social security

[wingman]

Can anyone tell me why they think the administrations plan for reforming
ss will work. I just don't see it, my cynical mind tells me there is big money to be made for large corporations on this plan. There will be bucks
(taxpayer) spent on getting this done and 30 years from now it will be less
money for the retired working poor.

[Wingshooter]

All I know is that I would love to be able to invest my money however I wanted to.  That would be additional money I could contribute to my 403b fund.  I know how much social security will give me when I retire, and it's a pittance of what I could get if I could invest this money on my own.

[johnster999]

The key is will it truly provide personal ownership in the plan, rather than the pay-as-we-go system we live with today.

IF the plan can provide true personal ownership, it will be a very good thing for younger workers as well as their decendants who will inherit some of their money from generation to generation.

It's a big "if". Time will tell.

[Unisaw]

wingman,

So buy stock in the large corporations that are going to profit from the switch.  

The current system is so flawed given the demographics of the US that almost anything would be an improvement.

[nico]

I have a question for you, wingman.  Do you think the current Social Security system can work indefinitely even with the top heavy population we're developing?  If not, what would be a better solution to the inherently flawed system we currently have than to allow people to start partially opting out of it?  
From what I've heard about it, I think Bush's plan is a step in the right direction.  I don't know how you could do it without seriously ripping off a lot of people, but I'd be perfectly happy if social security became nothing more than a requirement that people set aside a certain amount of their income in a retirement fund of some sort (completely getting rid of it would be even better, but I can't see that happening after the government dependence that SS has created).

[wingman]

I have a question for you, wingman. Do you think the current Social Security system can work indefinitely even with the top heavy population we're developing?


No, however if the money had been held in account rather then "borrowed" from, etc. perhaps it would work. However
again when government tells you they will do something good
for you be aware.
 We have large numbers of people who have no clue about stock market
in my opinion this will be a mess however only time will tell.

[trapperjohn]

Wingman, Look up the phrase " ponzi scheme" and compare that to the ss sytem.  It was always set up so that the younger workers subsidized the retired people. It is unsustaniable with an aging population.
That being said, I have Major problems with the current proposals I have heard to "privatize" part of it. The current proposals that i am aware of have individulas "keeping" a portion of it and puttign it into 3 or 4 government approved mutual funds. I really dont want the government dictating my investements. Allowing us to put them in our own 403b's or 40lk's would be much better. The best scenario would be let let whoever wanted to to opt out of the system altogether.

[wingman]

a portion of it and puttign it into 3 or 4 government approved mutual funds


I think this part is my biggest concern.

[Ready on the Right]

When asked what he thought was man's greatest achievement, Albert Einstein answered "Compound Interest".

The social security system we are currently burdened with DOES NOT TAKE ADVANTAGE OF COMPOUND INTEREST.

The only way to make the current scheme work as people live longer and Baby Boomers retire is to raise the FICA tax and make young workers wait longer and longer for benefits.

Investing a portion of the Social Security money ripped out of our paychecks will free up more cash for investment so corporations can buy equipment, create jobs and (HORRORS!) make profits.  It will also add the mathematical miracle of compunding interest to the mix.

I'm 40 and I've been paying FICA tax since I was 15 years old.  Without some change in the system, I don't expect to ever see a return on the hundreds of thousands taken from me and squandered on the poorly designed Social Security system.

[Ready on the Right]

30 years from now it will be less
money for the retired working poor.

As it stands now, the system will be insolvent in 30 years.  Without a change, the "working poor" will have more $$ ripped out of their paychecks while they are working, work longer before they receive benefits and depend on a system that everyone on both sides of the issue agrees will be insolvent by the time they retire.

Other than Bush-hating*, I just don't see why anyone would not want to improve the system.

*Edited to say -- I'm not accusing anyone of anything, this is just the only reason I can see that people disagree with even discussing changes to Social Security.  Any President who fixes it will create a legacy.  If Clinton had tried to fix it, I'm sure many on the Right would have fought him on it.

[macavada]

The Bush plan does nothing to address the solvency issue.

[Monkeyleg]

I posted a reply on this topic a few hours ago. It hasn't shown up. Why, I don't know.

My father is 87. He started paying into SS in the 1930's when his "contribution" was maybe ten cents a week.

Even in the 1960's, when he was at the peak of his earning years as a computer engineer, he was "contributing" 2.5% of his pay.

Since he began drawing benefits more than twenty years ago, he's gotten roughly $400,000 out of the system. There is absolutely no way that my father put enough into the SS system to warrant that amount of money.

My father figures he's gotten about a 500% return on his "contributions." He's an extremely intelligent man. He knows that this is a scheme.

Yet, he defends it. He defends it because he's an FDR Democrat. He defends it because Harry Reid, Ted Kennedy and all the other opponents of Bush oppose any changes: any positive change to the system drains the Democrat's "scare base."

The Social Security system is going to go broke. It doesn't matter whether it does in 40 years or 70 years. Believe me, forty years goes by like a blink of the eye.

The alternatives to the current situation are thus:

1. Raise the FICA and CO-FICA taxes from the current 12.5% to higher levels.
2. Reduce the "benefit" for people either on SS or those who are factored into the current equation.
3. Raise the retirement age, and significantly so.
4. Raise the FICA ceiling from $90,000 to who-knows-what. My father, and many others, want to see no ceiling at all; Bill Gates, George Soros and other billionaires pay 12.5% as well.
5. Establish "means testing," whereby those who have saved enough on their own receive a lesser--or no--amount of benefits.
6. Gradually introduce privatization accounts over the course of generations, with each being able to put increasingly more of their FICA taxes into personal accounts.

For younger workers, option #1 is not an option.

For those of us who have paid 1/8th of our pay into this system, option #2 is not an option.

For those of us who will continue to work until we no longer can do so, option #3 is not exactly an option.

For those making more than $90,000 a year, option #4 is not an option. For most of my working years, the FICA ceiling chased me; everytime I thought I didn't have to pay in any more, they raised it.

What's more, raising the FICA ceiling to obscene levels is not fair. Of all of the options, it is the least fair. It is forced welfare payments, and exorbitant ones at that.

Option #5 is also completely unfair. It punishes those who planned properly, and rewards those who either didn't plan, or just had things go wrong.

I fall into the last category. I planned properly, but had things just go haywire, many of which were outside my control.

You'd think that, given what's happened to me, I'd favor raising the FICA ceiling, or establishing means-testing. After all, those plans keep my "benefits" the same without any pain, right?

Wrong. It's just wrong to seize more of a person's money as that person earns more. It defeats self-initiative. If we didn't learn anything from the collapse of Communism, we should have learned that much.

The only option that even approaches being "fair" is privatization. At my age, it does little or nothing for me. But it gives my great-nieces and nephews in their 20's a better shot at a better life when they're in their 60's.

As for the solvency question, the answer is a question itself: solvency when? Thirteen years from now, forty years from now, or seventy years from now. Or somewhere in between?

We've gone from 42 workers for every benefiary in the 1930's to 12:1 to 3:1, and we're coming up on just 2:1.

If we stay on the current course, "solvency" will either mean huge tax hikes for younger workers, or drastic benefit cuts for those of us who have had 1/8th of our pay taken to pay into a scheme many of us didn't want a part of.

GW has put SS on the front burner as an issue. He didn't have to do so, and could have let it slide just as other presidents did.

He does these sorts of things, though, and gets a large chunk of what he wants. Prior to raising the issue, it wasn't discussed at all. Now the issue isn't whether Bush's proposals are the right strategy, it's what the alternatives might be.

I suspect that GW is going to get a good portion of what he wants. And, considering the system we have now, that can only be good.

[grampster]

What Monkeyleg said.

[Fly320s]

Monkeyleg has some good ideas, but I like mine better.

Cut off Social Security.

No new enrollments, no more deductions from the people's paychecks.  Yep, lots of folks are gonna get screwed, me included.  But the short term pain sure beats the long term pain.

Let me decide where my money goes.  If I spend it all on guns and ammo and end up broke, but a good shot, then that is my problem.  I don't want you to pay for my retirement and I certainly do not want to pay for yours.

[wmenorr67]

What most people forget is that SS was only there to supliment any retirement income people may have.  Also FDR also said something about 4% could go into "private" accounts.  I would love to have the right to say where my money is invested.
Also think about congress.  They nor the President pay into SS.  When they "retire" they receive what they were making when they did so.  Not a bad gig.

[Monkeyleg]

wmenorr67, when SS was set up, it was supposed to be a temporary fix for the unemployment problem during the Great Depression: encourage older workers to retire to create jobs for unemployed younger workers.

The age requirement of 65 was no accident: few people lived much longer than that.

I was listening to Walter Williams read a brochure from the SSA from 1949. In it was a statement that the SSA would take no more than $3,000 from a worker during his/her lifetime.

Well, taxes have a way of not going away, and politicians lie. That's a truth we can all agree on.

While the idea of eliminating SS completely right now may seem attractive to some, it isn't for someone like me who's 54 and paid--as I keep repeating--something like $130,000 into the system. It would be awfully difficult to put aside that much money over the next decade or so.

I've paid it, and I want as much of it as I can get. If I could get even 1/2 of that in a lump sum now, I'd be happy.

That's not going to happen, though. The only alternatives that I'm aware of are those I outlined above.

So, pick and choose.

[critter]

Monkeyleg had a good analysis.

I believe the following:
1. SS is in deep trouble and without something done, will soon collapse.
2. I believe deeply in keeping and using my own money rather than sending it to DC and letting a bunch of bureaucratic crooks seeking only reelection deciding when, if and how much of MY money to send back to me.
3. I had a friend die last week or so who was 57 years old. He will never see one cent of his SS nor will his wife nor will his kids. That is not right in anybody's book. Privitization would let him pass on that part to his heirs.
4. As has been said, SS was to be a suppliment to retirement, not the 'cradle to grave' socialistic program some would seem to think. Make your own preparations for retirement!
5. It's gonna be a long, hot, dry, contentious road and the bureaucrats, crooks, pols and party friction will most likely screw it up worse than it is now!

[bountyhunter]

Can anyone tell me why they think the administrations plan for reforming
ss will work. I just don't see it, my cynical mind tells me there is big money to be made for large corporations on this plan. There will be bucks
(taxpayer) spent on getting this done and 30 years from now it will be less
money for the retired working poor.

AMEN.

Bush's plan is built around ATAMO financing.  

And
Then
A
Miracle
Occurs


Somehow, money just pops out of thin air.  All the lost revenue when money is diverted into private accounts must come from somewhere... expensive bonds sold to raise money.  The bonds have to be paid off in the future....  that's when the miracle occurs.  In the future, there will be so much money we will pay off old bond debts, current SS benefits, and have money left over......

[bountyhunter]

Monkeyleg has some good ideas, but I like mine better.

Cut off Social Security.
.

So, under your plan, the old people currently eligible for benefits who paid in all their lives are just SOL?

The sad thing is, that is only slightly worse than Bush's plan.

[nico]

bountyhunter, what would you propose?

[bountyhunter]

bountyhunter, what would you propose?

 I propose doing what was done under Reagan.  make sane, sensible adjustments to retain solvency when needed... and admit it is always skewed such that fewer workers support more recipients as life spans increase and that will take some decisions.  We will have to increase contributions, and/or decrease benefits and/or raise eligibility age limits.... there is no magic cure, but the only fair thing to do is make adjustments when required that spread the pain evenly.

Bush's plan is a train wreck.  It is just more borrow and spend hocus pocus.  

The thing is, people believe their SS money is "invested" and the cure is to invest it someplace else.  It is NOT invested, it is a tax that pays SS recipients and also other government functions so it is not an investment program at all... the money is spent before it gets to Washington.  If that money is diverted, it would have to be replaced by other money... which Bush wants to borrow.  How is that fixing SS?


The other big lie is that SS is on the verge of collaps:  in reality, it's solid until about 2050 with no changes, and can be extended indefinitely if adjustments are made in contributions and benefits.

The first step toward fixing it would be for Bush to stop pretending that the magic fix is to give everybody private accounts.  In reality, that fixes nothing and doesn't even address the core issues.  Second, he should stop ringing the alarm bell and claiming it is about to collapse.

[Phantom Warrior]

I propose doing what was done under Reagan. make sane, sensible adjustments to retain solvency when needed... and admit it is always skewed such that fewer workers support more recipients as life spans increase and that will take some decisions. We will have to increase contributions, and/or decrease benefits and/or raise eligibility age limits.... there is no magic cure, but the only fair thing to do is make adjustments when required that spread the pain evenly.

Did you listen to what Monkeyleg said at all?  Especially the part about the worker to beneficiary ratio going from 42:1 to 2:1?  With the enormous Baby Boomer generation starting to retire combined with the increased life expectancy Social Security is going to be taken to the woodshed over the next few decades.

Now, we can either string this colossal joke along by "making sensible adjustments", which means huge tax increases, because there is NO WAY anyone is going to accept cuts to their SS payments.  Or we can move towards privatization and private savings accounts.  This will turn SS into an investment, rather than a bottomless money pit.  Each person will be financing their own retirement and building capital that can be passed on to heirs, rather than sending a check to to DC every payday.

I agree with you that private accounts will not address the issue of solvency RIGHT NOW.  It is going to require additional money (borrowing, most likely) to fill the gap created by transfering money to private accounts.  But, instead of looking at insolvency in 40 years we would be looking at a system where most of the old SS system beneficiaries have passed on and the majority of those approaching retirement will have enough capital built up in their private accounts to finance their own retirement, rather than expecting that the government will take care of them.  

Solvency, both short-term and long-term, is not a simple issue.  I would like to see some more concrete plans from Bush on this issue.  But simply sticking your head in the sand and saying "There are no problems that can't be fixed without a little more taxing and benefit readjustment." is ridiculous.  Something new has to be done.

[Ready on the Right]

To fix SS in 30 years:

Eliminate the $90K earnings cap.
Raise the withholding % to an even 10% for workers.
Force employers to pay a matching 20%.
Raise the retirement age to 120.

This is what I expect when I retire if we do not do something now.

[Ready on the Right]

I would like to see some more concrete plans from Bush on this issue.

Bush has mentioned privitization, but from what I saw in the State of the Union Address, he is trying to open up the debate and get Congress to come up with some solutions, not push a pre-determined plan.

I think we should replace Social Security with Gun Rights as America's political "Third Rail".

[macavada]

I don't think he really wants the congress to come up with anything.  He wants to break down the American psyche until they want his "plan" and then he'll ram through the most right-wing ideological piece of legislation his hatchetmen can draft and have the congress pass it or face political retribution.  Whether it makes sense, or is good for the welfare of the nation, or not.  The most important thing with them is the ideology.