Social Security - your thoughts?

#301
#301
lawgator1 said:
No doubt that for people entering the work force now the investment option is a better choice than for someone who is retired, or is about to retire. The corollary to the concept of dollar cost averaging, however, is that folks on the back end of that process take on a much higher risk of it not working well as a substitute for traditional SS.

Remember, the shortfall hits in about 2030.

I'm 60. If I retire at 67 that's right around then. And if the SSA tells me, well, your guaranteed SS amount is going to be lower, but X percent of your monthly check will be some portion of your assigned benefit being invested in securities which, even if low risk, are not fool proof....

I could weather it if that investment portion underperformed for a few years. But there are a lot of people my age who could not.
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All joking and digs aside....in your scenario are you thinking the SSA will put some portion of your monthly retirement distribution will go to purchase private investment instruments?
 
#302
#302
lawgator1 said:
Sigh.

Do those funds deliver those returns EVERY SINGLE YEAR?

Do these funds GUARANTEE in an enforceable way, those returns for any given five year period?

No. They don't. They can't. And if you force people to invest a portion of their retirement savings (SS or otherwise) in such funds then yes, for may it will work out. Most, probably. and the earlier the better.

But it won't work for everyone. And if its a big enough downturn, for long enough, and at the right time, for many people it could be a disaster. Do we back those people up, like we did the banks?
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If an attorney wins 90% of her cases over a 50 year career, what is your confidence in her handling your case?

There are guaranteed instruments out there designed specifically for the person who is risk averse and cannot lose any principle. Why can't those be an option instead of SS?
 
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#303
#303
McDad said:
If an attorney wins 90% of her cases over a 50 year career, what is your confidence in her handling your case?

There are guaranteed instruments out there designed specifically for the person who is risk averse and cannot lose any principle. Why can't those be an option instead of SS?
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"Cannot lose any principle."

You will have to explain to me how privatizing social security ENSURES, with a 100 % GUARANTEE, that the amount available to be paid to a beneficiary will be AT LEAST what it would have been had their benefit been paid as planned.

I just don't think you can.
 
#304
#304
lawgator1 said:
"Cannot lose any principle."

You will have to explain to me how privatizing social security ENSURES, with a 100 % GUARANTEE, that the amount available to be paid to a beneficiary will be AT LEAST what it would have been had their benefit been paid as planned.

I just don't think you can.
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Social Security doesn’t 100% guarantee principle.
 
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#305
#305
lawgator1 said:
"Cannot lose any principle."

You will have to explain to me how privatizing social security ENSURES, with a 100 % GUARANTEE, that the amount available to be paid to a beneficiary will be AT LEAST what it would have been had their benefit been paid as planned.

I just don't think you can.
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Are you familiar with annuities or any of the following?
Screenshot_20240507-145641_Chrome.jpg
 
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#306
#306
lawgator1 said:
Sigh.

Do those funds deliver those returns EVERY SINGLE YEAR?

Do these funds GUARANTEE in an enforceable way, those returns for any given five year period?

No. They don't. They can't. And if you force people to invest a portion of their retirement savings (SS or otherwise) in such funds then yes, for may it will work out. Most, probably. and the earlier the better.

But it won't work for everyone. And if its a big enough downturn, for long enough, and at the right time, for many people it could be a disaster. Do we back those people up, like we did the banks?
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your problem is that you don't understand how bad of an "investment" SS already is.

if our country goes to that much crap where we are -15% for 3-5 years each year, we have a lot more problems than worrying about what the retirees do. and we as a country aren't going to be in any type of shape to help anyone. the only time we have something like that was the great depression, but that was after 4 years with 120% annual growth *in some markets*, with unregulated growth.

there is pretty much zero way, as in has literally never happened in this countries financial investment history, you would end up worse off than SS. for anyone who makes over a pretty low amount of money SS is already a NEGATIVE ROI. so yes, I would consider that a guarantee.

IIRC the breakdown is: if you make less than 40k a year, SS currently gives you more than you put in. but not because of an ROI, simply because it takes from others to give to the poor. If you make between 40-60k a year, SS is breakeven. if you make over 60k when you retire, its a negative investment. under any type of reduction of SS benefits, and those break even points shift much much lower.
under a privately held government mandated investment program, every single group above would come out in the "better" category.

and here is the other point you are missing. if you retire at 65 and the markets are crap, unless you are going to die in the 3 year mythical window you created, your money will still be in the market at 68 as things rebound. just minus whatever you pulled out. There would also be nothing stopping you from pulling your money out at 65 and stuffing your mattress, so that you don't risk losing anything to market changes. a privately held retirement fund would offer flexibility that SS will never cover.
 
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#307
#307
We've dealt with LG's scenarios and "what ifs" which are so statistically unlikely it's ridiculous to even discuss. But if we're willing to give guarantees for novices, then on the other end of the spectrum shouldn't people like me who are comfortable investing in real estate be allowed to invest SS contributions into an investment that they are familiar with?
 
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#309
#309
McDad said:
We've dealt with LG's scenarios and "what ifs" which are so statistically unlikely it's ridiculous to even discuss. But if we're willing to give guarantees for novices, then on the other end of the spectrum shouldn't people like me who are comfortable investing in real estate be allowed to invest SS contributions into an investment that they are familiar with?
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I think we’re meant to draw only one conclusion: taxes are going to have to be increased.
 
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#310
#310
McDad said:
The safest investment (or one of the safest) are bank CDs.

Our hypothetical employee having $150 per week (employee and employer portion) sent to the government, who put that money ($600 per month) into a CD at 1.5% interest, which doesn't even keep up with inflation, would have almost $500,000 at 65.
Even the most abysmal instrument for rate of return but is no risk is better than our current SS system.
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How old is your hypothetical employee?
 
#316
#316
Go aeiou said:
I suspect that you are capable of managing your money, and making sound investment decisions including diversity.
Most people are not. SS is really for them

Here is a good article from a reputable source. Brookings.
www.brookings.edu

Privatizing Social Security: The Troubling Trade-Offs

Policy Brief #14, by Gary Burtless and Barry Bosworth (March 1997)
www.brookings.edu www.brookings.edu
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Your link was pro privatization.

No management is required by any lay-person regardless of savviness. Apart from a decision to contribute, most are contributing to a 401 or IRA without money management capability.

Side note: articles from 1996 discusses 2T dollars as if it is a big deal. How i wish we could go back to that attitude.
 
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#318
#318
Rasputin_Vol said:
‘No one in the US should be retiring at 65’: Ben Shapiro said Social Security was not designed to provide retirement benefits for 20+ years — and those who expect that are ‘crazy’
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That's not a popular take but he's not wrong.

The nuance is that one should be semi-retired by at least 65 if not 55. Work because you want to and be selective in the scope and intensity of the work at that age. This work doesn't have to be a 9-5 for a company. It can be helping raise your grandchildren, a hobby that is revenue neutral, part-time philanthropy work or part-time work for a non-profit.
 
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#320
#320
McDad said:
Your link was pro privatization.

No management is required by any lay-person regardless of savviness. Apart from a decision to contribute, most are contributing to a 401 or IRA without money management capability.

Side note: articles from 1996 discusses 2T dollars as if it is a big deal. How i wish we could go back to that attitude.
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Often the problem is the withdrawals. Gotta have that vacation, car, etc. So quit working at 62 and live on SS.
I used to have a construction company, and provided all of my employees a SEP-IRA plan. I made all the contributions, and one of them would take them out almost immediately. often to get their kids out of jail.
 
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#321
#321
Go aeiou said:
Often the problem is the withdrawals. Gotta have that vacation, car, etc. So quit working at 62 and live on SS.
I used to have a construction company, and provided all of my employees a SEP-IRA plan. I made all the contributions, and one of them would take them out almost immediately. often to get their kids out of jail.
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C’mon man. Who hasn’t had to dip into their long term savings to make bail?
 
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#322
#322
Go aeiou said:
Often the problem is the withdrawals. Gotta have that vacation, car, etc. So quit working at 62 and live on SS.
I used to have a construction company, and provided all of my employees a SEP-IRA plan. I made all the contributions, and one of them would take them out almost immediately. often to get their kids out of jail.
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Understood.
If SS contributions are mandatory and the amount built up untouchable until a certain age where pre established distributed amounts begin, I don't understand why those regs couldn't carry over to a private system.
 
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#323
#323
lawgator1 said:
I don't know whether you folks touting these vehicles understand the dynamics of rates of return over time, or are simply unwilling for political purposes to acknowledge the shortcomings.

Those funds will have some years where they make 2 %, some where they make 11%, and some where they lose 15%. An average rate of 7 % over thirty years is great if you have the full thirty years to recover from those -15% years. But not so great if you are 82 years old and won't have it long enough to recover to a point of getting 7%.

And if that occurs, for those people in that fund who now can;t pay rent or buy food or medicine, what are we going to do? Leave them be? Not help them, despite their having paid into the system for 50 years? All because they had the misfortune of needing that average return for a period of years when the fund lost money....
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You seem to have a fundamental lack of understanding with regard to CAGR and rates of return.
 
#325
#325
Can’t privatize it. Too many people aren’t capable of saving and will spend every dollar that they can get their hands on.
 
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