How's everybody feel about SS?

[Webzter]

Unfortunately, even though life expectancy has increased, most of the increase is from the early years. Less people die young. The increases in life expectancy for those reaching 60 has increased, but not substantially.

Chinaco has a lot of good points. A number of people retire just because they don't have the health to work in their job anymore.

I never said anyone was retiring just because they felt like it. Although, my wife's 80 yr old grandpa who has retired from two jobs and now works part time at Home Depot for fun might disagree on people not living longer or being able to work longer.

I mentioned two other thoughts about what might happen. Do you disagree about the general thought that SS is in trouble? If not, what do you think the long term solution will be.

 

[Rustic23]

My guess is that most of the 'young' folks on this board will never benifit from SS. I'm not saying they won't get something, they just won't benifit. As the 20 somethings get older SS will be means tested, or/and a higher precentage will become taxable. As the taxable figure is not means tested, inflation will push all 20 somethings into the 85% catagory anyway, and by the time they retire, Congress will have made it 100%.

If you plan your retirement, LBYM, save, do without, when you retire, the government will consider you rich, and you will get less SS. The guy that blows all his money, plays hard, and retires with little, will get maximum benifits. That's what is known as being 'Fare'.

 

[cute fuzzy bunny]

Hmm, so it seems like theres some consensus that younger folks will receive less social security, if any at all...30 to 40 years from now when they're of age.

Whats the prognosis for folks who live a little longer than they're supposed to? Someone in their 50's now thats counting on SS benefits as their safety net should they live to 100 or 120...thats even further out.

Will we pull the rug out from under the really, really old folks, or cut further into the younger retirees?

 

[Nords]

If not, what do you think the long term solution will be.

As the 20 somethings get older SS will be means tested, or/and a higher precentage will become taxable. As the taxable figure is not means tested, inflation will push all 20 somethings into the 85% catagory anyway, and by the time they retire, Congress will have made it 100%.

Means testing (more than currently exists) with additional tweaking of the CPI adjustment. From here it's just politics! Maybe a rise in the age of full eligibility, but as Martha said the human lifespan has not lengthened very much.

People physically unable to work will have to find other occupations or apply for disability. How well that will work out seems pretty speculative.

The guy that blows all his money, plays hard, and retires with little, will get maximum benifits. That's what is known as being 'Fare'.

Social Security will become a club for whose membership you won't want to qualify. The cost of paying the payroll tax, however, will be far less than the social costs of not having a safety net for the rest of society...

 

[lazygood4nothinbum]

does increasing immigration eventually contribute to the solvency of social security by increasing the population and therefore the workforce?

i'm 50 so ss should be there for me until at least my early 80s. i'm counting on it to make lease payments on nice new beemer vertibles. if i don't get it i'll be happy in a toyota. and by the time it runs dry i'll be in my 90s and out of gas anyway.

 

[cute fuzzy bunny]

does increasing immigration eventually contribute to the solvency of social security by increasing the population and therefore the workforce?

Ding ding ding!

 

[Rustic23]

does increasing immigration eventually contribute to the solvency of social security by increasing the population and therefore the workforce?

Maybe, not so easy to answer. What if we don't increase the workforce. If economics 101 is right, wages will go up. As wages rise, SS payments increase. Will the rise in SS payments offset the increase in workforce. I doubt if anyone has looked at it. However, there is a difference between undocumented immigration that work in the cash arena, and pay no SS, and documented immigration that pay a full share. A reason to solve our ileagal imigration problem.

 

[FIREd]

There are just 3 ways to solve the SS/Medicare shortfall: 1) decrease benefits, 2) increase taxes or 3) a bit of both.

The problem I see is that, as boomers start retiring, AARP is about to become the most powerful lobbyist in Washington. Benefit cuts for boomers are just not going to be supported by any lawmaker in his right mind (and who wants to stand a chance to be reelected). Whether they are republicans or democrats, no retiree depending on SS and medicare would support benefit cuts for themselves (but I can see how they might support benefit cuts for the next generations who are not so politically powerful). So that leaves us with massive tax increases for workers to fund SS but mostly Medicare which is by far the costliest program of the two. So, although I support an opt-out system, I just don't see it hapenning. Guess who's gonna be left paying the bills? yeap future generations.

 

[73ss454]

You forgot #4, the government keeping their hands out of the general fund.

 

[Moemg]

When SS started there was not the divorce rate there is now .People have multiple picks on SS ,take your own ,take one of your ex -husbands ,take a dear departed spouses .Some men have two or three people collecting on their record .This needs to be changed .

 

[samclem]

Some men have two or three people collecting on their record .This needs to be changed .

Some men have two to three people taking part of their paychecks each month, too.

 

[FIREd]

You forgot #4, the government keeping their hands out of the general fund.

It would help SS for sure if politicians stopped raiding the general fund. But I don't see how it would help medicare: Medicare is currently the recipient of just about 19% of the payroll taxes levied, but future obligations for the program are far larger than those for SS. Medicare is a much bigger problem than SS.

 

[cho oyu]

Maybe, not so easy to answer. What if we don't increase the workforce. If economics 101 is right, wages will go up. As wages rise, SS payments increase. Will the rise in SS payments offset the increase in workforce. I doubt if anyone has looked at it. However, there is a difference between undocumented immigration that work in the cash arena, and pay no SS, and documented immigration that pay a full share. A reason to solve our ileagal imigration problem.

A couple of points. Are wages, after looking at the cap for SS taxes, increasing at a rate above inflation? From what I have seen, this doesn't seem to be the case.

Regardless of input into the SS system for illegal immigrants, I think people anticipate that it is their children (and so on) who will make the biggest difference. There is a tremendous difference in birthrates between the recent immigrant population and the rest of the US population. And, legal or illegal, immigrants want their children to have US citizenship. This means that they will most likely be paying something into the SS system as they age.

Saying this, I think that governmental fiscal policy that requires an increased population to survive is a complete travesty.

 

[tapper]

Personally, I don't believe that retirement is a right and therefore I'd rather see social security be means tested. If you still have the capacity to work then you are not eligible.

Those that want to retire (i.e. not work) can do that as long as they have saved to allow it.

 

[wildcat]

does increasing immigration eventually contribute to the solvency of social security by increasing the population and therefore the workforce?quote]

So these immigrants won't demand the same benefits out of the system they pay into? I have a hard time believing that is the foundation of solvency. Sounds like topping off the car's oil every week without trying to fix the leak.

I think SS will be around in some form or another. It has to be. *WARNING - THIS A VERY DIFFERENT POINT OF VIEW* I don't mind paying in so long as I have the opportunity to live in a country where I can accumulate such wealth.

A lot of people in the US want to collect their check no matter what their net worth reads but if I have a couple million in the bank and could live off what I have saved, keep what would be a tiny check. I suppose the difference for me is that I don't expect SS nor do I feel SS was ever guaranteed to me. It is almost as if the lock box was never real

 

[Webzter]

So these immigrants won't demand the same benefits out of the system they pay into? I have a hard time believing that is the foundation of solvency. Sounds like topping off the car's oil every week without trying to fix the leak.

Well, I want to find out more sources... but, the farm that we buy from employs work visa labor from Mexico. He's busy writing a 3-part story on immigration right now that's been pretty fascinating.

His first fact is a bit alarming. It's true that there are 11mm or so illegal immigrants in this country. However, he states that most businesses can't afford cash-only employees (and thus can't account for expenses, etc). So, he has it's estimated that roughly 8mm illegal immigrants actually have forged papers that at least set them up well enough to be tracked in the system. In fact, many of the restaurants he supplies have told him that they've purchased said papers for their kitchen staff.

That means that we have about 8mm tax-payers paying into the system with no hope or way of getting their money out.

I think it's a bit fascinating. I'll find the article again and see what his sources for this are.

Another thing that I think would be interesting would be means testing that also takes into account net wealth. I'm actually a bit surprised it doesn't right now. Before we fired our financial advisors (no correlation to the story), they told us about two clients they have. He was a doctor for many many years and now has a portfolio that's hovering around 10mm. He can't figure out why he'd need SS so he takes his SS check every month and just rolls it into his investments.

Now, without arguing over if it's his money and if he's entitled to it or not, I wonder if his SS money wouldn't be better distributed elsewhere. Wealth sharing through taxation is a tricky area.. but at some point we're going to have to make more choices about what kind of society we want to be. Of course, those that have 10mm in net work and don't need SS are a minority, but it's an interesting straw man to talk about.

 

[cute fuzzy bunny]

I probably wont "need" the social security $$$ and I'm sure I'll only get a fraction back (if any), but I'm having a little bit of a hard time buying into the socialist (but certainly pleasing and reasonable) idea that if you've done well, you should get less so as to favor people who didnt plan or work as hard (or as effectively) in saving for their retirement.

I sure as heck could have used the money I paid out in FICA withdrawals back in my teens and twenties, when money was scarce, but that wasnt an option. It would have been pretty sweet to be able to throw out the ramen noodle packages with the mouse tooth marks in them.

For that sacrifice with 40 years of interest, I'd like to get a little extra spending money out of it for a while when i'm older...vs some schmuck who lived beyond his means, only to arrive in his 60's unable or unwilling to work but fully capable of looking sad and sorry and holding his hand out.

But thats probably how it'll unfold.

 

[wildcat]

I probably wont "need" the social security $$$ and I'm sure I'll only get a fraction back (if any), but I'm having a little bit of a hard time buying into the socialist (but certainly pleasing and reasonable) idea that if you've done well, you should get less so as to favor people who didnt plan or work as hard (or as effectively) in saving for their retirement.

I sure as heck could have used the money I paid out in FICA withdrawals back in my teens and twenties, when money was scarce, but that wasnt an option. It would have been pretty sweet to be able to throw out the ramen noodle packages with the mouse tooth marks in them.

For that sacrifice with 40 years of interest, I'd like to get a little extra spending money out of it for a while when i'm older...vs some schmuck who lived beyond his means, only to arrive in his 60's unable or unwilling to work but fully capable of looking sad and sorry and holding his hand out.

But thats probably how it'll unfold.

People will always cheat the system. They will always find ways around it no matter what. My belief is unique. I would rather rely on myself, my ability to accumulate wealth and my ability to live off of what I saved than worry about some disfunctional govt program providing me with a tiny check each month that may or may not fill up my gas tank.

I too don't like to support dead beats and those who fail to manage their finances. Sure, the $$ you put in could have provided so much more in today's dollars. All valid points but I have no choice and it is part of living in this country.

I think their day of reckoning comes eventually. Surviving on SS alone will not provide much of a lifestyle in retirement. Your reward at least is you can retire far earlier and live a far more comfortable lifestyle than all of the deadbeats/those who lived beyond their means.

In response to Webzter, a guy taking an SS check with $10 mil in an account is beyond me but the systems allows it. To me at least, enough money is enough money at some point. Will those extra SS checks really add that much to his comfort level and lifestyle? Doubt it.

 

[maddythebeagle]

No offense....but I wouldnt call everyone that relies on SS "deadbeats/those who lived beyond their means."...I know of a few that lived frugally in the working years and with nothing more than SS simply continue with a similar lifestyle...I suspect that folks that live way above their means, just have to continue to work since SS wont be enough to continue on as before....

 

[FIREd]

I probably wont "need" the social security $$$ and I'm sure I'll only get a fraction back (if any), but I'm having a little bit of a hard time buying into the socialist (but certainly pleasing and reasonable) idea that if you've done well, you should get less so as to favor people who didnt plan or work as hard (or as effectively) in saving for their retirement.

Although it is hard for some people to accept it, our whole system is already full of programs that are socialistic by nature. Social security, medicare, medicaid, food stamps, unemployment benefits are all socialistic programs. Even our current tax code is socialistic by nature (people who earn more pay a higher percentage of their income in taxes). Really, the only major program that socialist countries have and we don't have (yet) is universal healthcare (although in this country we already have a form of universal healthcare system in the way of Medicare and medicaid). So looking at it this way, we are facing the same choices other industrialized countries face: Do we move towards a more capitalistic model where people become solely responsible for themselves or do we move towards a babysitting model where the government picks you up everytime you take a tumble? The truth is, even European countries with a strong socialistic tradition, are starting to move more towards a capitalistic model. Why? because the socialistic model is not sustainable financially over the long run (except perhaps for those wealthy countries with relatively small populations like Norway). People HAVE to take responsibility for their future and well being. It's that simple.

 

[Zipper]

We had the same problems with CPP a few years back. The money was loaned out to the provinces at firesale rates and the investment return was basically nil.

The problem was solved by ramping up contributions and the formation of the Canada Pension Plan Investment Board.

The government has no say in the investment decisions and the plan has been racking up impressive gains for years.

The CPP is actuarily sound for many many decades.

We used to worry about the plan running out of funds up here, just like you, but no one talks that way anymore.

 

[wildcat]

No offense....but I wouldnt call everyone that relies on SS "deadbeats/those who lived beyond their means."...I know of a few that lived frugally in the working years and with nothing more than SS simply continue with a similar lifestyle...I suspect that folks that live way above their means, just have to continue to work since SS wont be enough to continue on as before....

True. I don't think I wrote to imply that by any means. If I did, I did not mean it to sound that way. A lot of working poor people will have to rely on SS. I suppose in some ways that is how I justify my view. Those people are large contributors to our wealth but they do not always get to share it.

 

[wildcat]

Although it is hard for some people to accept it, our whole system is already full of programs that are socialistic by nature. Social security, medicare, medicaid, food stamps, unemployment benefits are all socialistic programs. Even our current tax code is socialistic by nature (people who earn more pay a higher percentage of their income in taxes). Really, the only major program that socialist countries have and we don't have (yet) is universal healthcare (although in this country we already have a form of universal healthcare system in the way of Medicare and medicaid). So looking at it this way, we are facing the same choices other industrialized countries face: Do we move towards a more capitalistic model where people become solely responsible for themselves or do we move towards a babysitting model where the government picks you up everytime you take a tumble? The truth is, even European countries with a strong socialistic tradition, are starting to move more towards a capitalistic model. Why? because the socialistic model is not sustainable financially over the long run (except perhaps for those wealthy countries with relatively small populations like Norway). People HAVE to take responsibility for their future and well being. It's that simple.

I agree. Seems like we are closer to making that choice now more than ever.

 

[cute fuzzy bunny]

No offense....but I wouldnt call everyone that relies on SS "deadbeats/those who lived beyond their means."

None taken, because I didnt imply that 'everyone' was a deadbeat.

I'd rather have the money back that I put into the system than some guy who didnt plan for retirement and therefore qualifies to get it more than I do.

Simply that.

 

[FinanceGeek]

This was just discussed a few days ago, my opinion remains that for those under about 45 now, Social Security will be means-tested by the time you hit retirement age. And unless you're near the poverty line you won't be getting any benefits.

As I tell DW, "with any luck, we won't qualify".

About all any of us can do to diminish the harm that the lack of future Social Security benefits will cause is to retire early and stop paying into something you'll never collect from.