Skip to comments.Give Low-income Earners Exit from Social Security
Posted on 12/16/2013 6:20:55 AM PST by Kaslin
A new study just published by the National Institute on Retirement Security Race and Retirement Insecurity in the United States- presents a dismal snapshot of the state of retirement savings of minority American families.
It reports that 54.3 percent of blacks work for employers that offer retirement plans compared to 62.3 percent of whites. And 43.9 percent of blacks participate in those plans compared to 53.9 percent of whites.
Among Latinos, 37.8 percent work for employers with retirement plans and just 29.7 percent participate.
Only 37.9 percent of non-white Americans have assets in a retirement account compared to 63.4 percent of whites.
And the mean amount of retirement savings held by black households is $20,132, by Latino households is $17,600, compared to $111,749 held by white households.
Many, usually those on the left who claim to represent the interests of low income Americans, say the answer to retirement security for minorities is Social Security.
But Social Security, a demonstrably bad deal to begin with, is broke.
Log on to www.socialsecurity.gov/estimator/. This is the Social Security Administrations calculator where you can estimate your retirement benefit.
The site warns that the benefit estimate it reports for you may be different from what you actually get for various reasons, including by 2033 the payroll taxes collected will be enough to pay only about 77 cents for each dollar of scheduled benefits.
In other words, the Social Security Administration has announced to all Americans now in their forties and younger, who will be retiring in 20 years or more, to expect only a little more than 75 percent of their promised benefits.
Year after year our brave politicians in Washington, who will claim they are looking out for us, hide from this huge problem affecting almost every working American.
They hide because it is hard. If payroll taxes, as the Social Security Administration indicates, are almost 25 percent short to pay required benefits, then taxes need to be raised by almost 25 percent to make up the difference.
What politician is going to propose this? Other options are to cut benefits paid or to raise the age at which they can be collected.
Another possible outcome, so typical of what we can expect from Washington, is to means test. That is, leave everyone paying taxes, but remove benefits for those above a cut-off income level.
This would essentially turn Social Security into a welfare program.
The bottom line is that minority Americans, who on average constitute our lowest income earning Americans, get the worst deal of all. They dont have extra resources to put in a wealth building retirement account. And the resources they do have are taxed into a Social Security system that pays out a poor benefit which in another 20 years wont even entirely be there.
End the tyranny. At least give low income Americans the option to get out of the Social Security system. Allow them a choice to take their payroll tax and invest those funds to build their own retirement account nest egg.
Conservatively invested funds over a 45-year working life can produce savings that will pay retirement income several times greater than Social Security benefits.
Over thirty years ago, workers in Chile were given the option to opt-out of their Social Security system. A recent report from a Chilean consulting firm, Dictuc, indicates that private accounts in Chile payout retirement income equal to 87 percent of what workers were earning before retirement.
Todays Social Security benefits, even forgetting about the upcoming shortfalls, dont match 50 percent of pre-retirement income
Lets help solve our national dilemma and also give low-income wage earners freedom and dignity and a chance to build wealth. Give them the option to get out from under Social Security and save in a personal retirement account.
We have no idea of what will be available in 2033 to pay SS recipients. It’s a big guess depending on employment stats & incomes.
At 33, I would GLADLY sign any paperwork required to exempt me from Social Security and allow me to reinvest that money in my own managed retirement fund. I would swear/promise to never submit an application for SS in the future and understand that if I did, I would be subject to fines and or legal action.
I know I’ll never see a dime of the money I am or have put in, and I would gladly take that extra money every paycheck for my own savings.
It’s a God forsaken tragedy that over 60% of whites have money in retirement accounts yet we’re seen as “bad people” or otherwise “keeping the black man down” because they don’t have the drive to want to do better for themselves. Instead of other races and cultures looking up to white Americans, they’re trying to drag us down to their level, and that’s a freaking disgrace.
This is BS! It's all in a lockbox! Algore told me so!...................
Low income earners don’t have the brains to figure out they’re being screwed. The issue will be demigogged.
“Allow them a choice to take their payroll tax and invest those funds to build their own retirement account nest egg. “
They can’t manage money now and this idiot thinks they will invest in anything but leases on BMW’s, hair “perms” and nails? I would only be for it if they had to sign waivers absolving taxpayers of any future responsibilities for supporting them in their “retirement” years.
At 49, I would happily forgo Social Security if it would allow me to invest half of what I remit to the program.
Star - Low income earners is who Social Security was designed for!
This is a foolish article for a failed and foolish program. The poor will no more save if opted out of SS than if they are in it.
The poor will always be poor and we will not stop that.
Better yet, phase the program out entirely. Do not replace it though with another Wall Street gift like the 401.
At best replace it with a program like Chile’s or Galveston Texas’.
Means testing and endless exceptions are not constitutional and neither is the progressive tax.
Whatever. What we think, what I think makes no difference.
Where are the Asian retirement figures?
Oh,that’s right,they are successful minorities and don’t count.
And why only low income earners? How about letting everyone invest their own money if they choose?
Oh, yeah - the whole ponzi scheme thing...
Well, everyone in the pool.
It was designed to be that - a safety net, not a retirement plan.
What do those signs in the national parks say: Don't feed the animals, they will get dependent on the food. Humans are no different.
Why save when you know the government will take what *you* have worked for to give to those who didn't plan ahead.
Ah - Star Parker. I hadn’t realized she was the author. After reading the post I wondered what kind of person could write this baloney. I should have known.
“They hide because it is hard. If payroll taxes, as the Social Security Administration indicates, are almost 25 percent short to pay required benefits, then taxes need to be raised by almost 25 percent to make up the difference.”
Taxes will not happen, but more borrowing will. The SS bills will always be paid. That is how you keep the masses content. Just like EBD cards, there will always be enough money to cover it. Same for disability payments.
We must do away entirely with the idea that a monthly pension check from the government is a good idea. People should have full control of their retirement funds and should manage their affairs responsibly. This is true freedom.
I know many won’t and they will become dependent on welfare or private charity. As evidenced by the story, even with social security, we will always have that problem.
That is very true. We also have no idea if anyone is still around in 2033
We need a solvent national pension for people who don’t waht to think about it or are not financially literate, a voluntary one.
Social Security needs to be there for those whose ability to save for retirement was leeched away, many have no option. Phase out, buyout, I have no idea what would both work and be politically acceptible.
401K plans have been more of a boon to the wrong people than the recipients of the plan, the billions of inflow every month have hidden all manner of malfeasance to the point that I distrust stock valuations.
Do you recall that this was exactly what President Bush wanted? He was ridiculed by the rats and by some in here
And if they don't? The author said it himself, fewer than half participate in the programs currently available and fewer that a third of Hispanics. Why should we believe the percentages will go up if you eliminate Social Security? What do you do with them when they hit retirement and have nothing? Or what if they become disabled? Or die? Do you cast them or their widows and orphans out onto the street for lack of income?
Never heard of her...sounds like a comic strip figure LOL
THEY WILL, “NATIONALIZE” ALL RETIREMENT FUNDS TO, “EQUALIZE”
I’m not flaming, perhaps (you have stolen my often-used sign-off, Flame away,” BTW”), but if people are too stupid to take care of themselves I just can’t get behind the idea that the fruits of MY labor need to be taken at the point of a gun for their benefit.
This idea that we need a Federal/national whatever to achieve some “social good” is a crock, a fundamental crock, and the obvious ruination of this once great, once Constitutionally-based country. It is Socialist/Communist/Marxist in its basic assumptions, and - I’m afraid - in the totalitarian measures that are ultimately used to enforce such schemes.
Download a PDF of “None Dare Call IT Conspiracy” - written 1972! - to get some understanding what’s going on here. And keep your hands out of my pocket!
Inflation will eat it up...............
it’s not just your retirement they are after:
Some 55- to 64-year-olds, who may have taken early retirement or who were laid off during the recession, have found themselves plunged into a low-income bracket. Unlike Medicaid recipients in the past who were required to reduce their assets to qualify theyre more likely to have a home or other assets.
For health coverage through Medicaid, income is now the only financial requirement.
At first, Prins was pleased at the prospect of free coverage.
BUT the more she thought about the fine print, the more upset she got. Why was this provision ONLY for people age 55 and older? Why should those insured by Medicaid have to pay back health expenses from their estates when people with just a bit more income who get federal subsidies dont? Why didnt she and Balhorn know about this before getting to the application stage?
As Prins began searching for answers, she found that even those trained to help people sign up for insurance under the ACA werent aware of this provision, nor were some government officials. In short; if you are over 55, and cannot afford health insurance; the government forces you onto Medicaid, then if you have acquired any real property in your lifetime, when you die the government gets it.
Gee; I wonder what they will do with it?
You’re right. Star Parker, Sparkle Plenty.
She’s a minority who spends more money on her elaborate hair adornment than on her social security payment.
You’re far from the first to post “flame away” when anticipating disagreement, so “stolen” is misapplied, just as it is in the instance of a pension. “Stolen” is also misapplied when referring to Social Security. There always have been more benefits paid out to beneficiaries than paid in. Problem is, there are quite a few people who will become a burden on the state without it, it’s all they have. I’m not on board with throwing them out into the street, many who own their homes and have been responsible. Some people just don’t make that much money, and saving anything above what was taken from them has not been possible. There are many, many people who are no financial genius and to pretend that there aren’t is foolhardy. The nation and the people need some assurance of a means of support in their old age. The existing scheme has been bastardized and used to pay for every leftist pipedream to come down the pike. That’s been the problem. Social Darwinism and throwing elderly out into the street is not the answer and it won’t fly politically.
She's not an idiot.
Jesus Christ: You cant impeach Him and He aint going to resign.
Give the option to everyone.
Yes but early death hits minorities and the poor hardest.
SS is not actuarially sound. It is a Ponzi scheme. It has nothing to do with government spending. SS has been running in the red, i.e., benefits paid out exceed the revenue taken in since 2010 and will continue to do so indefinitely until the SSTF is exhausted in 2033. Then benefits will have to be reduced by law to only the amount of revenue received.
Not so. SS used to be a cash cow taking in more in revenue than it paid out in benefits. It is the reason why the excess was put into the SSTF in the form of interest bearing, non-market T-bills, which now total around $2.4 trillion.
In the early 1980s, SS went into the red, i.e., benefits exceeded revenue. It resulted in the Faustian bargain between Reagan and Tip O'Neil that increased taxes and reduced benefits, including raising the retirement age for full benefits from 65 to 67. They also forced all new hire federal employees into SS.
Now SS is costing us money as the General Fund must redeem T-bills from the SSTF to make up the shortfall.
Source: CBO Combined OASDI Trust Funds; January 2011 Baseline 26 Jan 2011.
Note: See Primary Surplus line (which is negative, indicating a deficit)
Social Security has passed a tipping point. For years it generated more revenue than it consumed, holding down the overall federal deficit and allowing Congress to spend more freely for other things. But those days are gone. Rather than lessening the federal deficit, Social Security has at last as long predicted become a drag on the governments overall finances.
Sadly, my experience with people in this boat is, that most of them are simply too financially illiterate to pick even the most basic indexed mutual fund. Consistent and persistent investment produces the best nest egg, and workers in temp jobs, and jobs subject to frequent layoffs don't help. These are people living hand-to-mouth, and their "golden parachute" arrives when they receive their annual income tax refund.
That said, there may be "up-and-comers" in this category, maybe those in school, or just starting a business. Their incomes may be temporarily smallish, but they'll go on to bigger and better things.
Re-read my sentence. Recipients have always received more benefits than paid in. Recipients, not Social Security as a whole.
Have you ever met and gotten to know “poor” people? It is a condition that cannot be fixed with money. It is a mindset that MUST be changed. Not to mention Jesus told us “The poor will always be with you”.
I have never been in support of this ponzi sceme we call Social Security. I would like to not pay into it and send the money straight to my own relatives, or whomever I want to aid, or invest for myself, BUT POOR PEOPLE will spend EVERYTHING they get before they put a dime into any savings or investment. It has to be done for them. That is why Socialism exists, it’s for losers, poor people. They already “settle” for being poor, and will adjust to the cut in income, by settling for lesser living conditions. The better off than poor people make similar adjustments to changes in their income too. It’s all relative.
Besides all that, what’s wrong with working the rest of your life? That’s my plan, as I know better than to think I would be happy not working, and settling for what SS can send me, hoping I don’t outlive the money I’ve saved or invested. I just take more time off now that I have the chance, and that has come about by planning and acting. Why wait until I’m in my sixties to go fishing and hunting more, or visiting my friends and relatives while we’re still young enough to do fun things together?
The democrats have taken $13.4T out of Social Security and spent it on pork. JFK was the first to break open the piggy bank hand help himself.
I re-read it and it still is ambiguous as to whether you are talking about the SS system as a whole or the individual. In the preceding sentence, you are talking about the system as a whole.
Recipients have always received more benefits than paid in. Recipients, not Social Security as a whole.
Always? You can pay into SS for 50 years and die a month after you start receiving benefits. Yes, most people do receive more in benefits than they contributed even counting the employer's contribution. But it is not always the case, which is why SS is insurance not a real pension plan nor is it part of your estate.
The individual contributions don't belong to you--they become the property of the government, which can revise and change the benefits according to SCOUTS (Nestor vs Flemming)
The SS Trust Fund has always operated the same way since the inception under FDR. Contributions are converted into interest bearing, non-market T-bills. As far as SS is concerned, these T-bills are the same as those held by the Chinese and are backed by the full faith and credit of the US.
By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.
In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash.
However, in terms of the USG, the SSTF represents an unfunded liability and is part of the $17.3 trillion national debt and is held under "Intragovernmental Holdings" as distinct from the publicly held debt. All trust funds are treated similarly including the HI (Medicare) and federal employee pension funds.
JFK was the first to break open the piggy bank hand help himself.
This is a myth. The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been "put into the general fund of the government."
Most likely this myth comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no affect on the actual operations of the Trust Fund itself.
Semantics and spin is what we got here. We may never know the truth.
In 2008, before the Great Recession started, almost 25% of Black Americans were employed by federal, state, or local governments, or by a government contractor.
Without that government connection, I will speculate that Black participation in retirement plans would be much lower than it already is.
The SSTF is included in our national debt. The "surplus" contributions were invested in T-bills. The USG is obligated to honor those T-bills in much the same way that it must honor the payment of the Chinese T-bills or those accumulated by the Fed.
The most important thing to remember is that even if those T-bills were exchanged for cash and deposited in a CD, SS will still go broke. It is unsustainable actuarily. In 1950 we had 16 workers for every retiree, now it is about three and in 20 years it will be 2 workers for every retiree.
Medicare is in even worse shape. It's trust funds will be exhausted in 2023. And the SS disability fund will be exhausted in 2016. Within the next few years, Congress must approve moving T-bills from the SSTF to the SSDI trust fund to continue making payments. This will impact the effective date the SSTF runs out T-bills.
Semantics and spin is what we got here. We may never know the truth.
The truth is known. You just have to read the annual Trustee Reports for SS and Medicare. What many people don't understand is that we must borrow money to continue to redeem the T-bills in the trust funds so we can pay full benefits.
Also, many do not know that by law, the premiums for Medicare Parts B and D (SMI Trust Fund) cover only 25% of the costs. The remaining 75% comes from the General Fund. In 2012 that amounted to $214.8 billion. In 2012 the GF also had to come up with $97.7 billion to redeem SSTF T-bills. With 10,000 baby boomers retiring every day for the next 20 years, Medicare and SS will eventually consume the entire federal budget if they are not reformed.
These programs are unsustainable because they pay out more in benefits than they collect in revenue. It has nothing to do with the USG "stealing" the money.
Here is the way it works: All of the revenue received from payroll taxes is immediately converted into non-market, interest bearing T-bills after benefits are paid. In essence, the USG gets the money right away.
On the other hand, the argument is that if they did not issue these T-bills then they would have to borrow the money from someone else like the Chinese. The rationale is that it is better to owe the money to ourselves rather some outsider. However, there is no doubt that Congress finds it far easier to use the trust funds to fund our debt than outside investors who must be persuaded to invest in our T-bills.
Do you really think any of the money used to buy treasuries will ever be repaid?
Of course. It is being done now with SS and Medicare, which are running in the red and must redeem some of their T-bills to make up the shortfall. Eventually, unless these programs are reformed, all of the T-bills held by the SSTF and HI Trust fund will be redeemed to make up the funding shortfalls for these programs. Medicare has been running in the red since 2008 and SS since 2010.
I think this mismanagement of the system will be used later to crash the retirement systems and the government will confiscate IRAs and 401ks to save the system which will really enslave us in socialism.
A distinct possibility that has already been talked about in academia. The idea is to seize the holdings of all 401ks and give the holders a credit similar to how SS and Medicare have been handled. When you are going bankrupt, you look for money from any source. This country is headed for fiscal disaster and the longer Congress kicks the can down the road, the more painful the solution.
Socialism is the least of our worries. It implies that there is some order and control. I am more concerned about a breakdown in our civil society if the economy crashes and the life savings of most people are wiped out. History is replete with such examples and it can happen here.
You see the laws and manipulating the fund and I see the theft of my future and resources enslavement of the country.
I am explaining to you how the system works, but I am not unaware of the consequences of what will happen if we don't get our fiscal house in order. We need to identify and understand the problem before we can solve it. Again, the entitlement programs are going bust for actuarial reasons, not because the government stole the money. These are Ponzi schemes that benefited those at the top of the pyramid, but there is not enough revenue to pay for those at the bottom of the pyramid. Wait until there are only two workers for every retiree. And these programs are just part of the problem as Medicaid, Obamacare, and food stamps are increasing even faster. The welfare state is unsustainable.
undoubtedly the obamas and other democrats have cronies who run investment funds and they would be happy to skim off hundreds of millions or billions of US tax dollars for a contract to invest the money of the poor, so, yeah, um, it will be there in 45 years. Put that lockbox in the hands of a democrat connected crony and hand them the key
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