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Not true for me. I worked without interruption for 52 years. Combined Employer/Employee contributions to fund over that time total $135,000 per SS statements. Future Value of let's say average $2500/yr contribution compounded over 52 years at 4% is $417,000. Amortized payout $1,847/mo. @ 3% interest would take 28 years to exhaust fund. At that point I will be 97. If a more agressive rate of return is used, I'm well over 100 before what I/my employer have paid in is exhausted. I think that scenario is probably true for many of the more recent retirees as cited above. Most boomers have pretty much worked their entire lives, so they will have much more than the average $1,000 benefit. Social Security has to hope we all die much sooner than 97.
That said, hilgi is absolutely correct that the compounding problem will accelerate the shortfall issues because my benefits rely on contributions of current workers. US economy will never restore the numbers of high paying jobs it had, so future contributions will be less. GOP/capitalists have done great job of bringing this country to its knees.
Yes, new retirees won't get back what was put in.
Our demographics can't sustain us even with full employment. I have been talking about this issue for over 20 years.
I don't play the team game, I give equal blame to both sides. WE don't have anything even close to capitalism/free markets. We have a crony corporatist system brought about by both sides.
They do divide and conquer but the elitists have conquered.
What are the maximum SS payouts? I believe it's about $1500 per month, but if someone has a better figure, I'll be happy to update.
The figure is $2,366.
Quote:
The maximum benefit depends on the age a worker chooses to retire. For example, for a worker retiring at age 66 in 2011, the amount is $2,366. This figure is based on earnings at the maximum taxable amount for every year after age 21.
Have you heard of any payee who died before collecting? I'm 53 and know several people who've worked for many years and then poof, there gone and so is their benefit.
I've known many. The inequity really isn't the worker of today retiring and receiving an excessive return because they have contributed their fair share. It is the earlier beneficiaries of the system who only contributed for a few years, but collected benefits for decades.
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Originally Posted by hilgi
I don't play the team game, I give equal blame to both sides. WE don't have anything even close to capitalism/free markets. We have a crony corporatist system brought about by both sides.
They do divide and conquer but the elitists have conquered.
What are the maximum SS payouts? I believe it's about $1500 per month, but if someone has a better figure, I'll be happy to update. So, $1500/monthX36 months equals $54,000 total per your statements.
Your payment into SS is 15.3% IIRC. So, lets say you make an average income of $40,000 and worked from age 20 to age 67, that's 47 years. $40k*47years*15.3% equals $287,640 paid into the system, using those figures. Or more than 5X what you indicated he got out in 3 years. Granted, there's an assumption on wages and on payments, YMMV. I'll do some digging on just what that same $287k would have grown into had it been compounded at even a modest rate of return. Such as if that same money had been invested in a 401k in his name. I can promise you, you'd be shocked.
There is a flaw there as the tax rate that you (and also your employer) paid started at 3.65% 47 years ago to the current 7.65% today. That would significantly reduce that total number "put in" - plus the max monthly payouts have increased greatly from 47 years ago to today. Plus, I have a bit of a hard time taking that someone making 40k/year at age 67 in 2011 started out at 40k/year in 1964 since an "average wage" in 1964 was around 4,500/yr.
A 4% average componded return? I think the SS compounded return is a whopping 1.1% (if that good!)
What are the maximum SS payouts? I believe it's about $1500 per month, but if someone has a better figure, I'll be happy to update. So, $1500/monthX36 months equals $54,000 total per your statements.
Your payment into SS is 15.3% IIRC. So, lets say you make an average income of $40,000 and worked from age 20 to age 67, that's 47 years. $40k*47years*15.3% equals $287,640 paid into the system, using those figures. Or more than 5X what you indicated he got out in 3 years. Granted, there's an assumption on wages and on payments, YMMV. I'll do some digging on just what that same $287k would have grown into had it been compounded at even a modest rate of return. Such as if that same money had been invested in a 401k in his name. I can promise you, you'd be shocked.
Ariadne22 got the amount for 66, if you waited until 70 it is well over $3,000 a month.
15.3% has not been the figure for 40 years, it didn't take off until 1986. Plus 2.9% of that is for Medicare.
A you can see you would not have paid tax on $40,000 i income until 1986 and it would have been at a lower rate. It didn't get to 15.3% for SS and Medi until 1990. FICA & SECA Tax Rates
For people who retired in the 80's or 90's they should get a good return, now we are screwed.
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Originally Posted by jmking
Have you heard of any payee who died before collecting? I'm 53 and know several people who've worked for many years and then poof, there gone and so is their benefit.
Yes, hence why it is a horrible system. If married their spouse, even one who never worked would receive the higher spouses check for life, sometimes even prior spouses can collect also. Single people are screwed.
It doesn't pay for itself, to answer the thread title. With all the boomers retiring, it is quickly going in the negative. Last year it was in the red for the first time.
And RWers don't want to cut it. I can only speak for myself, but I want to be able to opt out, or at least privatize it. At the VERY least, we need better scrutiny of those receiving SSI and SSDI. People think it's so hard to get but there are exceptions to that and these people are essentially scamming the system...they end up remaining on SS for life when they could be working still. I know someone who has a child with cerebral palsy...the child gets SSDI but his medical bills are completely taken care of by a local group (well, it's a national group but the local chapter takes care of it) and I believe they also have Medicaid. The mom works full time and the dad works as much as he feels like, which isn't much. Anytime his wife gets a raise, he works fewer hours so they don't cut the SSDI (he has actually admitted this). His rent increased one time and I remember him saying he hopes SS will pay out more so they can afford the extra $100/month. Scammers like this are more common than you would think and this is part of what is destroying the system. But the bigger problem is the boomers retiring and starting to collect en masse.
The SS costs to be incurred by the retirement of the Baby Boom have already been paid by workers. 1983 legislation provided for tax increases and benefits decreases that solved the problem, 100%. Unfortunately for Americans, our leaders are corrupt and insatiable spenders, and they raided the excess of SS taxes over outgoes every year, spending the money that could and should have been invested to pay for the future bulge of costs.
Our elected leaders spent the money on other government spending, and did NOT invest it in valid investments like Treasure Bonds or Treasury Bills that could be redeemed as assets. Instead it created a new type of non-negotiable security (one used only for the SS fund, since there is no demand for securities that have no value), one that had no value because there was no money invested in the first place. Investing the money in a valid security or investment would have meant the tax money would have had to have been used to actually buy the security, instead of spending it on multiple foreign wars and such. As we all know, we can't buy a Treasury Bond and still spend the money on a vacation. We can, however, write a worthless IOU to ourselves and then spend the money, which is what the politicians did. The fact that politicians and others like to talk about the SS Trust Fund as if it existed, and that it would "go broke" in 2042, is simply a way to confuse the issue so that it can be kicked down the road for later politicians to be crucified for.
Even the government admits there are no assets that can be redeemed in the accounting device known as the Social Security Trust Fund. The Office of Management and Budget stated: "These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense.... They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures." (FY 2000 Budget, Analytical Perspectives, p. 337). Couldn't be clearer. I don't know why so many continue to mis-state the issue.
We already paid for our retirement benefits under the current tax structure. Especially since it is likely that a lifetime of high-stress jobs working 80 hour weeks will result in little, if any, time after the absurd retirement age of 67. The average retirement age in the US is 62 (What Is the Average Retirement Age in America? | eHow.com) and of the 14 nations listed here only the US and Norway have increased the retirement age to 67. Too bad we adopted the socialist government and massive taxes of Europe, but failed to get any of the benefits like reasonable work hours, decent vacation time, or protection from financial collapse due to the mess of American health care and other Big Business scams that we cannot escape.
Because at the growth rate it will take huge increases in medicare payroll deduntions to break even and much more than when boomers were wrokig as far as rates. We have quite the opposite of when bommers where workig payig inot the system to fund SS for many less people.
The SS costs to be incurred by the retirement of the Baby Boom have already been paid by workers. 1983 legislation provided for tax increases and benefits decreases that solved the problem, 100%. Unfortunately for Americans, our leaders are corrupt and insatiable spenders, and they raided the excess of SS taxes over outgoes every year, spending the money that could and should have been invested to pay for the future bulge of costs.
Our elected leaders spent the money on other government spending, and did NOT invest it in valid investments like Treasure Bonds or Treasury Bills that could be redeemed as assets. Instead it created a new type of non-negotiable security (one used only for the SS fund, since there is no demand for securities that have no value), one that had no value because there was no money invested in the first place. Investing the money in a valid security or investment would have meant the tax money would have had to have been used to actually buy the security, instead of spending it on multiple foreign wars and such. As we all know, we can't buy a Treasury Bond and still spend the money on a vacation. We can, however, write a worthless IOU to ourselves and then spend the money, which is what the politicians did. The fact that politicians and others like to talk about the SS Trust Fund as if it existed, and that it would "go broke" in 2042, is simply a way to confuse the issue so that it can be kicked down the road for later politicians to be crucified for.
Even the government admits there are no assets that can be redeemed in the accounting device known as the Social Security Trust Fund. The Office of Management and Budget stated: "These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense.... They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures." (FY 2000 Budget, Analytical Perspectives, p. 337). Couldn't be clearer. I don't know why so many continue to mis-state the issue.
We already paid for our retirement benefits under the current tax structure. Especially since it is likely that a lifetime of high-stress jobs working 80 hour weeks will result in little, if any, time after the absurd retirement age of 67. The average retirement age in the US is 62 (What Is the Average Retirement Age in America? | eHow.com) and of the 14 nations listed here only the US and Norway have increased the retirement age to 67. Too bad we adopted the socialist government and massive taxes of Europe, but failed to get any of the benefits like reasonable work hours, decent vacation time, or protection from financial collapse due to the mess of American health care and other Big Business scams that we cannot escape.
If they didn't borrow the trust fund the assets would still be only about $2.6 Trillion, that doesn't sound fixed to me. NO matter how we slice it, more people need to pay in than take out, it is a pay-go system. Even the SSA admits it.
" A pay-as-you-go system can be visualized as a simple pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end. As long as the amount of money coming in the front end of the pipe maintains a rough balance with the money paid out, the system can continue forever."
The only way to show it is fixed 100% is to rig the numbers you input into the model.
"A pyramid scheme is a non-sustainable business model that involves promising participants payment, services or ideals, primarily for enrolling other people into the scheme or training them to take part, rather than supplying any real investment or sale of products or services to the public. Pyramid schemes are a form of fraud."
Here is the SSA teling us how it is not a pramid scheme.
" A pay-as-you-go system can be visualized as a simple pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end. As long as the amount of money coming in the front end of the pipe maintains a rough balance with the money paid out, the system can continue forever."
What is the difference between "enrolling other people in the scheme" and "As long as the amount of money coming in the front end"?
They both count on new people to fund the front end.
In a way yes, very much like the modern day stock market. The only difference is if you buy dividend paying stocks the lack of buyers could cause a price to fall dramatically and if you are receiving a 4-6% annual dividend, you make money over time.
Another difference is the market is voluntary, if a company is making money, the buyers will come.
Because most States with low life expectancy (though not DC, below all states) are Republican. Also many are low income, meaning they pay. Social Security on all their earnings. High income States have more who escape the tax on some of their income.
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Scammers like this are more common than you would think and this is part of what is destroying the system. But the bigger problem is the boomers retiring and starting to collect en masse.
