the advice that most of them should delay their benefits beyond the age of 62. But Fichtner blamed the agency itself for the fact that a generation of beneficiaries had claimed too early. For years, the agency had“ posters everywhere saying 62, 65 and 70,” he said. The explicit message from those posters, he said, was that they should file as soon as possible so they“ don’ t miss out on government benefits.” The agency failed to tell those taking the benefits at age 62 that if they lived past 76 they were being shortchanged by the government.
Finke added that many people claim benefits early“ because they think they are sticking it to the government.” If people received the reverse message and were told that those who waited until 70 to take benefits were the ones actually taking advantage of the government, Finke suggested
One measure that would go a long way toward salvaging the Social Security system would be to raise the payroll tax to either 15.4 % today or to 16.4 % in 2033 beneficiaries,” but for those who apply,“ we’ ll see how much” service disruption is occurring.
Biggs said,“ Ideally you have a plan before you cut staff.” However, he reminded the audience that President Trump had repeatedly voiced his commitment to maintaining current benefits.
Longevity Misconceptions
The talk eventually turned to the misconceptions people have about longevity and how that affects their behavior, particularly when it comes to taking Social Security benefits. The rules of the current system were devised in 1983, yet people today live much longer than they did 40 years ago.
Americans are finally starting to heed they might be induced to wait a lot longer.
Both Biggs and Fichtner agreed with the conventional Washington, D. C., wisdom that Congress will“ do something” before the system becomes insolvent before 2033.“ The question is what,” Biggs said.
Fichtner said he“ can’ t see Congress allowing an immediate 20 % benefit cut.” Lawmakers excel at“ kicking the can down the road and borrowing money,” but they are going to be forced to make hard choices.
One measure that would go a long way toward salvaging the Social Security system would be to raise the payroll tax to either 15.4 % today or to 16.4 % in 2033 from its current level of 12.4 %, with both employees and employers contributing equally, Fichtner suggested.
Biggs estimated such a move would represent the largest“ peacetime tax increase in history.” Republicans would not want to do it, while Democrats might want to spend the funds on another project like Medicare for All.
Biggs sees some risk that high-income beneficiaries might see their monthly check reduced. In a working paper for the American Enterprise Institute he authored last year, he offered a doomsday scenario: If Congress did nothing until 2033, the president could simply place a maximum cap on benefits of about $ 2,100 for all recipients until lawmakers worked out a solution.
Changes should ideally be implemented gradually, but if Congress waits until 2033 it is going to need to come up with a lot of money very quickly. The panelists pointed out that the 1983 legislation called for the“ full retirement age” to be raised from 65 to 67 over 40 years, giving people long lead times to prepare.
In contrast, France recently raised its retirement age by two years over a sixyear period and there were riots in the streets. This underscored the perils of waiting too long.
Biggs also noted how generous U. S. Social Security was compared with that of other nations. By 2032, a couple receiving the maximum benefits will receive $ 100,000 a year( the actual number will hinge on cost-of-living adjustments). Right now, that figure is about $ 96,000. In Canada, the number is under $ 40,000 and our northern neighbor is widely perceived as having a strong social safety net.
But what concerns Biggs and Fichtner is that the level of the debate has degenerated in recent decades. Biggs acknowledged that former President Bush’ s attempt at partial privatization was not handled well, even if experts on both sides led the argument. Today, the debate is being dominated by advocates and activists rather than policy wonks, making compromise that much more elusive.
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