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View Diary: Daily Kos goes to Paul Ryan's office with a message (40 comments)

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  •  Not everyone is in need. (0+ / 0-)

    SS redistributes wealth from the poor to the rich. Let's face it, a wealthy person is far more likely to reach a ripe old age than a poor person. Therefore, means-testing at least some benefits would sound like a good idea.

    •  I think this is incorrect. (0+ / 0-)
      SS redistributes wealth from the poor to the rich.
      Under current law the "first" dollar a worker and employer contribute to Social Security each year yields six times the eventual monthly retirement benefit that the "last" dollar a higher income worker contributes before hitting the cap (currently $113,700 of wages). See the PIA calculation for more details on the so called "Bend Points".

      I can't quickly find data on the difference in lifespan between low income workers and high income workers, but it seems very doubtful that the difference comes close to overcoming the effect of the "Bend Points" in the PIA formula. Remember, also, that one can't necessarily use standard "wealth adjusted" life span for the computation if, for example, lower wealth individuals are less likely to be employed for as many years of their life (and hence not contributing to Social Security nor receiving benefit "credits" while unemployed) or if child mortality is disproportionally lower among the wealthy compared to the poor.

      Also, in a sense there is already some crude "means testing" in Social Security. Social Security benefits are taxed at up to 85% if the recipient's total income exceeds certain amounts. Retirees who are better off are more likely to exceed the thresholds due to investment income and required minimum distributions from retirement accounts such as IRAs and 401(k)s. I don't know where this tax goes - I assume the general fund instead of back into the Social Security trust fund (which would seem more logical).

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