Posted on 07/20/2010 1:04:34 PM PDT by Andrea19
...But however much Social Security must be subsidized by the Federal government, lawmakers would never allow those promises to lapse for reasons of expediency. What is much more likely to occur is a general reduction of benefits over time such that Social Security pays for itself with small subsidies.
Of course, this strips away the entire point of Social Security: the reason to invest throughout life is so that the balances grow and compound over time rather than simply stuffing the money in a mattress. As Social Security simply becomes a transfer payment from the young to the old, benefit levels will drop correspondingly as the money has no chance to grow.
Today’s young adults will indeed one day receive checks from Social Security, but when those checks come, the recipients will only be able to laugh at the pitiably small amounts. The Social Security of today will be the latte-subsidy of tomorrow.
(Excerpt) Read more at americanshareholders.org ...
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*I* expect nothing from Social Security, for all those years I've already paid into it, and *I* am 55 years old. Wrongly? Someone isn't doing their math right...
the infowarrior
Of course we should expect nothing from Social Security. The math just doesn’t work.
LAWMAKERS. Would NEVER do something for reasons of expediency? Lawmakers?
can i stop paying the 15% then?
didn’t think so
In other news pre-schoolers overwhelmingly support Federal tax increases.
Subsidize SS? Hell, just pay back what was taken out! That will keep it going for a while anyway ...
THEN phase out SS and encourage SAVING for retirement.
Oh, forgot - we are talking about the government.
If American “Youth” had ANY brains they would run for office and/or get behind candidate who would DUMP “Social Security”. Like I said if they had ANY BRAINS(No Brains BUT LOTS of “Self Esteem”)!
Self employed like me aint that a bitch
Wow...is this ignorance of history, or an attempted rewrite of history?
SS has always been a transfer payment from the young to the old.
From the Evil Empire, Wikipedia:
The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. In 1937, 1938 and 1939 she paid a total of $24.75 into the Social Security System. Her first check was for $22.54. After her second check, Fuller already had received more than she contributed over the three-year period. She lived to be 100 and collected a total of $22,888.92...
Private saving and investment, 401(k)s and IRAs grow and compound over time.
SS is pure wealth transfer, a financial pyramid scheme.
Same. Not paying anything into social security, don’t expect to get a dime.
I have the hardest time giving away what the government wastes when I need it for me and my family
“SS has always been a transfer payment from the young to the old.”
This is true in a cash-flow sense. However, except for the early beneficiaries who got a huge windfall in terms of benefits vs. contributions, in more recent years, the average retiree does end up earning a “rate of return” on contributions to SS. That is, assuming average life expectancy, their benefits will equal lifetime contributions plus a small rate of interest (e.g., 1-3%, as opposed to the real rate of interest earned in stocks of about 6-7% over the past 75 years).
Clearly, if you die early, you’ll get less than you paid in, but likewise if you have longer than average life expectancy, your implicit annual rate of return may climb to 4, 5, 6% etc.
But even if they somehow find a way to make SS solvent through increasing retirement age, higher payroll taxes etc., the unpleasant truth is that within 65 years, the average SS check will cover ONLY the expected out-of-pocket spending for the average Medicare beneficiary, i.e., Part B and D premiums plus typical out-of-pocket costs related to cost sharing and deductibles.
In short, the young effectively will have their retiree health expenses bankrolled by Uncle Sam, but if they actually want money for food, clothing and shelter, they’ll be all on their own. Those who don’t save significant amounts will be up a creek.
yup... and when it comes to the government getting 66% of my income to hand to it’s politically affiliated, or my extended family losing their home... which way do you think i’m gonna go?
personally, i flat out refuse to be someone’s serf. and as an American, i believe it’s my duty to resist tyranny in every form.
i “went Galt” a year ago, but money still comes in from existing products. revenues are way down, which is fine by me... just means they get less.
and now that i’m personally funding the death of hundreds of American babies each year... i’m having an exceedingly difficult time writing the check
what does “went Galt” mean?
Read "Atlas Shrugged". Going Galt means just kind of dropping out of the productive world, in protest of creeping socialism.
My first FIL got what he paid into the system back in about two years, by his estimation. He was a "triple-dipper" for retirement purposes. He retired after 30 years working for the Feds. He started receiving his retirement immediately after.
As a Fed employee he didn't pay SS. He then went to work for a state government for ten years. That vested him in their pension system, plus SS.
Because of the way benefits are calculated, those who start work later in life get a disproportionately greater benefit.
Second: Those who retired relatively soon after the SS 'fix' in the early '80s got a disproportionate benefit. Tax rates (and the level where income was no longer taxed for SS purposes) went up substantially, but benefits were not grandfathered. So a person who joined the work force after the SS 'fix' will pay a higher rate of tax on a higher amount of salary for an equivalent benefit.
Third: because the SS 'fix' of the early eighties also gradually raised the age of retirement, those baby boomers (and younger) will work progressively longer, paying into the system for a longer period of time and collecting benefits for a shorter peoiod of time.
Fourth: (isn't this fun?) The rate of SS tax is not gender indicated, but total benefits are. Why? Because women on the whole outlive men, and it's a lifetime benefit.
Fifth (I'll stop here) the benefit is progressive. That means that a person who made $100K per year will not receive three times the benefit that a person who makes $30K will. And I won't go into taxation of SS benefits based upon income...
I could go on, but what's the point? A pension program run under these guidelines would be found fraudulent and the folks running it would be in jail.
That makes SS a great deal for women who work for only part of their adult lives at lower income. They will get what they paid in many times over.
Higher income guys will not come anywhere close to breaking even. Nowhere close.
SS has never been actuarily sound. Never.
It meets all the definitions of a Ponzi scheme, and it's run by the Feds. So when you say there is some rate of 'return' that is only true for a few. It's a scale from great deal to OMG.
“That’s a pretty broad statement. As with most, it is sometimes true, sometimes not.”
All I effectively said was that the AVERAGE rate of return to SS was positive. That statement is either true or false.
Here’s a cool calculator you can use to assess the accuracy of my claim: I input my birth year 1951 and assumed average lifetime annual earnings of $100,000—surely well above the average American’s. Even at that relatively high income level, the rate of return is .67%. The ROR is STILL slightly positive for someone earning LIFETIME average income of $150,000 (as opposed to someone who reached that level in their peak earnings years). Yes, if you go to $200,000 or $1 million in average lifetime earnings, the ROR actually is negative,but that’s a pretty small fraction of the population.
So I stand by my statement that the AVERAGE American gets a positive rate of return: it just isn’t particularly high. Even for someone with only 10K in average annual income, the ROR = 4.3%. Thus, the average American would be far better off investing in the stock market than in SS etc.
I’m reminded of what someone once said to me about a debt:
“I’d rather owe it to you than screw you out of it.”
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