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Old 11-01-2010, 08:57 PM   #41
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Originally Posted by ronocnikral View Post
do newspapers run articles with young workers talking about how hard it is to make ends meet? or do you get the article with a white haired old lady who acts sweet and talks about how she can't put food on the table. no sympathy here, sorry.

my solution is highly unpopular. i think we should follow the french and raise the retirement age on anyone younger than 62. and get payments in check.

and no, i don't believe the job market is zero sum.
The 4 folks that I am talking about are all in their 80s and none of them have a snowballs chance of finding a job. In good times or in bad.

I have no problem with them gradually raising the retirement age. It would give incentive to younger folks to save for old age. They would not do it voluntarily I suspect, but at least they know what the consequences are. SS was a false sense of security for the last generation.
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Old 11-01-2010, 09:03 PM   #42
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Both my parents and the wife's parents rely heavily on SS. They are all 4 very spry and I could see all 4 living into their 90s. I'd hate to see their benefits cut to the point of not being able to live independently.
Others have mentioned that the original intent of SS was to be one leg of a three-legged stool. So if you rely on one leg too heavily, well you might not always be able to get what you want, but you might get what you need.


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Any thoughts on whether SS cuts will be fazed in for future folks or is it possible to see the cut like I mention above?

The 4 folks that I am talking about are all in their 80s...
I really doubt that enough politicians could agree to cut SS significantly for people in their 80s. That's the last group that has this worry.

-ERD50
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Old 11-02-2010, 07:53 AM   #43
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Originally Posted by Pie Floater View Post
The 4 folks that I am talking about are all in their 80s and none of them have a snowballs chance of finding a job. In good times or in bad.

I have no problem with them gradually raising the retirement age. It would give incentive to younger folks to save for old age. They would not do it voluntarily I suspect, but at least they know what the consequences are. SS was a false sense of security for the last generation.
my point is...politicians, and I believe americans in general, would rather break the backs of the working population than let am old person starve.

ditto to what is above.
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Old 11-02-2010, 08:13 AM   #44
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I think the advice was just plain dumb. An FA telling you SS will not likely be there is making a political statement, not a financial statement. Worst case scenarios have SS benefits reduced by 25% not eliminated. On the other hand, it is reasonable to choose to ignore SS as a technique to force extra savings to fund an ER or better assure a good regular retirement. No different really than assuming a much lower than likely growth rate on your investments. If the advisor simply suggested that thinking OK -- but dire warnings that SS will not be there is misleading financial advice.
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Old 11-02-2010, 09:15 AM   #45
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Fire,

I'm not paticularly opposed to this idea but can you identify a state that can claim that this approach avoided or resolved their employee pension funding woes?
Perhaps a good part of the states' pension "funding woes" are the result of benefit promises that are out of line with their funding capabilities. In general, the benefits are relatively more attractive than SS both in terms of retirement age and $, especially for higher income workers. In any case, how would restricting the state pension plans to only investing in government securities improve this situation over the long term?
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Old 11-02-2010, 09:48 AM   #46
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Perhaps a good part of the states' pension "funding woes" are the result of benefit promises that are out of line with their funding capabilities. In general, the benefits are relatively more attractive than SS both in terms of retirement age and $, especially for higher income workers. In any case, how would restricting the state pension plans to only investing in government securities improve this situation over the long term?
That wasn't the case even ten years ago Fire. State budgets are in crisis today because we deregulated the financial industry, because we've bought into this notion of a free lunch e.g. tax cuts can pay for themselves and because our political system is incapable of addressing the extraordinary rise in healthcare costs....the largest portion of any state budget today.

I don't think DB pensions in the public sector will survive in either case due largely to taxpayer resentment. One would have to go back thirty years to find the origins of that resentment. And if you take Germany as an example, one can conclude that globalization isn't the only reason for this.

A similar dynamic is taking place with Social Security....It's burden on the future generations,..... the certainty of it's demise, ....characterizations of it as another welfare program.....

We've all been mugged.
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Old 11-02-2010, 10:51 AM   #47
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... and because our political system is incapable of addressing the extraordinary rise in healthcare costs....the largest portion of any state budget today.

We've all been mugged.
Our political system is probably the single most significant cause of the "extraordinary rise in healthcare costs".

The housing & credit bubble was a large (if not the largest) part of the financial meltdown that brought down the value of pension & 401K funds. And it was the political system that encouraged it.

We are getting mugged indeed.

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Old 11-02-2010, 12:06 PM   #48
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How could SS or public pensions ever be reduced? What would be the mechanism? I don't see how it could be done by legislatures, because retirees are voters, there are a lot of them, and there are going to be more.
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Old 11-02-2010, 12:08 PM   #49
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How could SS or public pensions ever be reduced? What would be the mechanism? I don't see how it could be done by legislatures, because retirees are voters, there are a lot of them, and there are going to be more.
Uh, because we can't afford the promises the politicians made?
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Old 11-02-2010, 12:30 PM   #50
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Uh, because we can't afford the promises the politicians made?
That's a reason for cutting benefits. My question was about the mechanism for cutting benefits. Would checks to retirees be reduced in their amounts? On whose authority? Or would banks stop honoring the checks? What would actually happen?
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Old 11-02-2010, 01:16 PM   #51
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That's a reason for cutting benefits.
My question was about the mechanism for cutting benefits.

Would checks to retirees be reduced in their amounts? On whose authority? ?
It would have to be legislation passed by congress and signed by the president.

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Or would banks stop honoring the checks? What would actually happen
All checks could be worthless along with our currency in worst case scenario(s) (eg. Greece, or 30s Germany) should this happen then problems are everywhere, not just in SS.

What is most likely, is that interest rates will go skyward, borrowing more $$ to fund everything becomes prohibitive. Then a crisis follows with ever higher taxes, cutbacks, strikes and lots of unhappy people who liked things the way they were.

Should we choose to monetize the debt, then inflation will eat away at the value of everything.
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Old 11-02-2010, 07:11 PM   #52
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That's a reason for cutting benefits. My question was about the mechanism for cutting benefits. Would checks to retirees be reduced in their amounts? On whose authority? Or would banks stop honoring the checks? What would actually happen?
It is a fallacy to think that something can't happen because you or even a room full of experts can't think of a mechanism for its happening.


Ha
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Old 11-03-2010, 10:21 AM   #53
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... My question was about the mechanism for cutting benefits. Would checks to retirees be reduced in their amounts? On whose authority? Or would banks stop honoring the checks? What would actually happen?
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It is a fallacy to think that something can't happen because you or even a room full of experts can't think of a mechanism for its happening.


Ha
We don't even need to imagine. It has already happened:

Social Security History FAQs Internet Myths

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In 1983 Congress changed the law by specifically authorizing the taxation of Social Security benefits. This was part of the 1983 Amendments, and this law overrode the earlier administrative rulings from the Treasury Department.
Adding a tax effectively cuts the benefits. I expect to see more of this, of course only for the minority of those who are collecting the higher amounts (who already receive lower payments relative to their inputs).

-ERD50
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Old 11-03-2010, 10:26 AM   #54
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We don't even need to imagine. It has already happened:

Social Security History FAQs Internet Myths



Adding a tax effectively cuts the benefits. I expect to see more of this, of course only for the minority of those who are collecting the higher amounts (who already receive lower payments relative to their inputs).

-ERD50
I agree. Absent a general tax increase, there are only three real needle movers to affect the deficit. SS, Medicare and Defense.
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Old 11-03-2010, 10:41 AM   #55
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I agree. Absent a general tax increase, there are only three real needle movers to affect the deficit. SS, Medicare and Defense.

There's a fourth that doesn't involve a tax increase.

Find a world class health care system and steal it.
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Old 11-03-2010, 04:40 PM   #56
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There's a fourth that doesn't involve a tax increase.

Find a world class health care system and steal it.
Well, I don't want to derail this thread with the health care debate, plenty of other threads on that. But I'll just say that the Swiss system seemed like a reasonable model. We didn't get anything even close .

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