The shame of social security

[bytor2112]

Well kinda makes one rethink when we speak badly of governments role in intitlement programs, bigger government getting involved with welfare issues, health insurance by government, and so on doesnt it? sometimes we talk how bad,evil and intrusive our government is until it strikes home in our own back yard and someone we love really needs help from all the things we stand against.

If you truly have ever read any of my comments Jadams....you would know that I am not opposed to entitlement programs, nor am I opposed to health care reform.

If you would read and comprehend you would know that I am opposed to government waste and government that is over reaching. I have stated many, many times that I am all for small and effective government that does a few things very well.

I am desperately holding back the rude in my comments to you. Please take your head out of the sand and recognize that our government generally doesn't represent the will of the people very well.....stop thinking in terms of Republican and Democrat only or liberal and conservative and think logically and realistically for a change. This isn't a football game where you cheer for your favorite team regardless of how stupid the players are.....

[nbblood]

While I agree that I would be much more capable of handling my retirement money than the Social Security program is/would be, let's face some honest, cold, hard truths here. With the way our cultural financial discipline is these days, I'm guessing it would be a flat miracle if 10% of income earners invested the potential SS dollars. Instead, for the most part, people would spend the money and have absolutely no retirement pension without SS. Then society would be crying out that the government isn't securing their retirement and we'd all feel so, so sorry for those poor souls who failed to manage their retirement funds. Then the government would have some sort of program to support them, without the benefit of SS dollars coming in.

Now, don't get me wrong, I'm not a fan of the SS system. I would much rather privatize the system and let individuals manage it. Really I think Anatess has laid it out pretty well. I simply don't have faith in our society and culture, in general, to wisely manage retirement funds individually. I suppose we could still mandate withholdings into accounts that were individually managed, but access was restricted until qualifications were met, i.e., age, disability, etc., that it could work. I don't know.

The SS system is not a success. I think we agree on that. Problem is every time somebody tries to change it significantly, it runs into dead ends. I do exactly as Anatess suggested, I kiss that money good-bye every paycheck like I'll never see it again (cause I probably won't). Then I plan for my own retirement.

[nbblood]

No. Because, if you put that same exact money on a regular pension fund - plain vanilla, no bells and whistles, set it and forget it kind of pension fund.

Watch carefully...

- Say you are turning 30 years old next month.

- Say you start putting $360/month starting next month into a simple pension fund

- Say you don't intend to retire until you are 65

- Say you won't die until you are 90 years old... that's 25 years of retirement living

- Say the fund only made a measly 6% annual fund return (the current fund returns are at least 8%, but since you're going to be starting on a recession year, I'll give you 2% mark down just to be on the super conservative side)

- When you turn 65, your fund would have ~$500,000 give or take a few dollars.

- Divide that number by 300 months (25 years x 12 months), that will give you....

DRUM ROLL PLEASE...

~$1,600 per month

And guess what. If you die, you can will that money to your spouse or kids!

I love compounding interest when it's working for you instead of for some tax agency!

Yes, but.......keep in mind what $1600/month is going to be worth in 35 years. Probably won't pay the grocery bill. The lowest form of currency may be the $100 bill (ok, that's an exaggeration). Too many people plan their retirements on the value of the dollar today. Don't forget inflation. $1600/month in 35 years won't be much.

Don't get me wrong. That's done well with the monthly withholdings despite the VERY conservative estimates you used. Your point is well made and well stated. I just think it's also a point to think about what your dollar will be worth when you need it and withdraw it. Just something else to think about.

[Palerider]

If you truly have ever read any of my comments Jadams....you would know that I am not opposed to entitlement programs, nor am I opposed to health care reform.

If you would read and comprehend you would know that I am opposed to government waste and government that is over reaching. I have stated many, many times that I am all for small and effective government that does a few things very well.

I am desperately holding back the rude in my comments to you. Please take your head out of the sand and recognize that our government generally doesn't represent the will of the people very well.....stop thinking in terms of Republican and Democrat only or liberal and conservative and think logically and realistically for a change. This isn't a football game where you cheer for your favorite team regardless of how stupid the players are.....

Don't get to upset....its hard to do when you have a tanker truck full of kool aid in front of your home.....

[bytor2112]

Well, let's look at it this way. You get about $180 taken out every payday for SS+Medicare. That's $360/month. When you turn 70 you can get SS for at least $800/month. I don't know what the Medicare insurance would come out to, let's say $200, so that's $1000. So you'd be getting $640 basically free. Isn't that a good rate of return?

That's really not how it works. Social Security benefits are based on quarters of coverage and your last high five earning years. The problem is that Talisyn may not live to see a penny of the money she paid in all of those years and her heirs will only see a death benefit of $255.00...unless you have minor children.

JAG made the point about insurance. The problem with that is that our government has nearly bankrupt Social Security and the age to start taking benefits is rising as a result of THEIR malfeasance. While we bail out GM and redistribute other peoples earnings through programs like cash for clunkers and first time home buyer programs and spend millions to fly Nancy Pelosi's family around or whatever form of government waste and foreign aid makes you crazy.....people like my mom struggle along, when they are the ones that should receive the money. Oh, I didn't get $8k to help with my first home...did you?

I manage money for a living and the return on investment for social security really amounts to a loss. Why? Well, average inflation rates of 3% and taxes require that you earn a rate of return of at least 5% just to compensate for the loss of purchasing power. Remember that a dollar today is worth much more than a dollar ten years from today or thirty years from today.

There are so many better and safe ways to earn a greater return than the slightly more than 1% that is the reality of social security and you have control and the ability to pass on to your loved ones or favorite charity. Younger workers should have the option to invest a portion of their SS tax in to a private managed investment.

While the market was tanking, I was shorting the indices and earning near 100% returns for my clients. Opportunities abound....just not when we allow the government to control our money and our lives and they do so with careless disregard. If I treated other peoples money the way they do, I would be sued and fined for ethics violations.

Edited February 5, 2010 by bytor2112

[miztrniceguy]

i bought 1 yr too early to get the 8k

[bytor2112]

i bought 1 yr too early to get the 8k

Just wait till the recipients discover that the cash for clunkers and first time home buyers money is taxable as income.

Huh....what do you mean I owe??????? What the!!!!

[Palerider]

Just wait till the recipients discover that the cash for clunkers and first time home buyers money is taxable as income.

Huh....what do you mean I owe??????? What the!!!!

wait until they find out the "tax the wealthy" has now dropped to 150,000 minimum and its changed about 3 times since it was uttered from his mouth....

[bytor2112]

I couldn't agree with your more, bytor. It's ridiculous to have put that money in, and to not be getting it back, and as Talisyn explained, it's usually the wife who is not getting the entire amount she should be.

There's another rule of Social Security called the pension offshoot which also usually ends up penalizing the wife. Diane Feinstein was working on having that rule repealed, but I haven't followed it forever. As of today, I don't think it has been.

It's heartbreaking to hear about your mother. A clarification though, Vocational Rehabilitation is not part of Social Security, or at least it's not in Utah. Is it different in Florida?

I understand people's opposition to Social Security, but I thank Zeus for it every day as I am disabled. I am very happy with the benefits I receive, and can't imagine where I'd be without them. I am extremely fortunate.

Good luck to you and your mom.

Elphaba

Thanks Elphaba....and no Voc. Rehab isn't part of SS. I was just sharing.....had it not been for Voc. Rehab. my mom would likely be in a wheel chair or worse.

[Traveler]

Social Security is worse than a sham because by law citizens have to be victimized and pay into it. I did some simple calculations and anyone that was born the same year that I was and if we were just to get the money back till we die (with no interest) that we put into Social Security that with the life expectancy, if we retired at age 67 we would receive 70 thousand a year.

If insurance companies were to defraud it customers to any degree that the government does to every citizen that pays into Social Security, politician would demand such a fraud (ponzi scheme by every definition) be ended by law and every principle in the company tired for securities fraud and put in jail. It gals me that the current president (Obama – as well as many other in both major political parties) think that American citizens are so stupid and gullible to think that the government is more trustworthy protector of retirement trust funds and cares more about people than the evil insurance companies.

The Traveler

[Elphaba]

Just wait till the recipients discover that the cash for clunkers . . . is taxable as income.

No, it's not. The following is from the cars.gov FAQ, "Rebate, incentive and Tax question Section"

Is the credit subject to being taxed as income to the consumers that participate in the program?

NO. The CARS Act expressly provides that the credit is not income for the consumer."

However, sales tax may be assesed and this is also mentioned in the cars.gov website.

"Do I have to pay State or local sales tax on the amount of the CARS program credit?

MAYBE. The question of whether a consumer must pay State or local sales tax on the amount of the CARS program credit depends on the sales tax law of each State or locality. Consumers should review the law of their respective States or consult a tax advisor to answer this question."

Anyone who took the rebate and didn't read this information is personally at fault for not doing so. The government did not hide anything, and this information should not be a surprise.

Elphaba

[Churchmouse]

I worked under SS for about 20 years. I am due $810 per month. That's what anyone would get with that many years of service. I than went to college and became a teacher. Since I am receiving a teachers pension I forfeit a large part (over half) of my SS benefits.

It's called the "Windfall Elimination Provision". Noone else that receives a pension from an employer losses SS. It may have something to do with being employed by some level of government, I suppose. Noone at the local SS office seems to have an explanation. There are exceptions. If your pension comes from a railroad ( All of which are operating on taxpayer money) this doesn't apply to you. You get both. They must have a better union.

[bytor2112]

No, it's not. The following is from the cars.gov FAQ, "Rebate, incentive and Tax question Section"

However, sales tax may be assesed and this is also mentioned in the cars.gov website.

Anyone who took the rebate and didn't read this information is personally at fault for not doing so. The government did not hide anything, and this information should not be a surprise.

Elphaba

Thanks....my comments were supposed to be a joke:) but thanks for the info. What about first time home buyers?

[Elphaba]

What about first time home buyers?

Ya got me!

Elph

[skippy740]

Bytor,

"Paid into the system?" You sound like a Madoff victim!

Social Security is a Ponzi Scheme. Unfortunately, it's legal and collectable via the IRS, so no one refutes it.

Social security is NOT a "savings institution"! It takes money from the masses who pay into it and doles it out to people who are no longer working and meet criteria for eligibility. It will be broken and need fixing once there are more people receiving and less people paying into the largest legal & enforceable Ponzi scheme in history.

Now, I feel bad for your parents. But to keep a ponzi scheme alive, it needs to have certain rules like only paying out one benefit when a spouse dies.

BTW, even with the broken system, I'd guarantee that she's going to get MORE out of the system than she paid INTO it.

The reason it's broken is not just the government's lack of money management. It's about society's demographics. The baby boomers, just by the sheer number of them, will swallow up and eliminate the social security program as it is now.

[mrmarklin]

I'm 30 yrs old...aint no way in heck it'll be around when i get that old

You're right. But thanks for paying for me. I'm 62 and will need the money in a few years when I retire.

Sorry, but the whole system is a giant Ponzi scheme. Don't people get arrested and prosecuted for that?

[john doe]

You're right. But thanks for paying for me. I'm 62 and will need the money in a few years when I retire.

Sorry, but the whole system is a giant Ponzi scheme. Don't people get arrested and prosecuted for that?

Not when their name includes Senator and (D).

[Traveler]

Bytor,

.......

BTW, even with the broken system, I'd guarantee that she's going to get MORE out of the system than she paid INTO it.

The reason it's broken is not just the government's lack of money management. It's about society's demographics. The baby boomers, just by the sheer number of them, will swallow up and eliminate the social security program as it is now.

It is unlikely that after we adjust for inflation that anyone will get anything close to what they paid into SS.

There was an audit of SS by a world renowned economist under the Ragan administration. He concluded that two problems in government are causing the SS shortfall. First was to mix SS money with the general funds (something illegal to any private business – that is to mix investor money with company money without accounting for it on the books). Just for example a Real-estate Agent will go to jail for depositing “earnest” money into his private account – A special non interest account is required by law. But government does not follow its own advice.

The second was to spend the money without oversight. It was suggested that the executive branch of the government quit funding “black” secret operations (that do not have to be reported to congress) for the CIA with Social Security funds.

The Traveler

[boyando]

I'm inclined to agree.

It sounds heartless, but Social Security was conceived as insurance. Most of us are comfortable with the general principle that if you don't use insurance, you lose the money you've paid into it. That's how the system stays solvent--the ones who don't use it subsidize the ones who do.

Where a spouse has elected to stay home to raise the children and therefore has accrued no benefits under her (or his) own name, it makes sense that she should be allowed to claim her spouse's benefits in the event of his death. But where a widow has been in the workforce long enough to accrue full benefits for herself, then--provided the benefits are sufficient to attain the purposes for which the program was instituted (which is debatable, I suppose)--I find it difficult to justify allowing one person to claim the benefits of two. That's how programs go broke.

Many years ago, I studied to be an insurance salesman. The definition of insurance that I was taught; A group of people banning together, to protect against the loss of an individual or individuals, of that group. premiems are set by the predicted loss of the group and what is called loading.

Loading being the cost of running the insurance, including commissions, investigations and secretarial work.

SS is more like a annuity with out investment and out of control loading.

[Moksha]

Not when their name includes Senator and (D).

Are you implying these two items have something to do with NuSkin?

[bytor2112]

Many years ago, I studied to be an insurance salesman. The definition of insurance that I was taught; A group of people banning together, to protect against the loss of an individual or individuals, of that group. premiems are set by the predicted loss of the group and what is called loading.

Loading being the cost of running the insurance, including commissions, investigations and secretarial work.

SS is more like a annuity with out investment and out of control loading.

Of course, there are survivor benefits with an annuity.......

[Traveler]

Many years ago, I studied to be an insurance salesman. The definition of insurance that I was taught; A group of people banning together, to protect against the loss of an individual or individuals, of that group. premiems are set by the predicted loss of the group and what is called loading.

Loading being the cost of running the insurance, including commissions, investigations and secretarial work.

SS is more like a annuity with out investment and out of control loading.

I believe that by law the loading (overhead) for insurance must be held under 7% of what the insurance company takes in. It is interesting that the loading (overhead) for Social Security is about 60%.

The Traveler

[OmahaLDS]

Social Security is worse than a sham because by law citizens have to be victimized and pay into it. I did some simple calculations and anyone that was born the same year that I was and if we were just to get the money back till we die (with no interest) that we put into Social Security that with the life expectancy, if we retired at age 67 we would receive 70 thousand a year.

This is not true. Please do the math...

Social Security takes out 6.2% of your paycheck. Now one source I found says this is just the the first 90k, but another says it is the first $102k currently. For the sake of math let’s say it is total pay.

Now, Traveler says he would have $70k from 67 until life expectancy, currently 77 years.

Here is the data. At 6.2 percent of gross income, and assuming 50 years of working, that is determined as follows….

$70k/50=$1400 a year. This means that every year Traveler would need to put away $1400. If this is 6.2 percent of his gross income that equates to…

$1400/.062=$22,600

Now this is per year for a total of $70k at 67. But this is only one year of $70k. If he wants another $70k when he is 68, and another when he is 69, etc… he needs to multiply the salary by the number of years he wants to draw his $70k.

So to get $70k, from 67 to the average life expectancy of 77 (10 years) he would need to make $226,000 a year, for 50 years, starting at 17. The average income in the US is $44k. To make Traveler’s retirement goals he would need to make over 5 times the national average, consistently for 50 years.

Now your employer adds a second 6.2% for every employee, so let’s assume that Traveler is self employed. In this case simply divide by two, and Traveler would only need to make over 2.5 times the national average.

If my math is off here please let me know, but I do not think your numbers add up.

[OmahaLDS]

wait until they find out the "tax the wealthy" has now dropped to 150,000 minimum and its changed about 3 times since it was uttered from his mouth....

Unfortunately this is untrue. It never happened. There also is no $150,000 tax bracket.

Tax Brackets (Federal Income Tax Rates) 2000 through 2009 and 2010

There is a $171k tax bracket if you are single...

a $137k if you are married filing jointly

a $104 or $186 if you are married filing separately

a $117 or $190 if you are filing as head of household.

No $150k bracket, and nothing was raised three times. Sorry.

[OmahaLDS]

I believe that by law the loading (overhead) for insurance must be held under 7% of what the insurance company takes in. It is interesting that the loading (overhead) for Social Security is about 60%.

The Traveler

Why do you think the overhead is 60%? Source?