I'm 54 and I could SCREAM when I hear "anyone over 55 doesn't need to worry about Social Security"

[exboyfil]

78. Needs testing is a bad idea

We already needs test through the tax code by taxing a portion of the benefits for incomes above a certain level. In addition the number of individuals with $1M in assets at retirement is very small so the impact will not be that great. Another example would be fairness - a lifetime annuity from a pension for example at $1M does not pay out all that much when you consider that it yields a non-inflation indexed lifetime annuity of $72K/yr when purchased at 65. An inflation indexed annuity (like Social Security) would offer much lower payments (about $52K/yr). You put in the 100% to survivor spouse the value even goes down further (for a 65/65 with 100% survivor and no inflation index the payment would be $60,000/yr).


For a couple at retirement, S.S. is a very valuable as you can see above. It offers a both inflation indexing and 50% survivor (since, if the spouse is using the husband's S.S. over their own earnings they would already be at 50% when they assumed the S.S. of the spouse and gave up their 50% spousal).

If you go after those with assets, you should also consider going after those with pensions of like value. What will happen is most will draw down to the level to avoid the taxes.


I am a strong proponent of removing of the cap though. Currently those making about $55K-$105K are carrying the weight of the Social Security program. Their contributions over about $40K go into the benefit formula at 15% (from 0 to $9K the formula is 90% and from $9K to $55K the formula is 32%). At some point during the 32% bracket individuals begin to subsidize other individuals with their contributions. Now this is ok if all income participates in carrying the weight. That is the best argument for removing the cap (I would offer a sweetener of reducing the withholding rate for that income over $105K to reflect that will not receive any additional benefits from the contributions - in other words putting them in the same category as those contributing between $55K-$105K).