Protect SS, it's important

[keegs]

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Originally Posted by Emeritus E.G. If I work 40 years and marry and divorce 3 spouses they all get a spouse benefit if we were married 1o years for which no taxes are paid

They're eligable to a spousal benefit if each never contributed to the system.

[ronocnikral]

Quote:

Originally Posted by keegs for eighty percent of us ss is the pension. the system is being / has been undermined so that someone else can get a tax cut....it's as plain as the nose on your face. marginal rates need to go up to pay back the IOUs and between now and 2040 we can figure out a way to adjust the system's future payouts. ....and with such mediocre results...why is it again that we're spending double what other industrialized countries spend on healthcare ?

don't worry about the mule, just load the wagon.

[ziggy29]

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Originally Posted by Emeritus Raising the age puts the cuts disproportionately on poor African Americans due to shorter life expectancies. Not to mention that the working ability of low income workers declines dramatically as they reach the middle and late 60s

And makes the unemployment problem even worse.

[keegs]

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Originally Posted by ronocnikral don't worry about the mule, just load the wagon.

Ron...if you consider where the income distribution has gone in the past three - four decades then some might question who that mule is.

If fiscal dicipline is on your mind then we trippled the national debt in the eighties and doubled it again in the 2000's. Those fiscal policies put the "mule" before the cart.

But we both know with all honesty that fiscal prudence was never the objective here.

[Emeritus]

Quote:

Originally Posted by keegs They're eligable to a spousal benefit if each never contributed to the system.

or if its bigger than what they would get from their own contribution. My point is that it is a social insurance benefit not tied to contributions so there is no reason to limit its funding source to payroll taxes on the middle class.

[nun]

The main point of my original post has been lost. There is s definite bias against thinking of SS as a critical part of retirement funding.
The article states

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Workers have clearly gotten the message that they're largely on their own: Just-released numbers from Charles Schwab reveal that almost half of the general population say they do not plan on counting on Social Security as a source of income in retirement.

Why not write it like this

Quote:

Workers have clearly gotten the message that SS is important to their retirement: Just-released numbers from Charles Schwab reveal that more than half of the general population say they plan on counting on Social Security as a source of income in retirement.

[ziggy29]

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Originally Posted by nun Why not write it like this

Because there is a strong downward trend in the level of trust that younger generations have that they won't get screwed by it relative to their elders. And the longer we take to deal with it, the more they will get screwed.

For that matter, why doesn't a newspaper report about the thousands of planes that landed safely in any given day instead of the one that crashed?

Having said all that, from a personally selfish point of view I'd be better off if they "kicked the can" a little longer, until I'm at least 50.

[Independent]

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Originally Posted by Ronstar Well, then I don't agree with economists. The employers portion is a tax paid by employers. Which brings up the question - what is the reasoning for the employer and employee each paying half?

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Originally Posted by ronocnikral the question is, if SS went away, would your income go up 6-7%? or whatever the effective increase would be. my company adds that in as a benefit when trying to sell the "total compensation package" to naive college students. it's also a big fat minus in the pension calculation.

I've done financial analysis for sales compensation in situations where sales people can be either employees or independent contractors. The IC's always got more cash per sale. I've sat in meetings with both types of people and gone down the list (with dollars and percents) showing why the company will pay more to the ICs. SS is right at the top because it's non-controversial.
Both types of sales people understand that the cost gets shifted to employees through lower cash comp.

I've also done cost/benefit on automating processes. We always include the company half of SS in the cost of employees. If employees want to beat out the machines, they need to accept wages that are lower than they would be if their were no company half of SS.

[Independent]

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Originally Posted by kaneohe Thanks....slick calculator. I got returns of 1-2% which is similar to what I remember getting when I did it the hard way a while ago. l assume that's not the real rate of return.

That probably is a real rate. I didn't see if they disclosed all the assumptions in their method, but 1-2% is common for current workers.

Remember that SS indexes your wages when they calculate your initial benefit, and then increases the benefit with CPI. So the easy calculation just assumes no inflation and produces a real rate.

[Independent]

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Originally Posted by nun The main point of my original post has been lost. There is s definite bias against thinking of SS as a critical part of retirement funding. The article states Why not write it like this

I have to agree somewhat with ziggy's observation that news stories rarely lead with good news. However, I also agree with the notion that "financial service" firms have a strong vested interest in convincing current workers that SS won't be there when they want it, so they just keep beating that drum.

The negative externality is that it's even harder to have a rational public policy discussion about the topic.

[keegs]

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Originally Posted by Emeritus or if its bigger than what they would get from their own contribution. My point is that it is a social insurance benefit not tied to contributions so there is no reason to limit its funding source to payroll taxes on the middle class.

E,

There are many arguments like this that with all due respect are on the margins.

I'll admit I haven't thought this through but I don't even know that I agree FICA is a tax. SS is an old age annuity, funded through contributions paid by the employer and the employee much as a defined contribution 401k benefit. And for that reason I don't think SS should be funded through an income tax.

The SS benefit is determined by the individual contribution and an annual cost of living adjustment. If the program becomes underfunded for whatever reason, (e.g. demographic) then the administrators of the program should be expected to ajust the participant contributions accordingly. But again..we're good until 2037 or there abouts.

The decision to make the SS surplus available to the general fund has provided flexabilty to congress but the tax policies subsequent to that decision have become / are clearly a strategy to undermine the program.

[ziggy29]

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Originally Posted by Independent I have to agree somewhat with ziggy's observation that news stories rarely lead with good news. However, I also agree with the notion that "financial service" firms have a strong vested interest in convincing current workers that SS won't be there when they want it, so they just keep beating that drum.

I certainly agree that Schwab and other firms have a vested interest in wanting to "scare" more people into investing more of their own money. But stories like this are just as commonly seen in mainstream media reports on financial matters.

[keegs]

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Originally Posted by Independent I have to agree somewhat with ziggy's observation that news stories rarely lead with good news. However, I also agree with the notion that "financial service" firms have a strong vested interest in convincing current workers that SS won't be there when they want it, so they just keep beating that drum. The negative externality is that it's even harder to have a rational public policy discussion about the topic.

Amen.

[ziggy29]

Well, here's the thing. We have two different somewhat opposing dynamics at work:

1. Convincing younger voters (say under 40) that continuing SS for the foreseeable future is a good thing for generations to come;

2. Knowing that *any* fiscally workable reforms to make SS solvent for many decades will, by necessity, make it a worse deal for younger generations while the older generations share little to none of the pain.

Frankly, other than an appeal to altruism or respect for elders, from a strictly economic standpoint I don't know why 20-somethings and 30-somethings would buy into it eagerly. Retirement is often such a foreign and far-out topic that they consider needs in the here and now more important, like being able to hold a job or generating enough income to live an acceptable lifestyle today. A few of us (myself included) were fortunate enough to be focused on retirement even in our 20s, but we are decidedly in the minority.

[nun]

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Originally Posted by ziggy29 I certainly agree that Schwab and other firms have a vested interest in wanting to "scare" more people into investing more of their own money. But stories like this are just as commonly seen in mainstream media reports on financial matters.

...and the media gets a lot of copy from those very firms. There is a constant drum beat against SS, if it wasn't for AARP I'd hear nothing positive about it. Seriously if we gut SS that will be the final barrier stopping
that majority of older people form either working until they die or living in poverty.

[stoutboy]

you are correct. unfortunately, memories are short, and there are few around anymore alive before the days of SS who can explain just how bad it really was to get old in our country then. Old age meant poverty for the majority of people.

The other thing is that most people are way, way too overconfident in their investing acumen. Those behind privatization are fully aware of that, and they manipulate this.

I think George Carlin was utterly correct in one of his monologues about the true owners of American society. They want that money and they are going to get it. Eventually.

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Originally Posted by nun ...and the media gets a lot of copy from those very firms. There is a constant drum beat against SS, if it wasn't for AARP I'd hear nothing positive about it. Seriously if we gut SS that will be the final barrier stopping that majority of older people form either working until they die or living in poverty.

[Emeritus]

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Originally Posted by keegs E, There are many arguments like this that with all due respect are on the margins. I'll admit I haven't thought this through but I don't even know that I agree FICA is a tax. SS is an old age annuity, funded through contributions paid by the employer and the employee much as a defined contribution 401k benefit. And for that reason I don't think SS should be funded through an income tax. The SS benefit is determined by the individual contribution and an annual cost of living adjustment. If the program becomes underfunded for whatever reason, (e.g. demographic) then the administrators of the program should be expected to ajust the participant contributions accordingly. But again..we're good until 2037 or there abouts. The decision to make the SS surplus available to the general fund has provided flexabilty to congress but the tax policies subsequent to that decision have become / are clearly a strategy to undermine the program.

I am afraid you are incorrect on both ends. It is not in any way an annuity. It is a tax and benefit program. Some benefits are RELATED to taxes paid some are merely computed on someone's earnings.

[ronocnikral]

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Originally Posted by keegs Ron...if you consider where the income distribution has gone in the past three - four decades then some might question who that mule is. If fiscal dicipline is on your mind then we trippled the national debt in the eighties and doubled it again in the 2000's. Those fiscal policies put the "mule" before the cart. But we both know with all honesty that fiscal prudence was never the objective here.

you missed my point. with the increase in national debt, it's not necessarily fair* to say, "we need adjustments, we'll make them to some arbitrary date and then look at the situation from there," after you have lived high on the hog. while flexibility is always needed, it's a crappy deal for those who are young to get stuck with paying for the current bill and paying yesterday's at the same time. shouldn't we all bear this burden?

Quote:

Originally Posted by ziggy29 Well, here's the thing. We have two different somewhat opposing dynamics at work: 1. Convincing younger voters (say under 40) that continuing SS for the foreseeable future is a good thing for generations to come; 2. Knowing that *any* fiscally workable reforms to make SS solvent for many decades will, by necessity, make it a worse deal for younger generations while the older generations share little to none of the pain. Frankly, other than an appeal to altruism or respect for elders, from a strictly economic standpoint I don't know why 20-somethings and 30-somethings would buy into it eagerly. Retirement is often such a foreign and far-out topic that they consider needs in the here and now more important, like being able to hold a job or generating enough income to live an acceptable lifestyle today. A few of us (myself included) were fortunate enough to be focused on retirement even in our 20s, but we are decidedly in the minority.

i'm on board with 1. i grudgingly accept 2. the problem is, as i stated above, this burden should be shared. it's not fair* to "change the rules in the middle of the game." but it's also not fair* for me to be stuck with the tab, as I have been a voter for less than a decade. i say obama should go sarkozy on those under 60. sure, there may be chaos, but i predict it will be short lived. let's share the love...

*i realize the objectives of these gummit programs are not to balance them to what i think is fair.

[Independent]

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Originally Posted by Emeritus You have to deconstruct the social security problem into its components. Social Security has two critical components, which we can call the Earned component and the Welfare component. The welfare component of social security includes spousal benefits, added benefits for low income workers and benefits for disabled children. The earned components are pensions for middle and upper contributors and disability payments. you can tell the difference because all wage earners benefit from the earned component in proportion to taxed earnings. the welfare components are "detached" from the earnings i.e. they are calculated based on the earnings but no taxes are paid to support them. In particular there are no taxes collected to support the spousal benefit. The entire welfare component of social security is paid for by middle income workers. The rich are absolutely totally exempt from this welfare tax Class Warfare on a grand scale. I have not seen recent estimates of the welfare component but the last ones I saw indicate its about 50% of the SS tax for middle and upper income wager earners. (50-100,000 ) Its highest for the Dual income wager earners close to the social security limit. All repeat all of the social security privatization arguments are based on eliminating this welfare payment. that is how they make the numbers work. In particular they always eliminate the spousal pensions. The easiest path to solvency for social security is to shift the welfare component to the general government budget. There is simply no rational basis for taxing only middle income workers for social welfare payments.

FWIW, I agree with the general drift here. There are details, like the "absolutely totally exempt" that don't ring true if "rich" means someone with very high earned income.

I've never seen a calculation of the "welfare component" and I don't think we'll get a theoretical agreement on exactly where to draw the line. As an idea that won't fly politically, I could see freezing (or even reducing) the SS payroll tax and saying it pays for benefits up to a replacement ratio of xx%, with additional benefits paid from the income tax. Then solve for xx each year as SS benefit/tax ratio changes.

[keegs]

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Originally Posted by ronocnikral you missed my point. with the increase in national debt, it's not necessarily fair* to say, "we need adjustments, we'll make them to some arbitrary date and then look at the situation from there," after you have lived high on the hog. while flexibility is always needed, it's a crappy deal for those who are young to get stuck with paying for the current bill and paying yesterday's at the same time. shouldn't we all bear this burden? .

Did we all benefit equally from those tax policies? If you don't think so then shouldn't the majority of the cost of re-balancing be borne by those who did?