Political Ramblings

[mom'sfolly]

Simple fact of the matter is the government has been borrowing against social security. The other fact is that what people put in isn't what they are currently drawing out.

For the boomers...average household income from 1960-1970 was about $7000 or about $38,000 in today's dollars (1970-1980 income of$18000 equaling the same $38,000 in today's dollars). The average social security payment for a retiree in 2012 is $14,700. If the people in the 1960's had paid 1/3 of their income in social security funding, they would be pulling out the same amount as they paid in. As they paid in less than they are taking out, the system is loosing money. The other issue is that life expectancy has risen, meaning people are taking out money for a longer period. If the money had been allowed to accumulate without the other manipulation, a sort of locked box, the system would be flush longer. At least as I understand it, I realize that I could be wrong.

 

[kuntrygirl]

I do not think that I am being overly optimistic if I say that I am certain that your SS will be there when you are ready to retire.  The retirement age may go up a few years, but it will be there.  I am not as optimistic about medicare.  I think that it will be there in some form but I can not say what that will be.

That's good to know. I have heard some many times that it won't be there and that frightens me. Looks like I'll be working until I'm 80 years old. I guess I could be a WalMart greeter. :/

 

[ChickensRDinos]

That's good to know. I have heard some many times that it won't be there and that frightens me. Looks like I'll be working until I'm 80 years old. I guess I could be a WalMart greeter.

That is the sad thing about politics at the moment. There are a lot of rumors that circulate based on fear and then people make choices based on those rumors. I think it is really important to do you own research and to be sure that you understand your own government and what it is doing. Your rights are your responsibility.

SS is not a bank account or a 401K. With a 401K YOUR money goes into YOUR account and you get YOUR money back in the end. SS is nothing like that at all and people thinking of it in that way causes this kind of misinformation.

SS is a community pool of money that all employees and employers pay into. As you work throughout your life you earn points and based on those points, and some complex equations, what you get back is determined. Between SS and medicare, which is often lumped into that, retirement ages, life expectancy, inflation and cost of living, a lot of people take out more than they put in. The idea is more that the younger generation is paying for the older's benefits than that you are paying your own. You are not getting your money back, you are taking money from the community pool of which you were also a contributor.

As Mom'sfolly stated so well above, the government also borrows against this money, which concerns a lot of people.

One of the other things about SS that is rarely discussed is that everyone who works gets it even if you have billion dollars in the bank. A lot people who do not need it cash their checks as well and because people have a MY money mentality about it they see no problem with drawing from this limited pool that some people actually truly need.

The majority of economist seem to agree that benefits will need to decrease but will not go away.

 

[Capvin]

Mom...your post is 100% correct. The government began borrowing the surplus funds from SS quite a long time ago and reached its zenith under Bush. As of now the borrowed anount exceeds 2.7 trillion and is considered to be intra government debt. In other words the government owes the money to itself. The SS trust seems to be able to putter alond until 2033 (maybe) but will then abruptly run out. That does not mean that the political powers that be will allow that to happen. I am still confident that SS will remain a viable Trust provided the retirement age is amended to keep up with longevity. Hopefully, not too many other changes will be necessary.

GREAT POST BY CHICKENSRDINOS!!!

 

[kuntrygirl]

*SS should be JUST like my 401k. What I put in, I should get out or just stop taking it out of my check and let me have my money to put in my 401K. :/

So if a person NEVER works in their life, do they get social security? I better brace myself for this answer because if it's not what I want to hear then..............*holding my breath for the answer*.

 

[ChickensRDinos]

*SS should be JUST like my 401k. What I put in, I should get out or just stop taking it out of my check and let me have my money to put in my 401K.

So if a person NEVER works in their life, do they get social security?

I better brace myself for this answer because if it's not what I want to hear then..............*holding my breath for the answer*.

No. You get points or credits based on your own earnings. I think currently it is 1 point for every $1,200 ish (but I would need to look it up again to be sure) that you earn and you have to earn a certain number of credits to even qualify to receive any SS at all.

This link is a good description:

"In the Social Security system, the money you pay into the system gets immediately paid back out to the people who are currently getting Social Security checks. This arrangement came into being because of the way the system started. In 1935, when Roosevelt signed the Social Security Act into law, there were a lot of people who needed benefits (because of the Great Depression), but there was no money to pay those benefits with. The idea at the time was that people currently working would pay into the system, and their money would immediately go back out in the form of benefit checks. Each generation of retiring workers would get paid by the people currently working, and therefore the system would fund itself forever despite the fact that the system had no money to start with....

In the future, the retirement of millions of baby boomers will hurt the ratio -- there will be so many retired people that the working people will not be able to support them. If the population had grown steadily this would not have been a problem, but there is no good way for the design of the Social Security System to handle a population spike like the baby boomers."

http://money.howstuffworks.com/question385.htm

SS was amazing in a 1935 economy. It is no longer 1935 and things need to be adjusted. It is not even because we currently have a bad economy, it would need to be adjusted regardless as our overall community has changed.

 

[ChickensRDinos]

So, if you retire right now its not YOUR money, it's actually MY money. lol. But, I like to think we are a community.

 

[kuntrygirl]

*SS should be JUST like my 401k. What I put in, I should get out or just stop taking it out of my check and let me have my money to put in my 401K. :/ So if a person NEVER works in their life, do they get social security? I better brace myself for this answer because if it's not what I want to hear then..............*holding my breath for the answer*.

No. You get points or credits based on your own earnings. I think currently it is 1 point for every $1,200 ish (but I would need to look it up again to be sure) that you earn and you have to earn a certain number of credits to even qualify to receive any SS at all. This link is a good description: "In the Social Security system, the money you pay into the system gets immediately paid back out to the people who are currently getting Social Security checks. This arrangement came into being because of the way the system started. In 1935, when Roosevelt signed the Social Security Act into law, there were a lot of people who needed benefits (because of the Great Depression), but there was no money to pay those benefits with. The idea at the time was that people currently working would pay into the system, and their money would immediately go back out in the form of benefit checks. Each generation of retiring workers would get paid by the people currently working, and therefore the system would fund itself forever despite the fact that the system had no money to start with.... In the future, the retirement of millions of baby boomers will hurt the ratio -- there will be so many retired people that the working people will not be able to support them. If the population had grown steadily this would not have been a problem, but there is no good way for the design of the Social Security System to handle a population spike like the baby boomers." http://money.howstuffworks.com/question385.htm SS was amazing in a 1935 economy. It is no longer 1935 and things need to be adjusted. It is not even because we currently have a bad economy, it would need to be adjusted regardless as our overall community has changed.

WOW! Just wow. Thanks for the break down. I will have to pull out the letter that I get annually letting me know how much money I will get if I retire at a certain age.

 

[rufus]

This is more of what I am afraid of:

http://www.shtfplan.com/headline-ne...of-401k-accounts-may-be-reality-soon_10112010

http://www.foxandhoundsdaily.com/2012/09/the-government-seizure-of-private-retirement-plans/

http://www.humanevents.com/2010/05/04/republicans-sound-alarm-on-administration-plan-to-seize-401ks/

Most of this talk started in 2010, but there is nothing as pervasive or all enduring as a bad idea.

 

[chickened]

I do not think that I am being overly optimistic if I say that I am certain that your SS will be there when you are ready to retire. The retirement age may go up a few years, but it will be there. I am not as optimistic about medicare. I think that it will be there in some form but I can not say what that will be.

You're retired Don is medicare getting better? Is your SS increasing with inflation? People should be concerned when someone puts thier SS money into the general fund and give you peanuts when you retire. For what is paid in we should be getting a lot more of a return than we actually get. 15% of your total income your whole working life is what is paid in on your behalf. That is a lot of investment money and you would most likely get more back in a private investment plan.