Retirement Fact of the Day
Three quarters of near retirees (ages 50 to 64) have average total retirement account balances of only $26,395.
Source via this Sunday NY Times article.
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Monday, July 23, 2012
Source via this Sunday NY Times article.
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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355 Comments:
Which shows that Americans have lived beyond their means and that many of the claims were made on the basis of illusion.
Why save when the government promises to take care of you from retirement to grave?
So lets have the government take over, that'll help
that's a pretty revealing statistic but it might be misleading.
for instance, some people have other income and wealth such as pensions and real estate.
interestingly enough:
" In her book When I'm Sixty-Four: The Plot against Pensions and the Plan to Save Them, Ghilarducci proposed mandatory participation in a government-run savings plan to which each worker and their employer would supplement their Social Security pension by contributing 2.5 percent each of her or his salary. The plan would be administered by the Social Security Administration, but would be separate from Social Security records. In turn, a refundable tax credit of $600 would go to each participant, regardless of his contributions. The account would have a guaranteed interest rate equal to the government's official inflation rate plus three percent."
Yes, Larry, let's give the government even more of our money to "invest" for us in IOU's. The feds have done such a swell job managing everything else they touch...
Nathaniel just looked at me and said, "We are doomed."
Does info like this dampen your usually buoyant attitude, Mark?
Yes, Larry, let's give the government even more of our money to "invest" for us in IOU's. The feds have done such a swell job managing everything else they touch...
well Paul, the ONLY part of SS that is "invested" is the surplus. The vast majority of SS is paid for from the FICA tax.
we'll been over this before but facts are meaningless when it comes to ideology apparently.
Even if the govt reneged on the "IOUs", FICA would still fund social security.
every industrialized country in the world has mandatory payroll savings.
what you and your ilk would have us do is revert to 3rd world status.
the reality is that 3/4 of people would have almost nothing if it were not for the govt forcing them to pay FICA taxes so they'd have "something" by the time they retire.
what you and your ilk would have us do is revert to 3rd world status.
no thanks.
Larry,
"well Paul, the ONLY part of SS that is "invested" is the surplus. The vast majority of SS is paid for from the FICA tax."
That accounting shell game won't save you when the reckoning comes. As I've pointed out repeatedly, FICA, Medicare, and income taxes all come out of the same pocket and end up in the same rat hole. Taxpayers can only be bled so much, the opportunity cost of forking over to fund your lush retirement is money that could have been spent on funding the rest of government, or our own retirements. Further, politicians starting with LBJ used the temporary entitlement "surplus" to hide the true size of the deficit which allowed them to grow government even bigger. There is no surplus, there is only $16 trillion in debt.
"what you and your ilk would have us do is revert to 3rd world status."
That's hilarious coming from a die-hard Obama bootlicker. 3rd world is our certain future if your hero gets another term, this time with more "flexibility."
Larry,
what you and your ilk would have us do is revert to 3rd world status.
Seriously? Do you really believe that the only reason we have first world living standards is because of social security? Ha!! I laugh in your face!
"what you and your ilk would have us do is revert to 3rd world status."
That's hilarious coming from a die-hard Obama bootlicker. 3rd world is our certain future if your hero gets another term, this time with more "flexibility."
name another industrialized country that has gotten rid of payroll taxes for retirement.
your only "idea" is virulent anti-govt gloom and doom no matter what the facts and realities are.
the only countries without payroll taxes are 3rd world countries.
no industrialized country has voted to get rid of payroll taxes.
your response to this is essentially that ALL such countries are doomed to go bankrupt.
right?
"your only "idea" is virulent anti-govt gloom and doom no matter what the facts and realities are."
And just what are those facts and realities, Larry? You apparently just skip along at the trough while Obama continues to borrow 40 cents out of every dollar he spends, financed by historically low (and temporary) interest rates. His Treasury Secretary admits they have no plan to resolve the crisis.
"your response to this is essentially that ALL such countries are doomed to go bankrupt.
right?"
No, idiot.
Larry,
name another industrialized country that has gotten rid of payroll taxes for retirement.
So in order to gain "status", rather than increase wealth, you want the equivalent of "keeping up with the Joneses" at the federal government level? Of course, many of these other first world nations can only afford this because the US subsidizes so much of it, like completely funding the military defense of Europe. However, despite not having to adequately fund a military, many first world nations are now feeling the damage done by implementing the most wide reaching and expensive pyramid schemes in history.
Can we please stop with the ridiculous arguments like "limited government would reverts us to third world status" and "Obama is running us into the ground"? Neither are true and are just rhetoric that will get us nowhere.
Now, back to the topic at hand:
We do have a saving issue in this country. Is it really surprising to anyone? In many cases, we punish saving (interest rates below inflation, capital gains taxes, taxes on interest, etc). Due to the nature of how interest rates are determined in this country (based of Treasuries rather than inflation), most of the "safe" investments are loser bets. This has forced more and more people into high risk things like junk bonds, MBS, hedge funds, etc., even when they should be investing more conservatively. If the interest rate were allowed to adjust properly, then this issue would be less.
That being said, I'd like to offer my opinion for a Social Security solution.
What if, rather than taking each person's FICA and putting into a big pool (Yes, I am simplifying, but bare with me), each person's FICA was distributed into an account of his choosing? I don't know about you guys, but I automatically have 10% of my paycheck taken out each week to go into my IRA. This could be a similar set-up, I think. It would eliminate the collection and distribution problem, not to mention the revenue problem, and each person would be responsible for his own account. We'd never have to worry about insolvency or IOUs or anything like that, no politician would be able to use "grandma scaring" as a political tactic. Each person would be able to invest as he wishes: mutual fund, real estate, stocks, etc.
Thoughts?
"your response to this is essentially that ALL such countries are doomed to go bankrupt.
right?"
No, idiot.
oh I forgot..you do that in between your anti-Obama rants...
"average total retirement account balances of only $26,395"...
It would've been a damn site higher if the governemnt hadn't extorted money to finance their vote buying Ponzi scheme...
So in order to gain "status", rather than increase wealth, you want the equivalent of "keeping up with the Joneses" at the federal government level? Of course, many of these other first world nations can only afford this because the US subsidizes so much of it, like completely funding the military defense of Europe. However, despite not having to adequately fund a military, many first world nations are now feeling the damage done by implementing the most wide reaching and expensive pyramid schemes in history.
no. there is no "keeping up with the jones" All industrialized countries do this not to keep up with other countries but because they think it best for their country.
the US does not subsidize other countries payroll taxes and SS and when you say that our military subsidizes them that's foolish as we are looking after our own perceived interests.
pay-as-you-go is not a pyramid scheme guy.
it's the same business model that private healthcare, life insurance, and private annuities use.
characterizing pay-as-you-go as "pyramid" is like calling all kinds of insurance as "pyramid". It's either ignorance or blind ideology or both.
Larry,
there is no "keeping up with the jones"
Except, this is exactly what you are saying when you say: "what you and your ilk would have us do is revert to 3rd world status."
You use of the word status can only mean one of two things:
1. Without SS, living standards in the US would revert to that of the third world. This is laughable on its face.
2. Keeping up with the Joneses type status.
If you mean 1, you are completely wrong. If you mean 2, this is certainly not the way for federal government to be spending money.
the US does not subsidize other countries payroll taxes and SS
Since money is fungible, this statement is wrong.
characterizing pay-as-you-go as "pyramid" is like calling all kinds of insurance as "pyramid".
Not really, since most insurance plans invest much of the premiums they take in. The money taken in by premiums in the private sector is not spent immediately.
Additionally, SS is definitely NOT insurance. The way it works doesn't even fit into a very broad reading of the definition of insurance.
Just kind of a bonus calculation to my plan:
Let's assume a person makes $40,000 year for his entire 40-year career. If 10% of his check goes into a retirement account and it earns a constant 10% interest rate, then he'd retire with $2,322,808.10. Assuming a 20-year retirement, that works out to $9,678.37 per month. By contrast, the average SS payout is $1,229 per month.
Under my plan, we could increase the payout of social security by 687.5%, and it wouldn't cost the government an extra dime. In fact, we'd save money!
Under my plan...
to do a proper comparison, you'd have to recognize that SS is really a life annuity - with disability, survivor and dependent insurance.
an annuity will pay you as long as you live but if you die early, your survivors don't get a "fund", they get some portion of your annuity for some period of time.
You can buy on the private market, products that are very similar to SS.
take a look:
http://analyzenow.com/Articles/Investments/Investment%20Articles/investments_that_can_equal_socia.htm
What is the status of Social Security? Here is the 2012 Trustees Report Summary that is signed by top administration officials.
Some Highlights:
"While the combined OASDI program continues to fail the long-range test of close actuarial balance, it does satisfy the test for short-range financial adequacy. The Trustees project that the combined trust fund assets will exceed one year’s projected cost for more than ten years, through 2027."
"However, the Disability Insurance (DI) program satisfies neither the long-range test nor the short-range test. DI costs have exceeded non-interest income since 2005, and the Trustees project trust fund exhaustion in 2016, two years earlier than projected last year."
Would you buy an annuity that will fiscally unsustainable in fifteen years?
How about disability insurance that will not be funded in four years?
Oh, and those projections don't reflect the current reduced payroll taxes!
Would you buy an annuity that will fiscally unsustainable in fifteen years?
in 15 years, it will STILL pay 75% of scheduled benefits.
Would YOU BUY an annuity from a private company and hope they are still around by the time you retire?
How about disability insurance that will not be funded in four years?
you see that's not the truth.
FICA will still collect taxes and still pay benefits but the benefits themselves will be cut in nothing id done.
Oh, and those projections don't reflect the current reduced payroll taxes!
they will in the next trustee report but you know... that virtually every pension plan in the US has the same exact baby-boomer demographic "problem" that SS does.
That's why many corporate and public pension systems have large unfunded liabilities. They got double-whacked by demographics and a investment meltdown.
so why would you blame SS and not the other pensions and annuities also affected by the same demographic forces?
""...
That's one heck of an assumption...
Use the KISS theory jm and think of what the money extorted for FICA had instead been put into simple passbook savings account...
How much would that have been worth and how much would those savings accounts have helped the economy?
Use the KISS theory jm and think of what the money extorted for FICA had instead been put into simple passbook savings account...
How much would that have been worth and how much would those savings accounts have helped the economy?
if it had been put into the same investments that many public and private pensions funds invested it - it would have gotten whacked the same way those other funds got whacked.
and passbook savings plans these days don't even keep up with inflation and SS pays inflation-adjusted benefits.
jon-
"This has forced more and more people into high risk things like junk bonds, MBS, hedge funds"
who you callin' high risk?
you plan for private savings is far superior to what we have. SS has negative nominal returns. even this twisted and zirped bond market can beat that.
http://www.coyoteblog.com/coyote_blog/2007/01/social_security-2.html
coyote has done all this math here and published a spreadsheet.
you wind up with 4-9 times the income at retirement.
the social security proponents argue "well, some people might make bad investments and have less/nothing".
while possibly true, it's difficult to imagine that the vast majority or even a meaningful portion of people would generate negative nominal returns over a 40 year period.
that's actually pretty difficult to do if you use even a modicum of sense.
but the notion that someone might save badly so we all ought to be required to seems like indefensibly bad logic.
if the government wants to offer a retirement scheme that you can put you money into if you so choose, fine, but making it mandatory is appalling and destructive.
"
if it had been put into the same investments that many public and private pensions funds invested it - it would have gotten whacked the same way those other funds got whacked.
and passbook savings plans these days don't even keep up with inflation and SS pays inflation-adjusted benefits."...
Flunk arithmetic much larry g?
Larry,
"oh I forgot..you do that in between your anti-Obama rants..."
Show me where I've ever said that.
there is no "keeping up with the jones"
Except, this is exactly what you are saying when you say: "what you and your ilk would have us do is revert to 3rd world status."
You use of the word status can only mean one of two things:
1. Without SS, living standards in the US would revert to that of the third world. This is laughable on its face.
2. Keeping up with the Joneses type status.
not really. It means if given a choice, people who live in industrialized countries PREFER payroll taxes to having elders living on the streets.
If you mean 1, you are completely wrong. If you mean 2, this is certainly not the way for federal government to be spending money.
well it certainly is is over 80% of people want it.
the US does not subsidize other countries payroll taxes and SS
Since money is fungible, this statement is wrong.
using that standard, you could say we are subsidizing ALL of their expenses, no?
characterizing pay-as-you-go as "pyramid" is like calling all kinds of insurance as "pyramid".
Not really, since most insurance plans invest much of the premiums they take in. The money taken in by premiums in the private sector is not spent immediately.
Much of it is - what they keep in reserve is what they need if claims end up higher than expected but for you average auto insurance company, the premiums are paying the claims.
Additionally, SS is definitely NOT insurance. The way it works doesn't even fit into a very broad reading of the definition of insurance.
SS IS Insurance Guy. You need to read up on it.
Old-Age and Survivors Insurance and Disability Insurance (OASDI)
"if it had been put into the same investments that many public and private pensions funds invested it - it would have gotten whacked the same way those other funds got whacked."
why do you keep telling this lie over and over larry?
if a fund was 50% s+p and 50% bonds, it has fully recovered from the last downturn. jsut the S+P + dividends alone pretty much gets you there.
oven since 2007, they have outperformed social security.
over a decade, they have outperformed it by a huge amount and over 40 years by a staggering sum.
the S+P is up 10X over 40 years.
5% bond yields would get you a 7X return.
social security gets you -35% over 40 years.
the gap is literally staggering.
your repeated claim about pension getting "whacked" is totally baseless.
the problems at pensions is from too low a contribution and longer lifespans/bad actuarial math, not the return on portfolios.
we have gone over this in great detail previously.
so why make the same unsupported claims that you know to be untrue?
"
not really. It means if given a choice, people who live in industrialized countries PREFER payroll taxes to having elders living on the streets."
no, it means that guys like you who are really bad at math are allowed to vote and mistakenly thing that they know what is best.
the math here is very, very clear.
SS is a disaster from a return standpoint.
i have no idea what the returns are in other countries, maybe they are not so bad, but in the us the program is literally criminally bad.
if a private fund were run like SS, its management would all be in jail.
@morg
SS is not a pension fund - it's a life insurance annuity with survivor and dependent insurance.
you have to compare apples to apples
re: investments
ALL Trust Funds - more than one hundred of them are NOT invested in the stock and bond market.
The Civil Service and Military Pension funds are NOT invested in the stock and bond market.
the gas tax that funds highways is NOT invested in the stock market.
There might be a case made for doing that but most trust funds including the SS trust fund are not the primary funding mechanism.
FICA is and much of what FICA takes in is paid out with only the surplus being held.
SS is pay-as-you-go
it's not an advance funded pension fund.
"
SS IS Insurance Guy. You need to read up on it.
Old-Age and Survivors Insurance and Disability Insurance (OASDI)"
nonsesne. calling a dog a cat does not make it so.
SS is not insurance by any legitimate definition.
what's being "insured"? what other kind of insurance pays everyone predictably?
there si no "you only get it when you need it" aspect.
it's a pension plan. (and a bad one)
they can call it whatever they like.
the definition of insurance is this:
"coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril "
http://www.merriam-webster.com/dictionary/insurance
how does SS fit into that?
it doesn't. even if you claim it "insures" against turning 65, there is no loss from turning 65, so there is nothing to indemnify.
Larry states:
"Oh, and those projections don't reflect the current reduced payroll taxes!"
they will in the next trustee report but you know... that virtually every pension plan in the US has the same exact baby-boomer demographic "problem" that SS does."
Larry, I meant reduced payroll taxes.
Do you know how Social Security shortfalls from reduced payroll taxes are being funded?
From the administration trustees report:
"A temporary reduction in the Social Security payroll tax rate reduced payroll tax revenues by $103 billion in 2011 and by a projected $112 billion in 2012. The legislation establishing the payroll tax reduction also provided for transfers of revenues from the general fund to the trust funds in order to "replicate to the extent possible" payments that would have occurred if the payroll tax reduction had not been enacted."
Replicate deficient funding by dipping into the largely borrowed general fund.
Hmmmm -- Yikes
SS is a disaster from a return standpoint.
actually the disaster is those who do not understand what SS is and is not.
Larry, I meant reduced payroll taxes.
Do you know how Social Security shortfalls from reduced payroll taxes are being funded?
From the administration trustees report:
"A temporary reduction in the Social Security payroll tax rate reduced payroll tax revenues by $103 billion in 2011 and by a projected $112 billion in 2012. The legislation establishing the payroll tax reduction also provided for transfers of revenues from the general fund to the trust funds in order to "replicate to the extent possible" payments that would have occurred if the payroll tax reduction had not been enacted."
Replicate deficient funding by dipping into the largely borrowed general fund.
I think you are correct on that. The other possibility is that they are drawing down on their surplus in the trust fund (which would still be paid out of the general fund).
well Paul, the ONLY part of SS that is "invested" is the surplus.
It is not 'invested'. It is consumed by Congress. The 'trustees' get IOUs that promise them that in the future the government will tax or borrow enough to put the money back into the fund. There is never a consideration about what happens when the government can't borrow or tax any longer without destroying the economy or the currency.
The vast majority of SS is paid for from the FICA tax.
That was the case but over the next few years SS contributions will not be enough to pay recipients. At that point the shortfall will have to be made up by new taxes.
we'll been over this before but facts are meaningless when it comes to ideology apparently.
It is a matter of accounting, not ideology. IOUs are not marketable securities.
Even if the govt reneged on the "IOUs", FICA would still fund social security.
Actually, it wouldn't. There would be a shortfall that would grow every year. Young people will never get any of their contributions back while the richer old people might get multiples of what they have put in.
every industrialized country in the world has mandatory payroll savings.
what you and your ilk would have us do is revert to 3rd world status.
Have you seen what is happening in Greece? People are giving away their kids because they can no longer afford to look after them. Should we ask these same people to pay more in taxes to fund pensions that are not their own?
the reality is that 3/4 of people would have almost nothing if it were not for the govt forcing them to pay FICA taxes so they'd have "something" by the time they retire.
That is not true. The reason why they have so little is because they expect to be looked after by the government.
what you and your ilk would have us do is revert to 3rd world status.
No. What 'our ilk' would do would be to allow people to set up their own plans to look after their own needs and have people take responsibility for their own lives. If you are a loser you have to ask for charity, not demand redistribution programs that are doomed to fail and bring down the entire system.
Can we please stop with the ridiculous arguments like "limited government would reverts us to third world status" and "Obama is running us into the ground"? Neither are true and are just rhetoric that will get us nowhere.
He can't. Larry suffers from brain damage and incapable of learning. His are faith based arguments.
"
actually the disaster is those who do not understand what SS is and is not."
SS is a form of forced savings in which a chunk of my money is coercively taken from me and placed into a system that yields negative nominal returns to investment even assuming that the promises made by the SS agency are kept which, by the time a retire, will be mathematically impossible barring a huge tax hike.
so what is it that i do not understand?
well Paul, the ONLY part of SS that is "invested" is the surplus.
It is not 'invested'. It is consumed by Congress. The 'trustees' get IOUs that promise them that in the future the government will tax or borrow enough to put the money back into the fund. There is never a consideration about what happens when the government can't borrow or tax any longer without destroying the economy or the currency.
sure there is. it's the same for all the trust funds including the civilian and military pension funds.
The vast majority of SS is paid for from the FICA tax.
That was the case but over the next few years SS contributions will not be enough to pay recipients. At that point the shortfall will have to be made up by new taxes.
not true. they will be payed but less. The law requires the benefits to be cut - rather than made up with general funds.
we'll been over this before but facts are meaningless when it comes to ideology apparently.
It is a matter of accounting, not ideology. IOUs are not marketable securities.
that's true but the other things like saying people will not get benefits is a lie.
Even if the govt reneged on the "IOUs", FICA would still fund social security.
Actually, it wouldn't. There would be a shortfall that would grow every year. Young people will never get any of their contributions back while the richer old people might get multiples of what they have put in.
and that's a lie. it's one thing to disagree on principles in concept, it's another to lie.
every industrialized country in the world has mandatory payroll savings.
what you and your ilk would have us do is revert to 3rd world status.
Have you seen what is happening in Greece? People are giving away their kids because they can no longer afford to look after them. Should we ask these same people to pay more in taxes to fund pensions that are not their own?
what a load of malarkey. Tell me what they are doing in Singapore? Are they EATING their kids or worse?
the reality is that 3/4 of people would have almost nothing if it were not for the govt forcing them to pay FICA taxes so they'd have "something" by the time they retire.
That is not true. The reason why they have so little is because they expect to be looked after by the government.
and here we go off the rails again.
what you and your ilk would have us do is revert to 3rd world status.
No. What 'our ilk' would do would be to allow people to set up their own plans to look after their own needs and have people take responsibility for their own lives. If you are a loser you have to ask for charity, not demand redistribution programs that are doomed to fail and bring down the entire system.
You can do that now with 401(k) and 402 and IRAs, right?
that's not what you really want. you want to lie about SS and refuse to accept that if 80% of the country supports it - we keep it.
SS is a form of forced savings in which a chunk of my money is coercively taken from me and placed into a system that yields negative nominal returns to investment even assuming that the promises made by the SS agency are kept which, by the time a retire, will be mathematically impossible barring a huge tax hike.
so what is it that i do not understand?
you disagree with the concept of SS but you argue not based on facts of the program.
that's letting your ideology get in the way of the facts and realities.
in your view, anything the govt takes form you is "coercive".
right?
Larry,
It means if given a choice, people who live in industrialized countries PREFER payroll taxes to having elders living on the streets.
I'm pretty sure you're wrong on this one. If it was possible to opt out of social security, the program would collapse next week due to most people opting out.
Also, SS does not prevent "elders living on the streets." The "elders" are the richest segment of our population. SS represents a wealth transfer from the poor to the rich. The net worth of those over 65 are 47 TIMES richer than those under the age of 35.
using that standard, you could say we are subsidizing ALL of their expenses, no?
Yes. This is why it's so stupid for the US to have so many over seas bases. If Europe wants to eat itself in another war or implode trying to bring about a socialist utopia, fuck 'em.
SS IS Insurance Guy. You need to read up on it.
I know what the government propogand is "Guy". But if the government said I was a black lesbian chick, I wouldn't believe them. Grow up!
It means if given a choice, people who live in industrialized countries PREFER payroll taxes to having elders living on the streets.
I'm pretty sure you're wrong on this one. If it was possible to opt out of social security, the program would collapse next week due to most people opting out.
ah..you should check the polls. the only ones who want out are the young and the dumb.
Also, SS does not prevent "elders living on the streets." The "elders" are the richest segment of our population. SS represents a wealth transfer from the poor to the rich. The net worth of those over 65 are 47 TIMES richer than those under the age of 35.
there are a surprising number of elders whose only income is SS - about 12K a year.
using that standard, you could say we are subsidizing ALL of their expenses, no?
Yes. This is why it's so stupid for the US to have so many over seas bases. If Europe wants to eat itself in another war or implode trying to bring about a socialist utopia, fuck 'em.
geeze tell me me what you REALLY THINK! :-)
the counter argument is that if we don't protect their lazy asses, it will cost us more .... right?
SS IS Insurance Guy. You need to read up on it.
I know what the government propogand is "Guy". But if the government said I was a black lesbian chick, I wouldn't believe them. Grow up!
that's just more anti-govt blather.
you don't need the govt to tell you what SS is or is not - but you do need to be interested in the truth and not what those who are opposed to it are pushing as propaganda.
there are LOTs of sources of credible info on what SS is or is not.
to argue SS based on what is not the truth - and know you're doing it is just dishonest ideology. We're being overrun with it these days.
ah..you should check the polls.
I really don't want to get into this argument, but I do just want to say this point is a little weak, Larry. Elderly people are a very large voting block and they like social security. On the other hand, young people tend not to vote, and they are the ones most likely to oppose social security.
For the record, I am not saying you wrong, but this may not be the best measurement to use.
Larry,
ah..you should check the polls.
Because people don't lie to pollsters all the time, right? It doesn't take a genius to know that people wouldn't choose to have the federal government take nearly 15% of their pay with the promise that the government might pay it back to them, but only after four or five decades. Why do you think it's mandatory, dumbass?
there are a surprising number of elders whose only income is SS - about 12K a year.
$12K is plenty to live on, especially when your house is paid off.
the counter argument is that if we don't protect their lazy asses, it will cost us more .... right?
Is that your counter or just some sort of weasel argument that you will later claim isn't really YOUR claim, just what someone, somewhere may put forward.
that's just more anti-govt blather.
Just more ignorance falling from your mouth. Here's your homework, if you decide you don't want to be a complete dumbass:
1. Define insurance.
2. Look up the definition of social security and how it is actually implemented.
You'll see that social security isn't insurance. But since it wasn't a popular program and had to be sold to the public, a lie had to be created to make it stick. Well, FDR being the master liar he was told the lie repeatedly, knowing suckers like you are everywhere.
ah..you should check the polls.
I really don't want to get into this argument, but I do just want to say this point is a little weak, Larry. Elderly people are a very large voting block and they like social security. On the other hand, young people tend not to vote, and they are the ones most likely to oppose social security.
For the record, I am not saying you wrong, but this may not be the best measurement to use.
I'd actually agree with you but most of the polls - all ages above the low 20's show support of keeping SS.
and as far as opting out of it.. sure... if you asked folks if they could opt out of any tax - what would be the result?
Most folks simply do not really know what SS is and is not and many are susceptible to sound-bite propaganda...like "social security is broke" or " the deficit can be reduced if we cut SS", and so on.
we're not really have a debate on the facts as much as being inundated with disinformation from organizations that oppose SS as a concept - and, in fact, have opposed SS as a concept from the beginning.
Most people who do understand what SS really is and know what the propaganda is - support the concept of SS.
they want it reformed and changed but they support the basic concept - as most people do in every other industrialized country in the world, do.
larry-
that's total nonsense.
this is not ideological. it's common sense.
first off, fica taxes ARE coercive. you have to pay them. even if you vote no, you still do. that is the very definition of coercive.
government IS coercion. that's the whole point.
"Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master."
-george washington
just because somehting is the will of the majority does not make it non coercive. you really seem to have no idea what government is.
second, i have given you the math. work it through. you keep making this wildly false and unsupported claim that SS somehow keeps you from "getting whacked". this could not be further from the truth.
SS GUARANTEES that you get whacked.
over 40 years you lose 30% instead of making 600-900%.
with 3% inflation, a dollar you put into SS at 25 will be worth 20c in real terms when you retire.
that is an abominably bad return.
third, the program will fail in the very near term. even if we pretend that the trust fund is real and can be paid, SS will be in the red post 2033 (and the date for inability to fund keeps getting closer). this is from the report of its own trustees.
so i have no idea what you are babbling about.
it's a bad plan with mandatory participation that no sane individual would willingly participate in.
so what is it about this plan that you like?
and plese, no more repeating the same glaring logical fallacy of "that's what people do" over and over.
governments all impose tariffs as well. does that make them a good idea? no. they are provably harmful in every instance.
in all seriousness, do you even see that this argument is a logical fallacy? it's certainly been pointed out to you over and over.
so i'm asking a really simple question:
do you realize that saying that all countries do X is not a justification for X?
i'm asking an honest question here. do you understand that claiming such is a logical fallacy?
Because people don't lie to pollsters all the time, right? It doesn't take a genius to know that people wouldn't choose to have the federal government take nearly 15% of their pay with the promise that the government might pay it back to them, but only after four or five decades. Why do you think it's mandatory, dumbass?
well..most folks if you asked them if they could get out of paying any tax, would say the same thing, right?
what does that prove, dumbass?
there are a surprising number of elders whose only income is SS - about 12K a year.
$12K is plenty to live on, especially when your house is paid off.
it's enough.. I agree but if it is your only income..it's pretty close and man people do not own their homes..they live in rental apts.
the counter argument is that if we don't protect their lazy asses, it will cost us more .... right?
Is that your counter or just some sort of weasel argument that you will later claim isn't really YOUR claim, just what someone, somewhere may put forward.
no.. I try to understand both sides arguments. That's the argument used by strong pro-military types, right?
that's just more anti-govt blather.
Just more ignorance falling from your mouth. Here's your homework, if you decide you don't want to be a complete dumbass:
1. Define insurance.
2. Look up the definition of social security and how it is actually implemented.
follow your own advice, guy
You'll see that social security isn't insurance. But since it wasn't a popular program and had to be sold to the public, a lie had to be created to make it stick. Well, FDR being the master liar he was told the lie repeatedly, knowing suckers like you are everywhere
it's insurance guy. you're just spouting propaganda now.. and showing your own ignorance of what is is.
it's basically pay-as-you-go life annuity insurance.
you can buy this same product on the private market except it will cost you more than what you pay in payroll taxes.
larry-
http://reason.com/poll/2011/05/25/young-people-favor-social-secu
support for SS is very thin.
it's also entirely focused in the older populations.
those under 54 (the ones who are paying) want it reduced.
are you really surprised that the people getting goodies favor goodies and those paying don;t want to pay to pay others, especially when they know that they are never going to get any?
i realize that you believe that tyranny of the majority is the end all be all of politics and philosophy, but do you even even stop to consider notions of fairness or justice?
how do you make up your own mind about voting? just jump in with the majority?
larry-
"
follow your own advice, guy"
what a disingenuous dodge.
i gave you the dictionary definition of insurance and asked you how SS could be thought to fit it.
you ducked the question.
to repeat:
the definition of insurance is this:
"coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril "
http://www.merriam-webster.com/dictionary/insurance
how does SS fit into that?
it doesn't. even if you claim it "insures" against turning 65, there is no loss from turning 65, so there is nothing to indemnify.
that's total nonsense.
this is not ideological. it's common sense.
first off, fica taxes ARE coercive. you have to pay them. even if you vote no, you still do. that is the very definition of coercive.
government IS coercion. that's the whole point.
"Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master."
-george washington
all govt and all taxes are coercive - not just FICA, correct?
just because somehting is the will of the majority does not make it non coercive. you really seem to have no idea what government is.
If taxes are allowed in the Constitution and people are allowed to vote - then your claim of "coercive" is more ideological than practical IMHO.
second, i have given you the math. work it through. you keep making this wildly false and unsupported claim that SS somehow keeps you from "getting whacked". this could not be further from the truth.
you're not comparing apples to apples.
SS is pay-as-you-go annuity insurance not an advance funded pension plan.
SS GUARANTEES that you get whacked.
tell me why both private and public sector pension plans have unfunded liabilities.
over 40 years you lose 30% instead of making 600-900%.
with 3% inflation, a dollar you put into SS at 25 will be worth 20c in real terms when you retire.
that is an abominably bad return.
do you read the links I provide you?
http://analyzenow.com/Articles/Investments/Investment%20Articles/investments_that_can_equal_socia.htm
third, the program will fail in the very near term. even if we pretend that the trust fund is real and can be paid, SS will be in the red post 2033 (and the date for inability to fund keeps getting closer). this is from the report of its own trustees.
Morg - the trust fund is a flea on a dog's butt. the real money in SS comes from FICA and virtually all of it is spent before it has time to be invested.
so i have no idea what you are babbling about.
it's a bad plan with mandatory participation that no sane individual would willingly participate in.
it's virtually the same as any pay-as-you-go insurance where premiums pay claims and the little left over is kept as a contingency.
so what is it about this plan that you like?
and plese, no more repeating the same glaring logical fallacy of "that's what people do" over and over.
I like it because I don't end up having to pay for others who are old and destitute.
I'd rather have them put away something for their retirement.
governments all impose tariffs as well. does that make them a good idea? no. they are provably harmful in every instance.
in all seriousness, do you even see that this argument is a logical fallacy? it's certainly been pointed out to you over and over.
so i'm asking a really simple question:
do you realize that saying that all countries do X is not a justification for X?
i'm asking an honest question here. do you understand that claiming such is a logical fallacy?
but it's not guy. You yourself make the claim that we ought to have our corporate taxes not higher than other countries.
so you're comparing us to other countries.
are you engaging in a logical fallacy when you do that?
Oh Contraire Morg:
http://newoldage.blogs.nytimes.com/2010/08/25/social-security-and-younger-americans/
you need to stop getting your "news" and "info" from folks like Heritage.
"
well..most folks if you asked them if they could get out of paying any tax, would say the same thing, right?
what does that prove, dumbass?"
that's a disingenuous and stupid answer that is a deliberate oversimplification.
if someone came to me and said you must give up all the fica you have paid to date but can avoid paying any in the future of you give up all rights to participate in medicare and social security, i would jump on it.
that's not "hey, do you want to pay taxes?" it's "do you think the services we are promising in the future are worth what we charge".
you make a choice just like you would for life insurance or cable tv: are the benefits worth the price?
the fact is that the majority of americans under 54 do not like the price/benefits ratio.
i would LOVE to get out of SS and would happily surrender the over $200k in taxes i have paid to SS and take ZERO for it to get out of the program.
it's that bad an offering.
at 55 with only 10 years left to pay, maybe it would makes sense to stay in, but not now.
i'd leave in a heartbeat and give up the benefits.
Larry,
most folks if you asked them if they could get out of paying any tax, would say the same thing, right?
what does that prove, dumbass
That government is a bloated, cancer.... Dumbass.
it's enough.. I agree but if it is your only income..it's pretty close and man people do not own their homes..they live in rental apts.
So after a lifetime of earning, you failed to take into account that you would get old? So you support policy to take from the poor to give to the rich?
That's the argument used by strong pro-military types, right?
No. I'm pro-strong military and this is not my argument.
follow your own advice, guy
I did. A few years ago. You know what I found? Flemming v. Nestor. Clearly stated in that decision is "... eligibility for benefits, and the amount of such benefits, do not in any true sense depend on contribution to the program through the payment of taxes ...
...
To engraft upon the Social Security system a concept of "accrued property rights" would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands.
...
Congress included in the original Act, and has since retained, a clause expressly reserving to it "[t]he right to alter, amend, or repeal any provision" of the Act.
...
We must conclude that a person covered by the Act has not such a right in benefit payments as would make every defeasance of "accrued" interests violative of the Due Process Clause of the Fifth Amendment."
In other words, social security is definitely NOT insurance. You can continue to delude yourself if you'd like, though.
you need to stop getting your "news" and "info" from folks like Heritage.
Morganovich's link was to Reason.com. Reason is a publication that is quoted fairly often in mainstream news (by outlets on both sides). It's not a political think-tank like Heritage; it's a newspaper with a research division (Reason.org).
re: http://www.merriam-webster.com/dictionary/insurance
there are a lot of honest and credible descriptions of what SS is and it is insurance.
it's described that way in law and in practice.
to not recognize the truth here is to continue to rely on dishonest propaganda.
It's one thing to disagree on concept, it's another to argue a lie especially when you know the truth and can find it easily.
http://en.wikipedia.org/wiki/Social_Security_(United_States)
the fact is that the majority of americans under 54 do not like the price/benefits ratio
ha ha ha..
they feel that way about ALL Taxes!
what is your REAL point here?
larry-
did you even read that?
it was so slanted it was unreal. if you think the NYT is credible as opposed to agenda driven, then you are truly lost.
i note you are trying to make this about "majority" again and cannot answer any of the substantive questions i have asked.
try it, it will be educational for you to tray actually thinking for a change.
polls of people wanting free stuff are hardly surprising.
the poll i gave you was about wanting to pay for it.
that's where you get honest answers not, hey, who wants free stuff.
further, the vast majority know the program is in deep trouble.
http://www.politico.com/news/stories/0311/51476.html
Of those who see the system as in crisis or on the verge of one, 66 percent said they think Social Security needs a major overhaul.
that's 53% saying it needs a major overhaul.
I did. A few years ago. You know what I found? Flemming v. Nestor. Clearly stated in that decision is "... eligibility for benefits, and the amount of such benefits, do not in any true sense depend on contribution to the program through the payment of taxes ...
...
To engraft upon the Social Security system a concept of "accrued property rights" would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands.
...
Congress included in the original Act, and has since retained, a clause expressly reserving to it "[t]he right to alter, amend, or repeal any provision" of the Act.
...
We must conclude that a person covered by the Act has not such a right in benefit payments as would make every defeasance of "accrued" interests violative of the Due Process Clause of the Fifth Amendment."
In other words, social security is definitely NOT insurance. You can continue to delude yourself if you'd like, though.
that's not what it said guy. That's your own tortured logic that ignores the reality.
you're just letting your ideology overrun the truth here and that's par for the course with guys like you.
you live in your own self-constructed world and ignore the obvious realities because it violates your own beliefs.
if you want to oppose something, at least oppose it on the facts not your prejudices.
"
what is your REAL point here?"
the real point is simple:
the cost benefits ratio on SS is so horrible, that almost no one would willingly participate in it.
you seem to be in favor of forcing them to destroy their own wealth.
why is that?
"you need to stop getting your "news" and "info" from folks like Heritage"...
Yeah larry g, sites like wikipedia are so much better...
ROFLMAO!
that's not what it said guy.
I quoted directly from the opinion guy. If that is "not what it said", then what is it? Taking direct quotes is the definition of "what is said". This is an excellent example of your own delusion.
larry-
this whole thread has been you accusing others of prejudices etc and failing to answer question, objections, or provide evidence.
you argue like a 2nd grader.
"
but it's not guy. You yourself make the claim that we ought to have our corporate taxes not higher than other countries.
so you're comparing us to other countries.
are you engaging in a logical fallacy when you do that?"
yes, it is larry.
here, i'll prove it:
proposition:
all countries do X so that justifies doing X.
let's swap in some actual values for X.
"ban women from voting"
"allow slavery"
"impose tariffs on trade"
"support the divine right of kings"
all of these have been true at some point.
so were they all justified?
seriously, are you capable of logical thought at all?
what does a corp tax rate have to do with anyhting? seriously, your mind is like a pile of broken gears. this is practically tourettes.
saying that if you have a higher corp tax rate than other countries, businesses will move to other countries is not the same thing at all.
that's like saying if we lift of this end of the kiddie pool, water will slosh to the other side. it's a simple fact.
i have never once argued that the rates other countries charge for taxes provides any evidence as to what a desirable level is, only that relative levels matter in terms of business decisions.
if you cannot see the difference, then you are unable to think clearly.
i have long been trying to figure out whether you are just wildly disingenuous or if you seriously cannot think logically at all.
your response here seems to have cleared that up.
you really don't see this huge, repetitive gaping hole in your reasoning process, do you?
re: Reason:
The Reason Foundation is a American libertarian research organization[2] founded in 1968 that also publishes Reason magazine. Based in Los Angeles, it is a non-profit, tax-exempt organization that, like other think tanks, produces papers and studies to support a particular set of values. According to its web site, they are "the values of individual freedom and choice, limited government, and market-friendly policies."
re: social security polls
there are LOTs of Polls.
the vast majority of them show 80% support for SS.
the Reason poll was, as is often the case with that kind of group - cherrypicking....
I quoted directly from the opinion guy. If that is "not what it said", then what is it? Taking direct quotes is the definition of "what is said". This is an excellent example of your own delusio
where in the opinion did SCOTUS say denial of benefits means it's not insurance?
do you know that if you are found guilty of a felony you can be denied any/all benefits whether they are insurance or otherwise?
denial of benefits does not make it not insurance.
there is no end of credible and reputable sites that say SS IS insurance and you CHOOSE to believe something different. That's denial guy.
larry-
i know that SS calls itself insurance.
i can call myself a unicorn.
id does not make it so.
by no conventional definition is social security insurance.
only by it's own self serving description is that so.
the concept of indemnity is inseparable from the concept of insurance. that is the very integument of what insurance is.
SS is not indemnity for loss.
therefore, it is not insurance.
it's not even an annuity. annuities have fixed payouts.
it's a pension scheme and a bad one.
I've another idea:
What if giving Social Security to everybody, we only give it to those below a certain income level and/or in a dire emergency? This way, it could still function as insurance, without giving money to the elderly folks who don't really need it.
For example, if you are making $X or less, you get a check. Anything more than X (X+n), you get nothing.
This isn't the ideal solution, but it would serve towards weening America off Social Security. We can't go the nuclear option and just dissolve it immediately; the fallout would be too great.
So, while not preferable to my earlier plan, this would help solve some of the solvency issues.
Based in Los Angeles, [Reason Foundation] is a non-profit, tax-exempt organization that, like other think tanks...
Yes, Reason Foundation is a think-tank, but Reason.com is not.
re: not dealing with the facts and logical fallacies.
I will admit that comparing us to other countries on SS is a logical fallacy if you'll admit that the same logic applies when comparing us to other countries on other issues like taxes and entitlements, etc.
otherwise, you're cherry picking.
re: the facts
you're not arguing on the facts, Morg.
you're arguing on a personal ideology that is opposition to known facts about SS.
you are opposed to it in concept and I accept that but your argument is based on things that are not true - like the fact that SS is not a pension plan, was never intended to be one and functions like most all pay-as-you-go insurance does - and, in fact, is described that way by most credible organizations who have no anti-SS agenda.
You're spouting propaganda guy.
I'm not your guy, buddy!
jon-
means testing has been an often mooted idea for SS.
economically, it may make some sense.
it does, however, very dramatically change the purpose and role of SS.
it turns it into a kind of welfare for which we are taxed very heavily (12% of gross income is no joke) and makes one of the flatter parts of the us tax code into probably the most progressive.
if you are going to go that way, i think that just expanding welfare is a more honest approach and would likely wind up being cheaper and yield better economic effects by allow individuals to actually get positive returns on their retirement savings meaning that fewer would actually need any sort of government aid.
getting 5% return a years instead of nearly -1% would result in far fewer people needing aid at all, which seem to be to be the real goal.
continuing to take from those who will never get cash out of the system and subjecting their savings to negative returns as well seem like a way to inhibit wealth creation and savings and increase need for the program itself. SS itself is a vast destroyer of wealth. better to just get rid of it and put another safety net into place is need be (but one that would likely tail off, not grow).
What if giving Social Security to everybody, we only give it to those below a certain income level and/or in a dire emergency? This way, it could still function as insurance, without giving money to the elderly folks who don't really need it.
So you want individuals and their employees to pay 12.4% of their income into a fund only to get nothing back if they manage to save and are successful? In what world does that make any sense or can be considered moral? And how do you measure income but not look at total wealth? People who are smart and have access to good lawyers and accountants can set up a scheme that will provide them with very little official income while they manage to live very well.
This isn't the ideal solution, but it would serve towards weening America off Social Security. We can't go the nuclear option and just dissolve it immediately; the fallout would be too great.
Sorry but you are not seeing the unintended consequences.
i know that SS calls itself insurance.
i can call myself a unicorn.
id does not make it so.
when most credible organization describe it that way also....
and you refuse to accept...
by no conventional definition is social security insurance.
in fact it is acknowledged as such by most credible organizations who have no opposition agenda.
only by it's own self serving description is that so.
the concept of indemnity is inseparable from the concept of insurance. that is the very integument of what insurance is.
SS is not indemnity for loss.
it is. If you die, it pays benefits. If you become permanently disabled it pays benefits.
therefore, it is not insurance.
it is guy..
it's not even an annuity. annuities have fixed payouts.
http://money.cnn.com/retirement/guide/annuities_basics.moneymag/index2.htm
totally bizarre. It is insurance. It's describe in law and practice as such and it functions as such.
you're just in denial guy because of your ideology.
you can buy the same thing as SS on the private market and it's called a Life Annuity with Insurance.
What if giving Social Security to everybody, we only give it to those below a certain income level and/or in a dire emergency? This way, it could still function as insurance, without giving money to the elderly folks who don't really need it.
For example, if you are making $X or less, you get a check. Anything more than X (X+n), you get nothing.
This isn't the ideal solution, but it would serve towards weening America off Social Security. We can't go the nuclear option and just dissolve it immediately; the fallout would be too great.
So, while not preferable to my earlier plan, this would help solve some of the solvency issues.
That's a principled argument. In fact, it embodied in SS right now and is proposed further in the reform options.
there's a report worth reading - about when Galveston, Texas opted out of SS and ran their own plan:
http://www.ssa.gov/policy/docs/ssb/v62n1/v62n1p47.pdf
for myself - I'd say this.
When SS was first enacted, a substantial number of households, the women did not work but stayed home to raise kids and maintain the household.
If her husband died or became permanently disabled, the whole family was in dire straights.
So SS was meant to cover that kind of casualty and it paid in addition to a pension for those that lived, survivor and child annuities if he died and disability benefits if he became disabled.
Back then, many occupations were much more manual and workers much more subject to getting injured or killed.
So those two things are much less true now days and other proposed reforms have suggested providing full coverage to those who still work in more dangerous occupations.
larry-
"
I will admit that comparing us to other countries on SS is a logical fallacy if you'll admit that the same logic applies when comparing us to other countries on other issues like taxes and entitlements, etc.
otherwise, you're cherry picking."
no.
wow. i am staggered that you cannot grasp this bit of elementary logic or see the difference.
saying "all countries have tariffs so tariffs must be good" is nothing at all like saying "if our taxes are higher than mexico's, companies will move to mexico"
if you cannot see the difference, then you literally cannot think logically at all.
the former is an appeal to authority/practice. everyone does it so it's OK.
the second is an application of a simple economic law: companies prefer to pay lower taxes and if the difference is big enough, will move to take advantage of it. that's like saying "water runs downhill".
now if i had said "other countries have lower corp taxes and that means we should too" then yes, that would be the same fallacy you are committing.
however, i have never once made such an argument.
i have argued that high corporate taxes are harmful and presented reasons why and i have argued that having higher taxes than others causes business to relocate, but i have never, ever said that the tax rates others set provide a justification for setting ours at X.
so, no, i do not agree to anyhting like what you just said. it's completely wrong.
regarding the facts, no larry, it is you who are not addressing the facts.
i have laid them out very simply and you have not been able to contest a signle one.
ss yields negative nominal returns to investment.
private investment over a 40 year timeframe yield returns that are far, far higher and would result in 5-10X the ultimate payout.
read the spreadsheet in the coyote article.
it's all there.
participation in SS is mandatory by law.
thus, we are being legally required to impoverish ourselves.
we would be far better off if this were stopped.
(and the economy would grow faster from the additional investment into useful things)
it's a huge win all around.
those are the facts.
go ahead, try disputing them.
Larry,
where in the opinion did SCOTUS say denial of benefits means it's not insurance?
Everything I quoted from the opinion means it's not insurance. One of the defining charactersistics of insurance is that payments reflect benefits, but the opinion reads "benefits... go not... depend on contribution..."
The acknowledgement that benefits are based solely on political patronage by saying "To engraft upon the Social Security system a concept of "accrued property rights" would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands". Meaning SS is based on what is politically expedient is has no basis in the actuarial world.
That congress has "[t]he right to alter, amend, or repeal any provision", but "contributors" still have to contribute the same amount.
larry-
that still does not make it insurance.
you are committing another logical fallacy called "appeal to authority".
you say "they say it is and they are really smart/credentialed/authoritative".
that's just another in your endless bag of illogic.
http://en.wikipedia.org/wiki/Argument_from_authority
it seems to me that your entire mental process is built around repeated logical fallacy. it is your primary argument in virtually everyhting.
i have given you a first principles argument.
i gave to a definition of insurance from a widely used dictionary. i then pointed out why SS does not meet the definition.
you have responded with a sea of whining about "they say it is!" but no actual argument.
find me a common definition of insurance.
then show me how ss is insurance.
notions like survivors benefits show nothing. pensions work exactly the same way.
this is the definition of pension:
"# A regular payment made during a person's retirement from an investment fund to which that person or their employer has contributed..."
that sure sounds like SS to me.
either find me a definition of insurance that fits ss better, or admit that you have no argument.
it's really that simple.
wow. i am staggered that you cannot grasp this bit of elementary logic or see the difference.
horse manure...
saying "all countries have tariffs so tariffs must be good" is nothing at all like saying "if our taxes are higher than mexico's, companies will move to mexico"
if you cannot see the difference, then you literally cannot think logically at all.
double horse manure
the former is an appeal to authority/practice. everyone does it so it's OK.
the second is an application of a simple economic law: companies prefer to pay lower taxes and if the difference is big enough, will move to take advantage of it. that's like saying "water runs downhill".
now if i had said "other countries have lower corp taxes and that means we should too" then yes, that would be the same fallacy you are committing.
however, i have never once made such an argument.
ever? come on Morg.. you are sliding sideways here big time
i have argued that high corporate taxes are harmful and presented reasons why and i have argued that having higher taxes than others causes business to relocate, but i have never, ever said that the tax rates others set provide a justification for setting ours at X.
so, no, i do not agree to anyhting like what you just said. it's completely wrong.
regarding the facts, no larry, it is you who are not addressing the facts.
i have laid them out very simply and you have not been able to contest a signle one.
but you've laid out propaganda and personal beliefs and not facts....
ss yields negative nominal returns to investment.
private investment over a 40 year timeframe yield returns that are far, far higher and would result in 5-10X the ultimate payout.
read the spreadsheet in the coyote article.
it's all there.
and it makes the same mistake. SS is not a pension.
participation in SS is mandatory by law.
thus, we are being legally required to impoverish ourselves.
so are IRS taxes guy
we would be far better off if this were stopped.
(and the economy would grow faster from the additional investment into useful things)
it's a huge win all around.
those are the facts.
go ahead, try disputing them.
the only countries that do not have payroll taxes and SS are worse off economically than us... right?
can you name one that does not have payroll taxes and as a result is better off economically?
with your logic.. all the countries without payroll taxes should easily best us economically...
right?
even Singapore just 10 years ago could have not had payroll taxes... or Chile with the private accounts but both countries had mandatory payroll taxes...
right?
Everything I quoted from the opinion means it's not insurance.
only in your mind guy.
no one else took that opinion that way, and certainly not Congress.
and no reputable organization that has views on SS took it that way.
you've created this in your own mind and that exemplifies your overall and other thinking.
it's what you want to believe - not what the verifiable facts are.
Larry,
Well I guess you got me there with your reasoned logic about what insurance is and how social security fits that model to a 'T'.
larry-
your whole argument was "nuh uh".
do you really expect to be taken seriously arguing that way?
did i say second grader? i was being too generous. i know several second graders that would immediately laugh you out of an argument for your last comment.
you have committed a logic fallacy. it's provable and obvious.
you cannot refute it.
then, you further demonstrate that you cannot think by calming that saying that the comment "france has lower taxes so we should too" is the same as saying that "france having lower taxes makes it more attractive to business".
arguing with you is surreal. i do not think i have ever met anyone so totally unable to think in logical terms.
the rest of your response just proves my point by making the same mistakes over and over.
i gave you the definition of a pension. what part of that does SS not meet? you just make more appeals to authority.
your entire strategy of argument is to flail from one fallacy to the next.
"
can you name one that does not have payroll taxes and as a result is better off economically?
with your logic.. all the countries without payroll taxes should easily best us economically...
right?"
here, look, you do it again.
try subbing anther term into your logical structure.
can you name one country that does not allow slavery/ban women from voting/impose tariffs? etc.
it's really amazing larry.
you clearly do not grasp this concept at all.
you go right back to "others do it so it must be good" even after admitting it to be a fallacy.
uninformed is one thing, but you actually seem to be unable to think and process information.
there's really no way to argue with someone who resolutely refuses to think in logical terms.
@Ken - if you become permanently disabled and you receive income for the rest of your life -
isn't that insurance?
if you are married and you die and your wife and kids receive benefits, isn't that insurance?
if you yourself live longer than what you paid into FICA and you still get your monthly check - ending up with far more than you paid into the program, isn't that insurance?
@Morg -geeze guy.
I"ll grant you your logical fallacy argument but not the rest of the facts vs your beliefs on SS.
the fact that you refuse to accept verifiable facts while simultaneously arguing "logic" is amusing ....
"no one else took that opinion that way, and certainly not Congress.
and no reputable organization that has views on SS took it that way"...
Drinking deep into that kool-aid aint ya boy?
These are facts:
" The current Social Security system works like this: when you work, you pay taxes into Social Security. The tax money is used to pay benefits to:
People who already have retired;
People who are disabled;
Survivors of workers who have died; and
Dependents of beneficiaries.
The money you pay in taxes is not held in a personal account for you to use when you get benefits. Your taxes are being used right now to pay people who now are getting benefits. Any unused money goes to the Social Security trust funds, not a personal account with your name on it.
Social Security Is More Than Retirement
Many people think of Social Security as just a retirement program. Although it is true that most of the people receiving Social Security receive retirement benefits, many others get Social Security because they are:
Disabled; or
A spouse or child of someone who gets Social Security; or
A spouse or child of a worker who died; or
A dependent parent of a worker who died.
Depending on your circumstances, you may be eligible for Social Security at any age. In fact, Social Security pays more benefits to children than any other government program."
http://www.ssa.gov/pubs/10024.html#a0=0
For someone to refuse to admit that SS is insurance in the light of the above facts is mind boggling...
.. but when that same person insists that Heritage or some other propaganda group is telling the truth - it's comical.
what arguments?
you have provided no valid arguments at all (nor responded to mine), just a senseless lurching from appeal to authority to appeal to practice.
essentially everyhting you have said on this whole tread is one of those 2 fallacies.
it's really pretty breathtaking.
i'm not sure i have ever seen anyhting like it.
equally bad, you try to miss the forest for the semiotic trees.
so, let's set aside the insurance/pension thing for a moment.
the role of SS is to take you money now and save it for you so that you (and possibly your dependents) are provided for in you old age. yes? call it whatever you want. it's not germane to the discussion.
now we must ask "does it do a good job of this". here, the answer must emphatically be no.
it gets you negative nominal returns to your contributions, a truly staggering achievement given that not everyone even lives to collect it.
we then look at various ways that the 12%+ of your income could be otherwise utilized to serve the same goal (like private savings accounts).
these clearly do a far better job of making you financially secure in your old age. combined with some simple life insurance, it does a better job with your dependents as well.
if we simply put all that money in private accounts, we'd get more savings, more economic growth (as it would actually be invested not stuffed in federal ious), and the taxes from those accounts would likely be able to fund welfare for the needy elderly (of which there would be fewer due to better savings returns).
so what about that is so difficult to grasp?
"
The money you pay in taxes is not held in a personal account for you to use when you get benefits. Your taxes are being used right now to pay people who now are getting benefits. Any unused money goes to the Social Security trust funds, not a personal account with your name on it."
which differs from, say, the pension fund at GM how?
that pension fund will also cover your spouse if you die, your kids etc.
to ignore this basic fact is just willfully ignorant and an attempt to hide the fact that your core ideas are all logical fallacies in ab semotic thicket.
calling SS insurance makes it even worse.
life insurance currently pays rates of return way above equity or bonds returns. this makes SS look even worse by comparison.
if you support SS, you should be DYING to call it a pension as then it does not look so bad.
How about this:
At the age of 65, we send all the old people out into the desert with a pointy stick and a 12 oz bottle of water and say "go nuts, old timer."
i should have said "primary role" of SS. like private pensions, there are other things it does, but those are not its main goal.
also note:
if you are going to make appeals to authority, then you should look at the real world.
why did virtually every private company abandon defined benefits pensions in favor of 401k etc?
they did it because they work better and, unlike a government, companies cannot print money and have to abandon practices that are financially unsound.
are you seriously trying to argue that SS either gives a good return on investment or is going to be solvent in 30 years without huge pay cuts or tax hikes?
are you arguing that, given the choice, you would prefer to participate in SS?
"At the age of 65, we send all the old people out into the desert with a pointy stick and a 12 oz bottle of water and say "go nuts, old timer."
in my tribe, we use ice floes.
it's neater and the polar bears seem to like it.
Jon said:
What if, rather than taking each person's FICA and putting into a big pool (Yes, I am simplifying, but bare with me), each person's FICA was distributed into an account of his choosing? I don't know about you guys, but I automatically have 10% of my paycheck taken out each week to go into my IRA. This could be a similar set-up, I think. It would eliminate the collection and distribution problem, not to mention the revenue problem, and each person would be responsible for his own account. We'd never have to worry about insolvency or IOUs or anything like that, no politician would be able to use "grandma scaring" as a political tactic. Each person would be able to invest as he wishes: mutual fund, real estate, stocks, etc.
Thoughts?
I'm personally in favor of it, but the three main drawbacks are:
1. Fraud and vested interest issues
2. The "entitled" group who screw up and manage to lose it or not make enough to retire on.
3. Just plain poor performance, as in many periods in history where losses were prevalent - like most stocks since 2000.
in my tribe, we use ice floes.
I figure Global Warming is melt all of the ice caps by 2013.
bart-
1. it's hard to imagine fraud occurring in individual accounts on a scale even remotely comparable to what has happened with ss.
2. hey, if you screw up, you screw up. it's a good reason to be careful.
3. returns since 200 have indeed been weak, but let's assume you retired right at the market lows in 2002 at age 67. you started putting money in at 22, 45 years earlier in 1957 when the S+P was about 50. that's a helluva return even after the drop to 800. add in dividends etc and it's quite a tidy little return. start with heavy equity exposure and shift to bonds as you near retirement etc and you wind up doing quite well, var better than the actual nominal losses SS yields.
returns seem like the least like issue here. i do not think there are any periods in which the S+P has had a negative return over 45 years whereas SS even if it keeps its promises guarantees it.
I'm personally in favor of it, but the three main drawbacks are:
1. Fraud and vested interest issues
2. The "entitled" group who screw up and manage to lose it or not make enough to retire on.
3. Just plain poor performance, as in many periods in history where losses were prevalent - like most stocks since 2000.
Very true, Bart, but aren't we facing those same issues now, but with a gov't beaurocracy on top of it?
But on an unrelated note, isn't this just another example of how capitalism has made everyone rich? Retirement is not a privilege any more: it's a right.
"figure Global Warming is melt all of the ice caps by 2013."
which is why you should invest in my ice floe business and them help me demand a federal law requiring their use for oldsters to balance the budget and save the polar bear.
jon-
"
But on an unrelated note, isn't this just another example of how capitalism has made everyone rich? Retirement is not a privilege any more: it's a right."
i have to take issue with that.
retirement is not a right.
it cannot be a right.
you cannot have a right that you cannot posses alone on a desert island. you cannot have a right that requires others to do things.
federal pensions are an entitlement, not a right.
they derive from government law and can be abolished the same way, not from your person-hood.
they are not inalienable.
this may seem like a nit pick, but i think the term "right" gets badly overused and extended to many things (like healthcare) that cannot be rights.
Jon said:
Very true, Bart, but aren't we facing those same issues now, but with a gov't beaurocracy on top of it?
Not quite, SS is a much more of a guaranteed return. And the "investing expertise" and economic education level of the average person... well, it sucks.
I'm also most concerned about that "entitled" group who would whine... and they vote.
But on an unrelated note, isn't this just another example of how capitalism has made everyone rich? Retirement is not a privilege any more: it's a right.
Amen... and *deep sigh*.
i have to take issue with that.
Once again, you have caught me not saying enough!
What I should have said is "retirement is perceived to be a right."
re:65 and into the dessert..
or is that desert?
one of the "reforms" is to index life expectancy to the age at which retirements benefits begin... to keep a more or less fixed number between retirement age and life expectancy.
but that still would not solve the baby boomer demographic issue (that affects all type of insurance, annuities and pensions).
re: defined vs contribute "why".
exactly. Pension plans went to from defined to contribute precisely because they could not predict how investments would perform with enough certainty to guarantee benefits and this is why they now have unfunded liabilities.
re: is it "insurance"?
I said SS was insurance.
I provided some simple facts to back it out.
Is Morg still disputing that it's insurance or does he admit it?
Question - How come Heritage and Reason and others seldom if ever mention the fact that it is insurance?
isn't that misleading people?
one other thing when you are "comparing".
SS benefits are inflation adjusted.
self-directed pension plans are not inflation-indexed annuities unless you pay extra for that and that extra can be costly.
read here: http://analyzenow.com/Articles/Investments/Investment%20Articles/investments_that_can_equal_socia.htm
" To make an honest comparison with Social Security with a low income spouse, you would have to find an inflation adjusted annuity that paid $1,500 a month with a 67% or $1,000 a month survivor’s benefit. Now let’s compare the annuity costs using data from Vanguard.com. A savvy retiree using a conservative mix of stocks and bonds likely would require an even larger investment to preserve funds for a possible longer-than-average life."
annuity cost payments
141,451 1000 monthly fixed
200,128 1000 month adjusted
for inflation
375,507 1000 inflation
adjusted + survivor
Larry,
@Ken - if you become permanently disabled and you receive income for the rest of your life -
isn't that insurance?
if you are married and you die and your wife and kids receive benefits, isn't that insurance?
It could be, but not necessarily. How is that income coming in and what was the process to get it? If I saved a lot during my work years or had a stable relative take me in and provide for me, then no, neither one of those situations is insurance.
if you yourself live longer than what you paid into FICA and you still get your monthly check - ending up with far more than you paid into the program, isn't that insurance?
No.
Insurance is defined by risk management with benefits being defined by how much you pay for premiums. Or do you think it's due to some statistical fluke that comprehensive auto insurance costs more than simple liability coverage? When SCOTUS delinked benefits from contributions, by definition, that act alone makes SS NOT insurance.
wow. i am staggered that you cannot grasp this bit of elementary logic or see the difference.
And I am staggered that after arguing for as long as you have on so many posts you can't figure out that Larry is one of the dumbest or intellectually corrupt individuals that you will ever run into. If you think that he will be persuaded by logic you are mistaken.
well we're not talking about logic here.. just ordinary facts... that some seem in total denial of:
if you die or become disabled and you or your familly receive benefits, that is insurance guy no matter how much you paid in premiums ...
your level of benefits in SS is determined in part by how many years you've paid into the system.
but any way you cut it - when you get benefits because you became disabled - that's insurance.
how can anyone actually be able to discuss SS on the merits if they won't even acknowledge it's easily-verifiable defined benefits?
I've notice this about folks who are ideologically "challenged".
they basically believe what they wat to believe ..and hang the facts...
or their next favorite is that the govt lies... like when you go to the SS web site that explains benefits...it's a "lie" whereas if you go to Heritage.. it's the truth.
and these folks lecture us on "logic"
:-)
indeed.
The sad fact is that if the Government had set up Social Security as a defined contribution plan (like a 401-K) 70 years ago the biggest complaint we'd have is having contributions capped because the SS endowment was getting too big.
Of course Congress wouldn't have been able to use my money to buy my grandparents' votes . . . .
Question - How come Heritage and Reason and others seldom if ever mention the fact that it is insurance?
Your definition of insurance is not the dictionary definition.
SS is not insurance. It's redistribution. It's very popular redistribution, but that doesn't make it insurance.
Larry, there are a couple of kinds of discussions that are very common on this blog 1) normative discussions of how people think the world should be and 2) descriptive discussions of how things are.
Citing poll numbers has no bearing on a normative discussion! That would be like the pollster telling suffragettes to give up because polls say most women don't want the vote & most men don't want to give it to them.
SS is a redistributive system that takes money from working people and gives it to non-working people. "civilized" nations do this because people think old people would starve otherwise. Also, old people vote and have more money to donate to politics.
You have made ZERO arguments that SS is the best way to accomplish non-starving-old-people.
Larry the Liberal,
I've notice this about folks who are ideologically "challenged".
they basically believe what they wat to believe ..and hang the facts..."
Your lack of self-awareness is a sight to behold.
You have made ZERO arguments that SS is the best way to accomplish non-starving-old-people
I was not defending SS . I was get the facts out.
SS IS Insurance by any standard.
That's clear. Those of you who say otherwise are blinded by your own ideology that prevents you from even acknowledging clear facts.
There's been a litany of lies here ranging from what the trust fund is or is not to social security having no money for benefits to whether or not it is insurance.
it's totally bizarre that folks cannot even admit simple verifiable facts about something because they are so opposed ideologically.
Larry's moronic arguments call to mind the famous quote by Upton Sinclair:
"It is difficult to get a man to understand something, when his paycheck depends upon his not understanding it."
the only person here that has even tried to stay with the facts is Jon and my hat is off to him for that.
the rest here can't seem to acknowledge simple verifiable facts which is not only bizarre but more and more what constitutes those who simply refuse to acknowledge simple facts because they disagree with the concept.
It would be one thing to oppose the program on the merits of what it actually does and does not do.
It's an old program whose original premise is not the same as when it was created - that's room for honest debate.
but the approach here is basically to spew Heritage-type propaganda and refuse to accept facts - facts that can be easily verified.
The program is entitled "insurance" - OASDI. FICA is Federal INSURANCE Contributions Act.
People pay into it like insurance.
It functions like insurance.
it pays benefits to the insured if they suffer a loss.
it works just like any other insurance that you might purchase.
and yet.. we have people here that refuse to accept that.
that's bizarre but it typifies those who are so ideologically opposed that they have developed their own belief systems.
Maybe we're using different dictionaries here Larry. Here's what mine says.
Insurance: A practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.
Retirement does not constitute loss, damage, illness or death.
Premium: An amount to be paid for an insurance policy
Looks like we're OK here, except...
Policy: A contract of insurance
The supreme court has ruled that SS is not a legally enforceable contract - it's a whim of congress. Also, contracts MUST be voluntary. SS is not.
I agree completely that SS smells like insurance. I totally understand how ignorant people could confuse it for insurance. There are definitely some similarities. Unfortunately, it tastes like a shit sandwich. For my generation at least.
Insurance: A practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium
did you miss the part about SS paying benefits if you die or become disabled?
did you miss the part about SS paying benefits if you die or become disabled?
No, but you evidently missed everything else.
I used to think the other posters were being too harsh on you.
Can we make SS work better if the surpluses could be invested in other securities besides special Treasury bonds? The only way for SS to invest in Treasury bonds is by the government running a budget deficit. When the government runs large deficits, as they currently are, then interest rates are held artificially low. Is there a better way for the sake of SS?
Thats OK, at least they will be able to pay their medical expenses out of their health savings account.
FICA, Medicare, and income taxes all come out of the same pocket and end up in the same rat hole.
================================
Is that the same rat hole that the Enron retirement plan went down?
but I automatically have 10% of my paycheck taken out each week to go into my IRA. This could be a similar set-up, I think. It would eliminate the collection and distribution problem, not to mention the revenue problem, and each person would be responsible for his own account. We'd never have to worry about insolvency
================================
yes and you can invest your IRA / 401k money more aggressively thanks to the basic savings provided by SS.
And if you think that investing in private funds mean you do not have to worry about insolvency, you are smoking crack.
I am pretty certain that a lot more people have gone bust investing on their own than have gone bust on SS: the only way you do that is by dying prematurely.
the social security proponents argue "well, some people might make bad investments and have less/nothing".
while possibly true, it's difficult to imagine that the vast majority or even a meaningful portion of people would generate negative nominal returns over a 40 year period.
==============================
Agreed, but that is pretty hard to prove over the last ten year period. If you happened to retire eight to ten years ago, youare probably screwed, because you would be subr=tracting your living expenses from your savings, just as your savings tanked, with no way to recover, unless you go back to work.
Good luck with that.
A few individuals will always go broke in the private sector. All of us are going to go broke in 40 years with Social Security.
it's totally bizarre that folks cannot even admit simple verifiable facts about something because they are so opposed ideologically.
================================
Get used to it Larry.
It even has a name: cognitivbe dissonance.
For some people, it is so hard to accept the truth, that it is easier and less painful for them to reject reality than accept something that disrupts their core beliefs.
The last social security adjustment should have been enough to keep it going for a very long time. The single thing that disrupted it was that so much income moved to the very top tier, where muchof it is exempt from social security taxes.
Can we make SS work better if the surpluses could be invested in other securities besides special Treasury bonds?
=============================
What?
You want government picking winners and losers by betting on and investing in private eneterprise?
if a fund was 50% s+p and 50% bonds, it has fully recovered from the last downturn. jsut the S+P + dividends alone pretty much gets you there.
=============================
That is true provided you were able to leave it alone. But if you happened to retire just before the downturn, you would be sucking founds OUT for living expenses at the same time the balsnce was decreasing. Under that scenario you would be a long, long way from recovery/
Also, SS does not prevent "elders living on the streets." The "elders" are the richest segment of our population. SS represents a wealth transfer from the poor to the rich.
=============================
Thyis is a lousy argument. What you say is true but incomplete. As a group the elders are wealthy, but for those that are not, social security keeps them off the streets.
Lets say that Mom would not be on the streets in any case, her children would care for her in a pinch. Instead, she gets a room in sonnie's house, and pays him some modest rent out of her social security.
This would be a transfer of generational wealth the other direction, no? And such an arrangementis pretty common, as it allows the elderly the dignity of "paying their own way" while taking some of the load off the kids.
Insurance is defined by risk management with benefits being defined by how much you pay for premiums. Or do you think it's due to some statistical fluke that comprehensive auto insurance costs more than simple liability coverage? When SCOTUS delinked benefits from contributions, by definition, that act alone makes SS NOT insurance.
===============================
What?
There is no link between premiums paid and insurance. You could insure your house for one month, have a total loss fire and stillget paid. Or, you might pay your entire livfe and neer have a claim.
Likewise with Social security: If you are a smoker you may pay in your whole life and then die, just as your payments should start.
As you say, insurance is defined by the risk taken.
Hydra, SS exempt state retirement funds are betting on private enterprise to an extent. Texas has ERS, TRS and of course Galveston and Brazoria
county plans. Hardly a new concept, just a different scale.
Very sorry for getting into this discussion so late. I've been out of commission all day.
Ken: "$12K is plenty to live on, especially when your house is paid off."
Earlier today, I read in my local paper that a married couple should expect to spend $240,000 (in 2012 dollars) for medical care over the remainder of their lifetimnes. That's in addition to whatever Medicare pays. And that assumes that Medicare will be able to pay the level of benefits it is now paying. That estimate does not include the cost of any long term care.
Assuming these researchers are correct, that means that a married couple in retirement will incur an average of almost #10,000 per year in medical expenses.
It is possible for a married couple to live on 2 X $12,000, or $24,000 a year in retirement. But it will not be a comfortable life if $10,000 per year must be allocated to medical expenses.
jon murphy: "What if, rather than taking each person's FICA and putting into a big pool (Yes, I am simplifying, but bare with me), each person's FICA was distributed into an account of his choosing? I don't know about you guys, but I automatically have 10% of my paycheck taken out each week to go into my IRA."
The problem, jon, is how do we get from here to there?
Boomers like me never had the choice to put our 6.2% or 12.4% into private accounts. There was no surplus just as there is no surplus now. SS taxes were used to fund teh retirement of our parents and grandparents. It's no different than now.
All Boomers have been funding the retirement of their parents and grandparents for 30 to 45 years. Do you think that any of us Boomers are going to agree to let you not fund our retirement?
jon murphy: "What if giving Social Security to everybody, we only give it to those below a certain income level and/or in a dire emergency? This way, it could still function as insurance, without giving money to the elderly folks who don't really need it."
Well, the votes of your generation combined with those of Boomers who refused to save are probably enough to make that happen. But if you combine forces and implement means-testing, know that I'll hate you both until the day I die. And if you die first, I'll piss on your grave.
By what moral right would you have to reduce my retirement standard of living by 25% or 30%? I paid much more towards my parents' retirement than did most of my lazy and unproductive siblings. Yet you would vote to give them SS retirement and not me? Just because I put aside $25,000 or more every year and they racked up debt?
Even if we disregard the personal - the unfairness of means-testing - what would it mean for future Americans? If a thrifty person realize that personal savings just means loss of SS, what happens to the incentive to save?
There are alternatives to means-testing that will work without screwing over half the population.
This comment has been removed by the author.
ken: "The "elders" are the richest segment of our population. SS represents a wealth transfer from the poor to the rich."
The first sentence is true, but very misleading. Wealth is hardly distributed evenly across the population of retirees. Millions of retirees have no assets other than the homes they live in.
The second sentence is also misleading. Many of us paying SS taxes today are far, far from poor.
First,consider that those who are now 30 have 35 to 40 years of earning potential. Those who are 75 likely have none. Those remaining decades of earning potential are certainly a form of wealth.
Second, remember that 40-somethings and 50-somethings and even 60-somethings pay SS taxes. Many of them have hundreds of thousands in financial wealth - plus the decade or two of earning potential.
Social security is not a good plan for funding retirement. But it is an equitable plan. Everyone funds the retirement of their parents and grandparents. Or, at least, everyone who works.
What is not equitable, of course, is that higher income folks pay much more relative to benefits eventually received. Jon Murphy would make that even less equitable by implementing means testing.
Not all of us. I will be dead by the. If I die soon enough, you will enjoy t money I paid in.
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All Boomers have been funding the retirement of their parents and grandparents for 30 to 45 years. Do you think that any of us Boomers are going to agree to let you not fund our retirement?"
it's a good question.
i do think there are some ways around it though.
you get a lot of leeway moving to private accounts because the return is so much higher.
if you take the -0.7% return to ss vs say a 5% return to a safe portfolio, you just need to find an equivalence point.
beyond that point, you are better off giving up what you paid and opting out.
that injects some money into the system and cuts the tail off the liabilities.
then you just need to look at the population that is still better off getting ss. i have not done the math, but let's say, for the sake of discussion that it is people over 52.
they keep paying in and they get the benefits that were promised.
this will not be enough to cover the expenses. it would probably cut income into the system by 40% or so. (fewer payers, but they are later in their career and have higher earnings than the young)
to keep payouts moving with the lower income, you institute means testing.
do the richest 40% of those getting SS actually need it?
quite possibly not. is this fair? no. it's a breach of the deal and it turns ss into a welfare scheme as opposed to pension, but it would likely work and avoid the issue of leaving those who are dependent on ss out in the cold.
perhaps we also move the retirement age. when ss was created, 65 was the avg life expectancy. the average american got 0 years of the benefit. if we move the age to 75, then oldsters may need to live off savings for 7 years. (or perhaps retire later)
the trick is to pick a means testing point and a tax rate/benefits age that allows the fund to run at a surplus again that will be sufficient to fund the tail when no one is paying again.
if you took the top 1/3 of seniors out by means testing and then roughly another 40% out by moving the age, even a 40% drop in income would yield a large surplus at current rates. if it were actually invested in somehting with a positive yield this time, it might well pay for the wind down or at least come close.
lots of private firms have managed transitions from defined benefit pensions to a 401k style structure in a manner like this.
looking to how they handled it could likely provide a template.
it's not easy and will take real political will and will violate the "deal" many thought they had and offend some notions of fairness, but the system as it is currently set up is not looking terribly fair either as the young paying in today are unlikely to get much out.
the inter-generational transfer aspect of the SS system was a disaster waiting to happen right from the start.
larry-
you are still mired in this foolish semantic issue.
SS is predominately a pension fund. it also has some features that look like insurance, but they are a small part of it and are not what are bankrupting it.
calling SS insurance is like calling Harvard a bookstore.
further, private defined benefit pension funds also provide for things like survivor benefits and disability. yet we call them pension funds. your repeatedly ignoring this fact just seem like willful misrepresentation.
it's also a smoke screen to avoid the real issue: the solvency of SS and how badly it does its job.
you are desperately trying to divert the discussion into a semantic wrangle to avoid the fact that you cannot even speak to the broader issue.
you look at the negative return to investment generated by SS and say "well, it's not a pension" as if that means anyhting.
no matter how you slice it, getting less money out in nominal terms than you put in is no way to run a savings scheme.
you'd do better with the money in your mattress. private pensions that provide all the same coverage do not have this problem. their returns on investment are positive.
SS is arguably the most mismanaged program in all of us government and the theft from contributors is arguably the greatest financial crime in history in terms of size (unless you can think of another $1.5 trillion theft for personal use. if your broker took $100k out of your account to use for his own purposes and replaced it with an iou that promised to give you back $80k based on very questionable assumptions as to where he would get the money, you'd scream bloody murder. yet you seem fine with the government doing the same)
it's terrible program that destroys wealth on an epic scale, provides a dramatic drag on the economy (imagine what 12% of gdp could do as actual investment) and will fail actuarialy as a mathematical certainty.
what is it about this program you want to defend?
and please, no more appeals to authority or to common practice. your logical fallacy seesaw demonstrates nothing apart from poor thinking. the benefits to eliminating SS are legion and the benefits to keeping it pretty much non extant.
There are alternatives to means-testing that will work without screwing over half the population.
Hey Jet-
I think my meaning got a tad lost in translation. My first proposal (the IRA one) was the serious one. My second (the mean-tested one) was tongue-in-cheek. You'll notice my third was just plain ridiculous.
another aspect that is often not well recognized is the difference between an purchased annuity and a self-directed self-owned pension (like an IRA or 401(K).
Social Security is an annuity not a pension.
with a 401K or IRA pension, there is no guarantee on how the fund will perform nor is it inflation adjusted - one hopes it will outgrow inflation or at least stay even with it.
the advantage of an annuity over a fixed pension is that payments are guaranteed no matter how long you live whereas with a fixed pension you could outlive your fund.
the disadvantage with annuities is that with a basic annuity, if you die you get nothing more (unless you buy add-ons).
annuities are life insurance products. the rates are determined by actuarial calculations - the same calculations that life insurance companies use when they quote you life insurance rates. And not unsurprisingly the same actuarials that pension fund managers use when calculated unfunded liabilities.
then there are additional extra cost things you can add on to an annuity.
1. - death benefits to survivors
2. - continued annuities for survivors
3. - inflation-adjusted payments so payments keep pace with inflation.
If you convert your pension to an annuity you can get the above "extras" but they cost you extra and essentially reduce the amount of money you receive in payments.
Social Security provides all 3 of the above as part of it's basic program.
your annuity is inflation-adjusted and your family can essentially inherit your annuity. (kids only get payments until they are 18).
A classic definition of an annuity:
http://www.sec.gov/answers/annuity.htm
notice the word "insurance company" because if you buy a private annuity that's who you'd buy it from.
so if you wanted to actually apples-to-apples compare a pension to an annuity like SS - you'd have to calculate what your pension would look like once it was converted to an annuity - where you actually have to pay extra for things like death or survivor benefits and inflation protection.
SS is a life annuity with death and disability and inflation options.
the way you know it is an annuity is that how much you get is based on how much you pay in plus your life expectancy and the fact that you'll receive benefits as long as you live and there is no residual fund if you die.
there is no diversion of discussion here. All I'm trying to do is to get folks to admit what SS really is.
the fact is that if you have a pension - you cannot get a death or disability on that pension. You have to convert it to an annuity to do that.
In order for you to do an apple-to-apple comparison - you'd have to compare a pension converted to an annuity with the same features as SS (including inflation adjustment) and then compare the two.
If you do that - you'll be hard pressed to find a private market annuity product that will compete with SS on what you get verses what you pay into it.
One of the reasons why is that SS has an enormous pool of people whereas many private sector annuities do not have near as big a pool.
There are some legitimate issues to discuss pro and con about SS - once you recognize what it really is or is not but claiming it's a pension when it's clearly an insurance annuity does not get us there.
If you take the time to read the Galveston Texas report that compares the Galveston retirement system with SS (that it opted out of), you get a much truer picture of what SS is because in order to actually compare it with another plan, you have to use facts and not beliefs.
jon murphy,
The "pissing on your grave" part of my comment was a bit tongue-in-cheek as well. However, I honestly believe that half the Boomers and most of the younger population will support means testing.
Means testing irritates the hell out of me because I saved during working years while my siblings did not. With means testing they would receive all they have been promised from SS while I get nothing.
It doesn't matter if your generation wants to deny SS to just the top 5% of retirees or to the top 30%. In all cases, you would be rewarding the profligate and punishing the prudent.
I agree with you, Jet (and I laughed really hard at your "pissing on your grave" comment).
There are plenty of problems associated with any proposed solution (which is part of the reason I favor a phase out of SS, rather than just cutting it off).
SS is already means-tested for tax purposes.
your SS benefits are taxed as regular income, if your total income is more than $32,000 for married couples filing jointly and $25,000 for single, head of household.
http://www.irs.gov/newsroom/article/0,,id=179091,00.html
morganovich: "do the richest 40% of those getting SS actually need it?"
What difference does that make? All who paid SS taxes were promised an income in retirement. All should receive something. Just because my brother lived extravagantly during working years makes him no more entitled to a SS payout than I am.
To me, the just way to solve the funding problem is this:
1. SS taxes remain at 12.4% of earned income;
2. total SS payouts are reduced to the level of total SS tax receipts;
2. all SS recipients receive the same identical amount.
Such a plan will likely increase significantly the payouts for the poor and decrease significantly the payouts for the not so poor. But at least everyone gets something.
The young will hate such a plan because they will - correctly - point out that private savings would generate a higher return. That was true for my generation as well. Many of us tried to get SS partially privatized. Many of your generation did not support partial privatization. (Young voters were far more likely than older voters to vote for Democrats.)
Now that Boomers are about to receive SS, the program is not going to be ended. Your generation does not have the votes.
Larry G,
That tiny amount of means-testing generates very little savings for SS. Those who advocate SS means testing are proposing zero benefits for as much as one-third of retirees.
I would argue that all income levels - all voters who allowed Congress to spend the surpluses - should be penalized in order to meet the shortfall.
Larry G,
That tiny amount of means-testing generates very little savings for SS. Those who advocate SS means testing are proposing zero benefits for as much as one-third of retirees.
I would argue that all income levels - all voters who allowed Congress to spend the surpluses - should be penalized in order to meet the shortfall.
I know some will not agree but SS was also designed to provide a floor level income for those who worked their whole life but never earned much money overall. SS was designed to keep them out of poverty -barely.
in term of "surplus".
all trust funds whether they are the gas tax or the civilian or military pension funds work the same way.
By law - the money they take in, in revenues is cashed in for special issue treasury notes - and then redeemed for cash when spent.
Even though there is about 2 trillion in the SS trust fund, it's a gnat on a dogs butt in terms of total revenues collect and spent as virtually all of the funding for SS benefits comes from the same years worth of FICA revenues.
The Trust Fund has never been what FICA and SS are really about. It's a distraction to the bigger issue of how much FICA brings in verses how much is paid out in benefits.
All the trust fund would do is buy a few years of supplemental funding when FICA no long produces enough funds to pay full benefits.
If you take away the trust fund, all that happens is that the date when FICA no longer can fully fund benefits accelerates closer to immediate, near term.
FICA was increased to build a surplus so that surplus could be used in a transition period when SS would be reformed.
IN my view, the easiest and most fair reform is to return SS to it
s original premise which was to provide income between retirement and death and it was a finite number of years (on average).
That's what we should do now - is push the retirement age so that the distance between retirement age and life expectancy - remains the same so if we push the current benefits to be more like the years between retirement and death back in FDR's time, the current retirement age would probably be more like 70 or 75.
that would be more fair to everyone IMHO and help keep FICA at it's current level and maintain benefits instead of reducing them.
Right now, people who retire on SS are getting far more years of benefits that the program gave when it was first created.
jon murphy: "which is part of the reason I favor a phase out of SS, rather than just cutting it off"
Any solution needs to have enough votes to be implemented. I think you're better off trying to limit SS taxes to current levels rather than tryng to phase out SS. I don't think you'll ever have the votes to do the latter.
Once a voter reaches age 45, he has been paying SS taxes for 20 to 25 years. I don't think such voters will support an end to SS.
The last time the under 45 voters exceeded the 45 and over voters was in the 1990s. I think it will be two decades before that happens again.
Larry G,
Why do you persist in arguing that the SS trust fund has any meaning? You certainly seem too smart to believe that nonsense.
Once a voter reaches age 45, he has been paying SS taxes for 20 to 25 years. I don't think such voters will support an end to SS.
but what you could do is gradually wind down SS for existing recipients and put the balance into advanced funding personal retirement accounts.
But what you're gonna find is that a personal savings account does not provide what SS currently does which is an inflation-adjusted annuity with survivor benefits.
for a personal fund to provide that, you'd have to pay extra for it to be inflation-adjusted and to pay death and disability benefits.
Your 401K and IRA is not inflation-adjusted nor does it pay death and disability benefits unless you purchase those things extra - which when you do - has the effect of reducing the amount of your pension fund.
Larry G,
I agree that too many ignore the disability and survivor benefits of SS. When some do comparisons of returns from SS and from private options, I never see the value of those insurance benefits included. I'm not sure anyone can value those benefits because I don't believe a comparable private alternative exists.
Why do you persist in arguing that the SS trust fund has any meaning? You certainly seem too smart to believe that nonsense
because it works the same way as 100 other trust funds including the military pension trust fund.
If someone wants to say the SS trust fund is toast, they have two problems:
1. - no trust fund has ever defaulted in the history of the US and it would have immediate impacts on the treasury notes we sell the public and foreign countries.
2. - what other trust funds would you also default on? How about the Military or Civil Service trust funds?
I never see the value of those insurance benefits included. I'm not sure anyone can value those benefits because I don't believe a comparable private alternative exists.
Jet, they not only exist but they are common.
When a person retires, on a public or private pension or even their own 401(k) or IRA, they have the option of converting it to an annuity - with death and disability features.
You basically take your retirement fund and buy an annuity.
the difference between an annuity and your pension are that the annuity guarantees a monthly income no matter how long you live even if you outlive your pension fund proceeds but if you keep your pension fund and outlive it -you're screwed.
Larry G: "but what you could do is gradually wind down SS for existing recipients and put the balance into advanced funding personal retirement accounts."
Even if one ignored the survivor and disability benefits, I don't think the majority can be sold on the personal retirement accounts. But that really doesn't matter. SS cannot even be partially paid without collecting taxes from younger workers. The Boomer population is just too large and too close to retirement.
Larry,
No one is saying the trust fund is toast. They're saying it is meaningless. The taxes which will have to be collected to pay SS benefits are exactly the same whether the "trust fund" exists or not.
Furthermore, Congress can reduce SS payouts any time it desires to do so. It doesn't matter whether or not there are IOUs in a SS filing cabinet. Congress could continue rolling over those IOUs forever.
Even if one ignored the survivor and disability benefits, I don't think the majority can be sold on the personal retirement accounts. But that really doesn't matter. SS cannot even be partially paid without collecting taxes from younger workers. The Boomer population is just too large and too close to retirement.
if you let the younger opt out for future benefits but still have to pay for the current retirees but gradually winding down - it could work.
I believe this is the way that Chile is doing it.
Basically you split the payroll tax into paying for the gradually reducing existing retirees and the other half goes in private personal accounts.
the "split" would gradually shift from a higher percent to retirees to a higher percent to personal accounts.
What I think would happen is that younger folks would start comparing what they'd get from a personal accounts vs standard SS benefits.
Not everyone is going to retire making 200K a year. A lot of folks are going to retire as ordinary working people and most of them (I think) would opt for SS over a private account if SS guarantees to pay them until they die and a personal account could run dry.
No one is saying the trust fund is toast. They're saying it is meaningless. The taxes which will have to be collected to pay SS benefits are exactly the same whether the "trust fund" exists or not.
Furthermore, Congress can reduce SS payouts any time it desires to do so. It doesn't matter whether or not there are IOUs in a SS filing cabinet. Congress could continue rolling over those IOUs forever.
re: the trust fund. we agree.
Actually if Congress does nothing and remains gridlocked - SS, by law, cannot pay more in benefits than FICA generates.
So if Congress makes no changes, SS will automatically reduce benefits to about 75% of what is scheduled.
In the past, Congress has always acted to make the necessary changes to maintain SS but I'd be the first to admit that nothing today works like it used to , least of all Congress.
My idea of releasing old people into the wilderness is looking better and better, no?
My idea of releasing old people into the wilderness is looking better and better, no?
well.... either that are issue them cardboard boxes and food stamps every January
morganovich : "the fact is that the majority of americans under 54 do not like the price/benefits ratio."
Larry: "ha ha ha
they feel that way about ALL Taxes!"
So it's your belief that even though a majority of Americans do not like the cost/benefit ratio of all taxes including payroll taxes, and would prefer to not pay them, they should be forced by some minority to pay them anyway?
This is even worse than your usual claim that majority rule and "they're all doing it" are correct answers to every issue.
Larry G: "I believe this is the way that Chile is doing it."
The difference is that Chile started phasing out the fixed pensions 30 years ago. They converted their Boomer population long before retirement years.
Larry G: "Basically you split the payroll tax into paying for the gradually reducing existing retirees and the other half goes in private personal accounts."
You cannot do that and fund existing retirees. SS taxes do not now cover existing retirees. Boomers within 15 years of retirement will not agree to give up fixed pensions. You can't make the math work, Larry.
So it's your belief that even though a majority of Americans do not like the cost/benefit ratio of all taxes including payroll taxes, and would prefer to not pay them, they should be forced by some minority to pay them anyway?
This is even worse than your usual claim that majority rule and "they're all doing it" are correct answers to every issue.
who said anything about cost/benefit?
most folks don't care about cost-benefit - they just hate taxes and if you put it to a vote - "would you like your taxes cut".. it is a no-brainer.
Ask folks if they had a choice they'd pay gas taxes, or sales taxes, or income taxes.
Most would say hell no. right?
but how about this:
tell them they can opt out of one - either FICA or Fed/State Income taxes.
which would they choose?
I think they'd choose the one that got them the most money back regardless of "benefits".
or they'd cut FICA but still expect SS or they'd cut income but still expect schools or Defense.
Larry: "to not recognize the truth here is to continue to rely on dishonest propaganda."
Merriam-Webster is dishonest propaganda?
Larry G: "I believe this is the way that Chile is doing it."
The difference is that Chile started phasing out the fixed pensions 30 years ago. They converted their Boomer population long before retirement years.
Larry G: "Basically you split the payroll tax into paying for the gradually reducing existing retirees and the other half goes in private personal accounts."
You cannot do that and fund existing retirees. SS taxes do not now cover existing retirees. Boomers within 15 years of retirement will not agree to give up fixed pensions. You can't make the math work, Larry.
you could offer people the option of paying 2 or 3% more in FICA and that money would go into personal accounts and if you chose the extra, then your own FICA contribution would shrink over time as existing retirees passed on.
no...you cannot do it without increasing FICA during the transition period.
If not mistaken that's what they had to do in Chile.
Ron H: "even though a majority of Americans do not like the cost/benefit ratio of all taxes including payroll taxes"
It doesn't matter what a majority of Americans like or dislike. It's what a majority of voters want. Boomers, their parents, and their surviving grandparents constitute a majority of voters.
IMO, few who have been paying SS taxes for 20 or more years are going to vote to end SS. And even fewer will vote to end Medicare.
The reason Medicare will not be ended is there is no alternative for most who are over 55. Private insurors do not want to take on the illnesses of seniors at any price. That's why employment-based health insurance started in the first place - so that insurors would have young, healthy insurees to balance the higher cost of the aged ones.
IMO, few who have been paying SS taxes for 20 or more years are going to vote to end SS. And even fewer will vote to end Medicare.
they'll vote to reform rather than vote to end though.
The reason Medicare will not be ended is there is no alternative for most who are over 55. Private insurors do not want to take on the illnesses of seniors at any price. That's why employment-based health insurance started in the first place - so that insurors would have young, healthy insurees to balance the higher cost of the aged ones.
well.. it started because employers wanted to offer more/better benefits when there was more work than there were workers.
The old age is the mother of all pre-existing conditions so I agree with you but the goal of all private sector insurance is to cut expenses and to reduce costs and that includes not signing up people who are likely to cost them money.
this is true of all types of insurance. If you are "high risk", you are toast.
this is why health care will not work as a pure free market non-govt function.
The thing that many will not accept right now is that we already have universal health care. We have Medicare, MedicAid and EMTALA as well as CHIP for kids.
we already cover everyone and everyone who is a taxpayer or has their own health insurance pays for it.
larry g: " it started because employers wanted to offer more/better benefits when there was more work than there were workers."
Employment based health insurance plans were started by Blue Cross and Blue Shield in the middle of the Great Depression. By the time WWII had started, other insurors had joined them.
Health Insurance in the United States
Larry,
See Melissa Thomasson's Health Insurance in the United States at the website of the Economic History Association.
Larry G: "this is why health care will not work as a pure free market non-govt function."
I think it could have worked. In the absence of medicare, I believe private insurors would have emerged to offer employer-based or industry-based retiree health plans.
larry g: " it started because employers wanted to offer more/better benefits when there was more work than there were workers."
Employment based health insurance plans were started by Blue Cross and Blue Shield in the middle of the Great Depression. By the time WWII had started, other insurors had joined them.
I think it could have worked. In the absence of medicare, I believe private insurors would have emerged to offer employer-based or industry-based retiree health plans.
here's what I was reading:
" While its origins can be traced back to 1929, when a group of Dallas teachers contracted with a hospital to cover inpatient services for a fixed annual premium, the link between employment and private health insurance was strengthened by three key government decisions in the 1940s and 1950s. First, during World War II the War Labor Board ruled that wage and price controls did not apply to fringe benefits such as health insurance, leading many employers to institute ESI. Second, in the late 1940s the National Labor Relations Board ruled that health insurance and other employee benefit plans were subject to collective bargaining. Third, in 1954 the Internal Revenue Service decreed that health insurance premiums paid by employers were exempt from income taxation."
http://www.nber.org/aginghealth/2009no2/w14839.html
re: coverage of older
one problem is that companies that have retiree health insurance end up competitively disadvantaged against younger corporations who don't have a retired workforce.
Companies that shed the retirees health care plans cut their expenses which allowed them to sell their products for less.
"Social Security is an annuity not a pension."
this is categorically untrue.
pensions guarantee payments. social security does not. annuities are purchsed for X price and provide y in benefits.
SS is purchased at a price but benefits are determined through paygo based on later contributions from others.
that is not an annuity. no annuities work that way. such an annuity would be illegal under ponzi laws.
M: "wow. i am staggered that you cannot grasp this bit of elementary logic or see the difference."
L: "horse manure..."
M: "saying "all countries have tariffs so tariffs must be good" is nothing at all like saying "if our taxes are higher than mexico's, companies will move to mexico"
if you cannot see the difference, then you literally cannot think logically at all."
L: "double horse manure"
Nice responses. You have destroyed morganovich's arguments with that brilliance.
Where are your substantive arguments? Will you ever make them?
By the way, since I can safely assume you are unfamiliar with the Flemming vs nestor SCOTUS decision that Ken referenced, You should know that Nestor, a non-US citizen, was deported, and denied SS benefits. He sued, and the ultimate decision which Ken quoted directly from, established that Nestor was not entitled to any benefits even though he had paid FICA taxes.
That established that NO ONE is entitled to benefits, even though they may be forced to contribute for their entire working lives.
SS is by intent 2 separate programs, one a tax and the other a welfare benefit, with no legal connection, no matter what it's purported to be by the SSA. Certainly not an insurance program, and only by torturing logic beyond all reason can it even be considered a retirement program.
The Constitutional problem of government involving itself in private enterprise, in this case selling insurance, is thereby circumvented. This is by design, as a careful reading of the history of SS would show.
As morganovich explained to you, calling a dog a cat doesn't make it so.
Besides that, you have yet to answer the repeated question of why anyone would chose such a monstriosity if given a choice.
http://finance.yahoo.com/news/social-security--the-cheapest-annuity-in-town.html
"it's neater and the polar bears seem to like it."
So they aren't endangered any more? What an elegant solution. I was afraid they were goners.
What will your tribe do when there are no more ice flows due to global warming? :)
jet-
"
What difference does that make? All who paid SS taxes were promised an income in retirement. All should receive something. Just because my brother lived extravagantly during working years makes him no more entitled to a SS payout than I am."
as i said originally, you are right, that is not fair. it's a breach of the deal. however, so is making a 25 year old pay in now when he's never going to get paid out. the whole system is set up in an unfair way.
at this point, it's just a question of who bears the brunt of the unfairness and how to best get to a system that is fair.
your solution does not really solve the problem.
it also inflicts serious unfairness upon those whose trust-fund was squandered. the "unfairness" is just spread out more. it's not reduced. you paid in, you expected X due to the money that had been saved. now it's gone so you get less and we shift immediately to paygo? how is that any more fair? it affects everyone i guess, but it still breaks the deal.
moving the existing system to paygo now (as opposed to when the alleged trust fund is exhausted) also perpetuates the deeper SS issues like negative returns, bad administration, and the economic drag of pulling all that money out of the system.
as the boomers retire, the returns will become more and more deeply negative. the whole system wildly reduces the overall possibility frontier. why support that?
i'm not sure what the rest of your argument about "having the votes" is about.
that seems like an appeal to the mob as opposed to a reason to do somehting. what i'm interested in is a proposal that would work. selling it might or might not be possible, but why bother trying to sell somehting that isn't going to work?
ss is already extremely unfair in terms of what you put in and get out. it deeply favors lower earners and has strong redistributionist mechanisms.
make 20k all you life and you get out far more than you put in. make 100k and you get far less. it's already a very significant progressive welfare scheme.
means testing just takes this further.
i'm not saying it's ideal, fair, or follows the intent of the program, but it is one of the few possible solutions that could be made to work financially.
if we go to paygo now, lots of seniors would be getting much less than they expected over the next decade, perhaps not enough to make ends meet. that seems to give rise to a new set of problems. how would you propose dealing with that?
we could say, hey, tough, it's what we have, but does that meet your "fair" criterion?
"how can anyone actually be able to discuss SS on the merits if they won't even acknowledge it's easily-verifiable defined benefits?"
They are not defined benefits. Nothing is guaranteed.
Flemming vs Nestor:
"Congress included in the original Act, and has since retained, a clause expressly reserving to it "[t]he right to alter, amend, or repeal any provision" of the Act."
larry-
that study is pure crap.
it also does not say at all what you seem to think it does. did you even read it?
it is presuming you already have ss. it's not looking at what you paid over your life, just what you could save over a couple of years while you defer getting SS.
go back and read the coyote piece.
if, instead pf paying fica your whole career, you put the money in bonds and stocks, you'd be able to buy a private annuity at retirement that pays out 5-9X what SS does.
it's about the worst retirement plan in the us.
SS has negative nominal returns.
They are not defined benefits. Nothing is guaranteed
not only with respect to SS but to just about anything.
someone who works for 30 years can have their pension taken away for conviction of illegal actions.
no one guarantees Medicare
but so what? this has nothing to do with SS specifically.
Nestor basically said the govt reserves the right to make changes - on virtually any entitlement.
why attempt to use this as if it was something specific to SS and nothing else?
ron-
1. the polar bears have actually been flourishing.
http://wattsupwiththat.com/2012/04/05/nunavut-government-study-the-polar-bear-population-is-not-in-crisis-as-people-believed/
2. as i said to jon, that is why you should invest in morganovich ice floe inc, my new ice floe company. we can custom make them to the specifications of your loved one. polar bears are extra.
let me know if you want a prospectus.
"someone who works for 30 years can have their pension taken away for conviction of illegal actions."
but not their 401k or brokerage account.
so which would you rather have?
@morg the Coyote stuff is pure propaganda... guy
SS is an annuity because:
1. - it will pay you no matter how long you live even if you end up getting more benefits than you paid into SS.
2. if you die - there is no residual fund - even if you die 2 days into receiving SS - your heirs get nothing.
this is the way that most all annuities work.
If you had a pension fund:
1. - you could outlive it
2. - if you died, your heirs would get the remaining fund.
"someone who works for 30 years can have their pension taken away for conviction of illegal actions."
but not their 401k or brokerage account.
so which would you rather have?
the salient point is that neither a pension not an entitlement is guaranteed and it's not just SS so using that argument against SS as if it was only SS that is affected is irrelevant.
From Analyze Now:
"annuity cost payments
141,451 1000 monthly fixed
200,128 1000 month adjusted
for inflation
375,507 1000 inflation
adjusted + survivor"
LOL
You have just made morganovich's argument for him.
How much would you expect to set aside monthly to reach that $357k amount by retirement compared to the amount taken from you in payroll taxes during your working lifetime? Ask someone with a working knowledge of simple math to calculate the difference for you.
"How much would you expect to set aside monthly to reach that $357k amount by retirement compared to the amount taken from you in payroll taxes during your working lifetime? Ask someone with a working knowledge of simple math to calculate the difference for you.
the point it did make is how much you'd have to set aside in annuity to match an equivalent SS annuity and the point they are making is that if you just compare a bare pension with SS and do not include the inflation adjustment as well as the survivor annuity - you're not comparing apples to apples.
here's another one that makes the same point:
http://www.bankrate.com/financing/retirement/annuities-vs-social-security/
if you want a valid apples to apple comparison to a pension - you have to address the inflation protection and the disability insurance and survivor/dependents annuity.
misterjosh:
"Maybe we're using different dictionaries here Larry. Here's what mine says."
It doesn't matter what dictionary you use. Larry has already stated that Merriam-Webster is propaganda.
morganovich: "so is making a 25 year old pay in now when he's never going to get paid out"
What evidence do you have for this assertion that a 25 year old is not going to receive SS retirement benefits? Did vangeIV provide you with a "shadow" trustees report?
morganovich: "moving the existing system to paygo now (as opposed to when the alleged trust fund is exhausted)"
It is paygo now. The "trust fund" is a meaningless accounting entry.
morganovich: "that seems like an appeal to the mob as opposed to a reason to do somehting."
It's not an appeal to anything. It's reality. You can reason all you want, but Boomers are not going to let your generation off the hook. We funded the retirement of our parents and grandparents. You will do the same. The best you can hope for is maintaining SS taxes at current levels.
"Maybe we're using different dictionaries here Larry. Here's what mine says."
It doesn't matter what dictionary you use. Larry has already stated that Merriam-Webster is propaganda.
Nope. If you don't know the word to be looking up, it's not a dictionary problem.
If you won't admit the insurance characteristics of SS then looking up the definition while continuing to ignore the insurance characteristics is just lame but it seems to be the favored activity of those who like to wallow in propaganda.
A life annuity is an insurance product.
SS is a life annuity that insures against, disability, early death, survivors and outliving what you paid into it.
If it walks, talks, and quacks like insurance and you still refuse to believe it - it starts to characterize those who believe what they wish no matter what the facts and reality are.
Lary:
"@Morg -geeze guy.
I"ll grant you your logical fallacy argument but not the rest of the facts vs your beliefs on SS.
the fact that you refuse to accept verifiable facts while simultaneously arguing "logic" is amusing ...."
Larry, I just love it when you school morganovich on economics and logic. Please don't ever stop.
I have to read in short bursts, though, so I can catch my breath after laughing hysterically.
larry-
"@morg the Coyote stuff is pure propaganda... guy"
and there it is. the logical fallacy trifecta! appeal to authority, appeal to practice, and now, ad hominem!
well done larry! you truly are an affront to all logical thinkers.
no "guy" it isn't.
it has an attached spreadsheet with all the math. did you try reading it or did you just decide based on your preconceptions what to believe the way you just posted that yahoo piece that you clearly did not read?
i have done the math coyote did on my own ss info and got and even worse result than he did.
you on the other hand seem unwilling/able to even try to parse the actual fact resorting instead to baseless dismissals and attempts at grandstanding and obfuscation.
get a grip "guy". you are all sound and fury but signify nothing.
Larry, I just love it when you school morganovich on economics and logic. Please don't ever stop.
I have to read in short bursts, though, so I can catch my breath after laughing hysterically.
well in my view, Morg is making a fool of himself on this - he knows better but is too stubborn to admit it.
You are not so lucky and have far more failings...
i have done the math coyote did on my own ss info and got and even worse result than he did.
you on the other hand seem unwilling/able to even try to parse the actual fact resorting instead to baseless dismissals and attempts at grandstanding and obfuscation.
get a grip "guy". you are all sound and fury but signify nothing.
if you did not include the inflation adjustment and survivor annuity, you're just sucking in propaganda.
"I"ll grant you your logical fallacy argument but not the rest of the facts vs your beliefs on SS."
So you agree that your arguments based on appeals to authority and tradition are worthless?
So you agree that your arguments based on appeals to authority and tradition are worthless?
who said worthless?
more problems with thinking here?
"Is that the same rat hole that the Enron retirement plan went down?"
No, it isn't.
jet-
"
What evidence do you have for this assertion that a 25 year old is not going to receive SS retirement benefits? Did vangeIV provide you with a "shadow" trustees report?"
i may have phrased that badly. they will get SOMETHING. i'm not saying it's a zero. they will not, however, get as much as seniors get now. lifespans will lengthen and the payor to payee ration will keep decreasing driving payments down.
"
It is paygo now. The "trust fund" is a meaningless accounting entry."
while i agree that the trust fund is a fiction, SS is NOT paygo now. it is already paying out more than it takes in. it will do so until the accounting fiction of the trust fund is depleted. that is the way the law is written. THEN it goes to paygo. but first, it's going to grab $1.5tnish form somewhere.
if we simply do away with that trust fund as an accounting device, then the law is not being followed and the deal that people payed in expecting is broken.
i see no way to describe that as fair. so, moving to paygo now would seem to be deeply unfair to those whose benefits will start getting cut sooner.
alternately, paying out that trust fund is "fair" to them, but rough on the young who are paying in like the old did but will get far less out.
but my deepest issue with SS in terms of fairness it that it has negative nominal returns. coercing the whole populace into such an unattractive scheme seem deeply unfair to me as well as unwise and inefficient and ineffective.
morganovich: "it's already a very significant progressive welfare scheme."
There's a world of difference between "significantly progressive" and "you get nothing". "Means testing" means I get nothing while lazy siblings get 30 years of income. I'll fight means-testing with my last breath.
[Reason Foundation] "According to its web site, they are "the values of individual freedom and choice, limited government, and market-friendly policies."
And you find those values to be objectionable?
larry-
"
well in my view, Morg is making a fool of himself on this - he knows better but is too stubborn to admit it.
You are not so lucky and have far more failings..."
your view is based on repeatedly ducking the argument and resorting to logical fallacy after logical fallacy.
the worst part is that you do not even see it. you are literally unable to absorb the concept and use fa lacy after fallacy in a ludicrous circle of illogic.
then, when someone points it out you say "nuh uh" and go right back to making stuff up.
here's another fine example:
"
if you did not include the inflation adjustment and survivor annuity, you're just sucking in propaganda."
but they did larry. when SS gives you your payout figures, they already have the COLA built in. so it would appear that, once more, you are just wallowing in ignorant distortions because you never actually read anyhting that you are talking about.
private annuities also have spousal and dependent coverage. you just keep making up facts and flinging them around in hopes they stick in the same way you grab yahoo news stories.
in light of how badly you deal with actual information, it is not surprising to me that you chose logical fallacy as your key argument tactic. astoundingly, it makes you look less foolish than actual attempts at argument.
morganovich: "coercing the whole populace into such an unattractive scheme seem deeply unfair to me as well as unwise and inefficient and ineffective."
I agree. Fifteen and twenty years ago I supported gradual privatization. But not now, right before I reach retirement age.
As I said before, your generation is going to fund your parents' and grandparents' retirement, just as my generation did. Because of the demographics, you will not be able to fund it to the extent which we did. But you will still fund something because we have the votes.
[Reason Foundation] "According to its web site, they are "the values of individual freedom and choice, limited government, and market-friendly policies."
And you find those values to be objectionable?
should I quote you some similar high-sounding values from a lefty site?
I PREFER sites that are neither left nor right or things that both left and right do agree on.
Sucking pure propaganda from either left or right is for the loons.
"There's been a litany of lies here ranging from what the trust fund is or is not to social security having no money for benefits to whether or not it is insurance.
it's totally bizarre that folks cannot even admit simple verifiable facts about something because they are so opposed ideologically."
I second what Paul said about your lack of self awareness.
if you did not include the inflation adjustment and survivor annuity, you're just sucking in propaganda."
but they did larry. when SS gives you your payout figures, they already have the COLA built in. so it would appear that, once more, you are just wallowing in ignorant distortions because you never actually read anyhting that you are talking about.
not for the future - and you KNOW this if you go look at what an inflation adjustment will cost for a similar private sector annuity.
such inflation adjusters are not cheap...and for good reason - because they are good until you die.
private annuities also have spousal and dependent coverage. you just keep making up facts and flinging them around in hopes they stick in the same way you grab yahoo news stories.
in light of how badly you deal with actual information, it is not surprising to me that you chose logical fallacy as your key argument tactic. astoundingly, it makes you look less foolish than actual attempts at argument.
here's what your Coyote hero said:
" Postscript: As pointed out in my postscripts and the comments to the original post, taxes, inflation, spouse survival, etc. all complicate the analysis, but most of the effects work both ways. For example, Social Security provides some benefits to surviving spouses I don’t include. That potentially understates the value of the SS package. However, as pointed out in the comments, private savings would be inheritable by my family in the case of my early death, and would dwarf SS survivor benefits in most cases. Ditto for disability benefits."
so basically he blows it off rather than crank it into his trusty spread sheet..
then he goes on to talk about "leftists" so you know where he is really coming from.
He's biased guy. He is not an objective sources. He's feed your own prejudices and you do not even see what he's ignoring in his "calculations".
there are a number of objective sites that do an honest comparison between a pension fund and social security but you choose instead to go to a biased site for your info.
and you blather on about logical fallacies guy..
how logical is it to go to a clearly biased site when more objective sites are available?
it's totally bizarre that folks cannot even admit simple verifiable facts about something because they are so opposed ideologically."
I second what Paul said about your lack of self awareness.
LMAO guy.. are you for real?
"Agreed, but that is pretty hard to prove over the last ten year period. If you happened to retire eight to ten years ago, youare probably screwed, because you would be subr=tracting your living expenses from your savings, just as your savings tanked, with no way to recover, unless you go back to work."
Have you somehow missed the news that private retirement accounts have mostly recovered to pre-recession levels?
"
There's a world of difference between "significantly progressive" and "you get nothing". "Means testing" means I get nothing while lazy siblings get 30 years of income. I'll fight means-testing with my last breath."
sure. they are different. i never said they were not.
but fight it so you can do what?
the system as it exists is already grossly unfair and underfunded.
someone is going to get screwed.
hell, i am actually volunteering for it to be me.
i would happily surrender the $225k or whatever it is i have paid into SS and give it as a gift to the program in exchange for being let out of it. i am literally offering to walk away from over 200 grand and surrender all my future benefits just to get out.
is that fair to me? no. i am getting screwed. but i will also wind up better off at retirement by taking the hit now and being able to actually save that money myself.
i suspect there are many others in a similar situation.
you may wish to fight means testing, but i feel the same way about being forced to participate in a money losing venture.
both are unfair.
it's just a question of allocating who gets screwed.
there is no way to run the system as is and not screw someone.
"Under current projections, the annual cost of Social Security benefits expressed as a share of workers’ taxable earnings will grow rapidly from 11.3 percent in 2007, the last pre-recession year, to roughly 17.4 percent in 2035"
this is straight from the SS trustees own report.
somewhere, around 5% of taxable income has to be found.
this is not going to be about fair. there is no fair solution in such a broken system.
this is going to be about who gets shafted. the best way to minimize the size of the pool that must get screwed is to increase the size of the pie. the way to do that is to up returns. the way to do that is private accounts.
so it seems to me that what we ought to be talking about is how do we get there with the least damage.
morganovich: "SS is NOT paygo now. it is already paying out more than it takes in."
You are correct, but just barely.
In 2010, receipts from OASI payroll taxes plus taxes on benefits totaled $566 billion. Payments to beneficiaries totaled $577 billion. But that's only due to the very high level of unemployment.
"Get used to it Larry.
It even has a name: cognitivbe dissonance.
For some people, it is so hard to accept the truth, that it is easier and less painful for them to reject reality than accept something that disrupts their core beliefs."
Do you think Larry will understand that you mean him?
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