3 Reasons to Fix Social Security Now!

[jonny5]

1. Social Security is broke.

Social Security is already paying out more in benefits than it brings in via payroll taxes; it makes up the difference by drawing on surpluses built up over the past decades. According to the most recent report by Social Security’s trustees, those surpluses will be totally gone in 2033 and unless taxes get jacked up, the system will only be able to pay 75 percent of current benefits.

2. Social Security is a terrible investment.

People think of Social Security as a retirement account, but it yields a terrible rate of return. Researchers at the liberal Urban Institute estimate that virtually all people retiring in 2010 or later will receive far less in benefits than they paid into the system via payroll taxes. Nobody would stand for that in a voluntary retirement plan.

3. Social Security Screws Younger Workers.

Not only will younger workers get smaller benefits – if they get any benefits at all – we have no control over our contributions. What's more, we can’t will savings or unpaid benefits to heirs. The result is less disposable income now – and in retirement.

3 Reasons to Fix Social Security Now! - Reason.com

Common sense article from Reason. Really this is a broken record. Social Security has been headed downhill for decades, with the date where it will be unable to pay benefits closely approaching. It already takes in less than it pays out, and is cashing in bonds from the Treasury, which is also taking in less than it pays out. Lowering the payroll tax a couple years ago made it worse. And Im ignoring the fact that its unconstitutional in the first place.

Regardless, whenever someone tries to fix it, Democrats cry foul and use it as a wedge issue. Yet they propose little of their own. So, what solutions are you liberals willing to accept that conservatives also agree with?

Raise the tax rate?
Raise the retirement age?
Privatize all or a portion?
Let people opt out?
Means test and make it a welfare program?

 

[blaxshep]

3 Reasons to Fix Social Security Now! - Reason.com

Common sense article from Reason. Really this is a broken record. Social Security has been headed downhill for decades, with the date where it will be unable to pay benefits closely approaching. It already takes in less than it pays out, and is cashing in bonds from the Treasury, which is also taking in less than it pays out. Lowering the payroll tax a couple years ago made it worse. And Im ignoring the fact that its unconstitutional in the first place.

Regardless, whenever someone tries to fix it, Democrats cry foul and use it as a wedge issue. Yet they propose little of their own. So, what solutions are you liberals willing to accept that conservatives also agree with?

Raise the tax rate?
Raise the retirement age?
Privatize all or a portion?
Let people opt out?
Means test and make it a welfare program?

That is obvious the liberal solution is to raise the tax rate and the debt limit; problem solved.

 

[CalGun]

Social Security was not suppose to be an investment but a retirement supplement so the poor didn't go into an age they could not work and be broke and dependent on children. There are some modifications needed, some will include more taxes, and others won't but to keep it working it does need change.

I think, instead of means testing, we need to go the other way. What I mean is we gradually eliminate the cap so the wealthy are paying more into the system, but at a certain date our elaborate computer systems should enable us to track everyone's deposits and a percentage - maybe 75% - would belong to them with 25% providing for those who don't meet a minimum standard. I also think there needs to be a means of taxing one's investment income for social security since a person living off dividends, rents and interest don't pay into it at all - like me.

 

[Fisher]

I would lower the retirement age with reduced benefits to 55 or 60 raise the retirement age for full benefits to 73 or 75 with some kind of formula so that if you are low wage worker you clear the market place and get closer to your full retirement benefits but if you are a higher income worker you have to work until the full retirement age to draw your max benefits. I would be okay with making it means tested just so long as there is some safety gap that would prevent someone from pouring a mint into a trust the benefits them and calling that not income. I would be okay with allowing younger workers to divert up to 20% into a government run investment program (no T Rowe Price fingers and fees) but if the person dies, the account defaults back into the system if there is no surviving spouse or underage children to draw them down.

 

[jonny5]

That is obvious the liberal solution is to raise the tax rate and the debt limit; problem solved.

Yeah, but thats a non stater, so Im interested in what they WOULD accept.

 

[blaxshep]

Yeah, but thats a non stater, so Im interested in what they WOULD accept.

That is the only thing they will accept, that is why the Republican party has had to resort to obstructionism.

 

[Blue_State]

I would like a program that allows you to pay into the SS or you put it into a private investment that you can use under the same rules as SS. Allow choice. The return on the government program stinks. I would be far better off in the private sector. I would also be willing to pay a percentage of my gains on that account back to the FED SS program...50 / 50 split. So if I put $100,000 during my life time, and those investments were valued at $500,000 at retirement, I would be willing to take a 200000 hit in taxes. (500,000 - 100,000) x 50% = 200,000 to the government.

 

[specklebang]

Isn't that what a 401K or IRA does?

I would like a program that allows you to pay into the SS or you put it into a private investment that you can use under the same rules as SS. Allow choice. The return on the government program stinks. I would be far better off in the private sector. I would also be willing to pay a percentage of my gains on that account back to the FED SS program...50 / 50 split. So if I put $100,000 during my life time, and those investments were valued at $500,000 at retirement, I would be willing to take a 200000 hit in taxes. (500,000 - 100,000) x 50% = 200,000 to the government.

 

[Blue_State]

Isn't that what a 401K or IRA does?

I can't direct the SS money taken from my check to a 401K or IRA. That would be the difference. I am talking about not paying SS to the US government in your monthly check. Instead, you direct it to the private investment of your choosing. Also, you would pay the taxes upon taking it out.

 

[specklebang]

I've posted my thoughts on this elsewhere but I'll summarize them here in hopes of a real conversation instead of the usual Liber Bad Conservative Good (or vice-versa) that most of these conversations become.

I would like to see a Mandatory Savings Account by individual. 10% of your income and a 5% match by the employer. Each time $1K is accumulated, you get a T-Bill of apporopriate length to the retirement age, which I suggest should be 70. After enough is accumulated, a percentage can be allocated to a S&P500 fund or similar. When you are ready to retire, you may request a distribution commensurate with your actuarial chart. You pay taxes as you withdraw the money and you pay an annual administration fee. If you die, you may leave your MSA to your heirs MSA accounts.

Like I said, this is the short version. I'll see how it goes from here. Will we discuss SS or will we just be doing the usual name-calling? Inquiring minds etc......

 

[jonny5]

That is the only thing they will accept, that is why the Republican party has had to resort to obstructionism.

No, thats because they are afraid to have the debate.So instead they do nothing. Instead they need to be bold, put a plan together WITH DEMOCRATS and then pass it. Just like happened with immigration. It may not pass but it opens the conversation.

 

[jonny5]

I've posted my thoughts on this elsewhere but I'll summarize them here in hopes of a real conversation instead of the usual Liber Bad Conservative Good (or vice-versa) that most of these conversations become.

I would like to see a Mandatory Savings Account by individual. 10% of your income and a 5% match by the employer. Each time $1K is accumulated, you get a T-Bill of apporopriate length to the retirement age, which I suggest should be 70. After enough is accumulated, a percentage can be allocated to a S&P500 fund or similar. When you are ready to retire, you may request a distribution commensurate with your actuarial chart. You pay taxes as you withdraw the money and you pay an annual administration fee. If you die, you may leave your MSA to your heirs MSA accounts.

Like I said, this is the short version. I'll see how it goes from here. Will we discuss SS or will we just be doing the usual name-calling? Inquiring minds etc......

That seems reasonable. Its basically privatization though, which has always been a problem for liberals.

 

[blaxshep]

No, thats because they are afraid to have the debate.So instead they do nothing. Instead they need to be bold, put a plan together WITH DEMOCRATS and then pass it. Just like happened with immigration. It may not pass but it opens the conversation.

As far as I am concerned there is nothing to discuss or debate. Reduce the government to the 18 enumerated powers or obstruct any and everything they do or say.

 

[specklebang]

It is reasonable and even doable. Don't fall into the trap of this kind of nonsense "there is nothing to discuss or debate. Reduce the government to the 18 enumerated powers or obstruct any and everything they do or say.". I'm trying to discuss something reasonable. It is a form of privatization that might appeal to both parties. I don't propose eliminating SS, just modifying it to be more logical. I think that's what the OP was inviting.

That seems reasonable. Its basically privatization though, which has always been a problem for liberals.

 

[rabbitcaebannog]

First and foremost, keep it as a defined benefit and none of this contribution bologna! Raise the cap!

 

[Vern]

Social Security is broke.
Social Security is already paying out more in benefits than it brings in via payroll taxes; it makes up the difference by drawing on surpluses built up over the past decades.

Oh, another “Social Security is broke” editorial. Mmmm, even the ‘editorial’ mentions its using its ‘surpluses’ . If it has assets, then its not broke. Why do libertarian ‘editorials’ feel the need to pander and lie to a gullible base like conservative ‘editorials’? Oh, I know, we spent those assets and people who don’t depend on SSN don’t want to pay it back. If someone borrowed money from you and then determined you could cut back on your living standard so he didn’t have to pay you back, you’ d be pretty pissed. Why is this different?

And its not an entitlement program. You are entitled to nothing if you’ve paid nothing in. That should be the first sign the ‘editorial’ is really not trying to inform in an honest or intelligent manner.

2. Social Security is a terrible investment.
People think of Social Security as a retirement account, but it yields a terrible rate of return

Oh my, SSN pays a terrible rate of return. I guess that’s true if you pretend its only a retirement account. Its also an insurance account. If I become disabled, I can collect disability. My children and wife are beneficiaries if I die. Oh, that’s assuming I’ve paid in enough to qualify. (geez even my children and wife are not entitled to anything from it if I haven’t paid into it)

 

[Oceandan]

Let's examine some facts about SS. I won't bore you with the history, only to say when created, the retirement age was 65 and the life expectancy was lower. The program was designed with the hope a citizen would never gain benefits.

In 2010, the program took in less than it paid out. There has been much discussion about a "lock box". What most don't know and this includes many politicians, is when ss had a surplus ie: the program took in more than it paid, by law "government bonds" were purchased. The part most don't know is these aren't "government bonds" per se. They have no intrinsic value and they aren't marketable. It's not even an IOU. It's simply a "legal right" to deficit spend until those "instruments" are exhausted. What's it all mean? The program is and has been "broke" since well before 2010. Another tidbit most don't realize is through the magic of "federal government bookkeeping" the surpluses that weren't really surpluses were used to "offset" the reported federal deficits. Happy happy happy! (sorry I digress)

Poo poo it all you want. One thing Paul Ryan was spot on during the campaign, is the time to act has actually passed. Over the next nearly two decades, as the baby boomers reach retirement age and begin drawing benefits, the program is mathematically impossible to continue. SS payments along with medicare/medicaid and soon to be obamacare, will lead directly to financial catastrophe.

If, today, not three years from now, but today, 7/15/2013, you made no changes to those already 55 or older, allowed everyone else to partially opt out, raised the retirement age in stages to 70, and means tested, you could partially save the program. How many of you, realistically, from either side of the aisle, think any of those are possible?

I'm an optimist, so I don't mean to sound so pessimistic. I guess in this case I'm more a realist. The possibility to "save" this program is gone. The only questions remaining, are, how long before the payments end, and what's the reaction when that happens.

 

[washunut]

I've posted my thoughts on this elsewhere but I'll summarize them here in hopes of a real conversation instead of the usual Liber Bad Conservative Good (or vice-versa) that most of these conversations become.

I would like to see a Mandatory Savings Account by individual. 10% of your income and a 5% match by the employer. Each time $1K is accumulated, you get a T-Bill of apporopriate length to the retirement age, which I suggest should be 70. After enough is accumulated, a percentage can be allocated to a S&P500 fund or similar. When you are ready to retire, you may request a distribution commensurate with your actuarial chart. You pay taxes as you withdraw the money and you pay an annual administration fee. If you die, you may leave your MSA to your heirs MSA accounts.

Like I said, this is the short version. I'll see how it goes from here. Will we discuss SS or will we just be doing the usual name-calling? Inquiring minds etc......

My sense is that is not a bad starting point. It would not seem to work for the bottom quartile or the top 5%. The problem for the lowest quartile is that this group can never realistically save enough for a retirement out of poverty. For the top, perhaps the percentage should go down after something like $1 million.

Overall good thought. Not sure why people would be against something along these lines.

 

[specklebang]

I agree it would be capped and after you met that cap, you were out of the system. When you retire, you'll have these funds as a stipend wether you need it or not. As for the bottom, just as we do with disability cases. We subsidize them because its the humane thing to do.

My sense is that is not a bad starting point. It would not seem to work for the bottom quartile or the top 5%. The problem for the lowest quartile is that this group can never realistically save enough for a retirement out of poverty. For the top, perhaps the percentage should go down after something like $1 million.

Overall good thought. Not sure why people would be against something along these lines.

 

[jonny5]

As far as I am concerned there is nothing to discuss or debate. Reduce the government to the 18 enumerated powers or obstruct any and everything they do or say.

But you arent the only one in the country. Im with you on simply abandoning the US, but until thats possible, we can at least fix the drivers of our high taxes.

 

[Blue_State]

I've posted my thoughts on this elsewhere but I'll summarize them here in hopes of a real conversation instead of the usual Liber Bad Conservative Good (or vice-versa) that most of these conversations become.

I would like to see a Mandatory Savings Account by individual. 10% of your income and a 5% match by the employer. Each time $1K is accumulated, you get a T-Bill of apporopriate length to the retirement age, which I suggest should be 70. After enough is accumulated, a percentage can be allocated to a S&P500 fund or similar. When you are ready to retire, you may request a distribution commensurate with your actuarial chart. You pay taxes as you withdraw the money and you pay an annual administration fee. If you die, you may leave your MSA to your heirs MSA accounts.

Like I said, this is the short version. I'll see how it goes from here. Will we discuss SS or will we just be doing the usual name-calling? Inquiring minds etc......

This isn't far away from where I am thinking.

I think the one thing you and I can agree on is that we want to privatize, or even privatize a portion of SS. I don't mind having to let the government have a portion, but the part that is more interesting to me is the ability to invest in a fund.

 

[Vern]

I would like to see a Mandatory Savings Account by individual. ......

That seems reasonable. Its basically privatization though, which has always been a problem for liberals.

Overall good thought. Not sure why people would be against something along these lines.

Mandatory?!?!? If I put that in front of Healthcare, cons (as instructed) scream “unconstitutional”. If I put that in front of “sonogram” or “vaginal exam” cons cheer and fire their AK 47s in the air.

 

[WhyNotWhyNot]

My sense is that is not a bad starting point. It would not seem to work for the bottom quartile or the top 5%. The problem for the lowest quartile is that this group can never realistically save enough for a retirement out of poverty. For the top, perhaps the percentage should go down after something like $1 million.

Overall good thought. Not sure why people would be against something along these lines.

The problem with the various "privatization" schemes (and I admit I like this one better than most) is that there is a very high barrier blocking the transition. SS is a ponsi scheme - it depends upon income from current workers to pay retiree benefits. It is pure cash flow from income to pay out. If we move to a scheme where some or all of the income can be diverted into some other retirement fund, then the ss income will fall but the ss benefits demand will not fall to match until all the current beneficiaries and those who are approaching retirement die (30 years at least). Consequently, we are trapped by the original design of the system into making it serve as best as possible. I expect it will ultimately become something like managing a business bankruptcy - a broad spreading of short payments to creditors - choosing bad over very bad.

 

[haymarket]

Raise the tax rate?
Raise the retirement age?
Privatize all or a portion?
Let people opt out?
Means test and make it a welfare program?

Pop the cap on the taxable limit.
Freeze benefit levels for ten years.

Mission accomplished.

 

[specklebang]

Using very loose figures, I'd say that until you had enough in your account invested with 100% safety, you couldn't invest speculatively. After a cut-off, you could buy simple index funds but not individual stocks. By the time you get to enough safety for stocks, you would exit the program.

Its important not to lose sight of the reality that some accounts will need a simple subsidy at the end. Lets say the "minimum MSA draw" would be pegged at $1K per month. This could replace a lot of other programs and yes, minimum is poor but you were always poor so its not a punitive situation.

For more agressive investments, we already have vehicles like IRAs.





funds

This isn't far away from where I am thinking.

I think the one thing you and I can agree on is that we want to privatize, or even privatize a portion of SS. I don't mind having to let the government have a portion, but the part that is more interesting to me is the ability to invest in a fund.