Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Plan Could Cut Social Security for Young Workers
Newsmax.com; AP ^ | January 4, 2005 | AP; Newsmax

Posted on 01/04/2005 12:46:03 PM PST by RetiredArmy

Plan Could Cut Social Security for Young Workers

NewsMax.com Wires

Tuesday, Jan. 4, 2005

WASHINGTON – Future Social Security benefits could be cut almost in half for some younger workers under a plan President Bush is considering for overhauling the nation's retirement system.

Bush so far has refused to discuss the difficult financial trade-offs that would be required to remake the system to let younger workers divert some of their payroll taxes into personal investment accounts. He has said he will use as a model proposals from his 2001 Social Security commission to craft a proposal that Congress will consider this year. Under the commission plan that lawmakers said Tuesday was being discussed as the framework for the overhaul, Social Security benefits for younger workers would be cut by 0.9 percent to 45.9 percent from traditional benefits. Investments in the personal accounts would be counted on to make up the loss in income.

Supporters of Bush's idea argue that the current projected level of traditional benefits is not guaranteed in any case, and they note that the Social Security system is projected to start running a shortfall in 2042.

``Social Security has promised to pay benefits way in excess of what it's going to be able to pay,'' said David John, Social Security senior analyst at the Heritage Foundation.

But opponents claim the Bush administration is exaggerating the problem. The retirement system will be able to pay full promised benefits until 2042, and then will be able to cover about 73 percent, they say.

``The Bush administration has finally acknowledged that the centerpiece of its plan to radically overhaul Social Security is a benefit cut of more than 40 percent in the coming decades for every American senior,'' said House Democrat leader Nancy Pelosi, D-Calif. ``This is the equivalent of forcing seniors today to live at a 1940s standard of living.''

But Senate Majority Leader Bill Frist, R-Tenn., said any change to the system would not affect current retirees. ``Young people today recognize it's their money they're putting into Social Security,'' Frist said Tuesday on CNN. ``They own that money. They would like to be able to invest in personal accounts if they want to, a nest egg that can help them in later retirement.''

Cuts would occur by changing the formula used to calculate benefits to address the system's future shortfall. The growth in benefits would be slowed dramatically by tying them to inflation rates instead of wages. The rate of inflation grows more slowly than wages over a person's lifetime.

For example, a person retiring at age 65 in 2021 with a two-earner income of $35,277 is promised $1,194 in monthly benefits, in 2001 dollars. If the formula is changed, the monthly benefit would be reduced by 0.9 percent to about $1,088 a month.

The younger the worker, the more dramatic the cuts. For a person retiring at age 75 in 2075, the monthly promised benefit of $2,032 would be cut by 45.9 percent to $1,099 a month. Investments in the personal account would be expected to make up the difference.


TOPICS: Front Page News; Government
KEYWORDS: socialsecurity
Navigation: use the links below to view more comments.
first 1-2021-31 next last
Recently posted as headline on Newsmax.com
1 posted on 01/04/2005 12:46:03 PM PST by RetiredArmy
[ Post Reply | Private Reply | View Replies]

To: RetiredArmy

Well of course it would be cut, they will have a part of what they would have got in a savings account somewhere. Where is the news in this?


2 posted on 01/04/2005 12:50:11 PM PST by stopem
[ Post Reply | Private Reply | To 1 | View Replies]

To: stopem
Expect a lot of "news" items to come out about Bush cutting SS benes.

Those "cuts" are going to be diverted into private retirement accounts, I think, or something like that.

To be honest, I'm 36 and have been making my retirement plans without SS in the picture. I've pretty much invested in IRAs, mutual funds and some stocks that have proven to be solid investments over the long-haul. Will I retire a millionarie? Prolly not, but I won't be depending on a bankrupt system to be there for me either.
3 posted on 01/04/2005 12:54:34 PM PST by fsorbello (This space available.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: RetiredArmy
the monthly promised benefit of $2,032 would be cut by 45.9 percent to $1,099 a month.

Ummm...someone needs to invest in a calculator.

4 posted on 01/04/2005 12:55:19 PM PST by ravingnutter
[ Post Reply | Private Reply | To 1 | View Replies]

To: ravingnutter

Wow thats pretty high figure for benefits. Last I heard the highest was about $500 to $1500 for an average earner isnt it? It certainly isn't something that you can negotiate.


5 posted on 01/04/2005 1:00:29 PM PST by stopem
[ Post Reply | Private Reply | To 4 | View Replies]

To: ravingnutter

They miscalculated the amount in the paragraph above, as well. Or they think that .9% = 9%.


6 posted on 01/04/2005 1:01:47 PM PST by skip_intro
[ Post Reply | Private Reply | To 4 | View Replies]

To: RetiredArmy

My wife and I both hope we can get our money out of this ponxy scheme. We woulf love to invest it our way. And yes we are investing and planning a retirement based on the assumption that SS will not be there.


7 posted on 01/04/2005 1:04:03 PM PST by TXBSAFH (Never underestimate the power of human stupidity--Robert Heinlein)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ravingnutter

$2,032-$1,099 = $933/$2,032 = 45.9%


8 posted on 01/04/2005 1:09:46 PM PST by wmichgrad ("We must find a way to help the liberals!" Sean Hannity November 9, 2004)
[ Post Reply | Private Reply | To 4 | View Replies]

To: RetiredArmy
One would hope the old would be cut as they new will be two to four times more that they would expect from regular social security and taxes will not have to be raised 60 to 70% to pay for the system.
9 posted on 01/04/2005 1:10:57 PM PST by YOUGOTIT
[ Post Reply | Private Reply | To 1 | View Replies]

To: fsorbello

I'd let them keep all of mine to date if they'd let me out now...

Nancy Pelosi, Dumbass-Calif. ``This is the equivalent of forcing seniors today to live at a 1940s standard of living.''
..it was never supposed to be to enough to retire on, it was to be as it was called, "supplemental" income.

Senate Majority Leader Bill Frist, R-Tenn., ``Young people today recognize it's their money they're putting into Social Security,'' Frist said Tuesday on CNN. ``They own that money."

He's wrong, too . Any money that goes to Washington has a great chance of never coming back.ever.


10 posted on 01/04/2005 1:19:28 PM PST by Rakkasan1 (Justice of the Piece: There is no justice, there's 'just us'.)
[ Post Reply | Private Reply | To 3 | View Replies]

To: YOUGOTIT
All I can say is, if any democrat in his/her left mind, thinks that SS is going to survive as currently established, we need to discuss the purchase of a certain bridge in Brooklyn that I would like to interest him in! SS is in trouble and sadly, young people who are going to lose out as a result of this program, do not care. They simply think, as do many seniors or near seniors, that Congress will simply FIX it. There is no FIX, because dems like Algore kept telling everyone that SS is in this so called lock box which does not even exist. Yet, stupids drink it in and believe all the socialists tell them.
11 posted on 01/04/2005 1:21:42 PM PST by RetiredArmy (DEMOCRATIC PARTY MOTO: If you can't win fair and square - cheat, steal and lie to do so!)
[ Post Reply | Private Reply | To 9 | View Replies]

To: ravingnutter
Ummm...someone needs to invest in a calculator.

Someone = ravingnutter. ;O)

12 posted on 01/04/2005 1:24:20 PM PST by newgeezer (Just my opinion, of course. Your mileage may vary.)
[ Post Reply | Private Reply | To 4 | View Replies]

To: RetiredArmy

20 yrs from now the young who will be told to shoulder this burden might not have too many ethics that will get in the way of senior abortions...voluntary or otherwise...


13 posted on 01/04/2005 1:25:34 PM PST by joesnuffy (Moderate Islam Is For Dilettantes)
[ Post Reply | Private Reply | To 11 | View Replies]

To: RetiredArmy

How about just raising the retirement age one month every year?


14 posted on 01/04/2005 1:49:39 PM PST by eccentric (aka baldwidow)
[ Post Reply | Private Reply | To 1 | View Replies]

To: qam1

Ping to the list!


15 posted on 01/04/2005 2:34:37 PM PST by LibertarianInExile (NO BLOOD FOR CHOCOLATE! Get the UN-ignoring, unilateralist Frogs out of Ivory Coast!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: LibertarianInExile; qam1; ItsOurTimeNow; PresbyRev; tortoise; Fraulein; StoneColdGOP; Clemenza; ...
Xer Ping

Ping list for the discussion of the politics and social (and sometimes nostalgic) aspects that directly effects Generation Reagan / Generation-X (Those born from 1965-1981) including all the spending previous generations (i.e. The Baby Boomers) are doing that Gen-X and Y will end up paying for.

Freep mail me to be added or dropped. See my home page for details and previous articles.  

16 posted on 01/04/2005 2:52:01 PM PST by qam1 (Anyone who was born in New Jersey should not be allowed to drive at night or on hills.)
[ Post Reply | Private Reply | To 15 | View Replies]

To: Rakkasan1

I love how Pelosi glosses over the fact that to keep things as they are, she'd force people who are still paying into the system to live at a 1940s standard of living.

I am with you--don't reform it with these stupid accounts. END IT NOW. LET US OUT! YOU CAN KEEP ALL THE MONEY, and even cash out the seniors with big fat checks! JUST LET US GO!

Even Ponzi didn't MAKE people pay in at the point of a gun.


17 posted on 01/04/2005 2:58:04 PM PST by LibertarianInExile (NO BLOOD FOR CHOCOLATE! Get the UN-ignoring, unilateralist Frogs out of Ivory Coast!)
[ Post Reply | Private Reply | To 10 | View Replies]

To: RetiredArmy

Honestly, even if it does-ha ha-get FIXEd, there is certainly no harm in planning as if it wouldn't, that's for sure. Too many people are putting all their eggs into one basket, all right.


18 posted on 01/04/2005 2:59:16 PM PST by exnavychick (I'm no expert, but I stayed at a Holiday Inn Express last night!)
[ Post Reply | Private Reply | To 11 | View Replies]

To: fsorbello

If you max out your deposit to $12K a year and get even a few points of match then you are looking at close to $15K a year. In seven years that's $150K, 14 years it's $450K, in 21 years it's over a million and in 28 years you have $2.2 million.

The government can keep my SS provided they let my taxes go on my retirement accounts. My goal is to retire before 60 with about $3 mil in today's money and the value of my current house paid for.


19 posted on 01/04/2005 3:04:51 PM PST by misterrob
[ Post Reply | Private Reply | To 3 | View Replies]

To: RetiredArmy

Even if the social security money wasn't invested, just having it in savings and building up would make quite a little nest egg.


20 posted on 01/04/2005 3:08:26 PM PST by HungarianGypsy
[ Post Reply | Private Reply | To 1 | View Replies]


Navigation: use the links below to view more comments.
first 1-2021-31 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson