OK, I cringe at starting another offtopic thread, but this one should be of interest to many on this group.
According to an article in my morning paper, the dire warnings about Social Security going broke in a few decades are based on the economy growing at a rate of 1.6% a year. For the last 75 years, the economy, according to the article, has grown at an average rate of 3.6%.
The economics professor quoted in the article is of the opinion that the "crisis" has been manufactured by the mutual funds and other investment types to tout privatizing of Social Security. That's a big pile of money they'd love to get their hands on.
Please don't let this degenerate into yet another philosophy harangue. The only question to be debated is whether the article is accurate or not.
It appears to me that even if the average rate is halved, it's about 10% higher (1.8% vs 1.6%) than the crisis estimates used.
Regardless of what that article says about the growth of the economy, the real reason for the crisis is the number of workers per retiree. Back in the 30s, it was close to 300 workers paying for the SS of one retiree. Today, it's at 3 and heading to 2 with a bullet.
That tells me one thing - I need to pump up my 401k and other savings, because I'm not counting on SS.
And most of the money paid in has been stolen. Whoops. Pols don't steal. They simply take and use for other purposes.
By the way, when in the '30s was it 300 to 1?
SS was never intended, or, rather, was not originally intended, as a complete retirement program. It was to be a supplement for those who couldn't make enough money to save on their own, but was never intended to be all the income anyone had. Of course, now it often is and in some areas, for some people, it is more than adequate.
Charlie Self In a New Hampshire Jewelry store: "Ears pierced while you wait."
Well, based on past history and your whining tag line, you're probably not reading unbiased sources. However, if you care to check, did the article talk about projections on benefit growth?
That, and demographics, is the problem. Only someone with an irresponsible axe to grind would neglect to mention them. Judge your article accordingly.
Ideology is what destroys, not the weapons ideologues wield. How many were killed by machete in Rwanda?
It's supposed to be a pay as you go program, but for at least 3 decades, excess is collected and put in the "trust" fund. Since hiding cash for long periods of time is a good way to see it evaporate through inflation, the govmint "invests" the trust fund money in govmint IOU's to be paid back with a small interest rate in the future using govmint profits (more taxes for future generations). Meanwhile, the current excess SS taxes are spent on us, now. And all this by folks who talk about all the things we must do "for the children". Worst of all, the debt in this and 40 or so other "trust" funds is counted as an asset rather than a liability! Some estimates place the amount of these "assets" at $40 _trillion_ in the next3 or 4 decades. Makes the national debt look miniscule.
It was more like 30-something to one, and the average lifespan at the time was 65, meaning the program didn't have to pay out for long.
The sad part is many otherwise intelligent folks think SS will take care of them and forego any planning/savings on their own.
If you want to go through an interesting exercise, look for your next statement from SS listing the years and amounts you have paid in. Then apply a reasonable return of say 6% for the first year, add the next years contribution, apply 6%, etc. You'll discover you could retire at 55 with about double the money SS will pay you, and never reduce the current value. Compound interest is wonderful! And if we had all done this on our own, not only would we be better off, but wouldn't be leaving trillions of debt to be paid by future generations.
All this is why I put 10% of gross away as untouchable starting about 30 years ago and have my kids doing the same. Talk about a safety net...
As a republican, I am against raising taxes. But that's because of a complete lack of control on politicians parts. I can't see FEDERAL funding a lot of what the fed funds now. Most things should be handled by the state\local taxes. Let the taxes be collected at the state\local level where the politicians are close enough for me to slap!
Example, we're pumping more into education than we have in US history and the children are getting dumber by the minute. That's why we homeschool. The average VA locality (with funds from local\state\and fed) spends well over $6000 per year to teach per pupil. I homeschool my daughter for $900 per year and have better results. She's 6 years old, is writing cursive better than I, is adding double digit number (46+87 and such that require her to carry over a number) and can name you the top Bush administration officials! She also doesn't like Al Gore, she says he's talks mean (even children can pick up on deconstructive speech). Is this because of curriculum, no. It's because I'm INVOLVED in her education. Most parents are more concerned about that new Suburban, boat or second house than they are about actually going to find out WHO their child's teachers are and WHAT their child needs help with. In addition, any attempt to enforce discipline in school is met by the ACLU and the aforementioned parents. It seems these parents don't want anyone doing a better job than they are. What happened to responsibility?
What does this mean? We're throwing money at a problem that money won't fix.
There IS NO SS savings account, so the whole "No Money by 2035" is misleading at best.
As is the "National Debt". National Debt is a forecast based primarily on FUTURE payments and entitlements. National debt is composed of different types of debt: debt by federal, state and local governments, international debt, and house-hold, business, and financial sector debt plus un-funded social security, Medicare and government pension contingent liabilities. It includes what we are GOING TO owe without mentioning how much we will have generated in the same time frame! Remember the PROJECTED $Trillion + surplus we had that was PROJECTED in a vacuum without consideration of the inevitable 10-12 year recession? If I rated my own debt on what I was going to spend in the next 60 years, Then I'd have a Personal debt that would invite suicide. However, if I rated my PROJECTED surplus on the rates of increase in pay I had during my BEST years, I'll be dining with Bill Gates this evening! I doubt that will happen.
The Nation Deficit is only relative when referrer to as a percentage of GDP. GDP has more than quad-drupled in the last 20 years> With out that info, a $550 million deficit seems outrageous on it's face. But when viewed next to the GDP and deficit from 20 years ago, it's actually quite benign comparatively. Regardless of the National debt being BIG as a dollar figure, as a percentage of what we produce, it's less than MANY< MANY< MANY instances in our history. It is no where NEAR what it was in 1946 (a 1.28 ration, debt was 269 and GNP was 210). It then when down over the next ~35 years and worked up to another peak ( a ratio of .72) during '94-'96. Then started down again.
Lower federal income taxes and raise the cap for SS. You'll encourage the economy and increase government revenues. Revenue is made when money is SPENT by consumers (be it business or consumer), not when money is taken by the government. If most people would sit down and realize just how many taxes are paid when they BUY something, they'd realize why. You INJECT money into the economic cycle.
I still don't see how anyone can possibly think that the government is even QUALIFIED to spend money effectively! Too much overhead and pork (on BOTH side of the aisle).
That's it for me, I've ranted myself out...
SS and Medicare increases, fine. I have no problem with that.
Tue, Mar 2, 2004, 9:49am (EST-3) snipped-for-privacy@fastmail.fm (Larry=A0Blanchard) claims: OK, I cringe
From what I understand, once a congressman/woman or senator gets in office, even if for just one term, they're covered, with a healthy income for life (I was told 100% of their salary, but don't know if that's true or not - given their past records tho, probably is). Same with health care. So, they really aren't concerned about it, they've already got theirs.
A politician's number one priority is getting into office. Once in, their number one priority is staying in office.
JOAT To preserve liberty, it is essential that the whole body of the people always possess arms, and be taught alike, especially when young, how to use them.
- Richard Henry Lee, 1788
Life just ain't life without good music. - JOAT Web Page Update 28 Feb 2004. Some tunes I like.
I don't know if 5 years was the expected lifetime, but I had a paternal aunt who started drawing the minimum (about 88 bucks a month, IIRC) some time in the late '50s, after paying in for maybe 6-8 years, and drew it until she died at about 88, so 23 years. Not much money, but one helluva lot more than she'd paid in. Her husband was a design machinist who didn't opt for SS until he was 70 because his boss needed his work. I think he kept working until he was about
80, but only part-time, as back then SS limited earnings. That may have been until he was 70, now I think of it. He couldn't earn over xxx bucks per month or he'd lose his SS check, or at least part of it.
It's still over-complicated all to hell. I start paying Medicare part A or B (one is free, one is paid, and I'll be dipped if I can ever recall which). And I haven't got a clue as to what it covers. You'd think going to the site would help, but it's more confusing than asking my granddaughter about it. At 13 she knows it all and is not ashamed to tell you what it all is. Of course, she's wrong 99.97% of the time, but what the hell...
Drives her aunt up the wall, but the granddaughter is a clone of the aunt, at least in that respect. In the 8th grade, there was NOTHING she didn't know. She doesn't remember that today.
Charlie Self "There is nothing wrong with America that cannot be cured with what is right in America." William J. Clinton
Charly got it right on the actual policy. It was/is meant as a supplemental in old age. As far as theft, well... There is no SS fund. All the money goes into the general fund kinda like petty cash account. Fletis hits spot on with the # of years one was expected to draw on it before they were off to join the choir invisible (shamelessly stolen from Monty) The fix? well it the 3s bear any resemblance to reality, I see about 5 ways. 1. Raise taxes. 2. Reduce benefits. 3. Raise retirement age.
Remove the death tax - completely. 5. Triple at least, limits on IRA contributions
You know, if I could get in for one term and retire with a living pension I'd be all for the in and out approach. No way I'd want to spend any more time hanging around those types than was absolutely necessary.
This wasn't the case until about a dozen years ago. The Social Security fund was off-budget, meaning that the politicians couldn't touch it. It had accumulated a huge surplus in anticipation of the baby boomer retirement bulge that's beginning now. However, the national debt became so severe in the 80s that the Congress passed a law putting SS on the budget so the pols could tap into the excess funds. That surplus has now been drawn down to the point where they talk about a crisis--but it was their own fault. Social Security IMHO should be removed from the budget. For too many people it is the prime source of income in retirement: the poor, the self-employed, those without company benefits, etc. Yes, it's easy to say that private investment returns more, but millions can't afford to invest.
But why not eliminate Social Security and allow people to invest the money they save? Because it's a welfare program. Like everyone else I'll draw out all of my investment and interest in less than 5 years. If I draw SS for more than that, it's welfare. Dirty word in these parts, eh? I'd rather have at least some income sheltered from the greedheads running private investments, and from the fluctuations in the market brought on by short-term profit seekers. And when your invested funds run out, you're left with nothing. At least SS gives you an income you can count on.
Congress knows that touching SS is a political third rail. It's what Jefferson said (in another context) was like holding a wolf by the tail. You don't like it, but you don't dare let go.
Taxes have consistently gone up on SS. Benefits also have risen, but supposedly as a COLA, which I have a feeling reduces the raise in taxes considerably. Retirement age has risen, though probably not enough. I'm not at all sure what the death tax has to do with SS. While larger limits on IRAs make sense for many, the people SS is actually aimed at will get no benefit at all. If you haven't got the money to save one way, you don't have enough to save another way.
Charlie Self "There is nothing wrong with America that cannot be cured with what is right in America." William J. Clinton
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