Posted on 01/08/2008 7:59:45 PM PST by tralfaz7
Hear,hear.
You aren’t alone. What I am fairly confident will happen is that our standard of living will devolve to the lowest common denominator present in the squalid countries that the millions of future voters are coming from.
And that doesn’t include the socialist states of
America such as NJ, et al.
I suggest that you also make provisions for your children to relocate to another country, if it comes to that, since I also believe that this country will not be looking friendly upon your viewpoint, and those who espouse it.
And my dad passed away in 1974, having paid in since SS inception and never collected a dime.
I am saddened to hear about your Dad. The situation you describe is one of the real tragedys of the existing system - NONE of us have any ownership rights over the money we have paid in. It is not ours. We can’t bequeath it to our heirs. We have no real accounts.
We need to reform the system (or get rid of it entirely - an unrealistic expectation) so that the money we put in is:
1. ours
2. invested, not spent
3. managed honestly and transparently
None of these things are true today.
I am going to check in a bit more detail when I get home.
What folks who have been paying in for a long time need to remember is that for many years the maximum contribution was really REALLY small, like just a few hundred dollars a year. Even after 50 years, those small contributions have not grown huge. The contributions didn’t start to grow large until after 1983.
“Increase the retirement age and provide incentives for seniors to work by eliminating payroll taxes after retirement age as long as benefits are not taken.”
Yours is one of the better ideas I’ve seen. But the masters of the printing press in our corrupt government will never allow it to happen.
Allowing tens of millions of citizens to keep their entire earnings would result in massive increased consumer spending and probably trigger inflation to the point where that inflation would be obvious to all. One of the primary reasons for taxation, in my opinion, is to sop up all those extra fiat dollars manufactured by the Fed so inflation does not overwhelm our printing press economy.
You may have a different opinion since my forte is not business while your occupation is exactly that.
The reason why you should use stock market rates of return is that even back when I started working, before the 401(k) was invented, every financial advisor I read said that long term savings should be invested in stocks. And, I read dozens of financial advisors' writings.
This was especially true for younger workers, since their money had longer to grow and compound.
Even way back then large employers had retirement plans and the money in these plans was most commonly invested in stocks.
Essentially, I see no reason at all to accept a lower rate of return than that achieved by professional money managers, especially on what should have been the largest pot of retirement money in the world. If a private employer accepted a 5% return on their pension plan they would have failed in their fiduciary responsibility to the plan participants and would have been sued. In fact, I have read about examples of this, but do not have a reference.
You can have any opinion you want, by my contention is that the funds stolen from me by Social Security should have received no lower a rate of return than the average of either the stock market, or the average of large company pension plans, both of which are in the 12% to 14% range.
This is not 20/20 hindsight or pie in the sky, but real results achieved by real pension plans.
I have no argument with either investing in equities or in mutual funds, as I have done so myself for decades, and I too would be very dissatisfied with a long term return of 5%.
I am certain, however that many highly secure investment funds do in fact only offer a return of a few percent, and as long as they don’t misrepresent the expected return, they won’t be successfully sued, at least not on that account.
While such investments might not satisfy either your requirements or mine, they certainly do have clients. And I would suggest to you that viewed as an investment, social security is more like one of these highly secure investment offering a very low rate of return than it is like an equity investment.
You may well argue that you would not have so invested had your money not been taken from you under color of law. I’d agree with you; mine would not have been so invested either - and what I did keep and invest was not.
But I think it is a bit unfair to use a 12 to 14 percent rate of return to judge social security’s return.
Let me do a bit more math, and I will come back to you with the actual rate of return that I am getting from Social Security. I think you may be surprised. Or then, it may be me.
Well, figure it out.
At retirement, I will have been forced to pay SS for just short of 50 straight years.
While income was way lower, the money was worth an large amount more.
When I was 16 I could walk into the Ford dealership and plunk down $4,000 and change for a brand new Mach one with the Boss 302 option.
Of course after high school graduation, I was earning the princely sum of $1.90 per hour.
That money that they took - and supposedly invested, haha - was a lot of money to me, and if it were saved and invested for all of that time, I would be wealthy from that alone.
That 69 Boss car that I bought then now goes for anywhere from $75 to $250,000 today.
As far as I can see, SS was outright theft.
Now, were they to structure a mandated free market type of system, with matching contributions from employers, we might all be very comfortable indeed after 50 years of input and compounded interest.
But no, its the agenda for change and the class warfare struggle
The rats have been milking that since at least F.D.R.. It worked then and it works now.
All I ever wanted was a free pony but I learned long ago that I am the free pony provider for others.
No free pony for me.
Nothing will change for the better in my life time regarding the socialist nature of our government but maybe for my children and grand children, I have hope.
While such investments might not satisfy either your requirements or mine, they certainly do have clients. And I would suggest to you that viewed as an investment, social security is more like one of these highly secure investment offering a very low rate of return than it is like an equity investment.
Typically, the only people who invest in these highly secure funds, are financially naive and have low incomes/small amounts to invest. The rich do better, and mitigate risk through diversification. You are missing two important points about investments which offer a low percentage return. They usually offer liquidity and a guarantee against nominal (not inflation-adjusted) loss.
SS offers neither. Courts have ruled that the government has no obligation at all to make any future SS payment, so there is no guarantee against capital loss, and SS is a very non-liquid "investment". I "invest" at age 18 and can not usually get any return until age 62.
Now, some of the insurance features of SS slightly mitigate these drawbacks, but if you do a reasonable analysis you will discover that this is very, very expensive insurance.
SS is touted as a program for the common man, a protector of the "little guy". The truth is that SS is handing out a worse financial drubbing than the sleaziest salesman of high-load mutual funds and annuities. If any company or individual operated a retirement vehicle like SS they would be prosecuted for fraud and imprisoned.
A little late with this reply:
I recently turned 62 years old, I have been retired for more than 8 years, I am not dependent on S.S.
Good for you, sir. I hope I’m as succesuful as that when I get there.
From reading your posts on the subject, you are on the right track.
“the employer is required to match that 7%, so it is actually 14% per year that goes in.”
Correct!
That is 14% that could just as well go to the employee. The employer pays the salary, including the 7% that the employee sees, and the employer pays the additional 7% that the employee does not see, and may not even be aware of. It is all part of the cost of employing someone. The employer would be just as happy to give you the entire 14%.
This is a 14% employment tax, separate from and additional to the income tax. This 14% tax is applied to current social security recipients, and to add to the general fund. In the general fund, it pays for such things as interest on the national debt, highways, national defense, earmarks, etc.
Early demographics were favorable. There were many workers and few retirees. In the future, there will be many retirees and few workers. Then the obligation will be to take from the general fund, instead of adding to it. So how can that work? You can increase corporate income taxes, which are already high by world standards, but you would drive even more employers oversees. You can increase the income tax and a lot of effort would go into income tax evasion, deferment, etc., and you would not get the revenue you expected. The answer of choice, used before and a ready template, will be to advance the retirement age so that more people can conveniently die off before collecting, reduce benefits (maybe by taxing them), and raise (voluntary??) contributions to 8%+8%=16% (for starters). Thanks FDR, you are wonderful and I adore you. That last sentence is sarcasm from me, but genuine from many people, many of whom are now deceased after having taken out many more SS$ than they ever put in.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.