Australia has 24 million people. Whenever people mention what Australia (or Canada) does with respect to something, they ignore the problem of scalability. Australia is also a very different economy.

For example, when people suggest investing all the SS funds in the stock market, how exactly does the market absorb all that liquidity? Sure we can "invest" it and that will just create an asset bubble; unemployment is at 4%, corporations have lots of cash, interest rates are low, all of which speaks to there are fundamental limits to how fast a huge and complicated economy can grow.

I think it does scale. Our economy and population are roughly the same multiple of the respective Australian numbers. It seems like if the right program is created it would work.

In terms of SS, I am in favor of raising the salary number that is subject to taxation. It would impact me, but at least that would extend and improve the fiscal stability of the program.

drn92

What kind of jobs do you think the average 60-68 year old is going to get?
Continue the job they had at 59.

If it was based on overall wealth, what would stop someone from just liquidating all of their assets, holding cash, claiming they had no money and then collecting SS?
I guess I see your point. I'm sure everyone would sell the condo in Florida, the house in NY, Cash out all the IRA's, and Schwabb Accounts, and have all that cash under the sink.

Then you also have the moral hazard problem, so you are going to punish the people who actually saved? Once people realized they would not be able to get SS if they did save, even less people would save, because what would be the point?
Again, you make a great point. I'm sure all the savers would say screw it. Since the governments is going to screw me over. I'll teach them. I'm going to be poor!

Why couldn't the pool contribute into age-adjusted asset allocated funds with a mix of stocks and bonds that gets more conservative as the individual gets closer to retirement? Folks in their 20's and 30's would be heavy in stock indexes, 60's they'd be more into bonds to protect whatever they've invested. If this is a mandatory contribution during peoples entire income-earning years they'll hit, on average, a 7% stock market return over ~30 years and have their funds protected when they near, and enter, retirement.

no, there would be a point where it wouldn't do any good to save any more because a person will just lose SS with more saving. At that point a person would either hide the savings as cash, or spend it on things or trips instead of saving.

also the government already punishes people with higher incomes that want to save. The only tax sheltered investment vehicle I have is my 401k. I cant contribute to a Roth IRA, and I cant deduct contributions to a traditional IRA. Not by a lot mind you, but just enough over the limits that I cant use them. Thanks to the Fed I get shit for interest rates in CDs and savings accounts, so I have a 401(k) with arbitrary contribution limits and high fees (work for a small company so the total account values are low), and retail market investing.

Yes you can. Back-door Roth. We contribute 13K each year. Do you max out your 401K? We can put in 48K (we are old, so we get higher amounts).

Regarding the Fed, hard to blame them for a poor return on CD's without crediting them for higher returns on assets that benefited from low interest rates. Well, it's never hard to only see one side ;).

FICA taxes will take $200/month alone, so your savings/rainy day fund is now gone. The Federal income tax on $33,000 is $3769 (not "a grand or two, max"), so instead of starting at $2,750/month, the teacher starts at $2,435. So there goes another $300, so the teacher is now in the red. Using your own numbers. Not even counting state taxes, car/life/renter's insurance, etc.

Just because you once did it, many years ago, doesn't mean that everyone is in a position to do it.

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"Go yell at an M&M"

What do you do with those people who made poor investment decisions, had their savings decimated at the wrong time by bad economic conditions, were unlucky in their health situations, got wiped out in a hurricane, were too poor to put enough away, or otherwise don't have the money to escape poverty or even survive in retirement? I guess you could have a government backstop program that might provide funds for such people. Call it Social Security or something catchy, maybe?

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"Go yell at an M&M"

Ever try roofing at age 60? Or masonry? Or factory work?

Everyone who suggests raising the eligibility age seems to forget that the people who need most to retire are those least able to continue gainful employment, not to mention the fact that they *also* tend to have the shortest lifespan.

Maybe that's the kind of society you really want: you get yours, and screw everyone else.

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"Go yell at an M&M"

Not to mention the asinine assumption that the teacher will have a husband or that if she does, he’ll be making $100K.

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clm
Nashville, TN
https://twitter.com/ironclm | http://ironclm.typepad.com

Agreed, I see lots of folks who are pretty much done at 60, while some could chug along a lot longer. Lots of folks without savings are already trying and failing to work until 70.

This SSI replacement is simply a different investment means of the funds put into SSI - you opt in to a target age asset allocation fund. This does not change any of what you speak of, it's just a different means of funding social security monies. Hurricanes? We'll still have disaster relief funds and private insurance. Poverty, too poor to invest? We'll still have welfare.

It sounds like you want everyone to have guaranteed results regardless of the conditions they either find themselves in or put themselves into. I don't think life works that way. I wish I didn't have a bum hip before I'm 40 that will likely need to be replaced before I'm 50. I wish I could've found a job out of college and not racked up $15K in credit card debt before I was 25, or that my wife didn't have $100K+ in student loan debt when she graduated nursing school. Sometimes life sucks, or conditions suck, or results suck...nothing that social security provides--or in my opinion is meant to provide--will ever change these things.

Teachers don't get paid a ton of money. They also have 2-3 months off during the summer where they can earn additional income. Further, my asinine assumption is merely a caveat that, if this is a young teacher, he or she will likely be able to live in a cheap apartment with friends and not pay much in rent - I was paying $1,300 a month in rent but that's way more than what you can find in a 2- or 3-bed around the country. You could easily cut that number in half, perhaps more, depending on where they live. If and when that person wants to take on a mortgage, or have kids, my assumption is that the person is likely married - or at least (in my opinion) should be married before taking those big steps that have huge monetary implications.

No, I want everyone to not have to live in abject poverty while retired in the richest country in the world, no matter how they got there. You seem okay with it.

"Election to manage funds yourself rather than dumping in the SSI pool, isn't that exactly what was proposed by Bush fifteen years ago to much derision from the Democrats?"

Again: what do you do with those who so elected, and have insufficient funds at retirement age? Give them those Social Security benefits they didn't pay into, or leave them to die penniless on the street? Hope they can find charity to support them over their last few decades? Maybe back to the good old days of poor houses? That derision was well-deserved.

As for age asset allocation moving to less-risky investments when approaching retirement: it's being shown that's not the best way to manage your retirement savings, unless you plan on pulling them all at the moment of retirement.

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"Go yell at an M&M"

Well they are not managing the funds themselves they are contributed on their behalf to heavily regulated funds. I think the biggest barrier to such a system working well is the temptation to ease up on the regulation like how the United States banking industry was screwed up leading into the 2007 crash.

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They constantly try to escape from the darkness outside and within
Dreaming of systems so perfect that no one will need to be good T.S. Eliot

We have supplemental security income for low-income retirees, meal assistance, medicaid and medicare, utility assistance. We spend as much per capita in social welfare programs as many of the socialist Euro countries, I don't know what more you want us to do. Some people are poor as shit, some people die because they're poor. I don't like this fact but it's like the war on drugs: some people are unwilling to help themselves, whether it's setting themselves up for retirement or even taking advantage of federal programs when they're retired. One of the biggest issues with poor seniors is them not using the programs available to them, what do you propose we do with them? No, I'm strictly talking about how we better manage pooled funds for retirement so the program is solvent when our kids and their kids want to retire.

Here are a few:

• Decide on what post-secondary education should be. Change our system built primarily on economic standing and massive loan programs, and move toward a more merit-based approach.
• Have universal health care coverage. (I don't care what form it takes, just do it)
• Be honest about actual taxes paid (not marginal rates), AND include all forms of taxation (and keep closing out abused loopholes, see below).
• Be aware of how two-income earners in a household changes mobility. Rather than have a "marriage penalty", there is a gigantic "marriage bonus", especially if both people work. While I know some two income families who can't save, overwhelmingly most the folks falling behind are single or divorced or married w/one income.
• Be honest about the overwhelming advantages our policies grant to folks who have capital, and that we don't tax wealth at all (except for property taxes), and we have no estate tax. We have a system in place which creates more growth and distributes wealth more unequally than any other industrialized country. It won't end well (the strains are already showing)

As an aside, apparently Kushner paid virtually no income tax from 2009 to 2016. We could be more forthright about this loophole, and limit these legal tax avoidance schemes.

Geez...I didn't pose that as a generic question, I was talking specifically about what more can be done for retirement and those retiring while poor. And before you say these all impact that, I know but that's not what I was asking.

Re: post-secondary education, do you really want a merit based system when the overwhelming majority of elite college applicants come from well-off families? There's been a push for more diversity in admissions for precisely this reason. Education starts at a young age, and it starts--and continues--at home. Schools make a difference, obviously, but the kid who goes home to a stable environment where learning is promoted will almost always fare better than the kid who goes home to a single parent who either doesn't have the time and energy, or the desire, to promote education in the home.

As to the 'marriage bonus', even if the two parents weren't both working there's a marriage bonus in that there is a second adult in the home to care for children. Marriage and stable home environments is incredibly important to the well-being and education of children, we SHOULD be promoting marriage and responsible parenting. I don't look down upon single parents--almost always moms--often it's a shitty situation they had little to no control over and caring for kids by yourself is a monumental task. But it doesn't mean we shouldn't be promoting marriage and stable home environments for kids.