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First Salvo to Fix Social Security Fired in Congress

Category: Financial and taxes in retirement

December 21, 2016 — Almost everybody agrees Social Security needs some tweaking to keep this popular program running smoothly. After all the latest estimates are that, if no changes are made, starting in 2034 only 75% of promised benefits will be able to paid (Social Security Trustees Annual Report).

Politicians and economists have been talking about the need to fix Social Security for years, but up until now no one has done more than talk. Finally, at least one person in Congress, Rep. Sam Johnson (R-TX), has proposed something. We don’t agree with a lot of what is in his plan, but we salute him for at least proposing something. The Bipartisan Policy Center has also proposed solutions, some similar to Johnson’s and some different. Soon to be President Trump said during the campaign that he wouldn’t cut Social Security benefits, although judging by Rep. Johnson’s bill, the Republican majority in Congress might have other ideas. Who knows who how this will work out – stay tuned.

A few highlights
Johnson’s plan has many facets, and almost each one is guaranteed not to be liked by someone (or liked by someone else). Johnson’s 15 point program would, over a long time span, do some of these things:
– Increase the Normal (Full) Retirement Age to 69 for those hitting age 62 by 2030
– Make adjustments to benefits to slightly favor lower earners and those who have 35 years of earnings, while decreasing benefits slightly for higher earners
– Change to chained-weighted CPI for COLAs and eliminate COLAs for higher earners
– Eliminate the earnings test for those under the Normal Retirement Age
– Eliminate taxation of Social Security benefits
– Provide a lump sum settlement for people who agree to postpone their retirement benefits
– Unlike the plan from the Bipartisan Policy Center, it does not increase the taxable base for higher earners or the base tax rate paid by everyone. The BPC recommended taxing all benefits paid to higher earners.

Early criticism of Johnson’s plan centers around several issues. One is that his plan is not particularly progressive – higher earners are not being asked to pay more and over the long term below average earners will get less. The other is that it mostly cuts benefits with only a slight increase in revenues, the result will be harsher than it has to be for most recipients.

Johnson’s proposed changes are too extensive to discuss here, but these articles that will give you more details – and the most recent issue of Retirement Weekly by MarketWatch (requires a paid subscription but worth it for people seriously interested in retirement issues).

Bottom line
This is very early in the game for Social Security changes – our new President hasn’t been inaugurated and the new Congress hasn’t been sworn in yet. Whatever happens eventually will probably be very different from what is proposed now. But what is important as a citizen and a current or future Social Security recipient is that you pay attention to the debate. And if you don’t like what you see, let your opinions known.

AARP Position
We just read AARP’s position on Social Security reform and think that their principles are in the right direction.

Posted by Admin on December 20th, 2016


  1. I agree with some aspects of the bill. As I understand the low income recipients would receive a 20% increase in their payments.

    by Mary11 — December 21, 2016

  2. Why do the high earners get penalized? They are the ones that paid most of the taxes to support the system in the first place. This socialism has got to stop.

    by Brian V — December 21, 2016

  3. I think if the government would just STOP putting their fingers in the pot, and then pay back at least half the amount with interest then we wouldn’t be talking about SS. Change the retirement of the congress (not to get a full retirement make them put their money like a 401k and limit their terms to eight yrs), now I know some won’t like this but things in Congress would change and we would have new ideas every eight yrs

    by Richard — December 21, 2016

  4. I would like to see some changes regarding SS for women who spend time at home raising children. I know that I have taken a big hit for the years that I spent at home. Also, I think the provision for divorced wives should be changed to cover only first wives who were in long term marriages. As it stands now, the number of spouses who could possible collect is unlimited. I know a man who was married and divorced three times. He is now 80 and there are three women collecting half of his SS benefits. No wonder we are going broke!

    by MaryNB — December 21, 2016

  5. The easiest solution would be to eliminate the earnings cap for the SS tax. Soc Sec would be fully funded forever! Why won’t that happen? Because our elected reps would lose money, Can’t let THAT hapen, can we?

    by RichardO — December 21, 2016

  6. What is chained-weighted CPI for COLAs

    by Louise — December 21, 2016

  7. I agree that the govt. caused the problem by ” borrowing” from SS. So now the taxpayer pays twice, once for the initial pay in and then again in reduced benefits. As for the abused high income earner, they did not pay in on all their earnings, like the rest of us did. They don’t pay after their income reaches somewhere after $100K. Tax all of it, make Congress join and halt all govt subsidies to big oil, factory farms, pharamaceuticals, tobacco industry, defense contractors, developed nations such as but not limited to Israel, and bring all our troops home. That would be a good start to replacing the money stolen for other projects.

    by Susan — December 21, 2016

  8. Changing the COLA formula makes little sense when the current COLA formula is already extremely unfair (it doesn’t reflect inflation pressures affecting retired persons) and we are paid no or almost no COLA these days.

    by Greg — December 21, 2016

  9. Also, if the GOP feels Social Security is welfare, why do rich people receive Social Security while not needing it at all? The only mention of rich people is that their benefits would be reduced slightly.

    by Greg — December 21, 2016

  10. As it is, recipients receive less monthly than they earned. Any cut should not be allowed. receiving more than you earned also should to be allowed. Raising the full retirement age only keeps younger workers out of the workforce that much longer, not a good idea.

    by D. Pal — December 21, 2016

  11. Cuts To Social Security Benefits Coming In 2017
    Employees claiming benefits at age 62 from 2022 on will have a 30 percent reduction in the annual benefit that they receive throughout their lives. “If that 30 percent cut were in place today, it would shrink the available benefit for a $30,000-earner turning 62 down to the poverty level, a bit less than $12,000 a year,” reports Investor.

    by DeyErmand — December 21, 2016

  12. The best thing that could be done is for the Gov’t to give back the trillion dollars that they took out of the fund! it would become solvent once again! The Gov’t had no right taking the money away from the workers the way they did! This is not an area for the Gov’t to take money from! If we had done this we would have our butts in jail for the rest of our lives!

    by Brenda — December 21, 2016

  13. The most simple fix is for those working to keep paying the SS tax year round. In 2016 those who earn over $118,500 stop paying the tax. It has always been this way with the earnings limit rising over the years. However,If the tax was paid year round, the wealthy would never receive fair compensation for the taxes they paid into the system. On the other hand, all of us who are home owners pay property taxes. Most of the property taxes we pay are ear marked for support of our schools. How long has it been since anyone who reads this has had a child in a public school system? We pay those required taxes for the good of our children. The same argument can be made for paying the SS tax year round with no earnings limit. It is for the good of all our senior citizens and would help keep the system solvent. Think of the movie “Pay it Forward” and what a good feeling it gave you.
    Robert H

    by Robert H — December 21, 2016

  14. I expect to see early retirement raised to 64 years of age. I do know that would hurt those being pushed out of jobs due to age. Social Security benefits are on the table to be “re-budgeted” this coming year. I know when I read the below article back in 2015 I had to readjust my retirement plans. Those that turn 62 in 2017 will get $9 less a month, compared to those who retire at 62 in 2022 who will get $50 less a month.
    JED GRAHAM 5/14/2015
    No matter who wins the White House in 2016, there’s no getting around it: Social Security benefits will be cut starting in 2017. A 1983 pact between President Reagan and the Democrat-led Congress to stave off an imminent Social Security financing crisis included a hike in the official retirement age from 65 to 67 somewhere in the far-off future.
    The retirement age rose to 66 in two-month increments between 2000 and 2005. Between 2017 and 2022, the retirement age will rise to 67.The cuts are intended to be an actuarial fair trade-off allowing people to get a benefit that’s smaller but runs for more years…..
    In practical terms, workers claiming benefits at age 62 in 2022 and beyond will face a 30% reduction in the annual benefit that they receive throughout their lives. When the retirement age was 65, those claiming benefits at 62 suffered a 20% cut…..
    Chris Christie and Jeb Bush (among others) have both put themselves squarely behind a further increase in the retirement age. Christie specifically advocated a hike to age 69, closing a bit more than one-third of the financing shortfall.
    But a hike to age 69 would mean that early retirees would have a whopping 39% benefit cut for life. To avoid that scenario, Christie proposed raising the earliest eligibility age for claiming benefits to 64, in tandem with the retirement-age increase…..

    by DeyErmand — December 21, 2016

  15. Chain weighing hurts retirees because it does not consider lost value for same money spent – whereas CPI does. For example, a 1000 sq.foot condo in 2017 costs $50,000. In 2018, the same condo costs $55,000. A retiree with a budget of $50,000 can now purchase only a 850 sq/ foot condo. Chain weighing says no inflation has occurred – same amount spent. CPI says 10% inflation – from $50 to $55k. Unless prices for essentials drop (unlikely), those on fixed or limited budgets will spend the same amount – for less value.

    by OldNassau — December 21, 2016

  16. Whatever the outcome of eventual changes in social security, make sure all government employees are part of the system, especially those that will vote to make those changes.

    by Tim Bauer — December 21, 2016

  17. I believe that some of these outrageous proposals are meant to stir the pot and get people fired up so that they can come in later with a privatization plan which will seem more palatable. That is the real goal. Privatization of everything. Also, if you up the age 62 start of reduced benefit SS you are definitely removing a safety net from some who are pushed out of the workforce. Although our life expectancy is growing, albeit not much and has stopped growing, there are many laborers such as construction workers as an example who have bodies that are worn out and will not be able to continue in their field until 69….not everyone sits at a desk. There is much bad stuff in these early proposals and everyone does need to pay attention. The 1% just keep getting all the breaks….I say let the SS be taken out of every penny earned up to $500,000. The most critical thing in my mind is that we don’t create negative impact for those who are now over 40 years old as they do not have the ability to adjust enough to compensate. And then are you willing to tell someone who is 25 that you need to pay into a system that you should definitely not count on at all! It will not benefit our country to push loads of elderly people below the poverty level and it doesn’t speak well for our nation if we do that. We need to look for ways to protect our seniors in the manner that Social Security intended.

    by ljtucson — December 22, 2016

  18. All new members of Congress have been covered by Social Security since 1983, These members do contribute to Social Security as part of the Federal Employees Retirement System (FERS). Members who were in Congress prior to 1983 were covered by the old Civil Service Retirement System (CSRS). Employees under CSRS did not contribute to Social Security but contributed a greater amount to the CSRS retirement fund. By this time, there should be few, if any, members covered by the old system.

    by LS — December 22, 2016

  19. If the SS benefit is reduced it will throw more people into poverty thus increasing more people on Medicaid and other programs like food stamps. Will lowering the SS monthly benefit really pay off in the long run if millions end up on the various social programs? Plus, increasing age is ridiculous. Have they ever done a study to find out how many 69 year old people are still in the work force? As much as some people would like to work till age 69 many cannot due to health. Many cannot because few will hire an older person. If you get laid off in your 50’s good luck finding a decent job that doesn’t require mopping floors at a gas station or working in retail making $8.00 an hour. Not to mention there are jobs older people just can’t do anymore like Surgeons with shaky hands, operating a jack hammer or climbing on roofs of tall buildings.

    We can help other countries and give them billions of dollars but we can’t help our own people. Maybe if they were a little creative they could come up with a plan that won’t hurt Americans who have paid into SS for their entire working lives. What if they also offered some kind of a supplemental program like a 401k where workers paid into SS plus paid into a SS-401k and allowed them to get a tax benefit plus increase savings.

    by Louise — December 22, 2016

  20. Social Security is and was meant to be a “safety net”, not a retirement account. Even if all the funding problems are solved, you will be hard pressed to live on Social Security alone??? with the cuts already in place and the cost of living rising. All of us make a choice to save or not for retirement. I am glad I did.
    I am curious what money (from where in the Federal budget) would people like to be put toward bolstering our Social Security program? We’re broke.
    The reduction of spending needed to save our economy is higher than the total percentage of defense spending so even if the whole military were to be slashed (impossible) spending would still need to be greatly reduced.
    So take your pick,?? cut either healthcare or Social Security.. or perhaps? ??both?
    Maybe close some of the Social Security offices, or Post offices?
    Or how about decent paying jobs in this country 40 hr weeks with health insurance and mandatory retirement accounts to add to our Social security checks at retirement????

    by John Last — December 22, 2016

  21. The comment “All of us make a choice to save or not for retirement” is not true. Many poor and middle class people simply don’t have anything left to save after basic expenses for themselves and their family are paid. Yes, there are some in those categories who don’t spend on the right things, but most are living from day-to-day, week-to-week, even if they have a job (or two). If anyone thinks all of the people in this country are able to save, he or she has led a very sheltered life and does not know reality. A simple lifting of the cap on income upon which SS taxes are paid will solve the problem and allow the program’s benefits to continue as they currently do. Or, if the cap could be left as is, and then kick in again at $250,000 of income, that will allow the rich to contribute a fairer share to the SS program and keep it intact. Have the more fortunate in this country lost compassion for those who have not fared as well? The Golden Rule is the cornerstone of the Judeo-Christian tradition.

    by Clyde — December 22, 2016

  22. The problem is these days most people live from paycheck to paycheck so it doesn’t give you the opportunity to save for your retirement. Like Louise mentioned, the low end recipients will have to depend on food stamps, HUD, and Medicaid. I know the high end earners will just have to pitch in more than they probably would like to but I don’t see any other way otherwise we will have more homeless people. Not all companies can afford to offer a 401K to their employees. Also, families who are caregivers to their elderly parents lose work year credits when they stop working to care for them. We and Congress need to work together to come up with a better plan than we have currently. I just pray that the new President Elect isn’t swayed by all his cabinet members who mostly want to cut our benefits…..

    by Mary11 — December 23, 2016

  23. I think congress has some really idiotic ideas come 2017. Repeal ACA, mess with Medicare, Medicaid and Social Security. And this is without one plan to replace any of it. I don’t know why but they don’t seem to be able to fix anything – just take things away. Maybe the first thing they do is return the money they stole from SS with interest.

    To quote Jimmy Carter – ” The test of a government is not how popular it is with the powerful and privileged few – but how honestly and fairly it deals with the many who must depend on it.”

    I wonder if changing the name of ACA to Ryancare would change the venomous attitude of some of our government. Or maybe Trumpcare.

    by elsie45 — December 23, 2016

  24. I don’t know John Last, I have seen people wiped out from the unexpected in life. I myself dipped in my savings to help my children in this economy. I got one child who is able to save a little for retirement monthly.The majority of those retiring do not have paid off homes, or retirement savings to rely on. Sure I seen others my age not save, but in the last 16 years I don’t think it has been an option. The point is they have paid in Social Security tax and it has been cut, and it will be cut again! This effects all of us!

    by DeyErmand — December 23, 2016

  25. Clearly, paying SS while working on ALL income is necessary, public employees such as government workers included – all the way up from the custodian at the White House to the President! The expectation is that the harder you work, the more you are paid, the greater your SS contribution – and then when you retire, you will reap the benefits of a hard-working life. Stick to these concepts, keep the congressional hands out of the pot, pay back the billions already taken (by cutting or eliminating the handouts to other countries who hate our guts), and maybe the future of SS will be brighter. It is not a welfare p[rogram, not a handout – it is a deferred savings plan for American workers. In fact congressional hands grabbed a huge portion in the past so we the taxpayers provided welfare to them!

    by SandyZ — December 23, 2016

  26. John Last, wouldn’t it be wonderful if all of our “plans” came to pass. Good for you that life has gone according to your plans! For many women, like myself, who saved for retirement with my husband for many years , stayed home for a number of years to raise a family, and then got replaced by a newer model late in life, the meager amount I will get from Social Security is essential. Then, there are cancer patients, like myself, who spent every penny of what was left after the divorce on medical bills just to stay alive. There are many, many life circumstances that blow up your plans and blow through your savings.

    by MaryNB — December 23, 2016

  27. Social Security isn’t broken! The U.S. Government is broken. Enough dollars just haven’t been appropriated to fund the Social Security trust fund. It’s their fault. Rich people will just have to pay more on their income (not just salary but all earnings without a cap). The COLA is broken. It needs to reflect the true CoL for seniors and the disabled. We don’t spend money on the same things as working people.

    by Fred — December 24, 2016

  28. Well, I understand the notion that the easiest way to fix something is to take it away. I propose that Congress and
    the Senate have the same medical we will get at retirement – then they will fix it correctly.

    TonyG December 24, 2016

    by TonyG — December 24, 2016

  29. Fred,
    You have hit the nail on the head. One problem that contributes to government financial issues is tax dodger and outsourcing. I am concerned because our newly elected president and our Republican congress have promoted both outsourcing and tax dodging.
    Another issue with social security is paying checks to people who are drug addicts, “disabilities”, and child welfare.
    All of these are good causes but need to come from another source other than Social Security.

    I think all we can do now is go to the voting booth with the ideas than no candidate that does not strongly support Social Security and improvement to the elderly condition and quality of life will get elected regardless of which party they may be in.

    “Baby Boomers” represent the largest voting block yet for some reason seniors seem to vote against their own best interest perhaps due to political lies and fabrication of other issues that are less important to seniors.

    Fred we can only hope our fellow seniors join hands and guide the American government back to what is was intended to do and that is to be “for the people” and not for the 1%er’s.

    by Ron — December 24, 2016

  30. Reap what you voted for.

    by Billy — December 24, 2016

  31. President Lyndon Johnson opened up the untouchable and flush Social Security funds to be used for other purposes in addition to Social Security. Now it’s on the brink of not covering what it was originally intended. Politicians, both Democrat and Republicans are to blame. If you want term limits, to really drain the swamp, vote out all incumbents, and send a clear message to all. AMERICA’S interests first or you’re out!

    by Charlie — December 24, 2016

  32. I don’t like the idea that those that will be deciding this for us, will be people who have mostly work behind a desk, with a lot of them from a different era. Can they really decide for those of us who have done physical manual labor? How many of them are disable from work, or from birth?Do they have one spouse and/or many ex’s? If we don’t start voting in “new blood” in our own home States we will continue to see no change in budgeting.I like your idea Charlie, but we have to research who is going to replace them first. Lots of people don’t even know who they are voting for, they just vote Democrat or Republican. Vote the best person for the job!!

    by DeyErmand — December 24, 2016

  33. I agree with most everything said here. But we need to get new blood to come forward to get elected!! Too many people will vote for the same old because they are afraid of the unknown. But the only ones we have running are the same old ones!! I don’t remember ever voting FOR someone, I’ve ALWAYS voted AGAINST someone… that is truly sad!! And yes, the government needs to stop screwing with social security. They’ve taken too much of it and given it to something it was not meant for. That’s why we don’t have the funds to keep it going. Cutting benefits is NOT the answer. Most of us can’t live on social security alone now, if it’s cut, we will end up on the welfare roles. Then what will happen to our kids and their kids?? They will be paying in more and more and never see any of it when they retire at what?? 90?? Things need to be fixed! Congress and all government shouldn’t be allowed to raise their own pay, or decide not to include themselves on national health care… if it’s supposed to be “good enough”, then they must lead by example!! this is all, of course, just INHO.

    by jacci — December 24, 2016

  34. Some corrections about Social Security. Our President, Senators, and Congress members do not pay into Social Security while in power. They have their own retirement plan that pays them more in retirement than when they were working. When FDR created Social Security he thought he created a system that could not be touched for any other means. Harry Truman was the first President to take from Social Security to balance the budget, but he repaid it. Ronald Reagan was the first President to take money from Social Security and not repay it and his successors have followed suit. Al Gore had the correct idea about Social Security by putting a lock on it to prevent presidents from stealing it.
    Reagan changed the cola formula to exclude gas and groceries. Two of the biggest costs to seniors. CPI reduces the cola formula even more.

    by Gary H — December 25, 2016

  35. I’m pretty sure if the money that was siphoned off and bilked out of Social Security by Congress and others were returned this conversation would sound very different. It never ceases to amaze me how many people think more taxes is the answer especially when SS taxes are not subject to the same exemptions and “loop holes” income taxes are. I think most reasonable people understand and support the need to allow sufficient SS tax dollars to support the disabled and indigent in our society but the SS system seems to be over run by freeloading hustlers, illegal immigrants and lazy or greedy politicians. Some are blaming Trump and he has even been inaugurated. please stop whining.

    by Pat — December 25, 2016

  36. When I look at my social security report, I find it notable that I already had my forty quarters in by the time I was in my late twenties. This despite the fact that I had been a full-time student for most of those years. Every part-time job I had paid enough such that I was able to contribute. Both of my kids are in their late twenties and neither of them are anywhere near forty quarters. That is because most part-time work today doesn’t pay enough to qualify. A large proportion of our population is being paid inadequately and thus we have fewer people contributing. The money instead goes to the top earners who are paying less and less of their income towards social security.

    by Lynn — December 25, 2016

  37. From Admin: Thanks to everyone for contributing to this topic. It seems like there are a lot of interesting opinions on the right way to fix this problem.

    We feel it is our duty to not be a vehicle for misleading or even false information that is rampant on the internet. To that end we have fact checked 3 of the statements made a few times in these comments to correct the record. These are some of the incorrect statements we are referring to:

    1. Members of Congress don’t pay Social Security, and they get fabulous pensions that can exceed their salaries even after 1 term;
    – See . They do pay into Social Security and their pensions, while generous, cannot exceed their salaries

    2. Congress “Stole the money” from SS and that is why it is broke
    – See
    In past years more funds were paid into SS than paid out. That money was invested in special Treasury bills which pay interest. As a government obligation, the money is still there and is being paid out every year to make up for the fact that more is being paid out now than collected.

    3. SS is broke because of payments to illegal immigrants and others.
    – See
    While some undocumented immigrants (as well as U.S. citizens) do get Social Security benefits through fraud or errors, the immigrants actually pay more into the system than is being paid out (because they usually can’t legally collect it)

    by Admin — December 26, 2016

  38. Here is a link to a good summary of Congress members salary and retirement benefits, including health care:

    There is so much confusion and misinformation out there on these issues. Please do your homework before you post.

    by LS — December 26, 2016

  39. Thank you, Admin, for your input about not allowing fake news to be allowed to stand. Most of the comments here are a combination of opinion and fact and that is fine. We learn so much about issues of retirement from the participants on But when clear misinformation is flatly presented by a commenter as fact, it is appropriate to step in gently, but properly, to set the record straight. I know I and most all other commenters look forward to years of reading here to make our retirements better and more fulfilling. We’re all in this together!

    by Clyde — December 26, 2016

  40. Admin, thankyou for enlightening us with the correct information. I hate all of this misinformation that is being spread on the Internet. It definitely hurt us during the election.

    by Mary11 — December 26, 2016

  41. Admin: Thanks for publishing facts. I get so tired of seeing the same old lies and misinformation spread all over the internet.

    by Linda — December 26, 2016

  42. I have a question that somebody may know the answer to. I am divorced and getting ready to start collecting SS. I was in a long term marriage and my ex’s earning history is far greater than mine due to the years I stayed home to raise a family. On the phone the SS admin told me that What they do is combine mine with half of his. I thought that I could start ocllecting half of his while mine grew with time and then switch. I am 65, he is 66 and has not started collecting SS.
    Is the SS admin. correct?

    by MaryNB — December 26, 2016


    It all seems to boil down to either cutting taxes or raising taxes. My money is on a bit of both.

    Here’s a trend that concerns me: a decline in the middle and upper class with a rise in the lower class within the last decade.

    20 years ago while I was at an economic summit for medicos, they were forecasting the decline of the middle class with a resulting rise of the lower class due to the outsourcing of jobs to cheap-labor third world nations.

    This appears to be occurring.

    It would appear we will have more people in need of SS in the future with more people earning less so taking the limit off earned income may have some logical merit.

    by Gary — December 26, 2016

  44. MaryNB Here is a link to Divorced SS benefits:

    You may have already researched this yourself. From what I read, it looks as if you have to be at full retirement age as well as your Ex.So I would assume Full Retirement age for you would be age 66. See the blue boxes in the link I have attached.

    Sorry, I don’t have any solid knowledge of collecting Divorced SS benefits!

    by Louise — December 26, 2016

  45. I also found this discussion to be interesting, and appreciated the Administrator’s fact-checking. As a high wage earner who came from a low-income family, I see both sides of the issue. This is an interesting article on that suggestion:
    It’s interesting that 2/3 of people are in favor of making high earners (the “other guy”) pay more. However, this is ultimately it’s a drop in the bucket and doesn’t solve Social Security’s problems. There simply aren’t enough high wage earners.. Potentially it would also have to result in an increase in the maximum social security benefit too, since otherwise there is a potential for the tax to be unconstitutional as confiscatory…although I’ll leave that debate to Constitutional scholars.

    This discussion reminded me of time that I spent in the 1980s at my employer’s Canadian affiliate. They did not have a government Social Security program, although Canada did have national health care. I remember sitting in the cafeteria and hearing employees endlessly discuss their retirement savings and investment plans – including young people. When people got severance, they would negotiate payments into their retirement accounts. While my US coworkers were buying SUVs, mini-mansions and vacation travel, our Canadian workforce lived much more frugally with an eye on the future. Their retirement deposits were as essential and automatic as paying their cable and heating bills. (I also remember a coworker was on a national health-care wait-list for a heart by-pass at a Toronto hospital, and was saving to try to get the surgery performed faster in a US hospital in Buffalo – but that’s another issue).

    I’ve tried to discuss my Lessons Learned about retirement planning with my own kids, who are in their 20s-30. I’ve been unsuccessful so far. They’re too focused on trying to save for a deposit for a home, making car and grad school loan payments, and having a social life on starter salaries. They have friends who are still working in stores and restaurants at minimum wage, who also don’t give retirement in 40 years a thought. If they think about retirement at all, I think they’re engaged in Magical Thinking. Maybe they will get an inheritence (sorry – not going to happen). Maybe Social Security problems will be fixed, or they’ll win the lottery. There are few employers with pensions anymore.

    There definitely needs to be a change in how Americans view retirement, with a greater focus on personal accountability and frugality. We might be seeing the start of this, between the tiny house movement, enthusiasm for smaller gas-efficient cars and similar trends. It could be also be desirable to use some of those federal infrastructure plans to build income-based senior housing. It’s too late for our generation, but there are decades in which future retirees can work on solutions for the retirement crisis.

    Personally, I’ll be relying heavily on Social Security. You never know what life is going to throw at you. I’m a widow, and my spouse was not able to purchase life insurance due to a health condition. We ultimately only had my income, and our assets were spent-down for his health issues and then years of nursing home care. Compared to friends who found themselves unexpectedly divorced or who were in lower income jobs, I’m not in bad shape and I’m not complaining – but it’s scary to face a fixed retirement income, especially if Social Security or Medicare may face cuts in the future. We’ll obviously all be paying close attention to Washington to see what is proposed that will affect us.

    by Kate . — December 27, 2016

  46. Sorry about typos – just kept typing :-). Wish we could edit our posts after hitting “submit”!

    by Kate . — December 27, 2016

  47. Kate – thank you so much for your intelligent and detailed analysis of multiple serious retirement issues. I found your observations about Social Security and the casual attitudes and practices of many Americans toward financing their retirements (vs. those of some Canadians you’ve met) to be highly accurate (unfortunately) (and your writing essentially typo-less!). Best wishes to you, Kate – such a difficult journey!

    by Ann — December 27, 2016

  48. Kate, I agree with so much you have said. It is hard for young people to fathom saving for ‘old age’. They may save for a vacation or Christmas presents or enough for a down payment for a car/house. Kids cost a fortune too to raise.
    401K is one of the greatest saving programs. It is pretty painless and comes out of your paycheck each week. You don’t have the money in your hand to spend. On the other hand, with an IRA you have to put money aside then go to the bank or elsewhere to do the paperwork and are only allowed around $5,500 a year. A 401K allows approximately $18,000 a year. However, not all employers offer 401K. A lot of people may be intimidated by how to open an IRA. If the government would somehow make it more of an automated process for people to save for retirement, people might be inclined to do so. If it could be arranged through an employer that would be the first step. Years ago, when my hub and I were first married (1973) we saved my whole paycheck each week and interest rates were 10% and more. We saved enough in two years for a down payment on our home we built. Between the two of us we probably only made around $8-9 an hour! Back then we had no 401K or IRA but as time went on we did. It sure would help Americans save for retirement if it could be done through payroll deduction. And if you could contribute to it your entire working life as you move from job to job. The government probably doesn’t want to offer saving money due to less money going into the coffers. It would also help if people just started to become frugal and avoid buying every new gadget that is offered. Stop the instant gratification. That reminds me of a host on QVC. He will admire each and every appliance/kitchen gadget they are hawking and he will say he has one of them at home and how much he loves it! Every show he says he owns whatever it is they are selling. Haha, if so, the guy must live in a warehouse!

    by Louise — December 27, 2016

  49. Sounds like maybe retirees with a low income are in a better situation because they at least have their medicare payed for, can receive food stamps and discounted housing and free nursing home care or in home care in their later years. If you really have saved enough money to cover all of these expenses it’s better but if not you do have other options.

    by areti11 — December 27, 2016

  50. I always come back to one recommendation – a financial course which is mandatory for every senior in high school. Course covers: budgets, taxes, medicare, medicaid, social security, IRA, 401K, investing, mortgages, lease vs purchase, rent vs buy, etc… I was super blessed to be taken under the wing of a financial savvy boss at the age of 25 and taught about many of these things – it changed everything for me!

    by ljtucson — December 27, 2016

  51. litucson, very wise advice. The things in life a lot of us take for granted are not taught in schools! Common sense too!

    by Louise — December 27, 2016

  52. ljtucson, Great recommendation!! The world these kids face today is much more complicated than the one we entered 40 years ago. I have no idea if the schools are touching on any of this, and if they are it’s probably not mandatory.

    by Jim C — December 27, 2016

  53. It seems obvious that one way to generate more funds would be to remove the limit for contributing to SS for upper in one earners. It does not seem equitable that those who receive the most in benefits do not have to contribute funds based on their entire salary.

    by Florence — December 29, 2016

  54. I would totally agree if they would receive the increased social security based on their contributions and not have their SS limited. I am so tired of our government penalizing hard working successful people while rewarding those who have not even worked.

    by Joyce Sanders — December 30, 2016

  55. So who are the people who have never worked?? Please don’t begrudge stay at home parents! I don’t fall in that category mind you. Also, the low end earning working people don’t make enough money to support paying in more to the system because they’re barely getting by…so what other choice do we have?

    by areti11 — December 31, 2016

  56. There are some people who work but don’t pay everything into the ‘system’. We have a landscaping guy come twice a year to do spring clean up and fall clean up. He has told us “I like cash”. So we pay him in cash. We had a guy come out and put in a new pump in our well. He told us if he was paid in ‘cash’ he would do it for less money. We paid him in cash. I have a neighbor who used to have a job where he was paid by his employer. He quit that job and is ripping up old cars/trucks and selling the parts and scrap metal for ‘cash’. I know he isn’t paying into the system. I also know a woman who was in a terrible accident about 30 years ago. She had a brain injury and was given a medical retirement from her job. She went on Social Security Disability. About five years later she got married and had two kids and that was over 20 years ago. She is required to see the doctor each year to determine if she is still sick enough to keep collecting. She has gotten better and she even says so. She told me she goes to the doctor and tells him she needs naps and other things that won’t allow her to work and he signs off on the paperwork. I also know she cleans houses under the table for ‘cash’. If they found out she would lose her disability check. Those are just 4 people I have encountered that are not paying into the system or not paying all that they should. So, maybe if all people who work paid their fair share and those who are no longer sick stopped collecting SS disability, maybe the SS system would be overflowing in money. Some of these people will gripe when it is time to retire and complain that their SS check is small. What they get is based on what they paid in! And like someone else here said, SS is not a retirement plan, it is a safety net.

    by Louise — December 31, 2016

  57. Joyce,

    Just because someone is not successful does not mean they don’t work hard. I come from a family that has owned its own successful business and some family members chose other paths working for others that do not allow for the kind of money that self employed people often make. The ones who work at the lower paying jobs work VERY hard. Also if one is a millionaire what do they need from a social security check? Pay for tee times to play golf? (I have seen this exact scenario.) If people have more than enough money and already live life well why take SS benefits?

    It is terrible since some people have only Social Security to live on because they could not save enough money for a decent retirement. Now, I do not like to see those that have never paid into the system get benefits, or to see women penalized because they were taking care of their elderly parents or young children during their most productive working years. What do they expect those on the lower end of the income scale to do? Not all jobs pay well, but they help society like clergy at churches for example. Truly successful people are already reaping the benefits from their increased income by their own efforts, and they should thank God above that they are doing well. Many others do not have that advantage.

    by Jennifer — December 31, 2016

  58. All Americans who pay into SS regardless of being rich or not are entitled to receive their SS check. When people have been fortunate to be successful and become rich, they shouldn’t be punished by excluding them from receiving a SS check. Social Security is not a pension. It is a benefit that every American has paid into from every paycheck. Whether you are a millionaire or a low wage earner, you paid into the system and are entitled to the SS check when the time comes. Is it fair to tax someone and they get absolutely nothing in return? Who’s to say the millionaire’s don’t donate their checks to charities? It is their money and they can use it as they please as well as the rest of us can do as we please with our checks. What if the tables were turned and they decided low income people who paid into SS didn’t pay in enough over the years and if their SS checks would only be $600 a month or less then it isn’t worth cutting a check so therefor those people shouldn’t get a check? All Americans who pay into SS are entitled to a SS check!

    by Louise — December 31, 2016

  59. The fact is that what you pay into social security is the basis for what you receive. If people choose to paid “under the table”, that’s their business. Not paying income tax on income is a different matter.
    (This comment came in from June)

    by Admin — December 31, 2016

  60. Jennifer, I agree with you 100%. So, I’m wondering Louise if all the millionaires don’t assist SS where do you think the money is going to come from? Is it better for all the low income retirees to have to depend on medicaid to get by. I thought this discussion was regarding SS , not disability payments. I would like to hear some ideas to help with this problem. I’m not hearing any……

    by areti11 — December 31, 2016

  61. Louise, That was exactly my point. I agree some are more fortunate than others but people who work and pay into Social Security should get their check or not have to pay into the system. The schools and parents should help educate the high school students on retirement, social security, jobs and what they can expect from each.

    by Joyce Sanders — December 31, 2016

  62. Hello and Happy New Year everyone! First I am going to say I believe it is up to the doctor’s to determine rather someone needs disability. I have watched my sister in law, who was born physically and mentally disabled work in a shelter work shop to earn her own Social Security credits from a stipend pay.(From lifting 20lb boxes of parts, from assembling those parts) We have people who are collecting disability checks and “working” the system. They can earn so much money, before they lose their disability check, just like working while collecting a Social Security check. My own mother worked 30 years until her diabetes caused her to apply for disability. When she reached 62 years of age, she was told to come in for Social Security benefits, which were reduced because she had collected disability! Still these things are not the problem with the Social Security system. With all the baby boomers retiring at a time unemployment rose beyond anything that was foreseen. Unemployment has cause a crisis to ensure the future generations with a safety net. Changes are being made whether we like it or not. Everyone needs to be educated to save for retirement. Those making the decisions for us, do not know how to live on just a disability check or a Social security check. One thing is for sure, those born after 1960 will have a rough retirement, if they haven’t saved to ensure it. And how they going to do that without decent paying jobs?

    by DeyErmand — January 1, 2017

  63. Actually, SS is an program that is not designed to be equitable, it is designed to protect the most vulnerable from poverty. It is a social welfare program, not a retirement program.We do NOT necessarily get back what we pay in. For example, I am divorced and not remarried. If I die, what I paid in to SS does not go to a survivor, it stays in the pot. If a widow has young children, her and her children collect SS until they are 18. I paid into SS, but stayed home to raise a family for years. My ex husband’s half is greater than my full amount, so what I earned stays in. What is even more amazing to me is that subsequent spouses(2), if they are married for more than 10 years, also collect half of his amount. In my opinion, only a first long term wife should be allowed. There are other examples. This program was to designed to prevent poverty . It has gotten out of control and there is much fraud in the SSI program. I live in amstate that has had high unemployment in the past years. During this time, the population collecting disability benefits has gone up in almost a direct correlation. I think the answer is to clean up the fraud, and close some of the loopholes.

    by MaryNB — January 1, 2017

  64. Regarding millionaires collecting social security – I believe there is a cap on the income involved. For 2016, social security is only taken out from income UP TO $118,500. Anything over that is not considered, so millionaires only get the maximum amount anyone else can claim. It is NOT paid to scale (meaning the more you make, the more you get.)

    by HEF — January 1, 2017

  65. MaryNB this article is old but still looks pertinent in regard to women who have been stay at home moms then got divorced later on. Perhaps you could see a lawyer about Equalizing Social Security Benefits as mentioned in the article. Maybe that has to be negotiated while in the divorce process but you never know until you discuss with a lawyer.

    by Louise — January 1, 2017

  66. DeyErmand: I am not sure why your Mom was told that she had to switch from disability to SS at age 62, with reduced benefits! My spouse received disability due to his early-onset Alzheimers (and our children received benefits until age 18). His disability benefits continued until full retirement age, when they were automatically converted to his Social Security benefit.

    MaryNB- My spouse had been married before for a decade to a stay-at-home wife, who later became disabled. She’s been collecting on his benefits for 40 years. We were married for 30 years, and I’ve paid in close to the maximum for most of my work life. I’ll probably collect widow’s benefits before switching to my own. My family is long-lived, with many family members living close to 100. Clearly, between 2 spouses, disability, children’s, and my own expected benefits, we will receive more from the system than we have paid. The SS program has still been an absolute blessing for my spouse’s ex, our family when my spouse abruptly became severely disabled, to my own financial security since our assets and my income were needed for my husband’s long illness. We’re just one example, with everyone’s circumstances varying so widely. I agree with you that it’s a social welfare program, but it also has some components of insurance.

    Some people will die before receiving a single check, and others will receive much more than they paid in. None of us know how life will turn out for us, or whether SS will pay off or not. The people who are looking at tweaking the program are presumably going to base their input on their own family experiences, stories of people who have received benefits, and actuaries. It would be frightening to me to have decisions made by people who don’t know how vital the benefit has become to the majority of Americans.

    by Kate . — January 2, 2017

  67. Kate, yes, I agree. I think that now that divorce is so common and so many people marry two or three times, the ruls should be that only the first spouse who has been married for ten years or more can draw from SS. That seems very fair and rational to me as any subsequent spouse marries with full notice and knowledge of what they are getting into. The system just cannot handle paying out for 2 or 3 spouses. That really has to change.

    by MaryNB — January 2, 2017

  68. MaryNB I can see your point about many marriages and divorces taxing the SS system for multiple SS beneficiaries. However, some could look at it differently if you were to exclude all but the first ex spouse. Some could say once divorced, the union is dissolved and by law the ex spouse should no longer have any financial attachment to a former spouse. They could exclude all divorced spouses and only the current married spouse is eligible to collect on spouse’s SS record. Therefore, my opinion is that it is very fair to include all ex spouses who have been in long term marriages of 10 years or more.

    by Louise — January 2, 2017

  69. I think the system pays 10 year Ex’s and Widow’s no matter how long they are married to the deceased. The VA has set rules where the widow has to be married at least a year and they do not pay Ex’s. The New Bill speaks on the spouses and the percentages is going to change on what they receive.

    by DeyErmand — January 2, 2017

  70. Louise, iI have to disagree. The unfortunate fact is that many first wives who have been married for decades and raised a family are left in a poor financial position for younger women. Maybe SS should go to the woman who raised the children.

    Note from ADMIN: To see more Comments about divorce in particular and also as it relates Social Security you might want to read this article

    by MaryNB — January 2, 2017

  71. It will be interesting to see how the new administration deals with these issues.

    by Florence — January 6, 2017

  72. Our plan is to vote against any politician who does anything other than vote for an increase in the current social security as it exists or lowering the age for full retirement. These politicians have done nothing but make it harder for retirees to retire. If we work hard all our life we get a minimal amount to retire on which does not represent even a quarter of our actual living expenses.
    Social Security is paying far less than they should when you look at the actual COL we all have including the cost of our Medicare Part B and drug and supplemental policies for those who can afford these. The majority of seniors need an increase not a decrease in social security.

    by P. — January 25, 2017

  73. Hi P:

    I totally agree with you. Since many people did not make big bucks in their working careers even with a college education, an increase for those on the lower end of social security benefits is warranted. Not everyone was offered a cushy pension or any pension plan. It is really shocking! I just completed paperwork for a man who has a masters degree and he has NO family–all dead, few friends–certainly none that want to be responsible for him, and he has no assets and few funds. DC was giving him only $30.00 a month in food stamps! this seems cruel, His social security is turned over to the nursing facility. He expects his church to take care of him and they do not want the responsibility either, but they will help him to find living arrangements. He was in an independent retirement community for those on a lower income until it was determined he could no longer be trusted to care for himself. He was always calling the church for extra money every month. His former jobs offered no pension plan.

    by Jennifer — January 26, 2017

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