Who should pay for Social Security

The Coffee Shop
1

I see one of the concerns of fOccupy is that they will have to pay for all of us retired, or nearly retired people’s social security payments.

I guess I see their point to some degree. Of course all of us who have been paying into social security for 30-50 years feel like we have earned a paycheck in the end. On the other hand, we have also elected our officials who squandered all of our SS dollars. Our money should have been kept separate to pay that retirement check, but instead we elected people who used it for many other causes.

So when I hear of the complaints from Occupy, I have to agree that we somewhat let this happen to ourselves.

I guess we could just abolish SS payments. Of course that hurts those who have retired already. Very hard to go back to work to make up the difference.

We could make everyone from 18 - 70 work longer to make up for the amount they allowed their congress to squander.

So if we are the responsible generation, should we be taking some responsibility to fix this?

2

I see one of the concerns of fOccupy is that they will have to pay for all of us retired, or nearly retired people’s social security payments.

I guess I see their point to some degree. Of course all of us who have been paying into social security for 30-50 years feel like we have earned a paycheck in the end. On the other hand, we have also elected our officials who squandered all of our SS dollars. Our money should have been kept separate to pay that retirement check, but instead we elected people who used it for many other causes.

So when I hear of the complaints from Occupy, I have to agree that we somewhat let this happen to ourselves.

I guess we could just abolish SS payments. Of course that hurts those who have retired already. Very hard to go back to work to make up the difference.

We could make everyone from 18 - 70 work longer to make up for the amount they allowed their congress to squander.

So if we are the responsible generation, should we be taking some responsibility to fix this?

SS has a large surplus, enough to pay all promised benefits for about the next 25 years.

This surplus only exists on paper, as the SS revenues go into the “general fund” and are already spent.

However, it is completely wrong to believe that SS has anything whatsoever to do with the Federal Deficit, because to date, SS has collected more revenue than it has payed out in benefits and the current surplus is enough for several decades even if we do nothing. The fact that government borrowed more than it has the capacity to readily repay in order to fund other things like ethanol subsidies, useless foreign wars and $14 billion payments to Goldman Sachs to cover AIG derivatives liabilities should not be used as an excuse to get rid of SS.

Only very minor changes are needed to ensure the solvency well into the future (beyond 30 years). The simplest solution would be to raise the breakpoint, eliminate it altogether or require a smaller percentage contribution (but not zero as is currently the case) above the breakpoint. This would require individuals making over about $110,000 in wages pay up to 6.25% more in income tax on income over the breakpoint. Everyone who earns any wages (even the 53% of people who supposedly don’t pay taxes) already pay 6.25% on every dollar below the breakpoint and no change to this contribution is necessary.

The other alternatives would be to raise the benefit age slightly, reduce the benefits slightly, or lower the COLA over time. The problems with these are that life expectancy is not really increasing by any appreciable amount (may actually decline due to expectation that lower health benefits are going to occur over time due to excessive cost) and that with the elimination of pensions for mostly all but unionized public sector workers and poor stock and bond market performance will mean people will rely on SS much more in the future than they do now because other sources of retirement income will be much lower.

Medicare is another story, major cost problems in immediate future and will require substantial changes. Main point is do not be fooled into thinking the fiscal state of SS and Medicare have anything in common.

3

I thought their complaint was not jobs…

No Job > No SS Tax > No Problem

4

So if we are the responsible generation, should we be taking some responsibility to fix this?

You’re assigning an awful lot of collective guilt there. I notice that you use the pronoun “we” or “us” a total of 14 times in your post. “We” becomes a weasel word in such discussions, a way of covering up individual responsibility. Exactly who is responsible?

You say that “we have…elected our officials who squandered all of our SS dollars,” but I didn’t vote for the politicians who chose to do that. You also say that “we somewhat let this happen to ourselves,” but* I* personally didn’t have any choice in the matter; on the contrary, I got outvoted by the welfare/warfare statists at every turn, decade after decade.

You throw out the suggestion that “we could make everyone from 18 - 70 work longer to make up for the amount they allowed their congress to squander.” So what was I supposed to do, storm the Capitol building with an AK-47?

You’re right that if SS payments were abolished now, it would be “very hard” (maybe “impossible” would be a better word) for many of the retired to go back to work now to recover the losses. Of course, if they had not been forced to surrender a portion of our income to SS over the years and had been allowed to invest it properly, that might not even be an issue for many of them–even taking into account the downturn in recent years.

There’s no good answer to this crisis any more, because the damage has already been done. Therefore, I’m not going to suggest any solutions here. I merely wanted to set the record straight as to who was responsible for it in the first place.

5

So if we are the responsible generation, should we be taking some responsibility to fix this?

You’re assigning an awful lot of collective guilt there. I notice that you use the pronoun “we” or “us” a total of 14 times in your post. “We” becomes a weasel word in such discussions, a way of covering up individual responsibility. Exactly who is responsible?

For further insight into the misuse of “we” I refer you to the following thread:

http://forum.slowtwitch.com/gforum.cgi?post=3624248;sb=post_latest_reply;so=ASC;forum_view=forum_view_collapsed;;page=unread#unread

6

but I didn’t vote for the politicians who chose to do that. . . I merely wanted to set the record straight as to who was responsible for it in the first place.

that’s democracy, dude

-mike

7

Which is precisely why I prefer the system of government set forth in our Constitution over a democracy.

8

A study the other day just came out that the wealth gap between under-35 households and over-65 households hit record highs. Compared to 1984, the older group has 42% more net wealth, while the younger group had 68% less (both in 2010 dollars). Overall net worth went up 10%, but under 35, 35-44, and 45-54 all saw drops in net worth, with the 10% bump just made up by big raises in the 54-65 and 65+ groups.

In other words…maybe old people should pay for each other:).

http://www.pewsocialtrends.org/2011/11/07/the-rising-age-gap-in-economic-well-being/

9

I see one of the concerns of fOccupy is that they will have to pay for all of us retired, or nearly retired people’s social security payments.

That’s how a Ponzi Scheme works.

10

A study the other day just came out that the wealth gap between under-35 households and over-65 households hit record highs. Compared to 1984, the older group has 42% more net wealth, while the younger group had 68% less (both in 2010 dollars). Overall net worth went up 10%, but under 35, 35-44, and 45-54 all saw drops in net worth, with the 10% bump just made up by big raises in the 54-65 and 65+ groups.

In other words…maybe old people should pay for each other:).

http://www.pewsocialtrends.org/...economic-well-being/

You mean like paying into SS for their entire lives? Yeah I think they already have. As said earlier, SS isn’t the problem. If they would stop treating it like a ponzi scheme and actually keep SS money in investments for SS instead of taking every extra cent and spending it elsewhere we wouldn’t be in this problem.

11

Some sort of “lock box” maybe?

http://i.imgur.com/BNZ7Z.jpg

12

Our money should have been kept separate to pay that retirement check,

Actually this is a fundemental miss understanding of SS. The money is never “Kept” to pay future payments. Typically this is some “Over payment” but the majority of the funds paid into SS is paid directly out to those that are retired. IOW there is no “Keeping money” outside of keeping the over payments.

So when I hear of the complaints from Occupy, I have to agree that we somewhat let this happen to ourselves.

Actually no, “We” as in anyone alive today let this happen to ourselves. SS was set up originally this way. With in a few short years of implementation of SS people started collecting benefits. SS has always been a first in first out system, NOT a retirement savings plan.

**So if we are the responsible generation, should we be taking some responsibility to fix this? **

Fix what? As stated in another thread here SS is not in nearly as bad of shape as the rest of the US budget. Raise the retirement age by a couple years, increase the tax rate by a couple percent and “It’s fixed”. That however does not change the nature of the beast that a 16 year old is paying to pay benefits to 65-70 year olds. That is how SS is set up.

If by “Fix this” you mean turn SS into a government mandated retirement plan, then you’re not “Fixing” SS you’re getting rid of it and changing it to something entirely different.

Personally I would like to get rid of SS and move to the retirement plan idea. You could do this over a period of generations that slowly decreased the percentage into SS and put more into individual accounts.

You could then turn SS into what it has become a welfare program and those that worked would have a “Government mandated retirement account.”

~Matt

13

SS has a large surplus, enough to pay all promised benefits for about the next 25 years.

SS has a surplus based on expected revenue for the next 25 years. SS DOES NOT and HAS NOT taken in the money necessary to pay for the next 25 years.

Only very minor changes are needed to ensure the solvency well into the future (beyond 30 years).

Agreed, but that does not change the complaint by the OWS that they will have to pay for future generations as this is the way that the system is set up and has been from day one.

~Matt

14

I see one of the concerns of fOccupy is that they will have to pay for all of us retired, or nearly retired people’s social security payments.

That’s how a Ponzi Scheme works.

No, it isn’t.

15

The lack of a means test for Social Security benefits is insane. It’s not a retirement program, it’s a safety net.

And the idea of private accounts with Social Security monies totally misses the point of the whole system.

16

Yes it is
.

17

The lack of a means test for Social Security benefits is insane. It’s not a retirement program,** it’s a safety net.**

And the idea of private accounts with Social Security monies totally misses the point of the whole system.

Hey, something we can agree on.

18

If they would stop treating it like a ponzi scheme and actually keep SS money in investments for SS instead of taking every extra cent and spending it elsewhere we wouldn’t be in this problem.

SS IS a ponzi scheme.

If you don’t want SS to be a ponzi scheme then you have to fundamentally change how SS works. Since it’s inception dollars going into SS have gone instantly back out in payments. The only “Surplus” has been those “Overpayments” which as you said have been borrowed. However those overpayment have never been close to the actual liabilities accrued in promised future payments.

So while I pay 10.2% into SS maybe 9% of that goes back out into payments for those retired. I do this for 40 years and the government has promised to pay me the 10.2% plus compounded interest…which they don’t have because they paid out 9% the day I paid 10.2%. Even if they saved the surplus, noting that in the summer of 2010 we officially started paying more out than we were bringing in for SS, it would not amount to enough to cover the interest promised to me for my payments. So in essence each generation owes more.

If anyone other than the government openly created such a system they would be put in jail.

~Matt

19

Here is my solution.

If you are <=40, you do not get social security. Ever. You continue paying in to the system until all 41+ers get through the system. In return, for anyone <=40, withdrawals from 401k accounts after the age of 65, or whatever the hell it is, will not count as income and will not be taxed.

BAM.

problem solved?

20

The lack of a means test for Social Security benefits is insane. It’s not a retirement program, it’s a safety net.

Absolutely agree, except the benefits have been increased to the level that matches a “Retirement program” and the “Cost” is also equal to what one should pay into a retirement program. Thus over the years it has gone from “Safety net” to “Retirement program”.

I think reversing this trend would be a start.

And the idea of private accounts with Social Security monies totally misses the point of the whole system.

Means test SS, lower the SS tax rate. Create an entirely new “Mandated government retirement account” that the difference goes into individual accounts.

At this point Americans have become accustomed to SS as a “Retirement account” not a “Safety net”. Simply pulling the rug out from them with no “Weaning” will simply throw more people onto the SS roles because they will have zero “Retirement income” because many will not save and then they will “Means test” into SS defeating the purpose in the first place.

~Matt