Is Removing the FICA Cap a Viable Solution for Social Security's Future?

[turbo]

This was before "health care reform" was enacted. Now before anyone posts as to how recent legislation "fixes" the problem - please find the MOST CURRENT info - not the propaganda from the debate.

Here you go. Just one idea from the article.

http://finance.yahoo.com/news/12-Ways-to-Fix-Social-usnews-522214004.html?x=0

Modify the Social Security tax cap. Workers pay into the Social Security system on earnings up to $106,800 in 2010. About 83 percent of worker earnings were subject to Social Security payroll taxes in 2008. If all earned income above $106,800 annually were subject to Social Security contributions but did not count toward benefits, Social Security's projected deficit would be completely eliminated. If the higher income counted toward Social Security benefits, about 95 percent of the shortfall would be absolved. Other ideas: apply a new Social Security formula to earnings above the current cap or raise the amount of the income cap to apply to 90 percent of all worker earnings.

 

[turbo]

Here's another article.

http://www.cbsnews.com/stories/2010/05/18/business/main6494282.shtml

 

[russ_watters]

If SS had been privatized, or if people had to invest on their own in the stock market, mutual funds, etc, they would have experienced huge losses over the past 3 years or so.

If a dog had wings it could fly. The picture you paint of how saving for retirement works is no less nonsensical. Don't you have a 401k or IRA? Are you not aware that when you invest you are supposed to assume that you will see "huge" losses several times before you retire? Are you not ware that even including those losses a low risk, diversified mutual fund will almost always outperform SS?

 

[turbo]

If a dog had wings it could fly. The picture you paint of how saving for retirement works is no less nonsensical. Don't you have a 401k or IRA? Are you not aware that when you invest you are supposed to assume that you will see "huge" losses several times before you retire? Are you not ware that even including those losses a low risk, diversified mutual fund will almost always outperform SS?

Timing can be critical to people in some investment vehicles. If you are in a traditional IRA, you must start taking minimum distributions at age 70-1/2. Anybody who reached that age during the last few years were forced to lock in their losses when taking the minimum distributions. Average performance of investment vehicles (idealized) doesn't mean much in that setting.

The minimum distribution required is generally about $4000 or so based on $100K IRA, and ramps up as you age. It might not seem like much, but that's money that you can't leave in your account and watch it re-grow as the economy recovers. You can only claim losses in your IRS when you have taken a full distribution of all assets, and your total distribution is lower than your basis in the account.


http://www.irs.gov/publications/p590/ch01.html