Why Isn't Social Security's Reserve/Trust Fund In Equities?

[Blue Collar Guy]

I have a lot of time now that Im retired. I am going to follow this line of them investing some portion of this money into equities. I need to do some research in how Canada is doing it. Seems simple enough. And the Wellesley fund seems like my poster child for my way of thinking. I can readily access its numbers.

 

[Texas Proud]

Exactly. The SS trust fund is like you taking money out of your emergency fund jar, and spending it on your day-to-day lifestyle. You put a note in the jar to pay it back the money you took out. At some point, you think you will make the money back, and put it back in the jar. And maybe you pay back a tad bit more to pay yourself interest.

Since you did not have enough money to live within your means in the first place, you will never be able to live within your means. You keep taking the money out of the jar. When the last dollar is taken out, you have a problem. You do not have enough to live without the extra money that was subsidizing your lifestyle.

That is the social security problem.

Very bad analogy.... the person you talk about is basing their decision on what income he/she can make...

With the federal gvmt (not the same as a state) there is no limit to the amount of money they actually have.... if they want to pay it off they can just print more.... in reality it is an electronic entry, but you get the idea...


It will not come to a head until things are MUCH worse than they are today or likely to be in the coming decades.... look at how bad Illinois is right now and they can go out and borrow money relatively cheaply IMO....


The REAL problem with SS is that it is a dedicated fund... IOW, it is supposed to pay out only money that comes into the gvmt as SS money... since the actuarial numbers are saying that it will run out there is a problem....

Now, one way to fix the problem is to say the general fund will make up for any money SS taxes does not meet the needs.... done... fixed... but nobody wants to do that so we wring our hands and talk about how there is 'no money set aside'....

 

[Texas Proud]

Exactly. If the Government would cancel all the IOU's in the SS trust fund tomorrow, it would make no difference to the SS trust fund. Either way, the money paid out in SS payments are generated by current taxpayers. Not money coming in from the treasuries.

Even if the treasuries would produce income, or be allowed to be withdrawn, that withdrawal would also be generated from the current taxpayers (or printed).

Sorry, but wrong... right now it is using interest income to make up the shortfall between taxes and payments.... so if they cancel the IOUs there is no interest income and it has a shortfall.....

From the SS Trustees report... my bold...

Social Security's total income is projected to exceed its total cost through 2021, as it has since 1982. The 2016 surplus of total income relative to cost was $35 billion. However, when interest income is excluded, Social Security's cost is projected to exceed its non-interest income throughout the projection period, as it has since 2010.
​

 

[Alan]

This is what I remember reading so ai thought they did. Maybe it was scrapped after Osborne was forced out.
70 by 2060.

https://www.theguardian.com/uk-news/2013/dec/05/state-pension-age-raised-to-70-autumn-statement

And here is another one for the people Under 30 to 70. More recent article.
https://www.ft.com/content/634edc3a-1089-11e7-a88c-50ba212dce4d

IIRC you stated it as a fact that the UK has made the changes you stated, whereas you only read speculation on the possible changes in a couple of newspapers. I'm just trying to point out how it actually is.

The U.K. already changed their SS program so that the younger generations like my nieces won't get SS until age 70, IIRC. I don't think you can get SS early like 62 either. This is why it's even more important for my millenniums to contribute to their retirement account if they want to retire sooner.

 

[Fedup]

IIRC you stated it as a fact that the UK has made the changes you stated, whereas you only read speculation on the possible changes in a couple of newspapers. I'm just trying to point out how it actually is.

I did put IIRC(did you not see that)because that's what I remembered reading it including the age around 70, so it's actually 68. Close enough.

Her mom was able to get SS at 60. So they did change the law. Just the age was not actually 70 but 68. Isn't that what IIRC mean?

Here is this link, my niece was born 1978 and it says her retirement age is 68.
https://en.m.wikipedia.org/wiki/State_Pension_(United_Kingdom)

 

[Alan]

I did put IIRC because that's what I remembered reading it.

But you quickly determined that it was not facts but speculation once challenged. I only ask that you post sources when you state "facts" rather than "IIRC" because it is the headline that gets remembered, which is how fake news works.

 

[Fedup]

But you quickly determined that it was not facts but speculation once challenged. I only ask that you post sources when you state "facts" rather than "IIRC" because it is the headline that gets remembered, which is how fake news works.

I'm not sure what I posted that caused this much argument. I post IIRC the law has changed that the retirement age is 70 for younger generation. The IIRC is because I didn't want to spend the time searching for it. So it was actsually 68 instead of 70. I probably didn't have time to search for the information earlier because I had things to do. But I remember reading it that they were changing to 70. Now after lunch I have time to search and it's actually 68.

I reread my post, I put IIRC after the number 70. So I was not 100% sure about the age, I'm sure if it affects me I would remember. But the law did change. You combine the two things and stated that I was sure the law has changed to 70. I didn't.

 

[Gumby]

I call no harm, no foul. The correct information seems now to have been put out there for all to see. But it is a good reminder that it helps to cite our sources.

 

[REWahoo]

But it is a good reminder that it helps to cite our sources.

+1

On (far) more than one occasion I've looked up a source to link and discovered I was wrong! Yes, hard to believe, but true!

 

[Fedup]

That's why we have Google out there for free for you'all to check. Don't believe anything you read online either unless you see it out there. Don't call it fake news either. Go straight to the source for your reliable information.

 

[REWahoo]

That's why we have Google out there for free for you'all to check. Don't believe anything you read online either unless you see it out there. Don't call it fake news either. Go straight to the source for your reliable information.

One could take this to the next logical step and say "Don't post stuff unless you know it is accurate...."

 

[Fedup]

One could take this to the next logical step and say "Don't post stuff unless you know it is accurate...."

I didn't post any link that's inaccurate. I thought we were having a conversation. Who would remember the exact age whether it's 68 or 70. I don't even remember my exact FRA either. That's why I put the IIRC. That means going by memory. Maybe people should put on their old age glasses.

 

[Meadbh]

One could take this to the next logical step and say "Don't post stuff unless you know it is accurate...."

+1

 

[ncbill]

Any shortfall between SS taxes collected and benefits paid is borrowed for the current year.

BUT, that borrowing doesn't show up in the current year budget when it comes from interest or redeeming the (non-marketable) bonds in the trust fund.

Sorry, but wrong... right now it is using interest income to make up the shortfall between taxes and payments.... so if they cancel the IOUs there is no interest income and it has a shortfall.....

From the SS Trustees report... my bold...

Social Security's total income is projected to exceed its total cost through 2021, as it has since 1982. The 2016 surplus of total income relative to cost was $35 billion. However, when interest income is excluded, Social Security's cost is projected to exceed its non-interest income throughout the projection period, as it has since 2010.
​

 

[Meadbh]

I didn't post any link that's inaccurate. I thought we were having a conversation. Who would remember the exact age whether it's 68 or 70. I don't even remember my exact FRA either. That's why I put the IIRC. That means going by memory.

If one is not sure of the facts, one should at least make some attempt to look them up before posting information that may lead others astray.

 

[Fedup]

If one is not sure of the facts, one should at least make some attempt to look them up before posting information that may lead others astray.

That was not my intention because we are discussing US SS. But I think Alan's link did provide the source for the U.K. SS so that should clear up. But I did put IIRC. That means going by memory.

 

[travelover]

Facts are so yesterday.

 

[Meadbh]

That was not my intention because we are discussing US SS. But I think Alan's link did provide the source for the U.K. SS.

There are members here from countries other than the US. The world does not revolve around the US, you know.

 

[Fedup]

There are members here from countries other than the US. The world does not revolve around the US, you know.

I thought it does. Lol. But the title of the thread is about US SS not in equity, not the world.

 

[Meadbh]

I thought it does. Lol. But the title of the thread is about US SS not in equity, not the world.

Nevertheless, accurate information is important, even if it is about another country.

 

[Fedup]

Nevertheless, accurate information is important, even if it is about another country.

I agree, like I said, I was jus making conversation, but in between prepping for food and cooking, I've jumped back and forth and didn't pay attention. Next time I will cite for sources, if not when I post IIRC means going by memory folks, Fedup is busy prepping for food.

 

[Texas Proud]

Any shortfall between SS taxes collected and benefits paid is borrowed for the current year.

BUT, that borrowing doesn't show up in the current year budget when it comes from interest or redeeming the (non-marketable) bonds in the trust fund.

What do you mean 'borrowed'? SS is not borrowing money... it owns a bunch of securities and those securities pay interest... SS uses some of that interest to pay current benefits and invests the rest.... how is that 'borrowing'?

 

[Meadbh]

I agree, like I said, I was jus making conversation, but in between prepping for food and cooking, I've jumped back and forth and didn't pay attention. Next time I will cite for sources, if not when I post IIRC means going by memory folks, Fedup is busy prepping for food.

Thank you.

 

[gerntz]

There are members here from countries other than the US. The world does not revolve around the US, you know.

Sure it does.

 

[Hermit]

What do you mean 'borrowed'? SS is not borrowing money... it owns a bunch of securities and those securities pay interest... SS uses some of that interest to pay current benefits and invests the rest.... how is that 'borrowing'?

So the US Federal Government has a very nice paper trail between the income and outgo of the Social Security System. The Federal Government pays the money it borrowed from SS back including interest. Those payments to SS come from the general treasury. Just like the unused SS tax funds went into the general treasury and were used to pay for general fund stuff to keep the total debt down a bit. Very soon the general treasury will have to start paying back the bonds as well as the interest. That money all comes from the general treasury which is funded by taxes and deficit spending. The government will honor the SS commitment by making up the difference between the amount of income from SS taxes and SS payouts from the general treasury. The only thing that nice paper trail will do, IMHO, is fix a date when the current law says it is OK for the government to give SS recipients a hair cut. An alternative would be to change the law in some way to balance the SS taxes and SS payments.