Holy Social Security

[WackyDan]

just remove the cap on social security tax. boom, now it will be OK until almost the year 2100.

1. They've been raising the cap... going to be 117k here shortly.

2. You remove the cap and you have to create a new tier of SS payout... it really is that simple. You expose someone to more SS tax with no return and it will end badly for you politically.

# 2 is personal to me and many.

 

[Blackjack200]

That is why you change your allocation as you near retirement age into more conservative funds. Right now I am in 100% stocks but that is because my time horizon is long so I am ok with that exposure. I hate hearing the people that are in 100% stocks at age 60 and complain when their 401k takes a nosedive in a down economy. Why the F$%k where you 100% invested in stocks at age 60 or age 65? They even have targeted funds now. You choice a fund that best fits when you plan to retire and the fund handles the movement of assets into more conservative investments as you near retirement age for you.

It's kind of funny that you invoked target date funds when you criticize people for not being sophisticated investors.

I work in the retirement industry, and specifically manage a mutual fund platform. Target date funds were emerging as the lastest and greatest thing back in 2007 when I first started in the industry. Like any emerging asset class, there was a lot of competition between the various providers (Vanguard, T. Rowe, Franklin Templeton, etc.) to establish their funds as the best available and drive assets into the funds.

In 2007, equities were doing very well, the stock market was at all time highs, and there had been steady growth since the tech crash in 2001. So to juice their returns, many of the target date managers overloaded their funds with equities. In 2008, those equities didn't do so well. So lots of people that had trusted professional money managers to maintain an appropriate balance of equities and lower volatility fixed income and cash equivalent assets, found themselves with huge losses.

My point in all this is that it's real easy to sit there and say "investing is easy, just do XYZ". But the fact of the matter is, most people are not equipped to invest for themselves, they do stuff like pull money out of down markets, and invest in bubbles, and sometimes they do all the things we say they should do, and they still get screwed.

 

[Brovane]

Fairness obviously isn't a part of the equation with Social Security so I'm not going to start making it either. You have to start at some point to ween people out of it. For starters I'd say, anyone below the age of 30 doesn't contribute anymore, and gets no benefits either. Let the above 30 crowd fend for themselves until they all die off.

The above 30 crowd also votes and I can guarantee that would be a non-starter.

 

[xBiffx]

The above 30 crowd also votes and I can guarantee that would be a non-starter.

Of course, but there's no way to do it except for someone to eventually ignore politics.

Also, I'd make voluntary surrender an option. Anyone at anytime can surrender their contributions to date and any benefits in exchange for not contributing anymore in the future.

 

[fskimospy]

Of course, but there's no way to do it except for someone to eventually ignore politics.

Also, I'd make voluntary surrender an option. Anyone at anytime can surrender their contributions to date and any benefits in exchange for not contributing anymore in the future.

I also dream of the days before social security where the poverty rates among the elderly were 30%+.

 

[Brovane]

It's kind of funny that you invoked target date funds when you criticize people for not being sophisticated investors.

I work in the retirement industry, and specifically manage a mutual fund platform. Target date funds were emerging as the lastest and greatest thing back in 2007 when I first started in the industry. Like any emerging asset class, there was a lot of competition between the various providers (Vanguard, T. Rowe, Franklin Templeton, etc.) to establish their funds as the best available and drive assets into the funds.

In 2007, equities were doing very well, the stock market was at all time highs, and there had been steady growth since the tech crash in 2001. So to juice their returns, many of the target date managers overloaded their funds with equities. In 2008, those equities didn't do so well. So lots of people that had trusted professional money managers to maintain an appropriate balance of equities and lower volatility fixed income and cash equivalent assets, found themselves with huge losses.

My point in all this is that it's real easy to sit there and say "investing is easy, just do XYZ". But the fact of the matter is, most people are not equipped to invest for themselves, they do stuff like pull money out of down markets, and invest in bubbles, and sometimes they do all the things we say they should do, and they still get screwed.

Point taken. That is why I don't do target funds since I want to control my fund allocation. The retirement target date funds are certainly not perfect. I just hear to many stores of people 60+ people invested 100% in equities and then wondering how they suffered a huge loss. I remember reading someplace that people put more research effort into buying a car than how they invest their retirement savings. That to my is why Social Security is important because people need that guaranteed retirement income. I am not also a huge fan of 401k's and the move away from Pension's by corporations.

I took a financial 101 class in College that covered things like Annuities, 401k's/IRA's, insurance coverage, estate planning etc. One of the most useful classes I ever took.

 

[Brovane]

I also dream of the days before social security where the poverty rates among the elderly were 30%+.

+1 :whiste:

 

[Svnla]

I saw attack ads after attack ads on TV about how so and so would steal SS money to give to Wall Street bankers, how so and so raised the working age and gave tax break to the wealthy, how so and so would privatize SS into stocks => make WS rich even more rich and so on and so on. All of the scare tatics and 1/2 truth/lies.

Yet if one has a brain and able to think, SS and other entitlement programs will NOT survive if we continue on the same path/status quo.

 

[bshole]

Well then you don't understand how the US government works. Social Security cannot go bankrupt as a simple statement of logic.



Productivity per worker has more than tripled since 1960, which would make the productivity adjusted number of workers per retiree higher now than in 1960.



So yeah. That about settles that.

Um.... I guess that you didn't notice that average inflation adjusted PAY has gone DOWN for more than a decade now so that there are fewer workers who are each paying a higher percentage of their income (due to salary deflation). So nah, that doesn't about settle it.

Pro-tip, the government doesn't derive its SS income from worker PRODUCTIVITY.... it derives it from worker PAY!

 

[Exterous]

But considering that the poor need social security much more than the rich, does it make sense to cut the poor's social security because the rich are living longer?

Both economic demographics are living longer.

Regardless I think SS is the wrong place to address longevity concerns - mainly because if\when these issues are addressed additional political will will be needed to change SS again. Some are societal (health care costs) but there are some very large self afflicted reasons the poor don't live as long: tobacco use and alcohol abuse are substantially higher among the poor.

FWIW that $450 the poor spend on alcohol and tobacco (BLS 2013) could be worth around $200,000 at age 65

 

[Hayabusa Rider]

Of course, but there's no way to do it except for someone to eventually ignore politics.

Also, I'd make voluntary surrender an option. Anyone at anytime can surrender their contributions to date and any benefits in exchange for not contributing anymore in the future.

So let me see. I have a whole lot of contributions, the max for 20 or more years. I give that all up for the handful of years I have left. Now how does that work?

This is one mess I squarely place the blame for on the Republican idol, Ron R. He allowed, no encouraged the raiding of pensions forcing those "irresponsible" who really did have a retirement and often contributed onto SS with no other recourse. The cocky and condescending might do well to wonder how well they'd be off if their 401k's were seized, and then for many to loose their jobs at the same time.

I don't think they'd be quite so eager to destroy SS.

 

[fskimospy]

Um.... I guess that you didn't notice that average income adjusted PAY has gone for more than a decade now so that there fewer workers who are each paying a higher percentage of their income (due to salary deflation). So nah, that doesn't about settle it.

Pro-tip, the government doesn't derive its SS income from worker PRODUCTIVITY.... it derives it from worker PAY!

You're the one that attempted to make the case that Social Security was unaffordable due to the number of workers per recipient, not me. Don't get mad when I point out to you that one worker today is worth many workers from before.

By the way, that's also why you shouldn't link images from right wing advocacy organizations like Mercatus. They aren't attempting to look at the issue rationally or honestly.

Regardless, let me clue you in to how the world works: society derives its standard of living from the sum total of production for all of its component parts. The only thing that matters as to whether or not we can afford Social Security is how much we produce, not how much specific individuals are paid.

 

[xBiffx]

I also dream of the days before social security where the poverty rates among the elderly were 30%+.

You are dumb if you think eliminating social security for those who save otherwise is going to bring that back.

 

[xBiffx]

So let me see. I have a whole lot of contributions, the max for 20 or more years. I give that all up for the handful of years I have left. Now how does that work?

I don't know why you would do that if that is your situation, but there should be an option is all I'm saying.

 

[fskimospy]

Both economic demographics are living longer.

Technically true, but when you're talking about increasing the SS retirement age due to longer lifespans, one half of our country is responsible for ~86% of that increase. With that in mind it seems wrong to treat both haves equally.

Regardless I think SS is the wrong place to address longevity concerns - mainly because if\when these issues are addressed additional political will will be needed to change SS again. Some are societal (health care costs) but there are some very large self afflicted reasons the poor don't live as long: tobacco use and alcohol abuse are substantially higher among the poor.

FWIW that $450 the poor spend on alcohol and tobacco (BLS 2013) could be worth around $200,000 at age 65

While that might be true it seems odd to try and address those societal ills through Social Security. The fundamental problem here is that Social Security costs are going up in significant part because wealthier people are living longer. If you believe that these costs need to be addressed wouldn't it make the most sense to target your adjustments at the area that has changed?

 

[WackyDan]

And it will nose dive again next time there is a down economy and then back up and then back down. No doomsday here that is just the trend. Where will the economy fall when you hit 67?

We are sitting at 16k+ on the DOW today. Tell me where we were in 2007 - 2009?

I will tell you as you don't understand. The DOW was scraping highs near 14k. It dumped to roughly 6400. It is now scraping 16500. The market has always gone higher. Always. Over the course of a 40 year working career you should average a far better return than what SS nets you and the money is yours to pull out in chunks as needed or all at once if needed. This is based on a diverse pool of investments, which pretty much every 401k offers anyway.

Even if your 401k took a dump in 2007 and you were a few years from retirement what was the big deal? It's not like you were going to empty your 401k all at once anyway. You could work an extra year or retire like normal and watch your 401k rebound and grow again.

 

[WackyDan]

I saw attack ads after attack ads on TV about how so and so would steal SS money to give to Wall Street bankers, how so and so raised the working age and gave tax break to the wealthy, how so and so would privatize SS into stocks => make WS rich even more rich and so on and so on. All of the scare tatics and 1/2 truth/lies.

Yet if one has a brain and able to think, SS and other entitlement programs will NOT survive if we continue on the same path/status quo.

If one allows partial privatization we would see a nice broad bump in the markets (not a bubble) and everyone's existing investments (IRA, 401k, stocks) would benefit in addition to the better growth and control of their own SS savings.

 

[Exterous]

Technically true, but when you're talking about increasing the SS retirement age due to longer lifespans, one half of our country is responsible for ~86% of that increase. With that in mind it seems wrong to treat both haves equally.

The fundamental problem here is that Social Security costs are going up in significant part because wealthier people are living longer. If you believe that these costs need to be addressed wouldn't it make the most sense to target your adjustments at the area that has changed?

This isn't some sudden jump in age once one hits a mythical 'wealthy' turning point but rather a continuous increase. How do you plan to target adjustments based on that? Does the fact that the lower income levels are partially to blame for their poor longevity figured in at all?

 

[Exterous]

Even if your 401k took a dump in 2007 and you were a few years from retirement what was the big deal? It's not like you were going to empty your 401k all at once anyway. You could work an extra year or retire like normal and watch your 401k rebound and grow again.

Yes. There certainly aren't any examples of a stock market stagnating for long periods of time or anything...

http://www.forecast-chart.com/historical-nikkei-225.html

Maybe if they wait another 25 years their portfolios can recover. Past performance never guarantees future performance

 

[bshole]

. Don't get mad when I point out to you that one worker today is worth many workers from before.
.

I never but never get angry. I can feign rage but in reality my mood ranges from bored to mildly amused to laying on the floor laughing.

Meh, I don't really care if they raise the retirement age or start cutting off SS benefits for people with more than 1 million in the bank (until they bleed their accounts to less than 1 million). Basically SS benefits should be used for the recipients current needs and not as nest eggs for their children, therefor they are not needed by those with over 1 million in the bank. Both of these changes would affect me personally but I am willing to sacrifice for my fellow Americans.

I certainly hope Eski is right with his rosey predictions but I most certainly am NOT betting my own retirement on his predictions. My entire retirement is being planned with the understanding that I will receive NO federal monies for ANYTHING upon retirement. I pray that Eski doesn't buy into his own BS and find himself holding the bag when his own retirement age is reached.

 

[Victorian Gray]

Raise the retirement age to 72. After that, tie the retirement age to average life expectancy. Problem solved. Real fucking simple.

Welcome back to the 19th century. Based on average life expectancy in the US that would maybe give you a glorious 6 years to enjoy your retirement as an old fart. Enjoy.

 

[Victorian Gray]

You are dumb if you think eliminating social security for those who save otherwise is going to bring that back.

"Far fewer elderly are poor: In 1966, 28.5% of Americans ages 65 and over were poor; by 2012 just 9.1% were. There were 1.2 million fewer elderly poor in 2012 than in 1966, despite the doubling of the total elderly population. Researchers generally credit this steep drop to Social Security, particularly the expansion and inflation-indexing of benefits during the 1970s"

http://www.pewresearch.org/fact-tan...ears-into-the-war-on-poverty-a-data-portrait/

 

[xBiffx]

"Far fewer elderly are poor: In 1966, 28.5% of Americans ages 65 and over were poor; by 2012 just 9.1% were. There were 1.2 million fewer elderly poor in 2012 than in 1966, despite the doubling of the total elderly population. Researchers generally credit this steep drop to Social Security, particularly the expansion and inflation-indexing of benefits during the 1970s"

http://www.pewresearch.org/fact-tan...ears-into-the-war-on-poverty-a-data-portrait/

Way to totally not refute what I said. Good job!

If they have a 401k, its not because of social security. How many of those people in the research had private retirement? Funny, looks like that detail is conveniently missing.

Of course, there are likely other reasons too but the study failed to look into those. They started with a very myopic premise and extrapolated from there.

We use data from the March 1968-2001 Current Population Surveys to document the evolution of elderly poverty over this time period, and to assess the causal role of the Social Security program in reducing poverty rates.

So SS is the cause and that's all they looked at. Pretty ignorant premise if you ask me.

 

[Victorian Gray]

Way to totally not refute what I said. Good job!

If they have a 401k, its not because of social security. How many of those people in the research had private retirement? Funny, looks like that detail is conveniently missing.

Of course, there are likely other reasons too but the study failed to look into those. They started with a very myopic premise and extrapolated from there.



So SS is the cause and that's all they looked at. Pretty ignorant premise if you ask me.

So you read this 44 page study in 10 seconds and 'showed me up'. Good for you.

I suggest that you actually read the paper before trying to refute it.

http://www.nber.org/papers/w10466.pdf

site where the paper is linked

http://www.nber.org/papers/w10466

 

[Fern]

-snip-
The people that protest privatization don't understand investing at all.

I oppose privatization because I fully expect we'll have another case of 'privatized profits and socialized losses'. Some will do well under privatization and others will not. We'll end up subsidizing the latter.

Fern