Social Security Reform

[The_Dark]

It's been all over the news for the last 8-10 years. The Republican and Democratic parties keep changing their minds on the subject. When Clinton was president, he told us that SS would be out of money by 2042. The Democrats in congress at the time supported President Clinton’s position. The republicans of course opposed it, saying there was nothing wrong with SS. Despite President Clinton's speeches and the Democratic parties support of said position... they did nothing to fix the problem. Now, a few years later everything has switched. It's President Bush who is saying that SS is failing and the Republicans are the ones supporting that position. Those same Democrats that were saying that SS is failing are now saying that there is nothing wrong with the system. There are a few things that they agree on..

1. When SS was started there were 24 workers paying into the system for every person drawing out of the system. There are currently 4 people paying in for every person taking out.

2. When the Baby boomers start to retire in the next few years that number will drop to 1 or 2 paying in for every 1 drawing out.

3. By 2042 there will not be enough funds to give everyone that qualifies a check.

To me, this seems like a problem. Everyone that I have talked to agrees that this is a problem. If we leave the system as it is, it is agreed the following actions have to be done to insure that everyone gets a SS check...

a. Cut Benefits by 27%

b. Raise SS taxes by 18%

OK, I find problems with that too....

The only plan that has ever been put forward to fix SS is the one put forth by President Bush, Privatization. Now, this scares the hell out of the Baby boomers. It would mean that less of our money (young people) would be going in their pockets. They site risks in this system.

1a. There will be less cash in the SS pool to pay Baby Boomers.

2a. If you have control of your own retirement money, You may spend it. (see 1a.)

3a. If you have control of your own retirement money, You may loose it on bad investments. (Again, see 1a.)

So, What do you think?

[fallennon]

I hate politics...grrrr

[torn asunder]

no privatization is all i have to say...

[The_Dark]

Why? Really, whats your problem with it? Are you against 401K's and IRA's too? What's wrong with managing your own retirement funds? I can't get a straight answer out of anyone thats against it. At least with privatization if you have no money left when retirement comes it's your own fault, not the fact that it was all used by some baby boomer so he can tour the country in a motor home.

[Fierce Critter]

I really honestly don't know what to think.

I'm confused by the same things - one president/party claiming disaster during one adminstration, the other party/president doing the same thing, vice versa, ad nauseum.

I listen to Dave Ramsey when I can. He cites examples of how you can better serve yourself by taking the same money you'd pay on social security tax and investing it in mutual funds. The amount you end up with after the same amount of time is incredible. That sounds really tasty.

But I have to say that based on what I see of people in general, not everyone is capable of that kind of disciplined saving. And even if some/most are, there are still people out there who are living paycheck to paycheck, and to have that "extra" money would be too easy to spend on daily needs, rather than save for the future.

I just see too many people ending up penniless at retirement age without some kind of "enforced" saving plan.

And I don't pretend to know what to do to fix any of it.

I admit that all the talk about it, and what I see this administration wanting to do about it scares me. It just doesn't seem like it's being clearly, carefully investigated objectively.

I wish I knew what some objective economists think of what's going on. The only reading I do is through Rolling Stone magazine, which is, of course, heavily liberal. So the articles they run tend toward the, "Bush is wrong, economists are scared, blah blah blah" that even I, as a pretty far-left liberal, don't know whether to trust or not.

I'm willing to be moderate on this subject. But only if I get some input from sources that fall somewhere in the middle of the two extremes.

[The_Dark]

Under Bush's plan the money would never reach your hands until retirement. It would be put in an account that is managed by a brokerage. This is how 401ks are handled now.

[Fierce Critter]

O.k. But don't brokerages sometimes mishandle investments? Don't some investments sometimes end up losing, rather than gaining?

All I know right now is, we're paying into something - HAVE been paying into something - we'll never see a penny of the way things are going. And THAT pisses me off.

I want my f*ing money back.

[The_Dark]

Well, as I have said... it's been being talked about for 8-10 years. Noone, until President Bush, has ever put forth any plan to fix the problem. Baby Boomers and the AARP oppose it because it means they loose some power. They use SS for Voting power. If SS is no longer wholy managed by the government.. the AARP wont have the clout anymore. They wont actually loose any cash, they will still get thier SS check, they just wont have the political power they had. It's people you and I's age that are getting fucked.

Yes, Privatized is a risk... but a risk of loosing some money, to me, is better than no chance at all of getting the money.

[fallennon]

I have to agree with that. I would rather take a chance at getting some money rather than no money at all. In the position I'm in I have no way to prepare for retirement and if there is no kind of plan, I'm fucked. I would need to start saving now.

[Jarodaka]

If you put money into a CD, you'd have a better return than Social Security offers. The only reason SS has a 'return on investement' is because benefits have been increased by government fiat. You'd have to have such a horrible disintegration of modern society to cause investments in low-risk bonds or CDs to lose money that, if it were to happen, your retirement wouldn't be of paramount concern.

Bush's plan is a start. Compared to the Dems plan of 'do nothing', it is a gigantic leap in the right direction.

More, fun SS tidbits: Workers pay money in and money goes out, directly to retirees. This is referred to as a Ponzi Scheme when attempted by an individual or company. There is not a SS trust fund. The money is spent immediately by Congress or to current retirees. The trust fund 'vault' is a stack of IOUs. You only see half of the money on your pay stub that goes to SS. 7% of your income comes from you, 7% is paid by the employer. That is a real cost to employ you, but you never see it. Whatever you see listed under "FICA", double it, because that's the actual amount of money you're never going to see.

I'll take the 'risk' of investing my money (in whatever deflated form Bush's SS reform passes) over taking a risk that tomorrow's politicians will feel generous with the next generation's money.

I know, I'm taking the radical position that people will be somewhat responsible with their retirement when given the choice. I'm also operating under the delusion that people are generous and help each other out when things get tough. No, no, I know, people are uncaring, irresponsible morons who need Daddy Gubberment to hold their money for them.

</rant>

[torn asunder]

Why? Really, whats your problem with it? Are you against 401K's and IRA's too? What's wrong with managing your own retirement funds? I can't get a straight answer out of anyone thats against it. At least with privatization if you have no money left when retirement comes it's your own fault, not the fact that it was all used by some baby boomer so he can tour the country in a motor home.

i'm for 401k's and ira's, but these are (from what i can tell) supplemental to social security, not a repalcement... soc. sec. has been shown to be able to be solvent until something like 2052, or 2070-something, and i think that privatizing it is taking too much risk with "guaranteed" dividends. i am ready and willing to be educated/misproven/better informed on the subject, tho...

[The_Dark]

I never said that 401k's and IRA's were a replacement for SS. I merely used them to point out that they are retirment plans where we have control of our own cash and it seems to be working rather well.

In 2018, SS will be paying out more than it brings in. Thats a known and accepted fact that both sides of the argument agree on. At that time, SS will have to cash in it's Bonds. This will allow SS to keep paying out benefits in full until 2042. Some estimate the funds will last until 2052. At that point, there will only be enough funds for SS to pay 81% of the people retired. Are you willing to be the one to tell 19% of the retirees that they can go lick rocks?

http://money.cnn.com/2004/12/06/retirement/social_security/

http://www.urban.org/Template.cfm?NavMenuI...licationID=8246

http://www.heritage.org/Research/SocialSecurity/bg1802.cfm

http://www.nationalreview.com/nrof_bartlet...00502100848.asp

[torn asunder]

i already accept that i'm on my own for retirement. i will fend for myself, one way or another - personal responsibility... the only one you can rely on is you...

[phee]

i already accept that i'm on my own for retirement. i will fend for myself, one way or another - personal responsibility... the only one you can rely on is you...

That makes 2 of us... I have started some investments and CD's myself including a ROFRIA

[Troy Spiral (13)]

I dont really get a sense that large body of people can agree on "whats broke" about SS , other than "its not enough", depending on who your reading, is about it. Generally, the sort of story goes "around mid century, SS will be bankrupt and old people will be out on the streets".

From what i've read/heard its more like "around mid century current retiriees will end up with 20 to 40% less than what they are getting now". Which, is a slowly increasing problem, year by year, rather than some brick-wall that will be hit when doomsday comes. (this only addresses the "retirement" portion of SS, there is a ton of over services) But, lets just focus on the retirement aspect....

A radical way to fix this "problem" would generally be, to nuke the whole socalist / communist concept. If people want to plan for retirement, have at it. If not, we made our beds, we should also lie in them. It would be one way to start to re-introduce more of the economic darwanism that is slowy being replaced with socalism in the west.

Many say they belive in free markets and freedom from government meddling in their "personal lives" but when it comes down to it , most prefer a socalist democracy. Long term doing away with many of the socalist programs would do wonders for the economy, but short term, it would hurt. (tough love)

If people want "retirement insurance" get it from the private sector, not the goverment. The goverment never has, and never will be , a good place to go for money managment services.

And this is comming from someone that is currently applying for social security as of this writing. :

[The_Dark]

i already accept that i'm on my own for retirement. i will fend for myself, one way or another - personal responsibility... the only one you can rely on is you...

Ok... You do realize that you will stay have to pay SS tax and that you will never really see a return on it. Your giving it to the Federal governmant to spend. So you have less to do it with when the times comes. Individual SS accounts let you do it on your own. You loose it, your fault. Your quadruples it... god job. You don't get the choice now.

[torn asunder]

Ok... You do realize that you will stay have to pay SS tax and that you will never really see a return on it. Your giving it to the Federal governmant to spend. So you have less to do it with when the times comes. Individual SS accounts let you do it on your own. You loose it, your fault. Your quadruples it... god job. You don't get the choice now.

yes, i am paying into it for the sake of my "forefathers"... i consider this the least i can do, for without the people who built this country, where would i be? i'm thankful for them, and i'm happy to help them by doing my part to uphold the promise that the govt. made them so long ago. we (my generation) have known for years that we most likely won't see any benefits, but they fully expected and counted on them. i will take care of myself, and i will take care of them, even if in a small way like ss payments. some people make tithes to their church, some to non-profit charities - i think of this as helping my fellow man... if i become destitute, it will be my own doing, and i will accept that. if everyone took charge of their lives & took responsibility for it, we wouldn't have this dilemma in the first place. (retirement issue, i mean, not the other ss benefits) i hope to not be a burden on the whole ss system when i retire - in fact, i hope to not draw a thing, even if i'm eligible and the money's still there. i'd prefer to leave it for those who need it...

[The_Dark]

K, I understand your position a bit more now and I have to say I fully respect it.

[Fierce Critter]

While I can respect TA's position - I myself am faaaaaaaaaaaaaaaaaaaaaaaaaaaaaaar and away unable to feel that sort of altruistic appreciation.

I am ALL FOR some kind of revamping of the system. But if that means I won't be able to collect what I'm due when I'm SUPPOSED to - then I want what I put in BACK. NO questions - I want that freaking money BACK.

And if "giving it back" means it gets automatically deposited into some alternative savings plan of my choice - NOT that I get that cold, hard, spendable/wasteable cash back in my hands - that's all fine and dandy with me. Take the damned money and put it in a mutual fund, and I'll be happy.

I just want what I put in to come back to me. Call it selfishness if you want - I see it as wanting to cover my own a$$ when my government is saying that's what I should be doing anyway. Fine - let me cover my own. But give me back my money so I CAN.

[The_Dark]

But I am more in line with FC's position on this. Hence my support for Individual SS accounts.