Skip to comments.Vanity: Social Security - How does it work? (and is it solvent?)
Posted on 08/07/2011 8:08:14 PM PDT by bt_dooftlook
Can some Freeper please explain how SS works to me? So far, there are two theories...
2. Social Security payments come in to the SSA; what is not needed to pay current retirees is used to purchase special treasury securities which go into the trust fund; the cash goes to the Treasury where, as part of the General Fund, they disguise the true size of the Federal annual deficit. Should there come a time when current social security receipts cannot cover current social security disbursements, the SSA will redeem securities from its trust fund to make up the difference; the Treasury, which is obligated by law to redeem the special SSA securities on demand, must either give cash from the General Fund to the SSA to cover the principal and interest of the securities or, if there is not enough cash in the general fund, float government debt to cover the difference.
If (1) is true, then Obama was lying about not making payments to seniors on Aug. 3.
If (2) is true, and SS truly is a pay-as-you-go system, then SS will consume an ever larger portion of the federal budget as baby boomers retire, driving out all discretionary spending (especially defense), or taxes will have to go up dramatically in the absence of Congress taking steps to rein in SS and other "entitlements".
So which is it?
Is there a Freeeper out there with direct knowledge of the system?
Is there some 3rd way that I've overlooked?
a dishonest and usually illegal business in which many people are persuaded to invest their money and the money of later investors is used to pay the people who invested first called also (US) Ponzi scheme
2, except that they also have the option of printing money, and at some point, the IOUs run out so that there will not be enough money to pay the benefits unless they either increase taxes or keep printing money even though they are not redeeming the IOUs.
LBJ raided the trust fund to pay for his WAR, promising to py it back, which never happened. It is my understanding that the Social Security money collected is still dumped into the General Fund, making it in effect pay as you go.
do a search on “Panzi Scheme”
The correct answer is: DOOR NUMBER 2!! Social security entitlements must be cut to bring the deficit down. It’s unlikely they will be cut for current beneficiaries, although the inflation component will be reduced or eliminated. For other Americans, especially those not yet 50 years old, it’s likely that the retirement age will be raised by at least several years, and benefits may also be cut. We can’t afford it anymore.
“So which is it? “
Easy question. It’s pay as you go now, and future revenue will not even come close to paying.
We’re broke...but who cares, we’ll just print our way out of it.
Ask yourself this: Why would they say SS couldn't be paid during this whole debt ceiling debate? That's your answer right there, in plain sight.
If there was a trust fund, it would not have been an issue, or at least an immeidate issue along with everything else that was supposedly not going to get paid.
You'll only find articles on Boehner and Lindsey Graham.
Social Security is a fradulent ponzi scheme that has robbed me of $369,568.39 in cash that could have provided a better life for my family since 1972 up until 2009. Since then I have been forced to make other generous “contributions” to the “fund” since I am both employer and employee. Invested on my own at a mere 6% simple interest compounded annually, my “contributions” could have provided a present value of $838,009.43. There is nothing in my account but a worthless IOU at this time.
I have at least paid in part for my parent’s benefits but also a whole lot of people I don’t know or even care about. Many of whom I would not walk across the street Pee on if they were on fire.
Is Vanity really serious to ask about SS?
It doesn't and it's not.
I believe the Supreme Court ruled that SS is akin to a pay as you go system, much like welfare. My memory suggests this ruling came in the late 1950s or early 1960s. Your number 2 is apparently the best of the two choices given my understanding.
Look up “Ponzi Scheme”. The short and nasty is that the federal government has spent ALL of the SS contributions ever collected. There is no money in the “trust fund”. Just a bunch of IOU’s that you and I have to pay. The Treasury relies on tax money collected (SS and other taxes) last month to pay this month’s bills.
A couple of weeks ago, I crunched the numbers of someone making $10/hr working 40 hrs per week. If that person was able to invest 12% of his income into an investment fund earning 6% until he/she retired, that person could draw a monthly check of $2300/month from age 65 through age 95. I don’t know a single retiree who draws that much from Social Security. And if the person dies, his family gets an actual inheritance so that future generations will not be born into poverty. There is no such inheritance with Social Security. The cycle of poverty is continued generation after generation.
Pretty much the truth. I’ve crunched the same numbers years ago. For the squeamish, just about any investment house worth its salt would sell that insurance as well and make money, lots of money in all probability.
So tell me again why we have SS, Medicare and Medicade instead of some reasonably regulated reinsurance business?
Oh yeah, I forgot about the guy that says, “I’m from the government. I’m here to f...elp you.”
Funny, I’ve thought this way since I was a little kid. I like to think it is rubbed off self-sufficiency from my homesteader grandfather, pulled up by his bootstraps father and in-your-face independent mother.
My latest statement says that if I retire at 66, I'll get $2062/month. If I wait until 70, I'll get $2865/ month.
Of all the people I know who have retired, none have waited past 62.
Keep in mind that this person only makes the equivalent of $400/wk his entire life. I will assume you make more than that, yet you will receive less. Social Security is criminal. If an investment firm gave that type of return, it’s entire executive board would be spending the next 40 years in prison.
Depends on how you look at it. All the excess money that was collected via the SS payroll tax has been spent via the the general fund by congress. They replaced that money with IOU’s. Of course congress does not have the money to pay it back.
But don’t forget that the SS tax is still being collected. So new money is still coming in. My understanding is that at this time it is pretty close to enough to pay current obligations. But the line has been crossed now where it is not quite enough. Since there is a surge in people retiring, and a reduction in employed people...Then It will very soon go very upside down. At that time the SS fund should have been able to rely on “Saved” money to make up the difference until something like 2037. But as I said that money has already been stolen and spent. So the only way congress can replace it is to borrow more on the national debt. Then that debt becomes all of our debt for which we pay interest besides. So we pay for social security twice because of what congress has done.
If we had not raised the debt ceiling then we still could have payed almost all of social security at this time via the SS tax from pay checks. That is of course, unless congress and treasury continued to steal that money for the general fund. And therefore made a direct choice not to use that money to pay current social security benefits.
I hope that helps.
>>> You’ll only find articles on Boehner and Lindsey Graham.
hehe... oops... I mispelled that.
Yeah... I looked up Panzi and found Boehner’s picture.
I originally meant to spell Ponzi.
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