Americans are willing to pay more for Social Security

[Midpack]

Just seemed like a reasonable article on a topic of interest here.

Americans are willing to pay more for Social Security - Yahoo! Finance

Very large majorities across every age group, political affiliation and income group said they would be willing to pay more to maintain current benefits.

Just 14 percent of households report they expect to have enough money to live comfortably in retirement, according to the Employee Benefit Research Institute. Barely two-fifths of private-sector workers ages 25 to 64 have a retirement plan of any sort with their job, Boston College's Center for Retirement Research reported recently.

 

[NYEXPAT]

Let's hope they get their wish!

 

[BTravlin]

I'd be interested in seeing the poll results if an accompanying figure showing how much more they were going to have to pay was included with the question.

 

[ERhoosier]

I'd be interested in seeing the poll results if an accompanying figure showing how much more they were going to have to pay was included with the question.

Agreed. Everyone wants to raise taxes....on the OTHER guys.

FWIW- Even non-partisan Govt Accounting Office has for years viewed these US entitlement programs as "unsustainable".
U.S. GAO - The Federal Government's Long-Term Fiscal Outlook: Fall 2010 Update

 

[ziggy29]

It always sounds good until you get the details, then some subset of the population will feel like they are being targeted for getting screwed by it, at which time it becomes an "us versus them" argument... and then it goes nowhere.

And yet there is no political will for true "shared sacrifice" because they all have their own pet constituencies and/or special interests to take care of.

 

[donheff]

I'd be interested in seeing the poll results if an accompanying figure showing how much more they were going to have to pay was included with the question.

IIRC the SS shortfall is about 25% so that should be about the premium needed to maintain current benefits. Maybe a bit less with chained Cost of living increases.

 

[explanade]

Raise the income cap, that's the question that should have been asked.

 

[samclem]

I'd be interested in seeing the poll results if an accompanying figure showing how much more they were going to have to pay was included with the question.

Hmmm. What to believe:
- A poll says that, in the abstract, most people would be willing to pay more out of their income to maintain SS benefits.
- Real life experience that shows a relatively small number of people are willing to put away enough money to assure their own secure retirement.

Which is a better reflection of people's beliefs: What they tell a pollster, or what they actually do?

Or maybe they really mean: "Please take money from others to provide for my retirement."

 

[growing_older]

I wonder about this poll. In my workplace, the SS "tax" just went from 4.2% to 6.2% and people were complaining extensively. That's not raising additional tax, that's just putting it back where it was. It's one thing to say in a poll, please raise my tax, but people seem to respond very differently when faced with an actual increase.

 

[obgyn65]

Would it make more sense to pay into deferred annuities rather than into the SS fund ? I have paid the maximum SS 'tax' since I have been working in the US for the last 10 years, and still my projected benefit when I reach 62 is only about $1k.

I wonder about this poll. In my workplace, the SS "tax" just went from 4.2% to 6.2% and people were complaining extensively. That's not raising additional tax, that's just putting it back where it was. It's one thing to say in a poll, please raise my tax, but people seem to respond very differently when faced with an actual increase.

 

[donheff]

Hmmm. What to believe:
- A poll says that, in the abstract, most people would be willing to pay more out of their income to maintain SS benefits.
- Real life experience that shows a relatively small number of people are willing to put away enough money to assure their own secure retirement.

Which is a better reflection of people's beliefs: What they tell a pollster, or what they actually do?

Or maybe they really mean: "Please take money from others to provide for my retirement."

Or maybe they really mean: "Please take the money out of my check before I blow it on..."

 

[MichaelB]

Or maybe they really mean: "Please take the money out of my check before I blow it on..."

Could be.

Here's a link to the study http://www.nasi.org/sites/default/files/research/What_Do_Americans_Want.pdf

Pretty strong support. No sign of "other people's money" syndrome either. People like Social Security and want to see it strengthened.

 

[Midpack]

Could be.

Here's a link to the study http://www.nasi.org/sites/default/files/research/What_Do_Americans_Want.pdf

Pretty strong support. No sign of "other people's money" syndrome either. People like Social Security and want to see it strengthened.

Great link, thanks!

 

[samclem]

I wonder about this poll. In my workplace, the SS "tax" just went from 4.2% to 6.2% and people were complaining extensively. That's not raising additional tax, that's just putting it back where it was. It's one thing to say in a poll, please raise my tax, but people seem to respond very differently when faced with an actual increase.

It would be interesting to take a group of people and just expose them to the math on SS, let them see exactly how much each $100 of SS tax they pay results in a tiny amount of monthly benefit increase several decades in the future. Then let them see some historical results of how that money could have grown for them in a different investment. I'll bet the number wanting to put more into SS would be very small, and limited to those who are older and at the lowest income levels--i.e. those who benefit most from the transfer of "other people's money" in the SS setup we have now.

SS performs a valuable social function and even serves middle-income folks fairly well on an individual basis (by providing a stable expected "floor" retirement check, thus allowing invested money to be put in more volatile, higher growth investments). But on an expected marginal return basis, it's a bad deal for most people.

 

[ziggy29]

It would be interesting to take a group of people and just expose them to the math on SS, let them see exactly how much each $100 of SS tax they pay results in a tiny amount of monthly benefit increase several decades in the future. Then let them see some historical results of how that money could have grown for them in a different investment. I'll bet the number wanting to put more into SS would be very small, and limited to those who are older and at the lowest income levels--i.e. those who benefit most from the transfer of "other people's money" in the SS setup we have now.

I suspect the people who are already taking SS will love the math. People under 50, not so much and people under 40, not at all. That said, I think most people want some sort of old age safety net that means they don't have to work until they drop dead (not to mention that we don't have enough jobs for that). The biggest barrier to reform, IMO, is to do it in a way that feels reasonably fair to all generations (this can apply to Medicare as well).

 

[M Paquette]

It would be interesting to take a group of people and just expose them to the math on SS, let them see exactly how much each $100 of SS tax they pay results in a tiny amount of monthly benefit increase several decades in the future. Then let them see some historical results of how that money could have grown for them in a different investment. I'll bet the number wanting to put more into SS would be very small, and limited to those who are older and at the lowest income levels--i.e. those who benefit most from the transfer of "other people's money" in the SS setup we have now.

SS performs a valuable social function and even serves middle-income folks fairly well on an individual basis (by providing a stable expected "floor" retirement check, thus allowing invested money to be put in more volatile, higher growth investments). But on an expected marginal return basis, it's a bad deal for most people.

Unfortunately, I have a pretty good idea of how people would react if given a choice for what to do with the SS contributions. At best their eyes would glaze over and they'd do nothing. Most of the ones that do decide to 'do something' would give it to the nice man with the pretty brochure, the one with happy seniors on the cover, and great examples of how Convertible Variable Indexed Life policies would do. Maybe 5% (mostly the folks that hang out here and at bogleheads.org) would put the funds into a sane low expense long term growth portfolio (Vanguard 20XX Retirement Fund or similar).

I'd have loved to have a chance to put my lifetime SS contribution to work in a target date fund. Heck, even directing a quarter of it there would have been nice. I also know, though, that a big chunk of the population would have put that money into high expense, relatively opaque items that their financial advisor and insurance salesman recommended. Some special folks would have put their funds into the consistent high return offerings of Bernard L. Madoff Securities LLC, or safe high return CDs with Stanford Financial Group. When retirement time came, and the funds were wiped out or eroded away by fees, I know whose pocket would be picked to cover the shortfall.

See, Social Security is supposed to provide security...

 

[Hamlet]

Make sure that your math includes the disability insurance that it provides everyone, and the life insurance that it provides parents of young children.

There is more to SS than just the retirement income.

It would be interesting to take a group of people and just expose them to the math on SS, let them see exactly how much each $100 of SS tax they pay results in a tiny amount of monthly benefit increase several decades in the future. Then let them see some historical results of how that money could have grown for them in a different investment. I'll bet the number wanting to put more into SS would be very small, and limited to those who are older and at the lowest income levels--i.e. those who benefit most from the transfer of "other people's money" in the SS setup we have now.

SS performs a valuable social function and even serves middle-income folks fairly well on an individual basis (by providing a stable expected "floor" retirement check, thus allowing invested money to be put in more volatile, higher growth investments). But on an expected marginal return basis, it's a bad deal for most people.

 

[youbet]

I suspect the people who are already taking SS will love the math. People under 50, not so much and people under 40, not at all.

The info in the report posted by MichaelB (above) generally supports this. In a chart there, older groups were more in favor of FICA tax increases and removing the income cap than younger people by a significant margin.

I guess that's not a surprise. People who are going to receive a benefit and pay nothing or little for it favor it. People who are going to receive a benefit and pay a lot for it don't favor it as much.

 

[youbet]

There is more to SS than just the retirement income.

Yeah, wouldn't ya love to know what Roosevelt would think of today's SS vs his version?

 

[samclem]

When retirement time came, and the funds were wiped out or eroded away by fees, I know whose pocket would be picked to cover the shortfall.

Very true, and that's a good reason for keeping it. Plus, it (along with other wealth transfer schemes) helps "buy off" social disturbances that would otherwise disrupt private enterprise and drive up other costs (policing, courts, insurance, etc). But there's a tradeoff: The higher the perceived adequacy/ "comfort" of the safety net, the greater the number of people who never pay serious attention to meeting their needs themselves. And the higher the level of taxation, the fewer are the resources to make it possible.

It's a bit like seat belt and helmet laws: I have no interest in forcing other adults to wear seatbelts . . . until it becomes clear that I'm on the hook for their medical care, nursing home, drool cup.

 

[youbet]

The higher the perceived adequacy/ "comfort" of the safety net, the greater the number of people who never pay serious attention to meeting their needs themselves.

The root cause of the great debate over where the safety net line should be drawn........

 

[Jay_Gatsby]

The info in the report posted by MichaelB (above) generally supports this. In a chart there, older groups were more in favor of FICA tax increases and removing the income cap than younger people by a significant margin.

I guess that's not a surprise. People who are going to receive a benefit and pay nothing or little for it favor it. People who are going to receive a benefit and pay a lot for it don't favor it as much.

Unfortunately, there is little that younger people can do about it. Older folks are retired and have more time on their hands to give politicians a piece of their minds. In the end, currently promised entitlements are unsustainable, no matter who receives them.

 

[explanade]

One of the factions pushing for reform, which usually means private accounts, is the financial industry, which stands to reap huge revenues from fees.

 

[haha]

The root cause of the great debate over where the safety net line should be drawn........

Wherever they are drawn there will be unremitting pressure to expand what is covered. There are many focused and politically powerful constituencies for expansion, but only a diffuse poorly focused constituency for restraint.

It will go on, and overall increase, until governments finally really cannot borrow any more, at which point the entire western welfare state will collapse.

Likely still a long way off, but this day will come.

Jeremiah

 

[sanfanciscotreat]

Would it make more sense to pay into deferred annuities rather than into the SS fund ? I have paid the maximum SS 'tax' since I have been working in the US for the last 10 years, and still my projected benefit when I reach 62 is only about $1k.

That sounds about right. Remember, SS benefits are calculated on the highest 30 years of contributions. Ten years will not get you a large benefit, even at the max SS contribution. After 30 years of the max you would now get about 2500/month @ full retirement age.