Cato.com: Social Security in the Red (today)

[JMS]

Easy for you to say...

In that case, by the time I should retire, the retirement age will be around 120 years old

It's a balancing act. You need so many people paying into the fund to balance so many folks drawing funds out. If the retirement age was say 120, that would mean you would expect to live to 140.

Usually tweeking it by a few months per decade has been enough to keep the fund in the black. Since Social Security was created the retirement age has grown only about two years. Started at 65, today it's 67. Like I said jumping it to 67 and six months and we'd be in the black for another decade..... It's a deal, not a big deal though.

[JMS]

Exactly. Such as the choice to allow me to invest that 6.7 percent as I choose

you mean 13.4 percent; because you employer matches your contribution up to the first $70k

(think it's still $70k).....

Social Security is a trust, not a checking account. Your money goes to pay the expenses of your parents as their checks went to pay the expenses of your grand parents and so on....

It's a deal one generation signs on to the next generation. If you "invest" your money; you are basically walking out on your parents..... That's why you can't do it. It would mean the previous generation who paid into the program in good faith wouldn't get their checks.

As I said, SS is wildly popular, and wildly sucessful; so I understand completely why the GOP want's to scrap it for potentially some quick fast money...... Never going to happen. Folks like Social Security too much.

[helptheSKINS]

The difference is if you let loose dick and jaine taxpayer on the market with say a few hundred billion a year; the smart market players will take their money.

If you pump federal reserve money into the financial institutes and then make them pay you back; you can still retire that money from the economy after a few years; and you haven't fundimentally corrupted your market.

And grandma and grandpa still get to live above the poverty line.

JMS, I understand your point about SS. It was a great program when it began. It had 25-30 people paying in for every person taking out. That numbers down to around 4-1 now I believe. As more baby boomers retire, that will continue to shrink. The fact is our elected officials (both sides) have ignored the problem and spent SS dollars on other programs. There is no fix for SS, only ways to delay the inevitable such as pushing the retirement age and raising taxes.

I’m 32, there is no doubt that I will pay in for as long as the program exists and get very little in return. I will most likely see a small percentage of what I paid in. People 45 and under will paying taxes instead of having the option to opt out and invest those tax dollars themselves. The result is this age group will be paying for the retirement of the baby boomers, not for themselves. The 45 and under group will not have enough money to retire because they will spend 30 years paying with a negative return.

The only “fix” is to allow those 45 and under to opt out of the program (their choice) and take their chances with the market. I would even be fine with making it law that the taxes they are no longer paying MUST go into an individual retirement account. That will ensure those in the 45 and under group continues to put money away is set aside rather than spent when they cash their paycheck. This will lead to SS shutting down earlier. It’s a better option than raising taxes on this group which results in even less money they have to take care of themselves in retirement.

The fact is baby boomers didn’t save as they should and the younger generations shouldn’t be held responsible for it. The baby boomers have allowed themselves to become dependent on SS. Younger generations should be given the option not to. If they want to continue to pay in, that’s their choice. If the program is broke when they retire, they have no one to blame but themselves. For those that opt out, they can get whatever benefits they have already paid in. If there’s nothing left, at least they have their IRA to fall back on along with additional retirement savings they have accrued.

[Skins24]

Usually tweeking it by a few months per decade has been enough to keep the fund in the black. Since Social Security was created the retirement age has grown only about two years. Started at 65, today it's 67. Like I said jumping it to 67 and six months and we'd be in the black for another decade..... It's a deal, not a big deal though.

Yeah, but then you have to deal with the boomers and increasing life expectancy. Tweeking it by a just few months isn't going to work any longer....

Plus, the President opposes raising the retirment age (as do I'm sure most people nearing retirement...)

[Larry]

Just raise taxes and get it over with. It's the only solution acceptable to the 3 headed monster.

Actually, Larry's solution would be "raise the retirement age".

Now, I don't think it's fair to suddenly "move the goal post" on people who were inches away from the goal line. I think it needs to be done gradually, so that people don't get suddenly hit by the change.

My solution would be:

No changes for the next two years.

Starting in the third year, retirement age goes up by 6 months, every year, until it reaches 70.

That way, somebody who's 64 right now, has no change.

If you're 63, then your retirement age is 65 1/2, instead of 65.

If you're 52, then retirement age is 70.

(Observing that, under The Larry Plan, the people who are my age will be the very first people to "get hit" with the full effect of the change. This change would hurt me more than any other age group.)

According to the numbers I've seen, raising the age to 70 makes the existing SS system good for the next 75 years, with no other changes.

(Also suspecting that raising the age for Medicare to 70 would save a bunch of money, too.)

[Larry]

The difference is if you let loose dick and jaine taxpayer on the market with say a few hundred billion a year; the smart market players will take their money.

That was my observation about Bush's plan to kill it.

I've read the statistic (which I suspect is one of those "factually accurate, but deceptive" statistics) that of all the privately owned stocks in all the stock markets in the world, 95% of them are owned by 0.1% of the people.

And I think that those people think it would be great if 500,000 newbies were to sit down at their poker table with $5,000 each.

[Fergasun]

I think I saw something suggesting 1 or 2 more % of employee contributions, no?

The problem is there are numerous government programs that need bailing out.

Fannie / Freddie, FHA, Medicare/Medicaid, and Social Security.

These are all going to suck Federal spending.

Did I mention interest payments on the national debt?

America needs to get our financial house in order, we needed to do this 10 years ago. But we haven't been able to say "no" to any spending or other government programs.

Was it last month Congress didn't pass the fiscal commission?

[Homercles82]

Usually tweeking it by a few months per decade has been enough to keep the fund in the black. Since Social Security was created the retirement age has grown only about two years. Started at 65, today it's 67. Like I said jumping it to 67 and six months and we'd be in the black for another decade..... It's a deal, not a big deal though.

So when do you draw the line on raising the retirement age?

[LaxBuddy21]

Could you imagine the panic that would have ensued after the two big stock market crashes had we privatized Social Security during Bush's Presidency?

Not any different than my 401k which is tied to the market. What does anyone who has a 401k do when the market dips like it did? They postpone retirement a few months (or possibly year or more) until the market rebounds and they can withdraw their money. If the stock market doesnt rebound, social security isnt going to save anyone because the country will be in turmoil anyway.

[Duncan]

The difference is if you let loose dick and jaine taxpayer on the market with say a few hundred billion a year; the smart market players will take their money.

If you pump federal reserve money into the financial institutes and then make them pay you back; you can still retire that money from the economy after a few years; and you haven't fundimentally corrupted your market.

And grandma and grandpa still get to live above the poverty line.

Grandma and grandpa are by far the wealthiest demographic in the country (pensions, homes are paid for, stocks, savings, etc.)

The "grandma has to eat dog food or go without her medication" rhetoric is getting pretty tiresome.

If "the greatest generation" and baby boomers are means tested for transfer payments you might be able to solve some of this mess. Set the income threshold right above the poverty line. Both generations are responsible for implementing these despicable ponzi schemes and its time for them to be held accountable.

[Peeping Wizard]

So when do you draw the line on raising the retirement age?

Probably never. I suspect that in coming generations the idea of retirement will be something we look on as a quaint memory of yesteryear. Kind of like the idea of working for the same company your entire career and retiring with a gold watch and a pension.

[NoCalMike]

Lift the cap on social security tax. Social Security solvent forever.

[GibbsFactor]

Yep. Gonna have to raise taxes.

Unfortunately, in this climate, it's a death blow.

No one wants to give anything up. We are going to crumble because we want all this **** but don't want to pay for it.

[J.Campbell17]

All higher taxes are gonna do is tick off the wealthy and slow the economy down even more.

A good suggestion would be to not give Social Security checks to those who don't need it. It's a waste of money otherwise and is only bankrupting America even more. As soon as other countries with huge markets agree with China and don't want to buy our bonds anymore, we will collapse on ourselves.

[mcsluggo]

Not any different than my 401k which is tied to the market. What does anyone who has a 401k do when the market dips like it did? They postpone retirement a few months (or possibly year or more) until the market rebounds and they can withdraw their money. If the stock market doesnt rebound, social security isnt going to save anyone because the country will be in turmoil anyway.

that is why we have BOTH social security AND 401-k type retirement plans. They are meant to be somewhat orthagonal to each other in terms of risk: SS is supposed to be the bear bones minimum, with very low risk or variability, this allows you to be a bit aggressive with 401-k type investments.

They are not an either/or trade-off. Personally I would love it if we KEPT ss much like it is AND introduced subsidized (matching) saving/retrement plans

[JMS]

The only “fix” is to allow those 45 and under to opt out of the program (their choice) and take their chances with the market. I would even be fine with making it law that the taxes they are no longer paying MUST go into an individual retirement account. That will ensure those in the 45 and under group continues to put money away is set aside rather than spent when they cash their paycheck. This will lead to SS shutting down earlier. It’s a better option than raising taxes on this group which results in even less money they have to take care of themselves in retirement.

That's not a "fix". That's a call to scrap one of the most sucessful and popular programs of all time. It's basically preying on folks fears, and capitalizing on the youngest who are least concerned with their retirments many years away...

The "fix" for social security is to tweak it up again, and continue to push out the red date. Pushing out the red date isn't and shouldn't be seen as a herald of impending doom. social security shouldn't ever have a huge margine of profit, like it had in the early days. It's ok to keep it with a slimer margin of profit and continue to tweak it when it goes periodically into the red.

The fact is baby boomers didn’t save as they should and the younger generations shouldn’t be held responsible for it.

The fact is baby boomers lived up to the generational deal which is Social Security. The fact is if 40 somethings abandon Social Security, that will be reniging on deal and impoverishing their parents....

The gold standard of debt in the world is the US governent bonds... Fact is our population is growing, not shrinking like the rest of the industrialized world. The doom and gloom peddlers on social security are all wet and not reality based. They want to get their hands on the nation's retirement money and are hoping to spook the herd and pick off the straglers. In the current system, everybody wins. In the system they propose, most folks will loose.

[JMS]

So when do you draw the line on raising the retirement age?

I think a few months will get us back to the black. I would rather have the age adjusted every 5-10 years as it has been since the 30's than jump it significantly in order to return ss to the days of 20-30% profitability.

I could see the age going up to 70 in the next 30 years.

[Skins24]

I could see the age going up to 70 in the next 30 years.

Don't think the life expectancy is going up that fast a rate. I could see 70 if the LE was around 90 overall.

People want to enjoy and do stuff upon retirement. 70 would not go over well with the public.

[Ghost of]

No one ever cared about deficit neutrality for the latest bill, it was a rhetorical weapon, that's all. In fact, with the magical thinking that usually accompanies policies such as this (or SS or Medicare or....xyz) it wouldn't surprise me if deficits were ignored or thinking about such concerns was "beneath" the motives and intentions of the advocates of such measures.

Remember, it's not YOUR money, tax cuts are "spending" to them, therefore they will simply reallocate (steal/coerce) what they need or borrow it and people will pony up to invest in their schemes because they are just so teh ahsum.

[Brad_Edwards_Fan]

Lift the cap on social security tax. Social Security solvent forever.

I have often wondered if this would be a positive or a negative....in my opinion if you lifted the amount they could pay in, you would have to lift the amount that they coulg get out. I wonder how much extra that could actually provide.

[helptheSKINS]

That's not a "fix". That's a call to scrap one of the most sucessful and popular programs of all time. It's basically preying on folks fears, and capitalizing on the youngest who are least concerned with their retirments many years away...

The "fix" for social security is to tweak it up again, and continue to push out the red date. Pushing out the red date isn't and shouldn't be seen as a herald of impending doom. social security shouldn't ever have a huge margine of profit, like it had in the early days. It's ok to keep it with a slimer margin of profit and continue to tweak it when it goes periodically into the red.

The fact is baby boomers lived up to the generational deal which is Social Security. The fact is if 40 somethings abandon Social Security, that will be reniging on deal and impoverishing their parents....

The gold standard of debt in the world is the US governent bonds... Fact is our population is growing, not shrinking like the rest of the industrialized world. The doom and gloom peddlers on social security are all wet and not reality based. They want to get their hands on the nation's retirement money and are hoping to spook the herd and pick off the straglers. In the current system, everybody wins. In the system they propose, most folks will loose.

There is no fix for SS. All you are doing by raising the age is delaying the inevetable. The generational deal is a bogus argument IMO. The current deal is for younger generations to pay taxes into a program that will not give the return the baby boomers are seeing. The baby boomers broke the generational deal by not saving enough outside SS to allow the changes needed to be implemented. Tens of millions have become dependent on SS for their survival. Saying my generation is breaking a deal because we don't want to pay into a system that won't be around when retire is selfish by the older generation, not the younger ones.

I'd be happy to repost the current retirement savings of the 45 and older group. They spent and spent rather than saving. Now I'm expected to pay more in taxes, money I could be putting into an IRA to support them. SS is broken beyond repair. Saying I'm breaking a deal because I want to be responsible for myself and my family rather than supporting the irresponsible is wrong. Just another example of the govt's ineptness.

[ABQCOWBOY]

I don't believe that raising the age of SS from 67 to 70 is a very good option. First of all, I think that if you do this, then you have to figure out a way to allow for Seniors to continue to support themselves for those additional years. It's difficult enough now to help Seniors stay actively employed beyond 60. The other unintended consequence we see from that is the fact that younger Americans, coming into the work force have fewer jobs from which to gain employment. I think you also figure that people are simply living much longer today then they were when the program was first set up. That's not a trend that is going to go away so the problem will continue to get worse as time goes on. I don't know that this would be the answer.

I also don't think that increasing the % taken out of everybodies check to compensate will work because a big part of this problem is not that we are not collecting enough taxes. A big part of this problem is that our own Government is pulling money out of Social Security and replacing those funds with Bonds. That's all well and good but our Government doesn't have the money to pay back the Bonds and even if they did, that would simply mean that they are going to print more money to pay them back. What does that mean? It means that the money newly printed does not have the same value of the money that was pulled out because the value of the dollar is less. Of course, that problem would be passed on to Seniors so the Government probably doesn't care about that but we should. If you removed the cap, all you are doing is increasing the money in the till that our Government can then turn around and use on whatever they wish. That won't work because we can't trust our own Government.

I know this. I know that this is a numbers game and the way you solve it is to bring in more tax payers who are contributing . This is a big part of why the Democrats want to give amnesty to illegals but that really doesn't solve the problem long term. All it does is solve the immediate problem. Long term, if you give amnesty, then you take on a boat load more costs in a lot of other areas that will show up eventually. Your only postponing the inevitable and increasing the scope of the problem. Unless you pass a law that says you can not take money from Social Security, then the whole process behind Social Security is going to fail.

The real problem, IMO, is that we are not a disciplined enough Nation to stop spending like drunken sailors and actually get back to conservative financial policy. We have to stop this business of just creating social programs for everybody and make Government cost effective. To me, the problem is two fold. You can't just keep growing Government and expect it to stay financially responsible or even affordable. The plain truth of the matter is that for every dollar spent, it costs money to pay for Federal Jobs and it makes money when jobs are created in the Private Sector. Making Government bigger is not the answer. There is a report published last year that said the Federal Government would borrow 46 cents of very dollar it spent. Folks, I don't know if you can stop the Government from spending because they pass their own laws and you can't know what is being spent on a day to day basis. I honestly believe that the only real way to control that is to limit the size of Government itself. Government must not be allowed to just expand beyond our ability to pay for it. This is why I no longer claim to be Republican. The whole Republican/Democrat thing is just a distraction from what the real issue is. I now claim to be a Conservative because both sides, DNC and GOP, are interested in expanding Government and not shrinking it. That, IMO, is a recipe for disaster.

The other thing that WE must do is control ourselves. This is not just about Government people. This is about Americans and our willingness to just keep feeding the pig. WE will not look at this problem and come to the realization that WE can not do all things for all people. Everybody, unless they are mentally or physically unable to work, must carry their own load. WE can not afford to keep millions of people on the tab because the system is not designed to do this. WE must have all citizens contributing into the whole or the balance is not there. Social Security can work and it has proven to be a successful implementation but you can't change the working model and expect it to sustain. WE must stop and re-think. That means WE must be financially responsible. WE must stop all the social programs and make people support themselves. WE must go back to work as a Nation and be responsible and productive in order to correct the problem. WE must support smaller Government and reduce the costs. WE must demand that our elected officials be responsible custodians of our resources. WE must vote them out if they abuse this. WE must not allow them to use political parties to dictate to us what is best and just blindly follow political agenda. WE must not be lazy and commit to putting in the effort to Govern ourselves. Our Government was never designed to just vote in officials and walk away from the process. It was designed for Americans to play an active role in Governing ourselves. The fact that too many of us have become lazy in this process is part of why Big Government can take advantage of us. WE must go back to work in this country and WE must not become the Nanny State WE have worked so hard to create over these past several years.

I don't expect this to be a popular opinion but I think the writing is on the wall. This can not sustain.

[JMS]

Grandma and grandpa are by far the wealthiest demographic in the country (pensions, homes are paid for, stocks, savings, etc.)

They might have a higher net worth, but they are also not drawing an income anymore.

The "grandma has to eat dog food or go without her medication" rhetoric is getting pretty tiresome.

Yeah, if grandma can afford people food she's due for a social security cut. Nice..

If "the greatest generation" and baby boomers are means tested for transfer payments you might be able to solve some of this mess. Set the income threshold right above the poverty line. Both generations are responsible for implementing these despicable ponzi schemes and its time for them to be held accountable.

What a warped way to discribe a system which lifted the majority of elderly above the poverty line and kept them there for nearly 8 decades.

You live in a black world, devoid of historical reality. It's a world I hope we never have to visit again... Luckly the vast majority of Americans agree with me, and not you on this one...

[JMS]

There is no fix for SS. All you are doing by raising the age is delaying the inevetable.

You are wrong.... Social Security can be tweeked indefinitely to keep us in the black. They've been doing so for decades, they can continue to do so. There is no reason for it to fail if folks don't loose their heads.

[JMS]

Don't think the life expectancy is going up that fast a rate. I could see 70 if the LE was around 90 overall.

People want to enjoy and do stuff upon retirement. 70 would not go over well with the public.

Social Security today kicks in at 67.... up from 65 in the 1930's. I could see it jumping to 70 in the coming three or four decades..... Life expentancy is going up, and uping the retirement age is one of the best ways to control the ratio of folks in and folks contirbuting.

I'd rather do that than depend on raising taxes alone.