[Athos]

It will have been 100 years that the Social Security Insurance program kept millions of seniors out of poverty in their old age. Not bad for a government program, not bad for ANY program.

Now that times are changing, we should be looking to continue such an excellent poverty-fighting program instead of moaning its predicted demise.

Here's one good idea:
The school system should spend sufficient time teaching students real life skills like principles of saving and investing.

Sound familiar, tomder? That's only one idea, and it's yours.

As for the average ROI being 2%, that takes some looking at. For example it does not consider the following aspects of Social Security:

• It’s adjusted almost every year for inflation
• It’s not 100% taxable
• It’s backed by the US Government
• It will pay you for as long as you live

Also, the average ROI you mentioned if privatized may increase or decrease subject to many factors including a financial tanking when capitalism encounters one of its periodic panics. Woe to those entering retirement when that happens, and it will happen.

A society that does not take care of its elderly cannot call itself a civilized society.

[jlisenbe]

• It’s backed by the US Government

That's not really true. It's backed by the productive, financial capacities of the American people. And that's the problem. The 15% being paid in currently is not going to be sufficient to pay the bills in just a few more years. Then what?

A society that does not take care of its elderly cannot call itself a civilized society.

Who instituted that rule?

[Athos]

That's not really true. It's backed by the productive, financial capacities of the American people.

It's FUNDED by the taxpayer as is almost all government spending. Congessional legislation backs the program as almost all government programs are backed.

The 15% being paid in currently is not going to be sufficient to pay the bills in just a few more years. Then what?

Here's one good idea:
The school system should spend sufficient time teaching students real life skills like principles of saving and investing.

That's only one idea. It's from tomder.

Who instituted that rule?

It's not a "rule" - it's a principle of properly treating old people. If you look hard enough, you can probably find it or something like it in the Bible.

[jlisenbe]

Here's one good idea:
The school system should spend sufficient time teaching students real life skills like principles of saving and investing.

I get the point about that. It's got several answers. One is that, at least in my state, that is already being done at some level. Probably not enough, to be sure. But the big issue is the fact that schools have been consistently loaded with more and more to teach for the past twenty or thirty years. The plate is pretty full right now. It's a tough issue to resolve.

I do see what you are saying about old people. Certainly we are to love our neighbors as ourselves, but that is a command for individuals. Does it apply to governments? I don't know. And then how much should older people plan for their old age so that the government doesn't have to take care of at least most of us? I know my wife and I do pretty well, but then we have no debt, so that helps a great deal.

The bottom line is that SS is heading for trouble. We can likely do some things to help now. Increasing the age of eligibility will have to happen. Benefits will have to be scaled back some. Withholding will likely increase. It's not going to be pleasant which is why our current crop of pols avoid it.

[Athos]

Certainly we are to love our neighbors as ourselves, but that is a command for individuals. Does it apply to governments?

Yes. Individuals (the people) act through their elected representatives in government. There is no other large-scale effective way to do it other than via government.

And then how much should older people plan for their old age so that the government doesn't have to take care of at least most of us?

The bottom line is that SS is heading for trouble. We can likely do some things to help now. Increasing the age of eligibility will have to happen. Benefits will have to be scaled back some. Withholding will likely increase.

The problems are well-known. What is needed are solutions for today, tomorrow and the years to come.

[tomder55]

An idea of mine would be to ask millionaires to donate their Social Security payments back to the government to be allotted among needy old people.


That could very possibly take place.

Except it won't be voluntary . It will be a tax gimmick confiscation along the lines of the blond haired blue eyed native American's tax on unrealized gains scheme .

Or they will make rules changes to private plans to essentially bail out SS
as I posted about in 2011

Seizing private pensions (askmehelpdesk.com)

[tomder55]

I'm being realistic. The only thing I see is pain and crew cuts .

[Athos]

I'm being realistic. The only thing I see is pain and crew cuts .

You should try to improve your disposition. Twenty minutes of meditation twice a day will do wonders for you.

[tomder55]

OK here is my plan . Refund all the money collected for everyone who has contributed to the plan with that 2% interest . Allow everyone the CHOICE of a government guaranteed return plan if they think they are too stupid to figure out how to invest for themself . Let the rest of us contribute to a plan of our choice with the caveat that we MUST invest at a rate that would've been in the payroll deduction for the failed SS program . The government can regulate and exclude such plans that are obviously too risky (called the Madoff -SBF rule) . The government may NOT exclude plans for any other reason than that exception .

[jlisenbe]

You can't do that, Tom. It's a pay as you go system. There is no SS trustfund that's worth talking about. If people stop paying in, then benefits will stop going out. Then what?

Otherwise I really like the idea! Perhaps even better would be for the government to mind its own business and let citizens take care of their own lives.

[Athos]

OK here is my plan . Refund all the money collected for everyone who has contributed to the plan

Good. You're thinking.

Allow everyone the CHOICE of a government guaranteed return plan if they think they are too stupid to figure out how to invest for themself

Calling people stupid doesn't help your plan. Try to resist such language.

Let the rest of us contribute to a plan of our choice with the caveat that we MUST invest at a rate that would've been in the payroll deduction for the failed SS program

It might be hard finding a RATE of investment comparable to the SS program depending on how the SS RATE is computed, but it bears consideration.

The government can regulate and exclude such plans that are obviously too risky (called the Madoff -SBF rule)

Good idea.

The government may NOT exclude plans for any other reason than that exception .

Not a good idea. Better that the government approve plans instead of a carte blanche exclusion.

Keep thinking.

[tomder55]

It might be hard finding a RATE of investment comparable to the SS program depending on how the SS RATE is computed, but it bears consideration.

Every annuity in the country pays a minimum of 2% . Treasury bills are paying more with the current interest rates . I reinvest in treasuries all the time . My current short term bond is going to return 3+% all very safe and government guaranteed . I bonds issued in the last year are paying 6+ %

[Athos]

Every annuity in the country pays a minimum of 2% . Treasury bills are paying more with the current interest rates . I reinvest in treasuries all the time . My current short term bond is going to return 3+% all very safe and government guaranteed . I bonds issued in the last year are paying 6+ %

Excellent!

[jlisenbe]

I reinvest in treasuries all the time . My current short term bond is going to return 3+% all very safe and government guaranteed .

Inflation is 9%, so how is that a winner? Are you thinking relative to the stock market?

I'm still curious about your plan in post 29. How will the money paid in be reimbursed? Where will it come from? And if current workers are allowed to stop paying FICA, then how will current benefits be funded?

[tomder55]

Inflation is 9%, so how is that a winner? Are you thinking relative to the stock market?

Yes and to the ROI from the money put into the SS through payroll deduction. At best the average return is around 2% AND that is likely to shrink. Most new workers will probably put more into the scheme than they will see.

I don't see a way out of the coming collapse . All they can do is buy a few years like they did in 1984 . That was a raising of taxes and a cut in benefits .

I know that reimbursement is out of the question .But I would like to see young workers given a choice . Ponzi schemes screw people with skin in the game. SS is no different .

BTW CPI rose again today despite Fed rate hikes. This is not going to be a soft landing . The Fed will force a recession to fix it .

[tomder55]

What I do is convert stocks to bonds after I determine my annual budget . Then I scatter their due dates throughout the year . That way I always have cash available to withdraw from the retirement funds . I am determined to not tap into SS until I can get the max allowed .
As noted treasuries get better yield that SS . Stocks have been negative since December of last year and I don't see their return until the inflation and the fall out from the covid monopoly money liquidity injection is corrected... if ever .

money heist liquidity injection - Google Search



I also have to make it as easy as possible for my family when I am called . So I have been biting the bullet and converting the retirements funds to Roths so the taxes are on me .

[tomder55]

SS is unsustainable because it is set up like a Ponzi Scheme.
1940 there were 160 workers per retiree Today less than 3 .
To extend it further than a decade there will need to be a 20% cut in benefits and /or an increase in the payroll confiscation. In the last 2 decades to keep the plan afloat the income that was taxable went from $87,000 in 2003 to $113,000 a decade ago to $160,200 today . And still it will be insolvent in 10 years .

This of course hits the low income workers the hardest. Let's say a worker has a minimum wage job. They may pay no or virtually no income taxes and still be hit for the full amount of their 12.4% obligation for SS taxes .

How does a retire fare ? A worker making average wages can expect SS to pay them $20,000 . Had that worker put that money into an IRA they would get 3 x the amount.

Comparing the Returns from Tax-Favored Retirement Plans to Social Security Yields | Tax Foundation

And is the SS payout your money ? No You are not guaranteed anything

The Court ruled that there is no contractual right to receive Social Security payments. Payments due under Social Security are not “property” and are not protected by the Takings Clause of the Fifth Amendment. The interest of a beneficiary of Social Security is protected only by the Due Process Clause.

Flemming v. Nestor - Wikipedia

It is an outdated program. When it was passed there was nothing for seniors . Seniors without family support were consigned to poverty .

Now the reverse is true . Households run by seniors have more than twice the wealth of those by the young workers who support the program.
Average Net Worth by Age for Americans | Lexington Law

The answer is to wind the program down. Reducing the benefits for younger workers and give them an opt out . Take care of the seniors who REALLY need the program with other welfare programs .,

For the "stupid people" who can't manage their finances ;enlist the employer to make mandatory payroll payments into a private retirement program or an employer sponsored one . The good news is that it REALLY is the worker's money ....not some vague promise by the government for future returns that can be arbitrarily changed any time Congress choses to do so.

[jlisenbe]

The answer is to wind the program down. Reducing the benefits for younger workers and give them an opt out . Take care of the seniors who REALLY need the program with other welfare programs .,

That would be a swamp that most would not care to enter. I don't see a way out. It seems we are going to have to find some way to make this continue to limp along. Payroll taxes will be increased and the age of retirement will increase. And we haven't talked about Medicare which is another nightmare to consider. Wife just had a pacemaker put in. 24 hours in the hospital and the bill was north of 40K. This cannot continue forever.

[tomder55]

I would . But yes I am in the minority . GW Bush proposed something similar in 2005 and it was summarily dismissed. Had it been adopted we would not be having this discussion today.

[jlisenbe]

I think part of your argument comes down to not punishing the responsible in order to help those who are not responsible. That's an ongoing issue in our country.