3 ms·

The most effective way is likely not broad-based cuts but targeted cuts to old-age spending via means-testing to induce liquidation of 401(k)s or other savings

by mgh95 2mo ago

The most effective way is likely not broad-based cuts but targeted cuts to old-age spending via means-testing to induce liquidation of 401(k)s or other savings or tangible property to pay for their own care. I feel the longer (and slower) this trainwreck proceeds, the more likely this outcome is palatable. Roughly 52% of retirees have 250k or more in savings [1]. It is far preferable to drawdown those prior to either cutting benefits or raising taxes. [1] https://www.aarp.org/money/retirement/peak-boomer-readiness/ https://www.aarp.org/money/retirement/peak-boomer-readiness/

NewJazz 2mo ago
Fyi asset testing and means testing are different, but yes that is absolutely a good way to implement things from a utilitarian perspective. From a political perspective... Old folks vote. It is a tough situation.
- mgh95 2mo ago
  Assets are for practical purposes means and when relatively comfortable retirees draw on SS/401(k)s it is income. There are broadly two choices for the wealthy retirees: 1. cut back on SS and other benefits you can afford out of pocket 2. tax your income higher I would wager they would choose 1. To this group, the taxes hurt worse than the benefit losses For poor retirees: 1. cut benefits 2. don't cut benefits I would wager they would choose 1 The other two commonly suggested fixes -- tax the wealthy and broad tax increases -- also fail in my opinion. The holes we are talking about are in the hundreds of billions per year and won't be fixed by taxing just the wealthy. A broad middle class tax increase will also likely be rejected as unpopular. It really is my belief that a slow-motion failure here is best. If any fix occurs as the social security trust fund is at 0 cash and while the bond market is in revolt, there will be no fiscal room to maneuver to raise cash from the debt which forces rationing.

by mgh95 2mo ago

NewJazz 2mo ago

Fyi asset testing and means testing are different, but yes that is absolutely a good way to implement things from a utilitarian perspective. From a political perspective... Old folks vote. It is a tough situation.

mgh95 2mo ago
Assets are for practical purposes means and when relatively comfortable retirees draw on SS/401(k)s it is income. There are broadly two choices for the wealthy retirees: 1. cut back on SS and other benefits you can afford out of pocket 2. tax your income higher I would wager they would choose 1. To this group, the taxes hurt worse than the benefit losses For poor retirees: 1. cut benefits 2. don't cut benefits I would wager they would choose 1 The other two commonly suggested fixes -- tax the wealthy and broad tax increases -- also fail in my opinion. The holes we are talking about are in the hundreds of billions per year and won't be fixed by taxing just the wealthy. A broad middle class tax increase will also likely be rejected as unpopular. It really is my belief that a slow-motion failure here is best. If any fix occurs as the social security trust fund is at 0 cash and while the bond market is in revolt, there will be no fiscal room to maneuver to raise cash from the debt which forces rationing.