What's the big deal with Social Security?

[Malodorous]

@Voyager

As for borrowing, the money gets put into government bonds, which is by definition the government borrowing from the system in a sense. I suppose that it could have been put into stocks from the start, but I suspect that this didn’t seem like such a good idea 4 years after the 1929 crash. I think the real problem, if I got it right, is that borrowing from SS makes the actual deficit seem smaller.

The system didn’t start running a surplus until the 80’s, when they upped the amount people had to pay in to compensate for the eventual Boomer retirement. The decision to invest in Treasury Bonds was made then by, interestingly, a young(er) Alan Greenspan, who was head of the commision appointed to help make the necessary changes.

[Dangerosa]

@Ignatz

papaw, I bolded the phrase above. If you wait until the age when you get full SS, there is no limit to the amount you can earn without having the SS benefit reduced. And the amount of the SS keeps going up as long as you work and pay into the system.

No, but SS benefits become TAXABLE very quickly nowadays - which has the same effect.

On the other hand, I personally would rather earn a 1 and pay .30 in taxes on it, than not earn the $1. Its possible in taxes to actually end up in the hole, but it isn’t usual.

[Dangerosa]

@ParentalAdvisory

An index fund should prevent that, not that an index fund couldn’t go belly up though. But if all the companies in an index fund are going belly up, there are bigger problems in the world.

The real problem with this is that the time it takes for an index fund to recover (like from the dot com crash) can be several years. If you are dependent on the principle giving you a return, and it doesn’t create that return, you have to dig into the principle. That can create quite an issue for someone who needs the money today to live and won’t live the ten years it may take to recover - if it would recover while decrementing the principle.

I know several people who were darn close to retiring (early) when the dot com bubble burst - and most of them are just now darn close to retiring again. And a few who had to go back to work when their investments took a dive.

[DanBlather]

@ParentalAdvisory

An index fund should prevent that, not that an index fund couldn’t go belly up though. But if all the companies in an index fund are going belly up, there are bigger problems in the world.

So are you going to require people to put their money in an index fund?

[Cyberhwk]

@Cyberhwk

Can someone else elaborate on this. Is it just the “I’m sick of working and want to retire NOW” opinion that makes supporting raising the retirement age such a death wish politically or is there some actual logistical problems with it too?

AHEM…

[tonedef]

So does the USA have a superanuation or anything similar?
What other countries have this?

[Frank]

@Cyberhwk

AHEM…

But they are increasing the age at which you can collect full benefits. Gradually.

Someone born in 1942 can collect full benefits at 65+10 months, in 1957 at 66+6, in 1960 at 67. I expect that trend to continue.

[gigi]

@Kimstu

And yes, the official retirement age is going up; my generation will be entitled to full SS benefits only at age 67 (though we could take reduced benefits at 65), and will get more money if we delay retirement till 70. I don’t really see a problem with that. As life expectancy increases, and as average education levels increase, thus delaying more people’s entry into the full-time workforce until their early- to mid-20s instead of their late teens, why shouldn’t we expect to delay retirement?

But even folks in their 50s are worried about not being hirable. Even those willing and able to work longer may not be able to get jobs, at least at the level they had been. But yeah, you’re right that if the years of retirement stay constant but we stay alive longer, we would have to wait to receive the same length of benefits as our predecessors. It’s just not clear that we can support ourselves in the meantime.

[Clothahump]

Given that SS is nothing more than a giant Ponzi scheme, the only viable solution is to dismantle it and give the money back. I’d be happy as a clam in mud if I got even 50% of my money back. That’s more than I will get out of SS when I retire, and I can do a damn sight better job of investing it for my retirement than the government can.

[BrainGlutton]

@Clothahump

Given that SS is nothing more than a giant Ponzi scheme . . .

Bear in mind that the Bush plan to privatize Social Security:

1. Would not have affected the projected shortfall of SS tax receipts or had any net effect on the overall solvency of the system.

2. Was never anything but a cynical scheme to funnel tax money to Wall Street. See “The Trillion-Dollar Hustle,” by Thomas Frank, Harper’s, January 2002 (here, but only if you’re a subscriber); and “The 4.7 Trillion Dollar Pyramid,” by Michael Hudson, Harper’s, April 2005.

The “Ponzi scheme” you speak of is honest by comparison – in fact, is honest, period.