I'm one of those "high-earning" retirees who are waiting to turn 70 to collect Social Security OASDI retirement checks. I'm not alone in suggesting that the benefits I'll receive—nearly $5,000 per month today—are excessive. People must remember that Social Security was always designed to be a supplemental program, not a sole-source federal pension. Some sort of reasonable means testing that results in reduced benefits for high earners, I think, has more support among us higher-earning patriots than perhaps Congress realizes.
It’s fine that you think benefits for high income folks should be cut. (FWIW I do, too - just not by the same extremely high amount that Romina has advocated here and elsewhere.)
But your claim of “nearly $5,000 per month today” is disingenuous.
The max benefit today for someone retiring at their full retirement age is $3,822 per month - more than 23% less than the number you cite.
Of course, you are clearly referring to the higher amount you could receive if you delay taking benefits to age 70, by which time you will have foregone 3 years of benefit checks collected, and the actuarial fair amount paid out by the government is the same amount as the $3,822/month taken at full retirement age.
So a question for you: do you agree with the idea that your Social Security payment should be reduced to about $1,400/month? Because that is basically what Romina has advocated for here:
I would like to end taxes on interest for most people altogether. Taxes add insult to the injury of the pitiful interest people can earn on even money market accounts. Taxes could kick in at an income threshold. It could even be taxed as ordinary income at some point.
Well, actually because of Harris-Biden’s inflation, money market funds are paying 5% these days, with real interest rates positive for the first time in years.
However, I surely agree with you re: taxing interest. Although my personal preference would be to treat interest as long-term capital gains, and thus they should change the taxation on interest to be identical to the taxation on long-term capital gains: 0% up to ~$40K of (“earned”) income, then 15%, then up to 20% depending on “earned” income levels.
Sorry, that is simply incorrect. CPI is meaningfully below 5%, while MMF rates are above that.
And TIPS rates are close to 2% real.
And even if you distrust the government reported stats and believe that current inflation is higher than the reported 2.9%, it’s quite a stretch to claim that it is more than 2 percentage points higher.
Why the continued focus on making SS a far more redistributive program than it is (unless you combined it with *cutting* Social Security tax rates and *reducing* income caps, in which case you’d be consistent with long-established Cato values and have my full support), when your own Substack from two months ago suggests that changing the formula for calculating benefits so that benefits stop going up with average earnings (and instead increase only with inflation) ALONE would solve almost 80% of the projected shortfall?
I'm one of those "high-earning" retirees who are waiting to turn 70 to collect Social Security OASDI retirement checks. I'm not alone in suggesting that the benefits I'll receive—nearly $5,000 per month today—are excessive. People must remember that Social Security was always designed to be a supplemental program, not a sole-source federal pension. Some sort of reasonable means testing that results in reduced benefits for high earners, I think, has more support among us higher-earning patriots than perhaps Congress realizes.
It’s fine that you think benefits for high income folks should be cut. (FWIW I do, too - just not by the same extremely high amount that Romina has advocated here and elsewhere.)
But your claim of “nearly $5,000 per month today” is disingenuous.
The max benefit today for someone retiring at their full retirement age is $3,822 per month - more than 23% less than the number you cite.
Of course, you are clearly referring to the higher amount you could receive if you delay taking benefits to age 70, by which time you will have foregone 3 years of benefit checks collected, and the actuarial fair amount paid out by the government is the same amount as the $3,822/month taken at full retirement age.
So a question for you: do you agree with the idea that your Social Security payment should be reduced to about $1,400/month? Because that is basically what Romina has advocated for here:
https://debtdispatch.substack.com/p/social-security-pays-excessive-benefits
I will be very surprised to hear that you agree your benefit should be cut to $1,400/month. But I am all ears eager to hear your answer.
I would like to end taxes on interest for most people altogether. Taxes add insult to the injury of the pitiful interest people can earn on even money market accounts. Taxes could kick in at an income threshold. It could even be taxed as ordinary income at some point.
Well, actually because of Harris-Biden’s inflation, money market funds are paying 5% these days, with real interest rates positive for the first time in years.
However, I surely agree with you re: taxing interest. Although my personal preference would be to treat interest as long-term capital gains, and thus they should change the taxation on interest to be identical to the taxation on long-term capital gains: 0% up to ~$40K of (“earned”) income, then 15%, then up to 20% depending on “earned” income levels.
Interest rates are still lower than inflation.
“Interest rates are still lower than inflation.”
Sorry, that is simply incorrect. CPI is meaningfully below 5%, while MMF rates are above that.
And TIPS rates are close to 2% real.
And even if you distrust the government reported stats and believe that current inflation is higher than the reported 2.9%, it’s quite a stretch to claim that it is more than 2 percentage points higher.
Why the continued focus on making SS a far more redistributive program than it is (unless you combined it with *cutting* Social Security tax rates and *reducing* income caps, in which case you’d be consistent with long-established Cato values and have my full support), when your own Substack from two months ago suggests that changing the formula for calculating benefits so that benefits stop going up with average earnings (and instead increase only with inflation) ALONE would solve almost 80% of the projected shortfall?