Should Social Security be Strengthened or Weakened?

[NolanVoyd]

It needs to be FIXED !
And everyone should be on board with stopping the Fraud and Fleecing of the US People !

He is dumb in some cases and flat out lying in others.

He hasn't found any waste fraud or abuse.

You.people are being played

 

[gbg3]

Yes, mandatory and locked.

The swedish model is interesting.

• Mandatory investments by the individual.
• Mandatory investgments by the employer.
• The individual has a wide variety of (IIRC something over 100) where they can direct their investments funds, if the individual doesn't make a choice the government will invest for them in a fairly conservative account.
• The government guarantees a basic income and housing assistance if the investment returns don't last.

I support individual investment accounts, but the question has always been how to transition. But people respond with "well phase it in", but they can never articulate a reasonable method for still paying benefits and what to do with various age groups who have paid into the current system as a factor or paying for the transition model. A model that might take 50-70 years.

WW

I was just reading this about the Swedish model, earlier today. It is interesting.

MSN

www.msn.com

 

[gbg3]

Okay, but, the flip side of that is to now compare what they pay in to the benefit they draw out.

And the fact that there is a max benefit is exactly why there is a cap on the amount of earnings taxed. To disconnect those two would change the whole premise of SS.

 

[gbg3]

My employer contributes exactly $0 to my 401K.

So while 401Ks are "sponsored" by the employer, that does not mean they fund the 401K.

WW

I wonder if that is the norm though. In my career, every employer I had did contribute to my 401k. And most every employee opted to put in at least as much into their own 401k as they would be matched on. They'd often put in quite a bit more - but few ignored the advantage of getting that matching.

 

[gbg3]

I remember when company pensions began to move from a defined benefit model to a defined contribution model. Many were somewhat grandfathered that change. I think that happened with one of my kids who was well into their career but a long way from retirement age. I think they get a guaranteed benefit amount from the first part of that career but then it shifted to a defined contribution model for the upcoming years - so a hybrid of the two for that "middle" age group. In the same company, the oldest just got their defined benefit pension unchanged and the youngest just got the defined contribution option. Something similar happened in big companies throughout this country during those years, about a decade or so ago.

Maybe SS could turn into the hybrid version.

 

[WorldWatcher]

I wonder if that is the norm though. In my career, every employer I had did contribute to my 401k. And most every employee opted to put in at least as much into their own 401k as they would be matched on. They'd often put in quite a bit more - but few ignored the advantage of getting that matching.

In all honesty. It's not. The number of employers that provide some type of match is really high, something over 90% of employers offering 401Ks do some type of match. Most of those do a dollar for dollar match up to a percentage cap (typically 6%).

I need to correct something I previously said. I said my employer doesn't match my 401K contribution which is technically true. However I have a mandatory percentage of my pay that goes into a pension fund and the employer does match there. I'm grandfathered into the old system, younger workers do get some 401K matching, but it fairly small under a hybrid (401Ks/Smaller Pension) system.

Two major problems though:

• A lot of small businesses don't even offer a 401K. There are 10's of millions of small business and only about 24% offer 401Ks.
• Secondly is in the area of participation rates where people either elect NOT to contribute to a 401K or are not contributing anywhere near enough.

WW
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Myths about the 401(k): Why only 24% of small businesses offer them

(This column originally appeared in The Inquirer) Only 24% of small businesses offered a 401(k) retirement plan for their employees, according to a recent study from ShareBuilder, a retirement plan provider. The survey, put together by retirement plan provider ShareBuilder, looked at 500 small busin

www.linkedin.com

 

[cpwill]

I wonder if that is the norm though. In my career, every employer I had did contribute to my 401k. And most every employee opted to put in at least as much into their own 401k as they would be matched on. They'd often put in quite a bit more - but few ignored the advantage of getting that matching.

The average employer match is between 4 and 5 percent. As I recall, I thought @WorldWatcher was a State Employee at some point? Welcome correction on that if I am off base.

 

[cpwill]

In all honesty. It's not. The number of employers that provide some type of match is really high, something over 90% of employers offering 401Ks do some type of match. Most of those do a dollar for dollar match up to a percentage cap (typically 6%).

I need to correct something I previously said. I said my employer doesn't match my 401K contribution which is technically true. However I have a mandatory percentage of my pay that goes into a pension fund and the employer does match there. I'm grandfathered into the old system, younger workers do get some 401K matching, but it fairly small under a hybrid (401Ks/Smaller Pension) system.

Two major problems though:

• A lot of small businesses don't even offer a 401K. There are 10's of millions of small business and only about 24% offer 401Ks.
• Secondly is in the area of participation rates where people either elect NOT to contribute to a 401K or are not contributing anywhere near enough.

Worth noting, though, is that if a Small Business cannot even support a 401K.... they are nowhere near capable of supporting a Pension. I think about half have failed within the first 5 years - the percentage of small businesses who are going to survive and be strong enough in not 10, 15, but 50 years hence to be paying out a pension is going to be small.

Agreed that a higher portion of folks should be choosing to contribute - especially when it comes to getting the match. We do a poor job of educating in this area, and our culture prioritizes current consumption to a self-destructive degree.

Again, which is why I think we would benefit from a national mandated program that could - over time - replace traditional OASI outlays.

 

[WorldWatcher]

The average employer match is between 4 and 5 percent. As I recall, I thought @WorldWatcher was a State Employee at some point? Welcome correction on that if I am off base.

School system. That is considered a Local Education Entity, but we are in the State retirement system.

WW

 

[Dans La Lune]

So, um... maybe we should revisit the question as to whether 401ks and privatization are a good replacement for Social Security. Eh, @cpwill?

 

[WorldWatcher]

So, um... maybe we should revisit the question as to whether 401ks and privatization are a good replacement for Social Security. Eh, @cpwill?

Not only is it a good replacement (which I think they can be if mandatory and locked).

The bigger question is how to fund and transition from one to the other in terms of:

• Revenue
• Benefits
• Debt
• What does the transition look like for people in their 20s, 30s, 40s, 50s, 60s, and those already on SS

WW

 

[cpwill]

So, um... maybe we should revisit the question as to whether 401ks and privatization are a good replacement for Social Security. Eh, @cpwill?

Nope

Would you like to run the comparative numbers between the amounts poured into social security for a median worker v say, if the same amounts had been put in TSP-style SP 500 Index Funds, with a retirement date of COB on Monday April 7th?

 

[WorldWatcher]

Nope

Would you like to run the comparative numbers between the amounts poured into social security for a median worker v say, if the same amounts had been put in TSP-style SP 500 Index Funds, with a retirement date of COB on Monday April 7th?

Which is fine for one person.

Now predict the impact of 163 Million Americans dumping Trillions into the Stock/Bond/Equities markets.

WW

 

[NolanVoyd]

Nope

Would you like to run the comparative numbers between the amounts poured into social security for a median worker v say, if the same amounts had been put in TSP-style SP 500 Index Funds, with a retirement date of COB on Monday April 7th?

Social security isn't a personal retirement investment account. Not meant to be. Not designed to be.

You can and should invest, but social security is seperate, designed to be seperate. Insulated from the ups and downs of the market.

 

[WorldWatcher]

Social security isn't a personal retirement investment account. Not meant to be. Not designed to be.

You can and should invest, but social security is seperate, designed to be seperate. Insulated from the ups and downs of the market.

Just for clarity.

People think of personal retirement accounts as market driven and therefore retirement income is subject to market volitility.

However Defined Contribution plans can be converted to Defined Benefit plans paying fixed monthly revenue**

WW
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** Such conversions typically include COLA options. A smaller initial amount, but one that can increase over time with COLA adjustments. When purchasing annuniy conversions typicially there are some various options:

• The "Guarantee Period" during which benefits are paid to designated beneficiaries (typically 5, 10, or 15 year periods). The term of the Guarantee Period impacts monthly amount.
• A "COLA" option, which impacts monthly amount.
• A "Survivor Benefits" option for a spouse, which impacts monthly amount.

W

 

[cpwill]

Social security isn't a personal retirement investment account. Not meant to be. Not designed to be.

You can and should invest, but social security is seperate, designed to be seperate. Insulated from the ups and downs of the market.

Hello Nolan. I think you are continuing to confuse a thing's structure with its purpose.

 

[cpwill]

Which is fine for one person.

Now predict the impact of 163 Million Americans dumping Trillions into the Stock/Bond/Equities markets.

Hello WW!

The short answer is, I think we can look to other countries that have tried things like this to see what they experienced. Pulling up post 45:

So when we talk about Joe as an individual, that is one thing. When we talk about 163 MILLION Joe's waiving around their investment checks (hypothetically speaking, actually it would be electronically through deposits in their TSP), what would the impact be:

So, let me caveat what follows by admitting that I'm not an econometrician, and have to lean in these circumstances on rough math and looking at other countries who have done similar. Australia, for example "privatized" their version of Social Security similar-ish to what I am proposing back in 1992; I feel like the 30+ years since is probably enough for us to collect data. Other countries' experiences can be looked at as well, especially when looking for pitfalls to avoid.

• For Example, Australia allowed individuals to withdraw large sums to purchase housing, but then did not count housing against their wealth when determining whether or not to provide additional income support. This create a perverse incentive for Australians to over-invest in luxury housing going into retirement in order to artificially lower their account balances and gain renewed government support. Mandatory rates (or at least caps) of withdrawal combined with ONLY scoring the withdrawal rate allowed when determining whether a recipient qualifies for additional income support (as in the proposal I've offered) would avoid that.

• In terms of the impact that such a huge infusion of case would have on the investment markes (Dow, S&P, Bonds, Real Estate, etc.) going foward?
• What would be the impact on EXISTING investments in stocks, bonds, and real estate? Isn't it likely that such an infusion of investment cash (well over $1 TRILLION dollars per year) is going to tank existing markets meaning that those relying on CURRENT investments would see the value of what they have now - to put it kindly - tank. Not only would that impact existing workers, but the impact on retirees that rely on those 401K style investments for income to live on.

Hm, answering the second first: dollars pouring in to bid on equities will push those prices upwards. I think it is fairly straight forward that we will see an increase in the valuation of current equity holdings, which would increase the wealth of current 401K / IRA owners, as well as the health of our struggling pension funds.

In terms of long term impacts; I would look to Australia to answer that question. When they implemented their system, they had a one-time jump in their stock market of 40.5%, followed by a return to normal growth rates.

 

[cpwill]

Not only is it a good replacement (which I think they can be if mandatory and locked).

The bigger question is how to fund and transition from one to the other in terms of:

• Revenue
• Benefits
• Debt
• What does the transition look like for people in their 20s, 30s, 40s, 50s, 60s, and those already on SS

WW

Those are indeed the trillion dollar questions.

 

[NolanVoyd]

Hello Nolan. I think you are continuing to confuse a thing's structure with its purpose.

Nonsense.

It is you that is continuing to confuse the purpose.

It was intentionally designed to NOT be a personal investment account. Intentionally. Because that is not the purpose

 

[cpwill]

Nonsense.

It is you that is continuing to confuse the purpose.

On the contrary - it's purpose is to provide a measure of security against poverty in old age.

It's Telos - it's purpose - is not to be a particular structure.

 

[NolanVoyd]

On the contrary - it's purpose is to provide a measure of security against poverty in old age.

It's Telos - it's purpose - is not to be a particular structure.

It was designed with a structure seperate from the vagaries of the market intentionally. Because it's purpose is to be a fail safe against poverty in old age in the event that other investments fail, you will always have social security. If it was just another investment it would not be a fail safe.

It's design was intentional, based on its purpose

 

[cpwill]

It was designed with a structure seperate from the vagaries of the market intentionally. Because it's purpose is to be a fail safe against poverty in old age in the event that other investments fail, you will always have social security. If it was just another investment it would not be a fail safe.

It's design was intentional, based on its purpose

as I have already pointed out to you, this is ahistorical, and not supported by evidence from the time.

 

[NolanVoyd]

as I have already pointed out to you, this is ahistorical, and not supported by evidence from the time.

As I have already pointed out to you the only way you can say that is to ignore the historical context in which itvwas created and designed.

 

[cpwill]

As I have already pointed out to you the only way you can say that is to ignore the historical context in which itvwas created and designed.

And as I pointed out to you, it is your position that actually depends on ignoring the full historical context (and depends on a post hoc fallacy), which is why the words of the actual people involved at the time do not support your claims.

 

[What if...?]

Yes, because the rich aren't paying their fair share. Why do righties always want to tax the poor and middle class?

Money buys a lot of manipulation below the level of cognition.

So they get tax cuts and get to write off all their “living”expenses while we lose itemization in exchange for a temporary increase in standard deviations that ended this year, didn’t it?

They always “need” more of the costs of running a country transferred to those below them.

It’s cheaper to buy politicians and propaganda.

So they just do that.