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Privatizing Social Security

Stoked said:
You are right overall. You do have some outdated info however.

In 2012 you need to earn 1130.00 groos to earn 1 wuarter of coverage (QC).
Up to 110,100 is taxable by Social Security in 2012.

Those figures go up due to the state of various indexes (not sure which ones to be honest).
You do need 40 QCs to retire but once you have them you have them. As for your "sliding scale" on getting penalyzed for retiring early. It already exists. It goes by month. For every month earlier you retire you take a little harder of a hit. However the reverse is true. Let us say that your full retirement age is 67 but you retire and file for benefits at 68-70. Well you are given "delayed retirement credits (DRCs) that allow you to receive over your 100%.
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Yeah, my bad, I forgot to state that those figures were from 2003 I think. Overall, my sentiments and changes still stand though. What were your thoughts on them?
 
Wes Mantooth said:
Random thoughts. Any feedback would be much appreciated.

What's the exact equation to determine how much SS someone receives? What I believe I do know is that early retirement begins at age 62, full retirement at 67. One who chooses early retirement at 62 gets about 80% benefits. From there to 67, I imagine it's a sliding scale. One also needs at least 40 credits to collect. You can get a maximum of four credits per year, one per quarter, and need to only make $890 per quarter to get said credit. 6.2% of one's paycheck goes to SS but only on up to $90,000 of taxable income. How much of this am I wrong on? Any of it? Am I forgetting anything important?

What percentage of people retire early, between the ages of 62 and 66? I ask because I see that as a problem, somewhat at least. As our system stands now, if I'm understanding it correctly, someone who retires at 67 and gets paid in full at $1,000 (hypothetical number) a month, will receive $144,000 (ignoring interest/inflation for argument's sake) over their remaining years, up until their death at 79, the average age of death for Americans right now.

If someone retires early though, at age 62, and thus receives only 80% of full (the number I've seen thrown around for penalty), or $800 a month, up until the age of 79, they've received $163,200, while contributing less into the system as they retired five years early. Sure, they didn't really make more, because they did not have a job from the age of 62-67 but the fact is, if I'm understanding it correctly, more money is sucked from the SS funds despite the fact they contributed less. Big problem imo.

A bigger problem is how little the full retirement age has gone up over the years despite the huge increase in average life expectancy. Life expectancy has skyrocketed over the last 75 years yet the full retirement age for SS has not. Just plain silly imo.

If I'm fixing this issue, I:

*Raise early retirement age from 62 to 67, with a greater penalty for collecting early. Currently, one can retire at 62 and collect about 80% of their benefits. I'd lower that figure to about 75% (at new early retirement age of 67), and have a sliding scale where it goes up (75% at 67, 80%% at 68, 85% at 69, 100% at 70)...this should do a few things...obviously, it will push back paying any SS by five years. Much more will go into the system, less will come out, at least compared to our current model. It will also push the full retirement age back three more years, to 70, a number quite frankly that sounds scary. And at a certain point, people are gonna say **** it, I'm not working any more. It just doesn't make sense. I've worked a few more years than everyone else did in the past when they retired early at 62, and thus have more saved up. I don't need to. I'm outta here at 67. 75% of my bennies is just fine, considering how much more I've saved over the last five years of employment, as compared to my dad.
*Raise full retirement age from 67 to 70. This does two things. It lessens the gap between early retirement and full to three years from the five it currently sits at. It raises the full retirement age three years from 67 to 70. I see this as a great way to get a much greater number of people to retire early. Very few people want to work so close to death, unable to see their grandkids and kids mature, unable to enjoy their own twilight years. In my opinion of course. Another three years of employment, at that age, is a long effing time. The same sentiment as the previous paragraph stands here...that I think more people would retire early...but it would be at least five years later than they are currently at 62.

If they don't, and work toward 70 more than before, then only nine years (based on life expectancy) of SS is paid out, as compared to 12 years before. If they retire early, well, let's see.

In this scenario, at $1,000/month, one who retired at 70 would make $108,000 over the last nine years of their life.
Someone who retired early at 69 (85%) would make $102,000.
Someone who retired early at 68 (80%) would make $105,600.
Someone who retired early at 67 (75%) would make $108,000.

The amount they collect over the course of their remaining years, til 79, is no greater if they retire early or later. Now, quite obviously, if someone's worked 48 years instead of 45, at what is essentially the same salary over the last few years, they probably both don't get $1,000 a month. However, the difference would be nominal. Instead of $1,000, they may collect $1,065 or so.

Let me continue.

*Raise the number of credits from 40 to a much higher, yet attainable, figure of 100. To earn 40 credits, one simply needs to work 10 years--but not even on a full-time basis. They simply earned one credit for each quarter in which they earned $890. That's ludicrous. A stay at home mom could make this no problem on the side. A woman working at McDonalds can also make this working about 30 hours a week. I don't think that's too much to ask.
*I raise the amount we contribute per paycheck to a little greater percentage than 6.2% (7.25%) but keep the cap on employer contribution at the current figure.
*Lower the amount we get upon retirement by about 5%--from $1,000 to $950 in my scenario.


Let the flaming begin. I'm sure I've screwed up something, maybe a lot here, but these are my initial quick thoughts.
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This is the sort of comment I like, at least sometimes. Some good observations, some facts, and some questions. . . . in the place of an angry ideological rant. . . (which I do sometimes, I admit)

These ideas are pretty much what reform will do to SS sooner or later, because there is demand to make it more responsible, and more affordable, than a simple giveaway of taxpayer receipts.

Shifting the pure "safety net" provisions to straight taxes makes a lot of sense. . . . nobody is thinking they are building a nest egg with what will be used to take care of those who won't work, or who become disabled, or whose jobs get shipped overseas.

Then the idea of a "vested" interest in a government-sheltered account, where the government doesn't just use the money to buy bombs or the clever little honchos all over the world who grease the wheels for "American" international cartels. . . . That money would/could be invested in things which have a reasonable expectation of profit, such as public utilities, which also provide direct benefits to the general populace. . . . like Franklin was suggesting.
 
Wes Mantooth said:
Yeah, my bad, I forgot to state that those figures were from 2003 I think. Overall, my sentiments and changes still stand though. What were your thoughts on them?
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I particularly liked the part where earning more than 40 QCs is required to file for retirement. You do understand that your eligiblity for disability benefits is different right? That falls under your insured status. Like car insurance. Have you paid it recently to have it? The look at the last 10 years to truly determine your date last insured (DLI).

In order to get a private pension you usually have to work 20+ years. Why should that not be the case, baring things like being on social security disability at a younger age and we know you cannot earn that many years woth of earning?

100 QCs would be 25 years of good steady work. When I retire at this job I will have roughly 35-37 years of service at this job.
 
PKM said:
I hate speaking with 'republicans' and 'democrats', both. I only enjoy discussing the country, the government, and our future with those that are independent thinkers and can speak to things specifically, rather than in broad-sweeping generalizations. As soon as I hear anyone say, "well, those damn republicans" .. or "those damn democrats" .. I tune them out because I feel everything from that point on is going to be a waste of time./QUOTE]


Shouldn't you be a big enough person to listen and find what individual politicians bring to the table
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@Wes (and whoever else cares like Babe and Franklin*)

I am more in line with less government and control over my own money but I would be ok with giving a slight increase into SSA taxes. Say up to 1% more from everyone. I would also remove the taxable limit of 110,100 (in 2012) for SSA taxes and make there be no limit. If you earn it you pay the SSA tax.

I would also add a small premium of say 20$ for Medicare Part A.

What are your takes on the secondary programs of SSA? In particular the Lump Sum Death Payment, Disabled Widows Benefits, Child In Care and especially Supplemental Security Income?
 
franklin said:
@Wes--I agree with most of this. The main issue I see is older folks who cannot obtain replacement jobs & find there way onto the disability roles until full retirement kicks in. We would have to formulate some sort of hire the oldies incentives, & that's a can of worms.


According to this, the penalty for retiring early is already scaling in heavier each year. https://www.ssa.gov/oact/quickcalc/earlyretire.html

Also, if you were suggesting that a stay-at-home mother could easily earn the same benefit then you're mistaken on how the program is set up. The housewife would collect more under her husband's earnings anyway, so it's not like taking a part time job here or there would bump up their payout.
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Yeah, I thought about the older people situation but two things came to mind. Target and Walmart. I hear ya though.

Regarding the benefits reduction, interesting. Then, I'd reduce even more. I'll come back to this at the end.

Regarding a stay-at-home mom, I was not saying she would receive the same amount in her SS check if she worked part-time for 25 years as compared to her spouse who maybe worked 48 years full-time. I was simply stating that she could work part-time for 25 years and get 100 credits, the number of credits I proposed the number be raised to in order to qualify for SS benefits. It currently stands at 40 which is ludicrous imo. Obviously, if she did 100 credits by age 47 having worked part-time since college, she's not going to receive nearly as hefty a check each month once she hits 70 because very little was pouring in each paycheck but still. She'd still receive a check because she hit the 100 credits.

The biggest problem as I see it facing people around my age (37) and younger is monetary responsibility. I'm not talking about earning money and then protecting it with wise investments, though that's great obviously. I'm talking about overspending. I see so many 20-some and 30-some year olds going out ALL THE TIME to bars and restaurants, during the week, the weekend, owning a home, driving nice cars, and so on, that I wonder how they manage to save any money. AT ALL. What's going to happen in 30 years, especially after what I foresee as a ludicrous rise in medical expenses, when these people have very little saved, a shrinking SS check relative to the past, and insane medical expenses.
 
Mission Accomplished said:
PKM said:
I hate speaking with 'republicans' and 'democrats', both. I only enjoy discussing the country, the government, and our future with those that are independent thinkers and can speak to things specifically, rather than in broad-sweeping generalizations. As soon as I hear anyone say, "well, those damn republicans" .. or "those damn democrats" .. I tune them out because I feel everything from that point on is going to be a waste of time./QUOTE]


Shouldn't you be a big enough person to listen and find what individual politicians bring to the table
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I liked how you completely missed his point.
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babe said:
Being "inclined to think" can be a good thing. Following through on the inclination can be a journey of revising a lot of dearly-beloved ideas.
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I was trying to be nice and respectful. What I really think is that is it one of the dumbest conclusions I've ever heard.
 
PKM said:
Stoked said:
I have no idea who I was even quoting, referring to, or even agreeing with .. was just jumping in with my statement. Sue me, Stocked.
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Um...what? Shouldn't you be PKMing (see: PMSing) at Mission Accomplished for jumping down your stove pipe and stirring your soot? I was defending you because you were general ranting and he used a retort that makes no sense.

So go back to your walker grandpa...
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candrew said:
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?
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This only becomes a bad thing if we assume providing a welfare net only for those who go broke is a bad thing. I'd take that option every day over providing the net for everyone. Also, there has to be a spender for every saver, so if you take huge risks & lose it will help those who don't. Furthermore, those who swing for the fences & do hit the lottery will be a counterbalancing source of tax revenue to support those who go bust.

Let's look at the numbers. According to the most recent BLS Labor Report, average wages are roughly $42,000 per year. Plug that into a conservative calculation of no real raises per year & 3% real investment returns between the age of 25 & 70, 2% real in retirement, & you'll have a permanent income in today's dollars of $3200 per month until you are 95. Even a 1% real return beats SS by $500 per month.

Compare that to the current average SS payout of $1264 that is scheduled to be reduced by at least 25%. Wouldn't you much rather have the higher income & pay taxes to support those who fail than lower income in an unstable system?
 
franklin said:
This only becomes a bad thing if we assume providing a welfare net only for those who go broke is a bad thing. I'd take that option every day over providing the net for everyone. Also, there has to be a spender for every saver, so if you take huge risks & lose it will help those who don't. Furthermore, those who swing for the fences & do hit the lottery will be a counterbalancing source of tax revenue to support those who go bust.

Let's look at the numbers. According to the most recent BLS Labor Report, average wages are roughly $42,000 per year. Plug that into a conservative calculation of no real raises per year & 3% real investment returns between the age of 25 & 70, 2% real in retirement, & you'll have a permanent income in today's dollars of $3200 per month until you are 95. Even a 1% real return beats SS by $500 per month.

Compare that to the current average SS payout of $1264 that is scheduled to be reduced by at least 25%. Wouldn't you much rather have the higher income & pay taxes to support those who fail than lower income in an unstable system?
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In your example you have a person receiving 3,200 a month. Then you claim that it beats SSA by 500. Well in the extreme vast majority of cases (I'd say 95-99%) it would beat the SSA check by more than 500. Try closer to 1,500. The average payment for a man with a decent job is 1,500-2,000.
 
Stoked said:
In your example you have a person receiving 3,200 a month. Then you claim that it beats SSA by 500. Well in the extreme vast majority of cases (I'd say 95-99%) it would beat the SSA check by more than 500. Try closer to 1,500. The average payment for a man with a decent job is 1,500-2,000.
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Read it again and pay attention to the different projections.
 
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