Social Security - your thoughts?

[McDad]

Can’t privatize it. Too many people aren’t capable of saving and will spend every dollar that they can get their hands on.

Can.
The amount deducted / contributed via payroll could go to a selected group of safe options with no access for withdrawl until age XX...just as we do with SS.

 

[hog88]

Can’t privatize it. Too many people aren’t capable of saving and will spend every dollar that they can get their hands on.

Sure it can be privatized. It would take some laws that I would personally disagree with but it could be done.

 

[Thunder Good-Oil]

Can.
The amount deducted / contributed via payroll could go to a selected group of safe options with no access for withdrawl until age XX...just as we do with SS.

The program needs participants to die before being paid back what they paid in. Otherwise the benefits will have to be slashed and the 12.4% tax jacked way up.

 

[InVOLuntary]

What's really ashame is that we need SS at all. People should be responsible for their lives until they die. You can argue for or against it but we've made floor too comfortable. As Rush used to say, cradle to grave. I'm not advocating anything but a lot of people seem to be ok with a bare minimum existence.

 

[McDad]

The program needs participants to die before being paid back what they paid in. Otherwise the benefits will have to be slashed and the 12.4% tax jacked way up.

Does it?

Is this the only government program in the history of government programs which has to have guaranteed funding before any other options can be considered?

OK, here's a couple of spit balls....
leave the employer contribution to fund SS.
Allow people to opt out for a reduced percentage of what was paid in.
Tax the privatized distributions to continue to fund SS.
Raise the rate for payroll taxes for SS above a set amount (say 250k per year)
Raise the retirement age by a few months or years.

All we are talking about is math. Revenue in the system versus revenue out. If we knew the numbers we could figure it out with simple arithmetic.

 

[Thunder Good-Oil]

Privitization and self directed accounts are actually 2 different things. Phasing out the government program and giving the private sector a role would make it more efficient.

But switching to self directed accounts would never work because there are a couple hundred million citizens that do not have the self discipline to not take lump sums and spend it all on lottery tickets and Marlboros.

 

[Vol8188]

Can’t privatize it. Too many people aren’t capable of saving and will spend every dollar that they can get their hands on.

It’s not up to the government to save for you.

 

[InVOLuntary]

Privitization and self directed accounts are actually 2 different things. Phasing out the government program and giving the private sector a role would make it more efficient.

But switching to self directed accounts would never work because there are a couple hundred million citizens that do not have the self discipline to not take lump sums and spend it all on lottery tickets and Marlboros.

You just make that impossible. That simply can't take it out. They can contribute but can't remove one cent.

 

[McDad]

Privitization and self directed accounts are actually 2 different things. Phasing out the government program and giving the private sector a role would make it more efficient.

But switching to self directed accounts would never work because there are a couple hundred million citizens that do not have the self discipline to not take lump sums and spend it all on lottery tickets and Marlboros.

again, its a simple fix and one that people have some familiarity with. Defined distributions. Can be done so that people are unable to cash out the entire amount. But even if they could, we cannot create a system that is impervious to bad policy by lawmakers or bad decisions by private citizens. The current system sucks and some people fight to keep it.

 

[McDad]

The psychology behind SS is fascinating to me.

The "what ifs" created to refute changing the current bad system are not part of the Federal Governments constitutional obligations and yet, many have accepted that it is the government's duty to care for citizens.

 

[Thunder Good-Oil]

Does it?

Is this the only government program in the history of government programs which has to have guaranteed funding before any other options can be considered?

OK, here's a couple of spit balls....
leave the employer contribution to fund SS.
Allow people to opt out for a reduced percentage of what was paid in.
Tax the privatized distributions to continue to fund SS.
Raise the rate for payroll taxes for SS above a set amount (say 250k per year)
Raise the retirement age by a few months or years.

All we are talking about is math. Revenue in the system versus revenue out. If we knew the numbers we could figure it out with simple arithmetic.

There are 2 important considerations. The funding requires some to not get back what they contribute to pay for those that take out more than they put in.

The other thing is that Social Security contributions are a regressive tax on workers - no matter how the government spins it.

There are already parallel self managed options with defined contribution plans. It would be simpler to add incentives with those than to overhaul the SS system.

 

[Thunder Good-Oil]

It’s not up to the government to save for you.

It’s a government operated social welfare program. Not savings accounts for workers.

 

[McDad]

There are 2 important considerations. The funding requires some to not get back what they contribute to pay for those that take out more than they put in.

The other thing is that Social Security contributions are a regressive tax on workers - no matter how the government spins it.

There are already parallel self managed options with defined contribution plans. It would be simpler to add incentives with those than to overhaul the SS system.

The evidence convicting SS to the death penalty are contained in your first two paragraphs.

Why fight to keep an unjust system which steals individual wealth, and is a regressive tax on laborers?

And yet, we all see inevitable cliff approaching on the horizon...fewer people being born, decreased labor participation, retirees living longer than ever, and a system destined for collapse.

 

[85SugarVol]

Can.
The amount deducted / contributed via payroll could go to a selected group of safe options with no access for withdrawl until age XX...just as we do with SS.

Sure it can be privatized. It would take some laws that I would personally disagree with but it could be done.

The program needs participants to die before being paid back what they paid in. Otherwise the benefits will have to be slashed and the 12.4% tax jacked way up.

Still don’t see why everyone couldn’t have a government TSP assigned specifically for them - just like we already do with Federal employees and Military.

Thrift Savings Plan (TSP): How It Works and Investments

A thrift savings plan (TSP) is a retirement investment program open only to federal employees and members of the uniformed services.

www.investopedia.com

- The contributions are the employer/employee withholdings.
- The allocations are conservative, and target based.
- The disbursements are time bound and restricted.

 

[CobbVol]

Does it?

Is this the only government program in the history of government programs which has to have guaranteed funding before any other options can be considered?

OK, here's a couple of spit balls....
leave the employer contribution to fund SS.
Allow people to opt out for a reduced percentage of what was paid in.
Tax the privatized distributions to continue to fund SS.
Raise the rate for payroll taxes for SS above a set amount (say 250k per year)
Raise the retirement age by a few months or years.

All we are talking about is math. Revenue in the system versus revenue out. If we knew the numbers we could figure it out with simple arithmetic.

There is a political party with a donkey as their mascot that will not allow any of this to occur. Anyone offering this or similar solutions will be branded by them and their corrupt media partners as radicals, racist, wall streeters, etc.

 

[Thunder Good-Oil]

You just make that impossible. That simply can't take it out. They can contribute but can't remove one cent.

The issues being argued seem to be that (1) the undistributed benefits should belong (or not) to the workers instead of forfeited to the government AND (2) that investment options need to be available for participants. And of course the funding to pay for those that don’t pay in what they take out would collapse.

#2 could actually happen and equity markets would soar. If it were to happen then it would be interesting to theorize what happens to debt markets after a lot of the self directed investment choices were picking the option of owning debt instruments. That’s more debt on the open market (and interest rates should fall with the supply/demand imbalance) - BUT right now it’s 100% debt so slicing off a portion that to go into equities makes the entire debt pie smaller and therefore higher interest rates w/b the result.

 

[McDad]

There is a political party with a donkey as their mascot that will not allow any of this to occur. Anyone offering this or similar solutions will be branded by them and their corrupt media partners as radicals, racist, wall streeters, etc.

Cobb, what do you say about the R after R who had an opportunity to put forth legislation and did not?

Bush 2 at least gave it an effort. No body else has.

 

[McDad]

Still don’t see why everyone couldn’t have a government TSP assigned specifically for them - just like we already do with Federal employees and Military.

Thrift Savings Plan (TSP): How It Works and Investments

A thrift savings plan (TSP) is a retirement investment program open only to federal employees and members of the uniformed services.

www.investopedia.com

- The contributions are the employer/employee withholdings.
- The allocations are conservative, and target based.
- The disbursements are time bound and restricted.

Thank you, SugarBalls.

 

[lawgator1]

Can.
The amount deducted / contributed via payroll could go to a selected group of safe options with no access for withdrawl until age XX...just as we do with SS.

I think that's the problem, in a nutshell. If you force people to pay SS taxes and in return guarantee them some retirement income, that's one thing. But if you force them to pay into mandatory investment vehicles, and those fail, who makes up the shortfall?

Would be just a shell game.

 

[hog88]

Still don’t see why everyone couldn’t have a government TSP assigned specifically for them - just like we already do with Federal employees and Military.

Thrift Savings Plan (TSP): How It Works and Investments

A thrift savings plan (TSP) is a retirement investment program open only to federal employees and members of the uniformed services.

www.investopedia.com

- The contributions are the employer/employee withholdings.
- The allocations are conservative, and target based.
- The disbursements are time bound and restricted.

We can't do that, it would create transferable wealth and lessen dependence on the federal government.

 

[Orangeburst]

I am not sure where you guys get the concept that you have to draw until you are very old to get all your returns
Say you make 5M over 30 years, basically 170K annually and inflation adjusted.
At 6%, that is 300K in contribution, and really not even that much because the gross is inflation adjusted significantly.
Employer matches 300K, so total is 600k, with say an annual draw of 60K. That is only 10 years.

I am not advocating for it, but it isn’t as bad as some suggest. It is not good if you pass early, but spouses draw of their deceased SS,

 

[hog88]

I think that's the problem, in a nutshell. If you force people to pay SS taxes and in return guarantee them some retirement income, that's one thing. But if you force them to pay into mandatory investment vehicles, and those fail, who makes up the shortfall?

Would be just a shell game.

The same people are on the hook, us the taxpayer. SS has already failed.

 

[Thunder Good-Oil]

It. Is. A. Tax. The government disguises it as something else with their website showing how much workers are promised get back in monthly payments between retirement and death. But make no mistake. It is a social welfare program that is funded by employees and employers. Since it really is a tax, there should be a base amount of wages that are not taxed and the cap for the highly compensated should be eliminated.

 

[McDad]

I think that's the problem, in a nutshell. If you force people to pay SS taxes and in return guarantee them some retirement income, that's one thing. But if you force them to pay into mandatory investment vehicles, and those fail, who makes up the shortfall?

Would be just a shell game.

Why do the investment vehicles have to be something which may fail?

 

[McDad]

I am not sure where you guys get the concept that you have to draw until you are very old to get all your returns
Say you make 5M over 30 years, basically 170K annually and inflation adjusted.
At 6%, that is 300K in contribution, and really not even that much because the gross is inflation adjusted significantly.
Employer matches 300K, so total is 600k, with say an annual draw of 60K. That is only 10 years.

I am not advocating for it, but it isn’t as bad as some suggest. It is not good if you pass early, but spouses draw of their deceased SS,

I am not saying the program is without benefit. I am saying the benefits are miniscule and a gamble on long life compared to other, private, options.