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Robert Bennett: Avert the Social Security crisis

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  • marxist Salt Lake City, UT
    Jan. 15, 2014 1:04 a.m.

    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.

  • samhill Salt Lake City, UT
    Jan. 14, 2014 9:44 p.m.

    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.

  • The Hammer lehi, utah
    Jan. 14, 2014 6:02 p.m.

    @marxist

    There 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 Guy

    Yes 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.

  • 2 bits Cottonwood Heights, UT
    Jan. 14, 2014 2:48 p.m.

    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.

  • marxist Salt Lake City, UT
    Jan. 14, 2014 1:57 p.m.

    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.

  • Irony Guy Bountiful, Utah
    Jan. 14, 2014 12:31 p.m.

    Thid Barker is wrong about the last 10 years return on stocks. Total return is not 12%/annum; it's more like 3%.

  • Irony Guy Bountiful, Utah
    Jan. 14, 2014 12:30 p.m.

    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.

  • 2 bits Cottonwood Heights, UT
    Jan. 14, 2014 11:08 a.m.

    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).

  • Truthseeker SLO, CA
    Jan. 14, 2014 9:13 a.m.

    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)

  • The Hammer lehi, utah
    Jan. 14, 2014 12:58 a.m.

    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!

  • marxist Salt Lake City, UT
    Jan. 14, 2014 12:38 a.m.

    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!

  • atl134 Salt Lake City, UT
    Jan. 13, 2014 10:40 p.m.

    @Mountanman
    You 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 market.

  • Schnee Salt Lake City, UT
    Jan. 13, 2014 10:22 p.m.

    @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...

  • Thid Barker Hayden, ID
    Jan. 13, 2014 7:12 p.m.

    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!

  • JoeBlow Far East USA, SC
    Jan. 13, 2014 5:55 p.m.

    "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

  • jrgl CEDAR CITY, UT
    Jan. 13, 2014 4:53 p.m.

    Mountainman:
    Who is getting 8.0% on money markets funds these days? Try 1% or less. On stocks - many lost everything during the recession.

  • Mountanman Hayden, ID
    Jan. 13, 2014 3:49 p.m.

    @ 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!

  • Thid Barker Victor, ID
    Jan. 13, 2014 3:30 p.m.

    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 )n

    M 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.

  • samhill Salt Lake City, UT
    Jan. 13, 2014 2:53 p.m.

    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.

  • FT salt lake city, UT
    Jan. 13, 2014 1:56 p.m.

    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.

  • Irony Guy Bountiful, Utah
    Jan. 13, 2014 12:59 p.m.

    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?

  • Tyler D Meridian, ID
    Jan. 13, 2014 12:01 p.m.

    @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.

  • Roland Kayser Cottonwood Heights, UT
    Jan. 13, 2014 11:23 a.m.

    To banderson: I disagree with you about Social Security, but thanks for the civil dialogue.

  • bandersen Saint George, UT
    Jan. 13, 2014 10:54 a.m.

    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!

  • Tyler D Meridian, ID
    Jan. 13, 2014 9:29 a.m.

    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.

  • FT salt lake city, UT
    Jan. 13, 2014 9:27 a.m.

    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.

  • Roland Kayser Cottonwood Heights, UT
    Jan. 13, 2014 9:19 a.m.

    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.

  • Iron Rod Salt Lake City, UT
    Jan. 13, 2014 7:18 a.m.

    Would you consider running again against Mike Lee? Please Please Please

  • Mountanman Hayden, ID
    Jan. 13, 2014 7:06 a.m.

    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?

  • Million Bluffdale, UT
    Jan. 13, 2014 7:06 a.m.

    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.

  • JoeBlow Far East USA, SC
    Jan. 13, 2014 6:57 a.m.

    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)

  • Mike in Cedar City Cedar City, Utah
    Jan. 13, 2014 6:12 a.m.

    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.

  • Spoc Ogden, UT
    Jan. 13, 2014 5:20 a.m.

    "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.

  • Mike in Cedar City Cedar City, Utah
    Jan. 13, 2014 5:03 a.m.

    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.

    .

  • E Sam Provo, UT
    Jan. 13, 2014 2:14 a.m.

    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.