This tends toward being a GQ, but as politics may be involved, I’ve placed it here.
Much as I hate to admit it to myself, the date when I become a card-carrying old fart is inching ever closer. Thus I read with some disquiet a recent column by economic writer Scott Burns. He’s written a little allegory, about a couple named Sam and Sue :rolleyes: that sez the critical date for possible insolvency of the US social security system is considerably earlier than around 2040, as has been mentioned in most of the press reports I’ve read:
Which happens to be just about the time I’ll be considering retirement. The reasoning is that somewhere between those dates, Social Security and Medicare will begin to pay out more than it is taking in through employment taxes, and the IOUs will come due.
Due to a tendency toward debauchery in my youth, I got a late start building retirements funds, so social security is likely to make up the majority of my post-retirement income. Hence my concern at this news.
Question for debate: Given the above, am I gonna have to live on cat food when I retire?
Bonus questions: 1) Dopes this mean a big jump in SS withholding may be in the offing? 2) Is the deficit spending of the current administration beinging a day of reckoning for Social Security closer?
For this very reason, I intend to claim my SS retirement at the youngest allowable age, regardless of the reduction in monthly benefits. Half a loaf is better than none. Retirement? Bah! I am going to work until I drop in harness. And I will still outlive you all.
Well, if you are worried that the U.S. government is going to start defaulting on its financial obligations, I think the least of our worries will be Social Security! No, it won’t be growing broke in 10 years. These are mainly just scare tactics by those who have something to gain by seeing social security privatized.
On the other hand, this does not mean that we shouldn’t be planning for the future by running government responsibly now. Is giving tax cuts primarily to the wealthy and therein producing deficits out as far as the eye can see “running government responsibily”? Well, you be the judge!
The problem isn’t that SS is going to run out of money. The problem is that SS never made sense in the first place.
The entire idea of SS is a foolish scam. The government takes my money now to pay for retirees only to pay me back using funds from workers 40 years from now paying and making 0% interest along the way. The system was a failure the day it started.
Bush and the republicans need to get huge federal budget surpluses this year, next year, and in the next 10 -20 years, to make sure that our government, and social security is completely solvent.
Instead of “borrowing” from the social security trust fund, it needs to be kept separate, and we need to build up the actual savings and real assets in our social security account.
It’s more-or-less *Pay as You Go[i/]. Today’s contributions pay today’s benefits. By comparison, private pension insurance companies keep and invest today’s contributions to eventually pay benefits to today’s contributors. Current retirees are paid from money they had contributed long ago.
The current contribution rate produces more money than the current payout rate. The difference is the “SS Surplus”. It is loaned to the federal government, but that loan is not shown as a deficit in the federal budget. (IMHO it should be shown that way.) The total amount loaned to the government is the “SS Trust Fund.”
Over the next few years, as more people retire, the annual SS Surplus will decline and eventually turn into an annual deficit. Eventually, that annual deficit will use up the entire SS Trust Fund.
What does this mean to us?
As the annual SS surplus decreases, the Federal government will have to make up the lost income by cutting spending or raising taxes.
At some point, SS will have to raise the contribution rate or reduce the benefits.
Medicare has similar problems to SS. So, adjustments to benefits and contributions will increase the pain of the adjustment to SS.
Good work jshore and duckster. Wouldn’t it be nice if folk would look first to readily available data instead of bullshit op-eds? People really don’t realize how flat our wrong they are and how stupid they sound when they say stuff like “I don’t expect to see a penny of what I’ve paid into SS.” And it is really interesting how T-bills (equivalent) held by the govt are considered less secure than T-bills held by the public - generally considered among the safest of all investments.
Briefly, with response to december’s points.
2. At some point, SS will have to raise the contribution rate or reduce the benefits.
Exactly right. And what is the problem with that? The 70 year history of SS has seen any number of changes in contribution and entitlement.
3. Medicare has similar problems to SS. So, adjustments to benefits and contributions will increase the pain of the adjustment to SS.
I disagree only to the extent that I considr medicare’s problems far greater and more imminent that SS.
The unfortunate aspect is that this is not an imminent threat. As such, it is not politically advantageous for any politician to go out on a limb today. Instead, wait a while and it will become someone else’s problem. Entirely consistent with the short-term focus prevalent in much of business and government today.
I often think of an approaching meteor such as in Star Trek. If we act now, it just needs a little nudge to put it on the right course. But if we wait…
The conclusions of SoT Snow, SoHHS Thompson, SoL Chao, et al. are nothing more than political goobley-goop
I have a challenge: Can just one national political figure take their head out of their ass & touch the 3rd rail? You want the attention of the younger demographic? Cut the Sleepless Summer tours and I’m hip and wanna go on MTV crap and call a spade a spade. It’s time to start referring to SSI for what it really is: A shell game, a fraud & a ponzi scheme.
Nah. It’s not a shell game or a fraud.
But neither is it simply an individual retirement/pension system.
An honest assessment of the system would acknowledge that it is yet another tax among many, with many laudable goals - including income redistribution.
There are naysayers to the social security system, with a few representative posts here.
So rather than just complain about it, how would you reform it, even eliminate it? Since SSI is a pay as you go system, how do you change to self-pension systems, and support SSI for all those who wish to stay and paid into the system, and plan on drawing benefits from it at retirement? Even SSI were eliminated tomorrow and everyone be required to have their own retirement programs, how do you fund all those current beneficaries until they die? For those who paid into SSI, not foreced to have theie own programs, how do you fund their entitlements when they retire and demand their benefits?
Yes, it is interesting, because it illustrates an important principle of finance–an investment is only “safe” to the extent that it represents a claim on somebody else’s assets. Corporations are not allowed to hold their own bonds in their pension funds–and indeed, it would be meaningless for them to do so, since they already have full claim on their own assets.
For me to hold a government bond is safe. For Verizon to hold a government bond is safe. For the government to hold a Verizon bond is safe. For Verizon to hold a Verizon bond, or for the government to hold a government bond, is not safe–rather, it’s a meaningless paper transaction.
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Yes, but the only argument for Social Security is that it offers Security, unlike private investments to which you have to remember to contribute, and which can go belly up if you don’t diversify. If your benefits depend on the whim of politicians, and can be cut or postponed at any time, where is the Security?**