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I guess the purpose of all such programs is a certain amount of redistribution of funds. I mean, if the purpose were to pay everybody back what they have paid into the system, people might as well put their money in a savings account or under the pillow
I think most of us know that Social Security taxes are nothing more than a very huge tax on the working people to provide just another welfare program. Not many of us count on getting a dime out when we retire.
I think it's time to scrap the whole thing. Just accept it's welfare - and let those who want it live off welfare and let the rest of us save that money - I'd feel a whole lot better if I had all that money back and could put it under my mattress.
Or look what else I could have done if I had not been robbed of that money every pay check. I could have paid off my home mortgage years ago, saved more - but I'll end up with nothing while those who don't want to work will lay around getting the money I paid in.
Well, you are talking about abuse. I wonder what the percentage of recipients is that actually abuse the system. I guess it is smaller than some people and prominent cases want to make us believe.
I read somewhere, I guess it was even on this board, that in the US one can register for certain welfare programs via the Internet. I find that worrisome as it makes things too easy.
Here for instance one has to walk into their office and provide documents and stuff. One has to apply for aid and if it is granted, the need is regularly checked. For instance when one applies for unemployment benefits and does not try to find a job, the benefits are gradually but relentlessly reduced. Basically one has to accept pretty much any job offered to the recipient. Excuses such as overqualification do not count.
Then again, some people really do need help, even though they never made any contributions worth mentioning. I guess it makes us human to help them.
I know some of my taxes and social security contributions are wasted on cheaters and also on bureaucracy and stupid projects I don't approve of, but then again, I am healthy and way better off than others, so I try to just focus on the good things in my life without harboring a grudge against welfare recipients etc.
So what do we do with all of the disabled and elderly that cannot work anymore?
1. live with thier kids, like people used to do
2. save while younger (like people used to do, before they insisted upon living beyond thier means)
3. charity poor houses
Life is tough and we need to plan or rely on the generosity of family members or the church.
1. live with thier kids, like people used to do
2. save while younger (like people used to do, before they insisted upon living beyond thier means)
3. charity poor houses
Life is tough and we need to plan or rely on the generosity of family members or the church.
1. So people should uproot their entire LIFE and move across country?
2. And what if you never make enough to save enough?
3. What if people don't give enough $ to cover these charity poor houses?
You do realize the reason so much gov't aid exists is because people cannot rely on churches and/or families...right?
Oh joy, oh joy! It has finally arrived! You wouldn't believe how excited I was to receive a letter from the Social Security Administration. In the letter, they dutifully showed me how much taxable income I have ever made. (Is it me, or is there something really creepy about that?) They showed me how much I have paid in taxes and how much my employers have also "paid." Then they showed me how much my payment would be if I retire at full retirement (67 years old — not 62 or 65 like you may have heard) and if I delay "collecting" until I turn 70.
It is no secret that I turn 40 this year. That means I have another 30 years of work in front of me. I have (for fun) just taken an online life-expectancy survey, and it says that I will live until the age of 86. So let's assume that these numbers are correct. I will work for another 30 years and then have 16 years to spend it all.
According to the Social Security Administration, I will receive $2,522 a month during those 16 years. The value of that money when I turn 70 is a present-annuity-value calculation. For the purpose of this example, let's pick an easy interest rate of 5% per year. So the value of the Social Security payments (compounded monthly) for 16 years at annual rate of 5% is $335,444.57. In other words, for me to privately do the same as Social Security, I will need to have $335,444.57 in cash when I turn 70 and deposit it in a security that has a 5% annual return.
To take this example a step further, how much money would I have to set aside each year at an annual compounded rate of 5% to hit this target? Using some "quick math," we see that I would have to set $5,048.91 aside each year. Well, this does not seem too unreasonable. One might think that this is equivalent to putting away the maximum of $5,000/year in an IRA, and one would not be wrong for thinking that way.
Unfortunately, there is a larger point that has been missed. I have already been taxed for all of the previous years that I have worked. The Social Security Administration informs me that I have currently sunk a little more than $80,000 into this governmental pyramid scheme. Setting aside any interest I could have received over the past 21+ years, let's assume that they give me a lump sum payment today of $80,000.
Suppose that I take that $80,000 and put it into a security that gives me an annual return of 5% and I do not add another single cent. How much would I have when I turn 70? $345,752.00! I have already exceeded the target needed for the Social Security Administration to fulfill its "promise" to me.
Alas, I do not think that it will do me any good to write a letter to the Social Security Administration explaining that I have reached my target and that they no longer need to tax me. In fact, the letter states, quite explicitly, that I must maintain my current earning rate to collect the stated numbers. So at this point any additional taxes that come from me are just wealth extractions with no benefit to me.
You may think that this is a bad deal for me, and it is, but it is going to be much worse for those who are younger than I. At least I am still making a positive rate of return, somewhere between 2% and 2.5%.
A person born in 1988 making $30,000/year can expect to receive $1,539/month in the year 2058. The Social Security Administration says that he is expected to live until the ripe old age of 87. So that's another 17 years after retiring at the age of 70. The annuity present value of $1,539/month for 17 years at an annual rate of 5% is $212,938.88. In order to hit that target, he would have to set aside $1,132.50/year in a 5% security. This amount is only 3.775% of his $30,000 annual income.
Social Security and Medicare taxes are 15.3% of his income. If he invested that 15.3% of his income instead, he would be investing $4,590. Supposing that this annual contribution was invested each year for the next 48 years and the principal was collecting 5% interest, instead of the Social Security value of $212,938.88, he would have $863,036.55! That's a little more than four times the return that Social Security is "promising."
Or, to drive the nail home, he is paying $4,590 a year and is getting a future value of only $212,938.88. If he simply took that money and buried it in the dirt, he would have, after 48 years, $220,320! The bottom line is that, for today's 21-year-old, Social Security is a negative return.
1. live with thier kids, like people used to do
2. save while younger (like people used to do, before they insisted upon living beyond thier means)
3. charity poor houses
Life is tough and we need to plan or rely on the generosity of family members or the church.
You left out the 4th option. Back in the days before we had Social Security the average life expectancy was less than 55. In otherwords only a half of all Americans lived to be 50 somethings and mortality was such that only a few million not the 45 million today saw their 65th birthday. So option #4 is let the grim reaper do his work and go gentily into that final sleep. Just think how sound the social security system and our economy would be if most people exercised this 4th option. In fact a version of this option was described in the novel "Boomsday" where it was suggested that the SSA would come out ahead if it put $250,000 in the estate of anyone accepting a form of euthanasia called "Voluntary Transitioning".
Oh joy, oh joy! It has finally arrived! You wouldn't believe how excited I was to receive a letter from the Social Security Administration. In the letter, they dutifully showed me how much taxable income I have ever made. (Is it me, or is there something really creepy about that?) They showed me how much I have paid in taxes and how much my employers have also "paid." Then they showed me how much my payment would be if I retire at full retirement (67 years old — not 62 or 65 like you may have heard) and if I delay "collecting" until I turn 70.
It is no secret that I turn 40 this year. That means I have another 30 years of work in front of me. I have (for fun) just taken an online life-expectancy survey, and it says that I will live until the age of 86. So let's assume that these numbers are correct. I will work for another 30 years and then have 16 years to spend it all.
According to the Social Security Administration, I will receive $2,522 a month during those 16 years. The value of that money when I turn 70 is a present-annuity-value calculation. For the purpose of this example, let's pick an easy interest rate of 5% per year. So the value of the Social Security payments (compounded monthly) for 16 years at annual rate of 5% is $335,444.57. In other words, for me to privately do the same as Social Security, I will need to have $335,444.57 in cash when I turn 70 and deposit it in a security that has a 5% annual return.
To take this example a step further, how much money would I have to set aside each year at an annual compounded rate of 5% to hit this target? Using some "quick math," we see that I would have to set $5,048.91 aside each year. Well, this does not seem too unreasonable. One might think that this is equivalent to putting away the maximum of $5,000/year in an IRA, and one would not be wrong for thinking that way.
Unfortunately, there is a larger point that has been missed. I have already been taxed for all of the previous years that I have worked. The Social Security Administration informs me that I have currently sunk a little more than $80,000 into this governmental pyramid scheme. Setting aside any interest I could have received over the past 21+ years, let's assume that they give me a lump sum payment today of $80,000.
Suppose that I take that $80,000 and put it into a security that gives me an annual return of 5% and I do not add another single cent. How much would I have when I turn 70? $345,752.00! I have already exceeded the target needed for the Social Security Administration to fulfill its "promise" to me.
Alas, I do not think that it will do me any good to write a letter to the Social Security Administration explaining that I have reached my target and that they no longer need to tax me. In fact, the letter states, quite explicitly, that I must maintain my current earning rate to collect the stated numbers. So at this point any additional taxes that come from me are just wealth extractions with no benefit to me.
You may think that this is a bad deal for me, and it is, but it is going to be much worse for those who are younger than I. At least I am still making a positive rate of return, somewhere between 2% and 2.5%.
A person born in 1988 making $30,000/year can expect to receive $1,539/month in the year 2058. The Social Security Administration says that he is expected to live until the ripe old age of 87. So that's another 17 years after retiring at the age of 70. The annuity present value of $1,539/month for 17 years at an annual rate of 5% is $212,938.88. In order to hit that target, he would have to set aside $1,132.50/year in a 5% security. This amount is only 3.775% of his $30,000 annual income.
Social Security and Medicare taxes are 15.3% of his income. If he invested that 15.3% of his income instead, he would be investing $4,590. Supposing that this annual contribution was invested each year for the next 48 years and the principal was collecting 5% interest, instead of the Social Security value of $212,938.88, he would have $863,036.55! That's a little more than four times the return that Social Security is "promising."
Or, to drive the nail home, he is paying $4,590 a year and is getting a future value of only $212,938.88. If he simply took that money and buried it in the dirt, he would have, after 48 years, $220,320! The bottom line is that, for today's 21-year-old, Social Security is a negative return.
That is why I think the calculation based on previous salary is not a good solution, it should only be based on the number of years of contribution. There are people who used to earn a lot when younger and now get crazy sums as retirees. I don't think any old person needs more than $3000 a month. But there are people who get $5000+. At that age one probably does not have any mortgage to pay back, one's kids are out of college, etc. So why would anyone need more than $3000 a month? After all, old people get a lot of bonuses and discounts, sometimes even free this and that.
That is why I think the calculation based on previous salary is not a good solution, it should only be based on the number of years of contribution. There are people who used to earn a lot when younger and now get crazy sums as retirees. I don't think any old person needs more than $3000 a month. But there are people who get $5000+. At that age one probably does not have any mortgage to pay back, one's kids are out of college, etc. So why would anyone need more than $3000 a month? After all, old people get a lot of bonuses and discounts, sometimes even free this and that.
$3,000 is low(er) income in the US. Many older still have Mortgages or Rent to pay. Many Grandparents are sending their Grandchildren to college (there are many cases where the grandkids are now living with grandma + grandpa)
Retirees want to perhaps travel and relax. They deserve it. There may be health issues. And so on.
$3,000 is low(er) income in the US. Many older still have Mortgages or Rent to pay. Many Grandparents are sending their Grandchildren to college (there are many cases where the grandkids are now living with grandma + grandpa)
Retirees want to perhaps travel and relax. They deserve it. There may be health issues. And so on.
No, $3,000 is BARE existence in many areas.
Is retiree's income taxed in the US?
Don't have Medicare or whatever it is called for the elderly?
I wonder what the percentage of grandparents is who send their grandchildren to college and have them living with them.
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