Got to love that GW!

[gaijinda]

George Will, Washington Post: This election is the last before the boomers begin retiring in 2008. It will elect either a reactionary liberal, whose plan for coping with the demographic deluge consists of complaining about any changes in the welfare state's entitlement menu, or an activist conservative who tartly told his opponent that "a plan is not a litany of complaints."

The centerpiece of Bush's second term agenda is his "ownership society" tapestry of tax incentives for individuals to exercise increased responsibility for their security and opportunity. The contrasting conservative and liberal emphases on freedom and equality are clear: Tax-favored accounts for retirement, medical and education choices promote the attitudes and aptitudes of autonomous individuals exercising the freedom to choose. Liberalism's agenda involves increased dependency on government in the name of equality.

What do you guys think??

[techweenie]

No surprises from Will. He's turned a blind eye to GWB's deficit disaster because it's an inconvenient fact at an inconvenient time.

Both candidates are lying about Social Security. Selectively promising "seniors" and "young people" continued benefits, and 'future protection' and ignoring the masses in the middle -- people like me, who've paid in $80K plus, presumably for my own retirement benefit -- who may get a final return of only a fraction of the actual dollars paid in.

My biggest problem with what he wrote is that Will calls Social Security an 'entitlement' despite the fact that 100 million of us have paid large sums into the fund. What kind of wacky concept is that? Just give me my $80K back and I'll call it even.

[cmccuist]

Tech, I'm wondering how you feel about privatizing a portion of SS (You've probably addressed this before, but I may have missed it). Can't we all agree that something has to be done since there are fewer workers per SS recipient.

There are two problems with the current system. 1) Congress uses some of the funds for expenditures other than SS. 2) Seniors vote there wrinkly asses off! it's not called the third rail for nothing.

I think there should be some means testing, some privatizationing (good W word) and some opting out altogether (teachers and rail workers have this option).

Take care of the people who are already locked in, and offer some other choices to younger workers who have time to plan for their old age.

BTW, I'm pretty pissed off about the nasty deficit, but there was a terrorist attack the economy was tanking in the last few months of Clinton. Having said that, W was spending like my wife with a new charge card!

[gaijinda]

I think it becomes an 'entitlement' when 90% of the folks get more back than they ever paid in.. People are living longer as benifits have expanded.

Something has got to give, any ideas out there?

[cmccuist]

Originally posted by gaijinda
Something has got to give, any ideas out there?

My ideas include Privatize, means test and opt out. Also, stop putting SS tax money into the general fund where it gets spent on pork.

[turbo6bar]

I'm not sure why people are hung up on this Social Security. The average monthly check is $895 for single individuals and $1483 for couples. That's less than piss in a bucket. Why would anyone want to pay money into a system that gives you such a paltry sum?

[Rot 911]

Originally posted by turbo6bar
I'm not sure why people are hung up on this Social Security. The average monthly check is $895 for single individuals and $1483 for couples. That's less than piss in a bucket. Why would anyone want to pay money into a system that gives you such a paltry sum?

Because for a large part of working Americans, that is all they are ever going to get for a retirement. It's easy to talk about funding 401k's and IRA's when you make $100K a year. Not quite so easy to do when you have a combined income of $40K a year and a couple of kids.

[cmccuist]

Wasn't it Benjanim Franklin who said Democracy will work until people find out that politicans can bribe them with thier own money?

Now one segment (senior citizens) is being bribed with other people's money!

I'm in the category of Boomer (47 yrs old) and am actively preparing for my old age. I'd just as soon opt out, but there are too many who need that $800-1500 just to keep from eating dog food (if you believe the hysterical groups like AARP).

[gaijinda]

This idea of retiring at 62 in otherwise good health and maybe living to 85 or 90, is it reasonable to expect to collect SS benifits for so long?

Is it time to send the old codgers back to work? I know from my time in Japan, people "retire" and then go out and get a job...

Is our economy and productivity growing fast enough to support all the boomers?

[turbo6bar]

$4000 per year, or 10% of $40k/yr combined income x 30 years @ 12% return (standard mutual fund) = $437k adjusted for 3% inflation, or $1,000,000 without inflation.
$437k * 6% income fund = $26220
$26220 / 12 months = $2185/month monthly income

This is a bare-bones calculation using only 10% savings rate and 30 yrs of compounding. Even for the poorest Americans, a percentage saved each year, compounded over time = a modest retirement. So, I fail to see the great benefit of Social Security.

How to solve the problems? Good question. Only way I can see this happening is if SS continues to take in payments for say 30 years, and cuts off payments in say 15-20 years. Would you like a lump of coal with that, sir?

[72doug2,2S]

I think Kerry has a plan.

Since he will cure all our ills with stem cell research old people will live longer, so then Kerry will need to import some tainted drugs from Canada and effectually cause euthanasia on the elderly to eleviate our financial woes he solves the SS and third rail vote to boot. Ah yes, it's the final solution.
Hey, let's get Michael Moore to make another propaganda film on Kerry's final solution and sell it to the people. The only people he won't kill off will be the healthy people and those people fortunate enough to get a pass to be born, but that's OK they all contribute more than the rest do or would. Sounds like a plan.

[Superman]

Yeah, but compared to Bush's plan, at least Kerry's can be called a "plan." Fact is, we currently have the ability to save, and invest. That's Bush's plan, right? So, Bush's plan is to dump Social Security and let people fend for themselves. Very compassionate. He must be quite a Christian.

[CamB]

Originally posted by turbo6bar
$4000 per year, or 10% of $40k/yr combined income x 30 years @ 12% return (standard mutual fund) = $437k adjusted for 3% inflation, or $1,000,000 without inflation.
$437k * 6% income fund = $26220
$26220 / 12 months = $2185/month monthly income

This is a bare-bones calculation using only 10% savings rate and 30 yrs of compounding. Even for the poorest Americans, a percentage saved each year, compounded over time = a modest retirement. So, I fail to see the great benefit of Social Security.

$40k isn't the "poorest americans" - it isn't far below the median household income, plus someone's ability to save $4k/month declines pretty quickly below that $40k.

Owning your own home can help, but over 30years you'd be lucky to beat inflation by 5% (ie, say 8%).

Mutual funds don't get 12% average - I've seen numbers more like 6-7% real (<10% nominal).

And every little percent helps.

I guess at the heart of the problem is the statement above "I consider it an entitlement if 90% of people get out more than they put in". This tends to suggest that it is very very difficult for lower income people can ever save entirely for their retirement...

[techweenie]

Originally posted by cmccuist
Tech, I'm wondering how you feel about privatizing a portion of SS (You've probably addressed this before, but I may have missed it). Can't we all agree that something has to be done since there are fewer workers per SS recipient.

Thanks for the question, cmccuist. Not sure it's come up before.

I feel that partial privatization of Social Security is a good idea. But only on a 'clean slate' basis.

IMO, since the mid '70s, when SS "surpluses" were first raided to balance the budget, the idea of saving for yourself was corrupted into 'present generation pays for present retiress.' Under that plan, there will be only a handful of actual wage earners for every retiree within some of our lifetimes.

That is a completely untenable situation.

So my feeling is that we need to solve the problem in the medium-term before we completely change how the system works.

BTW, the financial industry is looking at an incredible windfall if/when 'partial privatization' comes about.

[SLO-BOB]

This is a test............

[techweenie]

Sebring, you nailed it. Same drugs; same manufacturer, same process -- Canadian equivalent of the FDA.

This 'tainted drugs' idea is just an extension of the fear-mongering that comprises the main thrust of the B/C campaign.

The real issue isn't "safety" it's profits. The US drug companies paid huge campaign contributions to get Canadian-market drugs stopped.

[turbo6bar]

Originally posted by CamB
$40k isn't the "poorest americans" - it isn't far below the median household income, plus someone's ability to save $4k/month declines pretty quickly below that $40k.

Owning your own home can help, but over 30years you'd be lucky to beat inflation by 5% (ie, say 8%).

Mutual funds don't get 12% average - I've seen numbers more like 6-7% real (<10% nominal).

And every little percent helps.

I guess at the heart of the problem is the statement above "I consider it an entitlement if 90% of people get out more than they put in". This tends to suggest that it is very very difficult for lower income people can ever save entirely for their retirement...

Cam, it's not $4k per month. It's $4k/yr. Virtually ever American pays 12.4% of their pre-tax income (under ~$90K/yr) to Social Security, so 10% of $40k ISN'T ridiculous. In addition, I calculated a 30 yr investment period. Most lemmings, I mean Americans, start bleeding into SS around age 16 and start withdrawing around age 65. That's nearly 50 years of compounded growth. If I run the numbers AGAIN, I'd probably laugh myself silly.

Cam, take a look at
http://ww4.janus.com/Janus/Retail/FundsHomeEquityFund

Janus Fund mutual fund has provided 13.91% since inception (1970).

Scudder Large Company Value Fund has yielded 12.92% since 11/1966.

None of my numbers are ridiculous. This is truly possible for the average Joe. Worst case, wouldn't it be better for Americans to get the 12.4% to invest as they wish? Wanna pay off your home quicker, go for it. Wanna invest in Nigerian scams? Go for it. Why let Bush and Kerry bathe in your hard-earned dinero?
Just my opinion,
Jürgen

[CamB]

Oops, I meant $4k pa.

I stand by my assertion on mutual fund returns - inflation over that period probably whacks that 13.91% down to about 7% real. Plug $20,000 into this calculator for an idea of the impact of inflation from 1982-present.

See this link for evidence of 7% real as the average for the market, then ask if you think the average mutual fund can outperform the market average by more than the amount of its fees and costs, and the potential impact of taxation (I suspect there is none for retirement savings, so a moot point).

http://biz.yahoo.com/funds/cs2.html

Plus, you know me (bleeding heart) - I get uncomfortable at the idea of suffering from people who (through bad judgement or luck) end up incapable of providing for themselves.

[red-beard]

What makes anyone think that Canada (Pop 32M) can supply the US (Pop 300M) with re-imported drugs?

This little scam thing worked fine, as long as you drove up to Canada and then crossed back across. It will _NOT_ work in a large scale. All it will do is screw up Canada's deal. And then _No One_ will have price controlled drugs. Because that is what we are talking about. Government mandated, price controlled drugs.

Put down the crack pipe, and back away slowly.

[turbo6bar]

Originally posted by CamB
Oops, I meant $4k pa.

I stand by my assertion on mutual fund returns - inflation over that period probably whacks that 13.91% down to about 7% real. Plug $20,000 into this calculator for an idea of the impact of inflation from 1982-present.

See this link for evidence of 7% real as the average for the market, then ask if you think the average mutual fund can outperform the market average by more than the amount of its fees and costs, and the potential impact of taxation (I suspect there is none for retirement savings, so a moot point).

Ok, I'd definitely have to concede on the mutual fund returns. 12% is at the upper end for long-term returns. It does make for big numbers, though. However, the calculations I ran are adjusted for 3% inflation. The $437k is the inflation-adjusted amount over 30 years. Without adjustment for inflation, the $437k is actually $1M.

I do think there would need to be some safety net for those "unfortunate" souls, but for the majority of participants, you can easily do better. I do not feel a mandatory government social security program should replace an honest effort to save for the future. In the absence of physical money, you can substitute time. Ya know what Ben Franklin said about compounding interest, eh?

If the average payout is virtually pennies, are we really helping the poor? Wouldn't this money be better spent educating and preparing individuals to bridge this gap? If I paid into the system for 40 years and got $900/month stipend, I'd be pissed. On top of that, this year's cost of living adjustment is a joke--$20. Why bother?