102. adrianne - May 5, 1999 - 5:48 PM PT
BoomerJeff
And if those investments lost money, as many of course would, what's your solution....starve, Granny!?
And I posted a bunch of stuff recently about the hunger problem among the elderly in America - even WITH SS - that infos at work, but if you insist, I'll post it again tomorrow.
When I posted it the first time it was amid a discussion in which Fraygrants all said variations of "I wouldn't let one of my neighbors starve!"
Where do you think these people live? They live in YOUR community, they are YOUR neighbors, and they are already starving.
103. BoomerJeff - May 5, 1999 - 6:02 PM PT
arky
Minimum wage is $5.15. That's 10,721/year for a full time job. Suppose a person earns minimum wage his entire life, from age 20 to 66. Current SS tax, exclusive of Medicare is 12.4% or 1329 per year. Suppose that money were put away at 4% every month.
When the individual reached age 66 (the age I was recently informed that I will be eligible for SS benefits) he will have saved $175,227. If he leaves this money invested at 4% he will be able to withdraw a monthly income equal to what he was paid during his working life, except without the deduction for retirement savings, for 26 years.
Once again, Arky, a minimum wage worker with the world's lowest paying savings plan would be able to support himself through 26 years of retirement, at the same monthly income he earned during his working life on the money that is now deducted from his check in SS.
If he invests a little smarter he could retire at 50 and live at the beach.
The money is already being taken from the working poor to fund their retirement. The only problem is the government is pissing it away.
104. BoomerJeff - May 5, 1999 - 6:04 PM PT
adrianne
If the government hadn't taken so much away from them, while lying to them about their retirment, maybe they'd be doing better. It's tragic what the government has done to honest hard working people.
105. LadyChaos - May 5, 1999 - 7:45 PM PT
Here's something to think about.
Is Social Security nothing but a great Ponzi Scheme?.
106. LadyChaos - May 5, 1999 - 7:46 PM PT
Frankly, I've often wondered why we're not contemplating a Chilean type scheme for SS. From what I've read, it's very sound, and they already have the kind of demographic ratios that we can expect in 2030.
107. chloel - May 5, 1999 - 7:50 PM PT
You two might enjoy reading Jane Jacobs' _Systems of Survival_, which compares the morals necessary for 'guardian' vs. 'commercial', or 'political' vs. 'business', work. I certainly enjoy reading it and your arguments simultaneously.
One of her contentions - bolstered with historical example, but not much arguing by theory - is that it's intrinsically destructive to mix principles from the two styles, in a single system. (This might explain why strong adherents of each system can't see any moral value to any of the principles of the other.)
She implies that the two arose by evolutionary necessity, so maybe I should crosslink to the Diamond thread.
108. TheDiva - May 6, 1999 - 6:29 AM PT
Check this out
109. ChristiPeters - May 6, 1999 - 7:05 AM PT
"Old people: kill yourselves before we have to do it for you."
OK
110. Wombat - May 6, 1999 - 7:23 AM PT
Boomer:
Rather than spouting pseudo-libertarian crap, why don't you study how well the old folks were taken care of in the palmy days of the 1890s the early 20th Century and the depression?
It would also be amusing to see how you would get by if you were lucky enough to reach retirement age (with your retirement savings in equities) during a downturn in the stock market. An example: my wife, who has her Government-401K equivalent in its stock fund, saw the value of her savings decline by 25% during last summer's brief downturn. Fortunately she is far from retirement age.
Incidentally, Boomer, the government bureaucrats who oversee the Federal Employee Retirement fund allocations for their equities fund have done extremely well for their "clients". Compare this to what will happen when millions of amateurs start playing the market with their retirement funds if some have their way.
111. JadeGold - May 6, 1999 - 7:27 AM PT
Right on, Wombat.
And you haven't even addressed the bite that a private investment company takes by way of commission and admin fees.
112. BoomerJeff - May 6, 1999 - 7:34 AM PT
wombat
Rather than address my arguments you petulantly dismiss them as "pseudo-libertarian crap."
Thus, I see no need to engage you by addressing your arguments. So I'll employ equal petulance and simply dismiss your thoughts as "pseudo-socialist crap."
113. Wombat - May 6, 1999 - 7:42 AM PT
Boomer:
The crux of your argument is that Social Security is another way that the Government is stealing our money for no good reason. If that is all your argument boils down to, you deserve far more than mere petulance.
114. JadeGold - May 6, 1999 - 7:42 AM PT
BoomBoom;
Your numbers are highly dubious and ignore things like taxes and admin fees. Additionally, you assume that every investment will have a positive ROI.
115. BoomerJeff - May 6, 1999 - 7:44 AM PT
Wombat…
Even though I said I would petulantly dismiss your thoughts the temptation to point out one glaring contradiction is simply too great.
Within the same post you…
1. condemn the stock market as a retirement savings vehicle using the 25% downturn in your wife's account as your justification;
2. Glorify the bureaucrats who manage her account for having "done extremely well for their clients."
Typical pseudo-socialist disorientation
116. CalGal - May 6, 1999 - 7:44 AM PT
Is ProfEm correct? If SS turned back into the insurance program it was originally intended to be, would this make a payroll tax reduction possible?
117. BoomerJeff - May 6, 1999 - 7:49 AM PT
Jade
Anyone can get a life insurance contract that pays at least 4%. CDs currently pay more than 4% and have averaged more than 4% over the past 30+ years. Government bonds have averaged more than 5%.
There are dozens of ways, with near zero risk, to NET in excess of 4% after any fees.
Four Percent Net after all costs and fees is a ridiculously low average return for a 45 year period. That's why I used it in my example, in the hope of not getting mired in disputes over risk, fees, etc. Yet I deal with morons who criticize as if I had assumed 20%.
Your argument is a red herring.
118. JadeGold - May 6, 1999 - 8:01 AM PT
BoomBoom;
Untrue.
From 1968 to 1978, the stock market fell by nearly 45% in real terms. People who retired in the late seventies, who financed their retirement through the market were hurt badly. Additionally, some investment do much worse. Are you willing to write those folks off?
You have yet to address admin fees. Probably because you understand that this undermines your already weak argument.
119. BoomerJeff - May 6, 1999 - 8:18 AM PT
Jade
Life insurance contracts, CDs, T-Bills, high grade corporate bonds, money market accounts, are not "the stock market." Once again you resort to a red herring and fail to address my point:
A minimum wage worker, investing in the lowest risk, lowest return savings plan in town will do far better with than SS with a monthly investment equal to what is now being deducted from his check.
120. ChristiPeters - May 6, 1999 - 8:27 AM PT
calling all lawyers!
calling all lawyers!
I have posted a "do I need a lawyer for this?" question in the Corner. I would appreciate it very much if some of you legal types would read it and respond.
thank you very much!
121. JadeGold - May 6, 1999 - 8:27 AM PT
BoomBoom;
Are you prepared to tell *any* citizen what type of retirement investment he or she must make? It sounds like you're assuming that low-income people must invest in low-risk alternatives.
Again, you ignore commissions and fees.
Additionally, you have this rosy opinion that all investments will *always* make money. That's a pretty silly assumption.
122. BoomerJeff - May 6, 1999 - 8:36 AM PT
Here is what is most astounding about this Social Security debate…
Lovers of the use of government force to achieve social goals...
... defend Social Security to the bitter end, even though it fails in so many ways. The crux of their defense is that private savings/investment plans can't be trusted for various reasons. The unstated implication is that government, run by elected politicians who come and go, ever changing the priorities and goals, somehow, CAN be trusted!!!
Yet these very same defenders of nanny government, without the slightest hesitation or compunction, right here in this very thread, join many Washington politicians who they seem to despise in calling for FLAGRANT abdication of the government's promise to millions of people over their entire lifetimes!
They propose to "fix" Social Security by simply NOT PAYING the promised retirement benefits to large groups of people! ASTOUNDING!
What would you guys say about New York Life or JP Morgan if promised retirement benefits were not paid to people who had invested, in good faith, over their entire working lives? Why you'd say "See! You can't trust those greedy capitalist crooks! Throw their butts in the slammer!" Of course New York Life and JP Morgan don't renege on their promises as government does, with predictable regularity.
123. BoomerJeff - May 6, 1999 - 8:38 AM PT
Jade #121
Same red herring. Same diversion from my argument. Same arguing not against what I actually said but against a straw-man of your own invention.
124. BoomerJeff - May 6, 1999 - 9:30 AM PT
Jade
Your #121 is really a laugh! You wrongly accuse me of wanting to "tell" a citizen what type of retirement investment he/she must make and of assuming that low-income people must invest in low-risk alternatives.
But Suppose you were right. Lets compare that with social security…
Even if low income folks were forced to chose low yield alternatives they'd do far, far better than they will in Social Security, which is now imposed upon them by ARMED FORCE!
125. JadeGold - May 6, 1999 - 9:35 AM PT
BoomBoom;
That's my point, you rail against a system that is "forced" upon people. Yet, your solution is to force lower income people into another system. You're being inconsistent.
Additionally, assuming your 4% rosy scenario, you still refuse to address those pesky admin fees. These fees would drive your effective rosy rate of return lower than the SS rate of return.
126. BoomerJeff - May 6, 1999 - 9:41 AM PT
Jade
One more time...
There are many ways to earn 4% NET, after fees. And, 4% is an extremely pessimistic projection, below the lowest rates of return on the least risky investments over the past 100 years. Any worker now approaching retirement could have done better over the past 40+ years.
And, of course I never proposed to force an investment on anyone. That's your straw-man.
127. JadeGold - May 6, 1999 - 9:47 AM PT
BoomBoom;
Sure, there are many ways to earn 4% net after fees---even higher rates.
And there are many ways to lose money as well.
Your strawman is that you are taking average returns over time. Some people do very well, some do average, and some lose money. Your strawman is that nobody ever loses money. Plus, you've already made the suggestion that lower-income people be forced into low-risk investments.
128. BoomerJeff - May 6, 1999 - 10:07 AM PT
Jade
Nobody has ever, EVER lost money in a contract with New York Life or Prudential, or John Hancock. Hancock is two centuries old!
Average returns over time are higher than 4%. I used 4% for my example because it is at the rock-bottom of the scale. Investment in a conservative bond fund will average more than 5% over time with virtually no risk.
One more time, I do not suggest that low income people be forced to do anything. I'm not going to respond to that false assertion again. I deplore the use of force. That's the fundamental difference between your philosophy and mine. You favor the use of force in thousands of ways to accomplish thousands of goals, some too trivial to merit consideration.
There is much greater risk in trusting the federal government and all the Senators and Congressmen who will come and go over the next 40 years than to trust New York Life.
BTW I have no stock or any relationship with any life insurance Co. I'm just pointing out the obvious.
129. ChristinO - May 6, 1999 - 10:40 AM PT
ProfEm ReMessage #79
I'm sure my point of reference is skewed, but I can't imagine giving money to a retiree who's income is over 50K a year, so while I agree with your plan of a graduated benefit scale I feel that there is a difference between what you might consider emergency funding and what I would.
I mean, even if you didn't own your home you could live quite comfortably on 50K. You could even travel a couple times a year and keep up on current movies. Why on earth should the government subsidize an income that high?
I'm curious about your views on decreasing payroll taxes. How would that work? (You don't have to speak slowly, but if you gear your answer for, say, a 12 year old I'll probably be able to grasp it----my understanding of econmics doesn't extend much beyond being able to balance my own budget)
To ANY,
Uh.....somebody thinks that SS is money taken from your own paycheck put into a fund just for you? I thought the whole purpose of it was so that people who needed help would get it not as some sort of enforced piggy-bankism. The money I put into SS might very well aid me in later years, but I would prefer that I not need it so that it can go to help someone else. What's up with the selfish attitude of "I paid in now I want mine!!!" You don't get your car insurance back just because you didn't have an accident. Your rates may go down, but it's not like you don't still have to pay.
It sounds like some people are unclear on the concept of insurance.
130. ChristinO - May 6, 1999 - 10:46 AM PT
BJ,
You totally overlook the fact that anyone making under 12K a year isn't putting any part of his earnings away for lean times. He's the very definition of lean times. He's not earning 4% on jack because he's spending every last cent he has keeping a roof over his head and food on the table.
131. JadeGold - May 6, 1999 - 10:51 AM PT
CO;
I largely agree with your points. It should be pointed out that 75% of our seniors have incomes under $21K per year.
There is much dissembling when it comes to SS. SS was intended as insurance or a "safety net." It was never intended to be the sole source of retirement income.
132. Wombat - May 6, 1999 - 10:54 AM PT
ChristinO is right on. It is an insurance program (it insures that the retired and/or incapacitated will not have to rely wholly on their own devices--however well or poorly prepared they may be) in order to live out the remainder of their lives.
133. bubbaette - May 6, 1999 - 10:55 AM PT
One reason for making everyone eligible for Social Security is to broaden the base of support. If you make SS into a means tested "welfare" program, consider how popular welfare is and what's happened to beneficiaries in recent years. By making everyone eligible, SS is the most popular gummint program around and a political 3rd rail.
One thing that worries me about privatizing SS is that the elderly are already the primary targets of scams and con men. When ever the government starts putting money into anything, it's not long before a scam industry grows up around it to try to milk as much $ for as little benefit as possible. Given that the elederly are all ready highly at risk for scams, there's a good likelihood that many of those "private investments" would be worthless. Dog food anyone?
134. ProfEmeritus - May 6, 1999 - 1:56 PM PT
ChristinO
Your understanding of economics looks fine to me. You surely have grasped the essence of what social security should be. And you have put the logic of it in very appealing terms - at least appealing to me.
I am sure that my proposals in Message #79 would yield a significant reduction in the FICA tax, but I am too lazy to do the research to support that view. I had been hoping one of those smart economists in the Fray would do that. If they don't, I will have to make the effort.
135. ProfEmeritus - May 6, 1999 - 2:07 PM PT
ChristinO
I was being very generous with the income level limits to qualify for social security. I didn't want to leave the impression that I wanted people to actually be starving before they qualified - for personal dignity reasons. If such a system were actually adopted, we could place the income ceiling at, say, 10% above the poverty level as defined by the government. Or it might be better to have an independent group of economists set that level.
136. ChristinO - May 6, 1999 - 2:09 PM PT
ProfEm,
Thank you. I generally hesitate to ask questions in this area because I fret over the bone-head factor, but so long as I'm making sense and not offending anyone's moron detector I'll forge ahead. My assumption is that with a graduated benefit scale we would eliminate many of the payments that are now being made therefore requiring less funding and enabling us to lower the tax, right?
General things I wonder about SS:
Is the amount of money received based on need or on contribution?
Can one "run out" of benefits?
Is anyone (citizen) ineligible for SS?
137. ChristinO - May 6, 1999 - 2:13 PM PT
Prof,
I think the average national income is currently something like 32K.
138. CalGal - May 6, 1999 - 3:29 PM PT
The problem is that Social Security is *not* presented as insurance, but rather as a retirement plan.
139. BoomerJeff - May 6, 1999 - 4:12 PM PT
ChristinO #130
Apparently you misunderstood what I wrote because your comment is not responsive. If you're still interested you may want to re-read my Message #103
140. ProfEmeritus - May 6, 1999 - 4:16 PM PT
ChristineO
I will try to answer your questions on the basis of my general knowledge. I am not an expert on social security, though there may be some Fraysters who are.
Restricting old age and survivors benefits would certainly reduce the cost and therefore the taxes needed to provide for a pay as you go system as we have now.
There are several types of social security payments beyond old age and surviviors; i.e., disability, medicare and supplementary security income. To qualify for benefits, the worker must have worked a certain length of time in "covered employment." The benefits formulae are rather complicated, and we won't go into that here. One never runs out of old age benefits, but when the spouse receiving benefits dies, the surviving spouse can receive one-half of the benefit if 65 or older.
The amount of benefits is based on contributions.
In May, 1998 there were 44 million people receiving old age, survivors and disability payments, 32 million over 65 and 25 million retired workers. In addition there were 2.5 million retired workers under 65 receiving payments. Retirees can elect to receive slightly reduced payments at age 62.
About average national income. I think average PERSONAL INCOME is more relevant. In 1997, that was $25.3 K. That is close to median income (a better indicator than average) of all full-time workers, 15 and older: $24.9K.
Also, the officially defined poverty level is interesting. In 1997 that was $8,183 for one person and $10,473 for two persons.
141. vonKreedon - May 6, 1999 - 4:18 PM PT
BJ - ChrisO was responsive; the response is that if one is making that little money there is no way that one is going to save any money. You also include the employer paid part of FICA in your calculations, correct as far as it goes except how to you make the employer pay to the employee something that they are no longer bound to pay? Perhaps you are assuming a rise in the minimum wage?
142. BoomerJeff - May 6, 1999 - 4:21 PM PT
ChristineO asks…
"What's up with the selfish attitude of "I paid in now I want mine!!!" You don't get your car insurance back just because you didn't have an accident. Your rates may go down, but it's not like you don't still have to pay. It sounds like some people are unclear on the concept of insurance."
For generations now we and our parents and grand parents have been promised retirement benefits by the government. We were never told that SS was "a concept of insurance." We were told that it was OUR retirement program. It takes a lot of nerve to criticize someone for having a so-called "selfish attitude" just because they expect to receive what they've been promised and have paid for.
What if New York Life said to a retiree, "You have other sources of income, you're doing pretty well so we're not going to pay the retirement benefits we promised you all those years you were paying our monthly contributions."?
How would you respond?
143. vonKreedon - May 6, 1999 - 4:27 PM PT
BJ - I would respond, to NY Life, give me the profits you accrued on my money and my money. However, SS is NOT a profit making enterprise, it is societal insurance to ensure that members of society are not destitute when unable to continuey earning money. The comparison between a corporation dedicated to making money for its owners and SS is a falacious comparison.
144. BoomerJeff - May 6, 1999 - 4:30 PM PT
vonKreedon
You and ChristineO are both unresponsive. The minimum wage worker is already paying. So your argument that he can't afford to save and earn 4% is bogus. The only question is will he be permitted to save it in a way that earns many times as much money? Or will he be forced into the brain-dead government system that doesn't provide even a modest return.
As to the employer portion, the employee is earning that money. The employer can't afford to hire an employee who isn't producing more than he/she costs, including wages, taxes, benefits, office space, equipment, vehicle, tools, supplies, etc. It is a myth that this money is somehow being squeezed out of the employer and is free to the employee.
But, In the interest of setting aside this red herring let's just say the employer would be required to contribute 6% to the employee's retirement program of choice.
145. HardyHarHar - May 6, 1999 - 4:31 PM PT
Well the "Graying of America" couldn't have happened at a better time for yours truly....
Back pain is the number one symptomatic reason for a visit to a physician's office in the United States....2% of the 38.9 million physician's office visits resulted in spine surgery last year....My company has a device in clinical trials that addresses the number one reason for spine surgery in the medicare population.
Yee-haw.
146. BoomerJeff - May 6, 1999 - 4:32 PM PT
ChristineO
The amount of the benefit is based on an extremely complex formula. But generally, the more you pay in the more you receive in benefits.
147. vonKreedon - May 6, 1999 - 4:35 PM PT
BJ - I may misunderstand your argument. Are you arguing for requiring everyone to continue to put money into, and keep it in, retirement accounts; that the difference would be that instead of SS collecting all the money and then disbursing it, the money would go to a variety of private accounts?
148. ChristinO - May 6, 1999 - 4:43 PM PT
BJ,
Sorry I'm a mutant. I have never considered nor was I ever told that SS was my retirement plan so I'm operating from a position apparently contrary to what you claim everyone else in the country holds. My response tends to be "Well, duh." I was under the assumption that Social Security was developed so that the elderly and infirm didn't end up starving and freezing to death on the street after having worked their whole lives. It never entered my mind that it was some kind of entitlement that you get just for reaching a certain age. That's frankly a really stupid idea.
149. CalGal - May 6, 1999 - 4:45 PM PT
Christin,
Um. It was developed for the elderly and the infirm, but it is now considered to be an entitlement. Have you not been paying attention to the political power of old folk and how angry they get about decreases in COLAs, etc?
You think it's just poor folk that are howling?
150. ChristinO - May 6, 1999 - 4:46 PM PT
My name is still not Christine.
151. BoomerJeff - May 6, 1999 - 4:47 PM PT
VonKreedon
Sorry, but I fail to see any reason to excuse the government from keeping its promises. The profit Vs non-profit distinction is irrelevant.
Just for the record, some insurance companies, called Mutual Insurance Companies are non-profit as well. They have no stock holders. The seek a return on their investments entirely for the benefit of customers. John Hancock and Prudential are two well known examples. Would you excuse them from paying promised benefits?
152. vonKreedon - May 6, 1999 - 4:48 PM PT
Cal - But the old folk certainly fit into the "elderly" if not the "infirm" catagory. While I have understood that SS is sort of a pension fund I have assumed that it would become means tested eventually, and support such a policy.
153. ChristinO - May 6, 1999 - 4:50 PM PT
CG,
I'm well aware that those doing the most howling are those with the most money. It is that same money that gives them the power to wield such influence. I'm not denying that many people believe that SS is an entitlement I'm simply denying that they are correct. Do you have any theories about when the shift occurred?
154. CalGal - May 6, 1999 - 4:50 PM PT
BJ,
Is it fair to say your objection is twofold:
1) Most people, save the very poor, could do better on their own than SS. That if we are to have it at all, it should be only as a bare minimum insurance policy? Reduce payroll taxes accordingly?
2) Why should the government be taking care of the poor by forcing its citizens to contribute? Why not leave it to the private sector?
155. BoomerJeff - May 6, 1999 - 4:51 PM PT
ChristinO
Are you saying you were unaware of the fact that EVERY senior is elligible for benefits?
The only way one fails to receive benefits is if one continues working for wages and earns over a minimal amount... about $3K/year I think.
156. CalGal - May 6, 1999 - 4:58 PM PT
Christin,
I asked earlier for confirmation, but it runs in my mind it was during the Nixon Administration.
vK,
"While I have understood that SS is sort of a pension fund I have assumed that it would become means tested eventually, and support such a policy."
The moment someone in the government says, "look. This is just for poor people. The rest of you are on your own." is the moment at which a good percentage of the upper middle class asks why so much of their money is going to a program that is nothing more than an insurance policy they are unlikely to ever benefit from. As it is, with the income cap, it's no big deal. But there are always proposals to do away with the income cap. Tell someone making in excess of $100K a year that you're going to tax 15% of their wages total (employer/employee, and every bit of that if you're self-employed) for an insurance policy that they'll never use.
And that's why it isn't presented as an insurance program.
What I don't understand, seriously, is why? Why not revamp it? Hell, everyone would save money.
157. BoomerJeff - May 6, 1999 - 4:59 PM PT
VonKreeden
What I have done so far is refute the assertion of Jade and others that without Social Security the "little guy" would be unable to provide for his own retirement income. I proved that even someone who earned the minimum wage for his entire life could, with the same money the government is now taking from him without his permission, provide for a much better retirement for himself. He could do this with low return savings programs that entail virtually no risk… Certainly less risk than social security.
I have also pointed out that while the government, for about 64 years, has promised SS benefits to EVERYONE, every last worker, without exception, without qualification, there are plenty of politicians, with the support of folks right here in this thread, who would, without the slightest hesitation, simply renege on that promise.
Obviously you can't trust government to give you what it promises. So why trust it with your retirement?
158. ChristinO - May 6, 1999 - 4:59 PM PT
What I'm saying is that it honestly never occurred to me that people with plenty of money should be dipping from a well that is intended to help the least fortunate among us. For that I fault the government for not implementing means testing a long time ago.
159. BoomerJeff - May 6, 1999 - 5:02 PM PT
The government doesn't even keep its promises to wounded combat veterans!
Why should it keep its promises to anyone else?
160. BoomerJeff - May 6, 1999 - 5:06 PM PT
ChristinO
The well is NOT intended to help the least fortunate. The well was, and is intended and promised to every person who works at least 10 years. No exceptions in the promise.
161. CalGal - May 6, 1999 - 5:07 PM PT
Christin,
"What I'm saying is that it honestly never occurred to me that people with plenty of money should be dipping from a well that is intended to help the least fortunate among us. "
It is not intended to help the least fortunate. It is one of the two biggest middle-class entitlement programs going.
Up to now, it hasn't been a big deal. Someone at your income level hadn't contributed all that much and could expect to live comfortably off of Social Security with your own retirement supplements.
But now, many people (I forget the cutoff point) are contributing than they'll ever get back. And being asked to retire later. Couple that *now* with means testing and those at the upper income levels are pretty much saying, fuck *that*.
If you reduced the amount they paid in and explained that this was only in the case of emergency--but primarily intended to benefit the working poor--I think there would be less objection.
Instead, the goal seems to be to continue to pay benefits to *all* retirees, and make everyone contribute more and work longer to give everyone some puny piece of the pie.
Incidentally, these are pretty much my own views, obviously. And as I said earlier, the objections of the working wealthy ($100K and up) are small potatoes overall. But if you wonder why people in that income class think SS is a joke, there you go.
Especially when people propose to do away with the income cap.
162. ProfEmeritus - May 6, 1999 - 5:08 PM PT
BJ
It is not at all true that every senior citizen is entitled to social security benefits. The retiree must have a minimum of covered employment, and the length of employment etc. determine the level of benefits.
The limit on earned income while receiving social security benefits in 1998 was $14,500. Beyond that $1 would be withheld for every $2 in earnings. After age 70, there is no limit on earnings. Note that interest and pensions etc. are not included in earnings.
163. ChristinO - May 6, 1999 - 5:09 PM PT
CG,
You mean nobody wants to pay for something they don't get to use, right? Like education if you don't have children or road improvements if you don't drive or police officers if you happen to live in the middle of nowhere and don't worry about crime.
sheesh.
164. ChristinO - May 6, 1999 - 5:19 PM PT
CG,
I'm in total agreement on paragraphs 3 & 4.
165. CalGal - May 6, 1999 - 5:21 PM PT
Christin,
No. As I said, I don't think there is any problem with paying into an insurance policy that you have no intention of using.
But Social Security is not presented as insurance. It's presented as retirement. And the amount people are being asked to pay is increasing, as are the years we're being forced to work. All for something that is being *presented* as for our own good. Our retirement.
But it isn't a retirement plan for the working wealthy. It's a retirement plan for the middle class. And let's face it--that's who SS is benefitting, and *that's* why it is so untouchable.
If its sole purpose was to be an insurance plan to protect the poor, I believe the payroll tax would be lower? I wish ProfEm would do the numbers.
166. ChristinO - May 6, 1999 - 5:22 PM PT
I realize that was somewhat confusing. I should have said I agree with the action put forth in paragraph 3 and I recognize that paragraph 4 is what is actually happening much to my displeasure.
167. ProfEmeritus - May 6, 1999 - 5:33 PM PT
CalGal
As I mentioned, you have to be over 70 to be among the working wealthy and collect full benefits.
I can't believe that the small social security benefits are important to the wealthy. Their retirement income is not from employment, but from interest, stock market gains and, especially, high pensions.
The lower and middle income workers will never invest for the future on their own. Their "time preference" is too high. Ask the average wage earner if he would prefer $100 now or $1000 twenty years from now. I am sure the answer will be cash now. This is the reason the tradeoff between reduced benefits in the future versus lower FICA payments now would work.
168. ProfEmeritus - May 6, 1999 - 5:37 PM PT
CalGal
It was Boomer Jeff who asserted that the payroll tax would be less. I merely agreed with him. I think you should get on him to do the demonstration.
If he fails, I will give it a whirl.
169. Silverscream - May 6, 1999 - 6:57 PM PT
CalGal,
Have to agree with you that Social Security is not a retirement plan for the working wealthy, but in real life, it is in fact a retirement plan for the working poor. There are plenty of old people living on social security alone, right now. For the middle class, it augments their real retirement plan, unless they were foolish enough not to have one (in which case they're either living off of their children or sharing senior slums with the people who were never middle class). For the wealthy, it's a ludicrous entitlement.
I'm not claiming that this will all be true by the time boomers reach the current age for collecting SS -- but it does describe seniors drawing on it today.
170. AuNaturel - May 6, 1999 - 8:56 PM PT
SS has a built in constituency that would be the envy of any other program. Let's look at who this constituency is:
People in their last ten years of work, at the peak of their earning potential and their political influence.
People who have retired and have endless free time to contribute to a political cause.
People who are either immediately and directly impacted by the issue or about to be impacted.
People with the highest rate of voting of any voter group.
One 65 year old person is politically worth three 40 year olds or 10 recent college graduates. Even a slight aging of the population can have spectacular effects on the political balance.
171. AuNaturel - May 6, 1999 - 8:57 PM PT
"I can't believe that the small social security benefits are important to the wealthy."
But the symbolism is VERY important.
172. vonKreedon - May 7, 1999 - 8:51 AM PT
Regarding how much the rich are being ripped off by SS, I don't pay SS on my income above $65,000.
173. BoomerJeff - May 7, 1999 - 9:46 AM PT
I shall offer something fray liberals hate, an anecdotal example. However, THIS example is, I sincerely believe, typical of many millions of retirees and people approaching retirement. It may be typical of more than half. The example is my father.
He began working during the depression at age 12, before Social Security and before income tax applied to anyone but the top 5% or so. When SS started he was still in his teens and worked menial jobs for low pay. He remembers when payroll deductions for SS began. He remembers that he and all his fellow low-wage workers were outraged. You can imagine how hard it would be to accept the fact that, for the first time, the federal government had the power to reach right into your employers payroll department and seize money from your earnings before you received them.
But he was assured by the liberal movement's Founding Messiah FDR that, in FDR's own words, "this payroll deduction is for a tax free retirement income for YOU." That is for YOU the individual who is paying the tax. FDR did not tell America that SS was only for certain economic classes. He solemnly promised that it was for EVERYONE.
Every succeeding president has re-affirmed the Social Security promise. Only since the Clintonites have taken over has there been any serious suggestion that the government should renege on its promise of 7 decades. Clinton can get away with it because the media never attacks him for any policy idea, even if they would have attacked any other politician with the same idea.
continued...
174. BoomerJeff - May 7, 1999 - 9:47 AM PT
conclusion
Throughout the remainder of the thirties my dad worked for near starvation wages, paying the SS deduction. During WW2 he served in the military and SS was deducted from his even more meager pay. After the war he continued to work in low-wage jobs for another 7 years or so while he went to law school. In the early fifties he started work for a big insurance company as an attorney and stayed with them till he retired in the 80s.
Today, he has a pension (the monthly benefit seems rather small to me) and a substantial amount of money in IRAs and a paid-off house. He could live comfortably without his SS benefits. But he can see no reason why he should. As far as he is concerned he is every bit as entitled to these benefits as he would be if he had paid into an insurance contract or some other private-sector savings program all his life.
The vast majority of people who end up "wealthy" start out in jobs that don't pay that much, that are below the median income. Like my dad they will all have to pay 12%, or more, during their early, low-wage years, when they can least afford it.
What are your thoughts?
175. ChristiPeters - May 7, 1999 - 10:02 AM PT
?? life sucks ??
176. JadeGold - May 7, 1999 - 10:03 AM PT
BoomBoom;
You've been proven wrong.
As for your anecdote---yeah, let's go back to the glory days of the pre-1930s. The elderly had it great then. So did the handicapped, orphan children, and widows.
177. PsychProf - May 7, 1999 - 10:08 AM PT
Boomer....tax on SS is a small price to pay for the benefits others receive...
178. vonKreedon - May 7, 1999 - 10:09 AM PT
BJ - You haven't answered my query in Message #147.
179. BoomerJeff - May 7, 1999 - 10:23 AM PT
Jade
Proven wrong about what?
180. bubbaette - May 7, 1999 - 10:32 AM PT
Points: SS *is* an entitlement by government definition -- if you meet the qualification criteria, you get the benefit, and that is not dependent upon the gubment appropriating sufficient funds as, for example, Pell Grants.
* SS is not comparable with a private savings program or private pension program and was not intended to be. For example, if I were single and died at an early age, my parents or other next of kin would have the right and ability to claim my contributions plus interest. If i'm single with no dependents and I croak, then the government wins, as no one can claim any benefits on my behalf.
*Actualily speaking, most social security beneficiaries -- even those who contributed at the highest rate -- get back far more in benefits than they ever paid in contributions. That's because SS was originally devised to replace about 42% of the retiree's pre-retirement income for the remainder of his life, which was reckoned to be 3 to 5 years post retirement back in the 30's when the program was developed. Even if you consider "interest income" on SS, which is silly since SS, unlike most retirement benefits are indexed for inflation, current life expectancy is such that most folks will get back far more than they paid in.
181. BoomerJeff - May 7, 1999 - 10:33 AM PT
VonKreedon
In response to your #147
I'm opposed to "requiring."
My position is that SS should be phased out in favor of voluntary private savings programs. Let each individual decide, individually what is best for his/her own situation, goals, lifestyle, etc.
The reason for the phase-out rather than simply ending SS would be to keep the promises made by the government to retirees and those approaching retirement.
The liberal "fix", by contrast is to continue using government armed force to keep the system going, even though as we read here in this thread there is no agreement as to what the purpose of the system is or who it should benefit or who should pay.
AND the most significant part of this "fix" is that liberals, the folks who most trust government are the very folks who are most eager for the government to renege on the 6 decades old, core, fundamental promise of their very favorite program, the very founding centerpiece of their movement!
The lesson? Don't trust government and don't trust liberals.
182. JadeGold - May 7, 1999 - 10:34 AM PT
BoomBoom;
Just about everything. Your portrayal of SS is almost nonsensical.
183. PsychProf - May 7, 1999 - 10:35 AM PT
Two hands and back in the saddle for the bubster...
184. bubbaette - May 7, 1999 - 10:36 AM PT
Howdy PP!
This two-handed thing is swell!
185. vonKreedon - May 7, 1999 - 10:37 AM PT
BJ - That's what I thought your position was. Given that both ChrisO and I *were* responsive when we pointed out that someone earning minimum wage was not going to save anything if SS were made voluntary. You described a rosy scenario in which the dishwasher took the money that used to be paid to SS by himself and his employer and instead invested it in a private retirement account of his choice. Christin and I pointed out that the diswasher was going to take that money and pay rent, buy food, put gas in the car because he can't afford to think about retirement.
186. BoomerJeff - May 7, 1999 - 10:37 AM PT
bubbaette
It is true that earlier generations, My dad included are getting more out of the system than they put in. But that is not true and will not be true for anyone who has began employment after about 1960. The overwhelming majority of those folks will be net losers. They won't even get back their principle. Certainly no interest. This includes even the lowest- wage people who pay the least in SS tax
187. bubbaette - May 7, 1999 - 10:39 AM PT
Not only that, but a host of "investment" opportunities are bound to pop up to fleece the uneducated and unwary (and those who are vulnerable to too-good-to-be-true schemes) that will end up providing income for no one but the funds operator when he or she absconds with them.
188. JadeGold - May 7, 1999 - 10:41 AM PT
Additionally, BoomBoom does not address what happens to a person who is disabled and may not be able to work---or children who may lose their parents. What about widows?
No, arguing with BoomBoom on any matter regarding taxation is silly. Anybody who believes that taxation is theft is not to be taken seriously.
189. bubbaette - May 7, 1999 - 10:44 AM PT
Boomer
That was not what the actuarials showed the last time I looked at them, but that was about 10 years ago. Also bear in mind that S.S. provides for those who become disabled and for dependent survivors of the deceased. Those who are disabled and those with dependent survivors certainly get more out than the put in.
By-the-way, I've paid much more in car insurance than I am ever likely to receive in pay-outs.
190. BoomerJeff - May 7, 1999 - 10:45 AM PT
So vonKreedon
Then it's your position (presumably you also tell ChristinO what her position is) that...
It is just fine for the dishwasher to be forced at gun-point to pay into a government run plan that is virtually guaranteed to pay back less than he put in. But you will not permit him to decide what to do with his own earnings, even though he might decide to save for his retirement or he might decide to save for something else or he might decide to save for retirmeent later.
In other words, Whatever plan results from political horse-trading in Washinton automatically beats liberty and individual choice and we can count on you and ChristinO for support.
BTW your posts were not responsive. My point was that the money being extorted from the dishwasher could be invested privately and provide him a much better return than SS. My point stands, unrefuted.
YOUR POINT, on the other hand is that the dishwasher is not to be trusted to run his own life and elitists like you and ChristineO must force him to do what you think is best, even though you know nothing at all about his circumstances, his plans, his goals, his skills, his education, his needs, his obligations, his problems.
191. JadeGold - May 7, 1999 - 10:48 AM PT
This is BoomBoom's Myth du Jour™
"you'll get back less than what you put in"
192. msgreer - May 7, 1999 - 10:48 AM PT
PP...
"tax on SS is a small price to pay for the benefits other receive".
You need to go on the *circuit* with just that thought.
You are so right.
A true story: There is a neo-natal nurse who worked in the hospital in my town. She worked for the hospital for 29 years and was known throughout the community for her excellence in the neo-natal unit.
She received many honors and every nurse adored her. She turned the entire unit around so it now flourishes.
She told the administration she was going to retire in 2 years.
The administration found every loop hole possible not to have to pay her her retirement and pension. They found what they needed and fired her.
Of course, all hospitals are firing RN's right and left these days.
Back to my friend.
She has her SS and a 401k and that is it.
She needs every cent of her SS now.
She is suing the hospital but until that ordeal is over and probably appealed, this is all she has. Knowing this hospital, they'll drag it on and on until this woman is in her grave.
It is not enough for her.
I work with older folks in my business. They have to have their SS, many live with that with little other income. Some are forced onto Medicaid living in low housing projects. Not everyone owns a home in this country.
If we take any part of SS away from the people who worked their lives with the understanding it *would be there* for them it will be a national shame.
A shame we all have to take the responsibility for.
Shame on any person who sits back and does not fight for the rights of these people... of all people.
And shame on the lawmakers for doing shit about SS reform.
193. vonKreedon - May 7, 1999 - 10:50 AM PT
BJ - When is the last time you worked for anything close to minimum wage? How much did you save when you did? Your taxation is theft shtick is sort of amusing, reminds me of a New Yorker cartoon, "You know, now that I think of it, I'm not real enthused about taxations WITH representation." But hey, we are a society that uses money to run things so society has to collect money in order to do things. We have a political system for electing those who decide how society should raise that money. But this is of course theft at the point of a gun rather than dues for living in society.
Regarding the poor dishwasher who is being mugged by the government every pay check, I would state from experience that it is the restaurant owner who I routinely felt mugged by, not the government.
194. bubbaette - May 7, 1999 - 10:50 AM PT
the dishwasher could also invest that 4% and lose every speck of it. Think the full faith and credit of the u s of a will be behind those investments? sucker.
195. bubbaette - May 7, 1999 - 10:56 AM PT
From what I've seen of brokers and investment firms, those minimum wage investors into the "private investment accounts" will be seen to be as easy as shooting fish in a barrel. Then, instead of the government taking his funds for social insurance, it will be the fly-by-nights taking the funds for yippeee time.
196. BoomerJeff - May 7, 1999 - 10:57 AM PT
What good is the so-called "full faith and credit" of the government when folks like you are elected and change the deal afther the money is paid in?
government promises aren't worth the time it takes to watch the sleazy politician make them, in his carefully arranged photo-op backed my a carefully selected multi-racial group of fawning supporters.
197. CalGal - May 7, 1999 - 11:00 AM PT
ProfEm,
Message #168
I'm sorry if I seemed to be demanding you back up your assertion. As I understood it, you made a proposal, BJ asked if the proposal would enable a substantial cut in the payroll tax, you said you thought so but hadn't run the numbers. I was genuinely curious to know if it was true, so was expressing the hope that you'd check it out.
I am not squawking on behalf of the working wealthy at this point in time. I don't think the current payroll tax is onerous--unless you're self-employed, but that's a different issue. Nor do I think it is unfair to cut off benefits entirely at a given point.
But whenever Social Security reform is discussed, taking off the income cap always is mentioned as a possibility.
Take off the income cap and the contributions of the upper income folks become substantial, rather than a reasonable tax. At which point it becomes relevant to wonder what they are getting for it.
And if the amount that we all are paying is necessary to support the poor, so be it. But if it's necessary to provide an income addendum to the middle class, then I think it *is* worth debating whether or not there are better ways to force the middle class to save for retirement. Particularly given that the middle class is now paying more into Social Security than it will ever get back.
198. CalGal - May 7, 1999 - 11:03 AM PT
All of you who are touting SS as a way to protect the poor....remember that the only reason it gets support is because it's a middle class entitlement.
199. JadeGold - May 7, 1999 - 11:06 AM PT
CaliGala;
Right. 75% of our seniors have incomes under $21K/year. Yeah, that's middle class.
200. BoomerJeff - May 7, 1999 - 11:06 AM PT
msgreer
I don't think anyone here has proposed taking SS benefits away from someone like the person in your example. I sure haven't.
Some of our more elitist lovers of government have proposed denying benefits to some groups of retirees though.