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A person making minimum wage all of their life will get $763/month in Social Security benefits. That person is currently paying $96/month in FICA payroll taxes.
If we privatize Social Security....opting to implement what effectively amounts to a "end-of-life-insurance" policy then a minimum wage worker would now be paying $21/month for $500,000 worth of retirement benefits, and would have a monthly retirement income of $1,660.
So....
minimum wage worker paying $96/month for $763/month = The Best Thing Since Sliced Bread & Jesus Christ & Toasted Bread With An Image Of Jesus On It.
minimum wage worker paying $21/month to get $1,660/month = Bad Stupid Dumb Moronic Retarded Asinine Absurd Ludicrous Ridiculous Evil Capitalist
Wondering on how you arrived at such a spectacular annuity based on a $21/mo contribution? In order to achieve an annuity of $1660/month from a $21/mo contribution over say a period of 50 years, compounded return would need to be 8.5%. Like I said earlier, that is a bit unrealistic, for all the reasons you cite here:
Quote:
Originally Posted by Mircea
You have a $Million in stocks in your 401(k) and personal retirement savings and the price drops to $0.03 per share (like Chiquita did once) and you cannot sell it so you have absolutely nothing, we cannot replace the $Million you lost, but we can provide basic subsistence living -- so-called "poverty level."
Again, that's what Social Security is.
I'm all for people taking personal responsibility for their own retirement, and being empowered to do that, but there are several realities that work against that. Not everyone has the ability to make sound investment decisions, and no amount of education or training will alter that; government and society should take actions to empower and help people, but they actually cause more harm than good, and in fact government has taken action to punish people; and then finally, even when people do all the right things....sometimes they still fail.
My greatest fear is that government will crow-bar Social Security into some type of investment scheme based on the Market.
Your point on the value of those benefits, depending on where one lives, is certainly valid, as you mention here:
Quote:
As I have proven, the so-called "poverty level" varies from State to State, and in fact, what the government claims to be the "poverty level" is actually the average poverty level for all 50 States, and we all know how averages can be misleading and deceiving.
So the intelligent thing to do is what? The government masquerading as a federal government needs to start acting like a federal government, turn Social Security over to the States, and allow the States to operate it...and hopefully privatize it.
That would allow each State to examine the cost-of-living and advise its citizens on the minimum amount of insurance coverage to obtain, and then monitor and audit the activities so there's no monkey-business.
But, I don't trust our state government at the moment, at all, so I'd rather let the feds handle it, for now.
A government who cant be honest with its people and changes the rules over time (also called moving the goal posts in some circles) is not to be trusted. If a corporation acted like the feds do, they would be sued but the social security deal gets changed all the time without even telling us in some cases. Social security started is a gov created ponzi scheme where it takes more workers paying into it to pay the current benefits promised but hard to deliver when the paid in social security $ are not invested but spent like all dollars one gives to the fed gov tend to be.
We need a higher retirement age. It is not the poor subsidizing the rich, despite the twisted logic of the left. When did class warfare become good for this country? The left wants more money to spend but ignores the best ways to grow the tax revenues through economic growth in the private sector not in DC where waste lives and thrives
Some here know all this, others may have never read up on SS solvency, and still others misunderstand because of the sources they've heard/read. A good read directly from SSA, something every (older) American should take 15-20 minutes to understand IMHO.
Though well intended I am sure (really), there's plenty of misinformation in this thread.
One useful way to describe the effect of the change in the aged dependency ratio and the resulting effect on the ratio of beneficiaries to workers is to consider the implied number of workers per beneficiary. For the past 35 years, there have been about 3.3 workers per beneficiary (consistent with the ratio of 30 beneficiaries per 100 workers). After 2030, the ratio will be two workers per beneficiary (consistent with 50 beneficiaries per 100 workers).
With the average worker benefit currently at about $1,000 per month, 3.3 workers would need to contribute about $300 each per month to provide a $1,000 benefit. But after the population age distribution has shifted to have just two workers per beneficiary, each worker would need to contribute $500 to provide the same $1,000 benefit.
Thus, in order to meet increased Social Security costs, substantial change will be needed. The intermediate projections of the 2009 Trustees Report indicate that if we wait to take action until the combined OASDI trust fund becomes exhausted in 2037, benefit reductions of around 25 percent or payroll tax increases of around one-third (a 4 percent increase in addition to the current 12.4 percent rate) will be required. Past legislative changes for Social Security suggest that the next reform is likely to include a combination of benefit reductions and payroll tax increases.
Because the large shift in the cost of the OASDI program over the next 20 years is not due to increasing life expectancy, it is not clear that increasing the NRA should be the principal approach for restoring long-term solvency. Increasing the unreduced retirement age beyond 67 is one option that may be considered, given that the population may be healthier in the future and able to work to an older average age. However, this raises the question of the adequacy of monthly benefit levels. After the NRA reaches 67, those persons claiming benefits at age 62 will receive only 70 percent of the unreduced benefit level. Further increase in the NRA would decrease the adequacy of monthly benefits at age 62, and at all other ages, even further.
There is no one clear solution to the problem of increased cost for retirees because of fewer workers available to support the retirees, which in turn is caused by lower birth rates. This issue is not specific to Social Security, but also affects Medicare as well as many other private and public retirement income systems. The decline in birth rates has been far more dramatic in Japan and many European countries that are struggling with the effects of aging populations because of declines in birth rates even more severe than in the United States.
A variety of possible changes to the provisions of the Social Security Act have been considered by policymakers and have been scored by the Office of the Chief Actuary. The reader is invited to look through these options, both as individual provisions and comprehensive proposals for improving solvency of the OASDI program.
I'm repeating myself, but this seems like a better way to illustrate why we should be addressing Soc Sec solvency sooner rather than later ('SS is solvent for the next 25-30 years). We start spending down the 'trust fund' very soon. It's unfair to future generations to knowingly not try to flatten out cost trajectory IMO...
OASDI program cost and noninterest income as percentages of taxable payroll, 2005–2008, projected under the intermediate assumptions, 2009–2085
The reason why there is so much confusion is the -----------SS TRUST FUND
Where has that trust fund money been "invested" ?
What a joke !
The problem is those SS Trust Funds have been spent by the US GOVT and the general revenue fund will have to figure out how to cut benefits so they don't have to pay it all back.
How stupid do they think we are stating the SS Trust Fund $$$$$$$$ have been........"invested "
I'm going with Mircea on a cut to benefits somewhere around - 2023/2024. He's posted on this numerous times, listing the overly optimistic GDP assumptions used by SS.
Quote:
Originally Posted by Mircea
You don't have enough workers to bankroll beneficiaries and you never possibly could have enough workers.
Legally...
Mircea
Quote:
Originally Posted by Navyshow "Please, please remember that exhaustion is an actuarial term of art and it does not mean there will be no money left to pay any benefits" he warned in issuing the trustees' annual report on the financial health of the Social Security program.
"After 2033, even if Congress does nothing, there will still be sufficient assets (from payroll taxes) to pay about 75 percent of benefits. That's not acceptable, but it's still a fact that there will still be substantial assets there," Astrue insisted.
He's wrong.
It isn't 2033, it's 2023-2025. That is when the Social Security Trust Fund will "exhaust" itself, and as best as I can tell you'll only get about 58% of your benefits.
Why? For the exact same reason I am always right, and Social Security and Medicare are always wrong. Their projections are based on outrageously flawed economic models. Those models show the US GDP growing at rates of 4.1% to 6.4% annually.
Those growth rates are impossible to achieve for a post-Industrialized State. Because it is impossible for the US to ever achieve such rates, the revenues Medicare and Social Security projected that they would collect are inherently flawed and grossly over-estimated.
As you can see, your GDP was in excess of 4% in the 1960s, but that is because you were still an industrializing. Agriculture is the first sector of the economy that industrializes, but it is always the last sector to completely industrialize. I have no idea why, it's just the way it works out in the world.
Once your agricultural sector industrializes, you'll see that your GDP drops to the standard for all post-Industrialized States. The reason GDP started declining this decade is due to the rapid industrialization of 3rd and 4th World States. BRIC has been doing the Jesus/Christian-thing and providing those countries with the money, tools and resources to develop (since the US refused to help them). Their development has resulted in rapidly rising global competition, and the US is unable to compete, and won't be, until about 2050-2060 or so (although things will get better in 2040 - maybe).
So, putting this altogether, the only way Social Security can collect the FICA tax revenues it needs to prevent exhaustion of the OASI/OADI Trust Fund by 2033 is this:
1] a GDP growth rate in excess of 4.1%; and
2] an unemployment rate of 5%; and
3] a labor participation rate of >66.5%; and
4] an underemployment rate of less than 6%-8%.
You need all four, not just one or two or three. In looking back at my spreadsheets and calculations, the reason the situation is worse than I anticipated, is because I did not factor in the underemployment rate.
Now that I have, I got a better read on it.
The problem is this: fewer people are working; those who are working are not necessarily working full-time, and even those who are working full-time are not earning the money they used to earn. All of those things (plus other factors) result in failed revenue projections. It also means that the Earnings Curve for many are heavily skewed, meaning the will not earn the wages over the course of their life-time that they normally would.
Social Security stupidly projected a 28.4% increase in revenues for 2012. I've explained repeatedly on other threads why that is impossible (and why the entire staff should be take out and shot). Because it is impossible to meet the revenue projections, you'll burn through 60%-70% of the Trust Fund by 2020, and then through the remainder in just a few short years at which time you will only collect enough in FICA taxes to pay out ~58% of benefits.
So, there it is.
Last edited by thepinksquid; 03-16-2013 at 12:31 AM..
Reason: Edit per request of Ariadne22
I think that raising the age for full retirement to 70 makes sense
What world do you live in? Only if you can keep your job. Too many employers force the older employee out in their 50s or early 60s. In a perfect world, everyone would have employment available until they WANTED to retire - which employment fit their physical and mental abilities as they aged. This isn't a perfect world. Better have great health, all your debts paid and a big retirement account by age 55 or 60 and have the ability to buy private health insurance - just in case your employer doesn't want you anymore.
no, you did NOT pay for medicare and SS. Nobody pays anything LIKE what they wind up costing those who are still paying into it. there is no END to what you might cost, with surgeries, etc. millions and millions of $. the average person doesm't ;ay more than a few hundred k into ss, in an entire lifetime of work. the average income is 40k a year in US, and you pay 15%, and you are WRONG if you "think" employer "pays half", that's ALL your money, the boss just helps Big bro steal it from you, that's all. Most peeople don't work more than 40 years, so that's 15% of 1.6 mill, which is just 1/4 mill. ONE heart bypass, and followup care, can easily run 150k, dudes. you might wind up costing everyone else many millions of dollars, very easilly. so no you did NOT "pay for " your ss benefites, other than a small partof them. Many people live another 20 years after they start drawing SS or medicare,and quite a few million draw it almost all their lives, being born Mongoloid, get messed up in a car wreck, etc.
The philosophy of SS and Medicare, is that the group as a whole, can provide benefits to the individual that would otherwise be obtainable. If one is to purchase an annuity (SS) or healthcare (Medicare) at market value, then what is the point? Why have the programs at all? But perhaps that is your point.
If you have anything of value -- a car, house, boat (an house-boat), musical instrument jewelry --- you insure it against loss, right?
You have employer-based retirement benefits or your own personal retirement savings or both. Aren't those valuable? Shouldn't you insure them against loss?
But, of course!
And that's what Social Security is....insurance against loss of your pension/personal retirement savings.
However, this particular brand of insurance is not "full replacement value."
You have a $Million in stocks in your 401(k) and personal retirement savings and the price drops to $0.03 per share (like Chiquita did once) and you cannot sell it so you have absolutely nothing, we cannot replace the $Million you lost, but we can provide basic subsistence living -- so-called "poverty level."
Again, that's what Social Security is.
As I have proven, the so-called "poverty level" varies from State to State, and in fact, what the government claims to be the "poverty level" is actually the average poverty level for all 50 States, and we all know how averages can be misleading and deceiving.
So the intelligent thing to do is what? The government masquerading as a federal government needs to start acting like a federal government, turn Social Security over to the States, and allow the States to operate it...and hopefully privatize it.
Of course if government did that, then how could government possibly lord over people and whip them into a frenzied state of bowel movements with the mere whisper of "entitlement cuts?"
That would allow each State to examine the cost-of-living and advise its citizens on the minimum amount of insurance coverage to obtain, and then monitor and audit the activities so there's no monkey-business.
I'm not exactly an investment wizard (as many already know) and I don't pretend to know anything about investing (other than investing is possible), so I'll leave it to others to work out the details.
Even if you privatized it, it would still be necessary to ensure any privatized version of Social Security enjoyed all of the same legal protections that Social Security has now, meaning that benefits cannot be assigned, seized, attached or anything else.
Since it represents future payments to you, it would be a liability, and therefore you could not declare your retirement insurance account to be an asset, or use it as collateral or even borrow against it (like you can with a 401(k) plan), since that would defeat the whole purpose of having insurance in the first place.
I'm all for people taking personal responsibility for their own retirement, and being empowered to do that, but there are several realities that work against that. Not everyone has the ability to make sound investment decisions, and no amount of education or training will alter that; government and society should take actions to empower and help people, but they actually cause more harm than good, and in fact government has taken action to punish people; and then finally, even when people do all the right things....sometimes they still fail.
My greatest fear is that government will crow-bar Social Security into some type of investment scheme based on the Market.
That will result in a spectacular fail, as in Fail-Boat and no, I don't mean the SS Minnow (on Gilligan's Island), I mean the SS Poseidon in the "Poseidon Adventure" --- that kind of fail --- with the "Towering Inferno" on top of it. And "Armageddon" --- without Bruce Willis.
It doesn't matter what I believe. All that matters is reality and whatever you or I or anyone else believes will not alter reality. I'm just telling how reality is...I didn't say liked it.
Smoking...
Mircea
Given the insolvency of some state pension funds, I'm reluctant to see them administering SS. Seems like going from the federal frying pan into the state fire.
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- Okay, then......
