that time. Even if you double it and add in their employer's contribution we're still talking an average (remember that word?) of $4000/yr. Multiply that by 40 years and you have 160,000. Remove $1300 (very low ball figure for someone who supposedly paid in that much) every month and you have a break even point of 123 months or just over 10 years. In reality, the person in that hypothetical would probably have a monthly check over $1500 which would be a break even point of about 8 1/2 years.

No, I didn't figure in compound interest. The basic concepts seem to be too much for some to grasp without throwing that in too. Plus, I estimated high for earnings and deductions and low for social security income to help offset that.

[Vee030473]

http://www.socialsecurity.gov/retire2/agereduction.html
http://www.muhlenkamp.com/methods/html/socialsecurity.html

[dv8grl]

I'll stand up for the people who get Retirement Social Security.
Not the mother/ father, who have genetic diseases & keep having disabled/diseased babies, in turn get Social Security benefits for them.

[SurferGirl]

This might give you a little better understanding of how social security works, it is weighted so that the lowest earners to get a higher percentage and look what happens to the higher wages. I never prepared a tax return for a low income person. Remember I did corporate tax and the taxes for the corporate officers or owners. Sometimes it might be simple to over simplify but some people have had to be nit picky for a living. You like to prepare taxes but you use a pub 17 a CPA has to go by the regs. (it's like a big law library but for accountants they probably have it on disk now). Anyway if you go to the link there is a planner where you can figure out your own estimated retirement earnings.

http://www.socialsecurity.gov/mystatement/howfigured.htm
Social Security
Statement Home How Your Benefit Is Figured
In general, your Social Security benefit is based on your earnings averaged over your working lifetime. It is not based on your last five years or your high three years. This is different from many private pension plans that use a relatively small number of years.

Here's how we figure your Social Security benefit at full retirement age if you turn 62 in 2007:

Step 1- We determine the number of years of earnings to use as a base. If you were born after 1928, that base number is your 35 highest years of earnings. Fewer years are used for people born in 1928 or earlier.

Step 2- We adjust the earnings in these years for wage inflation. We call this "indexing."

Step 3- We determine your average adjusted monthly earnings based on the number of years in step 1. (If you don't have earnings in 35 different years, some years with $0 earnings will be used to figure this average amount.)

Step 4- We multiply your average adjusted monthly earnings by percentages in a formula that is set out by law. If you turn 62 in 2007, that formula adds together:

•90 percent of your first $680 of average monthly earnings,

•32 percent of the amount between $680 and $4,100, and

•15 percent of everything over $4,100 to give you your full retirement benefit amount. (If you start your benefits before you reach full retirement age, this amount will be reduced.)

Note: If you turned 62 before 2007 or you would like additional information on how your benefit is figured, please read Your Retirement Benefit: How It Is Figured.

The formula results in benefits that replace a percentage of your earnings. The percentage is lower for people in the upper income brackets and higher for people with low incomes. The percentage for people who had average earnings during their working years is somewhere between those figures. That's because the Social Security benefits formula is weighted in favor of low-income workers who have less opportunity to save and invest during their working years.

If you become disabled or die before you reach full retirement age, we may use fewer than 35 years of earnings to calculate your average monthly earnings, but the same basic formula is still applied to figure your benefit amount.

You also can go to our Benefits Planner and use the earnings shown on your Statement to calculate your estimates yourself.