That is a great question. There are two different shortfalls. The 75 year shortfall is a joke because it does not include the full financing cost of the system. The infinite shortfall is much larger. Anytime that you hear the 75 year financing gap, you are dealing with a problem in another 20 years. It is my understanding that the full financing cost is projected to be sound.
"...if we can't touch what we put into SS why did Congress?"
Largely Congress didn't touch it. It was given to our parents and grandparents - more than 90% of all revenue ever collected.
"...if we had been mandated to pay into a saving account at our bank I wonder what the compounded interest would be? "
Social Security is insurance. The best measure is provided by SSA under the moneys-worth studies. The results will not surprise you. The economic returns have deteriorated steadily since inception.
The problem is that you didn't pay the same rates that her generation will. If you retired before 2011, you are likely to have made money on your contribution. If you are just entering the system, you are going to lose money. You are somewhere in between but comparing yourself to what they are getting is honesty self-absorbed.
If you started work in 1965 the maximum contribution in 2012 dollars was roughly $1,500. Today it is nearly than 10 times that amount. You will get your schedule benefits. At best, they are apt to get 75% of their benefits.
The problem is that the average person has no idea what benefits they receive. If you were married with kids, your SS provided you free life insurance. It was provided free of charge, and basically doubles the cost of providing benefits.
You aren't stealing from them. Your parents and grandparents are. Your parents and grandparents meant to steal from you, but up to now the country has transferred the theft from boomers to GenXers.
What you should explain to them is why you and your generation should be exempt from cleaning up the mess that your generation voted for. You are asking them to clean-up a mess for which they didn't have a vote.
What should scare you is that the writer was unaware that Social Security is already means-tested with a test that reaches up to 1/3rd of retirees. The portions of the piece dealing with Social Security are largely not researched.
The material is not well thought out. The Post should not publish material that lacks footnotes and research. Here is the thoughtful line... "Add in thoughtful measures such as a reasonable new age limit and "chained CPI," and the Social Security shortfall could be solved." There is no research to support this vague statement.
It was mainly self-absorbed mush about how wonderful he is to make such an offer.
Social Security Demographics Guarantee US Bankruptcy [View instapost]
"So absent a moral uprising against the blatant generational theft that is the Social Security/Medicare program, the demographics of democracy virtually ensure we will go full speed over the cliff."
"Fix Social Security Now" on FB. Reform will come. All we ask for is a honest discussion. http://www.FixSSNow.Org feel free to tell us where it is wrong.
Social Security Demographics Guarantee US Bankruptcy [View instapost]
The facts about Social Security and the Chain-CPI are worse than most realize. There is no cut. Obama didn't offer to accept the Chain-CPI by itself. It was in conjunction with other changes to protect the very old and those without income. Basically, I am agreeing to a change provided that you completely strip it of impact.
Social Security isn't an obligation of the government. Benefits cannot bankrupt the country. You are making the assumption that the voting block will change that fact. I doubt your assumption that participation rates will remain constant. Once we aren't able to print our way to prosperity, those rates will change.
Your data is more current - but this comes from 2010. In 2010, more than 50% of voting aged Americans expect to retire after the Trust Fund is gone - and that is in a good economy. More than 80% of the country expects to live long enough that they will see depleted benefits. Whatever participation rates are today, they will change as the collapse of Social Security comes into view.
John, I rarely run into articles so completely out of touch with reality.
"The key item is that long ago Congress, for better or worse, did away with the original trust fund concept and made it just one more of the many federal programs. "
Are you aware that Social Security was a paygo system until 1983 which produced almost no reserves. That is the definition of pay as you go.
The only thing that happened in 1969 was the reporting of the Federal Budget was changed to include SS revenue. It was taken off-budget in 1990. According to the Social Security Administration neither action had any impact on the operations or financial strength of Social Security.
Any voter who claims Social Security is in not trouble is either to dumb to vote or thinks that younger voters will want to support both the debt that we have created and the us in a comfortable retirement.
Maximizing Retirement Returns Through Social Security Elections [View instapost]
You are assuming that Social Security carries no risk. The system is short 20.5 trillion dollars, including its trust fund assets. This isn't a gen-x problem.
Before you sell outside assets to concentrate your risk in Social Security - you ought to at least read the Trustee's Report and understand what their assumptions are. They haven't said that Social Security will last until 2033. That requires favorable economic outcomes. The report assumes that Social Security will be immune to the insolvency of medicare - which is laughable.
According to the Supreme Court - Flemming V Nestor - you aren't entitled to anything. Your benefits are whatever Congress says that they are. In fact, if you are 63 today, you expect to live long enough to see your benefits forcibly cut because of lack of funding.
Why Nobody Is Talking About Social Security [View article]
I have bad news for you. You do pay into Social Security, you just don't get credits. If you are a taxpayer, you are going to be left with the debt from all of the subsidies that the General Taxpayer gives to the system.
The politicians call the payroll tax-holiday a tax-cut. It isn't. It is a tax shift where the general taxpayer - you - gives money to the system.
Here is an article from our site on the winners and losers of the payroll tax holiday ;
John, It has nothing to do with how long you live but rather when you lived.
The terms have changed greatly over time, and your description doesn't really convey the way it has changed. Unlike any insurance policy the terms have worsed very year since inception. The later you are born the worse the terms.Someone born in 1930 got a better deal than someone born in 1940 who got a better deal than someone born in 1950.
Congress set it up to be generous so that they could buy votes with the system. Over time it has become more and more difficult to keep up with the promises. Today SS is short 20.5 trillion according to the Trustees. That is more than the system has taken in in all forms from all Americans since its inception.
The problem with CBO and SSA are the assumptions. They are laughable.
They assume that OASDI will be unaffected by the insolvency in Medicare. They assume that future taxpayers will maintain the payroll tax rate despite (a) increased parental support as benefits are trimmed (b) increased income taxes to support the debt (c) decreased personal benefits.
John, The court case above already determined that the government has no obligation for Social Security. The fact that SSA tells you that benefits will be automatically cut in 2033 tells you that there is no obligation.
According to SSA, you are wrong about the change in funding in 1969. In 1969, Social Security was put on-budget for the purposes of making LBJ's budget look better. According to SSA, that has no impact on the finances or financing of Social Security. If the government decided to put you on-budget, it would not affect your salary or what you spend at the store. It should be sufficient to know that SS has gone on and off budget over the years without changing the finances of Social Security by a penny.
You seem to think that medicare and OASDI are unrelated. They may be separate, but they are anything but unrelated. Both draw financial resources from the same tax base. As medicare hits insolvency, Congress will have three options :
draw payroll tax resources away from OASDI draw general tax resources away from debt control redefine medicare benefits
One Proposal To Fix Social Security [View instapost]
One Proposal To Fix Social Security [View instapost]
Largely Congress didn't touch it. It was given to our parents and grandparents - more than 90% of all revenue ever collected.
"...if we had been mandated to pay into a saving account at our bank I wonder what the compounded interest would be? "
Social Security is insurance. The best measure is provided by SSA under the moneys-worth studies. The results will not surprise you. The economic returns have deteriorated steadily since inception.
One Proposal To Fix Social Security [View instapost]
If you started work in 1965 the maximum contribution in 2012 dollars was roughly $1,500. Today it is nearly than 10 times that amount. You will get your schedule benefits. At best, they are apt to get 75% of their benefits.
The problem is that the average person has no idea what benefits they receive. If you were married with kids, your SS provided you free life insurance. It was provided free of charge, and basically doubles the cost of providing benefits.
You aren't stealing from them. Your parents and grandparents are. Your parents and grandparents meant to steal from you, but up to now the country has transferred the theft from boomers to GenXers.
What you should explain to them is why you and your generation should be exempt from cleaning up the mess that your generation voted for. You are asking them to clean-up a mess for which they didn't have a vote.
One Proposal To Fix Social Security [View instapost]
One Proposal To Fix Social Security [View instapost]
One Proposal To Fix Social Security [View instapost]
It was mainly self-absorbed mush about how wonderful he is to make such an offer.
Social Security Demographics Guarantee US Bankruptcy [View instapost]
"Fix Social Security Now" on FB. Reform will come. All we ask for is a honest discussion. http://www.FixSSNow.Org feel free to tell us where it is wrong.
Social Security Demographics Guarantee US Bankruptcy [View instapost]
Social Security isn't an obligation of the government. Benefits cannot bankrupt the country. You are making the assumption that the voting block will change that fact. I doubt your assumption that participation rates will remain constant. Once we aren't able to print our way to prosperity, those rates will change.
Your data is more current - but this comes from 2010. In 2010, more than 50% of voting aged Americans expect to retire after the Trust Fund is gone - and that is in a good economy. More than 80% of the country expects to live long enough that they will see depleted benefits. Whatever participation rates are today, they will change as the collapse of Social Security comes into view.
The Future Of Social Security [View article]
"The key item is that long ago Congress, for better or worse, did away with the original trust fund concept and made it just one more of the many federal programs. "
Are you aware that Social Security was a paygo system until 1983 which produced almost no reserves. That is the definition of pay as you go.
The only thing that happened in 1969 was the reporting of the Federal Budget was changed to include SS revenue. It was taken off-budget in 1990. According to the Social Security Administration neither action had any impact on the operations or financial strength of Social Security.
Any voter who claims Social Security is in not trouble is either to dumb to vote or thinks that younger voters will want to support both the debt that we have created and the us in a comfortable retirement.
Maximizing Retirement Returns Through Social Security Elections [View instapost]
Before you sell outside assets to concentrate your risk in Social Security - you ought to at least read the Trustee's Report and understand what their assumptions are. They haven't said that Social Security will last until 2033. That requires favorable economic outcomes. The report assumes that Social Security will be immune to the insolvency of medicare - which is laughable.
According to the Supreme Court - Flemming V Nestor - you aren't entitled to anything. Your benefits are whatever Congress says that they are. In fact, if you are 63 today, you expect to live long enough to see your benefits forcibly cut because of lack of funding.
Why Nobody Is Talking About Social Security [View article]
The politicians call the payroll tax-holiday a tax-cut. It isn't. It is a tax shift where the general taxpayer - you - gives money to the system.
Here is an article from our site on the winners and losers of the payroll tax holiday ;
http://bit.ly/JGWukN
The Future Of Social Security [View article]
The terms have changed greatly over time, and your description doesn't really convey the way it has changed. Unlike any insurance policy the terms have worsed very year since inception. The later you are born the worse the terms.Someone born in 1930 got a better deal than someone born in 1940 who got a better deal than someone born in 1950.
Congress set it up to be generous so that they could buy votes with the system. Over time it has become more and more difficult to keep up with the promises. Today SS is short 20.5 trillion according to the Trustees. That is more than the system has taken in in all forms from all Americans since its inception.
The Future Of Social Security [View article]
The problem with CBO and SSA are the assumptions. They are laughable.
They assume that OASDI will be unaffected by the insolvency in Medicare. They assume that future taxpayers will maintain the payroll tax rate despite (a) increased parental support as benefits are trimmed (b) increased income taxes to support the debt (c) decreased personal benefits.
The Future Of Social Security [View article]
According to SSA, you are wrong about the change in funding in 1969. In 1969, Social Security was put on-budget for the purposes of making LBJ's budget look better. According to SSA, that has no impact on the finances or financing of Social Security. If the government decided to put you on-budget, it would not affect your salary or what you spend at the store. It should be sufficient to know that SS has gone on and off budget over the years without changing the finances of Social Security by a penny.
The Future Of Social Security [View article]
draw payroll tax resources away from OASDI
draw general tax resources away from debt control
redefine medicare benefits
OASDI is not going to be immune to that debate.