Eight Facts About Social Security

[Toro]

Personally, I would like to see SS be turned into a real pension fund that invests in stocks, bonds, real estate, etc.

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?

Yes.

 

[Toro]

Stocks can go out of favour for 10-20 years but over very long periods of time, they are the best investment. Since SS is a long lived institution that will be around for generations, SS should have a large investment in stocks.

No. The government should not be investing taxes in stocks. Only if SS is privatized and individuals own their accounts should the money be placed in stocks as individual investments.

Keep The Government Out Of Owning Companies.

Governments already own companies through state pension plans. Other countries do it. Pass a law that says the plan must be run according to ERISA standards, which is easy because corporate plans are run according to ERISA and most states abide by ERISA even if they don't have to. That eliminates the problems of government interference, for the most part. If it is run professionally, there aren't problems.

 

[JBeukema]

Is Social Security Constitutional? by John Attarian

 

[JBeukema]

If SS incests in stocks, i can hear the calls to bailout the companies SS has stocks in in order to save SS

 

[Toronado3800]

Since 1800 to now Dow (or Dow type) stocks with dividends have provided a 8% annual return. That means every nine years the savings doubles. Here's how stocks have compared to T-bills, corporate bonds, and inflation:

8% isn't too shabby either. But I would not recommend a retirment account be invested in stocks, or at least no more than 10% be invested in stocks. Go with quality proven funds that widely diversify the risk. We have a bit in metal funds that are quite volatile but have been in an overall upward trend for decades now; some in the DOW, some NASDAQ, large caps, small caps, domestic and foreign. When one tanks another is likely to be up.

The long term real return to commodities has been 0%. However, the return to gold since the government suspended the last vestiges of the gold standard in 1971 has been 9%. Stocks have returned 10%. Since 1913, gold has returned 4-5%. Since 1928, stocks have returned 10%.

Stocks can go out of favour for 10-20 years but over very long periods of time, they are the best investment. Since SS is a long lived institution that will be around for generations, SS should have a large investment in stocks. Stock returns over very long periods of time grow with the economy. Betting against stocks over very long periods of time, ie 50-100 years, is essentially a bet against the American economy. That doesn't apply to 5-10 or even 20 years, but it does over the very long term.

$100 billion invested today earning 4% per year over 50 years, which is about what government bonds in the SS trusts will earn, will yield $460 billion. The same amount earning 8% over 50 years, which is about the return a portfolio of 60% stocks and 40% bonds, will yield $4.6 trillion, or 10 times the amount compared to solely in government bonds. SS should invest in stocks.

Neat chart and that 8% should be quoted over and over.

I have always wondered if the DOW average counted the value of stocks from companies which got kicked off the DOW.

 

[JBeukema]

Personally, I would like to see SS be turned into a real pension fund that invests in stocks, bonds, real estate, etc.

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 stock market tanked?

Yes.

Yes, either it would be insured or I'd be up a river if the stock market tanked?

Or yes, I'd be up a river?

Or yes, it's be insured?

 

[Toro]

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 stock market tanked?

Yes.

Yes, either it would be insured or I'd be up a river if the stock market tanked?

Or yes, I'd be up a river?

Or yes, it's be insured?

In a defined benefit plan, you receive a fixed benefit for the rest of your life, regardless of how the assets within the fund perform.

 

[expat_panama]

...wondered if the DOW average counted the value of stocks from companies which got kicked off the DOW.

No it doesn't. The Dow is primitive but that means it's elegantly basic.

It was invented by Mr. Dow in the late 1890's and to get a feel for general stock trends he just took about 20 typical dominant stocks (mostly railroads) and averaged the prices. over the years the average got fudged for splits, adding 10 new ones etc. etc. but it's still an average. That means thousands of traders can all be buying big time a small price change up, and one goofball can sell a share at 10% off and the average goes down. For that reason the S&P 500, and the NASDAQ all use weighted indexes.

 

[expat_panama]

...a guaranteed income when I reach retirement age or would I be up a river if the stock market tanked...

...In a defined benefit plan, you receive a fixed benefit for the rest of your life, regardless of how the assets within the fund perform.

--and if the economy tanks and the plan managers can't make the payments you risk their going bankrupt, but if the economy soars you risk the lost opportunities that they profit from. You also accept all risks from inflation surges.

Life always has the risk of loss, and only the dead are safe from those dangers.

 

[Wiseacre]

...a guaranteed income when I reach retirement age or would I be up a river if the stock market tanked...

...In a defined benefit plan, you receive a fixed benefit for the rest of your life, regardless of how the assets within the fund perform.

--and if the economy tanks and the plan managers can't make the payments you risk their going bankrupt, but if the economy soars you risk the lost opportunities that they profit from. You also accept all risks from inflation surges.

Life always has the risk of loss, and only the dead are safe from those dangers.

Bailouts. Especially if you're a union.

 

[Toro]

...a guaranteed income when I reach retirement age or would I be up a river if the stock market tanked...

...In a defined benefit plan, you receive a fixed benefit for the rest of your life, regardless of how the assets within the fund perform.

--and if the economy tanks and the plan managers can't make the payments you risk their going bankrupt, but if the economy soars you risk the lost opportunities that they profit from. You also accept all risks from inflation surges.

Life always has the risk of loss, and only the dead are safe from those dangers.

That's true. However, if the rate of contribution was kept the same and SS became a real pension fund, the thing would be so overfunded, it would be bullet-proof, unless we went the way of Argentina.

 

[expat_panama]

...if the rate of contribution was kept the same and SS became a real pension fund, the thing would be so overfunded...

If we're imagining SS managed like a real pension fund then we might as well imagine old people pooping gold.

Governments are good at running courts or armies where the goal is something other than financial efficiency. Private companies are the only group good at making ends meet. While the state charities for extreme hardship cases are all well and good, the reason SS was started wasn't to help out old people. It was set up as a tax the young could be fooled into paying. Many kids are still fooled but as the system collapses more and more the secret can't be hidden from them much longer.

 

[Toronado3800]

...if the rate of contribution was kept the same and SS became a real pension fund, the thing would be so overfunded...

If we're imagining SS managed like a real pension fund then we might as well imagine old people pooping gold.

Governments are good at running courts or armies where the goal is something other than financial efficiency. Private companies are the only group good at making ends meet. While the state charities for extreme hardship cases are all well and good, the reason SS was started wasn't to help out old people. It was set up as a tax the young could be fooled into paying. Many kids are still fooled but as the system collapses more and more the secret can't be hidden from them much longer.

Private companies go bankrupt. They do good for awhile then go bankrupt.

 

[Trajan]

Personally, I would like to see SS be turned into a real pension fund that invests in stocks, bonds, real estate, etc., as well as the government giving me the option to invest my savings on my own if I so choose. But until that happens ...

1) Over the next 75 years, Social Security’s 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 Security’s 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, it’s around 80 years. Male workers in the top half of the income distribution, by contrast, have gone from 79 years to 85 years. Source.

Eight facts and three thoughts about Social Security - Ezra Klein - The Washington Post

saw an article today; the average couple, who worked 40 some odd years will put in roughly 450K and take out over a million $ in SSI/medicare etc.... it always was unsustainable...

I won't wait till 70, even though I should be able to live without it, becasue I am not sure how long I will live, I put a lot of miles on my body, starting at 66 is probably best, but in the end, I am not sure it will be there in its present form or award when I hit that anyway, I have roughly a decade and then some before 66...

On one hand means testing is probably in our future and they should not wait, so they can provide some type of tax relief now so we or they can make other plans to live without it when the time comes.

On the other hand, telling somone because you planned well and don't need it, you have sacrificed all of your ssi fica for 45 years, well, thats bullshit too. *shrugs*


toro-

Personally, I would like to see SS be turned into a real pension fund that invests in stocks, bonds, real estate, etc., as well as the government giving me the option to invest my savings on my own if I so choose. But until that happens ...

you do realize that the dems will never ever allow it if they can help it.

 

[Trajan]

...if the rate of contribution was kept the same and SS became a real pension fund, the thing would be so overfunded...

If we're imagining SS managed like a real pension fund then we might as well imagine old people pooping gold.

Governments are good at running courts or armies where the goal is something other than financial efficiency. Private companies are the only group good at making ends meet. While the state charities for extreme hardship cases are all well and good, the reason SS was started wasn't to help out old people. It was set up as a tax the young could be fooled into paying. Many kids are still fooled but as the system collapses more and more the secret can't be hidden from them much longer.

if they put it in the hands of people how know and are motivated by a profit with the proper safeguards, they would manage it well, look at my signature, becasue the politician manage it, its shit, you see its THEIRS, not ours first.

 

[MikeK]

Personally, I would like to see SS be turned into a real pension fund that invests in stocks, bonds, real estate, etc[...]

If you and George W. Bush had gotten your mutual wish prior to the virtual collapse of the Stock Market in '07/'08, which was brought about largely by Bush's profligate spending, tax cutting and the devious financial maneuverings of his "base," that privatized form of Social Security would have been totally wiped out.

The Social Security program is one of the best things to happen for working class Americans. It has been performing flawlessly for over seventy years and with some sensible adjustments in its administrative mechanism will continue to function indefinitely.

 

[MikeK]

[...]

On the other hand, telling somone because you planned well and don't need it, you have sacrificed all of your ssi fica for 45 years, well, thats bullshit too.

[...]

You need to understand that Social Security is insurance, not an investment portfolio.

Consider car insurance. We are forced by law to buy it but most of us never need it. I don't know about you but I've been paying for car insurance for over fifty-five years and I've never filed a claim. Should I feel cheated -- or fortunate?

Consider fire insurance. . .

So a means test for collecting Social Security payments is a sensible, reasonable proposition. If there were such a policy in place I probably would receive a hundred or two fewer dollars each month from Social Security but I wouldn't miss it. And if I were as well off as a couple of people I know I wouldn't be receiving a dime from Social Security but would still be living in absolute luxury.

Of course that scenario has a bit of a socialist ring to it, but the overall effect is no one suffers but a lot of people are saved from suffering the agonies of poverty. The bottom line being it makes for a better America.

 

[JBeukema]

You need to understand that Social Security is insurance

The government went to court to prove it's not.

 

[MikeK]

You need to understand that Social Security is insurance

The government went to court to prove it's not.

I wasn't aware of that. Do you have any details? If it's not insurance against poverty, then what is it? Did they say what it is?

It's not an investment program and it does function like an insurance policy except that everyone who pays a premium collects when the policy matures, whether they need it or not -- which I believe is it's major flaw.

 

[expat_panama]

...if the rate of contribution was kept the same and SS became a real pension fund, the thing would be so overfunded...

...Governments are good at running courts or armies where the goal is something other than financial efficiency. Private companies are the only group good at making ends meet...

Private companies go bankrupt. They do good for awhile then go bankrupt.

--and government run out of money after everything seemed fine.

The difference is how the operation is run before limits are hit. People spending their own money on themselves care about quality and price, and their own money on others care about price. When people spend other people's money on others they do it when and how it suits their own interests, they get it done, and move on.

Priorities are better when people manage their own retirement funds.