I decided to start this thread because the topic came up in another thread, and I didn't want that thread to stray off-topic.
My first point of discussion is the fact that people should be responsible for their own retirement savings and not rely on government or their employer to fund their retirement.
Second point of discussion is the fact that Social Security is NOT meant to be a "government retirement plan". It's supposed to be a supplement.
Third point of discussion is the fact that the "Social Security Fund" is pretty much full of IOU's from lawmakers. It's not something that you "pay into" and "get back". The way that it was intended to work was working people would pay the tax in order to supplement the incomes of those that are retired. At the time that it was implemented, there were far more workers than retirees so the excess money was building up. It has since shifted, and now there are far more people retired and drawing SS. Meanwhile the excess money was "borrowed" by our government for other things.
Fourth point of discussion is alternatives to Social Security. As an example, if a person is say 25 years old and entering the work force, rather than pay a tax for something that they will probably never benefit from, what if they were allowed to put that money into a modest account that actually earns interest over time? By the time they reach "retirement age" it would build up to a significant amount of money. What if they had the ability to leave any unused money tax-free as an inheritance to their heirs?
Our current system has us paying a tax in order to fund SS. Over the years, in order to draw from SS the "retirement age" has gone up and the rules have gotten so convoluted because the current system is unsustainable. I'll admit that I haven't researched the policy of either potential Presidential candidate enough to know what their solution is to our current problem, but I'm willing to bet that at least one side would rather increase the tax and basically "kick the can down the road".
Discuss.
It's a mandatory Ponzi scheme. What else is there to say?
In Australia it's mandated that your employer pays 9.5 percent on top of your gross salary into a fund of the employees choice. Hopefully it means most people will be self funded in retirement.
Keep your government hands off my social security and Medicare!!!
Quote:In Australia it's mandated that your employer pays 9.5 percent on top of your gross salary into a fund of the employees choice. Hopefully it means most people will be self funded in retirement.
I have to match the dollar amount that is withheld from my employees for SS and Medicare. Right around 6% currently for SS. Total of a little over 12 % .
another 1.4% for medicare for a total of around 3%.
I'll take a double scoop of Social Security and they can keep their Medicare.
For the 4th point, if people started funding their own retirement, who would continue pumping money into SS for those already retired?
Quote:I'll take a double scoop of Social Security and they can keep their Medicare.
My dad is on Medicare, he gets really good healthcare.
I agree that social security should be a supplement to a primary plan... But it should also be recognized that the plan actually works and shouldn't be cut or privatized.
I don't believe anyone should be managing their own social security account as it's meant to be a safety net not another avenue for some to mishandle their own discretionary funds, but the money in the social security trust fund should be invested in a well diversified conservative portfolio that is largely made up of corporate investment grade bonds with some stock exposure (no more than 20%) and perhaps some treasuries instead of being comprised of only treasuries. When it's all treasuries, it's similar to just giving the government all of the money and them putting an IOU back in the "lockbox". Not only that but a conservative mix portfolio historically outperforms an all treasury portfolio.
The idea of forcing the government to no longer use the money to purchase treasuries isn't likely to get much traction in Washington though.
Quote:My dad is on Medicare, he gets really good healthcare.
I agree that social security should be a supplement to a primary plan... But it should also be recognized that the plan actually works and shouldn't be cut or privatized.
This is just not mathematically accurate.
From an actuarial standpoint, social security is designed to be OLD AGE INSURANCE. That's why it was termed the old age, survivor and disabilities plan. What Is old age insurance? Its a policy you take out to insure the risk of outliving any reasonable expectation of life expectancy and planned savings. In the mid 40's who the hell lived to be 65? The system was designed on a 16 to one contribution to beneficiary ratio. That number has shrunk to 3 to 1. The program is scheduled for basic insolvency within the next couple of decades. It has reached the point of actuarial unsustainability.
The private sector actually came up with a solution for the average person to be able to build towards retirement. Its called an open ended investment company (mutual fund). Before the advent of pioneer fund A (the first mutual fund) there was no real way for the man on the street to have access in any meaningful way to a diversified portfolio and the ability to grow money safely over time. Ironically pioneer opened around the same time as SS. History shows that the private sector provided an inordinately better rate of return than SS. Ironically, under the current rules and regulations if you tried to open a mutual fund with the current debt ratio of the federal government you would be thrown in jail!
Quote:For the 4th point, if people started funding their own retirement, who would continue pumping money into SS for those already retired?
Because the money's not real. How do you think government pays for stuff? If it needs more "money" to send out the SS checks next month, and the SS fund doesn't have it, we go another 74 billion in debt. Why do you think the debt grows by several trillion per year?
Quote:For the 4th point, if people started funding their own retirement, who would continue pumping money into SS for those already retired?
People have to do both. You pay into Social Security and self fund your retirement. Hopefully you are fortunate enough to work somewhere that matches your contribution. My employer does it up to 6%.
Quote:People have to do both. You pay into Social Security and self fund your retirement. Hopefully you are fortunate enough to work somewhere that matches your contribution. My employer does it up to 6%.
I do. 6% is excellent though. I don't get that match. Would be nice if SS tax eventually rolled into IRA too though. Not holding my breath.
Quote:For the 4th point, if people started funding their own retirement, who would continue pumping money into SS for those already retired?
That's a good point, and I'm not sure of the ideal solution to keep the current system funded and "wean off" those that have paid into the system for some time and/or are nearing retirement age.
Quote:My dad is on Medicare, he gets really good healthcare.
I agree that social security should be a supplement to a primary plan... But it should also be recognized that the plan actually works and shouldn't be cut or privatized.
It has actually worked over the years, but it's headed towards insolvency at a pretty rapid pace. Part of the problem is that there are far too many people that think SS is their retirement plan and don't save or plan appropriately. The idea is to modify the plan in order to give people a better option. Read my Third Point of Discussion. Currently it is not something that you "pay into" and "get back". What if it was changed to something that you do in fact "pay into" and "get back"? What if it becomes personal to the point that if someone dies they can pass whatever funds are left on to heirs?
The point is to change the system to benefit people and keep government's hands off of our earnings. Take a look at what you pay in SS tax and imagine if you put it into an interest earning investment. Over time you would have a better "benefit" upon reaching retirement than you would with the current system. This is aimed at the millions of people that don't save for retirement at all.
Quote:I don't believe anyone should be managing their own social security account as it's meant to be a safety net not another avenue for some to mishandle their own discretionary funds, but the money in the social security trust fund should be invested in a well diversified conservative portfolio that is largely made up of corporate investment grade bonds with some stock exposure (no more than 20%) and perhaps some treasuries instead of being comprised of only treasuries. When it's all treasuries, it's similar to just giving the government all of the money and them putting an IOU back in the "lockbox". Not only that but a conservative mix portfolio historically outperforms an all treasury portfolio.
The idea of forcing the government to no longer use the money to purchase treasuries isn't likely to get much traction in Washington though.
That's the thing. There is no such thing as a person's "own social security account". What I think is a better idea is to actually create a system where each individual would have their own account. The idea wouldn't be for people to actually manage their own account, but have it get invested more-or-less as you describe.
All I know is I'd be dead without SSDI and Medicare. Now, I know for some of you it may be hard to see a downside to that, but it's been a godsend for me. Unfortunately, it's not all about me...except for me.
Jagibelieve, I think you hit the nail on the head with social security being individualized with no Government interference or at least very limited regulations so the money is guarantee to go to your retirement and as you said, should be allowed to pass down. While in fairytale land, social security has worked in the sense many people would be on the streets without it, but the fairy tale ended when the Government stole from it. Reagan is a big part of the blame and scammed Americans out of the money. So when people are being paid with non existent money we cannot say it is working. We are just using a bottle of codeine to cover the pain. Government, ours at least, has a way of screwing the American people over and now it is growing bigger then ever. Big Government Bush and Big Government Obama will have put us in almost 20 trillion dollars of debt by themselves. The richest nation in the world is all a sham with smoke and mirrors, but nobody wants to look behind the curtain. Eventually we will have to or our Country will be another page in history on how great civilizations destroy themselves.
Quote:All I know is I'd be dead without SSDI and Medicare. Now, I know for some of you it may be hard to see a downside to that, but it's been a godsend for me. Unfortunately, it's not all about me...except for me.
The point is, it may be a godsend for you, but a deathwish for future generations. If the Government didn't steal the funds than we would have a surplus. Knowing they did it means we can't trust them at least to the extent that they can take from it and it is all one big fund. It needs to be individualized. Had it been individualized then the money would be real today.
What is pitiful is the performance of our government in the management of the SS system. If they would simply eliminate the fraud involved there would be plenty of cash to make it work. When you have dead folks family still receiving and cashing checks for 20 years after the persons passing there is a serious problem.
Quote:All I know is I'd be dead without SSDI and Medicare. Now, I know for some of you it may be hard to see a downside to that, but it's been a godsend for me. Unfortunately, it's not all about me...except for me.
Nobody wishes that you were dead rj. Even though we disagree at times and have our "conflicts" I don't ever mean ill will towards you... and I truly mean that. That being said, the system does need to be upgraded and/or changed (reform).
Quote:Jagibelieve, I think you hit the nail on the head with social security being individualized with no Government interference or at least very limited regulations so the money is guarantee to go to your retirement and as you said, should be allowed to pass down. While in fairytale land, social security has worked in the sense many people would be on the streets without it, but the fairy tale ended when the Government stole from it. Reagan is a big part of the blame and scammed Americans out of the money. So when people are being paid with non existent money we cannot say it is working. We are just using a bottle of codeine to cover the pain. Government, ours at least, has a way of screwing the American people over and now it is growing bigger then ever. Big Government Bush and Big Government Obama will have put us in almost 20 trillion dollars of debt by themselves. The richest nation in the world is all a sham with smoke and mirrors, but nobody wants to look behind the curtain. Eventually we will have to or our Country will be another page in history on how great civilizations destroy themselves.
I agree with you for the most part. I wouldn't exactly say that Reagan "scammed" Americans out of the money, but it was the start of a precedent that got out of control very quickly. What the situation does illustrate is how government is the problem.
Or soon the gov't will bait people into a ridiculous percentage at 79 years old and hope they kick the bucket before or shortly after.