Sorry, College Grads, You’ll Probably Never Get Your Social Security Money

[freedombecki]

SS being in trouble is AARP's #1 myth. People believe Pub fear mongering and bs way too much. Pubs are a disgrace, but our people's poor education and ignorance, per Jefferson, are calling our democracy into question. Their silly cynicism is pathetic. Pub dupes!

^^ Summary of post: ^^ "If Congress kicks taxpayers by robbing Social Security Funds for pet rock projects, nobody gets hurt at the bank."

 

[asterism]

The cost of privatizing Social Security would be in the trillions. To phase out the Trust Fund, you have to pay back the money it's owed.

That's not necessarily true. We could allow the private option of having 1/3 of the money paid in as it's being paid in to be directed to investments avenues chosen by those individuals. In exchange, they give up 1/3 of their future expected benefits. The difference is the made up by putting less in the government bonds (which is why big government advocates don't like this idea).

Even a partial defined contribution model cuts trillions from the obligation.

The problem seems to be that the folks on the left think the population is too dumb to manage their own finances. They never take into account that one of the contributing factors to personal mismanagement of money is that the government is always there to buy some votes and save their bacon.

 

[NYcarbineer]

The cost of privatizing Social Security would be in the trillions. To phase out the Trust Fund, you have to pay back the money it's owed.

The benefit from privatizing Social Security would save us trillions more.

No it wouldn't. Social Security is highly efficient with very low overhead.

If you privatize Social Security, that ends the payroll tax. That means that the over 2 1/2 trillion dollars worth of government bonds that the SS Trust Fund holds would have to be cashed in to pay current and near future SS recipients.

All of that has to come out of the General Fund.

 

[HenryBHough]

The cost of privatizing Social Security would be in the trillions. To phase out the Trust Fund, you have to pay back the money it's owed.

The benefit from privatizing Social Security would save us trillions more.

No it wouldn't. Social Security is highly efficient with very low overhead.

If you privatize Social Security, that ends the payroll tax. That means that the over 2 1/2 trillion dollars worth of government bonds that the SS Trust Fund holds would have to be cashed in to pay current and near future SS recipients.

All of that has to come out of the General Fund.

But why pay the bonds off?

Hey, Government Motors stiffed their bondholders and got away with it, so why not Government itself?

 

[NYcarbineer]

The cost of privatizing Social Security would be in the trillions. To phase out the Trust Fund, you have to pay back the money it's owed.

That's not necessarily true. We could allow the private option of having 1/3 of the money paid in as it's being paid in to be directed to investments avenues chosen by those individuals. In exchange, they give up 1/3 of their future expected benefits. The difference is the made up by putting less in the government bonds (which is why big government advocates don't like this idea).

Even a partial defined contribution model cuts trillions from the obligation.

The problem seems to be that the folks on the left think the population is too dumb to manage their own finances. They never take into account that one of the contributing factors to personal mismanagement of money is that the government is always there to buy some votes and save their bacon.

We are currently right at the point of paying current beneficiaries with current year payroll tax revenues plus drawing on some of the annual interest on the Trust Fund bonds;

as soon as you cut payroll taxes by any significant amount, to let people invest that, SS will have to start drawing down the principal in the Trust Fund. That has to come out of the general fund - your income taxes, etc. - it would be the equivalent of starting a new huge federal spending program,

while we already have 1/2 to 1 trillion in deficits and no one wants to raise taxes.

 

[asterism]

Colleges have been inflating their tuition rates for years and passing it on the students. Why doesnt anyone complain? Why does everyone just accept it?

Oh lots of people have, it's just not going anywhere

But back to the point of SS.

SS is a fundamental part of why we are a First world nation IMO. Yes, it doesn't provide much but it's enough for people to get by. You first saw pensions go by the wayside, then 401Ks come in with their high fees and little return, and then you take away SS? People are going to emigrate away from the US in droves. Especially poorer Americans that can't afford to save money for retirement because they need that money for food and shelter.

It's one of the core principles of the American dream. You're born, you go to school and if you graduate, you learn a trade or go to college. Then you go to work and with hard work, you get rewarded and you're social mobility moves up. Then after decades of hard work, you retire and live out the rest of your years in peace and doing things on your bucket list. And then you die. Well right now the only two things America can promise you is that you'll be born and if you are born, you will die. Everything else is up in the air.

Social Security has to be there, it just has to be. Relying on the stock market to provide for everyone's retirement is putting an arsonist in a room with matches and gasoline and telling them "Don't set it on fire." Sooner or later it will crash and everyone (but the rich bankers (aka arsonists) of course) will suffer the consequences. There must be a safety net or their is no American dream. People will risk too much coming here with little chance of reward. The majority of people living here won't believe that they can make it. Hell, 60% of Americans today already believe the American Dream is unattainable, why add more fuel to the fire?

If we want to survive as a first world nation, we must have safety nets for our citizens. If that means raising the retirement age for SS benefits, so be it. We have to find bipartisan solution to this issue because no one wants to imagine a world without SS now.

Just because people live longer does not mean they are able to work longer, so raising the retirement age just makes the other entitlement programs for people that cannot work due to health programs more expensive. There's no savings, it's just creative accounting.

True story, social security was never meant to be a retirement income. It was intended to be a retirement supplement only and a way to prevent extreme poverty in old age. If we went back to those obligations the system would be solvent for a few more decades. However, two generations have come to rely on social security as their only or primary source of retirement income. Something has to give or the whole thing will collapse, just as all ponzi schemes eventually do (but they run great until the tipping point).

 

[NYcarbineer]

The benefit from privatizing Social Security would save us trillions more.

No it wouldn't. Social Security is highly efficient with very low overhead.

If you privatize Social Security, that ends the payroll tax. That means that the over 2 1/2 trillion dollars worth of government bonds that the SS Trust Fund holds would have to be cashed in to pay current and near future SS recipients.

All of that has to come out of the General Fund.

But why pay the bonds off?

Hey, Government Motors stiffed their bondholders and got away with it, so why not Government itself?

Are the Republicans ready to default on the government's debt obligations to the SS Trust Fund?

 

[HenryBHough]

The biggest obstacle to so many of those college graduates collecting, one day, on Social Security is that there is no employment available for underwater basket weavers in this country.

 

[asterism]

The cost of privatizing Social Security would be in the trillions. To phase out the Trust Fund, you have to pay back the money it's owed.

That's not necessarily true. We could allow the private option of having 1/3 of the money paid in as it's being paid in to be directed to investments avenues chosen by those individuals. In exchange, they give up 1/3 of their future expected benefits. The difference is the made up by putting less in the government bonds (which is why big government advocates don't like this idea).

Even a partial defined contribution model cuts trillions from the obligation.

The problem seems to be that the folks on the left think the population is too dumb to manage their own finances. They never take into account that one of the contributing factors to personal mismanagement of money is that the government is always there to buy some votes and save their bacon.

We are currently right at the point of paying current beneficiaries with current year payroll tax revenues plus drawing on some of the annual interest on the Trust Fund bonds;

as soon as you cut payroll taxes by any significant amount, to let people invest that, SS will have to start drawing down the principal in the Trust Fund. That has to come out of the general fund - your income taxes, etc. - it would be the equivalent of starting a new huge federal spending program,

while we already have 1/2 to 1 trillion in deficits and no one wants to raise taxes.

Then the program will have to start cashing in more of the bonds they hold instead of deferring them (which it currently does) and the government will have to get more efficient at spending and collecting enough revenue (which doesn't have to include tax rate increases).

 

[asterism]

No it wouldn't. Social Security is highly efficient with very low overhead.

If you privatize Social Security, that ends the payroll tax. That means that the over 2 1/2 trillion dollars worth of government bonds that the SS Trust Fund holds would have to be cashed in to pay current and near future SS recipients.

All of that has to come out of the General Fund.

But why pay the bonds off?

Hey, Government Motors stiffed their bondholders and got away with it, so why not Government itself?

Are the Republicans ready to default on the government's debt obligations to the SS Trust Fund?

Can they give some of the revenue stream to some unions and Canada? That's what the government did with GM. Why is screwing the bondholders that are taxpayers okie dokie by you but screwing a government program funded by those same taxpayers isn't?

(and no, I don't think it's at all feasible to renege on Social Security beneficiaries)

 

[bripat9643]

No big deal. Your taxes will be raised to pay back Social Security all the money that was borrowed.

Only a stupid turd like you would think that is no big deal. One thing is certain, it's a raw deal. Why should anyone continue to support this boondoggle?

The government borrowed the money from SS. It has to pay it back if necessary. Trust me, the People will not let SS go under.

No, they'll just cut the benefits until they are insignificant and raise the retirement age. The younger generations simply aren't willing to work like borrowed mules so grandpa can play golf in a gated community in FL.

 

[bripat9643]

The cost of privatizing Social Security would be in the trillions. To phase out the Trust Fund, you have to pay back the money it's owed.

Where is that law written?

 

[g4racer]

I am putting together a web site for the 60th reunion in 2015. Some interesting bits of information:
Population: 165,931,202
Life expectancy: 69.6 years
This may provide some numbers to make you think some other information which can be useful is:
RCA offers a $35,000 contract to Elvis Presley.
General Motors is the first US corporation to make a profit of over 1 billion dollars in a year
Average family income: $4,137
Gasoline was $.23/gallon (the cheapest I ever paid was in RI in 1952, $.129/gallon)
Bread $.18 *What ever happened to Wonder Bread?
Postage stamp: $.03

The only solution is to return to the social structure of medieval Europe. It wouldn't solve problems; but there would be fewer people complaining about the problems. If you crunch the numbers you will find out that as far as income and the cost of living is concerned we peaked out in the 1980/90 and been going down hill ever since.

Hazlnut, nice post. I noticed the similarities a few years ago. It is the effect of being an extremist. Extremism can not be constructive, it can only be destructive.

 

[Toddsterpatriot]

The cost of privatizing Social Security would be in the trillions. To phase out the Trust Fund, you have to pay back the money it's owed.

The benefit from privatizing Social Security would save us trillions more.

No it wouldn't. Social Security is highly efficient with very low overhead.

If you privatize Social Security, that ends the payroll tax. That means that the over 2 1/2 trillion dollars worth of government bonds that the SS Trust Fund holds would have to be cashed in to pay current and near future SS recipients.

All of that has to come out of the General Fund.

Social Security is highly efficient with very low overhead.

And very low returns. And still going broke.

That means that the over 2 1/2 trillion dollars worth of government bonds that the SS Trust Fund holds would have to be cashed in to pay current and near future SS recipients.

And as it's privatized, future liabilities will be reduced by a larger amount.

 

[bripat9643]

The cost of privatizing Social Security would be in the trillions. To phase out the Trust Fund, you have to pay back the money it's owed.

That's not necessarily true. We could allow the private option of having 1/3 of the money paid in as it's being paid in to be directed to investments avenues chosen by those individuals. In exchange, they give up 1/3 of their future expected benefits. The difference is the made up by putting less in the government bonds (which is why big government advocates don't like this idea).

Even a partial defined contribution model cuts trillions from the obligation.

The problem seems to be that the folks on the left think the population is too dumb to manage their own finances. They never take into account that one of the contributing factors to personal mismanagement of money is that the government is always there to buy some votes and save their bacon.

We are currently right at the point of paying current beneficiaries with current year payroll tax revenues plus drawing on some of the annual interest on the Trust Fund bonds;

as soon as you cut payroll taxes by any significant amount, to let people invest that, SS will have to start drawing down the principal in the Trust Fund. That has to come out of the general fund - your income taxes, etc. - it would be the equivalent of starting a new huge federal spending program,

while we already have 1/2 to 1 trillion in deficits and no one wants to raise taxes.

There is no money in the Trust Fund, numskull. It comes out of the general fund immediately.

 

[bripat9643]

That's not necessarily true. We could allow the private option of having 1/3 of the money paid in as it's being paid in to be directed to investments avenues chosen by those individuals. In exchange, they give up 1/3 of their future expected benefits. The difference is the made up by putting less in the government bonds (which is why big government advocates don't like this idea).

Even a partial defined contribution model cuts trillions from the obligation.

The problem seems to be that the folks on the left think the population is too dumb to manage their own finances. They never take into account that one of the contributing factors to personal mismanagement of money is that the government is always there to buy some votes and save their bacon.

We are currently right at the point of paying current beneficiaries with current year payroll tax revenues plus drawing on some of the annual interest on the Trust Fund bonds;

as soon as you cut payroll taxes by any significant amount, to let people invest that, SS will have to start drawing down the principal in the Trust Fund. That has to come out of the general fund - your income taxes, etc. - it would be the equivalent of starting a new huge federal spending program,

while we already have 1/2 to 1 trillion in deficits and no one wants to raise taxes.

Then the program will have to start cashing in more of the bonds they hold instead of deferring them (which it currently does) and the government will have to get more efficient at spending and collecting enough revenue (which doesn't have to include tax rate increases).

The only way to "cash in" those bonds is to raise taxes on you and me. Don't you get it? Where do you imagine the money to pay off the bonds is going to come from?

 

[Avorysuds]

Bush's "solution" was to privatize Social Security. Let the rubes hand their money over to Wall Street so Wall Street can invest it in those wonderful CDOs and CDSs. BWA-HA-HA-HA!

Moving Social Security from defined benefit to defined contribution is a Wall Street predatory wet dream.


The best and simplest solution is to index the eligibility age to 9 percent of the population. Raise the eligibilty age to 70 now, then index to 9 percent of the population going forward.


When Social Security was enacted, only 5.4% of the American population was over 65. When Medicare was added in 1964, 9 percent of the population was over 65. Today, more than 13 percent of Americans are over 65. A larger and larger portion drawing from the fund with less and less contributing is an unsustainable track.

We are living longer than our ancestors. We should be working longer. Common sense.

Horrible idea. So bad that it's already failing, so the question is why do the same thing and hope for a different result?

The better way is to not have SS, or even create an account that people pay into that is nothing more than a savings account with a set % gain. The Governments role can be to create the documentation and even sell these giant accounts to banks that have to guarantee the money. When you die any left overs go to family or act as inheritance.

No one ever pays for anyone else, the Government can't touch it and it's up the the individual to invest in themselves.

There is fair and unfair, the unfair system is currently failing. What happens if life expectancy drops in the next 50 years but you bumped the age up... and far less people are collecting? How is that fair to pay in and never receive?

 

[MikeK]

SS should have been made an option for each tax payer.

It wouldn't work.

Too many workers would opt to have the money in their hands rather than deducted from their paychecks, some because they simply won't believe something as good as Social Security will ever be there for them (as we are seeing now), others because they simply don't believe they will grow old (believe it -- it's true). The System is perfect the way it is and it should be thought of as a mandatory insurance policy against abject poverty in old age.

 

[MikeK]

SS should have been made an option for each tax payer.

And then when tens of millions of Americans get old and have squandared every penny they have, or had their retirement funds ripped off by frauds on Wall Street, what then?

Die!

Millions have squandered and gained before and after SS. Everyone should have a choice to opt in or out. I didn't say it should be trashed. It may be the right choice for some but it's not that difficult to obtain a higher rate of return through low risk ventures.

And it's not impossible to be wiped out, even in low-risk ventures. Do you know how many thought-to-be bullet-proof 401-k plans were wiped out by Bush's assault on the Economy? I have a neighbor whom you should hear from. If it weren't for his son he would be homeless.

As for those who were wiped out before Social Security, you should hear my late parents' horror tales about the Great Depression.

 

[MikeK]

There never was a Social Security "trust fund". Politicians can't stand to see money lying around so they stole from social security from the beginning. LBJ made it official when he ordered FICA taxes to be placed in the general fund.

As has been fully explained many times, the Social Security Trust Fund is not a "locked box" full of money. It is a government I.O.U. And if things ever get so bad government cannot satisfy that monthly obligation we'll have a lot more than that to worry about. Such as the second American revolution, which will result in a transition to communism.