Good News/Bad News RE: SS

[W2R]

Has anyone considered not applying for Social Security unless you need it?

I was required to contribute to SS with each job that I held, and my employers were required to contribute their share which otherwise would have been part of my salary (in my opinion). I could have taken all of this money and invested it, had it not gone to SS.

Therefore, I will apply for SS and take a sum equal to the investment (earnings and principal) of the required "contributions" that were taken from me. This money is rightfully mine.

If there should be any left over after that (which I seriously doubt), then I will consider what to do with that money at that time.

 

[Notmuchlonger]

Has anyone considered not applying for Social Security unless you need it?

What are the parameters on "need" ?

 

[Frugality_of_Apathy]

I was required to contribute to SS with each job that I held, and my employers were required to contribute their share which otherwise would have been part of my salary (in my opinion). I could have taken all of this money and invested it, had it not gone to SS.

Therefore, I will apply for SS and take a sum equal to the investment (earnings and principal) of the required "contributions" that were taken from me. This money is rightfully mine.

If there should be any left over after that (which I seriously doubt), then I will consider what to do with that money at that time.

You're dreaming if you think you are going to get interest on what you put in.

 

[W2R]

Therefore, I will apply for SS and take a sum equal to the investment (earnings and principal) of the required "contributions" that were taken from me. This money is rightfully mine.

If there should be any left over after that (which I seriously doubt), then I will consider what to do with that money at that time.

You're dreaming if you think you are going to get interest on what you put in.

You're so right!! That is essentially what I meant to communicate, in the phrase in blue above, but you phrased it so much better. I don't think I will - - but if I should, I'll think about what to do with it after I get to that point.

 

[Independent]

It doesn't have to be this way. If the SS trust fund had been able to be invested in assets that had a higher rate of return than government securities, it would have been possible for it to grow enough to offset demographic changes.

This is pretty complicated because it's not clear what else would have happened if SS had invested in private securities. Would the General Fund have spent less? or would it have borrowed more from "the public"? or would we have paid lower benefits to retirees?

In general, I'm thinking that any gain to SS would have been an equal-sized loss to some group of Americans.

As an individual, I would have come out ahead by investing my SS taxes into a mixed stock/bond portfolio. But, I think this is a case where what works for an individual doesn't work for the whole economy.

 

[M Paquette]

This is pretty complicated because it's not clear what else would have happened if SS had invested in private securities. Would the General Fund have spent less? or would it have borrowed more from "the public"? or would we have paid lower benefits to retirees?

Well, at the end of 2007, the combined SS trust funds (Old-Age, Survivors, and Disability Insurance Trust Funds) had a balance of:

2,180,619,000,000 dollars.

That's two trillion, one hundred eighty billion and some odd dollars. This is all held in the form of special issue bonds currently, available only to the trust funds, rather than in public debt. These bonds paid 3.875% yield as of July 2008. There's a similar amount held for the combined Federal Employees retirement Fund, Federal Supplementary Medical Insurance Trust Fund, Federal Hospital Insurance Trust Fund, Railroad Retirement Account, Unemployment Trust Fund, and a bunch of other fiddly small accounts (roughly 100 billion or so of pocket change),

Presumably if this money were invested elsewhere, the General Fund would have added this to the Public Debt side of the ledger, balanced off by a special series for the private investments. (Government accounting seems to be far beyond merely creative, venturing into the realm of fantasy.) I would be very surprised if the government would have reduced it's spending.

 

[clifp]

Has anyone considered not applying for Social Security unless you need it?

Sure right after I've sent in my sales taxes for my latest purchase from Amazon.com, and tripled my donation to reducing the Federal debt.

 

[cute fuzzy bunny]

Yeah, like I'd buy anything from amazon if it wasnt primarily to escape sales tax.

 

[Notmuchlonger]

Why thats why I always never buy from Amazon. Im a good citizen and pay all my taxes... .. . . . . .. . . . .

 

[Independent]

Well, at the end of 2007, the combined SS trust funds (Old-Age, Survivors, and Disability Insurance Trust Funds) had a balance of:

2,180,619,000,000 dollars.

That's two trillion, one hundred eighty billion and some odd dollars. This is all held in the form of special issue bonds currently, available only to the trust funds, rather than in public debt. These bonds paid 3.875% yield as of July 2008. There's a similar amount held for the combined Federal Employees retirement Fund, Federal Supplementary Medical Insurance Trust Fund, Federal Hospital Insurance Trust Fund, Railroad Retirement Account, Unemployment Trust Fund, and a bunch of other fiddly small accounts (roughly 100 billion or so of pocket change),

Presumably if this money were invested elsewhere, the General Fund would have added this to the Public Debt side of the ledger, balanced off by a special series for the private investments. (Government accounting seems to be far beyond merely creative, venturing into the realm of fantasy.) I would be very surprised if the government would have reduced it's spending.

In this case, the extra $2.2 trillion of borrowing from "the public" would have increased the market interest rate for Federal debt. The general fund taxpayers would have paid more taxes (or had additional debt accrue). The demand for private investments would have been higher, a good thing for anyone who owned them before this happened, but a bad thing for anyone who bought after, etc.

My point is that we would have the same number of workers, using the same technologies, producing the same goods. So any gain to SS would have to be a loss to someone else.

(That said, I would have supported the idea of investing the SS surplus in private investments back in the 80's when we realized we were going to have this trust fund build-up. But I would have supported it because my guess about the politics is different from yours. I would have thought that the difficulty of selling all those bonds to the public would have led to at least some fiscal discipline. I'm probably too optimistic.)

 

[ziggy29]

Sure right after I've sent in my sales taxes for my latest purchase from Amazon.com, and tripled my donation to reducing the Federal debt.

Don't forget declaring income from profitable eBay sales on your tax return!

 

[aenlighten]

Rates might have been higher than they otherwise would be

but China is adding 1T a year in savings and the Gulf states much as well and these would have greatly overwhelmed any piddly SS effect.

 

[CitricAcid]

Well, if we go through a mental exercise where, in general, people over 65 are more probable to experience certain illnesses and diseases, then we can assume that adding younger people, who in general are less probably to experience certain illnesses and diseases, will reduce the per capita coverage needs of the current plan.

This is possible, but if you take two different partitions of the population, the 60+ say and the 60- and throw them together, they should both be able to be profitable (for private) or breakeven (for public) on their own. If not, then it would be more profitable to just not cover one of the groups.

Two things exist, however. One is that for private companies, for profit, you need to have a profit margin based off of the investment. If you cover more people and have a greater velocity of cash flow, it is possible to make more money with lower profit margin (lower prices for all, even if slightly).

The other is that during your younger years you will pay more than your fair share for the nationalized health care and during your older years you will receive more of a benefit from it. Sound a little bit like Medicare and SS now? It is very similar, and I have a feeling this is the way it will be structured.

 

[FinanceDude]

Basically, nothing's changed. If you are age 50 or over, you're fine. If you're under 50 (like me), hold onto your wallet and pray.............