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1) Over the next 75 years, Social Securitys shortfall is equal to about 0.7 percent of GDP. Source (PDF).
2) For the average 65-year-old retiring in 2010, Social Security replaced about 40 percent of working-age earnings. That replacement rate is scheduled to fall to 31 percent in the coming decades. Source.
3) Social Securitys replacement rate puts it 26th among 30 Organization for Economic Cooperation and Development nations for workers with average earnings. Source.
4) Without Social Security, 45 percent of seniors would be under the poverty line. With Social Security, 10 percent of seniors are under the poverty line. Source.
5) People can start receiving Social Security benefits at age 62. But the longer they wait, up until age 70, the larger their checks. Waiting to 66 means checks that are 33 percent larger. Waiting to 70 means checks that are 76 percent larger. But most people start claiming benefits at 62, and 95 percent start by 66. Source.
6) Raising the retirement age by one year amounts to roughly a 6.66 percent cut in benefits. Source.
7) In 1935, a white male at age 60 could expect to live to 75. Today, a white male at age 60 can expect to live to 80. Source.
8) In 1972, a 60-year-old male worker in the bottom half of the income distribution had a life expectancy of 78 years. Today, its around 80 years. Male workers in the top half of the income distribution, by contrast, have gone from 79 years to 85 years. Source.
4) Without Social Security, 45 percent of seniors would be under the poverty line. With Social Security, 10 percent of seniors are under the poverty line. Source.
I find this highly amusing:
4) Without Social Security, 45 percent of seniors would be under the poverty line. With Social Security, 10 percent of seniors are under the poverty line. Source.
The government forces people to pay into a huge Ponzi scheme in the hopes that they'll get back a tiny return on their "investment" (taken at gunpoint) after a few decades instead of allowing them to keep their own money and save it for themselves. Then the government comes up with some bogus statistic that says without Social Security, nearly half of all seniors would be under the poverty line. Nice.
I find this highly amusing:
4) Without Social Security, 45 percent of seniors would be under the poverty line. With Social Security, 10 percent of seniors are under the poverty line. Source.
The government forces people to pay into a huge Ponzi scheme in the hopes that they'll get back a tiny return on their "investment" (taken at gunpoint) after a few decades instead of allowing them to keep their own money and save it for themselves. Then the government comes up with some bogus statistic that says without Social Security, nearly half of all seniors would be under the poverty line. Nice.
The point of the article is that it isn't a ponzi scheme. It's not how I would design a pension plan but it isn't insolvent either.
People generally undersave. I spent some time as a stockbroker. I was shocked at how little many people had. I had many meetings with couples who were in their 50s who had maybe $50k, and many had less.
As for the poverty line, whether or not it is an accurate reflection of poverty, clearly seniors rely heavily on it. That's why it is the third rail of politics.
http://www.usmessageboard.com/3597485-post1.html
All the hoopla about Brazil being the leader of Latin America leaves out the fact that its a poor country, with a small middle class, high poverty and unemployment rates, with substantial debt and it is still very much a 3rd world country.
Chile by far is the most successful pound for pound country in Latin America. It is an emerging first world country. This country should be the model for America to follow when tackling our Social Security Crisis. And YES its a crisis. We are putting in 12% of our income and that money is drying up. The problem needs to be addressed before it sucks in the entire US economy. So what is the answer? Follow Chile, as 31 other countries have done. They have privatize the social security system and its created 10 fold greater returns and evaporated the Chilean debt crisis, which was similar to our crisis. Not to mention it created countless jobs.
Insanity is doing the same thing and expecting a different result. Keeping with the current social security system is the definition of insanity. Everyone sees the coming storm, but won't do anything to prevent it!
Private Social Security System Turns 30 - Investors.com
May 1 marks the 30 years since Chile became the first nation to privatize its social security system. By turning workers into investors, the move solved an entitlement crisis much like the one America faces today.
"I like symbols, so I chose May Day as the birth date of Chile's 'ownership society' that allowed every worker to become a small capitalist," wrote Jose Pinera, former secretary of labor and social security and the architect of this pension revolution. He is now a senior fellow at the Cato Institute in Washington, D.C.
What he designed has succeeded beyond all expectations
Instead of paying a 12.4% Social Security tax as we do here, Chilean workers must pay in 10% of their wages (they can send up to 20%) to one of several conservatively managed and regulated pension funds. From the accumulated savings, they get a life annuity or make programmed withdrawals (inheriting any funds left over).
Over the last three decades these accounts have averaged annual returns of 9.23% above inflation. By contrast, U.S. Social Security pays a 1% to 2% (theoretical) return, and even less for new workers.
Long-Term Boom
History shows that pension funds prudently invested in a diversified portfolio appreciate significantly over long periods of consistent saving. In 1981, the Dow industrials stood at 900; today, despite three market crashes, it's nearly 13,000.
In 2005, New York Times reporter John Tierney worked out his own Social Security contributions on the Chilean model and found that his privatized pension would have been $53,000 a year plus a one-time payout of $223,000. The same contributions paid into Social Security would have paid him $18,000.
The system is doable here, but does require citizen education and political resolve.
First, implicit debts must be made explicit, which most politicians abhor.
Chile decided to compensate workers for money already paid into the system, through "recognition bonds." It financed this via bonds, partial diversions of existing pension taxes, sales of state assets and spending cuts.
Its road was made even easier as economic growth from a system that encourages work, saving and responsibility filled government coffers with new streams of tax revenue.
Politicians for decades have raided excess workers' contributions intended to cover baby boomer retirees. They left IOUs, giving the program the right to other government revenue. But that means the Treasury has to issue even more debt.
Those political raids can't happen in Chile private accounts are legal property, a right Pinera embedded firmly into the 1980 constitution.
As for Social Security, even the IOUs are projected to run out in 2037. If nothing is done, payouts will have to be slashed 22%.
Private accounts could generate better returns to help offset likely benefit cuts.
Thirty countries have adopted a Chilean-style system
Chile has a private SS system that appears to be the best in the world!
http://www.usmessageboard.com/3597485-post1.html
All the hoopla about Brazil being the leader of Latin America leaves out the fact that its a poor country, with a small middle class, high poverty and unemployment rates, with substantial debt and it is still very much a 3rd world country.
Chile by far is the most successful pound for pound country in Latin America. It is an emerging first world country. This country should be the model for America to follow when tackling our Social Security Crisis. And YES its a crisis. We are putting in 12% of our income and that money is drying up. The problem needs to be addressed before it sucks in the entire US economy. So what is the answer? Follow Chile, as 31 other countries have done. They have privatize the social security system and its created 10 fold greater returns and evaporated the Chilean debt crisis, which was similar to our crisis. Not to mention it created countless jobs.
Insanity is doing the same thing and expecting a different result. Keeping with the current social security system is the definition of insanity. Everyone sees the coming storm, but won't do anything to prevent it!
Private Social Security System Turns 30 - Investors.com
May 1 marks the 30 years since Chile became the first nation to privatize its social security system. By turning workers into investors, the move solved an entitlement crisis much like the one America faces today.
"I like symbols, so I chose May Day as the birth date of Chile's 'ownership society' that allowed every worker to become a small capitalist," wrote Jose Pinera, former secretary of labor and social security and the architect of this pension revolution. He is now a senior fellow at the Cato Institute in Washington, D.C.
What he designed has succeeded beyond all expectations
Instead of paying a 12.4% Social Security tax as we do here, Chilean workers must pay in 10% of their wages (they can send up to 20%) to one of several conservatively managed and regulated pension funds. From the accumulated savings, they get a life annuity or make programmed withdrawals (inheriting any funds left over).
Over the last three decades these accounts have averaged annual returns of 9.23% above inflation. By contrast, U.S. Social Security pays a 1% to 2% (theoretical) return, and even less for new workers.
Long-Term Boom
History shows that pension funds prudently invested in a diversified portfolio appreciate significantly over long periods of consistent saving. In 1981, the Dow industrials stood at 900; today, despite three market crashes, it's nearly 13,000.
In 2005, New York Times reporter John Tierney worked out his own Social Security contributions on the Chilean model and found that his privatized pension would have been $53,000 a year plus a one-time payout of $223,000. The same contributions paid into Social Security would have paid him $18,000.
The system is doable here, but does require citizen education and political resolve.
First, implicit debts must be made explicit, which most politicians abhor.
Chile decided to compensate workers for money already paid into the system, through "recognition bonds." It financed this via bonds, partial diversions of existing pension taxes, sales of state assets and spending cuts.
Its road was made even easier as economic growth from a system that encourages work, saving and responsibility filled government coffers with new streams of tax revenue.
Politicians for decades have raided excess workers' contributions intended to cover baby boomer retirees. They left IOUs, giving the program the right to other government revenue. But that means the Treasury has to issue even more debt.
Those political raids can't happen in Chile private accounts are legal property, a right Pinera embedded firmly into the 1980 constitution.
As for Social Security, even the IOUs are projected to run out in 2037. If nothing is done, payouts will have to be slashed 22%.
Private accounts could generate better returns to help offset likely benefit cuts.
Thirty countries have adopted a Chilean-style system
Would what I put in be insured against loss so I have a guaranteed income when I reach retirement age or would I be up a river if the stick market tanked?Personally, I would like to see SS be turned into a real pension fund that invests in stocks, bonds, real estate, etc.
I find this highly amusing:
The government forces people to pay into a huge Ponzi scheme in the hopes that they'll get back a tiny return on their "investment" (taken at gunpoint) after a few decades instead of allowing them to keep their own money and save it for themselves. Then the government comes up with some bogus statistic that says without Social Security, nearly half of all seniors would be under the poverty line. Nice.
The point of the article is that it isn't a ponzi scheme. It's not how I would design a pension plan but it isn't insolvent either.
People generally undersave. I spent some time as a stockbroker. I was shocked at how little many people had. I had many meetings with couples who were in their 50s who had maybe $50k, and many had less.
As for the poverty line, whether or not it is an accurate reflection of poverty, clearly seniors rely heavily on it. That's why it is the third rail of politics.
Of course people undersave when their paycheck is pilfered by the government. And if people knew they didn't have a safety net like SS, they could use that extra money to save.
You'd better believe Seniors rely heavily on SS because they've spent a lifetime putting money into it.
I'm not anti-SS, but it is a Ponzi scheme and should be radically changed. The 'opt-out' option should've have been put in from the get-go.
Would what I put in be insured against loss so I have a guaranteed income when I reach retirement age or would I be up a river if the stick market tanked?Personally, I would like to see SS be turned into a real pension fund that invests in stocks, bonds, real estate, etc.
