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Social Security: Why CEO Calls for Cuts Infuriate Workers

Millions of workers expect to rely on Social Security after they retire. But a group of corporate CEOs wants to cut Social Security benefits by raising the retirement age to 70. That has ordinary workers furious, but what's their best response to the situation?

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at proposals from the Business Roundtable and the controversy that they've raised. Dan notes that the big problem is that the CEOs proposing the cuts will themselves never have to rely on Social Security, as most of them sport sizable retirement packages of their own. One study points to CEOs at Honeywell (NYSE: HON  ) , Wal-Mart (NYSE: WMT  ) , General Electric (NYSE: GE  ) , ExxonMobil (NYSE: XOM  ) , and AT&T (NYSE: T  ) as having the five biggest retirement packages among Business Roundtable members.

Even more galling, many CEOs have been instrumental in dismantling traditional pension coverage for employees, replacing it with 401(k) plans that put the onus on investors to save for retirement and invest successfully. Dan notes one response to hit back at CEOs would be to propose removing the wage cap on Social Security taxes, which would mean CEOs and other high-income earners would pay more into the system.

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Read/Post Comments (21) | Recommend This Article (16)

Comments from our Foolish Readers

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  • Report this Comment On December 07, 2013, at 10:56 AM, Radon wrote:

    There is no reason why the wealthy shouldn't pay more toward social security by removal of the salary cap. Their pensions are vastly higher than the person at the bottom of the pay chain and the corporate CEOs contribute nothing toward workers pensions yet protect their own pensions. Everyone should pay the same percentage of their income into social security.

  • Report this Comment On December 07, 2013, at 2:52 PM, todamo13 wrote:

    Scrap the cap!

    The rich CEO-types seem to think that they magically created all of their wealth themselves, rather than the people working under them (or their parents who many inherited it from) and therefore only they deserve to not be on the street for their retirement years. Talk about people feeling entitled!

    My dad died at 68. He paid into social security for over 40 years, retired at 65, and at least received a few years' payments before he passed. My mom now receives his social security payments which is great because she's taken care of. If the eligibility age had been 70 what would have been the result? Tough luck?

    Social security is incredibly successful, incredibly beneficial to our society, and actually makes me proud to live in America. If we stop politicians from raiding the social security trust fund and raise the cap on contributions then social security would be plenty well funded forever.

    Luckily this is one issue where people won't be fooled by the 1%... There is now a big movement to not only stop the cuts, but actually expand social security by scrapping the cap. Let your representatives and senators know you support this!

  • Report this Comment On December 07, 2013, at 5:37 PM, thumber wrote:

    Too keep taking from the wealthy for every social inequality is ludicrous. Real fixes are needed in the tax laws and the return of jobs to the USA.

  • Report this Comment On December 07, 2013, at 6:30 PM, altha2008 wrote:

    if a person is 40 no, but everybody under 39 they have time to adjust their retirement

  • Report this Comment On December 07, 2013, at 6:31 PM, altha2008 wrote:

    make people who makes 100K pay on their whole income.

  • Report this Comment On December 07, 2013, at 7:13 PM, RichinHuaHin wrote:

    Better yet lower the retirement age to 60 or less and this will free up more jobs and continue to keep an influx of social security. The greedy always come up with scams.

  • Report this Comment On December 08, 2013, at 8:56 AM, Dadw5boys wrote:

    I agree with Richard. Raise the interest rates to 6 % then the Social Security Trust Fund will make money again and raise the cap to $200,000. Raise the tax on the high income back to the 1960 levels when the USA was at it's strongest ! Before the Vietnam War.

  • Report this Comment On December 08, 2013, at 9:28 AM, Barmil wrote:

    I have an Idea get the SS out of the feds hands and out of the general fund, In other words put it back the way it was before Pres. Johnson highjacked it.

    It would be able to handle the retiree's and then some if the Govt. didn't pilfer it.

  • Report this Comment On December 08, 2013, at 11:38 AM, nevadan99 wrote:

    CEO's call for cuts in Social Security. These are the people that are way overpaid in the first place. It's remarkable that a CEO can screw up a company, and get fired with millions of dollar bonus, and then be hired by another company.

  • Report this Comment On December 08, 2013, at 12:43 PM, JRP wrote:

    Ever notice how a few CEO's can get too command attention from the media and the working class is heard on the internet.

  • Report this Comment On December 08, 2013, at 1:32 PM, jsolo448 wrote:

    Did anyone notice that income received by people like Romney, for one, do not pay any SS or Medicare taxes, IN ADDITION to having a lower tax rate? That means that they pay nothing toward supporting the disabled, poor or orphans and widows; that is entirely the province of people who pay into SS. Nor fair.

  • Report this Comment On December 08, 2013, at 3:10 PM, slick21 wrote:

    What does a C.E.O. know all they do is sit on their big butts and do nothing for their pay. I think they should lower the age so people can enjoy their family before it's too late. Besides a C.E.O. is overpaid and under work like all that wears a suit or a dress, and i was wondering how one gets a job like this, i would like to see what they do, which is nothing all day.

  • Report this Comment On December 08, 2013, at 3:59 PM, BigFED wrote:

    I am 70 now and I retired from my first job at age 52 with 30 years service plus 2 for accumulated sick leave with the company. I took a 2% hit per year for being under age 55, but cost of living increases more than made up for that.

    I went back to work for a company that had contracts with my original company for another 7 years and then continued working on even after I turned 62 when I started taking SS.

    If I would have HAD to stay at my first company 18 additional years, I would have been dead from a heart attack (already had 3) or in prison for homicide against any one of the increasingly a holes that seen to be popping up that knew all the answers, but had never heard all the questions!!!

    Doing fine and still working at a job I love!!! YMMV!

  • Report this Comment On December 08, 2013, at 4:27 PM, spactruker wrote:

    My problem with SS is that there is a SS treaty with mexico that states even if they did not work here they can get SS, the other part is those that are here taking up jobs they should be a citezens and that the gov has been stealing from it for decades justifying it by saying it will never run dry well clearly it has always taking and not replacing what did they expect simple rule to balancing the check book, make Corp. pay their taxes( you would be surpised how much they owe right now, TAX MASTERS how many times have you fell 10,000. dollars behind on your taxes?) and then there are the sports franchise's that for some reason are tax exempt, and that somehow corperations are living breathing entities they can change political will just as much as bring illegals in to change the electorate when you have that many poor people that only want to soak up benefits once they are here, and my country's inability to open their eyes and want to make it a humanitarian issue but I'm I not a human deserving of the same treatment why do only the Mexican or other forging nationalists believe they should be entitled to mine and your rights they should be raising hell in their countries not mine

  • Report this Comment On December 08, 2013, at 7:03 PM, JePonce wrote:

    Shy go after social security? 58 million retirees share a meager $816 billion dollars.

    Local, State and Federal Government spend $1.1 Trillion a year on pensions for an estimated 4 million government employees.

    In fact, government employee pensions is the second largest government expenditure just behind health on which they spend $1,2 Trillion.

    They certainly know how to take care of themselves with taxpayer dollars!

  • Report this Comment On December 08, 2013, at 9:09 PM, luckyagain wrote:

    "Dan notes one response to hit back at CEOs would be to propose removing the wage cap on Social Security taxes, which would mean CEOs and other high-income earners would pay more into the system."

    Just removing the wage cap would go a long ways to making SS more secure. The greed of CEOs has no bounds. Many Americans will never get to 62 before their bodies give out. If you do physical work all day long, the wear and tear on your body means that you will not be able to work into your 60s. Many Americans still do hard physical work and cannot expect to reach retirement age while working. Also these CEOs make sure that when layoffs hit, its always the older workers who will not get their old jobs back and instead want younger workers instead at less pay.

  • Report this Comment On December 08, 2013, at 11:15 PM, kickchina wrote:

    Better to adopt Bowles-Simpson. Go to chained CPI including those on SS now and increase income subject to tax. Everyone has to give or benefits will be cut by 25% in 20 yrs. Too many old people living longer , fewer younger workers and thanks to outsourcing lower paying jobs for younger workers. Also, nobody stole anything from SS so please stop that song, we are better than Fox news posters here. Watch some c-span. Also, SS was never meant to be sole means of support in retirement, so elderly should have no expectation it should allow them to live on it by itself.

  • Report this Comment On December 09, 2013, at 7:30 AM, Hadenoughuc wrote:

    raising it to 70 just stinks keep it 65 0r move it down to 62 .the sooner people retire it opens up JOBS for other people .then this is better for the economy because more people would be working not just laid off !!!!

  • Report this Comment On December 10, 2013, at 6:47 PM, SkepikI wrote:

    On the one hand, the opposition of younger workers prevented us from properly fixing the system 15 years ago before the flood of boomers began. At that point it was just barely practical because most of us (I am 63) had enough time to recover from a hit. And I for one would have taken pretty restricted returns from what I already had in in order to put my FICA "contributions" in private investments where Hank Paulson and Larry Summers couldn't get their mitts on it. So if you are grousing about it now, just recall there were opportunities.

    If you are over 50 you are pretty much stuck. There just aint time to go private and recover enough to be ok.

    On the other hand, if you are 20-49 you are really hosed! If you are under 40 two of you get to support one of us. You are the victims of the cowardliness of your older siblings, parents and grandparents, and your own inertia. That's all the sympathy you get... Get to work!

    I reckon the revolution begins about 2025 as the first of these snoozers wake up about 51 or 52 and recognize they have been taken to the cleaners. Too bad I might still be on the right side of the dirt to witness it...

  • Report this Comment On December 11, 2013, at 11:38 PM, NotJesseL wrote:

    I think its ridiculous to claim that the 1% has had so much taken out of it to benefit the rest of us. A quick glance at the numbers will put that to rest. The 1% have been doing quite well, thank you very much, since Reagan, increasing their overall share of the wealth in the US at the expense of the rest of us.

    Scrap the cap makes sense to this Republican and Fool.

  • Report this Comment On December 12, 2013, at 12:05 PM, SkepikI wrote:

    ^ if you think this will "fix" the problem, you are either over 65 or under 25 and math challenged.

    taking the cap off simply makes more money available to the next Paulson or Summers. If you think they will invest it and grow it wisely, you are observationally challenged.

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Dan Caplinger
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Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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