Maybe we should also eliminate the base limit on Social Security taxes? And tax cap gains for SS as well? Instead of nuking the whole system, maybe we should stop letting the wealthy out of paying into the system.
Members of Congress won't likely vote impose such a large tax on themselves. Also, it would put high earnings in effective marginal tax brackets close to 70 percent. See my co-authored article on Marginal Taxation of Americans posted under articles at kotlikoff.net.
Interesting post. It says 1) "...benefits need to be permanently reduced by 31 percent starting today to avoid cuts, starting at a future date, that are permanently larger than 31 percent." Later you say 2) "If, at worst, Social Security benefits are reduced by 22 percent starting in 2032..." So is your view of the worst case 22% or 31%?
Lots of partisan holes........Does some action need to be taken....yes...but Privatization is NOT the answer!!! 1. Republicans have been out to get rid of Social Security since it was implemented to help prevent Americans from living the rest of their lives in poverty. 2. DOGE and Elon Musk, now a Trillionaire, did it's dirty work as a way to further Undermine Social Security and Medicare. Undermining Social Security and Medicare is part of the agenda of the current regime (and those supporting them) in DC. 3. "Private accounts" are a way for people Selling "investments" to get their hands on the retirement money of Americans. Viewed as a further source of untapped money to be taken from the American public. 4. There is an EASY fix right in front of our faces......the current cap on SS is $184,500. There is NO reason for it to stay there - ELIMINATE the current CAP to......$250,000, $500,000, $1,000,000 or SCRAP THE CAP entirely! And Stop protecting the wealthiest Americans. They are part of the reason we are in this mess, but the rest of us are being told that WE have to give and give up to fix it and NOT them. 5. "FICA taxes are dedicated exclusively and specifically to pay Social Security Benefits - which are EARNED BENEFITS! The system is 90 years old and never missed a payment or bounced a check." There is an update being proposed called the Social Security Expansion Act - working WITH the current system instead of scrapping it for the benefit of the people drooling to get their hands on the money of the American people. 6. "Trump accounts" are a backdoor attempt to use babies to let others "manage" their money. Ted Cruz even said so. 7. PRIVATIZATION is a major goal behind ALL of this. 8. To see how "private accounts" do NOT work in your favor if you are not paying attention check out "The Retirement Gamble" and bit dated that was on Frontline showing what happens to "private accounts" and those that invest in them and how the people who "manage" the accounts fair - always good for them - not so much for you. 9. Next time an advisor meets with you to "advise" you ask them what do they invest in? Are they happy with what they are getting? If they say yes, then tell them you want them to "invest" in that........and see how they react - but watch "The Retirement Gamble" before you talk to them. 10. Check out the bet that was proposed by Warren Buffet on the difference between investing in an index fund and leaving it alone and letting a financial manager do whatever they wanted to invest.... 11. Check out Social Security Works for another take on all of this. 12. Check out the Patriotic Millionaires for another take on all of this. 12. A challenge for YOU Larry - Share this with Alex Lawson of Social Security Works and interview him on his take compared to yours. I will be anxious to hear about your conversation with Alex Lawson.
Hi Murray, My plan is worth reading. It doesn't entail privatization. It's closer to the Norwegian and Singapore pension systems. And, yes, Social Security is 90 years old and hasn't missed a payment. But it's about to miss 73 million payments. Pls read my plan before deciding its partisan. It's absolutely not. Let me know what you think. Best, Larry
I will read it. Social Security has stood for 90 years and can last into the future with tweaks and upgrades. But too much is being made of taking it down and apart as the first option and only option. Too many are viewing Social Security as an opportunity to get their hands on it and take advantage of other people's money. Putting money aside with each paycheck having employees and employers contribute to the future of all was and is a great idea that has lasting financial power. Because sadly many will not do it on their own, or others will take advantage of them and end up with that money in their pockets instead of the people who need it and should have done it. "Pay yourself first" has been great advice if followed. Social Security protects the future of individuals and families and provides income that benefits the communities where people live, instead of having to help those people survive because they do not have enough money to live. Our financial inequality is getting worse by the day. That should not happen. It does not need a new plan to replace it. I still stand on SCRAPING THE CAP. And I stand by keeping Social Security. There certainly can be other plans, that do not replace Social Security, but do add to what people are contributing. (An example - A couple on Social Security, with a Defined Benefit pension (which people are also trying to end and do away with because they want people to have a Defined Contribution so they can make money off of them) - which many do not anymore sadly, and have their own private investments. Not millionaires by any means, but living well on what they have). I still want to hear about you and Alex Lawson of Social Security Works regarding his take on Social Security and what to do about it, discussing Social Security.
IRA's and 401K's were promoted as an alternative to Defined Benefit pensions. "You can do better yourself, it is your money (so "we" can get our hands on it)......" - not quite the whole story. And yes they can lead to positive financial opportunities if handled properly and well for the benefit of the people holding them and NOT for the people selling them. Fees and hidden costs add up in a hurry.... Why due diligence and independent research are important. That is why Defined Benefit plans are being eliminated as fast as possible to be replaced by Defined Contributions plans which provide the opportunity to make money to the people who sell those investments and accounts. A "Fiduciary" advisor is important. Check out "The Retirement Gamble" from Frontline. Check out the Warren Buffet bet. Check out "Invisible Doctrine: The Secret History of Neoliberalism" by George Monbiot and Peter Hutchison. They also have it as a Documentary. Good advice "Follow the Money" - who is behind it, why are they saying what they are saying, how will they benefit, what is not being said, what are others saying, how will this impact you, who are "trusted" resources with knowledge in this area, etc........
At first glance, I was impressed by the article’s depth and rational thinking. It wasn’t until nearly the end of the article that I realized it was an advertisement to spend $49 to download the author’s software.
Not quite fair. Larry was my dissertation advisor at Yale back in the 1980s. He has worked on social security his whole life and knows what he is talking about. Yes, he slipped in a plug for his software — but the software IS helpful in helping people quantify their options. He should be forgiven for that IMO.
Thanks for the backup, Emily. Trust you are well!!
All best and email me to catch up.
Larry
PS, Just FYI, I started my company in 1993. I've never earned a penny as I take no salary and never have. I want to keep the prices as low as possible. MMSS is the only accurate Social Security optimizer around for a host of reasons.
Maybe we should also eliminate the base limit on Social Security taxes? And tax cap gains for SS as well? Instead of nuking the whole system, maybe we should stop letting the wealthy out of paying into the system.
Hi Jason,
Members of Congress won't likely vote impose such a large tax on themselves. Also, it would put high earnings in effective marginal tax brackets close to 70 percent. See my co-authored article on Marginal Taxation of Americans posted under articles at kotlikoff.net.
best, Larry
Yet you seem to think Congress will vote to establish a financially and actuarially sound system somehow immune to future raiding and tinkering...
Larry, thanks for sharing this. As someone quickly approaching Social Security age, its stability has been a constant fear of mine.
We can:
- increase tax rate
- slow the growth of benefits,
- increase retirement age,
- remove income cap (and increase benefits accordingly)
- reduce regulation and profits taxes while increasing support for research, etc., to accelerate productivity growth
What is the balanced way to get to long-term sustainability?
https://www.economyactually.com/2026/06/your-mind-your-money-how-thoughts-attract-wealth.html?utm_source=substack&utm_medium=email
Interesting post. It says 1) "...benefits need to be permanently reduced by 31 percent starting today to avoid cuts, starting at a future date, that are permanently larger than 31 percent." Later you say 2) "If, at worst, Social Security benefits are reduced by 22 percent starting in 2032..." So is your view of the worst case 22% or 31%?
Lots of partisan holes........Does some action need to be taken....yes...but Privatization is NOT the answer!!! 1. Republicans have been out to get rid of Social Security since it was implemented to help prevent Americans from living the rest of their lives in poverty. 2. DOGE and Elon Musk, now a Trillionaire, did it's dirty work as a way to further Undermine Social Security and Medicare. Undermining Social Security and Medicare is part of the agenda of the current regime (and those supporting them) in DC. 3. "Private accounts" are a way for people Selling "investments" to get their hands on the retirement money of Americans. Viewed as a further source of untapped money to be taken from the American public. 4. There is an EASY fix right in front of our faces......the current cap on SS is $184,500. There is NO reason for it to stay there - ELIMINATE the current CAP to......$250,000, $500,000, $1,000,000 or SCRAP THE CAP entirely! And Stop protecting the wealthiest Americans. They are part of the reason we are in this mess, but the rest of us are being told that WE have to give and give up to fix it and NOT them. 5. "FICA taxes are dedicated exclusively and specifically to pay Social Security Benefits - which are EARNED BENEFITS! The system is 90 years old and never missed a payment or bounced a check." There is an update being proposed called the Social Security Expansion Act - working WITH the current system instead of scrapping it for the benefit of the people drooling to get their hands on the money of the American people. 6. "Trump accounts" are a backdoor attempt to use babies to let others "manage" their money. Ted Cruz even said so. 7. PRIVATIZATION is a major goal behind ALL of this. 8. To see how "private accounts" do NOT work in your favor if you are not paying attention check out "The Retirement Gamble" and bit dated that was on Frontline showing what happens to "private accounts" and those that invest in them and how the people who "manage" the accounts fair - always good for them - not so much for you. 9. Next time an advisor meets with you to "advise" you ask them what do they invest in? Are they happy with what they are getting? If they say yes, then tell them you want them to "invest" in that........and see how they react - but watch "The Retirement Gamble" before you talk to them. 10. Check out the bet that was proposed by Warren Buffet on the difference between investing in an index fund and leaving it alone and letting a financial manager do whatever they wanted to invest.... 11. Check out Social Security Works for another take on all of this. 12. Check out the Patriotic Millionaires for another take on all of this. 12. A challenge for YOU Larry - Share this with Alex Lawson of Social Security Works and interview him on his take compared to yours. I will be anxious to hear about your conversation with Alex Lawson.
Hi Murray, My plan is worth reading. It doesn't entail privatization. It's closer to the Norwegian and Singapore pension systems. And, yes, Social Security is 90 years old and hasn't missed a payment. But it's about to miss 73 million payments. Pls read my plan before deciding its partisan. It's absolutely not. Let me know what you think. Best, Larry
I will read it. Social Security has stood for 90 years and can last into the future with tweaks and upgrades. But too much is being made of taking it down and apart as the first option and only option. Too many are viewing Social Security as an opportunity to get their hands on it and take advantage of other people's money. Putting money aside with each paycheck having employees and employers contribute to the future of all was and is a great idea that has lasting financial power. Because sadly many will not do it on their own, or others will take advantage of them and end up with that money in their pockets instead of the people who need it and should have done it. "Pay yourself first" has been great advice if followed. Social Security protects the future of individuals and families and provides income that benefits the communities where people live, instead of having to help those people survive because they do not have enough money to live. Our financial inequality is getting worse by the day. That should not happen. It does not need a new plan to replace it. I still stand on SCRAPING THE CAP. And I stand by keeping Social Security. There certainly can be other plans, that do not replace Social Security, but do add to what people are contributing. (An example - A couple on Social Security, with a Defined Benefit pension (which people are also trying to end and do away with because they want people to have a Defined Contribution so they can make money off of them) - which many do not anymore sadly, and have their own private investments. Not millionaires by any means, but living well on what they have). I still want to hear about you and Alex Lawson of Social Security Works regarding his take on Social Security and what to do about it, discussing Social Security.
No love lost here for IRAs or 401Ks. Or for capitalism writ large.
IRA's and 401K's were promoted as an alternative to Defined Benefit pensions. "You can do better yourself, it is your money (so "we" can get our hands on it)......" - not quite the whole story. And yes they can lead to positive financial opportunities if handled properly and well for the benefit of the people holding them and NOT for the people selling them. Fees and hidden costs add up in a hurry.... Why due diligence and independent research are important. That is why Defined Benefit plans are being eliminated as fast as possible to be replaced by Defined Contributions plans which provide the opportunity to make money to the people who sell those investments and accounts. A "Fiduciary" advisor is important. Check out "The Retirement Gamble" from Frontline. Check out the Warren Buffet bet. Check out "Invisible Doctrine: The Secret History of Neoliberalism" by George Monbiot and Peter Hutchison. They also have it as a Documentary. Good advice "Follow the Money" - who is behind it, why are they saying what they are saying, how will they benefit, what is not being said, what are others saying, how will this impact you, who are "trusted" resources with knowledge in this area, etc........
At first glance, I was impressed by the article’s depth and rational thinking. It wasn’t until nearly the end of the article that I realized it was an advertisement to spend $49 to download the author’s software.
Not quite fair. Larry was my dissertation advisor at Yale back in the 1980s. He has worked on social security his whole life and knows what he is talking about. Yes, he slipped in a plug for his software — but the software IS helpful in helping people quantify their options. He should be forgiven for that IMO.
Thanks for the backup, Emily. Trust you are well!!
All best and email me to catch up.
Larry
PS, Just FYI, I started my company in 1993. I've never earned a penny as I take no salary and never have. I want to keep the prices as low as possible. MMSS is the only accurate Social Security optimizer around for a host of reasons.