Tweaks, of course, are in the eyes of those doing the tweaking and those to whom the tweaking is done. Both these approaches appeal to deficit hawks because they help reduce the government’s payout. Their effect on Social Security recipients is a different matter. Here’s an idea for reporters interested in going beyond complicated Washington speak. Why not go out and talk to people in your communities about what these tweaks—a.k.a. reduced benefits—will mean to them in dollars and cents?
For more from Trudy Lieberman on Social Security and entitlement reform, click here.
Means testing for SS and Medicare will be the final attack on the American Middle Class. Think about it folks. Traditional retirement plans (fixed benefit) are gone. Whats left are 401Ks, IRAs, and Social Security (SS). If you save for your 401k and IRA you will lose your SS with the means testing.
Do the math, you're taxed 6.2% on a salary up to around $106K for a guarrenteed benefit of Social Security. If you do the 401K you risk another 5% or more of income for a potential better gain. In most cases this gain is nominal and you will be penalized by your saving through means testing and loss of SS. If you're in the middle class and the government starts means testing, stop 401K and IRA. Spend what you saved during your late 50's and early 60's before you take SS.
This income manipulation is done for more than SS but also protect your Medicare. One serious illness and your middle class estate is wiped out.
Don't kid yourself, the target for means testing isn't the very wealthy like Bill Gates. That is a strawman argument. The target is the upper middle class making $100k to $250K.
The answer for SS is to raise the salary cap for contributions to SS to $250K and put a top level limit on SS payout at 70 yr old of $55K adjusted for inflation
#1 Posted by aj Michaels, CJR on Thu 19 May 2011 at 11:30 PM
The answer for social security is to balance the budget (now) and pay down the debt (soon) so that the non-transferable, unenforceable IOU's that make up the social security "trust fund" will actually be worth something in a few years, instead of eroding into utter worthlessness by the inflation that will inevitably come from borrowing or printing money.
Once fiscal sanity happens (if it does happen), the only way any entitlement program can persist without a bailout- be it a union pension fund, an Ivy League endowment, or a government retirement program - is for the plan to invest in real assets in the free market . Any plan that depends on future contributions instead of dividends or capital gains - like the current Social Security scheme depends on future general fund revenues to benefits - is doomed - such a plan is nothing but a Ponzi scheme that will never survive without exponentially increasing infusions of new cash.
#2 Posted by padikiller, CJR on Fri 20 May 2011 at 12:09 AM