12 ways to fix SS

[Svnla]

http://finance.yahoo.com/news/12-Ways-to-Fix-Social-usnews-522214004.html?x=0

What do you think? I think the sooner the better. We can't just maintain the status quo.

I LOL @ the last one. AARP is going to scream "Republicans are raiding the SS trust fund, give the money to Wall Street, and leave grandma and grandpa with dog food for dinner"

Diversify investments. Part of the Social Security trust fund could be invested in equities to try to earn returns that would help to sustain the Social Security program. Investing 15 percent of trust fund assets in equities would reduce the deficit by 14 percent if a 9.4 percent rate of return was achieved. If 40 percent of the trust fund were shifted into the stock market and earned 9.4 percent annually the deficit could be reduced by a third. Of course, this also exposes the trust fund to increased liabilities in times of economic downturn.

 

[MovingTarget]

Most of those ideas are pretty good ideas, but not necessarily politically feasible. For instance raising the retirement age...doesn't work too well as some professions you cannot continue to work in until you are 70 (for instance those that are manual-labor intensive). I, like the AARP, do not really trust any sort of privatization effort, despite the higher returns. It is about security/stability, not necessarily the best ROI. I would also go a step further to eliminate the gap entirely...all income, even capital gains, should be taxable by social security. Benefits will also have to be reduced somewhat, but any politician wanting to get reelected will avoid doing that like the plague...

 

[child of wonder]

Why not give people the option of investing their own money into their own Social Security account to increase their benefits?

The money would be put in pre-tax and would not be taxed if withdrawn at full retirement age. It wouldn't earn near as much money as a 401k, but would be an attractive option for those close to retirement, don't want to save in a 401k because they are relying on SS, or someone who has maxed out their 401k contributions.

If they contribute enough they could earn options like decreasing the full retirement age, increasing benefits, etc.

 

[Amused]

The best way to fix the SS is to get rid of the Brown Shirts.

 

[Genx87]

The best way to fix the SS is to get rid of the Brown Shirts.

lol I see what you did there.

 

[Blackjack200]

http://finance.yahoo.com/news/12-Ways-to-Fix-Social-usnews-522214004.html?x=0

What do you think? I think the sooner the better. We can't just maintain the status quo.

I LOL @ the last one. AARP is going to scream "Republicans are raiding the SS trust fund, give the money to Wall Street, and leave grandma and grandpa with dog food for dinner"

The one problem is that you can't just take a chunk of money that big and "invest it in the markets". It's incredibly difficult. Look at how complicated CalPERS is. This would dwarf CalPERS.

 

[dullard]

Why not give people the option of investing their own money into their own Social Security account to increase their benefits?

That idea is really original! It isn't like we have tax sheltered investements such as IRA, Roth IRA, Payroll deduction IRA, 401k, Roth 401k, Simple IRA, Simple 401k, 403b, SEP, SARSEP, Profit-sharing plans, money purchase plans, defined benefit plans, etc. Plus all of the other under-the-radar types of plans such as overfunded life-insurance plans. You are right, what we really need is just one more method then we'll be all good!

/End sarcasm/

Or, realize that we have tons of ways to invest tax deferred or tax sheltered. We can also invest on our own outside of retirement plans, buy stocks, open savings accounts or CDs, start a business, etc. We have an infinite number of options for investing our own money. And guess what the result is? After all those options for all those years, the median person of retirement age has ~$60k saved (link, see 2007 data for median people 65 or older). We give them all those options and they did horrible. Worse than horrible; the median retired person can survive at most ~4 years on that if they live like a pauper.

Social security is different. It is the last line of defence. No matter what happens to individual's retirement plans, no matter what happens to the stock market, no matter what, there will be enough money for basic shelter and food on the table. Leave it at that. Then use the taxpayer's money (in terms of tax savings, deferrals, etc) to help fund your 401k, IRA, etc.

 

[child of wonder]

That idea is really original! It isn't like we have tax sheltered investements such as IRA, Roth IRA, Payroll deduction IRA, 401k, Roth 401k, Simple IRA, Simple 401k, 403b, SEP, SARSEP, Profit-sharing plans, money purchase plans, defined benefit plans, etc. Plus all of the other under-the-radar types of plans such as overfunded life-insurance plans. You are right, what we really need is just one more method then we'll be all good!

/End sarcasm/

Or, realize that we have tons of ways to invest tax deferred or tax sheltered. We can also invest on our own outside of retirement plans, buy stocks, open savings accounts or CDs, start a business, etc. We have an infinite number of options for investing our own money. And guess what the result is? After all those options for all those years, the median person of retirement age has ~$60k saved (link, see 2007 data for median people 65 or older). We give them all those options and they did horrible. Worse than horrible; the median retired person can survive at most ~4 years on that.

Social security is different. It is the last line of defence. No matter what happens to individual's retirement plans, no matter what happens to the stock market, no matter what, there will be enough money for basic shelter and food on the table. Leave it at that. Then use the taxpayer's money (in terms of tax savings, deferrals, etc) to help fund your 401k, IRA, etc.

You completely failed to read one particular piece of information:

Let them put it into SS pre-tax AND withdraw it tax free if they wait until full retirement age. Isn't that 70 now?

Also, many people look at SS as a reason not to invest in 401k. If they can put (just throwing out numbers here) $20 extra per week into SS and get an additional $200 per month when they go on SS, and it's all tax free I think many will do it.

 

[dullard]

What do you think? I think the sooner the better. We can't just maintain the status quo.

I agree that we can't maintain the status quo. However, most of those fixes are just temporary patches. We keep paying too much and collecting too little. But simply collecting more or paying less won't suffice. Why? Because people keep getting healthier and living longer. Imagine a world where we regularly live to be 150 years old. Do you really think the people aged 18-67 can support the MUCH more populous and MUCH more costly people from 68-150 (plus support the people from 0-18)? No, well, not without tax rates approaching 100%. The only true long-term solution is to raise the retirement age.

I'd personally raise the retirement age to 70 and index it to longevity. Then, eliminate the regressive tax cap. These two items together would more than solve the problem. We'd now have far too much money in social security. I'd solve that by lowering the social security tax rate.

 

[Triumph]

Why is there not a single mention in this list, of eliminating raids of SS to pay for other programs? The way I understand it, if there is a surplus (more SS taxes taken in than payed out in a year), that money basically goes into the general fund where Congress can spend it, instead of that money being set aside for potential SS shortfalls in the future.

 

[dullard]

Why is there not a single mention in this list, of eliminating raids of SS to pay for other programs? The way I understand it, if there is a surplus (more SS taxes taken in than payed out in a year), that money basically goes into the general fund where Congress can spend it, instead of that money being set aside for potential SS shortfalls in the future.

You are only half correct. Yes, the social security surplus does eventually get into the general fund. But, you left off one very important step, and that is HOW it gets into the general fund. The social security surplus is used to buy government treasury bonds. Who is selling these bonds? The government. So, yes, money goes from SS to the general fund. But, the general fund pays it back regularly (when the bond is due) and pays it back with interest.

One fix to the social security problem is to raise that interest rate that it earns. SS can refuse to buy the low interest bonds and the interest rate will rise due to lack of demand for the low interest bonds. SS can theoretically invest in other areas such as the stock market. Suddenly SS gets a lot more money for its investments. Of course, that means the general fund pays a ton more money for interest to find other buyers of their bonds. You end up robbing your left pocket (the general fund paying much more interest) to pay your right pocket (SS earning more investment interest).

 

[soulcougher73]

I agree that we can't maintain the status quo. However, most of those fixes are just temporary patches. We keep paying too much and collecting too little. But simply collecting more or paying less won't suffice. Why? Because people keep getting healthier and living longer. Imagine a world where we regularly live to be 150 years old. Do you really think the people aged 18-67 can support the MUCH more populous and MUCH more costly people from 68-150 (plus support the people from 0-18)? No, well, not without tax rates approaching 100%. The only true long-term solution is to raise the retirement age.

I'd personally raise the retirement age to 70 and index it to longevity. Then, eliminate the regressive tax cap. These two items together would more than solve the problem. We'd now have far too much money in social security. I'd solve that by lowering the social security tax rate.

Well if we lived to 150 years old dont you think we would work until like 120 years old still paying into SS? That would be one hell of a retirement from 68-150 years old. Hell id get bored and off myself LOL

 

[CADsortaGUY]

Why is there not a single mention in this list, of eliminating raids of SS to pay for other programs?

Or no mention of eliminating it all together... Most of us would be better off without having to pay into the scam. Just stop collecting from those under 45-50 and tell them there will be no SS for them to retire on(since it's really only an old people check as it is now). Those above the break would still have to pay until they retired as they will receive the "benefit". Yes, it'd go broke quickly but it'd only be a short term "broke"(25-40 years) instead of the infinite broke we are headed to.

 

[QuantumPion]

While I am not totally against social safety nets, the idea of social security is flawed at the fundamental level and can never be completely fixed, for a similar reason why real communism can never work.

It's the same reason why the medical insurance industry is in a big mess - when you separate people from their investments, they don't have a vested interested in their success and it becomes corrupt and inefficient. Simultaneously, when you separate people buying medical service from having to pay the cost of that service, they no longer care how much they pay and it becomes corrupt and inefficient.

There's no way of getting around human nature.

 

[JS80]

Repeal

 

[dullard]

Well if we lived to 150 years old dont you think we would work until like 120 years old still paying into SS?

Not as the law is written now. That is why it must be changed.

 

[Zebo]

Kill old people it's the only way.

Once people realize equities are based on successful servicing of debt and debt contiues to default even their retirement plans and pensions will be wiped out.

 

[Triumph]

While I am not totally against social safety nets, the idea of social security is flawed at the fundamental level and can never be completely fixed, for a similar reason why real communism can never work.

It's the same reason why the medical insurance industry is in a big mess - when you separate people from their investments, they don't have a vested interested in their success and it becomes corrupt and inefficient. Simultaneously, when you separate people buying medical service from having to pay the cost of that service, they no longer care how much they pay and it becomes corrupt and inefficient.

There's no way of getting around human nature.

This is very true, although I have hopes that SS/health care can work, because it seems to work in some countries. I agree though that if you could make people see that it is actually costing them something to get this "free" healthcare, and that it's not an all-you-can-eat buffet, then things would be better.

 

[Acanthus]

Divert 2% of our military budget to it.

Fixed.

 

[Elias824]

When social security started the average life expectancy was about 65, now its what 78? Raise the age to 67-68.

 

[WhipperSnapper]

Congress could have helped by never raiding the SS trust funds in the first place. Now the money is not there when it is needed. Big surprise.

 

[Bateluer]

Congress could have helped by never raiding the SS trust funds in the first place. Now the money is not there when it is needed. Big surprise.

Agreed, every party in power have done this.

If you want to save Social Security, privatization is the only thing that's going to work. You can still have it privatized while keeping stability and security.

 

[Kappo]

I saved for my retirement, I will live better than I do now for sure (unless inflation does something really dumb). I would be happy to just not pay it anymore and don't give me anything later. You got 20ish years of my money, just leave me alone

 

[Throckmorton]

9.4% return? Wtf? I thought we got past this "invest social security" stuff when people lost all this money from their retirement accounts

 

[Throckmorton]

I saved for my retirement, I will live better than I do now for sure (unless inflation does something really dumb). I would be happy to just not pay it anymore and don't give me anything later. You got 20ish years of my money, just leave me alone

You get a lot more out of social security than you put in, that's the point of it