Social Security: a positive note for Gen X/Y

[armor99]

Quote:

Originally Posted by chinaco In my view SS is a necessity. Fortunately, it prepares for those who otherwise would not have anything. Even though it may be their fault for not preparing... I look at SS as a necessary mandatory program that we pay for (plus the company contributes). It is not a free ride. I am thankful that SS exists... the same goes for Medicare. Just imagine if your elderly parent (or other elderly family member) needed life saving surgery and it cost a couple hundred thousand dollars. Plus perhaps ongoing expensive medical care. What would you do let them die or possibly put yourself in financial jeopardy trying to pay for it. Most people who condemn and criticize these programs (that we pay for) do not consider the impact it could have on them and their finances regardless of their own personal financial preparation. Thanks goodness for these programs.

Well... I can now understand your point of view. You have made it very clear, and I can respect it, if not agree with it. It basically comes down to the question of what is a "right" and what must be earned in America. By your statements, you believe that medical care is a "right" for everyone in the US. Of course the one question left unasked is... "At what cost?". You could extrapolate this out and include food, water, shelter, and clothing into "rights" too. Again that nagging question of "At what cost?" never gets asked.
Some people actually believe that the government has money of it's own. This of course is a complete fallacy. The ONLY money that the govt has, is what it collects through taxes of the people. So when anyone says the "government should pay" or we should use the "governments money", is making a statement that is factually incorrect.

[lets-retire]

Quote:

Originally Posted by Oldbabe The neo-con slogan "starve the beast" has been at play here during the bush years. Some of us liberal boomers are very much aware of this; it's the conservatives who are in denial about the reprecussions of their own policies. In the next administration, I hope that decent people will once again take charge. YES, we need programs like Social Security and Medicare that help to support old people who can't take care of themselves. Obviously we can't continue social security the way it's set up. Seniors with middle class and higher incomes are going to take a cut in benefits. And Medicare is going to be reduced. The programs as they are currently designed are not sustainable.

Since the only real change that I can think of to SS occurred under Regan and it was simply raising taxes, what do you suggest? Raising taxes and lowering benefits do nothing but extend the problem to other generations, in this case the members of Gen X/Y (gee, thanks mom and dad). How would you change the system to make it sustainable? I think the Boomers really messed things up when they had the opportunity in the 70's and 80's to change the system and all they could come up with was let's increase taxes. It's easy to say something needs to be done, but if you don't have a plan to improve the problem you are just whining.

My proposal is similar to Bush's in that people should be given the opportunity to control their own futures. Let the taxpayers "own" a portion of their SS and control where it is invested. That portion will be willable, but not touchable until the person who owns it is 62 years old. It could be set up so people who feel they are superior to the rest in investing can own a higher portion of their SS. Those who opt for say 50% of their taxes go to the old system only receive say 40% of the full "old system" benefit. Nobody would be able to own all of their SS so the old system will always have some money going into it. Those who are not as able can opt to have 100% of their taxes go to the old system and they receive 100% of their benefits.

[FinanceDude]

Quote:

Originally Posted by FUEGO Well, there would be no debt remaining in the event of death. The govt forgives it. As a matter of law, the debt is extinguished by death. I suppose the only way one could repay it would be to direct one's executors to send a check over to the Dept of Treasury equal to the amount of extinguished debt and call it a donation to reduce the national debt. I think my heirs could use the money a little bit better. So, yes, fellow taxpayers, you'll be repaying my student loan debt if I kick the bucket in the next 27 years before it is repaid.

I thought student loan debt fell on the surviving spouse.....however it has been a LONG time since I had student loan debt........

[FinanceDude]

Quote:

Originally Posted by lets-retire Since the only real change that I can think of to SS occurred under Regan and it was simply raising taxes, what do you suggest? Raising taxes and lowering benefits do nothing but extend the problem to other generations, in this case the members of Gen X/Y (gee, thanks mom and dad). How would you change the system to make it sustainable? I think the Boomers really messed things up when they had the opportunity in the 70's and 80's to change the system and all they could come up with was let's increase taxes. It's easy to say something needs to be done, but if you don't have a plan to improve the problem you are just whining. My proposal is similar to Bush's in that people should be given the opportunity to control their own futures. Let the taxpayers "own" a portion of their SS and control where it is invested. That portion will be willable, but not touchable until the person who owns it is 62 years old. It could be set up so people who feel they are superior to the rest in investing can own a higher portion of their SS. Those who opt for say 50% of their taxes go to the old system only receive say 40% of the full "old system" benefit. Nobody would be able to own all of their SS so the old system will always have some money going into it. Those who are not as able can opt to have 100% of their taxes go to the old system and they receive 100% of their benefits.

One of the investment "choices" under the plan Bush tried to get passed and failed miserably was to be able to take a portion of your own monies and invest in 10 year Treasuries. Why that was considered risky of beyond me.......... Keep in mind the IRR of the SS fund is about 1.5%.........

[chinaco]

Quote:

Originally Posted by ziggy29 Other than the libertarians who object to these programs on philosophical grounds, a lot of the "condemnation" of Social Security isn't specifically the fact that it exists, but the fact that it was set up as a pay-as-you-go Ponzi scheme (albeit with other insurance benefits thrown in). It is this implementation of a "national old-age pension" (if you will) that is the issue with many. Because of this implementation, together with changing demographics, the program becomes a worse and worse deal for each successive generation, creates an atmosphere of intergenerational warfare and becomes an ever-increasing national burden at a time when international competition is eating our lunch on cost controls.

A weakness of the PAYG system is when the population stops growing. Otherwise it would likely be sound. And of course, the government spent the excess it took in over that last several decades.


Do you have any ideas on proposal that would eliminate the PAYG system and not leave the current folks that have paid in all those years high and dry?

Private accounts would just take money out of the system when it is needed for the current retirees.

Having nothing would likely lead to people out in the street in their old age. Unfortunately many do not prepare. But elderly in the street would not be good.

I suspect the fix will be done with means testing and higher taxes.

[chinaco]

Quote:

Originally Posted by armor99 Well... I can now understand your point of view. You have made it very clear, and I can respect it, if not agree with it. It basically comes down to the question of what is a "right" and what must be earned in America. By your statements, you believe that medical care is a "right" for everyone in the US. Of course the one question left unasked is... "At what cost?". You could extrapolate this out and include food, water, shelter, and clothing into "rights" too. Again that nagging question of "At what cost?" never gets asked. Some people actually believe that the government has money of it's own. This of course is a complete fallacy. The ONLY money that the govt has, is what it collects through taxes of the people. So when anyone says the "government should pay" or we should use the "governments money", is making a statement that is factually incorrect.

I agree... the system is not perfect. Plus we are in a tight spot because the population stopped growing.

Yes, one could extrapolate and take the logic all the way to pure socialism or communism. I am not for that type of government or system.

If the population was still growing, we probably would not be having the conversation. Most are concerned because they fear they may not get the pension they paid for.

One other likely event is that immigration will be increased significantly. Some will disagree, but I think this is likely to be part of the approach to keeping the US moving along as boomers retire. Mainly to provide enough workers with the added benefit of funding SS and Medicare.

[FUEGO]

Quote:

Originally Posted by FinanceDude I thought student loan debt fell on the surviving spouse.....however it has been a LONG time since I had student loan debt........

That would be a pretty draconian law to impose student loan debt of one spouse unilaterally onto the other spouse in the event of death of one spouse. I don't think that is the state of current law.

[Gumby]

Seems like increasing the age of eligibility (both early (62) and normal) to match increased life spans, together with increasing the amount of salary to which withholding applies, would go a long way to increasing solvency without an actual cut in benefits.

[ziggy29]

Quote:

Originally Posted by chinaco I suspect the fix will be done with means testing and higher taxes.

And that's where the generational warfare comes into play. The bottom line is that AARP and others block anything that makes today's seniors -- even the wealthiest ones who paid 2% of income into it for years and who get back several times what they put in, inflation-adjusted -- share in even a shred of the sacrifice.

Means testing on whom? No doubt it will exempt people already collecting and possibly those close to collecting. Higher taxes on whom? Certainly not those who are already receiving it (who paid MUCH lower payroll taxes than today's 6.2%/12.4% for many years). The bottom line is that pretty much everyone knows the "fix" (which the 1983 tax hi...err, "fix" was supposed to make unnecessary for at least 75 years) will screw the young almost exclusively.

That's why the funding mechanism is so odious. As soon as demographic trends go south in the worker-per-retiree ratio, the Ponzi scheme is in trouble. And no one in the AARP crowd will accept any "fix" which makes them share pain along side their grandkids. That's one of the main reasons why I hold AARP in such dripping contempt.

[megacorp-firee]

Quote:

Originally Posted by Rustic23 However, I am aware that several Counties in Texas chose to opt out of SS. NCPA - BA #215 - Some Americans Already Have Privatized social Security ... A worker making $50,000 would get almost $7,000 a month!! Three times more than the max SS payment currently. Now I don't know if their plan would have worked for the entire county, however, I can't imagine anyone in Galveston asking to go under SS.

? so you would get more in private texas ss than you were earning?
Damn ... everything is bigger in Texas.

[innova]

Quote:

Quote: Originally Posted by FinanceDude I thought student loan debt fell on the surviving spouse.....however it has been a LONG time since I had student loan debt........ That would be a pretty draconian law to impose student loan debt of one spouse unilaterally onto the other spouse in the event of death of one spouse. I don't think that is the state of current law.

The only way this can happen is if you make the tremendous mistake of co-signing your spouse's student loan debt or vice versa.

Otherwise, death gets you off the hook without sticking it to your spouse.

[ziggy29]

Quote:

Originally Posted by innova The only way this can happen is if you make the tremendous mistake of co-signing your spouse's student loan debt or vice versa. Otherwise, death gets you off the hook without sticking it to your spouse.

Sometimes you wonder what people were thinking, or what bad advice they received, when they make a financial move like this.

Another common bad move is for an elderly parent to put their children on title to their home before they die. Not only does that add liability concerns for the child should someone get hurt on the property, but it also eliminates the step-up in basis the child would receive on the property when the parent dies and the child inherits it. If the child turned around and sold it immediately upon their parent's death, this results in a lot of capital gains taxes that would have been avoided if they received the step up in basis.

I hope these aren't financial planners or advisors who instruct people to do things like this. In the general case, it's financial malpractice.

[FinanceDude]

Quote:

Originally Posted by ziggy29 Sometimes you wonder what people were thinking, or what bad advice they received, when they make a financial move like this. Another common bad move is for an elderly parent to put their children on title to their home before they die. Not only does that add liability concerns for the child should someone get hurt on the property, but it also eliminates the step-up in basis the child would receive on the property when the parent dies and the child inherits it. If the child turned around and sold it immediately upon their parent's death, this results in a lot of capital gains taxes that would have been avoided if they received the step up in basis. I hope these aren't financial planners or advisors who instruct people to do things like this. In the general case, it's financial malpractice.

It is done all the time, but in every case I have seen, it is either the parent or child who has pushed for it.................

[armor99]

Quote:

Originally Posted by ziggy29 And that's where the generational warfare comes into play. The bottom line is that AARP and others block anything that makes today's seniors -- even the wealthiest ones who paid 2% of income into it for years and who get back several times what they put in, inflation-adjusted -- share in even a shred of the sacrifice. Means testing on whom? No doubt it will exempt people already collecting and possibly those close to collecting. Higher taxes on whom? Certainly not those who are already receiving it (who paid MUCH lower payroll taxes than today's 6.2%/12.4% for many years). The bottom line is that pretty much everyone knows the "fix" (which the 1983 tax hi...err, "fix" was supposed to make unnecessary for at least 75 years) will screw the young almost exclusively. That's why the funding mechanism is so odious. As soon as demographic trends go south in the worker-per-retiree ratio, the Ponzi scheme is in trouble. And no one in the AARP crowd will accept any "fix" which makes them share pain along side their grandkids. That's one of the main reasons why I hold AARP in such dripping contempt.

I agree that this is at the crux of the problem. You can bet your last dollar that those who praise SS will change their tune with frightening quickness once they learn that they might have their benefits cut to help "others" get their SS share in the years ahead. The philosophy of most people seems to be... "well as long as I get mine (from someone else of course), what do I care if you get yours?" Whereas my philosophy is more along the lines of "I take from no one, and expect none to take from me."

[Rustic23]

Megacorp,
According to the article, the Galveston County workers get more than they were working! As close as I can tell, Galveston employees paid in the same amount as SS, however, the County invested the money rather than spending it and promising the employee a set benefit.

[megacorp-firee]

Quote:

Originally Posted by Rustic23 Megacorp, According to the article, the Galveston County workers get more than they were working! As close as I can tell, Galveston employees paid in the same amount as SS, however, the County invested the money rather than spending it and promising the employee a set benefit.

wow, a guvmnt entity that actually did something the right way? Makes me want to move to Galveston county.

... I wonder why isn't everyone lobbying their representatives to change SS to this type of a system? Seems like I would like that a lot more then SS.

[getrichslow]

Consider the next 30 years of SSI a charitable contribution from Gen X/Y to the Boomers. They outnumber everyone and it appears they will protect their benefits no matter the cost to the rest of us. I agree with the post that said ignore SSI and build your own retirement. If you are under 40 and reading this board you are smart enough to not need SSI.

[Rustic23]

Congress closed the loophole that allows local governments to opt out of SS

[Kronk]

Quote:

Originally Posted by getrichslow Consider the next 30 years of SSI a charitable contribution from Gen X/Y to the Boomers. They outnumber everyone and it appears they will protect their benefits no matter the cost to the rest of us. I agree with the post that said ignore SSI and build your own retirement. If you are under 40 and reading this board you are smart enough to not need SSI.

Yeah, but you're also potentially spending an extra five years working in order to build up an additional half million in retirement savings in order to generate the income SS would instead provide.

Of course, that's not entirely accurate for early retirees, since we'll need more money to get to SS age anyway, but the principal of working longer than you need to remains.

[megacorp-firee]

Quote:

Originally Posted by Rustic23 Congress closed the loophole that allows local governments to opt out of SS

... knew there had to be a reason. oh well ... and I was just looking up real estate in Galveston too.