Retirement Confidence Index

But that first finding is, in fact, accurate. It reflects the reality of senior’s feelings – what they have been repeatedly told. It opens the door to radical solutions. It is how elites get commoners to accept new mandates. It is how elites use entitlements (the threat of reduction, or the promise of “more”, “more” from someone else’s taxes) to buy votes.

Congress COULD allow for a 25+% across the board cut in benefits as soon as 2032 – but they WON’T do that.

Instead, they MAY use use this as an opportunity for wokeness – introducing a new form of “equity”.

Assuming Congress delays for a few more years until we are in crisis mode. Then, they COULD move in the direction of significant increases in the progressivity of the formula and taxation. For example, it would not surprise me to see them institute a new minimum benefit at perhaps the poverty level, raise up benefits for those already retired to that level (buying votes), and reduce benefits for retirees who paid in dramatically greater taxes than the benefits they were scheduled to receive (arguing that many of those are the same people who disproportionately benefitted from “structural racism”). They could either do this directly, or by increasing the taxation of benefits. However, I’m thinking they could change the earnings test and deploy the 2 for 1 offset beyond wages, to consider all income, from whatever source derived, reducing benefits down to the poverty level minimum.

Then we will have the desired “equity” that wokeness demands – all retirees will receive “equal” social security benefits, but at the poverty level. My guesstimate is that, with such changes, President-elect Biden can effect the benefit increases he wants (and more) yet limit obvious, direct tax increases to those households with earnings > $400,000. He will euphemistically call the reduced benefits/increased taxation something else – perhaps the New, Improved Social Security Formula for the 21st Century … yada, yada, yada … then head back to the basement of the White House.

So, my bet (and I am soon to be 70 myself) is that we will achieve “solvency” by changing taxes and benefits so that there is even less relationship between the taxes we pay and the benefits we receive – a la Medicare Hospitalization Insurance, where, an individual could pay as little as $745 IN TOTAL over a ten year period ending in 2020 and receive non-contributory Medicare Part A for himself and his spouse avoiding a MONTHLY premium of $942! Others who have paid in over 50+ years (myself included) will receive exactly the same benefit.

Similarly, in Part B and Part D, that same low wage individual not only avoided federal and state income taxes, he and his spouse will be “Dual Eligible”, receiving the other Medicare coverages without any premium, and without any deductibles or copays. While individuals who paid in hundreds of thousands of dollars paid federal income taxes that funded other’s Part B and Part D premiums (the part beneficiaries do not fund), and, will also have to pay their own premiums (and potentially IRMAA as well) as well as point of purchase cost sharing – deductibles, copays, etc.

Get ready for some “equity improvements.”

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