Re: The Hammer "There are not enough people earning over 113,000 to make
up the difference. Those people amount to about 15% of the working
population." They may make up 15% of the population, but they make up a
much, much greater percentage personal income. That's the point.
Hey "Mountanman"! Can you please direct us to that money market fund
where you can "conservatively" make 8%?I'd ***love***
to find a return even close to that in a MM fund.
@marxistThere are not enough people earning over 113,000 to make up
the difference. Those people amount to about 15% of the working population.
This would be a drop in the bucket to our problem. Additionally, the reduction
in discretionary income would shrink the economy by that much in consumption and
investment. This means it would be harder for more people to get in to the
working pool to contribute. That's basic economics.@Irony
GuyYes the most recent 10 years is about 3% but you most workers
invest over 30-40 years and that return is about 12% and is more accurate to use
in projections as it is the statistical average.
Irony Guy,Don't make such loony assumptions. Nobody said to just
invest your retirement money at passbook savings rates. They should at least
be invested at Annuity rates, which are much higher because they know they can
not be cashed in for 30, 40, 50 years. And there is a good chance that they
will not be cashed in at all (IF you die before retirement age). And the whole
balance will probably not be used (because you will die before using it all).I invested about 1/10th of what I donate to SS each month to an annuity
(it was actually a pension from an employer that they decided to cash out when
they stopped offering their pension plan).... but I get statements from both my
personal retirement account and the SS Administration... and the projected
monthly benefit I will get from SS is less than 1/4th of what I am projected to
get each month from my little annuity I got when my employer ended their Pension
Plan.How do you explain that? I put less into the annuity and my
401K (and over less time) and it is projected to pay out way more than SS.
Also, SS was made very regressive (only the first $113,000 of income are FICA
taxed) to placate wealthy interests. All income needs to be FICA taxed - then I
guarantee you there will be no problems at all.
Thid Barker is wrong about the last 10 years return on stocks. Total return is
not 12%/annum; it's more like 3%.
Mountainman, you're the one who proposed to put your money in a passbook
savings account, which currently pays one tenth of one percent interest.
You'd lose ground very fast. And even if you put in stocks, an 8% return is
NOT conservative--for the past 10 years, it's been more like 3%. Your math
is based on a fantasy.
IF they had bought annuities with the money I put into SS (like any private
retirement plan would have been required to do by law)... their would be plenty
of money there today.Problem is... instead of investing it... the
Government just spent it. They used it to buy votes, to cover up their
incompetency, and to placate the population just one more election... and one
more... and one more... until they are out of office.===That is history. The question is... what do we do now?I
don't know any good answers to that question. I am 55 now. So I
can't really start over and fund my retirement through SS. Luckily I saw
this coming years ago and started investing for retirement long ago. So
I'm not dependent on SS. But I really feel for those who will really need
it in the coming years who haven't saved a lot. They are going to have a
real struggle... OR the younger generation is going to have to keep paying into
this program with little or no expectation of getting any benefit from it
(except funding my generation's retirement).
Re:Mountanman"Government employees in Galveston, Brazoria and
Matagorda Counties have controlled their private retirement plan for 30 years.
They opted out of Social Security before Congress changed the law in 1983 to
prevent others from withdrawing.The General Accounting Office and
the Social Security Administration conducted the most current comparative
studies of the Alternate Plan and Social Security in 1999. Both the
G.A.O. and Social Security studies concluded that lower-wage workers,
particularly those with many dependents, would fare better under Social
Security, while middle- and higher-wage workers were likely to fare better, at
least initially, under the Alternate (privatization) Plan.(NYTimes)
Poverty among the elderly is still as high today. 80% of people retire with
nothing but social security because they don't save (before SS they did).
Also the math doesn't work out you can't raise taxes enough to pay for
the increase in costs the entitlements grow by each year. This is why our
Federal reserve has been favoring a steady inflation rate for the last 20 years.
Its the only way to pay for the rise in entitlement liabilities which increase
15% or more per year with no end in sight.The baby boom generation
will sink SS and medicare. By 2030 we will only be able to pay for entitlements,
we will have no defense, no domestic programs and no returning tax dollars to
states. The federal reserves policies are already causing irreversible harm as
we see a stock market grow not because of increased production and output but
because its cheap to borrow money and throw it at the stock market. What happens
when that ends and the margin calls begin?It won't be pretty.
Social security won't survive and you can count on that!
Social Security was the best FDR could do under the circumstances to take care
of the aged. Socialists such as myself had a much better idea. Had it not been
for socialists like me pushing for a much more radical solution, FDR would have
never gotten SS passed. He said to the malefactors of great wealth "you
better give me what I want 'cause you're going to like what those
other guys (like me) want a whole lot less."If SS is allowed to
falter, we socialists will take up where we left off. And this time the public
will be overwhelmingly with us!
@MountanmanYou assume people have a job that pays in 3600 + 7200 from the
employer. FICA is around a 6% tax. So 3600 is 6% of 60,000. Median household
income is around 51,000 so over half of people in this nation would be seeing
less to much less than what you suggest. The whole point of social security is
to be an anti-poverty program for the elderly. I think it's
funny that many of you oppose gambling but encourage gambling on the stock
@Mountanman"If you or I had been allowed to keep our FICA
confiscations along with our employer's contributions in our behalf, invest
that money in a simple pass book savings account at our bank, earn compounded
interest until we retire (say 40 years)we would be multi-millionaires during our
golden years."Malarkey. There's a good chance your
portfolio would've imploded in the great recession for one...
The stock market is at record highs and has averaged just under 12% for over 10
years, even with the corrections! Millions of people are making lots more than
8%, myself included. As far as the money market, its down now due to the federal
reserve but it has been a good investment in the past and will be again in the
future. You have to think long term!
"let's be conservative and just say 8.0% for 40 years)!"Tell you what. Guarantee me 6% for 40 years and I will retire today. And,
feel free to keep the excess
Mountainman:Who is getting 8.0% on money markets funds these days? Try 1%
or less. On stocks - many lost everything during the recession.
@ Irony Guy. Thid Barker is mostly correct! Let me help you with your math.
Let's say you pay in to FICA $3600/year and your employer pays in the same
amount in your behalf= $7200/year. You invest that in the stock market or a
money market fund @ (let's be conservative and just say 8.0% for 40 years)!
That interest rate is not hard to achieve because most people in the stock
market do better than 8.0% You would retire with a cool $2,170,840.04 in your
account! SS would not even come close to that, IF you collect at all!
Irony guy. You get an F in math. Compound interest is interest that is paid on
both the principal and also on any interest from past years. Over time,
compound interest will make much more money than simple interest. The formula
used to calculate compound interest is:M = P( 1 + i )nM
is the final amount including the principal.P is the principal
amount.i is the rate of interest per year.n is the
number of years invested.
Well, if the comments from several of the contributors here doesn't prove
the point that trying to convince someone of the disastrous actuarial facts
awaiting the Social Security system is a largely futile effort, I don't
know what would.But, one probably shouldn't even bother with
worrying about how insolvent the system will become. It's more important
to recognize how completely insolvent it IS.Because of the
essentially fraudulent way the system works, in actuality, there is no
"trust fund"...and hasn't been for a long time. Rather than
actually having a separate account into which SS taxes go and from which
benefits are drawn, there now is nothing but a file full of IOUs from the
government promising to pay back what was taken from the "trust" fund to
pay for general governmental operations.So, rather than some kind of
insurance annuity, the Social Security system is much more akin to the kind of
thing for which Bernard Madoff has become infamous, as someone who ran the
biggest Ponzi scheme of all time. The truth is, of course, our government has
Madoff beaten in that category by a Long, long way.
Bandersen-My opionion was not made to be patronizing. I think the
discussion on whether or not social security should be dismantled has long
passed. George Bush broght that up at the start of his 2nd term saying he had a
mandate from the people and he was going to use it. His plans to privatize and
get the federal govermnent out of S.S. went down fast after the overwhelming
majority of the public opposed it. If conservatives would accept the fact that
Americans want S.S. to remain in place and work to improve the financial footing
of it the party would have more support. My retirement will be set with
or without S.S. so my main concern is that as a pragmatist. I agree with some of
the other posters. Before we had S.S. a huge percentage of our elderly were
impoverished and if we disbanded it now conditions would only be worse.
It's a saftey net that makes our country stronger, whether you or I ever
need it or not.
Mountainman has not done the math. My OASDI contribution in a "simple
passbook savings account" would not even come close to compounding what I
need in retirement. At typical passbook rates, I would actually lose ground to
inflation. Why don't conservatives pay attention in math class?
@Roland Kayser – “To banderson: I disagree with you about Social
Security, but thanks for the civil dialogue.”Ditto… on
both.@ bandersen – “"...Adjustments need to be made
as they always will..." is dishonest and patronizing.”It’s no more dishonest or patronizing than if an insurance company
adjusts its rate and/or benefits based on actuarial facts. And
wanting people to take responsibility for their own saving sounds good, but the
fact is many millions would not do so for a whole host of reason, some within
their control and some not (e.g., stock market crash the day before you retire).
Social Security by itself is not landing anyone in the lap of luxury
(that’s what savings & investments are for). It simply insures that
elderly people will not have to live out their golden years under a bridge.
To banderson: I disagree with you about Social Security, but thanks for the
Roland Kaiser and FT: I like to find common ground as much as anyone. So, that
being said, I am one of those extremist right wingers that believe that
government messes up most everything that it gets involved in, including Social
Security! I just don't believe in it. I don't think I am alone. The
patronizing influence peddlers want you to believe that those who believe as I
do want to destroy the country. Not so! Wanting people to take responsibility
for their own savings will not destroy anyone! Nor do I want those who have put
into the system, as I have, to not get out what was taken from me. I find
FT's answer very patronizing and disrespectful in regards to Social
Security. His answer that"...Adjustments need to be made as they always
will..." is dishonest and patronizing. If the government promised
something, shouldn't it live up to its obligations? Therein is the
problem. How can you trust someone that wants to change the rules on a whim?
Kaiser, as far as the war on terror. I agree. We love war and that is not good
for any society!
This needs to be addressed but solution(s) are remarkably simple and
straightforward – unlike Medicare (the elephant in the room).We could slightly lower the benefits, slightly raise the tax, or slightly
raise the age limit – or a combination of two or all three. Mr. Bennett is
right that the longer we wait the more drastic (vs. slight) these changes will
need to be. But the baby boom bubble we eventually pass meaning in another few
decades the program will likely be in surplus territory again.Let’s act now so we can maintain a program that has done more to promote
a dynamic & risk taking outlook in our working years (something
conservatives often lose sight of), while keeping tens of millions of elderly
people out of abject poverty when they can no longer take those risks.
Social Security is one of the best pieces of legislation ever passed by
Congress. Conservatives and ill-informed posters often predict gloom and doom
to S.S. and other federal safety nets because they hate them. The reality is
they are quite popular and have made a huge difference to the quality of life
for our seniors. Without S.S. over 40% of our seniors would now be living in
poverty. Adjustments need to be made as they always will. If a politican does
not believe they should exist, throw those few out of office. The others need
to work together and make changes so S.S. exists for then next 50 years.
The social security "crisis" is greatly overblown. Social Security
currently consumes 5% of GDP. That is projected to rise to 6% of GDP by around
2040. It is not projected to exceed that amount for at least the next 75 years.
1% of GDP is never a crisis. By way of comparison the War on Terror has been
consuming 2% of GDP, and no one suggested that we couldn't possibly pay for
it.A small benefit cut coupled with a small tax increase will fix
S.S. for the foreseeable future.
Would you consider running again against Mike Lee? Please Please Please
If you or I had been allowed to keep our FICA confiscations along with our
employer's contributions in our behalf, invest that money in a simple pass
book savings account at our bank, earn compounded interest until we retire (say
40 years)we would be multi-millionaires during our golden years. As it is, we
were forced into a silly Ponzi scheme run by the government that stole and spent
our money on failed social programs and left an IOU in the "trust fund".
Bankrupt, full of fraud and corruption and some of you think that is a great
idea? Sounds just like Obamacare doesn't it?
The best form of government would be a benevolent dictator who makes logical
correct decisions. Obviously politicians who currently make the decisions
on our country's future can't make the correct decisions if their main
worry is getting re-elected. I am not sure if term limits are the answer either
since any decision a politician makes is reflected on their political party so
they don't make correct, controversial decisions because it may affect
their party's chances of being re-elected.
Unfortunately, too many would rather deal in hyperbole than facts.Mr
Bennett laid it out reasonably. And, with a little give and take TODAY from the
R and D and the problem could be fixed. Waiting makes the fix more painful.Raise SS tax, Push back the age a bit, raise the SS earnings cap (or get
rid of it)Unfortunately, the D's will support some of this and
hate other parts.The R's will like some and hate some.So,
because neither side will get everything they want, they will do nothing.And far too many people are fine with them doing nothing unless their
side gets all they want.Call your dang congressman and tell them to
drop the ideology and fix it.It aint that tough.(now,
Medicare is a whole other issue, and much tougher)
While I admire Bob Bennett as a sane Republican, I must take issue with his
"facts" about Social Security. His biggest mistake,is that he states
that "all workers" are required to pay into it. That is not the same as
saying all "earners" pay into it, and his argument fails to note that
employers pay into it as well. However, his "all workers" pay obscures
the truth that many "workers" are exempted from paying into social
security. Public employees of State and Local Goverments, some employees of
certain religious orders, Foreign Nationals, Children under the age of 18, all
these, and more, may be, and often are exempted. Also certain type of investment
incomes are exempted, like capital gains.
"It was known when it was created that half of its participants would lose,
getting none of their money back, because they would die before turning
65."Translation: Average Life Expectancy (50%) = 65."Average life expectancy for those over 65 in the 1940s was seven more
years,..."Translation: Average Life Expectancy for those over
the average (25%) = 72."As long as 100 percent of the workers
were paying in for as much as 45 years while only 50 percent of them were taking
out for an average of seven years, everything balanced..."No. As
much as 49 (65-16). And no, only 25% drew for 7 years."Today,
the percentage of workers who live long enough to draw Social Security is 85
percent, not 50 percent. The average number of years in which they do so is
closer to 13 than seven."Translation: Average Life Expectancy =
78. The "85%" is irrelevant to the equation. Closer to 13 than 7 would
be anything over 10. No, it actually is 78.8 (76 for men, 81 for women).Just the facts, mam.His point, however, is still valid. I
just don't know what his solution was.
Social Security is not a "lottery". Privately funded Life insurance
policies take into consideration mortality, as do private annuities. Social
Security is just a government administered annuity paid for in advance of
retirement by employees and employers. The burr under Bennett's saddle is
that annuity is administered by the Federal Goverment instead of some private
insurance firm. He, like most if not all right wingers, hate government with
such a passion, that they have convinced themselves that government can do
virtually nothing right. The success of the Social Security System over the
last few decades since it was enacted gives credible voice to the error of that
anti government ideology.Nevertheless there are some things that can
be done to Social Security. One thing is not to exempt any class of employees
as now permitted. Another is to eliminate the income cut off limit. Another,
would be to adjust the income test. Most people probably do not know that
Social Security is already income tested. Another is not to exempt any form of
income from the Social Security tax..
Easy solution. Just adjust the formula for SS taxes. Right now, it's
capped at, what, $102,000. Raise it to $200,000--actually, I've read that
$180,000 would do the job--- and we're good.