Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 11-06-2010, 01:51 PM   #81
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,815
Quote:
Originally Posted by samclem View Post
Well, maybe not "magic", but . . .
I find this idea of "forced savings" to be very distasteful, but my support for it comes from an appraisal of the world as it is, not as I'd wish it to be. Factors:
1) - We know from our national experience with both IRAs and 401Ks that Americans are, at present, crappy savers. For whatever reason, they aren't saving enough ...
2) - We know from the behavior of individual investors that many/most people are making investment decisions that are not in their long-term interest.
3) - When people fail in the US, those who have succeeded have to bail them out. The degree of wealth transfer in this regard will increase as there are more poor people voting to "soak the rich."
4) - A strong middle class is good for a democracy, and, conversely, democracies are dangerous places when the middle class declines. ... As I see it, the best hope for maintaining a strong American middle class is to turn many more people into investors.

A voter who is dependent on the government has a different outlook from a voter depending on his own investments for his security.

I don't believe these mandatory saving accounts are magic. I don't even much like the idea, except that it's the least bad alternative given what we know and where we are.
You can probably predict my response. I'll re-order your comments by my notion of "importance":

(3) is by far the most important to me. I've suggested a simplified version of SS to assure that we don't need to bail out people who failed to save. IMO, that removes the only good rationale for mandatory savings.

(1) I don't think that mandatory savings would have much impact on the total savings rate. People who voluntarily save today will save less because they will deduct the mandatory savings from their voluntary. (That's me.) Some people who don't save will simply borrow more - they've got the mentality that will justify the borrowing by looking at the big lump sum in their mandatory savings.

(2) Most people here think that retiring at 55 is a big deal. I wouldn't say that people who are willing to work to 65 are "wrong". In fact, we need them.

(1&2) If we really want to increase saving for macro-economic reasons, IMO we'd make more progress by eliminating the tax deduction for mortgages/HELOCS, and by working on our balance of trade*. (We also had lots of middlemen lying to both borrowers and lenders in the last decade, leading to too much borrowing. Hopefully we've learned our lesson.)

(4) I think the key to saving the middle class is good middle class wages. Saving money doesn't make up for low income if you don't have the income to save.

Note that mandatory savings plans involve lots of gov't control - mandatory contributions, limited investments, prohibitions on withdrawals while you're working, mandatory annuitization. I don't see much personal independence there.


*Any country that has a trade surplus with the US must lend us money to offset the trade. This lending in recent years has driven down our interest rates so rational consumers are incented to borrow more and save less.
__________________

__________________
Independent is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-07-2010, 07:26 AM   #82
Recycles dryer sheets
 
Join Date: Apr 2007
Posts: 71
I've read through most of this thread and there are many well written and well thought out posts. I stand in the corner that says the government should simply not be involved at all in administering retirement or health care programs. How is that for simplicity?

The people of this country must once again, "learn how to fish" and to start saving for their own good. We have to take away our ability to vote ourselves other people's money. Conversely, I tend to believe there will always be less fortunate people who, for the good of society (crime, disease, etc.), will need some assistance. And, I also believe that Americans are generally compassionate and will find ways through private charity to help those that most need it. To me, it's that simple. Despite our good intentions, we need to resist continuing down the path of government sponsored social welfare as there is a whole spiderweb of negative economic and social consequences that come with it.
__________________

__________________
cb7010 is offline   Reply With Quote
Old 11-07-2010, 05:56 PM   #83
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,264
Quote:
Originally Posted by cb7010 View Post
I've read through most of this thread and there are many well written and well thought out posts. I stand in the corner that says the government should simply not be involved at all in administering retirement or health care programs. How is that for simplicity?
Sounds like the kind of crazy talk that a bunch of revolutionaries would come up with, ummm, a couple hundred years ago. They'd probably give it an impressive, self-important sounding name like "The Constitution".

I've been reflecting this past week about how the Constitution (IIRC) never mentions anything about the strong taking care of the weak, the well off taking care of the poor, etc. Not that those aren't good things that we want to have, but is it the job of the Govt?

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 11-07-2010, 11:10 PM   #84
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,382
Quote:
Originally Posted by ERD50 View Post
I've been reflecting this past week about how the Constitution (IIRC) never mentions anything about the strong taking care of the weak, the well off taking care of the poor, etc. Not that those aren't good things that we want to have, but is it the job of the Govt?

-ERD50
It is according to government workers.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 11-08-2010, 05:02 AM   #85
Recycles dryer sheets
keegs's Avatar
 
Join Date: Oct 2010
Location: In a van down by the river
Posts: 407
I suggest you all gather round for a SS check burning demonstration..!
__________________
keegs is offline   Reply With Quote
Old 11-08-2010, 08:08 AM   #86
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,264
Quote:
Originally Posted by keegs View Post
I suggest you all gather round for a SS check burning demonstration..!
This tired old phrase always gets dragged out. It is empty and meaningless, not 'clever' at all.

Give me back my FICA and my employer's FICA contributions and all the investment gains I would have made during one of the greatest bull markets in history, and we'll talk.

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 11-08-2010, 10:01 AM   #87
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,815
Quote:
Originally Posted by cb7010 View Post
I've read through most of this thread and there are many well written and well thought out posts. I stand in the corner that says the government should simply not be involved at all in administering retirement or health care programs. How is that for simplicity?

The people of this country must once again, "learn how to fish" and to start saving for their own good. We have to take away our ability to vote ourselves other people's money. Conversely, I tend to believe there will always be less fortunate people who, for the good of society (crime, disease, etc.), will need some assistance. And, I also believe that Americans are generally compassionate and will find ways through private charity to help those that most need it. To me, it's that simple. Despite our good intentions, we need to resist continuing down the path of government sponsored social welfare as there is a whole spiderweb of negative economic and social consequences that come with it.
The way I read the bold is that certain types of aid to the poor really benefit "society", where "society" means everyone. So we have spending that benefits everyone, but you would fund it with voluntary donations.

That's the perfect set up for the free rider dilemma. I can get the benefits of lower crime, fewer beggars, etc. without spending my money by simply sitting on my hands when they pass the hat. We typically (but not always) deal with that by funding such activities (think national defense) with taxes.

AFAIK, all rich industrialized countries provide some social safety net with tax supported programs. It seems to be one of those things that people (as in whole societies) decide to do when they get richer.

I'd like to see (I'm serious here, not being sarcastic) some examples of rich countries that deal with the poor exclusively through voluntary charity. See what characteristics such societies have and compare them to the US. I know that we've got posters who have lived in a variety of countries, maybe someone can give some examples.

But, without that, I'm pretty skeptical that voluntary charity would avoid the downward spiral of free riders.
__________________
Independent is offline   Reply With Quote
Old 11-08-2010, 10:30 AM   #88
Thinks s/he gets paid by the post
GregLee's Avatar
 
Join Date: Oct 2010
Location: Waimanalo, HI
Posts: 1,881
Quote:
Originally Posted by cb7010 View Post
The people of this country must once again, "learn how to fish" and to start saving for their own good. We have to take away our ability to vote ourselves other people's money. Conversely, I tend to believe there will always be less fortunate people who, for the good of society (crime, disease, etc.), will need some assistance. And, I also believe that Americans are generally compassionate and will find ways through private charity to help those that most need it.
I see a couple of problems with this. The minor problem is the weasel word "most" in "help those that most need it". It might be true that private charity would suffice for those that "most" need it, but how about others that need it?

The other problem is a tendency to self-contradiction. If you're going to teach people to save, you have to punish those that don't, else where is the incentive? But if we could really depend on private charity to help those in need, where would the punishment come in?
__________________
Greg (retired in 2010 at age 68, state pension)
GregLee is offline   Reply With Quote
Old 11-08-2010, 10:47 AM   #89
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Apologies to those who've seen this before, but the topics here are well addressed by William Bernstein in "God Bless This Ponzi Scheme".

In addition to the humanitarian/charitable rationale for SS, he brings up a practical one:

Quote:
. . . Long, long ago, around the turn of the last century, we lived in a world of unfettered Ayn-Randian capitalism, with minimal government interference in daily life and commerce. And no income tax¾ a gauzy sort of New-Right Valhalla. The only problem was that the reaction to this system's excesses and inequities led to a backlash that inflicted communism and fascism on most of the planet. The US escaped these modern plagues, but just barely. This was largely because our political leadership had the courage and foresight to modestly redistribute income and wealth via antitrust legislation, a progressive income tax, and finally, Social Security. Of course, social and political peace also require a functioning market economy—Bismark’s prototypical welfare system did not save German society from the depredations of the Versailles Treaty, and the social benefits of the communist state did not overcome its crippling economic and political disadvantages.
So, in this view, SS, welfare, etc is the money we pay to keep social order, to keep the poor from taking to the streets with pitchforks and torches, or at least from voting themselves even more loot. There are a lot of problems with this idea (where does it stop? What about the Constitution? etc), but I can appreciate the reasoning. It's true that a mob is tough on business and prosperity, and that security/law enforcement can be more expensive than just paying the protection money.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 11-08-2010, 11:49 AM   #90
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
It's worth remembering that the Constitution was a replacement for the Articles of Confederation, which provided such a weak government as to be useless. Plus, it provided no good mechanism for paying our war debts.

The federal government supported expansion westward in many ways, including creating huge railroad monopolies by dangling tracts of land as a reward for laying tracks. Not to mention "handling" the Indians...

Most of the frontier was unlivable until there was "law and order", from every level of government. Neither the libertopia nor the "worker's paradise" ever existed. Those with the power tend to enrich themselves and their backers...

Ol' Joe Stalin wasn't standing in line for bread or shoes...
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 11-09-2010, 04:16 AM   #91
Recycles dryer sheets
keegs's Avatar
 
Join Date: Oct 2010
Location: In a van down by the river
Posts: 407
Quote:
Originally Posted by ERD50 View Post
This tired old phrase always gets dragged out. It is empty and meaningless, not 'clever' at all.

Give me back my FICA and my employer's FICA contributions and all the investment gains I would have made during one of the greatest bull markets in history, and we'll talk.

-ERD50
I was only half joking about the demonstration ERD. Such a protest would certainly drive home your points about self reliance and fiscal austerity for which I share your concern.

But to you point about a refund on SS, if you're 65, then you've benefited from the protection of FICA your entire life.

Would you expect such a deal from the good hands people?
__________________
keegs is offline   Reply With Quote
Old 11-09-2010, 06:47 AM   #92
Recycles dryer sheets
 
Join Date: Apr 2007
Posts: 71
Let's frame it this way..Let's say we all recognize that helping the poor acheive a reasonable standard of living is generally good for society. The question really is, how we do it most efficiently? Today, we run much of our support through large and grossly inefficient government programs that are administered by money/power hungry beaurocrats and politicians. I think then, we can all agree based solely on their track record, that this is NOT the best way to do this.

So, what do we do about it. Yes, the complete other end of the spectrum is to get government completely out and rely only on voluntary contributions. To me, this would be an interesting experiment that; but, it seems to scare people who want to cite "other Western societies" and "greedy capitalist free riders" as reasons to keep the current apparatus intact. Why don't we meet somewhere in the middle then..

How about getting the federal government out of social welfare and let districts and communities, towns, cities, maybe even States determine their own systems. Typically, the more local government is, the more control we have over it. Again, the issue here for most of us is not that we don't agree on giving assistance to those in need; but, how to best administer it. And, nobody can stand up now and say our current system is great.

One last point, I am talking about society helping needy individuals. The concept of the government having any hand in dictating the nation's retirement program is one that I really abhor. Perhaps that would be a good first step, let's re-define what Social Security is supposed to be?? A safety net for the poor? Or, a government administered retirement benefit program for all?
__________________
cb7010 is offline   Reply With Quote
Old 11-09-2010, 07:04 AM   #93
Thinks s/he gets paid by the post
Htown Harry's Avatar
 
Join Date: May 2007
Posts: 1,516
Great thread...

It's not exactly what you are looking for, Independent, but here's a Mercer comparison of 14 countries' systems, and an article with some critical analysis of Mercer's scoring system.
http://www.globalpensionindex.com/pd...eport-2010.pdf
U.S. retirement system ranks 10th

Quote:
Originally Posted by Independent View Post
AFAIK, all rich industrialized countries provide some social safety net with tax supported programs. It seems to be one of those things that people (as in whole societies) decide to do when they get richer.

I'd like to see (I'm serious here, not being sarcastic) some examples of rich countries that deal with the poor exclusively through voluntary charity. See what characteristics such societies have and compare them to the US. I know that we've got posters who have lived in a variety of countries, maybe someone can give some examples.
__________________
Htown Harry is offline   Reply With Quote
Old 11-09-2010, 07:12 AM   #94
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Quote:
Originally Posted by cb7010 View Post
How about getting the federal government out of social welfare and let districts and communities, towns, cities, maybe even States determine their own systems.
You can have a combination of different levels of government along with local organizations to organize various social services. It is that way in Sweden:

"Local politicians are directly elected at general elections and both municipalities and county councils levy taxes. The legislation on social services and on health care allows the municipalities and the county councils very great freedom to plan and organise their own services and levy taxes in order to finance them. Thus, services for the elderly are organised and prioritised differently in different parts of the country."

Reference:

Care of the elderly in Sweden

However, you must remember (regardless of government or local support), it does take a funding source and cannot just be supported by contributions from the general public (unless those "contributions" are taxes).

And in places (like Sweden) that do supply such services, the tax rates are much more (than in the U.S.) to ensure such services.
__________________
rescueme is offline   Reply With Quote
Old 11-09-2010, 07:29 AM   #95
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by rescueme View Post
And in places (like Sweden) that do supply such services, the tax rates are much more (than in the U.S.) to ensure such services.
And the public sentiment in favor of contributing to charity is much lower than in the US. In general, citizens of countries with high government safety nets believe their taxes take care of their obligations to materially provide for the poor.

The main argument used against more local control of welfare systems is the fear of a "race to the bottom." According to this argument, if poor people can migrate to where public welfare benefits are the highest, states which provide higher benefits will be swamped by the indigent. States will be in a race to reduce benefits to induce the poor to go somewhere else.
This makes sense in theory, but I don't know if it works in the real world. The gradient would probably need to be fairly steep to get folks to move.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 11-09-2010, 08:20 AM   #96
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Quote:
Originally Posted by samclem View Post
And the public sentiment in favor of contributing to charity is much lower than in the US. In general, citizens of countries with high government safety nets believe their taxes take care of their obligations to materially provide for the poor.
I can confirm your statement...

I did work in Sweden for a bit, so I'm aware of their "social system" of management not only those that are elderly, but also those that have drug/alcoholic challenges.

While you won't find any panhandlers and any apparently intoxicated person in public are looked down upon with distain (yes, I saw that), you are correct that they feel no desire to help out anybody/group for the "public good". They feel their (quite substantial) taxes will take care of any problems.

I was in a conversation one day in the office, with a Swede that had worked a bit in London. It was approaching Christmas, and we were talking about a tree we had in our office (I was based in the U.S.) that had cards - each one represented a "wish" from a child in a low-income home that we would buy a gift, put it under the tree, and have volunteers deliver the gift to a distribution point a week before Christmas.

He mentioned that he had gone through this same type of "charity" while living/working in London, and had a young daughter that he wanted to introduce to such charity. His wife (a Swede who never lived outside of the country) could not understand his reasoning. To her, charity was not the "obligation" of anybody personally. They were paying taxes and it was the obligation of the state/local government (and local councils) to take care of such "problems".

Everybody has their own way of looking at the challenge, based upon their social/local norms.
__________________
rescueme is offline   Reply With Quote
Old 11-09-2010, 09:25 AM   #97
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by rescueme View Post
And in places (like Sweden) that do supply such services, the tax rates are much more (than in the U.S.) to ensure such services.
The Swedes also have more stringent requirements for non-citizens receiving their generous benefits than the US. That is, they are more likely to be able to predict and fund future needs than the US who, at the call of a political whim, may suddenly have millions of additional folks to care for.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 11-09-2010, 09:58 AM   #98
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,815
Quote:
Originally Posted by cb7010 View Post
Let's frame it this way..Let's say we all recognize that helping the poor acheive a reasonable standard of living is generally good for society. The question really is, how we do it most efficiently? Today, we run much of our support through large and grossly inefficient government programs that are administered by money/power hungry beaurocrats and politicians. I think then, we can all agree based solely on their track record, that this is NOT the best way to do this.

So, what do we do about it. Yes, the complete other end of the spectrum is to get government completely out and rely only on voluntary contributions. To me, this would be an interesting experiment that; but, it seems to scare people who want to cite "other Western societies" and "greedy capitalist free riders" as reasons to keep the current apparatus intact. Why don't we meet somewhere in the middle then..

How about getting the federal government out of social welfare and let districts and communities, towns, cities, maybe even States determine their own systems. Typically, the more local government is, the more control we have over it. Again, the issue here for most of us is not that we don't agree on giving assistance to those in need; but, how to best administer it. And, nobody can stand up now and say our current system is great.

One last point, I am talking about society helping needy individuals. The concept of the government having any hand in dictating the nation's retirement program is one that I really abhor. Perhaps that would be a good first step, let's re-define what Social Security is supposed to be?? A safety net for the poor? Or, a government administered retirement benefit program for all?
You didn't specifically quote me, but I assume this is a reply.

I don't think "We can all agree .... NOT the best way ..." is correct. In fact, that is the issue. We can probably agree that any system has problems and the current US system isn't exempt. The question is would your idea is better.

I'm sure I didn't cite "greedy capitalist free riders". Why did you feel the need to add the two words to a piece of common economic jargon?

We already "meet in the middle" to some extent. For example, Medicaid is a federal-state partnership. I've never studied it, but I think the federal dollars come with a requirement that the state meets minimum benefit standards. That would be an attempt to prevent the race-to-the-bottom that Sam mentions. I've noticed that most communities seem to have subsidized elderly housing complexes. I'm pretty sure there is some federal money in them, but I don't know if or how there is a federal-local split.

The topic here is Social Security. I have trouble seeing any local old age pension scheme that would work in the US, due to our mobility. If you have an idea, why not write it up?

I agree that clearly stating a goal is very important. ERD pointed that out in post #52 and I tried to give my answer in #53. I think that means tested old age benefits incent behaviors that I'd like to avoid - consuming instead of saving during working years and manipulating/hiding assets, so I prefer systems without the means testing. Maybe you have some comments on goals.
__________________
Independent is offline   Reply With Quote
Old 11-09-2010, 10:05 AM   #99
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,815
Quote:
Originally Posted by Htown Harry View Post
Great thread...

It's not exactly what you are looking for, Independent, but here's a Mercer comparison of 14 countries' systems, and an article with some critical analysis of Mercer's scoring system.
http://www.globalpensionindex.com/pd...eport-2010.pdf
U.S. retirement system ranks 10th
Thanks. My question was roughly whether there are any rich countries that handle old age pensions (or any social safety net) through purely voluntary means. For pensions, that would mean that people can choose to save or not save without gov't interference, and those who end up poor are supported by private charity. I didn't see any countries like that on this list.
__________________
Independent is offline   Reply With Quote
Old 11-09-2010, 10:15 AM   #100
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Quote:
Originally Posted by youbet View Post
The Swedes also have more stringent requirements for non-citizens receiving their generous benefits than the US. That is, they are more likely to be able to predict and fund future needs than the US who, at the call of a political whim, may suddenly have millions of additional folks to care for.
They did have a problem with some folks from other areas of Europe (East/West) with "inferior" social programs (related to retirement) that did emigrate there in order to collect on retirement benefits, for whatever the minimum time was to collect benefits.

I remember reading a paper (English language) while working there, noting the problem and mentioning that even if the person passed, they continued to send retirement income in the person's name, to another country. There was no easy way to confirm that they were no longer eligible for the benefit (but their relatives still would intercept the check).

I don't know if that problem has been taken care of since I no longer work there (hey, I'm retired - yes, I was in Stockholm in June, but that was just on a get-away )...
__________________

__________________
rescueme is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Social Security Retirement Calculator JustNtime FIRE and Money 10 11-21-2009 10:27 PM
Social Security/Texas Teacher Retirement 2B FIRE and Money 18 08-28-2008 04:17 PM
Social Security Beneift Penalized by Early Retirement? more_or_less FIRE and Money 19 01-27-2007 10:19 AM
collecting full social security and military retirement? miatagirl FIRE and Money 15 01-23-2007 01:58 PM
Early retirement and Social Security jimhcom FIRE and Money 6 05-23-2006 10:13 AM

 

 
All times are GMT -6. The time now is 05:26 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.