Another Voice for Social Security Means Testing

Bill Keller is a columnist for the New York Times. He recently wrote a column challenging his fellow baby boomers to support cutbacks in “entitlement” programs, i.e. Social Security and Medicare. He referred to boomers as the “entitled generation.” I dislike use of the term “entitlement” in this context because so many of its users throw it out as a pejorative against those who receive the benefits. Keller supports some form of Social Security “means testing.” Let’s talk about that for a moment.

First, keep in mind that Keller is not just a columnist. He is a former executive editor of the Times. He is also the son of a former Chairman of Chevron Corporation. He no doubt has money, lots of it. Much of it has probably been inherited. I have no problem with that. But it does make it easier for him to look differently at Social Security and Medicare because he has no financial need for either.

Calling for means testing of Social Security retirement benefits is not new. I have thought about it quite a bit.

I believe that basing Social Security benefits on the financial wherewithal of the recipients is practically unworkable. For example, what “means” will be tested? Will it be your other income? If so, will it be taxable income or all income? Will income testing be applied monthly or yearly? Will gifts from family of food, services, or a place to live be counted?

Others have suggested that the “means” to be tested when determining Social Security benefit levels should be overall wealth, not income. Those with identical lifetime incomes could be treated differently by the Social Security system based on how disciplined they were in saving vs. spending. The excellent lifetime savers will find their benefits cut in favor of those who spent their money. If you finally own your home after years of mortgage payments, that could work against you when it is time to claim your retirement benefit. The government will say: “Congratulations for being so disciplined. We are going to reward you by cutting your benefits.”

Regardless of how the means are tested, a whole new industry of “means testing” manipulation will be created. Financial planners, lawyers, and Social Security “consultants” will become specialists in how to shield assets and/or income from the testing process. Lobbyists will attack Congress to obtain exemptions for certain sources of income or certain types of assets. A new bureaucracy of federal “means testers” will be formed to investigate us. Tax returns will take on new levels of complexity when we are required to fully expose our net worth to this new “Department of Social Security Means Testing.”

Does this sound like a good idea yet?

There is another problem with Social Security means testing:  How would we accurately plan for our retirement?  If our Social Security income will periodically vary based on other income and/or other wealth, tremendous uncertainty is introduced. If our other income or wealth is based on investment performance, our income cannot be accurately predicted. We will be even more at the mercy of the markets than we are now.

People just haven’t thought this through yet. When they do, they will see just how unworkable true means testing of Social Security benefits would be.

To Keller’s credit, he is not locked in to true “means testing.” In a follow-up interview, he suggests increasing the limit on how much income is subject to the Social Security payroll tax. I am actually OK with that, even though it is a tax increase. I am also OK with increasing the full retirement age, as long as it doesn’t apply to those of us who are already quite close to it.

But please take income or wealth-based means testing of Social Security benefits off the table, unless you plan to set the testing thresholds so high that only a small fraction of recipients will even have to care about it. Put the extremely wealthy in a special class of “don’t even bother to apply for benefits.” They won’t care, unless the market crashes like in 1929.

What is your take on the discussion of Social Security means testing?



  1. Steve Almost Retired says

    Means testing should be part of social security reform and should take into account financial resources, not simply income. Certainly some people will be better savers and, in a sense, possibly be worse off for it in the sense they may not receive the same benefits as others who could have but did not save. But I doubt it will motivate people to spend and not save given the modest benefit level. Will there be a cottage industry to serve those who want to increase eligibility? Perhaps, but it will not be anything like the estate tax or income tax planning industries because of the modest benefits payments. There will never be a perfect model for means testing. To paraphrase an old axiom, don’t let perfect be the enemy of the necessary, which is reforming social security.

    • mark says

      I don’t work so others that don’t want to live better then me. Times is just a talking peace for libs so what they say don’t mean a thing.

  2. Doris says

    I may be slitting my own throat when stating this but I have a real problem with folks that hardly put anything into the system (working low paying jobs for many years) and then wind up collecting for years. My mother in law is a great example of this—she never earned more than seven or eight dollars an hour and she has been collecting since age 62. She is now 88 years old. I have tried to explain to her that she has gotten way more than she put into the system when she was employed but her mindset is that the government “owes” her. Her and my father in law never owned any property, rented all their lives and never saved a dime for their retirement years. Yes, these are the people who need the money the most but at what point in time do you take responsibility for providing for yourself and salting away some money for your future needs? It can’t be on the back of the government all the time—you have an obligation to yourself to prepare for the future and not expect others to throw you a life jacket.

  3. mark says

    Do not touch mine. There are so meny people out there that want something for nothing. If I did not have to put money into that scam I would have made that into a 40 year invesment in the sp 500 and retired very happy and left the rest to my familly. We never made over $60,000 and still have invested to have over a million and I do not need some clown from times tell me it’s not mine…

  4. Robert says

    Why don’t the “means testing advocates” ask the real question? Do we want to turn SS unambiguously into a welfare program? SS enjoys it wide spread support mainly because the recipients have been lead to believe it is something the contribute to and “earn” and not a government dole. It was designed that way so recipients would feel worthy and not needy. An earned benefit. Change that and you change the entire relationship between the program and the publics view of it. If it is ever seen as simply a welfare program, popular support for it will generally plummet. We are not there yet but the strongest supporters of SS need to be careful about how far they go in that direction.

  5. Randy says

    I’m sorry about all the confusion and guilt folks seem to have about this but it’s really simple to me I payed the money in and I want it back!!!

    Yes I have prepared for my retirement but the SS is money taken from me all those working years and now I want it…. don’t care about all the people who didn’t plan really ..


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