Is Social Security means testing right or wrong?

Discussion in 'Politics, Religion, Social Issues' started by senseless, Jun 17, 2012.

  1. senseless macrumors 68000


    Apr 23, 2008
    Pennsylvania, USA
    It sounds fairly simple. If you have a lot of money at retirement, should you be able to collect Social Security payments? Some will say that the program was designed as a safety net for the poor and middle class and not to enhance an already comfortable lifestyle.

    But take two individuals into consideration. Bob saves, invests wisely and puts off luxuries and lavish vacations. He buys modest used cars, works overtime and does not gamble, smoke or otherwise waste money. He manages to accumulate 2 million dollars by age 65. "A secure and comfortable retirement is most important" is what he lives by.

    Ted, on the other hand, lives for the day, leases luxury cars, works as little as possible, enjoys frequent lavish vacations, buys more house than he needs and finds investing boring. "You only live once" is his credo. At age 65, he has little or no savings to fall back on.

    Is there a moral hazard in denying the saver and rewarding the spender?
  2. citizenzen macrumors 65816

    Mar 22, 2010
    How does Ted afford all of that if he works as little as possible?

  3. Peace macrumors Core


    Apr 1, 2005
    Space--The ONLY Frontier
    How much do these two guys make per month each ?
  4. jnpy!$4g3cwk macrumors 65816


    Feb 11, 2010
    Yes, but, that's just the start. People who planned for many years to have Social Security as a part of their retirement would be denied access to the pension benefits they paid for. Worse, this would be the first step in destroying SS for everyone, something that SS opponents have wanted to do since the program's inception. Social Security has been a tremendous success for the last 75 years. Why destroy it?
  5. hulugu macrumors 68000


    Aug 13, 2003
    quae tangit perit Trump
    I'm always suspicious of moral hazard arguments. The spender's going to spend regardless of the saver's habits, the question would be is the saver going to stop saving in order to assure that he can access Social Security. And, I think the real answer is generally no. People save for a good retirement and take Social Security as an additional payment, but they don't depend on it.

    So, means testing will create incentives for savers to save even more. People at some threshold might stop saving to insure they get that "free money," but that could be solved by setting the threshold fairly high.

    I think a more important move might be to remove the cap income that's taxed by Social Security. Though I don't know what the math would be compared to the benefits of means testing.
  6. fox10078 macrumors 6502


    Nov 6, 2009
    You pay in you get out, simple as that.

    No ******** about how rich you are or anything like that.

    If you paid into the system you get out of the system. Nothing more nothing less.

    And sounds like Bob had a pretty terrible life if he worked overtime AND invested yet no fun or luxuries or nice vacations and only ended up with 2 Million. :D (I know its a hypothetical but that made me laugh)
  7. samiwas macrumors 68000

    Aug 26, 2006
    Atlanta, GA
    Working from age 20 until 65 and ending up with $2m equals saving or garnering from investments over $45k a year. That's pretty damn good for the vast majority of Americans. The fact that some now see $2m as small sum shows just how out of whack we've come to see as "normal".

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