I disagree that it’s a Ponzi scheme. A few adjustments to the tax rate and it’s on solid ground. When you compare the financial state of seniors today vs. 75 years ago, I don’t think many of us want to go back. I wouldn’t characterize SS as leftist, it certainly is mainstream after all these years. In fact, many Tea Partiers who think that government is the spawn of Satan would be up in arms if their SS was cut off.
So what do the senior advocacy groups that you do approve of hold as political beliefs?
There I have to disagree a little; they aren’t consistently leftist. On crime for example they are pro gun control (which can be considered left of center) but heavily involved in victims rights and getting close to “boil them in oil” for fraud - more far right wing than even say the Republican Party. If you do read through their formal policy statements, and even more so read a couple of their publications, it becomes pretty clear that they are indeed promoting whats best for us older folks. The issue becomes when what is best for us may not be whats best for society as a whole.
I kind of glanced over the subject in Post #5 but if you really want to evaluate their worth to you and the more general tact they take, you really do need to grab a copy of their magazine and even more so the newspaper-like “bulletin”. That will give you the best feel for what they are in your eyes.
Oh, please…I got my first letter from them when I was 35! Finally figured out they must have bought a subscriber list from a quilting magazine I subscribed to, and they assumed a demographic that wasn’t accurate. Now that I’m 58, they seem to only send me offers three times a year. And I’ve never been one to resent my age, so it has never bothered me. Anyone who wants to give me a discount is welcome to…but I haven’t joined yet.
I don’t consider SS to be a bad thing, in theory, but in reality it is absolutely a Ponzi scheme. Previous investors (old timers) are paid from incoming capital from new investors (younguns). There are no “profits” to generate true investment returns for the old timers. When youguns outnumber or equal old timers, all is good (assuming stable or increasing salaries and employment stats for the youguns). When old timers outnumber youngsters, or younsters salaries drop, or unemployment stays high for an extended period, we got trouble. “Adjustments to the tax rate” is just uping the ante for the youngsters, just as a Ponzi scheme does to new investors as it grows.
How else would you organize a single-payer retirement system, especially one with guaranteed minimum benefits and ones that are relatively generous, across the board, relative to what each retiree paid in? SS remains stable despite investment fluctuations and while good, careful investors might be able to beat its return, the vast majority would do more poorly even if the investments were mandated rather than optional.
So it’s always going to be a “socialist” model of taxpayers funding the benefits. I don’t think it was ever intended to be a true “pension” scheme, at least not after the first decade or so. That it’s presented as a pension is something of a palatable lie, IMVHO, allowing recipients to believe they “earned” it as they would have in a company pension plan or with investments, instead of it being partially prepaid elder welfare.
I haven’t checked for a few years, but most SS retirees take back their entire contribution within a couple of years, and most take back far more than onservatively invested savings would have provided… and there is no limit on how long a retiree can draw it, Medicare and all cost-of-living increases.
“Ponzi” can only be applied if you fall for the shuck that it’s a pension scheme being somehow mismanaged to hide the truth or enrich some operator… and neither is true. Except to the contingent of elders who want to believe it’s not “welfare.”
Did you miss the part where I said “I don’t consider SS to be a bad thing…”? You did quote that part, after all.
Not at all. The “operator” need not be the one getting rich for it to qualify as a Ponzi scheme. It merely has to pay the original investors from contributions made by new investors. SS does not make enough in profit (from investing in US Bonds) to pay the promised benefits. From Wikipedia:
The deception in the current system is that SS can continue to pay the same (or better) lifetime benefits to the old timers in perpetuity. In reality, more and more new money will be required to foot the bills. That can only come through an increase in the younger population (which can’t happen forever), increasingly higher cost to the taxpayers, or both. But don’t take my word for it, look at this chart (PDF) of SS tax rates since it’s inception. The SS tax rate started at 2% in 1937 and is now at 12.4%. Medicare was added in 1966 with an additional tax of .07%. It is now at 2.9%. In addition, the maximum taxable earnings amount has increased from $3,000 in 1937 (which equates to roughly $50,500when adjusted to today) to a current $118,500. So, both the tax rate AND the amount of income taxed has increased dramatically in order to maintain the system. At the same time, benefits have gone way down. The maximum monthly benefit for a woman who retired at age 62 in 1957 was $938 (another PDF). Adjusted to 2015 numbers, that is the equivalent of almost $8,000. The actual 2009 (latest figures available) monthly benefit for the same criteria is $1760.
The system, as operating today, wil continue to deliver less and less benefit while requiring more and more income.
Read Doctor Jackson’s post just above. Do you still think this?
It’s not just a few adjustments that are needed. The entire concept of the SS program is fundamentally flawed and needs to be constantly shifting to give less benefits and take in more revenue via higher taxes to stay afloat. It was set up this way on purpose. It’s a ponzi scheme.
I don’t know. I don’t have to know of any. I don’t need to be a chef to know I don’t want to take a bite of a shit sandwich.
Is this a serious question? The obvious answer is with a system that takes in money and then pays out what it takes in, after investing the money in the meantime. This is the way that every private investment works. Bonds, Stocks, Money Markets, whatever.
This is completely false. Do you have any evidence of this claim? The “vast majority” of investors do more than 1% return. That’s beating SS. Just buying an index fund would get you 10% or so. (Or 6% or so after inflation). That’s way better than SS.
You don’t have to be “good” or “careful” to buy an index fund and wait forty years and be a millionaire.
There’s far more to the question (and my post) than just the theoreticals, or how some relatively small minority does/can do it now. The realities of managing a… 250 million? participant investment system over decades and in perpetuity would completely change the face of investing, both in the US and globally. A 6-10% return over the long, long haul is not likely in that scenario; the sheer plenitude of investment money would pull the rates and return down to something much lower.
The effects on goverment finance, given how SS funds are presently used, would also be… immense and possibly detrimental in many ways.
You can’t simply scale up the present rather limited scale of individual investment and savings to some almost unimaginably massive system. At least, not and expect things like returns, market stability, government economics etc. to remain the same.
I don’t have any particular answers or solutions here - but I am keenly aware that the whole system can be described in several almost completely contrarian ways, and trying to argue the issue is as much a matter of choosing which view of reality you want to support as throwing numbers and concepts around.
Could our national “pension” system be better? Hell, yes. It never should have become what it is, down to using the system number as a seekret ID. But it’s a long, long term program and changes should be made over decades… which is pretty much what’s being done, with moving retirement ages up by generation and trying to encourage less total reliance on its benefits.
Even if the system didn’t invest the money at all it would still guarantee a return of zero. That’s better than what young people today are going to get out of Social Security. Their return is likely to be negative.
I think the system will be revamped beyond recognition by the time today’s under-30 crowd reaches retirement age. The other thing I find frustrating about SS discussions is that too many of them assume it’s some kind of straight-line progression, and as we’ve already weathered a few “final crisis” eras I’d mildly suggest we will weather the coming ones. Probably not by tweaking the existing system, though. Nor by going to anything like “privatized” pensions, on an individual or group basis.
I think this must vary by state. Here in WA, our AAA didn’t offer its own insurance, but looked for the best deal then got us a discount on top of that. We ended up with a local insurance company with the same coverage for half of what we were paying Farmers.
Yes, they seem to have tunnel vision when it comes to their constituency, which given their reason d’etre is not to surprising. If a bill was put forward that confiscated all assets of people under 60, and gave them to people over 65, I have a feeling they would but their backing behind it.
On the other hand I took a look at Crafter Man’s proposed alternative to see if they were less political and what I found made News Max seem fair and unbiased. So no help there.
Don’t go thinking they tracked you down or anything. I’ve been getting membership invitations in the mail for years now and I won’t turn 50 for a couple more decades.
