Do you think starving, homeless people will just stay in their cardboard boxes and die in silence? They have a nasty habit of dragging the well fed people out into the street and lynching them. It’s been a while since we had real class warfare in America, but you have a outlined a nostalgic way of reviving the custom.
robertliguori , without really thinking it out, said;
Really? You’re planning on starving the very people who provided for you 'till you reached your present exhalted position? And likely still do? And please don’t give me that tired old “Father and Mother provided for me” story. You are the product of a community, my friend.
No one has mentioned that Debaser is also paying a marginal federal income tax rate of at least 28% on FICA. All factors being equal, when he starts collecting SS benefits he will also pay a marginal tax rate on that income.
My divorced mother died at age 62, after working most of those years and paying social security. Her heirs (my sister and I) were not entitled to any benefits because we were no longer minors.
Yes. However, I do not feel that taking my money to feed and shelter someone is in the sake of the public good.
Millions for defense but not one cent for tribute! Or, take the amount of money that you would be contributing to keep the masses from lynching us, and invest in a method of self-protection. More violent, yes, but paying the protection money is almost always safer. That don’t make it right.
So what? The oppertunities that I am or am not presented with are due to the actions of others, true. But I am soley responsible for my acting on said oppertunities. Therefore, I should get all the credit and all the blame for what I do. And I don’t want to starve anyone. I would prefer people to starve than to feed themselves with my money.
Well, robertliguori, reason obviously isn’t going to work. That leaves us with force. Not exactly force, but that deduction you have no say about.
Actually your replies point to the very reason we need a plan like social security. I assume you’re young. I think your opinion may change a little as you age.
Word;
There’s a lot of good common sense talk here about investment. I wonder how many youngsters would actually invest the amount of their SS tax if they had the option, and not spend it on cool cars and trips and such? I never even really thought about retirement until I was well into my 40’s.
And puh-leeze, don’t try to bs this old fart. We pretty much all want it now.
in the beginning, it would be. You arent saying we should immediately cease SS payments to seniors?
**
I’ll be the first to concede that it might help the economy by encouraging investment. However, the relative oversupply of capital entailed would mean that investments would get nowhere near the around 9% they get right now, let alone 12%. So as a retirement vehicle, they wouldnt be nearly as attractive.
**
The flip side of this is that there would be less consumer spending, since the money would be concentrated in fewer hands. This could actually contract the economy, and would definitely exacerbate the reductions in capital returns caused by increased capital supply.
In addition, there would be economic dislocations, as workers shifted from jobs in, say, medicine and nursing, to, say, upscale housing construction. This will hurt the economy temporarily as folks are retrained and managers grow to trust them.
That said, I am FOR the plan to decrease the size of social security or perhaps eliminate it. I’m just saying that there are a lot of negative factors proponents dismiss, and we had better do it gradually to spread out the negative effects over time.
—It was, in origin, a tax on wage-earners for the specific purpose of funding old-age pension-style income for people who expected to have to go on working until they could work no more.—
Yep. And, whatever we think of the current plan, there’s good reason to think that SS engineered a rather drastic change in the distribution of wealth among groups. It virtually wiped out the sort of malingering elderly poverty we had before, and brought the elderly way up from the bottom of the heap in the wealth distribution. Of course, it could have all been a coincidence.
—I’ll be the first to concede that it might help the economy by encouraging investment. However, the relative oversupply of capital entailed would mean that investments would get nowhere near the around 9% they get right now, let alone 12%.—
Thank goodness there are people that realize this. I couldn’t believe it when people a ways back were arguing that stocks were an astronomically better investment than bonds… and never mentioned that if everyone followed this advice and switched over to stocks, that this might alter the equation from then on.
The historic rates of return for various asset classes may be found at many places on the Web. For one example see here; scroll down to page 10. For those who don’t click on the link, average returns for 1926-1996 were:
Small company stocks 19.02%
Large company stocks 12.50%
Long-term government bonds 5.31%
Intermediate government bonds 5.16%
Inflation 3.22%
So a return for a diverse portfolio of stocks, corporate bonds, and government bonds which would be about 7 points above inflation is very much in line with historical averages. That’s why I picked it.
I don’t appreciate being associated with an organization which has been convicted of fraud because I make a historically valid assumption.
No. I understand that SS benefits will increase with inflation. They are based on earnings, and earnings increase with inflation. However, inflation and increased earnings will also increase Debaser’s contributions. Inflation will effect both sides of the equation equally. This is why I am expressing everything in real (2003) dollars, by assuming a constant salary and only consdering average private investment growth over and above inflation.
If that is your concern, it can be addressed less intrusively by requiring people to save a percentage of their income, but allowing them to control and invest their own assets. (And yes, I understand that a lengthy transition will be necessary to pay current and near-future beneficiaries.)
Well, I’m 30 and since I was 22 I’ve put as much as I was allowed into 401k and threw at least another 10% of my take-home pay into other investments. Presumably, I’m on the conservative end, but I’ve always thought of the money I put into SS as just another income tax that I’ll never see a direct benefit from.
An opt-out system makes perfect sense to me. If you opt out, you should of course never expect any benefits in return, but that would be a-ok with a lot of people. Of course, the question of how to pay benefits to all those who have already put money in the system comes up if the number of participants drops sharply, but if social security is truly capable of sustaining itself, the amount that those people have put in should have grown at rates greater than inflation, and they should be able to get back an amount comparable to what they put in, adjusted for inflation (minus some overhead) without any real hardship on the program. If this isn’t the case, then to me that says the system isn’t sustaining itself.
But your error (as far as I can see it) is that you’re attempting to be fair by calculating everything in 2003 dollars, then throwing it all out the window by comparing it to a figure ($1611/mo that he is supposed to receive in SS benefits when he retires) which is expressed in 2042 dollars. Am I right?
Wait, I confused myself. I retract that last post.
ntucker
You are indeed on the conservative, and minority, end for one so young. At least in my experience. I have known forward thinking youngsters, but they have been few. For one thing, many workers in their 20’s simply can’t afford, or don’t have the will to invest so heavily.
People like me. If I had had the SS deduction available as descretionary monies, I know I would’ve spent a lot of it on my kids for short-term needs, and on pleasureable persuits.
I’ll have enough from my retirement fund and Social Security to do ok when I retire, but believe me, without SS there’s no way. And I’m not going to give up what I’ve earned so that some of the younger set can be richer.
BTW; nobody lives well on SS benefits alone.
What about the idea I’ve heard of where they leave SS alone, separate it from the general fund, and administer it much as you guys are talking about investing your “shares” if you were to opt out? Didn’t Clinton (?) talk about this?
I must have misunderstood you; I thought you were in favor of putting more money in the pockets of young wage earners at the expense of retirees. How are you going to continue paying benefits to retirees without taking withholding from young wage earners? I have yet to see an explanation of how you can pay benefits without taking it from young wage earners. One pocket or the other; you can’t have it both ways.
That’s enough of a reason. There are more of us than there are of you, and we vote. Get used to it.
We used to hear more about “privatizing” SS a few years ago, before the stock market tanked. Remember how (justifiably) upset the Enron employees were when they found that the collapse of that company completely wiped out their retirement fund?
BTW, SS is not much to live on. If you have planned ahead and you own your home free and clear, and have no particular wish to travel or do much else besides pay your utility and food bills, you can scrape by, but that’s about it.
yup, we’re in quite the pickle.
You phase it out. No more payouts to anyone who is presently, say, 25 or so. But they have to continue withholding until everybody else (those 26 and older) dies. Benefits would still need to be adjusted to keep pace with the COL, but eventually the total paid out would decrease and so would withholding. Fifty years or so and the thing resolves itself.
No problem!
Hey, I’m 26 remember! Lets make that no payouts to anyone who is presently 26 or younger, not 25! 
I agree, mangeorge that this would be a good way to fix it, althought it would take 50 years.
Some people have been questioning the amount of returns that can be expected from the stock market. While getting my finance degree, we usually used 12% as the expected rate of return for a long term investment timeline.
jklann is the only person to come up with a cite for this and his numbers look like mine:
And, for those who refer the the enron scandal and recent fall of the markets with these numbers being invalid, I would like to point out that the timeline for the above numbers is 1926 - 1996. This includes the great depression, and black monday as well as any other bad times the market had during that period.
If you are investing aggressively (100% stocks) for a 41 year timeline, you can expect to earn 12%. This isn’t my opinion, it is the correct number. This number includes the fact that there are variations in the market.
I also specifically said “index funds” because they are cheap (no management fees to cut that 12% down) and they are extremely well diversified. So, I wouldn’t be able to lose all my money by a company collapsing like Enron. No one company would be able to affect my portfolio at all if I own 5,000 stocks, which is possible with an index fund.