Beating Social Security

[JoeTheEconomist]

If you log on to the SS website, they can send you a list of every payment you have ever made to Social Security and the date it was paid..

Take that list and try and experiment.

Pick any major private or corporate retirement fund. What if you had made those payments, at those times, to the retirement fund instead of to SS, collecting interest as the years went by at the rates that fund offers? Taking into account the good economic times, the crashes, the recessions etc.?

And if you continue that pattern to the day in the future when you retire, how much would you have at retirement?

Hint: Can you say "millionaire"?

You could live off just the interest when you retire, far better than you could live off what SS gives you.

And when you die, you could will the entire amount you saved, to your family... while SS would give them just a pittance.

Social Security has dispossessed more Americans than all the "Robber Barons", hedge funds, dot-com companies, and CEOs combined, in the history of the world.

Having done the exercise I can tell you that you will wind up with less than you think. I have seen the numbers run incorrectly. If you think that you would be a millionaire today, chances are you have the wrong numbers.

 

[JoeTheEconomist]

Pick any major private or corporate retirement fund. What if you had made those payments, at those times, to the retirement fund instead of to SS, collecting interest as the years went by at the rates that fund offers? Taking into account the good economic times, the crashes, the recessions etc.?

.

]USATODAY.com - Enron's dive destroys workers' pensions

Enron, MCI, and the all of the 2009 blow-out. If you had invested a $1 50 years ago, it would be worth $132 today. Inflation adjusted it would be worth $17. The problem with personal accounts is not all of the risk, blah, blah, blah. The problem is that SS is insurance. Insurance manages risk. Investments profit from taking risk. These are no more comparable than Michael Phelps and Uriah Bolt.

Personal accounts are a bad idea :

Why We Shouldn’t Privatize Social Security

 

[JoeTheEconomist]

If you log on to the SS website, they can send you a list of every payment you have ever made to Social Security and the date it was paid..

Take that list and try and experiment.

Pick any major private or corporate retirement fund. What if you had made those payments, at those times, to the retirement fund instead of to SS, collecting interest as the years went by at the rates that fund offers? Taking into account the good economic times, the crashes, the recessions etc.?

And if you continue that pattern to the day in the future when you retire, how much would you have at retirement?

Hint: Can you say "millionaire"?

You could live off just the interest when you retire, far better than you could live off what SS gives you.

And when you die, you could will the entire amount you saved, to your family... while SS would give them just a pittance.

Social Security has dispossessed more Americans than all the "Robber Barons", hedge funds, dot-com companies, and CEOs combined, in the history of the world.

Yes. this was during the Great Depression and most people wanted to invest all their excess money they were not using into corporations and other dead things.
FDR knew the Republicans would want to destroy the SS program so it was designed to be so difficult to destroy that it still exists. One of these days Republicans will claim Social Security was their idea and FDR fought it, and some people will believe it.

Before you praise FDR, you should realize that SS today is exactly what he opposed.

Would Roosevelt recognize today’s Social Security?

 

[Sun Devil 92]

Pick any major private or corporate retirement fund. What if you had made those payments, at those times, to the retirement fund instead of to SS, collecting interest as the years went by at the rates that fund offers? Taking into account the good economic times, the crashes, the recessions etc.?

.

]USATODAY.com - Enron's dive destroys workers' pensions

Enron, MCI, and the all of the 2009 blow-out. If you had invested a $1 50 years ago, it would be worth $132 today. Inflation adjusted it would be worth $17. The problem with personal accounts is not all of the risk, blah, blah, blah. The problem is that SS is insurance. Insurance manages risk. Investments profit from taking risk. These are no more comparable than Michael Phelps and Uriah Bolt.

Personal accounts are a bad idea :

Why We Shouldn’t Privatize Social Security

While I don't like the idea of privatized Social Security, I do like the idea of personalized Social Security. Changes nothing except that the money you put in is your money. You get an account and you get interest. When you pass, your balance passes along to your heirs. No taking anything out...it just may be that if their accounts hit a minimum they no longer need to pay in (or they can...up to them).

But it is still where it is today and it is subject to most banking regulations. The group handling it needs to be a government agency...the one we have today...but with very different and transparent oversight.

 

[regent]

If you log on to the SS website, they can send you a list of every payment you have ever made to Social Security and the date it was paid..

Take that list and try and experiment.

Pick any major private or corporate retirement fund. What if you had made those payments, at those times, to the retirement fund instead of to SS, collecting interest as the years went by at the rates that fund offers? Taking into account the good economic times, the crashes, the recessions etc.?

And if you continue that pattern to the day in the future when you retire, how much would you have at retirement?

Hint: Can you say "millionaire"?

You could live off just the interest when you retire, far better than you could live off what SS gives you.

And when you die, you could will the entire amount you saved, to your family... while SS would give them just a pittance.

Social Security has dispossessed more Americans than all the "Robber Barons", hedge funds, dot-com companies, and CEOs combined, in the history of the world.

Yes. this was during the Great Depression and most people wanted to invest all their excess money they were not using into corporations and other dead things.
FDR knew the Republicans would want to destroy the SS program so it was designed to be so difficult to destroy that it still exists. One of these days Republicans will claim Social Security was their idea and FDR fought it, and some people will believe it.

Before you praise FDR, you should realize that SS today is exactly what he opposed.

Would Roosevelt recognize today’s Social Security?

I think so, FDR knew the American people and the nation needed SS, and today look how SS has created other social programs. What would FDR oppose today in SS?

 

[JoeTheEconomist]

Pick any major private or corporate retirement fund. What if you had made those payments, at those times, to the retirement fund instead of to SS, collecting interest as the years went by at the rates that fund offers? Taking into account the good economic times, the crashes, the recessions etc.?

.

]USATODAY.com - Enron's dive destroys workers' pensions

Enron, MCI, and the all of the 2009 blow-out. If you had invested a $1 50 years ago, it would be worth $132 today. Inflation adjusted it would be worth $17. The problem with personal accounts is not all of the risk, blah, blah, blah. The problem is that SS is insurance. Insurance manages risk. Investments profit from taking risk. These are no more comparable than Michael Phelps and Uriah Bolt.

Personal accounts are a bad idea :

Why We Shouldn’t Privatize Social Security

While I don't like the idea of privatized Social Security, I do like the idea of personalized Social Security. Changes nothing except that the money you put in is your money. You get an account and you get interest. When you pass, your balance passes along to your heirs. No taking anything out...it just may be that if their accounts hit a minimum they no longer need to pay in (or they can...up to them).

But it is still where it is today and it is subject to most banking regulations. The group handling it needs to be a government agency...the one we have today...but with very different and transparent oversight.

So how will you pay the benefits of existing retirees?

 

[JoeTheEconomist]

If you log on to the SS website, they can send you a list of every payment you have ever made to Social Security and the date it was paid..

Take that list and try and experiment.

Pick any major private or corporate retirement fund. What if you had made those payments, at those times, to the retirement fund instead of to SS, collecting interest as the years went by at the rates that fund offers? Taking into account the good economic times, the crashes, the recessions etc.?

And if you continue that pattern to the day in the future when you retire, how much would you have at retirement?

Hint: Can you say "millionaire"?

You could live off just the interest when you retire, far better than you could live off what SS gives you.

And when you die, you could will the entire amount you saved, to your family... while SS would give them just a pittance.

Social Security has dispossessed more Americans than all the "Robber Barons", hedge funds, dot-com companies, and CEOs combined, in the history of the world.

Yes. this was during the Great Depression and most people wanted to invest all their excess money they were not using into corporations and other dead things.
FDR knew the Republicans would want to destroy the SS program so it was designed to be so difficult to destroy that it still exists. One of these days Republicans will claim Social Security was their idea and FDR fought it, and some people will believe it.

Before you praise FDR, you should realize that SS today is exactly what he opposed.

Would Roosevelt recognize today’s Social Security?

I think so, FDR knew the American people and the nation needed SS, and today look how SS has created other social programs. What would FDR oppose today in SS?

I would read the piece by Samuelson. He does a better job than I can. If you want simple answers, here are a few examples.

FDR wanted a self-sustaining program. What we have today is self-financing.

" Immediately upon receiving the report the President sent notice to Congress that he would be transmitting the report to them on the 17th, then he sat down to read the report. FDR very carefully went over the actuarial tables and discovered to his surprise that the program was not fully "self- supporting" as he had directed it should be. He summoned Secretary Perkins to the White House on the afternoon of the 16th to tell her that there must be some mistake in the actuarial tables because they showed a large federal subsidy beginning in 1965. When informed that this was no mistake, the President made it clear it was indeed a mistake, although of a different kind! He told the Secretary to get to work immediately to devise a fully self-sustaining old age insurance system. The report was transmitted to the Congress on the 17th as the President had promised, but the actuarial table in question was withdrawn until it could be reworked. Bob Myers, later to be SSA's Chief Actuary, was given the assignment to rework the financing and the system finally devised projected a $47 billion surplus by 1980--with no general revenue financing."

Social Security History

FDR Veto'd the 1943 Revenue Act which waived the increase in payroll taxes scheduled. Congress overrode the veto.

"We must not allow this type of insurance to become a dole through the mingling of insurance and relief. It is not charity. It must be financed by contributions, not taxes."

FDR 1934 - Social Security History

FDR's Social Security had 4 basic principles. Today we have none of them. I ran across Congressional Testimony from 1944 which predicted where we are today. You ought to look at the first 4 paragraphs of that testimony.

Predicting Social Security’s Financial Imbalance : FedSmith.com

 

[Arizona Willie]

SS is most easily reformed and will continue without any problems financially for the American people. SS is a program that Jesus Christ would approve.

====
All they have to do is take the Earnings Cap off and SS would be solvent forever.

If they just raised the Earnings Cap to $250,000 SS would be good to the year 3000.

 

[JakeStarkey]

 

[Camp]

Beating Social Security is mostly a question of how long you live beyond collecting the first check.

 

[JoeTheEconomist]

SS is most easily reformed and will continue without any problems financially for the American people. SS is a program that Jesus Christ would approve.

====
All they have to do is take the Earnings Cap off and SS would be solvent forever.

If they just raised the Earnings Cap to $250,000 SS would be good to the year 3000.

Thanks for the fairytale.

SSA and CBO project that completely eliminating the cap would serve to get us 50-70% of the way to kicking the can which isn't 3000.

 

[JoeTheEconomist]

Beating Social Security is mostly a question of how long you live beyond collecting the first check.

There are a number of subsidies in the system. Probably the biggest is marriage. Co-hort. Length of work career. Life expectancy will add to your return but nothing helps it like marriage and kids.

 

[JakeStarkey]

SS is most easily reformed and will continue without any problems financially for the American people. SS is a program that Jesus Christ would approve.

====
All they have to do is take the Earnings Cap off and SS would be solvent forever.

If they just raised the Earnings Cap to $250,000 SS would be good to the year 3000.

Thanks for the fairytale.

SSA and CBO project that completely eliminating the cap would serve to get us 50-70% of the way to kicking the can which isn't 3000.

Nope.

 

[Freewill]

The biggest problem with SS is where it invests the money. The treasury, Fed, can regulate what securities it sells. But by law the SS money is always invested in federal securities. So if the fed wanted to stop borrowing money it really couldn't. Every SS dollar cost the American people money in the interest they have to pay.

I am not sure what else can be done but I am thinking we are being set up for a huge federal government default.

 

[JoeTheEconomist]

SS is most easily reformed and will continue without any problems financially for the American people. SS is a program that Jesus Christ would approve.

====
All they have to do is take the Earnings Cap off and SS would be solvent forever.

If they just raised the Earnings Cap to $250,000 SS would be good to the year 3000.

Thanks for the fairytale.

SSA and CBO project that completely eliminating the cap would serve to get us 50-70% of the way to kicking the can which isn't 3000.

Nope.

Since you aren't going to do the research yourself : CBO Answers to Questions From Senator Hatch About Various Options for Payroll Taxes and Social Security SSA : Individual Changes Modifying Social Security

 

[JoeTheEconomist]

The biggest problem with SS is where it invests the money. The treasury, Fed, can regulate what securities it sells. But by law the SS money is always invested in federal securities. So if the fed wanted to stop borrowing money it really couldn't. Every SS dollar cost the American people money in the interest they have to pay.

I am not sure what else can be done but I am thinking we are being set up for a huge federal government default.

I don't know, but I am confident that we will find out sooner than DC thinks. This article doesn't give you answers, but it asks the same questions that you are, and answers half of the comments in this thread.

Social Security's uncertain future

"Traditional coverage of Social Security tells voters that if Congress does nothing, the system will continue to pay scheduled benefits for nearly two decades.

The problem with the analysis is of course that Congress is not in a position to do nothing. It cannot ignore Social Security as the relationship between Congress and the system evolves from private banker to creditor. Over the next 20 years, Congress will have to refinance debt held by the Trust Fund much to the chagrin of those who claim that the Trust Fund doesn't exist. "

 

[Freewill]

The biggest problem with SS is where it invests the money. The treasury, Fed, can regulate what securities it sells. But by law the SS money is always invested in federal securities. So if the fed wanted to stop borrowing money it really couldn't. Every SS dollar cost the American people money in the interest they have to pay.

I am not sure what else can be done but I am thinking we are being set up for a huge federal government default.

I don't know, but I am confident that we will find out sooner than DC thinks. This article doesn't give you answers, but it asks the same questions that you are, and answers half of the comments in this thread.

Social Security's uncertain future

"Traditional coverage of Social Security tells voters that if Congress does nothing, the system will continue to pay scheduled benefits for nearly two decades.

The problem with the analysis is of course that Congress is not in a position to do nothing. It cannot ignore Social Security as the relationship between Congress and the system evolves from private banker to creditor. Over the next 20 years, Congress will have to refinance debt held by the Trust Fund much to the chagrin of those who claim that the Trust Fund doesn't exist. "

The interest on the trust fund may be one reason that Bush spoke of investing in the stock market. At leas that way it wouldn't drive the federal government into default.

 

[JoeTheEconomist]

The biggest problem with SS is where it invests the money. The treasury, Fed, can regulate what securities it sells. But by law the SS money is always invested in federal securities. So if the fed wanted to stop borrowing money it really couldn't. Every SS dollar cost the American people money in the interest they have to pay.

I am not sure what else can be done but I am thinking we are being set up for a huge federal government default.

I don't know, but I am confident that we will find out sooner than DC thinks. This article doesn't give you answers, but it asks the same questions that you are, and answers half of the comments in this thread.

Social Security's uncertain future

"Traditional coverage of Social Security tells voters that if Congress does nothing, the system will continue to pay scheduled benefits for nearly two decades.

The problem with the analysis is of course that Congress is not in a position to do nothing. It cannot ignore Social Security as the relationship between Congress and the system evolves from private banker to creditor. Over the next 20 years, Congress will have to refinance debt held by the Trust Fund much to the chagrin of those who claim that the Trust Fund doesn't exist. "

The interest on the trust fund may be one reason that Bush spoke of investing in the stock market. At leas that way it wouldn't drive the federal government into default.

The money in the Trust Fund is already loaned to the government. If he had shifted anything from the Trust Fund to stocks, it would been cashflow neutral. Every dollar that goes into the economy from the Trust Fund would have been removed from the capital markets by incremental borrowing. It was 1 - 1 type of math. The investment of SS funds really only helps when there is excess cash. Yes, there was some at the time of "43", but not a lot.

 

[JakeStarkey]

More recently (Septempter 2010), here’s what Janemarie Mulvey wrote in a report for the Congressional Research Service:

“If all earnings were subject to the payroll tax, but the base was retained for benefit calculations, the Social Security Trust Funds would remain solvent for the next 75 years.”

 

[JoeTheEconomist]

More recently (Septempter 2010), here’s what Janemarie Mulvey wrote in a report for the Congressional Research Service:

“If all earnings were subject to the payroll tax, but the base was retained for benefit calculations, the Social Security Trust Funds would remain solvent for the next 75 years.”

That is from a CRS study from about 15 trillion dollars ago. It is about as relevant as Roman architecture to the Autobahn. You are also changing the benefits formula as well as removing the cap. So you have antiquated research of the wrong policy option. Stick with material from 2014 or 2015. It is about 700 billion out of date, but it is at least with a trillion.