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Old 09-28-2009, 03:54 AM   #21
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Originally Posted by ziggy29 View Post
borrowing money from your future income to buy future income streams,
what does that even mean?? the SS trust fund isnt borrowing money it is loaning it out (just like you do when you buy bonds) and that money loaned is from current income not future. and yes sometime in the futhure SS will convert those investments into an income stream (just like you will do to your portfolio when you retire)


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but in some sense it's like me borrowing money to buy a deferred SPIA which will start paying me at a future date.
not even close, like i said it is like you investing current income so that some time in the future you can start a periodic WD (even buy a SPIA)
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Old 09-28-2009, 04:01 AM   #22
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They have indeed been spent. And the amount of debt is indeed a serious problem, but SS debt is not somehow separate from all the other debt. SS is "invested" in "special Treasuries" that are in no way like the Treasuries, TIPS or other investments you would purchase. By their own admission (SSA) they spend it "As stated in the answer to "What happens to the taxes that go into the trust funds?", most of the money flowing into the trust funds is invested in U. S. Government securities. Because the government spends this borrowed cash...

If we didn't have deficits/debt as far as the eye can see, I would agree with your POV. And believe me, I wish I believed there was a trust fund...
from the POV of the SSA the money in the trust fund IS NOT SPENT it is invested in US government bonds. when someone loans someone else money the lender invested said money even if the borrower spends all of it. and frankly i am glad that the SSA trust fund is invested in presumably the safest investment available
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Old 09-28-2009, 07:20 AM   #23
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They have indeed been spent. ... "As stated in the answer to "What happens to the taxes that go into the trust funds?", most of the money flowing into the trust funds is invested in U. S. Government securities. Because the government spends this borrowed cash...
We are saying the same thing with slightly different emphasis. Yes the Government uses the money INVESTED by the trust fund to pay current obligations just like it uses the money invested by you or me in ITIPs to pay current obligations. All any of us have is the good faith of the US Government to rely upon. And, yes, I understand that they can change the law and alter what we get just like they can change my pension. All I am saying is that SS is not that difficult to fix so it is not the big problem, total debt is the big problem. I used to think that the law should have been structured to invest the SS funds in some other vehicle (like a stock index) but that wouldn't change the fundamental problem. We would just have a bigger ostensible debt on the books and we would face the same or similar SS gap (depending on how the stocks did) to be made up for in 2037 or whenever.

Edit: I do understand that some bookkeeping legerdemain was enacted that didn't take the SS the debt to the trust fund into account in the pay-go balance or something that distorts the debt picture and makes it easier to continue running up the debt.
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Old 09-28-2009, 10:46 AM   #24
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We are saying the same thing with slightly different emphasis. Yes the Government uses the money INVESTED by the trust fund to pay current obligations just like it uses the money invested by you or me in ITIPs to pay current obligations. All any of us have is the good faith of the US Government to rely upon. And, yes, I understand that they can change the law and alter what we get just like they can change my pension. All I am saying is that SS is not that difficult to fix so it is not the big problem, total debt is the big problem. I used to think that the law should have been structured to invest the SS funds in some other vehicle (like a stock index) but that wouldn't change the fundamental problem. We would just have a bigger ostensible debt on the books and we would face the same or similar SS gap (depending on how the stocks did) to be made up for in 2037 or whenever.

Edit: I do understand that some bookkeeping legerdemain was enacted that didn't take the SS the debt to the trust fund into account in the pay-go balance or something that distorts the debt picture and makes it easier to continue running up the debt.
Fair enough, we're somewhat in heated agreement. I guess I find the use of the term "trust fund" to be more than a little disingenuous. And even these days I still run into people/employees who think there is a SS account somewhere with their name on it holding all their contributions plus returns.
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Old 09-30-2009, 06:26 PM   #25
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Unlike most large problems like this one, the solution is actually kind of a no brainer....it's just that the politicians don't have the stomach to make the necessary changes.

The solutions:
1) Lower the benefits
or 2) Increase the SS withholding to cover the shortfall
or 3) Increase the age at which recipients start collecting
or 4) a combination of the above

NOTE: I guess there's another solution....means test individuals and don't allow people over a certain income to receive benefits....hopefully they won't pick this one.
How about, offer an opt-out to those of us who are working? They can keep every dime they've taken from me so far, but they don't collect another nickle. I get an instant 12% raise, and that's my "social security".

Hey, a guy can dream, right?
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Old 09-30-2009, 06:48 PM   #26
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How about, offer an opt-out to those of us who are working? They can keep every dime they've taken from me so far, but they don't collect another nickle. I get an instant 12% raise, and that's my "social security".

Hey, a guy can dream, right?
Sorry, I'll have to vote against that. I need your payment to finance my SS starting in Dec. 09. Hey, I paid for your grandfathers SS and that money is gone so I don't feel bad taking your money.
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Old 09-30-2009, 07:40 PM   #27
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The cause (recession) could be the cure. How many once they find some work will continue to pay in while they draw out? That could trump those who due to job loss had no other option than to apply. Also, some (not too many) if they get work that is decent for them may suspend SS.
I'll be helping the cause. I just came out of "ER" -such as it was, earning an MFA in Creative Writing while teaching part-time for my assistantship. Now I am a full-time legal writing professor at the regional law school paying into our state's teacher retirement system and will suffer the dreaded windfall offset when I cash in my SS chips beginning at age 70 nine years from now.
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Old 10-01-2009, 09:15 AM   #28
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How about, offer an opt-out to those of us who are working? They can keep every dime they've taken from me so far, but they don't collect another nickle. I get an instant 12% raise, and that's my "social security".

Hey, a guy can dream, right?
Social Security is almost unique among gov't programs in that a family can partially opt-out.

You probably have parents or grandparents who are getting benefits. Explain that your family should opt out. They can continue to collect their benefits, but they will send the money to you (and your siblings) to offset your taxes.

The offset won't be perfect because your family isn't perfectly average, but over your working career it will probably be substantial.
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Old 10-01-2009, 09:39 AM   #29
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You probably have parents or grandparents who are getting benefits. Explain that your family should opt out. They can continue to collect their benefits, but they will send the money to you (and your siblings) to offset your taxes.
A few years ago when my dad was still alive, he told me once that he expected his kids to get screwed by SS, so he wanted to save and invest quite a bit of their monthly SS checks to pass along as part of our inheritance so we would actually get a fair deal out of it, albeit indirectly.
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Old 10-01-2009, 01:49 PM   #30
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A few years ago when my dad was still alive, he told me once that he expected his kids to get screwed by SS, so he wanted to save and invest quite a bit of their monthly SS checks to pass along as part of our inheritance so we would actually get a fair deal out of it, albeit indirectly.
Classy decision. If all three of our children were working, I could imagine my wife voting for applying for SS then sending checks to the kids. I think that would make her feel good.

My folks never talked about SS directly. But they lived carefully in retirement and left some money for their kids. I don't think it amounted to all their SS income, but I'm also sure it would have been almost nothing if they hadn't been getting SS benefits.
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Old 10-02-2009, 04:53 PM   #31
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If the government would just keep their hands off our money we'd be fine. SS money goes into a general fund and the government just can't stay away.
That's the truth. They have raided the SS coffers more times than you would believe, with the promise to pay it back. That, of course, hasn't happened. Obviously, with the HUGE deficits looming in our future, it will probably NEVER be repaid.
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Old 10-02-2009, 09:20 PM   #32
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Originally Posted by 73ss454
If the government would just keep their hands off our money we'd be fine. SS money goes into a general fund and the government just can't stay away.


That's the truth. They have raided the SS coffers more times than you would believe, with the promise to pay it back. That, of course, hasn't happened. Obviously, with the HUGE deficits looming in our future, it will probably NEVER be repaid.
not true, scroll up to the top of the page and read my earlier posts and donheff's post. what would you rather have the trust fund invested in? you talk like you would rather there be a large stack of federal reserve notes (dollar bills) in some vault to represent the trust fund. is that how you are currently and historically invested? i doubt it!
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Old 10-03-2009, 06:09 AM   #33
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That's the truth. They have raided the SS coffers more times than you would believe, with the promise to pay it back. That, of course, hasn't happened. Obviously, with the HUGE deficits looming in our future, it will probably NEVER be repaid.
The problem with this argument is the focus on raiding SS as the culprit. Virtually all economists say that some deficit (a lot less than current) is healthy. If we had a totally balanced budget AND were stashing the last decade's excess SS payments in a shoe box we would choke the economy. So, even if we were doing things right, we would have spent the money invested in the trust fund. What makes things unsustainable is the total spending. SS is just one nit amongst many fur balls.
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Old 10-03-2009, 06:21 AM   #34
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The problem with this argument is the focus on raiding SS as the culprit. Virtually all economists say that some deficit (a lot less than current) is healthy. If we had a totally balanced budget AND were stashing the last decade's excess SS payments in a shoe box we would choke the economy. So, even if we were doing things right, we would have spent the money invested in the trust fund. What makes things unsustainable is the total spending. SS is just one nit amongst many fur balls.
I do agree with the assessment that the SS trust fund is just one pot of many that the government is dipping into for funds. But IMO, this fact doesn't make using money that has been earmarked for a national retirement safety net for everything from research on snail larvae to roads to nowhere acceptable.

As far as I'm concerned, there ARE funds that are more sacrosanct than others. Again, JMHO.
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Old 10-03-2009, 09:08 AM   #35
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It is hard for me to understand how someone believes the money is in a trust fund.

So how about this, I take my kid's money, put it in their trust fund, I manage, I spend it on say booze, and I have no way of paying back all the money when they ask for it except for getting more money from them.
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Old 10-03-2009, 09:28 AM   #36
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It is hard for me to understand how someone believes the money is in a trust fund. .
Rustic, it's like this: The govt. says, "It's in a fund - trust us."
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Old 10-03-2009, 10:41 AM   #37
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Yep, that's what I told my kids, I also said drop by for another margarita.
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Old 10-03-2009, 12:03 PM   #38
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...So how about this, I take my kid's money, put it in their trust fund, I manage, I spend it on say booze, and I have no way of paying back all the money when they ask for it except for getting more money from them.
That's exactly how it works when there are no restrictions on how the money can be spent.

Good luck to your kids!
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Old 10-03-2009, 01:39 PM   #39
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I do agree with the assessment that the SS trust fund is just one pot of many that the government is dipping into for funds. But IMO, this fact doesn't make using money that has been earmarked for a national retirement safety net for everything from research on snail larvae to roads to nowhere acceptable.

As far as I'm concerned, there ARE funds that are more sacrosanct than others. Again, JMHO.
So, if instead of borrowing from the SS "fund" the govt sold bonds to (equivalent to borrowed from) the Chinese to do research on snail larvae and build roads, you'd be OK with that?

Either way, borrowing from SS or borrowing from the Chinese, we'll have to have higher taxes to pay it back one of these days. I'm not sure which road is more treacherous.
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Old 10-03-2009, 01:43 PM   #40
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So, if instead of borrowing from the SS "fund" the govt sold bonds to (equivalent to borrowed from) the Chinese to do research on snail larvae and build roads, you'd be OK with that?...
No. I'm not OK with any borrowing.
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