Why your parents are ripping you off

BBC News ^ | Tuesday, 23 March, 2004 | By Laurence Kotlikoff

[gd124]

Will the young rebel against paying to support an ageing population?

In the film, the young protest under the slogan: We pay, they play

All highlights are from the original article.

[DameAutour]

Isn't this already happening in Germany? It's gotten to the point that to balance things out, they want to give babies the right to vote.

What a future is in store for this system of things.

[Terpfen]

BBC is WAY behind on this. My generation (I'm 19) has already started to trend away from massive entitlements. If only the Republicans would own up to the idea of making Social Security optional...

[wtc911]

My youngest is about your age. I've been paying into the SS System since 1969. Write me a check for what I put in, even without interest and we'll call it even.

[Revelation 911]

[Gerasimov]

Amen.

[tdadams]

Let's be honest. Who's really doing the ripping off? After paying into Social Security for forty years, my father died at age 63, never having collected a cent of it back.

Talk about a rip off.

[Moonman62]

The more likely scenario in he US is the Reconquistas will refuse to pay the Gringos.

[Paradox]

Its a giant Ponzi scheme, otherwise known as the Pyramid scam. If you or I were running such a scheme, we'd be hauled off to JAIL. If politicians do it, they are lauded as "caring".

[tdadams]

I've been paying in for enough years to matter. I'll gladly forfeit mine entirely if they let me out now. I'll still do way better than what I'd get from Social Security if I'd invest it myself the rest of my working years.

Sadly, Social Security has created a dependent class across the entire political spectrum.

[demlosers]

I guess it would be time for the geezers to get back to work.

[wtc911]

The aging demographic will be more of a problem in those countries that are classified as developing.

There is already a shifting in the birth/longevity balance in much of Asia, Latin Americas, Africa and the Arab world. Because of western medicine and vaccines provided primarily by the US a greater number of people in these regions are living longer. Their "productive" life is not generally increasing though. Long term debilitating health problems like diabetes, cardio/vasc and pulminary diseases, that were not of issue in prior generations because more aggressive diseases were unchecked are now creating a new class of citizen in these areas...the older, infirm, non-productive parent/grandparent.

The economic impact of this shift is three-fold and deadly:

The older generation lives longer but as a non-productive societal member needing care.

The younger generation's window in which to accumulate the personal capital needed to build wealth will be narrowed and capital that has been accumulated will be diverted to elder care rather than to wealth building.

These countries do not have an infrastructure devoted to health/elder care. Monies will need to be spent to build one.

Unless the developing nations make near miraculous strides toward long term economic viability in the next two decades the window will close and their own elders will become their greatest economic burden.

[DC native]

Agree 100%. The reason why our borders have not been secured is so that we can allow millions of baby-makers in to create a financial base for Social Security, etc. We give them food stamps, health care, etc. Later, when they have overwhelmed us with their numbers, they will kick us to the curb.

[Jim Noble]

These reforms include asking the current rich and middle class elderly to help

They've been "helping" a lot already via taxation.

Why not just give 'em their money back, and call it even?

[BraveMan]

[Mr. Bird]

Remember when Newt brought up orphanages, and there was a public outcry lamenting images of Oliver Twist and abused children? Well if they don't want to "reform" SS to allow for personal ownership and savings, this is what I propose:

No more cash payments of SS, starting in say, 25 years. If you are old and need assistance, you can either get help from your family, or you can check in to a nice, government run retirement hell hole. You get a roof over your head (and probably a roommate), 3 squares a day, and a nurse on hand to wipe your chin.

I believe that would provide a decent incentive for people to save for retirement, and would cut costs tremendously. Never mind the details right now, just threaten them with "the home", and see what kind of reform we get.

[moonman]

Thanks for the post.

My dearly departed father had said this was coming since Roosevelt, and again when Johnson became President. All their social(ist) programs were based on the young paying for the old and workers paying for bums. He tore up his AARP card back in the 80's after just having it a year, calling that group a bunch of Socialist B*st*rds. He claimed he didn't fight in W.W.2 for our Nation to become exactly what he fought against.

[Nakota]

Remember that your employer must match your Social Security/Medicare payments. That is a cost of employment by the employer that could otherwise have been paid to the employee. When an employee dies before collecting any benefits both the employee and the employer loose.

[palmer]

My dad got one check a few days before he died. On the other hand, my mom collects them now. On the other other hand, she's still paying in and thanks to SS policy and MA taxes her earnings are effectively capped (her marginal tax rate gets very high).

[general_re]

Let's be honest. Who's really doing the ripping off? After paying into Social Security for forty years, my father died at age 63, never having collected a cent of it back.

Unfortunately for him, and for everyone else, your father is, so far, the exception in that - for the majority of people who have already begun collecting Social Security, they get back everything they ever put into the fund within two to three years, and then go on to collect far more than they ever put in. Of course, that's not sustainable, as the boomers are due to find out in a very unpleasant fashion:

My grandparents got a pretty sweet deal from SS, but my arents are kind of up the creek due to the size of their demographic bubble, and at this rate, I'll be in even worse shape. The system is broken, and cannot continue in this fashion.