Social Security begins to run negative

[Bikerdude]

How about, offer an opt-out to those of us who are working? They can keep every dime they've taken from me so far, but they don't collect another nickle. I get an instant 12% raise, and that's my "social security".

Hey, a guy can dream, right?

Sorry, I'll have to vote against that. I need your payment to finance my SS starting in Dec. 09. Hey, I paid for your grandfathers SS and that money is gone so I don't feel bad taking your money.

 

[windsurf]

The cause (recession) could be the cure. How many once they find some work will continue to pay in while they draw out? That could trump those who due to job loss had no other option than to apply. Also, some (not too many) if they get work that is decent for them may suspend SS.

I'll be helping the cause. I just came out of "ER" -such as it was, earning an MFA in Creative Writing while teaching part-time for my assistantship. Now I am a full-time legal writing professor at the regional law school paying into our state's teacher retirement system and will suffer the dreaded windfall offset when I cash in my SS chips beginning at age 70 nine years from now.

 

[Independent]

How about, offer an opt-out to those of us who are working? They can keep every dime they've taken from me so far, but they don't collect another nickle. I get an instant 12% raise, and that's my "social security".

Hey, a guy can dream, right?

Social Security is almost unique among gov't programs in that a family can partially opt-out.

You probably have parents or grandparents who are getting benefits. Explain that your family should opt out. They can continue to collect their benefits, but they will send the money to you (and your siblings) to offset your taxes.

The offset won't be perfect because your family isn't perfectly average, but over your working career it will probably be substantial.

 

[ziggy29]

You probably have parents or grandparents who are getting benefits. Explain that your family should opt out. They can continue to collect their benefits, but they will send the money to you (and your siblings) to offset your taxes.

A few years ago when my dad was still alive, he told me once that he expected his kids to get screwed by SS, so he wanted to save and invest quite a bit of their monthly SS checks to pass along as part of our inheritance so we would actually get a fair deal out of it, albeit indirectly.

 

[Independent]

A few years ago when my dad was still alive, he told me once that he expected his kids to get screwed by SS, so he wanted to save and invest quite a bit of their monthly SS checks to pass along as part of our inheritance so we would actually get a fair deal out of it, albeit indirectly.

Classy decision. If all three of our children were working, I could imagine my wife voting for applying for SS then sending checks to the kids. I think that would make her feel good.

My folks never talked about SS directly. But they lived carefully in retirement and left some money for their kids. I don't think it amounted to all their SS income, but I'm also sure it would have been almost nothing if they hadn't been getting SS benefits.

 

[LLNOE]

If the government would just keep their hands off our money we'd be fine. SS money goes into a general fund and the government just can't stay away.

That's the truth. They have raided the SS coffers more times than you would believe, with the promise to pay it back. That, of course, hasn't happened. Obviously, with the HUGE deficits looming in our future, it will probably NEVER be repaid.

 

[jdw_fire]

Quote:
Originally Posted by 73ss454
If the government would just keep their hands off our money we'd be fine. SS money goes into a general fund and the government just can't stay away.


That's the truth. They have raided the SS coffers more times than you would believe, with the promise to pay it back. That, of course, hasn't happened. Obviously, with the HUGE deficits looming in our future, it will probably NEVER be repaid.

not true, scroll up to the top of the page and read my earlier posts and donheff's post. what would you rather have the trust fund invested in? you talk like you would rather there be a large stack of federal reserve notes (dollar bills) in some vault to represent the trust fund. is that how you are currently and historically invested? i doubt it!

 

[donheff]

That's the truth. They have raided the SS coffers more times than you would believe, with the promise to pay it back. That, of course, hasn't happened. Obviously, with the HUGE deficits looming in our future, it will probably NEVER be repaid.

The problem with this argument is the focus on raiding SS as the culprit. Virtually all economists say that some deficit (a lot less than current) is healthy. If we had a totally balanced budget AND were stashing the last decade's excess SS payments in a shoe box we would choke the economy. So, even if we were doing things right, we would have spent the money invested in the trust fund. What makes things unsustainable is the total spending. SS is just one nit amongst many fur balls.

 

[LLNOE]

The problem with this argument is the focus on raiding SS as the culprit. Virtually all economists say that some deficit (a lot less than current) is healthy. If we had a totally balanced budget AND were stashing the last decade's excess SS payments in a shoe box we would choke the economy. So, even if we were doing things right, we would have spent the money invested in the trust fund. What makes things unsustainable is the total spending. SS is just one nit amongst many fur balls.

I do agree with the assessment that the SS trust fund is just one pot of many that the government is dipping into for funds. But IMO, this fact doesn't make using money that has been earmarked for a national retirement safety net for everything from research on snail larvae to roads to nowhere acceptable.

As far as I'm concerned, there ARE funds that are more sacrosanct than others. Again, JMHO.

 

[Rustic23]

It is hard for me to understand how someone believes the money is in a trust fund.

So how about this, I take my kid's money, put it in their trust fund, I manage, I spend it on say booze, and I have no way of paying back all the money when they ask for it except for getting more money from them.

 

[REWahoo]

It is hard for me to understand how someone believes the money is in a trust fund. .

Rustic, it's like this: The govt. says, "It's in a fund - trust us."

 

[Rustic23]

Yep, that's what I told my kids, I also said drop by for another margarita.

 

[LLNOE]

...So how about this, I take my kid's money, put it in their trust fund, I manage, I spend it on say booze, and I have no way of paying back all the money when they ask for it except for getting more money from them.

That's exactly how it works when there are no restrictions on how the money can be spent.

Good luck to your kids!

 

[youbet]

I do agree with the assessment that the SS trust fund is just one pot of many that the government is dipping into for funds. But IMO, this fact doesn't make using money that has been earmarked for a national retirement safety net for everything from research on snail larvae to roads to nowhere acceptable.

As far as I'm concerned, there ARE funds that are more sacrosanct than others. Again, JMHO.

So, if instead of borrowing from the SS "fund" the govt sold bonds to (equivalent to borrowed from) the Chinese to do research on snail larvae and build roads, you'd be OK with that?

Either way, borrowing from SS or borrowing from the Chinese, we'll have to have higher taxes to pay it back one of these days. I'm not sure which road is more treacherous.

 

[LLNOE]

So, if instead of borrowing from the SS "fund" the govt sold bonds to (equivalent to borrowed from) the Chinese to do research on snail larvae and build roads, you'd be OK with that?...

No. I'm not OK with any borrowing.

 

[youbet]

No. I'm not OK with any borrowing.

You might want to rethink that. I tend to be a "pay as you go" type myself but do understand that even with a balanced budget and low deficit, there still needs to be some borrowing to smooth the hills and valleys of revenue input. No borrowing at all would make our monetary system (our means of value exchange and storage of wealth) pretty ineffective.

 

[ziggy29]

You might want to rethink that. I tend to be a "pay as you go" type myself but do understand that even with a balanced budget and low deficit, there still needs to be some borrowing to smooth the hills and valleys of revenue input. No borrowing at all would make our monetary system (our means of value exchange and storage of wealth) pretty ineffective.

I think so -- part of the idea of SS and pensions is that individuals don't assume the risk of retiring at the "wrong time" (when the markets are tanking, when the economy is terrible, et cetera), and that seems to mean there will be times when the program is running in the red. And that's fine as long as they are able to make it up during the years of plenty.

 

[novaman]

I think so -- part of the idea of SS and pensions is that individuals don't assume the risk of retiring at the "wrong time" (when the markets are tanking, when the economy is terrible, et cetera), and that seems to mean there will be times when the program is running in the red. And that's fine as long as they are able to make it up during the years of plenty.

The problem this country faces now is that the time of plenty has come and gone. And our elected leaders failed to put the money aside (or at least spent it and left an IOU). If you simply look no further than the population demographics, there are gonna be a lot of us who are gonna get screwed.

My feeling is that they will eventually raise the age threshold, reduce the payments, and make it needs tested. So if you were "lucky" enough to have been able to save for your retirement you will need to be a good citizen and have your SS benefits redistributed to those who weren't so "fortunate".

 

[Midpack]

So if you were "lucky" enough to have been able to save for your retirement you will need to be a good citizen and have your SS benefits redistributed to those who weren't so "fortunate".

See socialism...

 

[Dennis]

all good Suggestions.. I think SS tax just hasn't been enough.. it should have and Shoul be Alot more.. Thus In return get alot more, like DOUBLE.. at least +50% more. you hear it all the time how so many live only on their SS income and that has to tell us something.. If one was making $30k yr while working? Then they have to have that Much comming in from SS, not less.. Since we do not Save any extra on our own... Too many things happen along the way.. From Divorces to Emergencies to outright Carelessness.. It's just Human Nature..

Just like There was Always a Home for any Extra Money in our Home...with our Family..

But? Seems to me that Wall Street and The Economy Can't afford to have such a Increase in SS & Medicare Payroll Taxes.. It would give workers Less $ to Spend & less to Invest into the markets.. Even the $2,000 Yr IRA allotment has Hurt SS , let alone increasing that Figure to be Saved an avoid paying SS & Medicare taxes on it.
and There have been way too many Additional Things added to having SS pay for over the Yrs and the same for Medicare.. maybe some kind of Nat'l Health Care plan would solve that problem? If it ever happens.. that has worked in other countries..like Norway/Sweeden etc..,per a recent PBS show..

I don't know the answers, just have the questions.. and glad I was Fortunate enough to have more than enough in additional savings not to depend on my SS, So Far..an that $ has just been invested in Global And EMD Bonds these past 8 yrs..

 

[Bikerdude]

My feeling is that they will eventually raise the age threshold, reduce the payments, and make it needs tested. So if you were "lucky" enough to have been able to save for your retirement you will need to be a good citizen and have your SS benefits redistributed to those who weren't so "fortunate".

In that case you might as well drop the work requirement and change the name to "welfare".

 

[jdw_fire]

It is hard for me to understand how someone believes the money is in a trust fund.

So how about this, I take my kid's money, put it in their trust fund, I manage, I spend it on say booze, and I have no way of paying back all the money when they ask for it except for getting more money from them.

That's exactly how it works when there are no restrictions on how the money can be spent.

Good luck to your kids!

what are you all thinking? i suppose you also think that the money people invest in cds is sitting in the bank's vault as cash too. no, instead it is loaned out to earn interest which is exactly what was done with the SS trust fund. and the SSA loaned it to the most credit worthy borrower around.

 

[ERD50]

.. I think SS tax just hasn't been enough.. it should have and Shoul be Alot more.. Thus In return get alot more, like DOUBLE.. at least +50% more. you hear it all the time how so many live only on their SS income and that has to tell us something...

It tells me that we need a better educated population.

I think the govt should have a short seminar each and every year for people. Show them that SS may not provide them the lifestyle they want, and what it would take to make it up on their own.

Use the 4% SWR number as a benchmark. Project that SS will likely provide $X/year at your current wage, and for anything above that you will need to boost with 25x of personal savings to meet a 4% SWR. Then show how much you need to save each year to meet that.

Sure, there would be a lot of assumptions in those numbers, and results could vary wildly, but some info is better than nothing. And it would get more accurate as you reach retirement age.

I might be OK with the govt going (further) into the annuity business. Turn over some of your personal stash, and they pay you X% for life. Pretty simple to admin, they have more buffer than a private company, so it should be safer, and no profits to draw down payments. It should be pay-as-you-go (over the long term); if they project running out, they might need to offer less going forward to new contracts, or maybe even a very slight trim to existing contracts (predefined limits).

-ERD50

 

[Rustic23]

If I gave my money to a bank for a CD and the bank took that money and spent it to save the snail darter, That is not investing! That is spending. When I want my money back the bank, it does not have it or anything it can turn into it. I do not expect the bank to come back to me and say 'If you want your money back for your CD you will have to give me the money first as I spent your money, and by the way, if you want the interest you will have to give me that first!" The bank, if my money is invested, has ownership is some other instrument not related to the bank, and yes it may be government bonds. Have you ever heard the government say 'When you buy bonds we put it in a trust fund, we don't spend it, we invest it in the safest investment around, more government bonds." Do you consider your purchase of T-bills as being in a Trust Fund?

 

[samclem]

I might be OK with the govt going (further) into the annuity business. Turn over some of your personal stash, and they pay you X% for life. Pretty simple to admin, they have more buffer than a private company, so it should be safer, and no profits to draw down payments. It should be pay-as-you-go (over the long term); if they project running out, they might need to offer less going forward to new contracts, or maybe even a very slight trim to existing contracts (predefined limits).

I see the possible advantages in this, as it might get people to take more responsibility for/contribute more toward their retirement by establishing a more tangible and guaranteed link between what they put in every month and what they can expect to get out.

But, there are downsides, too.
- To the degree that some of this money would have gone into investments anyway, then you've got the government competing with the private sector for capital. That drives up the cost of borrowing for businesses, which is not good for productivity.
- It won't be free of political ties. As the pool of investors grows, they'll have a vested interest in increasing the rate of return, and all of them have congressmen. So, we'll have the same "avoid short term pain by kicking the problem down the road" issues that have gotten us in trouble with SS.
- What will the money be invested in? I'd like to keep Uncle Sam from intruding further into boardrooms, so hopefully the $$ won't go into stocks. Investing it in more government debt just encourages more irresponsible spending at a time when bond buyers will likely (finally) be asking for more return for the risk they are taking with US bonds, thus reigning in the borrowing machine.
- Means-tested returns? Who knows. If things continue on the present path, there would be a fair possibility that the public would demand that the needy recipients of these annuity payouts should get higher "living wage" returns than the fat-cat wealthy recipients. Unlikely? That's where SS is headed.

Again, not an idea to reject out of hand, esp if it gets more people to save for retirement and thereby decreases the pressure to provide more taxpayer support for the elderly indigent. But we should look at all likely impacts. At first blush, I'd rather keep the annuity biz private and not increase the government's role in insulating people from the risks of the real world.