Can you count on SS?

[youbet]

Quote:

Originally Posted by Texas Proud those few years of teenage jobs don't count...

Yeah they do........ Plug them into the calculator. Even if you only earned peanuts, you'll see a difference between those numbers and zero.

[sgeeeee]

Quote:

Can you count on SS?

Yes, at least at 75% of current levels -- higher if we elect politicians with enough sense to legislate some minor changes to the tax - benefit formulae.

[mathjak107]

never forget the people who brought you ss also bring you the power to sell bonds and do magical financing to fund anything they want.

since some inflation may be tolerated better politically by 80 million baby boomers than politicians telling them they are cutting their ss or raising their taxes i dont think we have to worry.

[Mr._johngalt]

Quote:

Originally Posted by Mr._johngalt Hello C-T. Please tell me this was a CHP. JG

Hey, I am "galting" again (gotta love this board)

This is mostly for C-T and those who agree with the post that
inspired my response above. Let's assume (for the sake of argument)
that the effects on SS postulated in the C-T Bush-rant could come to pass.
Would you folks allow that it might be due to.......oh, say............
cluelessness, as opposed to some evil plan? Just wondering.

JG

[donheff]

Speaking of of post talking about Newsweek's use of the Vanguard calculator to dirive a present value of SS

Quote:

Originally Posted by jazz4cash If you use this approach, it ignores the time value of the SS taxes witheld over 40 years, but it still looks like a good "investment".

In a recent thread I posted figures from a run of DWs SS payments (both employee and employer portions) and calculated what her nest egg would have been under a couple of different interest rate scenarios. It showed that SS was a better deal that an SPIA based on the nest egg. Add in the benefits Astro listed and you have a very good deal.

And remember, with minor tweaks it pays for itself - even with the boomers retiring. The problem is not the SS system, per se, but that SS invested all of its revenues with the spendthrift US Government which is now having a hard time paying them back.

[Mr._johngalt]

Quote:

Originally Posted by donheff The problem is not the SS system, per se, but that SS invested all of its revenues with the spendthrift US Government which is now having a hard time paying them back.

Oh pshaw! They can just print more money.

JG

[rmark]

Yes, although I think its becoming more like a fixed pension due to rising medicare costs.

[Martha]

Quote:

Originally Posted by youbet Yeah they do........ Plug them into the calculator. Even if you only earned peanuts, you'll see a difference between those numbers and zero.

Baled hay for cash. Doesn't appear on my record. And that was hard work!

[youbet]

Quote:

Originally Posted by Martha Baled hay for cash. Doesn't appear on my record. And that was hard work!

Na na la la la la.....! Don't want to hear about your sources of illegal, non-taxed income.......... (Hands over ears)

Makes me think of some of those infamous American so-called "victimless" crimes like:

Collecting unemployment compensation when you're really not looking for work.....you're FIRE.

Hiding assets so grandma's stay at the "home" is covered by Medicaid to protect your inheritance.

Hiding income from the tax man.

BTW, my personal trip to the land of "wink wink, everybody does it" was as a teen working as a caddy and not reporting tips, which were the bulk of the compensation. We are all so bad.........!

[Nords]

Quote:

Originally Posted by New Thinking I'll take the contrarian approach to you posters who say that SS is currently means-tested due to the taxation of benefits. The benefits themselves are not reduced and you choose how much of your SS is taxed by your planning..The same exists for your IRA withdrawals. Are those means-tested? There are ways to eliminate the tax on SS for many including Roth conversions and delaying SS.

Sounds like the debate isn't "if" but "how much".

"We have established what you are, madam. We are now merely haggling over the price."
-- George Bernard Shaw

[FIRE'd@51]

Quote:

Originally Posted by donheff The problem is not the SS system, per se, but that SS invested all of its revenues with the spendthrift US Government which is now having a hard time paying them back.

I would phrase it a bit differently. Even if the government pays off its obligations to the trust fund in a timely matter (which nearly everyone expects it to do), there is still a problem in that the trust fund is not growing fast enough to make up for the demographic drop-off in workers paying into the system combined with the increased boomer retirees. Sometime around 2016, SS will no longer be able to operate as a "pay as you go" system where SS taxes paid by workers pay the benefits to retired beneficiaries. At this point the trust fund will be relied upon to make up the difference, which, under the current level of benefits, is forecast to exhaust it sometime around 2040. The obvious answer, IMHO, is to do what any other defined benefit pension plan does - raise the rate of return on its assets by including equities (an index fund) in its portfolio. The problem with the spendthrift government's deficit is twofold: (1) it continues to borrow the SS surplus, and (2) it can't pay back it's obligations to the trust fund early. Thus, funds are not available for equity investment, even if Congress were to change the law to allow this.

This is where the "smoke and mirrors" part comes in. The government could borrow more money from the private sector, and use those proceeds to repay a part of its obligation to the SS trust fund, thus "freeing up" money for equity investment. However, politicians don't want to do this because then they would have to report a bigger deficit, even though the actual deficit would still be the same. In other words, the current reported deficit doesn't include the money borrowed each year from the SS surplus.