From Birch Gold Group
Donald Trump was an ardent defender of Social Security on the campaign trail, but his cabinet pick for the Office of Management and Budget (OMB), Rep. Mick Mulvaney, wants to take radical steps to fix the program. If Mulvaney is approved by the Senate, there are three big ways he could go after Social Security.
If you are planning on eventually collecting benefits from the program, you should take note.
Your Benefits Are On the Chopping Block
As it stands today, Social Security is at risk of facing a major shortfall as soon as 2034. Depending on how those in power react in the coming years, insolvency of the fund could be just around the corner.
This means that for some Americans, receiving Social Security benefits in the future is far from a sure thing. Even today’s middle-age workers might find themselves left out in the cold when retirement age comes.
However, even if policymakers like Mick Mulvaney, Trump’s pick to run the OMB, step in and intervene, the situation still looks grim. Here are three things Mulvaney might do to “fix” Social Security that would burden taxpayers and beneficiaries, while still leaving the viability of the program up in the air.
Option #1: Cut Social Security benefits.
The first and most obvious way to prop up Social Security is to cut what it pays out to beneficiaries. Trump has said that such cuts are off the table, but Mulvaney’s statements in his Senate confirmation hearings stand in stark contrast.
According to the Wall Street Journal:
Rep. Mick Mulvaney, President Donald Trump’s pick to run the Office of Management and Budget, said on Tuesday during his confirmation hearing before the Senate Budget Committee that he would advocate for reducing spending on Social Security—that is cut Social Security benefits.
“I have to imagine that the president knew what he was getting when he asked me to fill this role,” Mulvaney told the Committee.
Mulvaney is being careful not to say anything to confirm or deny his intentions to make direct cuts to Social Security, but it isn’t hard to read between the lines here. Back in 2009, he called Social Security a ‘ponzi scheme’ and insisted the program as we know it should be brought to an end. Chances are slim his views are drastically different today.
Whether you agree with the way Social Security operates or not, big cuts to the program would be a painful blow to millions of Americans nearing or living in retirement.
Option #2: Increase Social Security taxes by raising the cap on payroll taxes.
In 2016, every American paid 12.4% of their income under $118,500 to Social Security, with most splitting that responsibility 50/50 with their employer. Depending on wage inflation and the overall health of the program, that cap can be adjusted by the Social Security Administration (SSA) and people like Mulvaney.
The SSA already announced the cap would increase by 7% (to $127,200) in 2017, meaning a large chunk of high-income workers will suddenly start paying an extra $539 in taxes every year.
But Mulvaney is ready and willing to push the cap even higher. During his confirmation hearings, he made a point to emphasize that his pledge as a congressman to oppose tax increases would not extend to his service in the OMB.
Option #3: Raise retirement age so benefits are paid out later and for fewer years.
Today, the age at which Americans can receive full benefits for Social Security is set to gradually increase to 67 for anyone born after 1960. But further increases aren’t out of the question.
So even if Social Security stays solvent, the length of time Americans can draw off the program during retirement could shrink significantly.
President Donald Trump’s pick to head the White House budget office said Tuesday that increasing the retirement age for Social Security should be considered, as Democrats pummeled him over protecting that program and Medicare.
Mick Mulvaney, a Republican congressman from South Carolina, made the statement during an exchange with Sen. Lindsey Graham.
“Do you think we need to look at adjusting the age yet again because we live longer?” asked Graham, also a South Carolina Republican.
“I do, yes sir,” Mulvaney replied.
If Not Social Security, What Can You Count On?
Regardless of what happens over the next decade, the long-term prognosis for Social Security doesn’t inspire confidence, and counting on the program for a comfortable retirement is a gamble, to say the least.
No matter how close or far away from retirement you are, it’s time to start looking for a Plan B.
But that’s easier said than done. With uncertainty ruling the global economy, betting on assets that traditionally go in a retirement account (such as stocks and mutual funds) may end up giving you even less of a guarantee than Social Security.
So where does that leave you?
One sensible option is to safeguard your retirement with tangible, reliable stores of value that have stood the test of time, such as physical gold and silver.
Throughout history, physical precious metals have proven to be one dependable way to protect personal wealth over the long haul. Could today’s retirement crisis prove them as such once again?
Birch Gold Group helps Americans protect their savings with physical gold and silver. Clients can purchase precious metals for physical possession, or move their IRA or 401(k) into a Precious Metals IRA. To learn more, request a free Info Kit on Gold – there is zero cost and zero obligation to you. All you need to do is enter your details at www.birchgold.com
Why should there be any ‘cap’ on income for SS taxes?
Mulvaney does raise a question that is running around my head, with several of Trump’s appointees that have a stated different view than what Trump has detailed.
Which one will be enacted?
I imagine what will happen in the long run, barring collapse of the nation and its systems, is the consolidation of all retirement and pension accounts into a single government system which will pay out on a needs based basis depending on the recipients net worth, capital assets, and continued employment and investment income.
No one wants to hear this, but it is what I consider the most likely final outcome of the SS and pension fund problems we face.
Or maybe, but probably a little less likely, we’ll have enough highly productive illegal Mexicans and Muslim migrants come in and pay a huge amount of SS taxes to rescue the system as it stands.
Are you suggesting that people pay into the system on the basis of “the more you earn, the more you pay” and when the time comes to collect you tell them they have/make too much money so they don’t get the SS they paid for?
I’m suggesting that that’s the way it will end up.
It’s already been discussed to some degree, and I expect we’ll hear more of it as the crisis point approaches in a decade or so.
I doubt if I’ll still be around to see if it turns out this way, but if it does give me a thought in remembrance of my projection.
2034? Dream on, a major fiscal crisis will occur long before then…
Dumb statement, in several ways. No such thing as a highly productive Muslim immigrant. The answer to public pension problems is let each entity work it out. Federal intervention is unnessesary. They all have enormous piles of money. They have the ability to tax. There needs to be some adjustments made between money in, and money out, simple math. Not a Federal problem. Social Security will be fine. Mick Mulvaney is being hired as a numbers person, not a policy guy. He’s not driving the bus.
The cap needs to be abolished. Is there any reason on earth why a ballplayer making $20 million dollars a year pays the same amount as a salesman making $118,500? Getting rid of the cap alone solves most of the problems of Social Security.
Just getting rid of the cap itself isn’t going to save it as long as we continue to use the collected money to finance all government operations because it is put into the general fund instead of a specific account that can’t be accessed in any manner by any other agency of government (meaning no IOU’s for government borrowing from it in place of a positive cash balance).
At this point all a removal of the cap would do is provide more money to finance the day to day operations of government. That needs to be addressed before the cap is changed.
AT least IMO, maybe I’m wrong about this and someone could show me why.
You’re right, the Trust Fund just holds government IOUs…
HEY! Anonymous and pyrrhus, too! In case you don’t understand, the Social Security Funds are in a ‘Lock Box’.
I heard Orin Hatch the Senator from Utah say so on national television. I have also heard other CONgressmen state the same thing in the past, but not so much anymore. They wouldn’t lie to us, would they. I didn’t think so!
Anonymous and pyrrhus quit spreading false rumors about CONgressmen putting the Social Security money in the General Fund and spending it for War and Welfare, both corporate and individual. Our CONgressmen are the pillars of government and have only our best interests at heart.
So! Stop it, you two!
Does the ballplayer get a bigger SS check than the guy making $118,500?
Great point, Dave. Great point.
So you want someone else to pay for your benefits. The cap on earnings taxed is also the cap on what they base SS payments on. The ball player does not get anymore SS when he retires than someone earning the cap amount. In fact the SS system is set up so that lower income people already get a higher return on their SS contributions and the SS payments the rich receive are taxed again at a higher rate than others.
So removing the cap is just another form of welfare, getting the “rich” to pay for other people.
I imagine it will happen as theft that is done for you by the government with academics telling everyone that it is moral is always popular.
If the kid cooking hot dogs up in the stands can pay 12.4%, then the $20 million dollar ballplayer on the field can pay 12.4%. The ballplayer is just paying the same as everyone else. He doesn’t get a break because he is rich. If you want to get rid of Social Security, just say so, but realize that about 90% of Americans, including most Trump supporters disagree with you.
Who agrees with me is of little interest to me. Lots of very bad ideas and people have been popular and robbing Peter to pay Paul will always get Paul’s vote. Heck, Hillary won the popular vote as did Obama. What would our grandparents and the founders have thought of a country that thinks that getting other people to pay their bills is right.
Getting rid of the cap sounds so fair, until you also state that the payments are also capped so that the high income guys don’t get any more.
The SS tax rate is not high enough to pay the benefits, and the system is already progressive so that the lower incomes get more return per dollar in. Is there a limit as to what you are willing to take from others? Should someone else pay in 10x as much in SS so you don’t have to cover your own benefits on top of the fact that they pay in much more in income tax to pay for all the rest of government?
My best guess is that not many people have ever read the original bill-
https://www.ssa.gov/history/pdf/fdrbill.pdf
It was never meant to be for everyone, it was specifically designed to provide for indigent and elderly people who could not provide minimum subsistence for themselves and repayment was to come out of their estates after death. What it was promised to do was to care for orphans, the elderly too poor to provide for themselves and those with disabilities that prevented them from participating economically- the blind and crippled.
That everyone regardless of wealth gets a check is a boondoggle of such immense proportion I am completely astounded that it ever caught on as a reality.
It was sold as one thing and it became a parody of itself and quite frankly the entire thing should be dismantled.
Yeah, that was its intentions, a result of the depression, but that isn’t what Congress turned it into.
Life expectancy in 1933 was 60 years old. That was why FDR set the age at 65. Very few people were expected to receive these benefits. Politicians made it into a retirement plan. It was supposed to be an insurance plan.
Jim, life expectancy has been extended more by decrease in infant and childhood mortality and decrease in workplace deaths than old people, I’m pretty sure. Social security will be fine, Medicare is the big one.
HSF, I never thought I would have to disagree with you, but…
What was the purpose of SS. This is my take on the matter. FDR need money for his ‘New Deal’. In those times you just couldn’t go to the FED and have them print up a bunch of moola to pay for your programs like today. The money FDR needed was raised thru taxes.
Big quandary! The USofA was in the mist of the biggest FED created Depression the country has ever seen. Bigger than any Panic before. How can FDR raise taxes under those circumstances? Why we will institute an Old-Age, Survivors, and Disability Insurance. The people would be taxed 2% up to $3000, which were most all Americans at that time. It was sold as old age retirement plan (Insurance). You pay now and collect it when you are older and need it. You paid in, but couldn’t collect anything for four years. People in the mist of the Depression (Hard Times) lacked any security and opted for the security that this scheme promised. FDR was the new god who could be trusted.
FDR spent the money faster than it came in while the government pushed the idea of a secure account in your name, err, SS number.
Like all Ponzi schemes, there is a point where the best laid plans of mice and men fail.
SS failed over 5 years ago. It had a helluva run. Sorry Boomers, it’s lights out, but look at the good side, you gave CONgress a lot of money to spend. You can take pride in that!
Undo the giving of Social Security benefits starting this year to illegal aliens who have never paid into the program.
What difference does it make what we call it, SS, UBI or Freeshit, soon all age groups will be given a monthly stipend. We don’t need to save SS from anything because now that the cat is out of the bag that .gov can create money in endless amounts, this is a moot point.
EDIT: I just wish now that I had not paid into SS all of my adult life, better get the Vasoline to grease my asshole from the lifelong reaming.
FLASH, you are the only guy here that would understand my comment. These people are more ill informed by the day.
BTW- Why so quiet?
Or: means test recipients.
Bring it back to its original mission as I think it has been expanded beyond its original scope.
Allow people to work without benefit caps.
Eliminate the income cap but replace it with reducing the tax the higher the income is. Actually reduce or eliminate abuses of the soc system.
Address the abuses and fraud that exist in all government benefits programs.
And of course simplify our byzantine tax system.
Anonymous, Anonymous, Anonymous. What am I going to do with you??? You just don’t get it. What your suggesting is the same as asking Bernie Madoff to tweak his system a little and make it work and bring back the benefits.
Just proves “Hope springs eternal”.
Why are these asshats from bitch gold group allowed to spread their spam through tbp? While most of you probably don’t know it, there is no problem with SS. There is no problem with SS in exactly the same way that there is no problem with the fed, and there is no problem funding foriegn wars. The .gov can print money all day every day and they can print it to save the bankster or they can print it to save SS or they can print it to throw a bitchin’ party for their buddies with all of the hookers and blow that they love so much.
And none of this will be changed even slightly if you go out and feed some asshat’s ponzi gold scheme. Come on Jim…cut us all a break for a while and stop with these ad/articles.
Rob, they are terrible, but we get every opinion here.
15% of every dollar I earned for 42 years and after beating death 3 times I went on social security disability due to a health problem that was genetic ! The reason I am still alive is because I was healthy in all other aspects so I paid for it and now I am entitled to it ! The fact that my congress and excutive staff pissed it away on people who did not pay in full is where we beat it out of them and their families not me and mine
Boatguy – paid for it? No you did not. You paid in a fraction of what you will take out. Maybe you covered a third or half of it. You think 15% of whatever you made will actually cover your medical expenses and your SS pension for life?
Not a fucking chance, you dimwit.
Edit: from politifact:
“Some types of families did much better than average. A couple with only one spouse working (and receiving the same average wage) would have paid in $361,000 if they turned 65 in 2010, but can expect to get back $854,000 — more than double what they paid in. In 1980, this same 65-year-old couple would have received five times more than what they paid in, while in 1960, such a couple would have ended up with 14 times what they put in.”
Llpoh, you do have a way with words!
Homer – I try. What gets me is that generally reasonable people lose their minds when it comes to SS/Medicare: “I paid in! I am entitled!”
They have zero understanding of what they will take out, how much they paid in (little compared to what they paid in), and no comprehension whatsoever that the money was spent on the previous generation, and no shame that they are expecting the young to carry the burden of their poor planning. All they do is squeal “I am entitled!” It is despicable.
And…You have 10,000 Baby Boomers retiring every damn day!
Intrest on investment friend learn true long term investment in the insurance and investment business the 15% I and employers paid in would pay a great deal more in a private properly managed funds and do a great deal more than fund a jobs program for government employees that retire in their early 50’s
Boat Guy! Damn right! You paid for it! You deserve it! As I remember, I believe, Barry Goldwater the Senator from AZ said many years ago, “You are going to get your Social Security check in the mail every month. You may not be able to buy anything with it, but it will be in your mailbox every month.” or something to that effect.
The USA is broke what is it about ‘broke’, Boat Guy, you don’t understand?
I can really understand why you’re angry at the thought of being screwed by your government. No one feels good at being taken advantage of.
I think Kübler-Ross’s 5 stages of grief applies here.
I know we are broke like children that will not listen sooner or later you cut your loses bye bye to everything eventually but just like business operations that blow the pension fund just before any one collects you do not let them off the hook easy ! Invest in last resort lead and brass
Eliminating the cap on Social Security tax would be the biggest tax rate increase in US history. The effective tax rate on earned income over the current SS cap would be >50%: 39.6% federal + 2.9% Medicare + 12.4% Social Security + state income taxes + phase out of deductions… One of two things would happen: people would just say “fuck it” and earn less or they would restructure their pay to take less as earned income and more as a distribution. People like real estate agents already do that. They gross, say, $150k, have $60k in expenses and pay taxes (incl self employment tax) on $90k. Then their cpa says “hey, start an S Corp, pay yourself $40k on a w2 and take the other $50k as a distribution”. So they save 12.4% self-employment tax on the $50k. You think people with W2 income >$118,500 won’t do that too? They’ll negotiate to get paid in stock options, blowjobs, whatever.
People won’t just take it up the ass without figuring out a work-around. That’s why the high tax rates in the ’70’s didn’t bring in tons of tax revenue.
No problem. Charge Social Security tax on distributions. Also on “stock options, blowjobs, whatever”. If the rich paid their fair share of this tax (the same rate as everyone else) then we could lower the rate for everybody across the board. Problem solved. I think the real problem is, you just don’t like Social Security. You should change your name to Herbert Hoover.
Possible solutions.
#1. Raise the retirement age slowly to 75.
#2 Freeze benefits
#3 Raise taxes (Already too high)
#4. Print, baby, print.
There are all sorts of ways out of this SS mess, it’s just that none of them are acceptable / reasonable / realistic.
In the Sullivan case, the SCOTUS said that there is no vested benefit in SS for anyone; that any Congress can set the payouts for SS, all the way down to zero. Problem “solved”, and all get equal treatment!
Those who understand math understand the dollar is worth zero; the fact that is still buys anything is a testament to stupidity of the average human, anywhere in the world. The fact that you can still trade worthless green paper slips for real world assets should be exploited to the maximum you are capable of, before the marks wise up and quit accepting them. Again, in any case, X times 0 = 0, so why care about how many green slips of paper you will receive? [When the marks all wise up at once (this is called, “loss of confidence in the currency”. See Weimar Germany].
Finally, once the Crunch hits and it all unwinds, no one will care about SS; staying alive will become the major, overriding concern of everyone everywhere. Finding food, shelter, clothing and becoming proficient with weapons to preserve yours will be what matters, not green slips of paper, worthless checks from the Treasury or any other paper financial instrument.
We can argue forever about how, why and where it went wrong, but SS is insolvent, the currency is cratering slowly and there is no real cure or prevention, short of divine intervention. SS will be “solved” , one way or another, but it will never deliver on its promises for anyone born after about 1960, so give it a rest. And use this time to plan on how you personally will protect your family from an insane government, insane, hungry and entitled neighbors, lack of long-distance trade and transportation, loss of mass-market anything, shortages of vital medicines and treatments, …..