Fixing Social Security

Discussion in 'Politics' started by KenH, Jan 8, 2005.

  1. KenH

    KenH
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    We all should know by now that by approximately 2018 that Social Security(SS) will go into deficit. To make up this deficit in 2018 and beyond, as things stand now, we will have to borrow money or immediately raise taxes/cut benefits.

    There has been talk of creating personal accounts that we could have the option of using, and if we chose to do so, would have our future SS benefits. An obvious downside is that these accounts would cause a rise in the current deficit problem until the reduction in SS benefits offsetting the personal accounts come into play.

    I see two realistic options:

    a) Giving people the option of personal accounts with a portion of their SS taxes, even if the current deficit problem is made larger for a few years, but knowing that in 20-30 years the SS system will still be healthy.

    b) Immediately begin phasing in a combination of higher SS taxes, reducing SS benefits, and raising the retirement age to keep the system as it is currently set up solvent for the decades to come.

    What do ya'll think we should do? Are there other options?

    b)
     
  2. NateT

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    I think we should put more money into the hands of the American people.

    Afterall, it is money I earned, and I'm pretty sure most people could do better at managing their money than the gov't.

    Chances are you 95% or more of the US people could get a better rate of return on their money than what the SSA would be able to give them under the status quo.
     
  3. StraightAndNarrow

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    We should have put the Social Security fund in a "lock box" as suggested by Al Gore in 2000. Instead we've been using it to finance Bush's $8T debt. Any money put into personal accounts comes directly out of the money navailable to current retirees. It's now the working person's money. It belongs to those that are retired. I've been funding retired folks for over 32 years and when I retire I expect for them to fund me.

    Obviously, this is going to break according to age. If we're going to take money from people who are going to retire say in 10 years I think we should go ahead and take money from people who are already retired. That won't be popular politically so I don't expect the current administration to suggest it.
     
  4. KenH

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    I think the age break will be huge. I expect those over 50 will fight tooth and nail to not make any changes to SS, in spite of what not doing anything will do to their children and grandchildren. And I expect those under 50 will want to have more say so in providing for their own retirement.

    S&N, how would the "lock box" have worked? Would the current surpluses have been placed in a real bank account somewhere? Even if that had been done, would it have kept SS from going into deficit by 2025, which would have been seven years later, but it still would not have been a long term fix?
     
  5. Daisy

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    SSA does put the money into the hands of the American people - the old American people.

    If that were true, then SS wouldn't have been instituted in the first place. If that were true, Americans would have more savings than debt.

    Probably not when you add in administrative costs which are currently very low and very cost effective. Under the privatized plan, if the market is down when you reach retirement age, you will make substantially less than if the market happened to be up then. This makes retirement very hard to plan, because the actual amount you'll receive is unknown (and could be zero). Social security spreads the risk so that while there are no big winners, there are also no big losers. I say keep widows and orphans off the streets and in their homes.

    On a related note, the highest average income was in NYC, at around $5,000 a week, mostly because of the astronomical bonuses paided to the financial sector. These are the people who will be handling the privatized SS accounts and these are the people who will make a killing.
     
  6. Joseph_Botwinick

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    I think the private account might be a good idea. I would say that we should start phasing it out as a retirement program a little bit at a time since that is not what it was originally meant to be. Take care of those in the baby boom generation, (which is, BTW, one generation before me). Start cutting back benefits a little more to people in my generation. With each generation, we should cut benefits a little more until it is phased out to the point that it is back to what it was originally meant to be...money that is used only during major financial crises. My point is that I don't think it should be an entitlement.

    Joseph Botwinick
     
  7. Pastor Larry

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    SS should be immediately disbanded. Moneys now in the account should be paid to people who have paid in. Then all retirement should become private, with a government program optional for those who want it. Those who paid in for years are now getting more than they paid. That is the problem.

    If someone chooses not to save, they can spend their whole lives working. They cannot live on the public dole. It will be unpopular but it will be the right thing to do.
     
  8. StraightAndNarrow

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    Right now the Social Security funds are in a separate account but money can be taken out of that account to fund other government needs. This money is replaced by "IOU's." It would have made sense years ago to do this while the demographics were favorable, i. e. while the Baby Boomers were working.

    This is not really a political issue since both parties have dipped into the SS fund to make their economy look better. Gore was just the first one I remember who made a point of stopping this practice so we could "put some nuts away for the coming winter."

    Obviously the sooner we had started saving this surplus the longer the coming crisis would have been pushed out. I don't know what the numbers are.
     
  9. StraightAndNarrow

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    This would be a severe blow to "The Great Generation."
     
  10. Pastor Larry

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    It shouldn't be. The money they have paid in is what they will receive back out of it. Changes have to be made and no one is wiling to make the tough choices because it will be a "severe blow" to someone. The reality is that that will always be true, no matter which generation it is. The only way to stop the cycle is for someone with the political will to stand up and change it.
     
  11. billwald

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    The "lock box" idea is crazy. Bury paper money in the ground?

    The money is actually used to reduce the national debt because it is spent for current needs and always has been.

    SS is a very successful welfare program. Without it, a third of older Americans would be on state welfare programs.

    Why does every person think that he is smarter than the average person? Without SS, a quarter of you will end up on welfare. You have a credit card balance? You are to stupid to run your own retirement program. Making car payments? Same thing.
     
  12. Joseph_Botwinick

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    Perhaps if we were to be responsible for our own retirement, we might change the way we manage our money. Speaking of being too stupid to run a retirement program, which entity has trillions of dollars in debt and deficit spending? It certainly isn't me. And yet, you think the government can do it any better? That's a laugh. [​IMG]

    Joseph Botwinick
     
  13. StraightAndNarrow

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    Is it better to bury the money in the ground or to steal from the fund? That's what's happening today.
     
  14. KenH

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    There is no money in the account. There are only IOUs from the general account.
     
  15. KenH

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    Have you not heard of IRAs and 401(k) accounts? I have both. My main retirement account is my 401(k) and I earned a return on my money of 9.4% in 2004 with a low risk strategy. My "money" in Social Security probably "earned" about 1%.

    By the way, how do you advise keeping Social Security solvent? Clearly you want to keep it going, but around 2018 it goes bust. So what's your idea for keeping it from going bust?
     
  16. UTEOTW

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    One idea I have had discussed goes as follows. I am doing this from memory so the basic idea should be right while the details may be sketchy. And it is only a partial solution.

    Historically Congress has provided for increasing SS benefits such that the benefits increase at the same rate as wages in the general economy. This means that benefits increase at a rate substantially higher than the growth in the economy. This seems to me to be unsustainable. The reason for doing so was so that seniors would see increases in standard of living on par with what the general population was experiencing. If you were to lower the rate of increase to that of inflation, then in theory seniors could have the same standard of living throughout retirement, it just would not increase with the rest of the population. This could lead to significant savings over time. The first obvious flaw I see with the logic is that you would expect some expenses, such as medical and other care, to increase with age and so it might actually lead to a decline in standard of living. But I also expect that this already happens. If we wish to do something about that then maybe it should be done with a different program.

    I, personally, would like to have some fraction of that money to do with as I please for my own retirement. 15% of my income is a lot of money to give to the government to run SS. I could retire very well and early if I had that 15% plus what we already put back.
     
  17. Hardsheller

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    Three Quick Steps that Would Help While we work on the Final Solution.

    1. Raise the cap on income. If you make 10 million a year you pay social security tax on it all but not at the employee or self-employed rate but at a lowered flat 2.5% rate of all over a $2 Million dollar cap. You have a Social Obligation (Baseball, Basketball, Football Players - High Powered executives - Entertainers!)

    2. Means test the recipients. Social Security should be a Federal Supplement for low income retirees only. If a person has private retirement resources which generates over $32,000 per annum then I question their need for Social Security. Medicare yes - SS no.

    3. Raise the Retirement Age and make it harder to fire and easier to hire older workers.
     
  18. Hardsheller

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    In addition to my simple and brilliant ideas above we need to combine them with a complete overhaul of the Federal Income Tax System. The only real solution is a National Sales Tax.
     
  19. Baptist in Richmond

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    Do you really believe that? How will all of us get credit for the sales tax we pay on cash transactions? Also, if we are entitled to a reduction in the national sales tax, how will we prove this at the point-of-sale?
     
  20. Hardsheller

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    Why do you need credit for Sales Tax?

    If you do not have a National Income Tax but only have a National Sales Tax - Why would you need credit for sales tax paid?

    What kind of reduction would anyone qualify for?

    "credit for" and "entitled" are buzzwords thrown around by Big Government Bureaucrats and people who are used to feeding at the government trough.
     

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