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Social Security idea - what do you think?

Lift the ENTIRE cap or get as close as possible.
People making four hundred million a year* should not be cut off at 400 thousand.

* or any ridiculously high amount
I'm willing to compromise about where the ceiling should be. I'm not willing to compromise about privatization schemes, though.

I mean, I realize that my opinion doesn't matter much, but I take a stand where I can take a stand.
 
Ok. We’re not personally going to do anything and we KNOW Congress isn’t going to either. So…this is ALL hypothetical. Bottom line, you don’t think this would work, or you just don’t like it? I’m hoping you are investing now in a retirement fund, and I’m betting that is private.
It's not hypothetical if the Republicans win significantly this time. I'm convinced that they are fully prepared to do what they have wanted to do for many decades.
 
I'm willing to compromise about where the ceiling should be. I'm not willing to compromise about privatization schemes, though.

I mean, I realize that my opinion doesn't matter much, but I take a stand where I can take a stand.
So you don't have a retirement account that is through a private agency? There is NO stand to take. It's a discussion about something that WON'T happen. It's an idea. And....to follow up on another comment as well, they aren't going to raise the ceiling either, so discussing that idea WON'T happen either. As I have said, I like that idea. They just aren't going to do it.
 
It's not hypothetical if the Republicans win significantly this time. I'm convinced that they are fully prepared to do what they have wanted to do for many decades.
I'm just asking about this idea. I was hoping it was not going to turn into another discussion about how the Republicans or Democrats will destroy everything, but that is where it feels this will be going soon enough.
 
Lift the ENTIRE cap or get as close as possible.
People making four hundred million a year* should not be cut off at 400 thousand.

* or any ridiculously high amount
Right...but what do you think about this idea? No merit? You think it might work? It's ALL hypothetical. NOTHING is going to happen. They aren't going to raise the cap. They aren't going to implement this idea. I'm just interested in people's ideas of whether this might have some merit or not, and if not, why not.
 
To start this off, I want to say that I do believe that Social Security is NECESSARY. At the same time, I do think that it could be more efficient. I've had this thought for awhile and am curious as to your thoughts on the viability of this idea. Here it is.

Let's say the US government gave EVERY US citizen $5000 at birth. They put that $5000 into a Roth IRA for that child, and it was an "aggressive portfolio" for most of it's time, if not all. That $5000 at a pretty modest interest rate of 8% (compounded interest of course) is going to be $867,684.07 at age 67. Now....at that point, the money isn't exactly "theirs," though I'm open to debate of course. This is a "debate forum" after all. But....maybe that person CAN add to that ROTH IRA when they turn 18, or whenever, at that money is theirs no strings attached. Parents could even add to that money as well. Why not????

But....the "idea" is that - just a suggestion - that only a certain amount per month can be withdrawn. Say $5000/month. That's pretty damn good, no? $7000? For everyday life, and whatever. Live well. We only have ONE life we're going to remember, yes? The remainder can be pulled out for situations in which assisted living is needed, or stuff like that.

It just seems to me that the US government and taxpayers would pay a heck of a lot less in everything in a system such as this in comparison to one in which we HOPE that people will do this ahead of time, but don't (or can't). Person passes away and that money goes back into "the system." Any money that they have contributed goes to them or whomever, but it is a heck of a lot more because of that compounded interest.

What do you think?

What is $5000 X 200 million? That is a Trillion $ in IRA's looking for returns and when all of them mature it will be over $100 Trillion. There are not enough investments in the world for that.
 
So you don't have a retirement account that is through a private agency? There is NO stand to take. It's a discussion about something that WON'T happen. It's an idea. And....to follow up on another comment as well, they aren't going to raise the ceiling either, so discussing that idea WON'T happen either. As I have said, I like that idea. They just aren't going to do it.
If Republicans win, I expect them to try to loot my retirement. As a not rich independent person, there's only one way for me to vote in a non-moronic way.
 
I'm just asking about this idea. I was hoping it was not going to turn into another discussion about how the Republicans or Democrats will destroy everything, but that is where it feels this will be going soon enough.
That's where we're at, unfortunately. If you want to talk about extreme ideas like completely changing our system, I might participate in that discussion.
 
What is $5000 X 200 million? That is a Trillion $ in IRA's looking for returns and when all of them mature it will be over $100 Trillion. There are not enough investments in the world for that.
Well, clearly there are not 200 million children born each year, but I take your point. Is that to say if 200 million Americans contributed $5000 into an account (Roth IRA) on behalf of their child (they can) that there would not be enough investments in the world for that? Are you saying that 200 million CAN'T invest in a retirement of their own because the "system" would not allow for that much money to be invested? I'm really asking. I don't know the answer to that, but that is curious to me. Because IF that is the case, then a plausible retirement system IS NOT sustainable no matter what you do. Please do note, however, that it is NOT that that money won't be spent. It will. But perhaps in a more "controlled" manner so as to not allow that money to just be gambled away, or something.
 
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That's where we're at, unfortunately. If you want to talk about extreme ideas like completely changing our system, I might participate in that discussion.
Isn't that EXACTLY what I'm discussing? Of course, there are OTHER ideas on doing that. And OF COURSE the idea of no cap on SS has been discussed. I think we ALL agree that SOMETHING needs to change, but of course it won't.
 
Isn't that EXACTLY what I'm discussing? Of course, there are OTHER ideas on doing that. And OF COURSE the idea of no cap on SS has been discussed.
I don't currently support no cap. It seems like the cap would be a good way to negotiate in order to keep the whole thing working, assuming that negotiation is possible.
 
I don't currently support no cap. It seems like the cap would be a good way to negotiate in order to keep the whole thing working, assuming that negotiation is possible.
Ok. You like a higher cap. So do I. Do you like how the other social programs are managed, or do you think something like my idea might be something that would create a more efficient and more expansive social service "program" for Americans to access when needed? When individuals need say assisted living in their later years and CAN'T afford it, who steps in? The US government. Wouldn't something like this be beneficial, or do you think that a cap of a higher limit solve all the social program issues as well?
 
To start this off, I want to say that I do believe that Social Security is NECESSARY. At the same time, I do think that it could be more efficient. I've had this thought for awhile and am curious as to your thoughts on the viability of this idea. Here it is.

Let's say the US government gave EVERY US citizen $5000 at birth. They put that $5000 into a Roth IRA for that child, and it was an "aggressive portfolio" for most of it's time, if not all. That $5000 at a pretty modest interest rate of 8% (compounded interest of course) is going to be $867,684.07 at age 67. Now....at that point, the money isn't exactly "theirs," though I'm open to debate of course. This is a "debate forum" after all. But....maybe that person CAN add to that ROTH IRA when they turn 18, or whenever, at that money is theirs no strings attached. Parents could even add to that money as well. Why not????

But....the "idea" is that - just a suggestion - that only a certain amount per month can be withdrawn. Say $5000/month. That's pretty damn good, no? $7000? For everyday life, and whatever. Live well. We only have ONE life we're going to remember, yes? The remainder can be pulled out for situations in which assisted living is needed, or stuff like that.

It just seems to me that the US government and taxpayers would pay a heck of a lot less in everything in a system such as this in comparison to one in which we HOPE that people will do this ahead of time, but don't (or can't). Person passes away and that money goes back into "the system." Any money that they have contributed goes to them or whomever, but it is a heck of a lot more because of that compounded interest.

What do you think?

I'll point out a few flaws

First, $5,000 or $6,000 or $7,000 a month in *today's* (2024) dollars will need to be much, much more in (future) inflation adjusted dollars. Assuming inflation is a constant 2% per year for 67 years, that $5,000 per month (in 2024 dollars) - 67 years into the future - would need to be about $18,844 per month (in 2091 dollars) or about $226,128 per year --- so that $867,684 isn't going to last you very long. If my math is correct (always a question), you run out of money in that account in 4 - 5 years.

Second, we all know that neither rates of return nor rates of inflation are "constant." If you're familiar with Monte Carlo simulations, then you know that WHEN the "highs" and "lows" occurs can make big differences in the ending balances.

For example, $10,000 at a steady, constant 8% per year for 10 years = $21,589; But, at 2% for the first five years and, then, 14% for the next 10 years (so an *average* of 8%) = $21,258 (or $331 lower) ---- even though both *average* 8% per year.
 
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I'll point out a few flaws

First, $5,000 or $6,000 or $7,000 a month in *today's* (2024) dollars will need to be much, much more in (future) inflation adjusted dollars. Assuming inflation is a constant 2% per year for 67 years, that $5,000 per month (in 2024 dollars) - 67 years into the future - would need to be about $18,844 per month (in 2091 dollars) or about $226,128 per year --- so that $867,684 isn't going to last you very long. If my math is correct (always a question), you run out of money in that account in 4 - 5 years.

Second, we all know that neither rates of return nor rates of inflation are "constant." If you're familiar with Monte Carlo simulations, then you know that WHEN the "highs" and "lows" occurs can make big differences in the ending balances.
Good point, however I would say then two things:

1) an individual could definitely add more to this and then take that money out as they please in retirement. I think of this like the “back up” plan for when individuals can’t or don’t invest in their retirement or when life just happens. Since that money was already invested, how much would the government save in say food benefits for those 67 and older? I would hope that it would be a lot more than they are going to receive in SS at that time. I can’t see SS paying $18,000 per month, can you?

2). How much more does nothing cost the government to take care of people? Because ultimately, people can’t or don’t put money aside. And they are going to apply for benefits. Does the current system cost less than this one might?
 
Ok. You like a higher cap. So do I. Do you like how the other social programs are managed, or do you think something like my idea might be something that would create a more efficient and more expansive social service "program" for Americans to access when needed? When individuals need say assisted living in their later years and CAN'T afford it, who steps in? The US government. Wouldn't something like this be beneficial, or do you think that a cap of a higher limit solve all the social program issues as well?
I believe that we have a binary choice. It's either the Republicans, who will loot and destroy the programs, or the Democrats, who will limp the programs along until they figure out how to win enough seats to improve them. I'm only sure about one of those options.
 
I believe that we have a binary choice. It's either the Republicans, who will loot and destroy the programs, or the Democrats, who will limp the programs along until they figure out how to win enough seats to improve them. I'm only sure about one of those options.
In other words, I would encourage everyone you know to invest $5000 in their child in a Roth IRA today, because it will pay dividends in the long haul. When they turn 60, reinvest that into low risk money markets. If not, they are SCREWED. It’s just a matter of time now.
 
Good point, however I would say then two things:

1) an individual could definitely add more to this and then take that money out as they please in retirement. I think of this like the “back up” plan for when individuals can’t or don’t invest in their retirement or when life just happens. Since that money was already invested, how much would the government save in say food benefits for those 67 and older? I would hope that it would be a lot more than they are going to receive in SS at that time. I can’t see SS paying $18,000 per month, can you?

2). How much more does nothing cost the government to take care of people? Because ultimately, people can’t or don’t put money aside. And they are going to apply for benefits. Does the current system cost less than this one might?
1) Yes, I can....why? Because SS retirement benefits are calculated on your EARNINGS over your lifetime which will, of course, adjust as labor costs rise. At age 60, SS stops indexing for wage increases, but starts adjusting for CPI.
 
To start this off, I want to say that I do believe that Social Security is NECESSARY. At the same time, I do think that it could be more efficient. I've had this thought for awhile and am curious as to your thoughts on the viability of this idea. Here it is.

Let's say the US government gave EVERY US citizen $5000 at birth. They put that $5000 into a Roth IRA for that child, and it was an "aggressive portfolio" for most of it's time, if not all. That $5000 at a pretty modest interest rate of 8% (compounded interest of course) is going to be $867,684.07 at age 67.
Well, let's see.

If you start this plan now, it's not going to kick in for 67 years. This does nothing for SS over the next 7 decades. Bit of an oversight, no?

3.6 million births in 2022, that's $18 billion. That's not too expensive.

You've forgotten about inflation, though, which will chew up and spit out purchasing power over 67 years. Average real S&P returns -- as in, when adjusted for inflation -- is around 6.5%. That means the actual purchasing power of the nest egg is closer to $340,000 after 67 years.

Could that replace Social Security? No.

First of all, SS isn't just for retirees; it also covers disability, which can kick in at any age.

Second: For retirees, the rule of thumb for retirement is that you only want to draw down 4-5% of your assets, otherwise you're likely to spend it all before the end. 5% of $340,000 is $17,000 per year -- much less than the current $21,000/yr average of SS recipients.

So, you'd probably want to plunk down $7,500 per person. That's $27 billion per year. Still not too bad, in the grand scheme of things.

At any rate: SS is a defined benefit, meaning it doesn't run out. This can run out. As a result, you're probably still going to need a SS-type program for those who spend all their assets in retirement. So it's not a full replacement anyway.

Other issues:

• What happens to those assets if the individual dies before they can collect? Should we treat death at 6 months differently than death at 60 years?
• Are there annual withdrawal limits?
• Who pays the tab if a retiree has their assets stolen?
• Do we allow people to withdraw early? If so, you can bet people will do it, and this will further reduce their retirement savings.
• What are the political implications of splitting off retirement completely from wages?

It's not the worst idea, but just the fact that it won't kick in for more than 6 decades does nothing to fix SS in the meantime.
 
Just back of the envelope:

The average SS retirement check in 2024 is $1,864.52.

Again, assuming inflation at 2% per year that $1,864.52 increases to $5,017 per month in 50 years.

So, yeah, I can see SS retirement paying $5,000 a month pretty easily.
 
In other words, I would encourage everyone you know to invest $5000 in their child in a Roth IRA today, because it will pay dividends in the long haul. When they turn 60, reinvest that into low risk money markets. If not, they are SCREWED. It’s just a matter of time now.
I did that for myself and I have plans to do something similar for my kids. We have been talking about it.
 
To start this off, I want to say that I do believe that Social Security is NECESSARY. At the same time, I do think that it could be more efficient. I've had this thought for awhile and am curious as to your thoughts on the viability of this idea. Here it is.

Let's say the US government gave EVERY US citizen $5000 at birth. They put that $5000 into a Roth IRA for that child, and it was an "aggressive portfolio" for most of it's time, if not all. That $5000 at a pretty modest interest rate of 8% (compounded interest of course) is going to be $867,684.07 at age 67. Now....at that point, the money isn't exactly "theirs," though I'm open to debate of course. This is a "debate forum" after all. But....maybe that person CAN add to that ROTH IRA when they turn 18, or whenever, at that money is theirs no strings attached. Parents could even add to that money as well. Why not????

But....the "idea" is that - just a suggestion - that only a certain amount per month can be withdrawn. Say $5000/month. That's pretty damn good, no? $7000? For everyday life, and whatever. Live well. We only have ONE life we're going to remember, yes? The remainder can be pulled out for situations in which assisted living is needed, or stuff like that.

It just seems to me that the US government and taxpayers would pay a heck of a lot less in everything in a system such as this in comparison to one in which we HOPE that people will do this ahead of time, but don't (or can't). Person passes away and that money goes back into "the system." Any money that they have contributed goes to them or whomever, but it is a heck of a lot more because of that compounded interest.

What do you think?

So a savings bond per child. Didn't we already try that.
 
Where would the $15B to $20B annual costs come from?
The solution to most all economic issues can be resolved by changes to the Federal income tax code, which I've offered more than once.

Why not just increase the SS FICA ‘payroll’ tax rates?
 
To start this off, I want to say that I do believe that Social Security is NECESSARY. At the same time, I do think that it could be more efficient. I've had this thought for awhile and am curious as to your thoughts on the viability of this idea. Here it is.

Let's say the US government gave EVERY US citizen $5000 at birth. They put that $5000 into a Roth IRA for that child, and it was an "aggressive portfolio" for most of it's time, if not all. That $5000 at a pretty modest interest rate of 8% (compounded interest of course) is going to be $867,684.07 at age 67. Now....at that point, the money isn't exactly "theirs," though I'm open to debate of course. This is a "debate forum" after all. But....maybe that person CAN add to that ROTH IRA when they turn 18, or whenever, at that money is theirs no strings attached. Parents could even add to that money as well. Why not????

But....the "idea" is that - just a suggestion - that only a certain amount per month can be withdrawn. Say $5000/month. That's pretty damn good, no? $7000? For everyday life, and whatever. Live well. We only have ONE life we're going to remember, yes? The remainder can be pulled out for situations in which assisted living is needed, or stuff like that.

It just seems to me that the US government and taxpayers would pay a heck of a lot less in everything in a system such as this in comparison to one in which we HOPE that people will do this ahead of time, but don't (or can't). Person passes away and that money goes back into "the system." Any money that they have contributed goes to them or whomever, but it is a heck of a lot more because of that compounded interest.

What do you think?


Some key questions:

1) Who in the federal government decides how that money is invested in an “aggressive portfolio”?

2) Could that investment portfolio be changed by the account holder once they turn 18?

3) What happens if the new retirement account holder becomes disabled at age 40 (or younger)?

4) While that allegedly might work for newborns (if such a law was passed), what would fund existing SS disability/retirement benefits for the rest of the US population? I’m assuming your plan would exempt those with these new SS alternative retirement accounts (and their employers?) from paying SS FICA ‘payroll’ taxes.
 
Honestly asking this question - what do you mean $15B-$20B annual costs? What are those costs for?
From your OP: "Let's say the US government gave EVERY US citizen $5000 at birth."
 
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