Greenspan Comments on SS

[Beststash]

Any opinions on the effect or potential impact on changing SS benefits, impacts to ER, "Close to retirement" comment by current admin. - what is "Close to retirement" ??

 

[Hiss]

Sounds like perhaps the worst we might expect come time to collect is perhaps a 25% reduction in benefits (through postponement, reduction in payout amount, or taxes). I think most who ER can probably absorb that loss. (I know there are many exceptions and this is a generalization).
I hope they follow Greenspan's advice and do something now rather than later. That way the burden can be spread to more retirees and those of us not eligible for another 20 years or so won't bear a more devastating effect.

 

[fire5soon]

We all knew it was coming... it seems sooner rather than later.

 

[cute fuzzy bunny]

While it was fairly obvious and a likely scenario, it seems perhaps a little irresponsible. The people who might depend most on SS and medicare are the ones that may be least likely to have a well planned and fully funded retirement.

SS having taken the extra step over recent times by sending people mailers telling them how much they'd be making wasn't an improvement, perhaps even more irresponsible.

On the cusp of these folks beginning their retirements, they learn they may have to wait and then get less money. Hmm. Again, not surprising to an educated and informed person, but I dont think I'd apply those descriptors to more than a quarter of people who will be retiring soon. All these other folks know is that they retire next year and while their nest egg isnt that great, they got a piece of paper from the SS administration telling them they'd be getting some checks of around a certain amount.

I might propose we forget about things like going to mars and the government trying to "fix" marriage and focus on fulfilling the relative promise of social security and medicare.

 

[Telly]

For those who missed Greenspan's speech, as I did, here is the official text:

http://www.federalreserve.gov/boarddocs/testimony/2004/20040225/default.htm

It is much better to read it yourself, than for some talking TV head to paraphrase it, or to listen to selected tiny sound bites without the context.

 

[Hiss]

Thanks Telly

but I wonder what the effect would be of taking the cap off of how much income is subject to FICA and placing a cap on the max SS which can be received.

GDER, I hope you have no political influence.

 

[Cut-Throat]

Sure - Reducing SS benefits would fix the problem or increasing taxes would also. :-/

The problem is - It will never fly politically. They will screw the very young and unborn. The voting block of baby Boomers is too huge to allow SS to be touched in any fashion.

My guess is that the problem will be solved with inflation. Government prints money for the HUGE debt, does not lower benefits or increase taxes. The benefits will be just worth less!

 

[TheFIREman]

The compounding effect of hedonics! Your chocolate ration has just been increased from 2 ounces to 25 grams!

 

[wabmester]

I still think indexing the benefit age to average lifespan makes the most sense, but what do you think of this idea?

A new form of estate tax. If you die with a positive balance in your estate, your minimum estate tax is your aggregate social security/medicare benefits paid out.

This would be sort of a retroactive means test, and I think it would be the least painful way to fund the program.

 

[Jarhead*]

TH:
Re: Your post on Social Security.

Folks up here (North State), definantly count on Soc. Sec. as the major part of their "retirement". (This aint Connecticut).
My father worked for years in a an undustry that was slowly dieing. (He was a logger). He worked until his bad back forced him out at age 70. He had Soc. Sec. plus a $50.00 a month "pension". He did not smoke or drink and raised 8 kids, while my mother stayed at home. True, it was their choice, but it was a different world back then. (When he died, they had a negative net worth. He continues to be my hero).
There are to this day, plenty of folks in this area that are hard working, do anything for you types, that are not ignorant, but choose to live their lives without an agenda. These are the folks that would be impacted unfairly if they change the promise of social security.
I remember a popular saying "that when you are young if you are not a liberal you have not heart, but when you get older, if you are not a conservative, you have no brains". (I personally have been effected the opposite of that.)
The country can continue to deliver the promise of soc. sec., but will require some changes that will not fly well with the folks that are not willing to sacrafice. (Very little, if done properly).
Jarhead

 

[Bob_Smith]

Wow Jarhead! You expressed my opinion far better than I could have. It reminds me of something my own father would say.

 

[sgeeeee]

A summary of the obvious problems and potential solutions can be found here :

http://cbs.marketwatch.com/news/story.asp?guid={924CA09F-EA9D-4D65-A9C7-2435ABA1A023}&siteid=mktw

Although I appreciate reading an article that is not as chicken little about social security as many have been, I think he's still off base in this column. Here's another view with at least a little bit of data:

http://www.calpundit.com/archives/002472.html

 

[wabmester]

My favorite chart is this one:

(I) shows that all we have to do is make more babies and stop improving lifespan so much, and everything will be A-OK.

 

[wabmester]

If Ted ever comes back, this will give him an alternative to his "it's our civic duty to work" spiel. It turns out it's our civic duty to go at it like bunnies

 

[haha]

I'm a contibutor too. I never made a lot of money myself, and I might actiually come out ahead on social security. But I saw my 24 year old son write out a check to pay his federal income tax in the amount of $995,000. So he has paid whatever benefits I'll ever get to draw, plus a hell of a lot more. My second son is doing his part too.

As to creating another generation, they are both eager to have kids, but a lot of young women today would rather go to law school. It's almost like a slow cultural suicide. I wonder where the old fashioned young women are today? I met a girl from Saskatoon that I would love to have as a daughter-in -law, but there really isn't a match-making role for an American father.

Mikey

 

[Hiss]

Doesn't the projected GDP rowth rate play one of the more critical roles in all these projections? I read an article today (cnnfn) that mentioned current SSA models project a growth rate of just 2.5%, however, most economists project a 3.5% growth rate in GDP through 2047. A change to a more realistic GDP (if this is a more realistic GDP) would prevent the sky from falling in 2042 or 2047 or 20_ _ (pick the number)??

 

[sgeeeee]

My favorite chart is this one:

What is the y-axis?

 

[wabmester]

What is the y-axis?

The chart is from the SSA study referenced above.

Long-Range OASDI Trust Fund Ratios Under Alternative Assumptions
[Assets as a percentage of annual expenditures]

 

[unclemick]

Simulation models - I repeat simulation models. Living in Hurricane Alley and watching the models(which don't always fully agree) - I still think SS should be modeled - by 'independant - or at least quasi-independent groups/agencies' allowing multiple inputs and 'good' data sets. I guess the weather isn't as polictically check or subject to 'selected data'.

My reason for thinking Greenspan is on the right track - is that high tax countries(Europe,Japan,U.S.) will suffer increasing competition(China,India,etc.) in addition to the demograpics.

 

[unclemick]

---politically charged----. Boy did I screw the spelling - must be getiing ansy about age 63 in three years.

 

[Telly]

On my own spreadsheets, I have always been putting in a less than CPI inflation factor for SS benefits. For example, if inflation is 3%, then I have been using only 2% as the growth for SS benefits once started.

Predictably, then, the percentage of my future income coming from SS is highest at SS initiation at age 62, and then declines thereafter as inflation slowly outpaces SS benefits.

The number I picked is purely arbitrary, but I could say that it came from Crooke's dark space if that makes it sound scientifically derived.