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Old 01-12-2011, 12:54 PM   #21
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For the great majority of employees, they would not just get additional $$$ if they showed up for work, even in a hot economy.
Well, they'd probably have to show a better job offer to their current employer to get it, but in a tight labor market, they probably would get that raise if they did so.
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Old 01-12-2011, 01:12 PM   #22
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If employees were given back their FICA contributions as well as their employer's contributions in their paycheck, what percentage would actually have a portfolio that would pay their living expenses and medical care for the rest of their lives?

For ER-Org posters, I'd guess a majority. For John Q. Public, I'd guess a tiny minority. Then, when the sh!t hit the fan, who would ante up to make up the difference? My guess would be the ants would be forced to save the grasshoppers. It is not a perfect system, but I firmly believe that the average American can't be trusted to take care of themselves in terms of retirement. Just call me Nanny.
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Old 01-12-2011, 02:32 PM   #23
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I thought the "return" on your Social Security contributions was ZERO, since you're paying for the Social Security being received by current beneficiaries. You have no true "entitlement" to the money paid into the system. Politicians can change the rules at any time to extend the age at which you are eligible to receive Social Security, the amount you will receive, etc... There is no guaranty that you'll ever see a penny of your contributions, so I just don't see how you have any legal right to a return.
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Old 01-12-2011, 02:38 PM   #24
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That's the talking points.

It certainly wasn't sold this way as the wealth shifting program that it has become.

And yes it really has become more of a welfare program than an insurance program. Your little dig aside.
Main problem with SS at the beginning was the limited wage earners that it covered, most of the jobs typically done by women were excluded. The system has improved over the years. Also as we all pay into SS it's a benefit that we earn.

Being a socialist I think the progressive nature of SS tax and payments is good. Also I see redistribution of wealth is a social and moral virtue (all religions promote it). It's interesting to note that in the UK state pension is independent of earnings.
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Old 01-12-2011, 03:36 PM   #25
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Well, Ms. Ida Mae Fuller got the first social security check on 31 Jan 1940 for $22.54. Social Security Online History Pages

Ms. Fuller lived to be 100 years old and received $22,888.92 on total contributions of $24.75. Now that's a return.
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Old 01-12-2011, 04:32 PM   #26
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The return on my social security is that my mother has continued to be able to live modestly, but independently, well into her 80s, long past the death of my father, and that I don't have to step over other indigent elders on my way to dinner and a movie. That's sufficient return for me.

"...we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age."

FDR from: Presidential Statement Signing the Social Security Act, August 14, 1935, Social Security Online - HISTORY
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Old 01-12-2011, 05:24 PM   #27
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SS used to be a much smaller % of wages (as you probably all know). I never even thought about it, it was so tiny. But when it ballooned to current rates, it was such a significant amount that I expect to get some money back now that I'm retired.

I probably don't absolutely need it - I wouldn't go hungry etc. - but I paid in and I want the reward, not the booby prize.
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Old 01-12-2011, 06:13 PM   #28
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I thought the "return" on your Social Security contributions was ZERO, since you're paying for the Social Security being received by current beneficiaries.
You can think of each dollar you pay in SS tax as flying directly into the pocket of a SS retiree, but it makes as much sense to imagine that your SS tax buys government securities which will later fund your own pension, and that current SS pensioners get dollars from government securities that they bought in the past with their own SS tax contributions. Making due allowance for certain welfare aspects of SS, of course. The principle is that dollars are indistinguishable, and it makes no real difference whether you view SS pension dollars as coming from current SS tax or securities (possibly hypothetical) bought in the past with SS tax dollars.
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Old 01-12-2011, 06:16 PM   #29
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You can think of each dollar you pay in SS tax as flying directly into the pocket of a SS retiree, but it makes as much sense to imagine that your SS tax buys government securities which will later fund your own pension, and that current SS pensioners get dollars from government securities that they bought in the past with their own SS tax contributions.
True in some ways, I think, with the obvious stipulation that each successive generation can expect less from each "invested" dollar than the previous generation.
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Old 01-12-2011, 06:40 PM   #30
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You can think of each dollar you pay in SS tax as flying directly into the pocket of a SS retiree, but it makes as much sense to imagine that your SS tax buys government securities which will later fund your own pension, and that current SS pensioners get dollars from government securities that they bought in the past with their own SS tax contributions. Making due allowance for certain welfare aspects of SS, of course. The principle is that dollars are indistinguishable, and it makes no real difference whether you view SS pension dollars as coming from current SS tax or securities (possibly hypothetical) bought in the past with SS tax dollars.
You can think that way, but the so called trust fund really has already been spent. There is no ready cash reserve waiting to fund your payment.

That's where all this talk of unfunded liabilities comes in. We promised you a SS pension but there isn't enough to pay everyone what we promised.
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Old 01-12-2011, 08:19 PM   #31
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I have never believed the fundamental question is whether you could potentially do better on your own than with SS...
True, since for most people this is not an optional "investment". But it is interesting to consider in the context of privatizing or otherwise revamping - not that this would ever happen.
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Old 01-13-2011, 08:22 AM   #32
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did any of you consider the income tax on ss benefits when calculating the return on investment or is this something that does figure in? just wondering.
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Old 01-13-2011, 08:37 AM   #33
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Here's a fact that stopped me the first time I saw it:

In a paygo public retirement scheme with a fixed tax rate, there is enough money to provide each cohort of workers an apparent "return" equal to the growth rate in total covered wages.

For example, if the number of workers grows by 1% per year, productivity driven wage gains are 2%, and inflation driven wage gains are 3%, the "return" on the paygo system should be 6% nominal or 3% real. Of course some workers will do better and some worse.
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Old 01-13-2011, 08:48 AM   #34
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For example, if the number of workers grows by 1% per year, productivity driven wage gains are 2%, and inflation driven wage gains are 3%, the "return" on the paygo system should be 6% nominal or 3% real. Of course some workers will do better and some worse.
What is this thing called "wage gains" of which you speak?
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Old 01-13-2011, 11:29 AM   #35
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What is this thing called "wage gains" of which you speak?
Something that used to happen in the US economy

It's interesting (maybe frustrating is a better word) that mean wages have been going up even though median wages are pretty flat. The SS trustees' report says that for the 40 years ending in 2008, the average gain in real covered wages was 0.8%. That's not great, but it beats 0%. 2010 Trustees Report: Section V.B, Economic assumptions & methods

Comparing SS to private investing, one issue is whether it's possible for corporate profits to grow faster than wages over a long period of time.

You've had a couple posts that indicate you believe each generation will do worse than the prior. Is that because you believe the labor force growth will continue to shrink, real wage growth will continue to shrink, or ?
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Old 01-13-2011, 02:18 PM   #36
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You can think that way, but the so called trust fund really has already been spent. There is no ready cash reserve waiting to fund your payment.

That's where all this talk of unfunded liabilities comes in. We promised you a SS pension but there isn't enough to pay everyone what we promised.
You forgot "and we took your money in exchange for that promise...."

If the government doesn't honor its promise, it has, for all intents and purposes transformed an entitlement into a tax. Funny how that works....
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Old 01-14-2011, 01:09 AM   #37
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Well, Ms. Ida Mae Fuller got the first social security check on 31 Jan 1940 for $22.54. Social Security Online History Pages

Ms. Fuller lived to be 100 years old and received $22,888.92 on total contributions of $24.75. Now that's a return.
With an ROI like that, she should have "invested" $10,000.
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