No one can guarantee and exact date but this decade will see more oney going out than coming in for the first time. So the current sysytem, as is, is no longer sustainable either. The ratio of retirees : workers is simply to high.
Privatizing Social Security
- Thread starter Revolution 9
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No one can guarantee and exact date but this decade will see more oney going out than coming in for the first time. So the current sysytem, as is, is no longer sustainable either. The ratio of retirees : workers is simply to high.
Former Member
Banned
Thanks for the answer. However, I have another question. If we were to raise the age of retirement (in order to fix the ratio), wouldn't that have an adverse effect on unemployment. How our economy is going, I'm led to believe that if there were more workers in the job market it would only lead to more unemployed workers in the job market.
Former Member
Banned
^^^ Question isn't just for stoked. I'm just trying to think of alternative ways of fixing SS that doesn't involve privatizing. Obviously, higher taxes is one way. But the American people generally reject higher taxes. All of the benefits with none of the pay is the American way... Or at least the American's mentality in the voting booth.
Was finally able to read the thread. A lot of good thoughts and suggestions here. Like too many other issues, this fix is less of a daunting task in practice than it is in politics, imo. Some have stated some of these things, but I see the necessary moves are through;
- Payroll taxes (more immediate fix)
- Adjusting down the current cost-of-living (more immediate fix)
- Raising the retirement age (longer-term fix)
As I understand it, the current SS surplus stands to be wiped out by 2033. At that point, the following 75 year projection will see a deficit of 167 trillion under current conditions, without change.
So it's clear that change is an absolute must and it must be substantial change. The longer we wait, the tougher the changes will be on the then current benefitees.
What SUCKS is that most politicians know the problems, know the solutions, but stating the obvious in such direct terms is to hand over an election. EVERY U.S. family is negatively impacted by what I outlined above .. or at least it seems. Reality is change is coming no matter what each group wants and no matter who gets elected because the status quo is ridiculously unsustainable. Too bad more Americans aren't better equipped to understand these things and take more interest in making our political leaders accountable to saying what needs to be said vs. what we think we want to hear.
- Payroll taxes (more immediate fix)
- Adjusting down the current cost-of-living (more immediate fix)
- Raising the retirement age (longer-term fix)
As I understand it, the current SS surplus stands to be wiped out by 2033. At that point, the following 75 year projection will see a deficit of 167 trillion under current conditions, without change.
So it's clear that change is an absolute must and it must be substantial change. The longer we wait, the tougher the changes will be on the then current benefitees.
What SUCKS is that most politicians know the problems, know the solutions, but stating the obvious in such direct terms is to hand over an election. EVERY U.S. family is negatively impacted by what I outlined above .. or at least it seems. Reality is change is coming no matter what each group wants and no matter who gets elected because the status quo is ridiculously unsustainable. Too bad more Americans aren't better equipped to understand these things and take more interest in making our political leaders accountable to saying what needs to be said vs. what we think we want to hear.
Don't have the data to support this answer, but I would suspect the number of folks over the age of, say, 71 (73 has been thrown around) that both need to work and choose to continue to work until that age, and its impact on unemployment, will be fairly neglibible in relation to the benefit received from the additional revenue of not paying retirement to those 66 to 71. Sorry for the looooong sentence.
Former Member
Banned
Well this has already been done. The Full Retirement Age (FRA) was 65 but is now on a upward slidding scale. The majority of us here will reach our FRA at 67. If you retire at your FRA is when you will recive 100% of your benefit as determined by a really big computation on your history of earnings.
Now you can still retire at 62 and receive a reduced amount. This is what most people do as because how many of us are truly capable of working into our 60s and 70s? Not many.
Part of the problem is all the "aux" benefits that are associated with Social Security. SURCHD, AUXCHD, CIC, DWB, SSI, LSDP..some of them need to be done away with (LSDP, CIC) and others tweaked.
One part of the solution that no one is talking about is doing away with the cap on the Social Security tax. In 2012 you are only taxed, by Social Security, on the first 110,100 you make. After that you do not pay any Social Security tax. Obviously this would only affect the wealthy.
The problem with Americans is that they only want "solutions" that affect others and not themselves. Well guess what folks. A little sacrifice from all of us will be needed to truly fix the financial problems that America has across the board.
many state pension plans are in dire straits due to underfunding (not putting in enough in the first place), promising overly generous benefits, and making unrealistic investment assumptions - the states would probably LOVE this idea, it'd give them more money for current obligations so that can put off facing the consequences for future obligations
to the first point about "only" being taxed on up to $110,100 of income, right now (2012) the maximum Social Security monthly benefit payment for someone at full retirement age is $2,513/mo (a little more than $30,000 annually) so high wage earners are already shouldering a greater share of the costs
https://www.ssa.gov/pressoffice/colafacts.htm
to your second point, I'd add that another part of the problem is that Americans tend to TALK like they want to take responsibility for themselves but tend to LIVE like they want someone else to take responsibility - there's a real disconnect as I see it. For whatever reason, people stopped saving their pennies for a rainy day. So Ryan's plan ends up with a government bailout? woo hoo!!!!
I took your second point as basically the same as mine. You just worded it in a more in depth way. As for your first point. The average person pays more into SSA over the course of their life time than they draw out.
The main problem is the ratio of workers:retirees. People simply have smaller families nowadays and so more people are starting to draw (those families of 8-12 kids, the kids grew up).
Everything was great while boomers were putting in, in greater numbers than were taking out, now the problem is boomers taking more out than those that are putting in. Pretty simple.
That's where this part comes in:
A couple issues I have with pensions is not having an age + y.o.s. requirement & the backloaded payout structure. The younger you start the longer you will collect (on average) & someone else shoulders the burden. Also, you may have put in a low amount for 25 years then get a huge promotion & your retirement is based on your last few years. Cops & fire fighters have loopholed this too by working tons of overtime hours the last few years to push their payouts way up.
My idea would require strict federal mandates to ensure against underfunding, optimistic projections, life expectancy advances, etc. One option worth considering is having a 2% surcharge placed on workers in the good years to cover underfunding issues when markets fall. This surcharge could be cut in recessions to act as a built in counterbalancing "stimulus", hopefully reducing politicians desires to craft recovery acts chock full of pork for their buddies.
that is a very recent development, and at any rate, it makes some sense because most people work for 40+ years, but only live for 20 (or less) past retirement
https://blog.aarp.org/2012/08/06/the-takeaway-todays-retirees-first-to-pay-more-into-social-security-than-theyll-get-back/
(one thing that's not clear, when they're talking about the amount "put in" does that include ONLY the employee contribution, or is the employer contribution also factored in? I really have no idea. EDIT: I think it means the amount the employee has paid. But I'm not sure, and if you add in the employer contribution, then the amount put in is doubled. Maybe it doesn't make as much sense as I thought at first)
candrew
Well-Known Member
If Ryan's plan ever became a reality I know I'd be swinging for the fences with my investment options. If I'm playing with house money what's the point of investing conservatively?
Of course once you take a closer look, the reality is Ryan's plan could never happen as written. And that's the fundamental problem with this guy - all his ideas, taxes, medicare, SSI fail the sniff test upon the most cursory examination. At the end of the day I don't think it's meant to be real anyway. It's just a bunch of mish-mash to make it appear as if he's a serious person.
your first statement really only applies to those with defined benefit pensions, and that is fewer and fewer people these days - but it certainly does apply to many who are employed by various entities of state and local governments
your idea sounds sort of like the "insurance" idea that Candrew's post referenced as being a part of Bush's pension/SS reform plan
Yes it is what the worker has paid in. But even those increased amounts do not cover the difference in the worker: retiree ratio.
https://www.ssa.gov/history/ratios.html
From 159:1 (1940) to 3 (2.9):1 in 2010.
this is the defined benefit pension, and fewer and fewer workers even have this -- but those that do tend to be employed by various entities of state and local government. And the issue of wage inflation for the final few years of employment is real, and has a major impact.
And your 2% "tax" sounds sort of like the "insurance" that Candrew mentioned as part of Bush's pension/SS reform plan
anyhow, I thought this was sort of enlightening:
https://www.ssa.gov/policy/docs/ssb/v69n3/v69n3p1.html
it's a lengthy article, filled with informative facts about historical trends and the like
That's correct. It basically replaces the social security form of a DB with a self-sustaining state ran option. People seem to want guarteed income for life (without realizing how much that actually costs) so I guess that's what we'll have to form policy around. I prefer to have a catastrophic welfare program funded out of the general fund, but free cake sells so I lose.
I see it more like workers compensation insurance than FDIC or Pension Benefit Guaranty Corporation. It's more of a self-insurance program that is drawn down when asset prices drop to replace any shortfall & hopefully provide higher returns.
https://www.google.com/hostednews/a...Xhc4Ng?docId=484eca4a2fef40f2ab05f752b8188309
Interesting article on how some simple fixes would go a long way to fixing the funding gap.
One year & a little lower payout eliminates 34%. That 0.3% COLA reduction amounts to a whopping $45 per year, on average. If $45 is going to bankrupt you then go work a temp job for one hour every third month.
Interesting article on how some simple fixes would go a long way to fixing the funding gap.
One year & a little lower payout eliminates 34%. That 0.3% COLA reduction amounts to a whopping $45 per year, on average. If $45 is going to bankrupt you then go work a temp job for one hour every third month.
You can actually earn up to 14,640 (2012) gross per calander year while on RIB (retirement insurance benefits) before any reductions. That is good until the year you reach full retirement age (FRA). The calendar year you reach FRA you can make 38,880 (2012 amount) until you actually turn FRA (month of) at which point you have no earnings limit.