Hacker News Reader

Comment by gringoDan | Hacker News Reader

We've known this was coming for a long time...as a Millennial, I don't expect to ever see a cent of Social Security benefits.

View on HN

As a millennial, I do. There are just too many easy mitigations here that will extend life several decades:

- Remove the cap and tax income above $120k, just like medicare and income tax

- Increased tax rate, possibly just on payroll not income (the employer-paid portion)

- Limited forms of means-testing (Maybe, attenuated survivor benefits as your estate value clears a certain high mark like $3 million)

- Eliminate "early" retirement ages and force the "full" age

- Extending minimum retirement age to 70 and beyond

Came here to say the same thing. There are some very sensible fixes to extend SS to younger folks.

Medicare, however, is another story.

The easy way to fix Medicare is to get medical costs under control.

means testing is super unfair to those who sacrificed lifestyle in their youth to save for retirement.

Consider the person that could have, but didnt, live a lavish lifestyle and instead responsibly saved. Then a benefit (which they paid into, and maybe rely upon) is removed after the fact? Bad news.

Unfairness is arguably in the eye of the beholder. If someone “responsibly saved” then they are not relying on the benefit as much as someone who didn’t or couldn’t save. Is it fair that a person who does not need financial aid receives it anyway?

But this then incentivizes people to not save and spend their money while young instead, on the assumption that social security will help them when they're old, leading to even larger burdens on the system.

Social Security is not a retirement account. We're paying today for the current generation of retirees so we don't have a class of elderly homeless eating cat food and dying in our streets.

Means testing is consistent with this outcome.

> so we don't have a class of elderly homeless eating cat food and dying in our streets.

Too bad we already do, and the number seems to be increasing rapidly: https://www.nytimes.com/2016/05/31/us/americas-aging-homeles...

So if Social Security isn't helping with that, what other excuses are there?

The fact that elderly homeless people exist does not imply that current social security policy does nothing.

Presumably, if we did away with SS, there would be more on the streets.

Incentives are much more powerful than intent. It isn't meaningful to talk about intent when assessing the likely outcome of an economic initiative. I can't emphasise this as strongly as I'd like to; in economics we want fairness and the incentives to align, but if they are not going to then incentives trump fairness. Fairness with poor incentives drives bad outcomes, and usually reveals that 'fairness' is 'fairness for some in groups, at the expense of the rest'.

Resources are no longer growing as quickly relative to population as they were in the 70s and 80s. We need normal people to make uncomfortable decisions _not_ to consume. Otherwise there are not enough resources when they grow old.

Incentivising spending in the present is not a clever idea, even if it isn't intended.

Means testing gets you nowhere because there are so few people who would qualify as too rich- it would be less than a drop in the bucket "saved." It would be purely symbolic, and it's another way for those in power to say that we punish the rich and social security is a wealth transfer to the poor, then use that as a reason to abolish it. The idea of means testing is totally counterproductive to your goal.

Also as an aside, there are wealthy elderly people already not cashing their social security checks, you just don't know it because it makes nearly no difference in the scheme of things.

Probably true, though separate from the argument that means testing is "unfair".

One of the problems with means testing is that as the average payout declines, so too does support for the program. Without broad support, cuts/changes to SS become less of a third-rail problem.

The marginal value of each dollar of social security benefit is smaller for those with independent wealth. Means testing is a way of making sure that each SSI dollar is highly valued.

If it's not a hard cutoff as suggested upthread but just a progressive phaseout then the responsible person still has a reward and yet the benefits can be focused on the needy.

I'm a proponent of BI but I have to point out that means-testing doesn't imply perverse incentives.

>Consider the person that could have, but didnt, live a lavish lifestyle and instead responsibly saved. Then a benefit (which they paid into, and maybe rely upon) is removed after the fact? Bad news.

Such a person wouldn't be able to live a "lavish lifestyle" with the benefits alone - that's not what they're for. And if they saved up throughout their entire life then they wouldn't depend on those benefits in the first place, and could likely live far more lavishly than the average recipient, anyway.

If I am paying into SS in my 20s and expect to get, say, $1000 per month in my 60s, and I responsibly design my 401k savings etc around that promise, and then have it taken away because I saved more than the average person then I will have a $1000 hole in my budget .

Itd be no different than a bank keeping the contents of my savings account and giving me the excuse "we changed the rules"

Except Social Security isn't a bank account, nor is it really a "promise," at least not a promise of a specific return on investment.

One could argue that designing your financial expectations around that program remaining exactly as is for the forseeable future given that history wouldn't be reasonable - any number of events could lead to that $1000 hole in your budget. Who's "keeping your savings" when stocks fall or inflation rises?

But, if the feasibility of the Social Security program as a whole depends on restructuring the program, as it has in the past, then I believe it's better for society that those cuts be distributed to those who can best afford them.

> - Eliminate "early" retirement ages and force the "full" age

I'd really be interested in seeing the math on this. If a person retires 2 years early (receive 86% of benefits) that person's total social security withdraw should be equal to someone that retired at normal age 13 years after retirement. With a retirement age of 67 and considering a life expectancy of 80, retiring early looks like favors the goverment on average.

There are additional factors to consider:

* How much more a person will pay into social security while continuing to work longer.

* If the last two years are the highest earning then it can increase the base payout.

* Does retirement age have an impact of life expectancy?

* Does a person's current health have an impact of if they decide to draw early?

* I don't really know how inflation changes social security, but it seems relevant to consider.

As a millennial-ish, I think the government should stop stealing my money and make Social Security opt-in only.

As a millennial, I think the problem with that approach is that no one would opt-in, but everyone would feel entitled to receive the benefits if they failed to save enough for their own retirement (and realized it).

Yes, I think the entire point of social security is to help people who don't have the foresight to help themselves. Since the program is dysfunctional and our representatives continuously borrow against the program, who is it really helping?

As a millennial, I take issue with anyone who mischaracterizes taxes as theft for ideological gain.

This country was literally founded because of excessive and tyrannical taxes brought by the British empire. How long until America becomes that empire?

It's funny, I see this meme sometimes around tax day: "Well, I just paid my taxes. Those roads should be fixed anytime now". It's funny because the excuses people use (my roads!) to justify reckless and out-of-control taxation ($21T debt, that's T for Trillion) are almost never at the head of where the tax revenue is actually spent.

As a US government contractor, governments are great at overspending and under-delivering.

"This country was literally founded because of excessive and tyrannical taxes brought by the British empire. How long until America becomes that empire?"

There were far, far more inputs to that than just "taxes are bad".

"As a US government contractor, governments are great at overspending and under-delivering."

And as a contractor, you're part of that problem.

> There were far, far more inputs to that than just "taxes are bad".

Very true, and excessive taxation was one of the major factors.

> And as a contractor, you're part of that problem.

Not myself, but it's a reasonable accusation about the company I work for. Even if that were true, we offer a product that the government could never engineer. The product is good, the government needs it, so they take money from their citizens to buy it. My points still stand unfortunately.

Social Security is opt-in; you choose it by choosing to work in a job which (either by mandate applicable to the job or by choice where not mandated, as is the case for some public sector jobs) participates in Social Security. You opt out by choosing to work in a non-participating job or to rely on some means other than wage labor for income.

Doesn't sound like much of a choice to me.

As a Millenial who tries to not hot-take, I do expect to receive Social Security benefits. I'm not planning on it being a requirement to survive, but I am expecting it to be there in a nontrivial form. As is widely noted the trust funds will, at current projected rates of usage, be tapped in 2034, but projected income (hence the "further looting" part) covers around 75% of all benefits at that point.

Baby Boomers will be dying off at that point, which should reduce the stress on the system, and there are a number of fairly politically safe ways to improve the financial position of Social Security like removing the caps on income. Don't get me wrong, Social Security is not a great system in a lot of ways, but it's not gonna just disappear and there is a recovery point in there if we should choose to take it.

I don’t know if caps are politically safe. After all even Obama wasn’t able to remove 529 college savings plans which purportedly benefit the upper middle class who don’t need that much help. Caps going up to say 500,000 sounds like it would meet a lot of resistance to me.

It's not a hot take to think that an unsustainable service that many members of government have campaigned on reducing or eliminating entirely wont exist in 30+ years.

While the exact current level of service might be unsustainable, some level of is completely sustainable as long as either: the working population grows OR the wages (under the cap) grow OR the cap grows OR the tax rate grows OR the things the fund is invested in grows.

As a millenial, I'm eating a teaspoon of cat food each day to prepare my body for the day when it becomes my full-time diet.

Just learn to purr and chase balls of yarn; you can be coddled as some rich old spinster's pet.

There are cheaper sources of protein than catfood, sold for human consumption. This is a weird meme.

Though, if I was a retired person, I'd move back home in the mountains and eat trout and squirrel and deer meat everyday. Buy a lot and a trailer for a pittance. Get a library card.

God, that'd be a life...

Typical, lazy millennial. You should be getting out there and catching your own birds, lizards, and other prey.

This was also the longtime belief of my parents, who both recently began collecting Social Security benefits. Social Security will only die if we let it be killed.

I'm pretty sure it can die from math, too.

Well not if we put it in a money market mutual fund, then we'll reinvest the earnings into foreign currency accounts with compounding interests, AND IT'S GONE.

That’s like blaming math on a bankruptcy that follows not paying your bills.

You will have Social Security. You just might receive something closer to the current level of social security benefits rather than a more generous package. Social Security benefits are indexed to median wages, which rise over time. If they just don't increase benefits so quickly system will be fine. Likewise, a hike in taxes which would still leave us one of the lower-taxed industrialized countries would do the trick.

A funny thing is that we have both fear of automation and fear of insolvent social security. If the economy gets more automated it will grow quickly, and it will be easy to tax the additional income to pay for social security---although we may have to use a value-added tax or a higher corporate tax rather than payroll taxes.

"If they just don't increase benefits so quickly system will be fine."

Problem is that the current level of benefit is completely inadequate.

"A funny thing is that we have both fear of automation and fear of insolvent social security. If the economy gets more automated it will grow quickly, and it will be easy to tax the additional income to pay for social security"

But will that be countered by the larger numbers of unemployed who no longer have an income due to automation?

I'm not sure why millenials have to worry about it. Social Security is not an aquifer that will be tapped out by the time we get to it. It is a pay-as-you-go system. The current crunch is coming from having a large retiring generation (the baby boomers), supported by relatively smaller working generations. Millenials will not necessarily have the same problems (unless the elect to have even fewer kids than baby boomers did, which is a possibility).

Total fertility rate has been pretty flat for several decades now in the US and I believe is declining if you don't include immigrants, so I expect the problems with social security to continue into the future.

> It is a pay-as-you-go system.

Then who paid for the first generation of recipients?

The kids of that first generation of retirees, who were workers at the time.

> as a Millennial, I don't expect to ever see a cent of Social Security benefits.

Even if the Trust Fund is fully exhausted, beneficiaries will see a sizable fraction of full benefits from current payroll taxes.

The only way this doesn't happen is if the program is modified to affirmatively deny people already-earned benefits, which is probably less politically viable than fixes that would protect full benefits even with pessimistic projections.

Social security will always be around in one form or another. Despite the fact that many Americans detest the idea of a welfare state, we're still collectively bright enough to realize that you can't simply leave no options for the sick, poor, and disabled.

The better question to ask is whether you will be happy living out the twilight of your life on a government controlled amount of money. This amount will likely always gravitate toward the prevailing poverty line. Unlikely to lead to a truly comfortable existence. Definitely not enough to live in any high COL location. Average monthly benefit in 2017 was ~$1,300, and MAX was $2,687 [1]. ~$15-$30K will cover the basics in most lower COL parts of the country, but not much more.

[1] http://time.com/money/4644332/maximum-social-security-benefi...

The US is already a welfare state, we're just worse at it than other countries.

In any case, if you are young and aren't happy living out your life on whatever social security pays there is a simple solution: pretend like it doesn't exist and plan accordingly.

Social security is eminently and easily fixable. It's just been obstructed for decades by people of bad faith who want to burn it, and the country, to the ground.

As a Gen-X'er, I don't expect to see it either.

Also get off my damn lawn you filthy heathen.

You'll receive social security. Benefits will be in tomorrow's inflated dollars but at today's amounts.

I've been predicting huge inflation for a long time for the simple reason that housing has inflated so much. Housing is so unreasonable and house prices are so sticky (people hate to take a loss and most are on loans) that the only reasonable way out of the housing affordability crisis is for the rest of the economy to inflate until house prices are reasonable again. This will also neatly "solve" the social security funding problem.

I don't know why you are getting downvoted. I think this is what will happen as well. It also helps solve the pension crisis.

Not that it's a "fair" solution but it is a solution.

It's a more politically viable solution than large tax increases or nominal benefit cuts and a much less painful solution than default. It also "solves" the impending student loan crisis by writing down all those loans.

Maybe people didn't get my rationale around housing. Put more simply I see housing inflation as the leading edge of a giant wave of inflation. Housing has inflated first because QE money first went to banks and coupled with historically low interest rates this allowed banks to pump massive amounts of money into the housing market via cheap mortgages. So the housing market is where the big wave of post-crash re-inflation money went. But houses do have a turnover rate, so the money is not going to stay there forever. All those people who made 200-600% profit on their homes will sell those homes and use the money for old age care and other personal expenses or pass it on to their children who will likely spend it. Housing may fall a bit but it's more likely that the rest of the economy will just inflate to meet it.

Reply on news.ycombinator.com