Is this really a common attitude? I thought the conservative view is that people should be allowed to take responsibility for their own actions, not be prevented from doing so in order to protect those who harm themselves by making bad decisions.
But you can’t really say that we have a 16 trillion debt but don’t really have a trust fund. Either we have a trust fund and the debt, or don’t really have the trust fund, but “only” have a 11 trillion debt.
No they didn’t. Unless their entire career only took place over a decade they were still well in the black. Again, over an entire working lifetime there has never been a period when Social Security beats the market. It never happened and it never will.
True.
False.
I’m not sure what you are possibly looking for with this. Who is a “legitimate economist”? Every financial professional and every financial services firm (minus a few quacks, possibly) would agree that 401ks and IRAs are a good way to invest because of the tax savings and possibility for compound interest tax free, either up front or on the back end with IRAs.
Do you seriously dispute that these are effective tools for savings? The entire financial industry is wrong on this?
Then force them. I’d prefer not to, and let people sleep in the bed that they made, but fine. Send the 15% into forced 401ks instead of Social Security and people will retire with millions instead of IOUs.
This just isn’t true. Most of the money lost in the recent downturn has already been made back. Over along enough timeline (such as a 30 year career) the market is always returning a positive return.
..and then it will be welfare for old people.
Benefits are determined using Average Indexed Monthly Earnings so removing the cap alone would not create a solvent situation. You would have to limit benefits as well.
It already is in part welfare for old people. Benefits are determined based on average monthly earning, but on a three tiered system where the highest earners only get back 15% marginal dollars on each extra dollar of monthly income, versus 90% for the lowest earners. The government is paying out less than they take in from these dollars. Having more of these high-income dollars taxable by SS will help the coffers of SS even without changing the payout scale. High income earners will see their benefits increase, but not enough to make it back during their retirement on average.
So it would still be welfare for old people, just balanced on the backs of the upper and upper middle class rather than just the upper middle class like it is today.
Hmmm…OK.
We have no trust “fund.” The “Social Security trust fund” is actually not a fund, but an arrangement by which 2.7 trillion dollars is owed to future recipients out of future tax receipts.
In addition to that debt, we also owe another 13+ trillion for other stuff.
All the money some people think they are “paying into the social security trust fund” is actually going to current spending.
What really makes this “long term” argument hard to swallow is that your retirement starts at a moment in time and if your retirement was November 1, 1932, your savings were almost entirely gone. There was no chance to recover, you were just screwed and eating out of dumpsters.
No you can’t liquidate your part of the social security trust fund and frankly most of the social security liability is not covered by the funds in the trust fund. But the government securities in the SS trust fund are just as much assets in the hands of the SS trust fund as they would be in the hands of a pension or a bank.
Lets say a working lifetime is 30 years. If you started working in 1920, your portfolio probably didn’t outperform treasuries.
Yeah, we tried (its what we had before social security) that and we ended up with extreme poverty among the elderly. Better to force the grasshoppers to save during the summer even if the ants think they can do a better job of saving because at the end of the day, we’re not going to let the grasshoppers starve to death if we can help it.
A couple of problems. Like I said before, the social security trust fund does not hold enough assets to fulfill its current obligations. We can’t move to that sort of system until we fully fund our current obligations unless you think we can default on our current obligations to remake social security in your image.
ALSO Eyeballing the returns on the S&P between 1950 and 1980, the S&P seems to be growing at about 3%. Look at the interest rates paid on 10 year treasuries over the same period of time and I’m not sure that the S&P is outperforming treasuries.
Besides, the point of social security isn’t to maximize returns on a risk adjusted basis. It is to provide a minimum floor income during retirement.
Yeah but that return isn’t always better than the treasury rate.
Besides most of the money lost in the downturn has NOT be made back. The stock market may have recovered but the people who benefitted from the recovery are not the same people who suffered the losses. You have entire populations of people who will never recover because they can’t afford to risk any more capital (and frankly those are the lucky ones).
Not in any more than it is now.
No you wouldn’t. You would get some people getting $50,000 social security checks every month during retirement but the social security formula works so that they would have to live to be 100 before they net a positive return on their social security contributions.
So is all that money that China is paying for US treasuries, the SS trust fund is buying treasuries, the proceeds of which are being spent currently. Are those treasuries held by China also worthless, or only the ones held by the national pension plan?
I do not think treasuries are currently worthless. There may come a point when we have to decide whether or not to pay China or pay SS beneficiaries, and I am confident that if we are faced with that choice, we will choose China (to prevent a default) and reduce benefits to SS recipients.
Does that help clarify why there’s no “fund”? In other words, there is not a stash of hard assets. I have money in treasuries now, but it’s outta there way before we collapse (if I get my timing right). SS is hopelessly linked to the US debt because it is not some sort of separate “fund.”
We have already spent every dime paid in to “fund” SS.
I don’t think anyone here believes there is an untouched SS fund, I’m not sure why you keep repeating that.
Being that we must borrow from somewhere to pay for gov’t obligations and programs, why is it not better to borrow from ourselves (SS) instead of borrowing from foreign governments?
We’ve also spent every dime that the Chinese have paid for their treasuries too. So?
Are you saying that the social security obligations are not fully funded or that the treasuries held in the social security trust fund might not be honored when they become due?
BTW, if America ever gets close to defaulting on its debt during your lifetime, then there will be no safe place for your money. Modern civilization would have effectively collapsed. America didn’t default on treasuries during the Great Depression, and things got very bad for a very long time. I think you’re probably being a bit hysterical if you are concerned about a treasury default.
I don’t think it’s quite as simple as that. Social Security is a promise to pay, and a 401k is a promise not to tax.
If the government can pass a law that says, say, Social Security benefits are now 80% of what they used to be, they can also pass a law that says all 401k withdrawals are subject to an additional 20% tax. The end result is the same. Given the power to tax, actual accounts of money that you own are subject to the approval of the state.
The only thing that’s preventing them from doing either is political disapproval. Right now, there’s pretty strong political opposition to increased taxes, but, then, we haven’t hit the wall as far as debt and spending go. In another 20 or 30 years, when this is all projected to come to a head, which will be the stronger political group: old people starving because they can’t get their Social Security, or the (relatively) wealthy people who actually saved a bunch in 401ks?
I’m always a little surprised and amused at the certainty with which folk hold various positions WRT various aspects of the SS program.
The program has been repeatedly tweaked throughout its 75+ year history. Any number of folk have received vastly more in benefits than they ever contributed, starting with the very first old age recipients who paid in not a penny.
The vast majority of such historical tweaks have been to expand coverage. I see no reason why the program could not be tweaked to restrict/reduce coverage - in fact, I consider such adjustments desirable. Legally and philosophically, I see no difficulty with current or prospective beneficiaries having their benefits changed. Folk never seem to have an objection to benefits being increased - I find it curious that they think there is some reason they couldn’t be ajusted in the other direction.
Whatever SS benefits are, one thing they clearly are NOT is a personal savings/retirement account. A lot of folk talk as tho they have a legal right to some specific benefits level at some time certain in the future. I’m not sure where that comes from. You may have an expectation or desire for such benefits, but you will receive only what the gov’t determines you are entitled to receive and any point in time.
One (of many) things SS clearly IS, is an income redistribution program. It is unfortunate so few people openly admit as much.
It seems pretty clear than any number of relatively minor tweaks could resolve most SS problems: increase the withholding rate; eliminate the max salary subject to withholding; increase age of eligibility; reduce child’s SSI recipients; tighten up disability eligibility; impose means test/set-offs of oldage recipients; etc. What I see as the problem is that each such change would affect a specific group of people, and each of these groups feels that their position should be sacrosanct, while everyone else should sacrifice.
I also find it amusing that the people whom I hear complain the most about SS issues, are folk who are the least likely to be dependent on those benefits. 09 figures showed that 35% of aged recipients relied on SS for 90+% of their income, and for 64% SS bens were 50+% of income. I’m nowhere near the 1%, but it does not offend me to have taxes withheld to provide a safety net for folk who have been less successful and/or fortunate than me. Obviously, many people feel differently.
Another thing that seldom gets mentioned is the statistical analysis that shows the vast majority of old age recipients receive considerably more than they personally contributed, even including for interest.
I’m confident that I will receive some SS benefits as some point in the future, which will be a welcome supplement to my pension, savings, etc. But even if I were to receive nothing - or greatly less than I currently expect, I’d be fine.
Oh - and as to the OP, IMO the “cut” was an inexcusable stunt.
Becuase in the case of social security, it is not necessary.
It is social insurance. Much of the wealth redistribution that occurs with social security is similar to the redictribution that occurs when your house catches fire but mine does not and the insurance comapny (that we both use) gives you part of my premium to pay for your losses.