social security

[Oldskool]

Utter BS.

As you would have known if you'd even bothered to read the thread.

If absolutely nothing is done, SS remains exactly the same until 2054, and then benefits have to be cut by 17%.

Read it and don't believe it.

Things are in motion right now that will tip the SS crisis to the forefront. It may stay the same if the status quo remains, but it never does and it won't.

You'll get yours Larry, but most will never sniff a SS check.

[Predicto]

Read it and don't believe it.

Things are in motion right now that will tip the SS crisis to the forefront. It may stay the same if the status quo remains, but it never does and it won't.

You'll get yours Larry, but most will never sniff a SS check.

Um, ok. Whatever.

[PiLfan]

Traditional IRA: The money you put in is pretty much considered money that you haven't earned, yet. If you have $50K, and put $5K into a traditional, then as far as the IRS is concerned, you made $45K that year. (One way of looking at that is: If you're in a 20% marginal tax rate, then for every dollar you put in, the IRS pays you 20 cents.) Like a Roth, the interest you earn is tax-free, too. But, when you take the money out, then you have to declare the withdrawal as income, and pay taxes on it.

But this phases out after some point.

Contributions to a traditional IRA are a front side AGI deduction, so long as your total AGI is less than $60K for single, $85K for Married filing jointly (assuming your employer offers a retirement plan like a 401k). Once you make more than that, then the deduction from your income begins to go down from the maximum amount you can contribute ($5-10k, depending on filing status) to, eventually, zero.

This doesn't mean you should discontinue contributing to a traditional IRA once your AGI exceeds the threshold that allows you to claim contributions as deductions to your overall income...it just means there isn't any up-front tax incentive (though there is in the long term, as your IRA earnings continue to accumulate without being taxed, at least until you begin withdrawing at retirement).

[Larry]

Things are in motion right now that will tip the SS crisis to the forefront.

Name some.

Yeah, if the US enters a Great Depression, and the US taxpaying workforce shrinks by 40%, then yeah, that will affect the SS "bankruptcy day".

You planning on Osamma vaporizing NYC 10 years from now?

And if so, what do you propose we do about it?

[outbaksean]

I'm still against social security for now. Try again in 30 years I guess.

[DjTj]

Absolutely.

The only reason to do a Roth is if you think you are going to be absolutely loaded when you retire, and in a very high tax bracket. Otherwise, load up the traditional IRA and avoid those taxes now.

Another benefit of the Roth is that it doesn't tie up all your money until retirement. If you want to take money out of a Roth, there is no penalty (as long as you're only taking out your contributions, and not your earnings). If you're saving up for a house or something, that can be a big help.

Also, the Roth actually puts more money in your retirement account because you're only allowed to contribute $4,000 to IRA's each year. With a traditional IRA, that $4,000 will be taxed when it comes out, so it may only really be worth $3,000 or so at retirement. With a Roth, that $4,000 is worth $4,000 (although you'll have paid $5,000 to get it in there). Now if you are disciplined and put $4,000 into the IRA and invest the other $1,000 yourself, you'll probably come out ahead with the traditional IRA, but if you just spend that $1,000 on something that won't last until retirement, then you may have been better off with a Roth.

[Predicto]

Another benefit of the Roth is that it doesn't tie up all your money until retirement. If you want to take money out of a Roth, there is no penalty (as long as you're only taking out your contributions, and not your earnings). If you're saving up for a house or something, that can be a big help.

Also, the Roth actually puts more money in your retirement account because you're only allowed to contribute $4,000 to IRA's each year. With a traditional IRA, that $4,000 will be taxed when it comes out, so it may only really be worth $3,000 or so at retirement. With a Roth, that $4,000 is worth $4,000 (although you'll have paid $5,000 to get it in there). Now if you are disciplined and put $4,000 into the IRA and invest the other $1,000 yourself, you'll probably come out ahead with the traditional IRA, but if you just spend that $1,000 on something that won't last until retirement, then you may have been better off with a Roth.

This is all true, I was just keeping it simple.

Besides, I'm not eligible for the Roth anyway, so I think it should be abolished! :mad: :laugh:

[Larry]

Oh, there's legitimate libertarian reasons to oppose all government social programs, on moral grounds.

Me? I'd put it up there with things like universal public education, in terms of how much positive impact it's had on what our country looks like, today.

-----

Now, the 800,000 lb gorilla in the room, is Medicaid.

[Thiebear]

I think were screwed way before 2030..

And then the real problems hit. Somewhere around 2017, on top of replacing Social Security's $100 billion annual surplus, Congress will have to find billions more so that Social Security can pay all of the benefits that it has promised. Within about five years, that additional money will reach $100 billion a year (not counting inflation). From there, the annual demands will reach first $200 billion a year, and soon $300 billion a year.

Then there is Medicare. Together, Social Security and Medicare will consume an estimated 60 percent of income taxes collected by 2040. What's left would have to finance the entire rest of the government.

Now add in perscription drugs.

Now add in the Universal Health Care that based on the 32million people in Canada is going to cost 440billion dollars a year for the first 3 years. AND THAT will be strained because the baby boomers WILL ALREADY be there... and causing it to cost more.

We spend the 100billion a year FROM SS.. when its gone it will COST us 200billion + whatever else we've created up until that point.

Obama is going to be in the White house the next 4 years.. NO chance he changes ANYTHING...

[DjTj]

This is all true, I was just keeping it simple.

Besides, I'm not eligible for the Roth anyway, so I think it should be abolished! :mad: :laugh:

I think it's really a toss-up for most people ... I tried doing some research and weighing the costs and benefits, and I couldn't really find a clear advantage for me without being able to know what I want to do with my money 10 years from now let alone 40 years from now. I just split the baby and put half my money into a traditional IRA and half into a Roth. :whoknows:

[outbaksean]

Obama is going to be in the White house the next 4 years

And the Patriots are going to win the superbowl...

[Predicto]

Oh, there's legitimate libertarian reasons to oppose all government social programs, on moral grounds.

Me? I'd put it up there with things like universal public education, in terms of how much positive impact it's had on what our country looks like, today.

-----

Now, the 800,000 lb gorilla in the room, is Medicaid.

You fool - it's an elephant, not a gorilla!

Sorry about the three posts in a row - but one more point.

The elephant in the room is not Social Security. That is easy to fix.

Medicare is the real problem. Huge huge HUGE problem.

[Thiebear]

And the Patriots are going to win the superbowl...

LOL i'm a conservative, but you gotta go with 80% chance.. a message that ends the known world and you pull that lil nugget out.. jeez

[Predicto]

I think it's really a toss-up for most people ... I tried doing some research and weighing the costs and benefits, and I couldn't really find a clear advantage for me without being able to know what I want to do with my money 10 years from now let alone 40 years from now. I just split the baby and put half my money into a traditional IRA and half into a Roth. :whoknows:

Just put it in the traditional. Get the tax savings now. That's a sure thing.

[Thiebear]

http://www.cato.org/testimony/ct-mt092496.html

Testimony of

MICHAEL TANNER

Director of Health and Welfare Studies,

Cato Institute

before the

SENATE SPECIAL COMMITTEE ON AGING

September 24, 1996

--------------------------------------------------------------------------------

Mr. Chairman, distinguished members of the committee:

Thank you for the opportunity to appear before this committee and address one of the most important questions facing this country today: whether today's young workers will have the same opportunity for a dignified retirement as do today's seniors.

I do not want to begin by attacking Social Security. For 60 years, Social Security has largely accomplished its goal. It has significantly cut poverty among the elderly and enabled them to retire with dignity. But despite all the good that Social Security has accomplished, the system now faces irresistible demographic and fiscal pressures that threaten the future retirement security of today's young workers.

Only by moving to a system of privately invested, individually-owned accounts can a system of secure retirement be preserved.

Just a couple of months ago the Social Security system's Board of Trustees reported that the retirement system will be insolvent by 2029, down from 2030 in last year's report. This represents the eighth time in the last 10 years that insolvency date has been brought forward. But focusing exclusively on that date is misleading. The implication is that Social Security's financing is fine until 2030, at which point benefits will suddenly stop. The reality is much more complex.

Currently, Social Security taxes bring in more revenue than the system pays out in benefits. The surplus theoretically accumulates in the Social Security Trust Fund. However, the situation will reverse as early as 2012. Social Security will begin paying out more in benefits than it collects in revenues. To continue meeting its obligations, it will have to begin drawing on the surplus in the Trust Fund. However, at that point, we will discover that the Social Security Trust Fund is really little more than a polite fiction.

For years, the federal government has used the Trust Fund to disguise the actual size of the federal budget deficit, borrowing money from the Trust Fund to pay current operating expenses and replacing the money with government bonds.

Beginning in 2012, Social Security will have to start turning in those bonds to the federal government to obtain the cash needed to finance benefits. But the federal government has no cash or other assets with which to pay off those bonds.

Of course, the Social Security insists that those bonds are safe, comparing them to the government bonds in private investment portfolios. Those bonds are backed by thin full faith and credit of the U.S. government. But this is irrelevant.

Pretend for a moment that there was no trust fund and no bonds. What would happen in 2012? The government would have to raise taxes to continue paying promised benefits.

Now, consider what will happen with the trust fund.

The government will have to raise taxes to make good on the bonds to continue paying promised benefits. Either way, the government can only pay benefits by raising taxes--or borrowing and running bigger deficits. Even if Congress can find a way to redeem the bonds, the Trust Fund surplus will be completely exhausted by 2029. At that point, Social Security will have to rely solely on revenue from the payroll tax. But such revenues will not be sufficient to pay all promised benefits. If the government is going to make good on all the promised benefits under both Social Security and Medicare, payroll taxes will have to be increased to between 28 and 40 percent.

Social Security's financing problems are a result of its fundamentally flawed design, which is comparable to the type of pyramid scheme that is illegal in all 50 states. ****note, my favorite line****

Today's benefits to the old are paid by today's taxes from the young. Tomorrow's benefits to today's young are to be paid by tomorrow's taxes from tomorrow's young.

Because the average recipient takes out more from the system than he or she paid in, Social Security works as long as there is an ever larger pool of workers paying into the system compared to beneficiaries taking out of the system.

However, exactly the opposite is happening.

Life expectancy is increasing, while birth rates are declining. As recently as 1950, there were 16 workers for every Social Security beneficiary.

Today there are only 3.3. By 2030, there will be fewer than two.

The Social Security pyramid is unsustainable.

more...

[outbaksean]

^^^^^^scary

[GibbsFactor]

Just put it in the traditional. Get the tax savings now. That's a sure thing.

While the GOP is still in office that is.

[GibbsFactor]

^^^^^^scary

You want scary?

David Walker, Comptroller General at the Government Accountability Office, appeared on the show “60 Minutes” last evening to discuss the federal budget outlook. If you saw the show, you know that he painted a very sobering picture regarding the federal government’s ability to meet its future obligations.

If you didn’t see the show, Mr. Walker’s theme was simple: government entitlement spending is like a runaway freight train headed straight at American taxpayers. He singled out the Medicare prescription drug bill, passed by Congress at the end of 2003, as “probably the most fiscally irresponsible piece of legislation since the 1960s.”

When it comes to Social Security and Medicare, the federal government simply won’t be able to keep its promises in the future. That is the reality every American should get used to, despite the grand promises of Washington reformers. Our entitlement system can’t be reformed- it’s too late. And the Medicare prescription drug bill is the final nail in the coffin.

The financial impact of the drug bill cannot be overstated. Government projections that the program would cost $400 billion over the next decade were a joke, as everyone in Congress knew even as they voted for the bill. The real cost will be at least $1 trillion in the first decade alone, and much more in following decades as the American population grows older.

The Medicare “trust fund” is already badly in the red, and the only solution will be a dramatic increase in payroll taxes for younger workers. The National Taxpayers Union reports that Medicare will consume nearly 40% of the nation’s GDP after several decades because of the new drug benefit. That’s not 40% of federal revenues, or 40% of federal spending, but rather 40 % of the nation’s entire private sector output!

The politicians who get reelected by passing such incredibly shortsighted legislation will never have to answer to future generations saddled with huge federal deficits. Those generations are the real victims, as they cannot object to the debts being incurred today in their names.

The official national debt figure, now approaching $9 trillion, reflects only what the federal government owes in current debts on money already borrowed. It does not reflect what the federal government has promised to pay millions of Americans in entitlement benefits down the road. Those future obligations put our real debt figure at roughly fifty trillion dollars- a staggering sum that is about as large as the total household net worth of the entire United States. Your share of this fifty trillion amounts to about $175,000.

Don’t believe for a second that we can grow our way out of the problem through a prosperous economy that yields higher future tax revenues. If present trends continue, by 2040 the entire federal budget will be consumed by Social Security and Medicare alone. The only options for balancing the budget would be cutting total federal spending by about 60%, or doubling federal taxes. To close the long-term entitlement gap, the U.S. economy would have to grow by double digits every year for the next 75 years.

The answer to these critical financial realities is simple, but not easy: We must rethink the very role of government in our society. Anything less, any tinkering or “reform,” won’t cut it. A good start would be for Congress to repeal the Medicare prescription drug bill.

[Larry]

Hey, Thiebear,

At least your second quote (the one you actually gave a source for) recognizes that SS actually has money "in the bank".

Yes, I agree (somewhat), that things will change, slightly, when SS begins cashing in it's securities, rather than buying them. For one thing, instead of SS acting as a force to keep rates on those notes down, it will begin pressuring them upwards.

[Thiebear]

Hey, Thiebear,

At least your second quote (the one you actually gave a source for) recognizes that SS actually has money "in the bank".

Yes, I agree (somewhat), that things will change, slightly, when SS begins cashing in it's securities, rather than buying them. For one thing, instead of SS acting as a force to keep rates on those notes down, it will begin pressuring them upwards.

Google baby boomer social security...

no wait.. don't.. its not worth it.

and whatever you do dont look 1 post up... it is 12 years after the post from cato and repeats the exact same thing... 16 years pissed away at this point.

neither link is from moveon or newsmax.

[Larry]

and whatever you do dont look 1 post up... it is 12 years after the post from cato and repeats the exact same thing...

No it doesn't. The only time it even mentions Social Security is when it says "Social Security and Medicare" (and then talks about what a problem Medicare is).

In short, the post "1 post up" (at least, I'm assuming you're pointing at GibbsFactor's latest) agrees with Predicto and I: If you want to talk about a looming crisis in government programs, look at Medicare.

[Mark The Homer]

I'm bumping this thread for an article I read in today's Wash Post which contradicts the time line of the predicted insolvency of the system. The numbers the writer uses are taken directly from the Social Security Administration, and what he says seems to make sense.

I'd like some opinions - particularly Predicto's, since I pretty much agree with his posts in this thread.

why is this not a bigger issue? many estimates predict social security will be bankrupt in 2042. I will be 53 then, meaning I won't see any of the money I've been putting into the program. More conservative estimate show social security going bankrupt in 2052. Still wouldn't see a dime:mad:.

1) SS is not doomed, it will be fixed. It's not even that complicated. The only questions are which way to fix it and when to start, but they are not insurmountable problems.

The elephant in the room is not Social Security. That is easy to fix.

Medicare is the real problem. Huge huge HUGE problem.

I'm sure the OP means to include that when he says "social security". But let's continue with the strict SS issue while we're in it.

I have a debate/question for those who know more about the topic than i do?

1) Should Immigrants be granted for SS? Example: Individual comes into this country at 55 and should they get paid SS if they never worked in the US

2) Should SS payments be only made to those who have actually worked?

Somebody can correct me if I'm mistaken - as I haven't researched this lately, but it's my understanding that an individual needs to work and pay into the system for at least 40 quarters. Once that's accomplished, the system will use the BEST 40 quarters when calculating the eventual payment. So there isn't any debate. If you pay in for the minimum time, you will get something. So they say.

Sean, I'm paying for my parents' social security, you will pay for my social security and your children will pay for yours. You need to get busy and have some kids.

That's part of the problem. The whole kid production thing has slowed down. Hence, the X generation is due to get shafted worse that the boomers because the boomers, at least, have some sort of surplus being paid in year after year at the moment. But the boomers will run through that like **** through a goose. The X generation will be coming into a system that's much worse than the one we boomers have, and the one we boomers have sucks.

If one simply raises the SS retirement age by about three years, the problem is basically solved. More workers paying in, less retirees taking out. Alternately, one could raise the contribution cap, so that people paid on on a higher percentage of income or add a means test so that the wealthy did not collect. However, both of those solutions tend to violate the social compact on which SS was founded, especially the second one.

Or you could do a little bit of all three of them, which I think is probably what is actually going to happen.

And in 2042, SSI will be 12 years away from "bankruptcy". (Which is the scare word for "will have to cut benefits by 27%".)

You make that claim based on?

(Now, me? I wouldn't mind raising the retirement age to 70, right now. (Well, I think, to be fair, it should be raised slowly, over several years. But it it gets raised to 70 before I get there, that's perfectly fine by me.))

I agree Larry. Raise it to something, whatever it takes, 66, 70 or something in between to make the system solvent. Do it now.

Imagine if they moved this from 65 to 68, on a gradual time scale, starting today. Suddenly, no more workers are moving off the pay-into system. Not only that, but suddenly, no more retirees are entering the system with their hand out. And this continues for three years. I'd imagine this would be a very healthy move for the SS system.

I never said permanently, I said long term. Many estimates don't have this lasting into my old age, but even if I believe when you say it could go another 80 years longer than I expect that doesn't make it the right option for this country. All I am saying is there will eventually be a time in the not to distant future where social security becomes obsolete. Then we will have to think of something else, or go without. My suggestion is that whatever we do we do it know. At least that way noone gets stuck with the short end of the stick. If the only option is to eventially live as a society without social security, than it would be much better IMO if we cut it now on our own terms instead of playing it out. If there is some alternative to social security, we should be finding/testing/impementing it today, not when my generation retires and the government "realizes" that social security needs fixing. It's called thinking ahead.

outbaksean, my position was just like yours 30 years ago. I had just done my taxes. I had to write a check for $4,500 - just to pay the SS fee for one year. And I was pissed off. That was my money. Here I am, with dreams of putting a down payment on a home someday, and I get ****ed by SS. I had paid the Federal tax, the state tax, the county tax, but that wasn't good enough. I had to pay ANOTHER ****ing check for $4,500 to SS. That really got me. And looking at the system, it didn't look like I'd see anything when I neared retirement. So back then, I was like you, I was fully in favor of disbanding the program. And I don't blame you for thinking the same way.

SS apocalypse is less than 10 years around the corner and nothing will be done until then.

Anyone under the age of 45 that believes that SS will be there for them in its current system when they retire, probably still believes in the Easter Bunny and the Tooth Fairy as well.

Utter BS.

As you would have known if you'd even bothered to read the thread.

If absolutely nothing is done, SS remains exactly the same until 2054, and then benefits have to be cut by 17%.

Read it and don't believe it.

Things are in motion right now that will tip the SS crisis to the forefront. ...most will never sniff a SS check.

Okay. Check this guy's article in the Wash Post today. From what he says, Oldskool is DEAD ON.

One of Washington's rites of spring is almost upon us. It's the wonks' version of the Cherry Blossom Festival: the release of the annual Social Security trustees' report showing the health of our nation's biggest social program. Each year, the report touches off a debate, mostly misguided, about Social Security's financial status. Given the political environment this year, you can expect more heat than usual when the report comes out. But you're unlikely to see much light.

So let me try to illuminate things for you. Forget all the talk you'll hear about how Social Security is okay until 2040 or thereabouts. That is, as we'll soon see, utter nonsense. The real problem starts only a decade or so from now, when Social Security begins to take in less cash than it spends.

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/17/AR2008031702702.html

He goes on to explain that cash flow will become negative around 2017 or 2018. Then he includes a link to charts provided directly from the Social Security Administration.

Please click below and scroll down to chart VI.F8. The writer says we cannot include interest income from the surplus of cash because interest is paid in Treasury IOUs which is not real money. Retirees are not going to want an IOU in leiu of a check. They're going to want real money to buy groceries with.

So to see actual cash flow, add Income and subtract Cost. You can see it runs out of cash around 2017 or 2018 according to the chart.

These figures are directly from the Social Security Administration.

http://www.ssa.gov/OACT/TR/TR07/VI_...s.html#wp150920

Discuss.

[GibbsFactor]

I now have to save for me and my mom. :doh:

[Predicto]

I'm bumping this thread for an article I read in today's Wash Post which contradicts the time line of the predicted insolvency of the system. The numbers the writer uses are taken directly from the Social Security Administration, and what he says seems to make sense.

I'd like some opinions - particularly Predicto's, since I pretty much agree with his posts in this thread.

.

I think he is pretty much correct, in the sense that there is no real "trust fund" saved up.

SS is still easily fixable and Medicare is not. I hold to that analysis.

[Larry]

Okay. Check this guy's article in the Wash Post today. From what he says, Oldskool is DEAD ON.

One of Washington's rites of spring is almost upon us. It's the wonks' version of the Cherry Blossom Festival: the release of the annual Social Security trustees' report showing the health of our nation's biggest social program. Each year, the report touches off a debate, mostly misguided, about Social Security's financial status. Given the political environment this year, you can expect more heat than usual when the report comes out. But you're unlikely to see much light.

So let me try to illuminate things for you. Forget all the talk you'll hear about how Social Security is okay until 2040 or thereabouts. That is, as we'll soon see, utter nonsense. The real problem starts only a decade or so from now, when Social Security begins to take in less cash than it spends.

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/17/AR2008031702702.html

He goes on to explain that cash flow will become negative around 2017 or 2018. Then he includes a link to charts provided directly from the Social Security Administration.

Please click below and scroll down to chart VI.F8. The writer says we cannot include interest income from the surplus of cash because interest is paid in Treasury IOUs which is not real money. Retirees are not going to want an IOU in leiu of a check. They're going to want real money to buy groceries with.

So to see actual cash flow, add Income and subtract Cost. You can see it runs out of cash around 2017 or 2018 according to the chart.

These figures are directly from the Social Security Administration.

http://www.ssa.gov/OACT/TR/TR07/VI_...s.html#wp150920

Discuss.

And he generates this prediction of apocolypse by saying (in effect) "Assume that all of the money that SS has in the bank is completely worthless, and that, while current government deficits are OK, that if they get any bigger, then the sky will fall."

Yes, his numbers come directly from SSA. But he takes the numbers from SSA, then says "now pretend that the trust fund doesn't exist and it's all been stolen".

He's claiming that the world will collapse in 10 years, because the government can't exist without borrowing money from SS.

-----

Now, yes, I think it can be said that, when SS stops buying t-bills, and starts redeeming them, that if the government intends to continue spending more money than it takes in, then it's going to have to pay a higher rate.

Right now, SS has a surplus, and is required by law to buy t-bills with it. When SS stops buying and starts selling, then they're going to have to find another buyer for the notes. And the other buyer isn't going to be required by law to buy. Therefore, the government's going to have to give the other buyer an interest rate that's good enough to attract him.

Interest rates will likely shift some. Which will make deficit spending less attractive, financially. (Although politically it may continue to be popular, since politics are based more on emotions than on facts.)

But the only way you can claim that SS, when it sells t-bills, is taking money from Washington, is if you claim that Washington took the money when it sold them the notes.