Did not know not all pay into SS.

[stevepaa]

"They don't understand that the money the pay into it now is being spent now and that when they go to collect they will be depending on someone elses work."

No, I think all older people like me know this. We bought into it.

So now as Bryan points out, we have diminshing support. So we need to make some adjsutments, some might say sacrifices.

Maybe raise the CAP, I am above it.
Maybe raise the age gradually for benefits. That would affect me also.
Maybe apply SS tax to non earned income. That would affect me also.


Maybe do away with the latest tax cuts for the top 1% nOW THAT WOULD NOT AFFECT ME.

[bryanthompson]

Originally posted by stevepaa
Bryan,
yes, it needs adjusting, but disaster, bankruptcy are not reality.
In 2050 you would get only 75% of proscribed benefits. Hardly bankruptcy.

So yes, let's fix it. We did it in 83. We will do it again.

Those are certainly numbers to be concerned about.

So what do you think about
1) raising the CAP, maybe elimaitaing it?
2) applying SS tax to all income, even beyon earned. Why should trust fund kids not pay into SS?
3) converting SS to government run retirement system based on Treasuries?

"adjusting" == raising taxes, right? That's what I'm gathering from your three solutions.

[Moneyguy1]

I dont thinkI have ever read so much in the way of misinterpretation re: retirement, social security, and the ability of people to save.

First: those in the lowest income brackets have a hard time making current expenses, let alone saving for retirement. By a specific amount being set aside every payday through Social Security, ift could be, in effect, forced savings if accounts were individually set up

Second: Many so-called "middle class" individuals are so busy spending beyond their limits that they cannot save any meaningful amount. Look at the penchant for "refinincing" a home so the additional value can be expended on more and more toys.

Third: Building on the second point above, the majority of individuals below a certain age look upon retirement as something in the far future, to be worried about later.

Fourth: Up to 4% of salary could be diverted into an individual investment account, to be invested in carefully chosen low yield, therefore safe, investments. So an individual could, if making 100k, invest 4k per year at maybe 6 percent. Using the rule of 72, the first year would double in 12 years, quadripule in 24. Do the math, depending on how many years you have left to invest and assuming the 6% rate holds.

Fifth: Assuming the retiree wants to maintain the principal for future emergencies (long term care, etc), then the nest egg will have to be one million for every 60 k in annual payout, assuming the same 6% rate of return.

Sixth: Therefore, the individual receiving 12k from the Social Security system would have had to amass 200 k in order to match the SS payout in private investments.

For many citizens, the Social Security system is a forced retirement savings account that they otherwise would not or could not contribute to. It should be looked at as an insurance policy into which the individual and the employer pay premiums. Insurance, by its very nature, is there to cover emergencies or to cover certain contingencies when they arise. Nursing care insurance comes to mind. If the person is (un)lucky enough to need it, it kicks in. If the individual dies before it is required, it goes into a pool for the others. That's the way insurance works.

I appears that most on this board, being Porsche owners and all, are not familiar with how the other half lives or how difficult it is to raise a family, pay for shelter, food, education. etc on $12 an hour. Some, I am sure, are, and the difference shows in their responses.

[competentone]

Originally posted by stevepaa
SS will not collapse of its own weight. Those like the adminstration who use terms as disaster, bankruptcy, etc are playing on people's fears. Maybe we need to alter it, as was done 20 years ago, but I would never consider privatization as a valid answer. I have lost more mney through the stock market and highly regarded mutual funds than I care to remember. I trust Treasuries and so I would push in that direction.

I'll bet you're math impaired! That would explain why you think SS won't collapse -- of course there is no shortage of people (who can do math) on both sides of the political spectrum who are warning about the impending collapse of the system.

Your math impairment could also explain your losses in the stock market. At age 39 I've already built the start of a decent retirement plan with stock investments in my Roth IRA; if I had everything I've paid in SS taxes invested in my Roth instead, I would literally be ready for retirement right now!

Making money in the stock market takes work, but if you're willing to do the work -- and paid attention during school so you can do basic math -- it's pretty hard to lose money. All the people I've known who have lost money in the market, simply were not willing to put the hours of research in such as I do. They were content to "hand their money" to some "manager" expecting him/her to do the work. If you want success (and this applies to most any endeavor) you have to take an active role in the process!

[Superman]

Originally posted by bryanthompson
"adjusting" == raising taxes, right? That's what I'm gathering from your three solutions.

Ummm.... If the whole issue for you is reducing your personal tax burden, then we thank you for your input and hope you find some other topic to discuss. For some of us, there is a sense of responsibiliy component that makes this much more complex than it is for you.

[Moses]

Originally posted by Superman

And as we divert, and create two strategies (one, investment; one, welfare)

Exactly! I believe that an agency whose sole mission is to provide welfare is likely to more efficiently identify need and provide resources effectively.

Compulsory retirement investing is a different kettle of fish altogether and should be managed with a focus on traditional investment strategies.

Asking SSI to do both effectively is just setting the agency up for failure.

[Moses]

Originally posted by bryanthompson
"adjusting" == raising taxes, right? That's what I'm gathering from your three solutions.

It's going to be expensive no matter how we deal with the problem. I'd rather set the ship on a proper course, knowing there will be cost in the transition.

[stevepaa]

Impending collapse is a lie. I keep saying this, but the year 2050 for a reduction to 75% of benefits can not be considered an impeding collapse. No the shortage of support is on your side.

At 39, good for you that you have something decent saved up.

My recent loses were primarily in highly regarded mutual funds which then had some accounting irregularities show up. Hard work and research would have never revealed that.

My brother in law, did the Amercian patriotic thing and invested all his money in the company he worked for. Too bad a terrorist decided that Pan Am should fall out of the sky. But again, I guess hard work and research would have revealed that too.

Your arrogance is amazing, but considering your youth and that you have made money, I guess it is understandable.

[competentone]

Originally posted by stevepaa
Your arrogance is amazing...

No, it's not "arrogance," it's called "compentence" -- what I think is arrogant is that you think you're entitled to other people's money!

[stevepaa]

Well, I have paid into it for almost 40 years. So you would deny it to me now? thanks

[Moneyguy1]

Competent:

Respectfully submitted:

If I had a c note for every investor who thought he knew how to manipulate the system....even AAII and Motley Fool make big mistakes in predicting.....

And, BTW..I have an MS in finance and am an accredited investment counselor....and have had setbacks as well, despite sophisticated software and analysis.

The only thing that can be depended upon not to change is change itself.....

As to being entitled to other people's money..Where do you think your "profits" come from? On a short term scale, investing is a zero sum game.

[legion]

Originally posted by mikester
Frankly there are a lot of Americans out there who can't be trusted to fend for themselves especially considering unforseen circumstances.

I wholly disagree with you here Mike. It's my opinion that by providing a safety net, it promotes irresponsible behavior. It creates a kind of moral hazard, if you will. People should be afraid of the negative consequences of their actions. I think that we, as a society, should allow people to fail miserably.

There is a "Demotivator" from Despair.com that sums it up beautifully: It could be that the purpose of your life is only to serve as a warning to others.

I believe that it is an individual's responsibility to save for retirement. Growing up in abject poverty is motivation to do better for oneself. Growing up knowing that you will always be taken care of fosters the belief in some people that they never need to do more than bare minimum to get by.

I wouldn't oppose a very small program that provided minimal retirement benefits (enough for food and shelter) if you fell below some present value of lifetime earnings at a given age.

Social security has been a big part of the death of individual responsibility.

[competentone]

Originally posted by Moneyguy1
If I had a c note for every investor who thought he knew how to manipulate the system....even AAII and Motley Fool make big mistakes in predicting.....

There is no "manipulation" of the system; it's about understanding economics, business, math, consumer behavior, human psychology, etc. I also am not saying I have never had a loss -- I've had some huge ones, but I knew the risks before making those investments. There are known variables and unknown ones; one can eliminate the unknowns through research, but often not completely. Just as in life generally, investing involves risk -- when people want "risk free" returns, they get scammed through things like SS!

As to being entitled to other people's money..Where do you think your "profits" come from? On a short term scale, investing is a zero sum game.

Investing is NOT any "zero sum game"!!! Investing is about business and the creation of wealth. I could go into a long explanation, but don't have time right now (and am extremely surprised that you could achieve advanced degrees and not understand this).

[Moneyguy1]

Legion:

Once again, respectfully..

How does one protect those who did plan but were unfortunate enough to work for, or be invested in Enron, Global Crossings, or the like? Other disasters can occur: Assume an individual who has saved and invested and his (or her) mate decides to run away with the maid or poolboy. Half of everything owned goes away. Can happen. Does happen. Seen it too often to recount. Amazing how much power people have over you and how little you have over them. How to make a small fortune? Start with a big one.

Whereas I do not agree with giveaway programs, do you really believe that every individual should be left on his or her own? The future is always uncertain.

I may lean toward the conservative on a lot of things, but the following words still bring chills:

"Are there not workhouses? Are there not prisons?"

Economic disparity brings about a class society. Class societies, history teaches us, bring about unrest and revolution. The Roman Empire, in its long history, had a basic understanding of this philosophy, hence the policy of bread and circuses. And it still failed in the end.

[mikester]

Originally posted by legion
I wholly disagree with you here Mike. It's my opinion that by providing a safety net, it promotes irresponsible behavior. It creates a kind of moral hazard, if you will. People should be afraid of the negative consequences of their actions. I think that we, as a society, should allow people to fail miserably.

There is a "Demotivator" from Despair.com that sums it up beautifully: It could be that the purpose of your life is only to serve as a warning to others.

I believe that it is an individual's responsibility to save for retirement. Growing up in abject poverty is motivation to do better for oneself. Growing up knowing that you will always be taken care of fosters the belief in some people that they never need to do more than bare minimum to get by.

I wouldn't oppose a very small program that provided minimal retirement benefits (enough for food and shelter) if you fell below some present value of lifetime earnings at a given age.

Social security has been a big part of the death of individual responsibility.

Would you have those that fail even with an attempt just go homeless? You say that there should be a benefit that makes up for food and shelter - how much do you think these people get? Do you see people getting pimp rich off of social security? My wife's father died and he was living off of it in a home (PArkinson's) he had enough to pay for his modest funeral in his checking account (By modest I mean we had him cremated and put in an inexpensive burial urn and then drove him ourselves to the family plot in southern IL. We dug his grave with other family members ourselves) and we got a check from SS for $255.

SS is not intended for those who would like to retire sipping martinis and snorting blow off a hooker's a$$ for the rest of their lives. I have my 401k for that thank you.

[mikester]

oops - double posted.

[legion]

Good points Bob. I know I can (and do) sound this way, but I really don't view this as an "I'm right and you're wrong" kind of issue. My style of writing is the product of a very argumentative family.

Unfortunate things that are not within their control happen to people. I feel bad for them. If it's a friend or family member, I'll help them get back on their feet. I just have a problem paying taxes to provide for many anonymous people that couldn't provide for themselves, regardless of circumstance. I feel that if you want to help those anonymous victims, give to a charity. I have a big problem with it being compulsory.

I don't think that you are wrong, just have that you have a different opinion. I am a strong libertarian. I want to be wholly responsible for myself and do not want to be made to be responsible for other people. I think charity is best administered person to person...and then through non-governmental agencies.

[gaijindabe]

A reduction to 75% is indeed a "collapse". Imagine if your paycheck was being cut that much..

Why not now raise the retirement age, limit payments or tighten elegiblity?? Because it is almost politically impossible. If it so difficult make incremental change, how is 25% is no big deal??

The system is broken, retiring at 62, living to 92 with no work is no longer realistic. I see "reform" of some sort as a good thing. I think it will turn SS into a base safety net, with all payouts above that as part of an expanded 401K scheme.

Two personal stories: my godfather worked in his own store for 40 years, a year beofre he retired, he signed up for SS which he received for the next 15 years.. And his widow 15 years more..
Local pizza place had every sibling and cousin come for work for a few years - they now sitting home in Sicily getting the same SS check as my dad..

No wonder the damm thing is broke..

[stevepaa]

Being wholly responsible for oneself is a worthy attitude. I think most poeple are like that.
But things happen. I could look on SS as the insurance program to provide charity on a societal level. But mostly I look on it as a program to provide subsistence to those who due to the genepool, life circumstances, whatever,... just couldn't save.

[stevepaa]

a reduction of 25% 40 years from now is hardly a collapse.

the other two stories need some follow through. How much did they really receive and for how long did they contribute?

I will take it that by broke you mean in need of a fix, rather than promote the idea that there is no mony for anyone.