Fixing Social Security game

[FinanceDude]

Maybe the United States needs to LBYM............

[lswswein]

This might not be relevant for this thread but I found this intersting calculation for the IRR(internal rate of return) that the govt is getting on the dollars that it is investing as SS

http://www.coyoteblog.com/coyote_blo..._security.html

In fact, the implied rate of return on my money in the Social Security system is -0.8% a year. In other words, not only is the government not paying me any interest, they are charging me to hold my money.

[Tadpole]

Quote:

Originally Posted by lswswein This might not be relevant for this thread but I found this intersting calculation for the IRR(internal rate of return) that the govt is getting on the dollars that it is investing as SS http://www.coyoteblog.com/coyote_blo..._security.html In fact, the implied rate of return on my money in the Social Security system is -0.8% a year. In other words, not only is the government not paying me any interest, they are charging me to hold my money.

At this point in time the calculations at that blog are quite irrelevent if for no other reason than he does not know how to read his social security statement.

[jdw_fire]

For all of you concerned that SS needs fixing it looks like it will fix itself, here is a quote from the SSA website http://www.ssa.gov/OACT/COLA/latestCOLA.html:

Quote:

Legislation enacted in 1983 may limit the COLA if the combined assets of the Social Security trust funds are below 20 percent of annual expenditures.

Since it appears this legislation would automatically reduce SS expendatures the question is would it limit them enough to make SS a true pay as you go program before exhausting the trust fund. Even if it doesn't immediately, over time with enough inflation (that increases wages but doesn't increase SS payments) it will get to be.

Also of note, this might affect a retiree's decision about when to start taking SS; that is you might want to take it sooner rather than later if in your future SS COLAs are going to be limited (or eliminated) as that would reduce SS's future value.

[cute fuzzy bunny]

Wow, that doesnt sound "ultra safe" at all to me!