Comments on Comments: Tackling the Social Security MessTypePad2006-02-16T17:48:00ZNAhttps://www.freemoneyfinance.com/tag:typepad.com,2003:https://www.freemoneyfinance.com/2006/02/comments_tackli/comments/atom.xml/William Larsen commented on 'Comments: Tackling the Social Security Mess'tag:typepad.com,2003:6a00d83451bcbd69e200d834aae40b69e22006-02-20T19:58:53Z2008-08-27T11:26:40ZWilliam Larsenhttp://www.justsayno.50emgs.comAlan Greenspan stated raising taxes to pay future Social Security and Medicare benefits pose a risk to the overall economy....<p>Alan Greenspan stated raising taxes to pay future Social Security and Medicare benefits pose a risk to the overall economy. Greenspan now says future benefit cuts are needed over tax increases. </p>
<p>President Bush stated Social Security benefits "should not be changed for people at or near retirement."</p>
<p>Both statements refer to the fact that both men believe that future benefits will have to be reduced because there will not be enough money otherwise. They are acknowledging that Social Security is on the road to financial ruin and that changes are needed if Social Security and our economy are to survive. What was known 60 years ago?</p>
<p>A. J. Altmeyer’s testimony www.ssa.gov/history/aja1144a.html</p>
<p>A. J. Altmeyer, Chairman, Social Security Board Before the House Ways and Means Committee November 27, 1944. “There is no question that the benefits promised under the present Federal old-age and survivors insurance system will cost far more than the 2 percent of payrolls now being collected. As I pointed out in my testimony of last year, none of the actuarial estimates which have been made on the basis of present economic conditions and other factors now clearly discernible result in a level annual cost of this insurance system of less than 4 percent of payroll. Indeed, under certain assumptions the level annual cost has been estimated to be as much as 7 percent of payrolls. On the basis of a 4-percent-level annual cost it may be said that the reserve fund of this system already has a deficit of $6,600 million. On the basis of 7-percent-level annual cost it may be said that the reserve fund already has a deficit of about $16,500 million.”</p>
<p>The payroll tax reached 4% in 1954 and 7% in 1966. However by this time Congress had increased coverage to non working spouses making even these tax rates inadequate. Way too little and way too late. The current tax is 10.6%.<br />
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The blame lies with Congress, which refuses to accept its responsibility for making the politically unpopular decisions required to fix the problem. Yet Congress holds hearings on all kinds of accounting, corporate governance, mutual fund, and media scandals. Congress has passed new legislation to correct other peoples' problems, making sure the interests of the American people are protected. </p>
<p>But who holds Congress accountable for its irresponsible governance of Social Security? The members of Congress are simply refusing to face the financial dilemma.</p>
<p>Social Security: What Went Wrong? www.justsayno.50megs.com/pdf/social_security.pdf</p>
<p>Myths: The Poltical Tool of Choice www.justsayno.50megs.com/pdf/political-myths.pdf</p>
<p>The Larsen Plan www.justsayno.50megs.com/pdf/larsen_plan.pdf</p>
<p>William Larsen's Blog www.wmlarsen.blogspot.com</p>
<p>William Larsen's web site www.justsayno.50megs.com</p>
<p>A program that pays those born after 1985 just 29 cents back for each dollar of taxes and credited interest is not fair. Americans want value for their dollar. You can buy a value meal at about any fast food chain consisting of a sandwich, fries and drink for about $4.00. If Social Security were a value meal, it would cost $13.79.</p>Madame X commented on 'Comments: Tackling the Social Security Mess'tag:typepad.com,2003:6a00d83451bcbd69e200d834750cae53ef2006-02-19T04:01:45Z2007-04-25T23:48:43ZMadame Xhttp://myopenwallet.blogspot.comSocial Security is not a Ponzi scheme. Certain systems work because everybody pays in and by the luck of the...<p>Social Security is not a Ponzi scheme. Certain systems work because everybody pays in and by the luck of the draw, some people take out more than others. Am I a "selfish bastard" if I pay health insurance premiums and then end up getting a lot of money in payments because I get cancer? And if I pay for insurance all my life and don't happen to ever have any serious health problems, am I some victim who is being "sucked dry?" Or am I someone who made a choice to participate in a system and pay for a certain degree of security? </p>
<p>As I said, I'm kind of interested in the opt-out idea, but I just worry that then the system gets too small to work as well, and it leads to problems when you don't have that enforced discipline for people who need it, and they end up with no retirement money at all. And then that has to cause serious social and economic problems if you suddenly start to have millions of people with no retirement money at all. Look at the levels of consumer debt we have now-- as a society, we don't have the discipline.</p>
<p>The reason the system is under stress now is that you have a baby boom generation retiring. You make adjustments to deal with it, adjustments that certainly don't need to include a 50% tax on anyone. Later you don't have a baby boom, or other factors come into play, who knows. You make adjustments and keep the system going.</p>Dus10 commented on 'Comments: Tackling the Social Security Mess'tag:typepad.com,2003:6a00d83451bcbd69e200d834aa219369e22006-02-17T14:01:55Z2008-08-29T16:54:12ZDus10http://finfree4all.blogspot.com"I'm looking at one of my SS statements right now. By the time I retire at 70, I figure I'll...<p>"I'm looking at one of my SS statements right now. By the time I retire at 70, I figure I'll have contributed about $180k into the system based on current guidelines, and I'm told I'll get a payment of about $2351 a month. For me it seems like a good gamble, especially since people in my family tend to live well into their 90s. I only have to live to about 76 to get ahead of my contributions. That doesn't take into account the time value of the contributions, of course, but if I average those out and assume I invested them in something pretty risk free, which would have a low interest rate, say 6%? Then I figure I have to live until 83 to come out ahead. Still an ok gamble to me."</p>
<p>The problem with this is that you are not investing. You paid for people who "invested" before you. In the future, people will pay for you. By definition, that is a Ponzi scheme, and is illegal... but since it is our Federal government, it is okay?</p>
<p>"The opt out idea is interesting, in terms of saving the system for those of us who might still opt in, but the opt-outers would not only demand less, they'd contribute less. Also I think a lot of people would not use that money responsibly-- just as people don't tend to participate in 401k plans unless their employer almost twists their arm about it. And then what do you do when all these elderly people suddenly have no income or savings whatsoever. What will happen to the cruise industry? :)"</p>
<p>Of course the opt-outers would contribute less, that is the entire point. For what reason would someone opt-out of the system and still pay the full amount? By drastically reducing the demand for the system, and reducing the contributions slightly less, we are improving the margin. That is what all the fuss is about. Coupled with raising the eligibility age for benefits, this could make a huge positive impact on the system. I myself would rather scrap the system, but making it viable for a while longer can give us the time necessary to solve the problem. If more and more people begin to opt-out, then there will gradually be so low of a demand that the system may make itself obselete. Further, the may problem we face is getting through the baby-boomers. If we can make it viable long enough to get past them, we stand a chance. We do not have very long until the answer is going to either be to raise taxes or cut benefits. That time IS 2017, right now. That is when the surplus is gone and the repayment of the "Social Security Trust" begins. How are we going to repay that? By raising taxes or going further into debt. I don't like either of those options. Further, nearly 50% of our national debt is the Social Security Trust Fund. These two problems are one in the same.</p>Easy E commented on 'Comments: Tackling the Social Security Mess'tag:typepad.com,2003:6a00d83451bcbd69e200d83474927053ef2006-02-16T23:23:28Z2008-08-29T21:10:39ZEasy E"By the time I retire at 70, I figure I'll have contributed about $180k into the system based on current...<p>"By the time I retire at 70, I figure I'll have contributed about $180k into the system based on current guidelines, and I'm told I'll get a payment of about $2351 a month. For me it seems like a good gamble, especially since people in my family tend to live well into their 90s. I only have to live to about 76 to get ahead of my contributions. That doesn't take into account the time value of the contributions, of course, but if I average those out and assume I invested them in something pretty risk free, which would have a low interest rate, say 6%? Then I figure I have to live until 83 to come out ahead. Still an ok gamble to me."</p>
<p>Yeah sure, a good gamble for you. But it's a pretty bad gamble for me, the one paying your benefits. What's left for me, a 23 year old, after you suck the system dry? You old people complain about the younger generation feeling entitled to everything, but guess what, I don't want or need social security. You feel that your entitled to it, so your going to make me and your children/grandchildren pay for it until there is nothing left and it takes 50% of our wages away, paying out less and making it harder to save on our own, so then we won't be able to retire until we're 90. I'm sorry, but you are a selfish bastard.</p>Madame X commented on 'Comments: Tackling the Social Security Mess'tag:typepad.com,2003:6a00d83451bcbd69e200d834748c0a53ef2006-02-16T21:35:42Z2008-08-30T05:24:00ZMadame Xhttp://myopenwallet.blogspot.comThe other thing I thought of after leaving that comment (2nd to last one) was just viewing it in terms...<p>The other thing I thought of after leaving that comment (2nd to last one) was just viewing it in terms of balancing one's retirement portfolio.<br />
RE. the 2nd comment quoted, how is SS taking money from working people and giving it to non-working people? Working people pay into it, and the people who get the benefits are former working people who have retired. <br />
And to me, the advantage of paying into this system instead of a private account is the shared risk. Again, look at it as portfolio balancing-- SS is the fixed-income fund, and you can use your other savings to buy large caps or what have you.</p>franky commented on 'Comments: Tackling the Social Security Mess'tag:typepad.com,2003:6a00d83451bcbd69e200d834747f0453ef2006-02-16T18:14:37Z2008-08-30T07:33:51Zfrankyhttp://franksatheisticramblings.blogspot.comHuzzah, Thanks for quoting me above (and first at that). Several good comments all around. I'd appreciate hearing more as...<p>Huzzah,<br />
Thanks for quoting me above (and first at that). Several good comments all around. I'd appreciate hearing more as well.</p>