Social Security

[heather112588]

very scary subject...i've been paying into something that i will never see, heck, even that my parents wont see.
Part of the reason i got chickens this year was to be more self sufficent and i remain glad that i did. If the value of the dollar goes down more or disaster strikes, my family wont starve. If only i had enough room to get goats and cows...dreams*

 

[Ridgerunner]

http://www.suite101.com/content/obama-payroll-tax-cut--2-lower-withholding-taxes-in-2011-a326789

This is another stimulus plan to put more cash in the hands of many workers that pay taxes in the hopes that the extra money will be spent and stimulate the economy for one year only. Notice it decreases the withholding on the employee's side only. The employer still has to pay the larger amount. It does not affect the benefits people receive, just the overall amount of money paid into the system.

Social Security is not a system where money is invested for the future. It is a pay-as-you-go scheme. The money paid in this year is the money paid out this year. This works fine as long as the amount of money paid in can pay for the money paid out. But when demographics change and the number of people paying into the system cannot provide the amount of money going out then the system is in trouble. It is not a case that Social Security is out of money this year. It is that the demographics are changing so that the system will run out of money in the future unless something basic changes.

The people we elect to government spend the excess with a promise that we, the taxpayers, will pay it back later when needed, not out of Social Security taxes but from the general fund. Of course, that is not likely to happen. We have for years been financing other parts of government spending due to higher than required Social Security withholdings based on Social Security outgo that year, with our elected officials in essense writing IOU's that we the taxpayers will pay it back later when it is needed. It's a great scam and it has worked until now.

I don't think it would be politically acceptable, but I'd like to see the system set up where you set the benefits levels, determine who is likely to receive those benefits next year, and set this year's Social Security rates to collect that amount a year in advance. f you see a shortfall, you up the next year's rates to cover it. Another way that would make more sense to me (which obviously means it won't happen) would be to roll the Social Security withholding into the income tax rates and pay for Social Security out of the general fund. This is not quite as simple as it sounds since half the money comes from the business end, but I'm sure our friends at AARP could come up with a system. Social Security withholding has not been dedicated to Social security spending anyway because of those IOU's.

Philosophically, can somebody explain the difference in cutting Social Security tax and the Bush tax cuts? Working people's paychecks are going to be a little bit bigger. The government is going to have a little less money. Government outgo is not going to change. I'm not asking if you think tax cuts create jobs. That is a totally different question. Does it really matter what we call a tax?

 

[nonseq]

Social Security should return to being a means-tested program.

 

[silkiechicken]

I expect to pay into SS for a long time and not see a dime by the time I retire in about 45 years. So I'm not planning for it to be there. And pensions? That was so my parents generation. I don't ever anticipate seeing that either.

That said... be careful in here, political threads are HIGHLY discouraged.

 

[I have WHAT in my yard?]

I stink at explaining social security. I cannot explain a tax cut that is yellow from one that is blue. I do know that who the tax cut effects matters greatly.

I cannot wrap my brain around all of the social security reports. I confess this freely. I have spent hours poring over the reports from social security. I went over the one on Ron Paul's page. I went over the ones on Bruce's wen page (no credentials really http://bruceweb.blogspot.com/2010_11_01_archive.html but this is an excellent site he has been closely studying SS for decades now.)

I work on the assumption that it will not be there for me when I get old. Then I hope it will be.

Massaging numbers is such a great career at this point that many accountants should consider themselves writers of fiction. 2 + 2 = whatever I want it to.

Is social security solvent? Depends on who you ask.
Should it be solvent? Well that one seems to have decent agreement that yes it should be solvent.
How long will it remain solvent? No one has a crystal ball yet. All anyone is doing is making an educated guess.


Let's put one aspect of this out there. Social security was supposed to be just that: security. The privatization movement began the "SS is going under" drumbeat a few years back because they wanted SS to be privatized. But, we got 401Ks instead. And what did that do? It socialized the entire market.

People swear they don't want socialization then they keep doing stuff that they think is going away from socialization but is actually doing the opposite. What happened was that everyone's retirement was now in the market. The old adage of "Don't invest money you cannot afford to lose" went out of the window. The money pouring into the market and being played with was money that no one could afford to lose. So when it WAS lost through no fault of the investors the government had to save it. Remember that one of the reasons that the government did TARP was to avoid everyone losing their entire 401's.

Socialization is a bad idea, full privatization is a bad idea. Sanity is in balance.

 

[chickendude]

I'm happy I don't pay into SS. I work for a Rail Road. We pay into Railroad Retirement and it is very secure. It seems SS is definitely on it's way out.

 

[Dunkopf]

Quote:
It's my understanding that SS is paid out of a specific fund. That fund currently has 2.3 trillion dollars in it. The SS withholding was doubled in the 70's I believe. The purpose was to compensate for the baby boomers who are starting to retire right now. If contributions would have stayed at 6.4% for employee and 6.4% for employer the fund would have paid for SS for 29 years based on projected birth rates. After 29 years benefits will still be paid at 80%. Right now there is more paid out than taken in each year. That is the purpose of the surplus fund. When the babyboomers start tipping over, things will equal out some.

Since it has been reduced to 4.4% that means the money will not accumulate at the same rate and will therefore run out faster. They will continue paying at the same percentages, it just won't last as long. Personally I don't expect it to return to the 6.4% rate. Once you give the public a cut, it's there to stay. Especially in this financial climate. I know it's supposed to be one year. The Bush tax cuts were supposed to expire in 2010. Even though it's costing us a trillion dollars over 10 years when everyone is so concerned about the deficit. They still got extended for 2 years. From a personal stand point I'm glad they did. From a perspective of what is good for the country, it's a bad thing. You will notice that the deficit hawks on the TV and radio were ok with it though.

 

[EweSheep]

I remember my father told me that the politicians took the SS money to pay for other things like highways and so forth, just to "borrow" that money. Well they never really repaid that "borrowed" money.

 

[Royd]

I am now 57, and have been saying, since I was about 40, that I was just throwing away my money, and that retirement was not in the cards, for me.

My consolation is that SS and the whole social saftey net concept, is a glitch in the history of man, along with the fact that if money becomes usless, even today's rich will join the beggars, on the street, looking for a handout, because they have grown soft, due to the convenience of the times.

Little wonder, when I gather my eggs, and roll them around, in my hand, I think,"Now, that's how you create a commodity, of value."

 

[ivan3]

Importantly, while we are starting off in a financial hole we don’t really have a very good picture of how deep it is. Specifically, there are a number of very significant items that are not currently included as liabilities in the federal government’s financial statements; for example, several trillion dollars in non-marketable government securities in so-called “Trust Funds.” In the case of the Social Security and Medicare Trust Funds, the federal government took in taxpayer money, spent it on other items and replaced it with an IOU. Given this fact, why aren’t the amounts attributed to such activities shown as a “liability” of the U.S. Government? At the present time, they are not! Does this make sense, especially when the government continues to tell Social Security and Medicare beneficiaries that they can count on the bonds in these “Trust Funds”? Is the federal government trying to have its cake and eat it too?

David Walker, Comptroller General of The United States (`GAM' `Director' of the GAO) 9/03: http://www.gao.gov/cghome/npc917.pdf (I really do read the GAO's stuff first, they don't muck about trying to massage or frighten - Like Sergeant Friday, `just the facts' - one agency that needs to be expanded). Remember, this is from a speech he gave back in `03.

The 2+ trill. in the SSTF is funny money. Sure, it will be paid out until the middle part of this century - however, taxes will HAVE to go up to cover the `free money' we've provided in good faith, that the gov. will no longer be receiving, so they could pretend that the picture is prettier than it is - `we don't have to raise taxes! - we'll just take your SS', that's why it's `pay as you go'; all revenues over that amount- and we paid in a LOT - weren't `invested' in the trust fund, they were spent on everything else and Uncle Sam, like wimpy, swore to pay us tomorrow for a hamburger today (need to redeem those `bonds' for cash? Sell more debt to pay the recipients, raise taxes to cover the higher resulting debt). So long as the U.S. can sell its paper (not default) all is surrealistically copacetic... for the time being...​