Pundits, politicians and commentators like to casually talk about the Social Security “excess” reserves in the Trust.
If you believe that, why don’t you believe that the NJ pension trusts have “excess” reserves for example? Both have a lot of money in them, both have made long-term promises to current and future retirees. Gov. Christie is accused of not funding the pension trust and yet that is exactly what Congress is doing to Social Security; not adequately funding the promised benefits.
In simple terms when you have a pension plan, there is no excess in the trust unless you have more money than needed to pay everyone retired and all current active plan participants in the plan their promised benefit for life.
The Social Security trust is now using incoming taxes and interest on its bonds to pay benefits. At some point it will start redeeming those bonds and then when those bonds are all redeemed only incoming taxes will be available to pay benefits. That means around 2033 only 77% of earned benefits can be paid.
There is no excess in the trust fund.
While the trust fund was approximately $2.76 trillion at the end of 2013 (according to the 2013 Social Security Trustees Report), this excess is projected to be depleted by 2033,
QUINNSCOMMENTARY 
You and I both know that they will someday “means test” Social Security and Medicare – in terms of the taxation of the benefits payable, the amount of the benefit payable, and for Medicare, who pays the current cost of coverage.
What they will lie to you and me and the rest of us about is that they will look at your current income and decide to means test based on that number – conveniently forgetting that they were “means testing” your contributions to those programs during your working life:
(1) Those who made more paid more into Medicare Part A FICA-Med taxes, along with the matching amount paid by their employer,
(2) Those who had taxable wages funded 75+% of Medicare Part B and Medicare Part D during their working lives, for people who had already retired,
(2) Those who made more paid more into Social Security – including the reduced wages for the employer-paid portion – even though the benefit formula is dramatically skewed based on the bend points to return a significantly greater portion of taxes paid to those who are lower income,
(4) There are both increased, income-based contributions for Medicare Part D and Medicare Part B coverage, and finally,
(5) There are along with income taxes on a significant portion of your Social Security benefits – if you are one of the stupid ones who took less in wages (in exchange for a defined benefit pension plan).
So, if you have done a good job planning for retirement, you will be penalized. There will be (financial) blood – compared to those who ignored their long term financial security in favor of maximizing current wages, or if you are one of the stupid ones who faithfully saved a significant portion of your wages/take how pay, versus those who spent every dime they took home, (and mayby 20% more than that), bought new cars or went to Vegas every year, and ended up in old age and in debt at the same time.
Bottom line, welcome to “Social” security. It is working out just as the socialists planned.
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Excellent points. I’m going to use them in a future post.
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Benefit Jack – great post. Means testing is definitely on the way. At least two presidential hopefuls have already brought it up (Christie and Graham) as far as I know. The fact that it isn’t fair won’t enter into the equation because the system is underfunded. It needs to increase revenue or reduce expenses and in the words of Willie Sutton when asked why he robbed banks, his answer was “That’s where the money is.”
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why dont they stop putting money into their pockets and give it to the people where it belongs..i dont feel that ex presidents and politicians need to be paid for life..they are now civilians..they should get jobs like the rest of us..keep social security funded for good…are politicians supposed to be “for the people”…???
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Why do you think ex presidents and members of congress receive their pay for life? They don’t. Some may receive a pension if they serve long enough just like any other government employee, but that is far less than their pay. Besides, you could take all the pay for every member of congress and it would not pay Social Security benefits for one day.
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