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Old 10-03-2009, 02:33 PM   #41
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No. I'm not OK with any borrowing.
You might want to rethink that. I tend to be a "pay as you go" type myself but do understand that even with a balanced budget and low deficit, there still needs to be some borrowing to smooth the hills and valleys of revenue input. No borrowing at all would make our monetary system (our means of value exchange and storage of wealth) pretty ineffective.
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Old 10-03-2009, 02:38 PM   #42
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You might want to rethink that. I tend to be a "pay as you go" type myself but do understand that even with a balanced budget and low deficit, there still needs to be some borrowing to smooth the hills and valleys of revenue input. No borrowing at all would make our monetary system (our means of value exchange and storage of wealth) pretty ineffective.
I think so -- part of the idea of SS and pensions is that individuals don't assume the risk of retiring at the "wrong time" (when the markets are tanking, when the economy is terrible, et cetera), and that seems to mean there will be times when the program is running in the red. And that's fine as long as they are able to make it up during the years of plenty.
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Old 10-03-2009, 03:53 PM   #43
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I think so -- part of the idea of SS and pensions is that individuals don't assume the risk of retiring at the "wrong time" (when the markets are tanking, when the economy is terrible, et cetera), and that seems to mean there will be times when the program is running in the red. And that's fine as long as they are able to make it up during the years of plenty.
The problem this country faces now is that the time of plenty has come and gone. And our elected leaders failed to put the money aside (or at least spent it and left an IOU). If you simply look no further than the population demographics, there are gonna be a lot of us who are gonna get screwed.

My feeling is that they will eventually raise the age threshold, reduce the payments, and make it needs tested. So if you were "lucky" enough to have been able to save for your retirement you will need to be a good citizen and have your SS benefits redistributed to those who weren't so "fortunate".
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Old 10-03-2009, 04:17 PM   #44
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So if you were "lucky" enough to have been able to save for your retirement you will need to be a good citizen and have your SS benefits redistributed to those who weren't so "fortunate".
See socialism...
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Old 10-03-2009, 04:38 PM   #45
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all good Suggestions.. I think SS tax just hasn't been enough.. it should have and Shoul be Alot more.. Thus In return get alot more, like DOUBLE.. at least +50% more. you hear it all the time how so many live only on their SS income and that has to tell us something.. If one was making $30k yr while working? Then they have to have that Much comming in from SS, not less.. Since we do not Save any extra on our own... Too many things happen along the way.. From Divorces to Emergencies to outright Carelessness.. It's just Human Nature..

Just like There was Always a Home for any Extra Money in our Home...with our Family..

But? Seems to me that Wall Street and The Economy Can't afford to have such a Increase in SS & Medicare Payroll Taxes.. It would give workers Less $ to Spend & less to Invest into the markets.. Even the $2,000 Yr IRA allotment has Hurt SS , let alone increasing that Figure to be Saved an avoid paying SS & Medicare taxes on it.
and There have been way too many Additional Things added to having SS pay for over the Yrs and the same for Medicare.. maybe some kind of Nat'l Health Care plan would solve that problem? If it ever happens.. that has worked in other countries..like Norway/Sweeden etc..,per a recent PBS show..

I don't know the answers, just have the questions.. and glad I was Fortunate enough to have more than enough in additional savings not to depend on my SS, So Far..an that $ has just been invested in Global And EMD Bonds these past 8 yrs..
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Old 10-03-2009, 10:36 PM   #46
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My feeling is that they will eventually raise the age threshold, reduce the payments, and make it needs tested. So if you were "lucky" enough to have been able to save for your retirement you will need to be a good citizen and have your SS benefits redistributed to those who weren't so "fortunate".
In that case you might as well drop the work requirement and change the name to "welfare".
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Old 10-06-2009, 09:27 PM   #47
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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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That's exactly how it works when there are no restrictions on how the money can be spent.

Good luck to your kids!
what are you all thinking? i suppose you also think that the money people invest in cds is sitting in the bank's vault as cash too. no, instead it is loaned out to earn interest which is exactly what was done with the SS trust fund. and the SSA loaned it to the most credit worthy borrower around.
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Old 10-07-2009, 08:21 AM   #48
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.. I think SS tax just hasn't been enough.. it should have and Shoul be Alot more.. Thus In return get alot more, like DOUBLE.. at least +50% more. you hear it all the time how so many live only on their SS income and that has to tell us something...
It tells me that we need a better educated population.

I think the govt should have a short seminar each and every year for people. Show them that SS may not provide them the lifestyle they want, and what it would take to make it up on their own.

Use the 4% SWR number as a benchmark. Project that SS will likely provide $X/year at your current wage, and for anything above that you will need to boost with 25x of personal savings to meet a 4% SWR. Then show how much you need to save each year to meet that.

Sure, there would be a lot of assumptions in those numbers, and results could vary wildly, but some info is better than nothing. And it would get more accurate as you reach retirement age.

I might be OK with the govt going (further) into the annuity business. Turn over some of your personal stash, and they pay you X% for life. Pretty simple to admin, they have more buffer than a private company, so it should be safer, and no profits to draw down payments. It should be pay-as-you-go (over the long term); if they project running out, they might need to offer less going forward to new contracts, or maybe even a very slight trim to existing contracts (predefined limits).

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Old 10-07-2009, 08:49 AM   #49
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If I gave my money to a bank for a CD and the bank took that money and spent it to save the snail darter, That is not investing! That is spending. When I want my money back the bank, it does not have it or anything it can turn into it. I do not expect the bank to come back to me and say 'If you want your money back for your CD you will have to give me the money first as I spent your money, and by the way, if you want the interest you will have to give me that first!" The bank, if my money is invested, has ownership is some other instrument not related to the bank, and yes it may be government bonds. Have you ever heard the government say 'When you buy bonds we put it in a trust fund, we don't spend it, we invest it in the safest investment around, more government bonds." Do you consider your purchase of T-bills as being in a Trust Fund?
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Old 10-07-2009, 09:45 AM   #50
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I might be OK with the govt going (further) into the annuity business. Turn over some of your personal stash, and they pay you X% for life. Pretty simple to admin, they have more buffer than a private company, so it should be safer, and no profits to draw down payments. It should be pay-as-you-go (over the long term); if they project running out, they might need to offer less going forward to new contracts, or maybe even a very slight trim to existing contracts (predefined limits).
I see the possible advantages in this, as it might get people to take more responsibility for/contribute more toward their retirement by establishing a more tangible and guaranteed link between what they put in every month and what they can expect to get out.

But, there are downsides, too.
- To the degree that some of this money would have gone into investments anyway, then you've got the government competing with the private sector for capital. That drives up the cost of borrowing for businesses, which is not good for productivity.
- It won't be free of political ties. As the pool of investors grows, they'll have a vested interest in increasing the rate of return, and all of them have congressmen. So, we'll have the same "avoid short term pain by kicking the problem down the road" issues that have gotten us in trouble with SS.
- What will the money be invested in? I'd like to keep Uncle Sam from intruding further into boardrooms, so hopefully the $$ won't go into stocks. Investing it in more government debt just encourages more irresponsible spending at a time when bond buyers will likely (finally) be asking for more return for the risk they are taking with US bonds, thus reigning in the borrowing machine.
- Means-tested returns? Who knows. If things continue on the present path, there would be a fair possibility that the public would demand that the needy recipients of these annuity payouts should get higher "living wage" returns than the fat-cat wealthy recipients. Unlikely? That's where SS is headed.

Again, not an idea to reject out of hand, esp if it gets more people to save for retirement and thereby decreases the pressure to provide more taxpayer support for the elderly indigent. But we should look at all likely impacts. At first blush, I'd rather keep the annuity biz private and not increase the government's role in insulating people from the risks of the real world.
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Old 10-07-2009, 09:51 AM   #51
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Sam,
Why would that be different than SS? The government would take the money and 'invest' it is the safest invest known...'U.S. Gov. Bonds'. Then it would be spent on pet political projects, and either more debt, more tax dollars, or decreased dollar value, i.e. inflation, to pay the annuity off.
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Old 10-07-2009, 09:56 AM   #52
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Sam,
Why would that be different than SS? The government would take the money and 'invest' it is the safest invest known...'U.S. Gov. Bonds'. Then it would be spent on pet political projects, and either more debt, more tax dollars, or decreased dollar value, i.e. inflation, to pay the annuity off.
I think you are right. The contributions would be voluntary, but except for that, it would function as SS does--it would give the government more money to spend right now (as folks contribute) and build up future government liabilities (to pay those promised monthly annuity checks when folks retire). By pumping money in right now, it would also allow the government to delay (again) the needed fixes to SS, which will make that problem still worse later.

The alternative is requiring that the government not spend the money, but instead invest it in private equity, which I think is even more dangerous.
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Old 10-07-2009, 11:02 AM   #53
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It tells me that we need a better educated population.

I think the govt should have a short seminar each and every year for people. Show them that SS may not provide them the lifestyle they want, and what it would take to make it up on their own.

Use the 4% SWR number as a benchmark. Project that SS will likely provide $X/year at your current wage, and for anything above that you will need to boost with 25x of personal savings to meet a 4% SWR. Then show how much you need to save each year to meet that.

Sure, there would be a lot of assumptions in those numbers, and results could vary wildly, but some info is better than nothing. And it would get more accurate as you reach retirement age.

I might be OK with the govt going (further) into the annuity business. Turn over some of your personal stash, and they pay you X% for life. Pretty simple to admin, they have more buffer than a private company, so it should be safer, and no profits to draw down payments. It should be pay-as-you-go (over the long term); if they project running out, they might need to offer less going forward to new contracts, or maybe even a very slight trim to existing contracts (predefined limits).

-ERD50
I'm thinking that the gov't already does both of these, at least partially.

I get an annual letter that gives me the dollar amount of SS I would get based on certain assumptions. I can look at the number, compare it to may current income, and figure out the gap. I'm sure a seminar would be more in-your-face, but I'd object a lot to any sort of mandatory attendance.

Regarding the annuity business, we already have a choice of deferring SS to age 70. Economically, that's the same idea. The only difference is how much annuity the gov't is willing to do.
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Old 10-07-2009, 12:28 PM   #54
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I'm thinking that the gov't already does both of these, at least partially.

I get an annual letter that gives me the dollar amount of SS I would get based on certain assumptions. I can look at the number, compare it to may current income, and figure out the gap. I'm sure a seminar would be more in-your-face, but I'd object a lot to any sort of mandatory attendance.

Regarding the annuity business, we already have a choice of deferring SS to age 70. Economically, that's the same idea. The only difference is how much annuity the gov't is willing to do.
True, I would like to see more emphasis on what it would take to fill the gap. The average person would probably benefit from being "hit over the head" with this info. Maybe "seminar" is too extreme, but a page of two of info, and a signature requirement to say you understand, and some standard info on a website that HR people would also be informed on (so they could answer employee questions) would go a long way, IMO.

To samclem's points - yes, there are downsides. I doubt the govt would pull this off effectively (or that they even have any desire too). But if we stay in fantasy-land for a while - perhaps the annuities could be managed by private annuity companies, but with a govt guarantee (and suitable regs so it is unlikely that the guarantee would be needed)? Similar to pension plan guarantee.

It's just that a true risk-pooled annuity (as opposed to many current annuity options) is a very attractive concept for many retirees - it would be nice if one was available with less of the risks/pitfalls of the private cos.

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Old 10-07-2009, 02:17 PM   #55
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It's just that a true risk-pooled annuity (as opposed to many current annuity options) is a very attractive concept for many retirees - it would be nice if one was available with less of the risks/pitfalls of the private cos.
Well, if the government behaves in the future as it has in the last year, it is likely they are going to step in anyway if companies offering annuities start sinking in a big way. So, if the government (i.e. you and I) are going to bail them out anyway, then we might as well make the guarantee explicit (boosting investor confidence in these products) and give the govt a bigger role in overseeing the operations of these companies. Like the banks and FDIC.

It's not what I'd like, but perhaps it is the best we can do given the public acceptance of/demand for an ever-rising safety net for every risk in life.
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Old 10-09-2009, 05:43 AM   #56
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Early retirees (actually a new take on the word FIRE) draining coffers

My Way News - Social Security strained by early retirements
Actually there are no "coffers".

There is no "trust fund" of money...it's a ponzi scheme made legal by our politicians. Remember SS is a "paygo" system. The payments that today's workers make IMMEDIATELY go to current retirees. Note the words "debt obligations" below from Wikipedia. If you open the virtual bank vault door on the trust fund, you'll find slips of paper from one arm of the government that say "IOU" to another arm of the government.

"Though widely used, the term "Social Security Trust Fund" is something of a misnomer, as the Social Security Administration of the United States actually oversees two separate funds that hold federal government debt obligations related to what are traditionally thought of as Social Security benefits. The larger of these funds is the Old-Age and Survivors Insurance (OASI) Trust Fund, which holds in trust those funds that the federal government intends to use to pay future benefits to retirees and their survivors.[2] The second, smaller fund is the Disability Insurance (DI) Trust Fund, which holds in trust those funds that the federal government intends to use to pay benefits to those who are judged by the federal government to be disabled and incapable of productive work, as well as to their spouses and dependents.[3]"

Edit: here's a good article on it -- >http://www.heritage.org/research/soc...rity/em940.cfm
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