Redefining social security? (wage, premium, death, companies)

[whogo]

Originally Posted by 2nd trick op

No problem ... as long as the tax rate remains absolutely flat.

We all know what happens as soon as the "progressive" or "compassionate" element shows up.

Currently SS taxes are regressive. Do you wish to change it to a flat rate on all income?

The fact is SS just takes some tweaking. Medicare and Medicaid cannot survive in their current form.

[buzzards27]

Originally Posted by afoigrokerkok

Ever hear of the PBGC?

Is that a gobernment agency that gets stuck with the bill when a company like Bain steals another companies pension funds????

[UNC4Me]

Originally Posted by afoigrokerkok

Yes, and it needs to be indexed to life expectancy. (Though I think for now 70 for reduced benefits/75 for full benefits would be too high.)



Well, people could be allowed to take the same money and put it elsewhere, but still be required to pay a small amount to help the poor seniors. That would make it a bit more fair.

Actually, it's not high enough if you want to have SS as it was designed. 65 was set as retirement age in 1935 when life expectancy was 59.9 for men and 63.9 for women. Very few were expected to live to collect a dime. Since life expectancy is now 77.6 years for men and 80.1 years for women, 75 is still too low.

As another poster said, SS was not meant to be a retirement plan. It was meant to be insurance. You can have one at little cost to you or your employer or another at a great cost to both. People need to wake up and realize what we have now is unsustainable. Drastic changes need to be made before the whole house of cards collapses.

I do think that yanking the rug out from under people who have paid for years into the system is unfair. But, breaking the system so it won't exist for younger workers is unfair as well. There are no solutions that don't involve sacrifice. I think we need to be mindful of sharing that sacrifice and not expecting one group to give all and another to give nothing.

[GregW]

Yes. The grasshoppers should be eligible.

First - not all that many survive to become elderly.

Second - the people they will be buying food and shelter from are the actual recipients of the money. Why should they suffer because one of their potential customers was a grasshopper?

Third – Why do you think the government should be engaged in social engineering using the Social Security System?

[UNC4Me]

Originally Posted by GregW

Yes. The grasshoppers should be eligible.

First - not all that many survive to become elderly.

Second - the people they will be buying food and shelter from are the actual recipients of the money. Why should they suffer because one of their potential customers was a grasshopper?

Third – Why do you think the government should be engaged in social engineering using the Social Security System?

You're telling me that my neighbor who makes the same money I do and spends literally ALL of it on cars, boats, vacations and crap won't live as long as I do? Please show me the actuarial table that takes saving vs. spending at the same income level into account when estimating life expectancy to support your claim.

I save, sacrifice and delay gratification in order to save for retirement. You believe that I should receive nothing while my "spend it all" neighbor deserves for me to support him in his old age. Yeah, that's the way it should work.

[Mircea]

Originally Posted by GregW

Social Security was, and should be, an income INSURANCE system. It was designed to insure individuals have a retirement income if their private pension or savings were lost to some form of economic collapse. It was to provide and income stream so the businesses providing good s and services to the elderly could remain in business. It was NOT a federal pension system.

That's the only person who got it right.

42 USC § 402 - Old-age and survivors insurance benefit payments

(a) Old-age insurance benefits Every individual who—
(1) is a fully insured individual (as defined in section 414 (a) of this title).

I highlighted the relevant parts for the ignorant and mentally challenged.

Questions?

Lauding....

Mircea

Originally Posted by VTHokieFan

What should the "definition" of social security be?I think it should be a program you are eligible at age 65 (no more early withdrawals) that ONLY serves to ensure seniors are at 130% of the poverty level. It's not a retirement income stream, but a poverty prevention program. If we can change our outlook to that, I think Social Security will be sustainable.

Okay, perhaps a more objective descriptor, rather than the vague and ambiguously subjective "social security."

Social Security is dead. It is an ex-Social Welfare Program. There are no possible set of circumstances that would allow you to fund it to its logical conclusion, and any attempt to do so would be detrimental to your economy, in addition to exacerbating your already deteriorating standard of living.

Discretion is the better part of valor. Admit defeat, end the program...say in 2040 and for those born after 1980, transition them to a new program that is not a Ponzi-Scheme.

Defining...

Mircea

Originally Posted by afoigrokerkok

So people who paid into it for 40-50 years shouldn't get any unless they're dirt poor?

I tell you what, calculate the ROI on your auto insurance and home-owner's insurance and get back to us.

Challenging....

Mircea

Originally Posted by NorthGAbound12

I think SS is unconstitutional and should be abolished eventually.

It is unconstitutional under the US Constitution, not mention illogical and completely absurd, but it quite possibly constitutional under the constitutions of the several States.

The States can surely set up and manage their own Social Security Plans. For those who doubt, note that as governor of New York State, FDR set up a social security-like plan for New York State residents.

That is more logical.

As it stands, you have situations were two persons have the same earning power over the course of their life-time, and based on the Social Security formula, they each get $1,175/month. One is living large, and the other is suffering in sheer misery, because of the vast differences in cost-of-living throughout the United States, that Liberals in their unicorn fantasy world pretend don't exist.

Liberals just don't get it. Due to variances in cost-of-living, $1,175/month in some areas of the US is equal to $2,300/month (or even more) and in other areas of the US, $1,175/month = $585/month.

Liberals think it's funny watching people suffer. It's the same with Food Stamps. A family of four in area of the US gets $400/month and eats Chilean Sea Bass, Filet Mignon and Bay Scallops, while another family of four living in another part of the US can only afford to buy Ramen Noodles and tins of tuna with their $400/month.

If States ran social security (and Food Stamps and other such programs), then they could set the tax rate for the insurance premiums relative to the cost-of-living and other inflationary factors unique to that State, so that no one suffers.

Originally Posted by NorthGAbound12

Anyone currently on it or close to retirement shouldn't be punished and should be allowed to keep it.

Absolutely. The government made a deal, and it should make every effort to follow through to the best of its ability, but it should also admit that the Social Security program was a mistake, predicated on a Ponzi-Scheme that would eventually collapse.

Originally Posted by NorthGAbound12

However we should be given an option to opt out of it anytime we please and if possible reimbursed for our payments into the system.

I tell you what, you tell me everything that will happen in your life in exacting detail, and I'll consider letting you opt out.

When I had 14 years, I wasn't sitting around saying, "Hey, when I grow up, I want to be a disabled veteran."

What do you want to be when you grow up?

Divorced 3 times with $6,342/month in child-support and alimony payments, and stuck in a Chapter 13 Bankruptcy for the next 60 months?

I'm sure many women have aspiring dreams, too: "When I grow up, I want to be a rape victim and suffer from PTSD, and then be at fault in a traffic accident and get sued in court."

You'll buy insurance for your car, your boat, your motorcycle, your RV, your home, your apartment, your business, but you won't buy insurance to keep you from panhandling on the streets and drinking water out of a gutter in your old age?

That makes no sense at all.

Originally Posted by NorthGAbound12

Social Security is a ponzi scheme that is unsustainable and should have never been put into place.

Agreed.

Constitutionally...

Mircea

Originally Posted by Dale Cooper

I agree the withdrawal age must be upped. If it must be a tier system, maybe age 70 for reduced benefits, 75 for full benefits.

Originally Posted by afoigrokerkok

Yes, and it needs to be indexed to life expectancy. (Though I think for now 70 for reduced benefits/75 for full benefits would be too high.)

That fails, because it only exacerbates your problems.

The world is changing, quite rapidly actually. There is a huge disparity in wages between the "Western democracies" and the developing-States and a really large disparity between the US and developing-States.

Let me introduce you to Realityâ„¢.

You have an American worker at Procter & Gamble who starts at $22.50/hour (with benefits).

You have a Romanian worker at Proctor & Gamble's Timisoara facility earning $3.80/hour.

Each worker is part of crew of 11 that operates a packaging machine packing Crealm Toothpaste. Packaging machines are in Italy or Germany. They both use the same German-made packaging.

Which packaging machine runs faster?

Neither. They both run at the same speed. I seriously hope people are not so stupid as to think that the packaging machine in the US runs faster because EST is 5 hours behind GMT and EET is 2 hours ahead of GMT. Or gravity. Sorry, gravity plays no role here either.

So, 11 workers on a packaging machine producing 100 tubes of Crealm Toothpaste per hour.

In the US one hour is 11 * $22.50 = $247.50
In Romania one hour is 11 * $3.80 = $41.80

See that? That's what you're up against. And if that packaging machine is in the Philippines where your average worker makes $1.60/hour....

11 * $1.60 = $17.60

$17.60 / 100 = $0.17 per tube of toothpaste
$41.80 / 100 = $0.42 per tube "" """"
$247.50 / 100 = $2.48 per tube "" """"

See that?

A Romanian making $2.15/hour or $3.80/hour can afford to buy Crealm Toothpaste made in the Philippines, or made in Romania, but not made in the USA.

And that's just your Wage Cost. Your Labor Cost is higher than the Wage Cost due to the taxes and other things US employers must pay that companies in foreign countries don't have to pay. And then the overhead. The overhead in the US is higher than in other countries. And then add in federal, State, county and local ordinances and regulations that must be complied with that drive up costs that don't exist in other countries.

So the US is going to be exporting to the World? Not in this century.

You got jobs for those who have 70 years? No, you don't, and if they work then your 30-and under crowd have no jobs.

I get the distinct impression that many are still in denial and refuse to see how utterly hopelessly screwed they really are. Because when Southeast Asia is done, then it will be Central Asia and then it will be sub-Saharan Africa -- so this will continue for decades and decades, not weeks, not months and not years.

Economically...

Mircea

Originally Posted by whogo

Currently SS taxes are regressive. Do you wish to change it to a flat rate on all income?

The fact is SS just takes some tweaking. Medicare and Medicaid cannot survive in their current form.

Social Security will take more than just "tweaking." I'll try to walk you through this. Read the April 2012 Report.

Social Security believes that the US GDP will grow between 4.1% (Low Cost scenario) and 6.4% (High Cost scenario) each and every year, between now and the next 75 years.

Social Security also believes that there is a relationship between GDP and wages, and that as a result the taxable wages --- what may be collected as FICA taxes -- can be expressed as a percentage of GDP. Social Security also believes wages will rise.

SSA also recommended your FICA tax be immediately increased from 6.2% to 7.05%.

And if those things happen, then the OASI Trust Fund will survive through 2033.

The problem is that your economy will not grow at rates of 4.1% or 6.4% or anywhere in between. Since 1961, your average annual GDP growth rate has been 2.89% which is good -- remember, you are a post-Industrialized-State.

There is no relationship between GDP and income. You can have a GDP of $14 TRILLION and 10% is household income or a GDP of $17 TRILLION and 50% is household income. And wages will not rise -- at least not significantly for many reasons.

And Congress will not raise the FICA tax rate to 7.05% (each for the employer and employee) this year. I doubt they will next year either.

Because of those failures, the OASI Trust Fund will collapse 2023-2025.

If you increase the FICA tax rate to 9.2%, you can extend the Trust Fund to 2028. If you eliminate the wage/salary cap and increase FICA to 9.2%, you can extend the Trust Fund about 2035.

If you do both of those, and means-test, you might be able to save it to 2040.

Originally, I thought means-testing would have a greater impact, but after studying the issue, I don't see that. I see many households with no savings, and then many households with 401(k) accounts that are actually nothing more than glorified pass-book savings accounts --- so means-testing will only weed out a very small percent of retirees. I also see those who have any form of savings dumping it or moving it where it won't be counted against them.

Raising the retirement age will cause far more harm and damage than good. Presently you can retire at 62 and collect 70% of your benefits. Eliminate early-retirement or raise the age and the only thing that happens is people collect Social Security Disability --- at 100% instead of 70%.

62 @ 70% for 20 years to death at age 82 versus 62 @ 100% for 20 years to death at age 82.

See the difference?

There are other costs as well. SSI (Supplemental Security Income) which is a federally funded program that has no relationship to Social Security will just be paying benefits out of the General Fund in lieu of Social Security. The average month Social Security benefit is $1,230 but note that many would collect only $1,000 at 100%, so if they got SSI at age 62, they'd actually collect more than the 70% of $1,000 they'd get retiring early at 62 years.

Either way, you lose.

And just so everyone understands and we're clear on the concept, when the FICA tax holiday ends, you lose jobs; when you raise the FICA tax rate to 7.05%, you'll lose jobs; when you raise it to 9.2%; you'll lose jobs; when you eliminate the wage cap, you'll lose jobs; and when Generation X, Y and Z are paying FICA tax rates of 12.8% to 16.4%, because, I guess they want Social Security, you will lose a helluva lot of jobs.

Problematically....

Mircea

[freemkt]

Originally Posted by afoigrokerkok

Yes, and it needs to be indexed to life expectancy. (Though I think for now 70 for reduced benefits/75 for full benefits would be too high.)

What do you say to people who pay in for decades and die before getting back what they paid in?

"Here's $255 to help pay for your burial, and thank you for playing!"

[freemkt]

Originally Posted by Mircea

That's the only person who got it right.

42 USC § 402 - Old-age and survivors insurance benefit payments

(a) Old-age insurance benefits Every individual who—
(1) is a fully insured individual (as defined in section 414 (a) of this title).

I highlighted the relevant parts for the ignorant and mentally challenged.

Questions?

Lauding....

Mircea

...but only if they live long enough to collect. I don't expect to live to old age, so why should my earnings be taken for an insurance program I don't expect to need and don't want?

Some observers have noted that black men get an especially poor deal from Social Security, as their life expectancy is very close to 65, and they also have lower marriage rates and fewer eligible survivors.

[GregW]

You do not ecpect an insurance system to pay back everything you put in. You exoect, if you are lucky, to get nothing back or if you suffer a loss potentially more than you put in.
With due deference to Mircea -

You insure your 200 k house for 20 years at 2 k a year. You have spent 40 k. You die and your estate gets the 200 grand house and a bill of 2 grand for the next year's insurance. You "lost" 40 k.

Same house and same insurance. Hurricane Wicca comes along and removes your house from this reality. You survive and collect the 200 k from the insurance company. You gain 160 grand and they lose the same. You win but then realize your replacement house will cost 300 grand due to inflation and market demand for builders. You still take a loss but it is less than you would without insurance.

[freemkt]

Originally Posted by GregW

You do not ecpect an insurance system to pay back everything you put in. You exoect, if you are lucky, to get nothing back or if you suffer a loss potentially more than you put in.
With due deference to Mircea -

You insure your 200 k house for 20 years at 2 k a year. You have spent 40 k. You die and your estate gets the 200 grand house and a bill of 2 grand for the next year's insurance. You "lost" 40 k.

Same house and same insurance. Hurricane Wicca comes along and removes your house from this reality. You survive and collect the 200 k from the insurance company. You gain 160 grand and they lose the same. You win but then realize your replacement house will cost 300 grand due to inflation and market demand for builders. You still take a loss but it is less than you would without insurance.

People who don't expect to live to "retirement age" wouldn't buy this "insurance" if they had a choice, plus they would be better off investing their money more profitably, plus they would be able to leave their retirement fund to their adult children when they die - things you can't do with Social Security.