Social Security Going Bankrupt?

[Traveler]

Over a decade ago I had to register for Social Security.  This was before such efforts could be completed online.  I live in Utah that is somewhat white.  Never-the-less, I was surprised that I seemed to be the only “white” person registering for Social Security.  In addition, I seemed to be the only individual of retirement age as well as the only individual that spoke English.   I did not think much about it at the time but since I have learned that if a person is disabled, they can receive Social Security funds even if they are not a senior citizen.  In fact, even if they are not citizens.  There are a few stipulations.  If they were lawfully admitted, granted conditional entry, paroled into the US, refugee, granted asylum, a Cuban or Haitian entrant or deportation is being withheld.

Are the democrats (liberals – progressives) deliberately attempting to bankrupt Social Security?  Are the republicans doing anything to preserve Social Security?  With the southern border as open as it is, and refugee or asylum granted without any validation – I do not believe Social Security is sustainable.

 

The Traveler

[Still_Small_Voice]

In my estimate, I have paid around $51,000 into Social Security over my life of working and I will probably never collect it.

Give the Federal Government control of part of your retirement funds.  What could possibly go wrong?  Social Security is the biggest Ponzi scheme ever created in my opinion.

[LDSGator]

On 3/16/2024 at 11:15 PM, Still_Small_Voice said:

Social Security is the biggest Ponzi scheme ever created in my opinion.

Yup. It’s guaranteed to fail, just a matter of when. 

[NeuroTypical]

There's still plenty that could be done to save SocSec, but the trick is politicians having the political will to do it.  Because the fixes on the table won't be popular, and doing unpopular things cost votes.

[mikbone]

This is what the government shows me for my options. 

Im hoping the the 2nd coming occurs prior to Social Security failure.

[NeuroTypical]

 

And just like that, now I want to eat the rich.  

 

[Backroads]

On 3/16/2024 at 7:49 PM, Traveler said:

   I did not think much about it at the time but since I have learned that if a person is disabled, they can receive Social Security funds even if they are not a senior citizen.

One concerning incident I was involved with as a teacher was a family trying to get their kid declared disabled in order to get SSI. No one in the family worked (Mom, Dad, and Grandma) and relied on an assortment of programs to survive.

Kid had ADHD, which, if extreme enough, can qualify for a disability, sure.

The parents' strategy was to enroll him in online school to manipulate his school work and use that to try for an IEP (which apparently can help with SSI cases).

Kid didn't qualify for IEP because our only evidence of any learning issue was the parents not sending him to class and then obviously manipulating his school work.

Mom threw a tantrum, then complained in a mutual Facebook group how concerned she now was about finances since they couldn't rely on a 6-year-old's SSI.

[Traveler]

For those that are wondering, there is not a penny left in the Social Security trust fund.  What is left in that trust fund is an IOU from the federal government.  Sadly, that IOU is not referenced nor considered when the national debt is calculated.   It is perhaps the happiest place for the federal government to borrow money because there is no interest paid on the money that is borrowed from Social Security.

I am sure if you ask anyone in the Social Security Administration – they will tell you that Social Security is as secure as our borders.

 

The Traveler

[JohnsonJones]

On 3/19/2024 at 1:51 PM, NeuroTypical said:

There's still plenty that could be done to save SocSec, but the trick is politicians having the political will to do it.  Because the fixes on the table won't be popular, and doing unpopular things cost votes.

The easiest solution is the one they will not choose.

The easiest solution is to raise taxes on Social Security, and a simple method is to make it so there is no limit on how much you make that can be taxed.  If you make 2 million in a year, it is taxed for Social Security.  At the same time, do NOT increase the limits on how much one can withdraw.

This action right here would probably extend SS for awhile longer.

Secondary would be to simply raise the retirement age.  Raise it to 70 or higher.  That also would extend it.

Now, I note that I am waaay past the SS age already, so many would probably be saying...okay Boomer.  You got your cake and now you want to keep everyone else from getting theirs...or something like that.

I admit I've been blessed in this regard, but if I live as long as I plan (I plan to go over 100!! no idea if I'll ever make it though), I'll be facing those shortages right along with others who haven't started their SS yet.

I think the most likely thing that will happen is that the politicians will continue to kick the can down the road until we are about a week from it going away.  Then they will all scramble (like they do with the Budget recently) only to discover this problem isn't as easy to fix...and that will be it.

I only hope I have enough money in my retirement accounts that I can get by if that ever happens (though with my luck, all stocks will fail, the banks will go bankrupt, and all the rest of my money will be gone as well, at which point I can only hope the Lord has appeared and we are living in millennial bliss by that point)(.

[LDSGator]

3 hours ago, JohnsonJones said:

The easiest solution is the one they will not choose.

The easiest solution is to raise taxes on Social Security, and a simple method is to make it so there is no limit on how much you make that can be taxed.  If you make 2 million in a year, it is taxed for Social Security.  At the same time, do NOT increase the limits on how much one can withdraw.

This action right here would probably extend SS for awhile longer.

Secondary would be to simply raise the retirement age.  Raise it to 70 or higher.  That also would extend it.

Now, I note that I am waaay past the SS age already, so many would probably be saying...okay Boomer.  You got your cake and now you want to keep everyone else from getting theirs...or something like that.

I admit I've been blessed in this regard, but if I live as long as I plan (I plan to go over 100!! no idea if I'll ever make it though), I'll be facing those shortages right along with others who haven't started their SS yet.

I think the most likely thing that will happen is that the politicians will continue to kick the can down the road until we are about a week from it going away.  Then they will all scramble (like they do with the Budget recently) only to discover this problem isn't as easy to fix...and that will be it.

I only hope I have enough money in my retirement accounts that I can get by if that ever happens (though with my luck, all stocks will fail, the banks will go bankrupt, and all the rest of my money will be gone as well, at which point I can only hope the Lord has appeared and we are living in millennial bliss by that point)(.

Would you be open to privatizing SS for young people? 

[NeuroTypical]

4 hours ago, JohnsonJones said:

The easiest solution is to raise taxes on Social Security[...]At the same time, do NOT increase the limits on how much one can withdraw.

Secondary would be to simply raise the retirement age.

Yep, those are both ideas that could, individually implemented, kick the can down the road for another couple generations.

To solve the larger issue, that of a shrinking workforce, a growing retiree base, and a declining population, I'm in favor of doing some sort of privatization.  Pretty much any hypothetical math done by any economist all say the same thing: Folks would do far better by investing $$ in the market, than they do by giving it to the government who will 'take care of you' in return.  Astronomically better.  

Of course, we can't just ditch SSI taxes and force younger folks to save, because that would mean all the retired folks' SSI checks would stop.  So the solution there would have to be some sort of hybrid system that allows workers (and those entering the workforce) to both invest for themselves, and pay for the old people.  Probably also coupled with raising the retirement age.  And phased in over decades to ease the shock of transition.

[Traveler]

7 hours ago, JohnsonJones said:

The easiest solution is the one they will not choose.

The easiest solution is to raise taxes on Social Security, and a simple method is to make it so there is no limit on how much you make that can be taxed.  If you make 2 million in a year, it is taxed for Social Security.  At the same time, do NOT increase the limits on how much one can withdraw.

This action right here would probably extend SS for awhile longer.

Secondary would be to simply raise the retirement age.  Raise it to 70 or higher.  That also would extend it.

Now, I note that I am waaay past the SS age already, so many would probably be saying...okay Boomer.  You got your cake and now you want to keep everyone else from getting theirs...or something like that.

I admit I've been blessed in this regard, but if I live as long as I plan (I plan to go over 100!! no idea if I'll ever make it though), I'll be facing those shortages right along with others who haven't started their SS yet.

I think the most likely thing that will happen is that the politicians will continue to kick the can down the road until we are about a week from it going away.  Then they will all scramble (like they do with the Budget recently) only to discover this problem isn't as easy to fix...and that will be it.

I only hope I have enough money in my retirement accounts that I can get by if that ever happens (though with my luck, all stocks will fail, the banks will go bankrupt, and all the rest of my money will be gone as well, at which point I can only hope the Lord has appeared and we are living in millennial bliss by that point)(.

Greetings @JohnsonJones:

Back in the 80’s an international acclaimed economists (Milton Friedman) did an audit of the Social Security for then President Ragan.  His audit was somewhat unpopular – especially for the Democrats but it did upset Republicans as well.  Two of the biggest problems with the Social Security Department was the expanded use of the funds (for example the funding of Black Military Ops) and the exorbitant overhead costs (10 time the allowable overhead costs – by law – for privately funded retirement funds).

According to Friedman, there has never been a shortage of funds, rather poor management (including unfunded changes).  As near as I can tell - none of Milton's recomendations have been adopted.

 

The Traveler

[LDSGator]

11 minutes ago, Traveler said:

Greetings @JohnsonJones:

Back in the 80’s an international acclaimed economists (Milton Friedman) did an audit of the Social Security for then President Ragan.  His audit was somewhat unpopular – especially for the Democrats but it did upset Republicans as well.  Two of the biggest problems with the Social Security Department was the expanded use of the funds (for example the funding of Black Military Ops) and the exorbitant overhead costs (10 time the allowable overhead costs – by law – for privately funded retirement funds).

According to Friedman, there has never been a shortage of funds, rather poor management (including unfunded changes).  As near as I can tell - none of Milton's recomendations have been adopted.

 

The Traveler

Free to Choose should be read by everyone. 

[JohnsonJones]

1 hour ago, Traveler said:

Greetings @JohnsonJones:

Back in the 80’s an international acclaimed economists (Milton Friedman) did an audit of the Social Security for then President Ragan.  His audit was somewhat unpopular – especially for the Democrats but it did upset Republicans as well.  Two of the biggest problems with the Social Security Department was the expanded use of the funds (for example the funding of Black Military Ops) and the exorbitant overhead costs (10 time the allowable overhead costs – by law – for privately funded retirement funds).

According to Friedman, there has never been a shortage of funds, rather poor management (including unfunded changes).  As near as I can tell - none of Milton's recomendations have been adopted.

 

The Traveler

Maybe.

I think, as @Still_Small_Voice voice said, is that it's basically designed like a Ponzi Scheme.  It works as long as you have an ever increasing number of payers...the problem is the payer base is decreasing.  For any Ponzi scheme, that is normally the precursor to the death knell.

Obviously, others putting their hands in the pot does not help, but the root of the problem from what I see is that SS is reliant on more people paying into the pot than those who are taking it out.

In all honesty, the money I get from SS today is NOT the money I put in.  The money I put in was used LOOONG ago by those who were utilizing SS when I was paying into the pot.  The average lifespan increasing as well as the numbers going from bottom heavy (a LOT of younger workers supporting a lot fewer older retirees) has changed to a more equal numbers or in worst case scenarios (as us Baby Boomers are now retired and Gen-X looks to join in) to being top heavy means that the original idea of it no longer works to sustain itself long term. 

Like a Ponzi scheme the idea was that the larger younger generation would always be growing far larger than the older generation so you always had a larger growing number of investers vs. those who were taking things out at the top.

I've heard the same things as you in that thus far there has been no shortage of funds, but with how it is designed and how things are today, it is bound to fail sometime.  I have no idea whether it will last throughout my life or not.

On the otherhand I could die tomorrow which would mean I wouldn't need to worry about it (though my wife would have the paperwork to go through in that case), but the problem for everyone else would still be out there. 

I don't think privatization is really the answer either if we see what is going on with the 401K's out there today.  We have been fortunate with the Stock Market, but it's largely a gambling scheme with how people handle their stuff today and I'm not so sure that's the best way to do things either.  All it takes is a really massive crash that could take a couple decades to recover from and that will kill a WHOLE LOT of people who have 401K's for retirement.  Do that with SS as well and you could have a complete collapse of people's retirements.

Of course, perhaps we should consider going back to how society used to be centuries ago (and in some nations it is still like this today) where Kids live with their families until marriage (and sometimes beyond) and then they support their parents afterwards.  Of course, with how Western society is going over the past century, with a lot less respect and honor towards parents (a lot of vitriol among the younger generation for the older generation) and more independence with children from their parents that would be a very hard pill for Western society to stomach today. 

[NeuroTypical]

2 minutes ago, JohnsonJones said:

I don't think privatization is really the answer either if we see what is going on with the 401K's out there today.  We have been fortunate with the Stock Market, but it's largely a gambling scheme with how people handle their stuff today and I'm not so sure that's the best way to do things either.  All it takes is a really massive crash that could take a couple decades to recover from and that will kill a WHOLE LOT of people who have 401K's for retirement.  Do that with SS as well and you could have a complete collapse of people's retirements.

Heh - two choices:   1-The government will take care of you and make all the decisions.   2-People take charge of their own futures and some of 'em will screw up and ruin their futures.

401ks have been providing tax-advantaged reliable 4-8% returns since they were invented.  If you started investing at age 20, and then there's a massive crash when you reach age 65 and your account suddenly dropped 40% in value, you'd still have more money to pull out of it than you'll see back from social security taxes of the same amount over the same timeframe.

Investing in the stock market is no more a gambling scheme, than sticking cash in a coffee can, or buying gold, or investing in real estate.  Gambling is gambling.  There is no risk until you decide to gamble, then the odds favor the house.  Having money and doing something with it is not gambling.  The risk exists no matter what you do, you have say in increasing or decreasing your risk, but you can't eliminate the risk.

[JohnsonJones]

16 minutes ago, NeuroTypical said:

Heh - two choices:   1-The government will take care of you and make all the decisions.   2-People take charge of their own futures and some of 'em will screw up and ruin their futures.

401ks have been providing tax-advantaged reliable 4-8% returns since they were invented.  If you started investing at age 20, and then there's a massive crash when you reach age 65 and your account suddenly dropped 40% in value, you'd still have more money to pull out of it than you'll see back from social security taxes of the same amount over the same timeframe.

Investing in the stock market is no more a gambling scheme, than sticking cash in a coffee can, or buying gold, or investing in real estate.  Gambling is gambling.  There is no risk until you decide to gamble, then the odds favor the house.  Having money and doing something with it is not gambling.  The risk exists no matter what you do, you have say in increasing or decreasing your risk, but you can't eliminate the risk.

401K's have only been around since the late 1970s (1978??).  We haven't had a big enough crash in the US to actually test how vibrant they are yet.  WE have been fortunate.  We have not had that once in a century crash (some think 2008's recession was it, but it was no where close.  We have been blessed thus far to be able to get our way out of things before they get too bad).

WE haven't had an economic crash such as the Great Depression (or after that, the aftermath of World War 2 in Europe and parts of Asia, one reason why the US economy was so robust in the 1950s-1980s).  Those literally took a decade or two to get out of for each area.

Social Security is a result of one of those Economic crashes.  It's not a good look to have your elderly starving to death and dying on the streets (and worse than that).  Going back there have been other crashes similar to these in history, but nothing really recent.

If we had a crash like that, I would not gamble that the stock market would actually even necessarily survive.  If it did occur, we could be several decades before someone gets out of it.

It's not like a 40% crash (or even 50% which wasn't unusual for some accounts in 2008), but something like a 90% crash (how is that possible?  Some go down to 0 in worth, others are barely in subsistance, etc, but the big kicker are the big brokers and those who handle the retirements go broke and disappear which cause 99% of investosrs, the small investors, lose everything).  The stock market might survive and many come out on top, but it could also be that many of the financial services that HANDLE the stocks for the common person and those 401K and other accounts (another thing that came out of the Great Depression was insuring your bank accounts, but that's only to a certain amount which in no way would give me enough to survive my retirement today, much less future generations) go bankrupt and all your investments disappear with them (meaning most of the public lose their retirements, even if the more wealthy may actually get wealthier). 

This was what they were afraid could happen in 2008  (and may have happened to a large degree with at least a minority of the population without the interventions the government did) but managed to avoid. 

Which means, until it's actually tested by a REAL and LARGE economic crisis in the US (which also normally means people are literally starving on the streets, the homeless are quite visible, not just those tent cities, but people walking commonly, going door to door, etc), I don't know if the current ideas of 401K will actually survive and be good ideas.

We are due for one in the next 30-40 years, but I don't know when it will hit or if we will actually be able to postpone it.  Maybe it will hit at the same time SS crashes?  That could be a stimulus to push us over the edge into one. 

[NeuroTypical]

Sad but true.  In the case of global economic collapse, the downfall of our nation, or zombie apocalypse, our 401ks may or may not continue to generate 4-7% yearly returns.

I mean, I get what you're saying.  I was raised by a child of the great depression, and I'm aware that 3 generations of Americans have grown up in the greatest bunch of successful economic expansion ever experienced by humans.  The rest of human history is hardly as rosy.  And I'm sort of a similar mind that we're overdue for a massive Great Depression-like reset.  But Imma keep my 401k as central to my retirement planning, and Imma keep training my newly-employed kid to do the same.

[mirkwood]

I'll get screwed out of about 60% of my SSN because I will have a public safety pension.  There are currently efforts to change the laws that take away my benefits.  Not really holding my breath.

[Traveler]

In another thread I pointed out that current government handouts are framed on the data of the 1960 national census.  That data indicated that a transfer of 2% of GNP to the poor would end poverty.  We are not approaching 70% of government spending is assistance for the poor – and today poverty is as rampant today (or worse) than 1960.  I suggested that we follow the outline provided by Milton Freidman and his negative income tax.  With a slight adjustment for retirement and disabled – the negative income tax could replace Social Security and SSI.

I also believe that we should not worry about term limits but rather put all government employees and elected officials on a negative income tax program.  Some worry that certain elected officials need security protection – this could be provided through government housing on military bases.

This would immediately save our country 60% from what is currently being spent with the saving of similar in the tax burden on the citizens that pay taxes.  A great economic boom for the middle class that would have more benefits than a war economy.  It would also make our military much stronger and bring peace to a very troubled world. 

This may be what Jesus has in mind for the Millennium?

 

The Traveler

[JohnsonJones]

On 4/1/2024 at 10:34 AM, Traveler said:

In another thread I pointed out that current government handouts are framed on the data of the 1960 national census.  That data indicated that a transfer of 2% of GNP to the poor would end poverty.  We are not approaching 70% of government spending is assistance for the poor – and today poverty is as rampant today (or worse) than 1960.  I suggested that we follow the outline provided by Milton Freidman and his negative income tax.  With a slight adjustment for retirement and disabled – the negative income tax could replace Social Security and SSI.

I also believe that we should not worry about term limits but rather put all government employees and elected officials on a negative income tax program.  Some worry that certain elected officials need security protection – this could be provided through government housing on military bases.

This would immediately save our country 60% from what is currently being spent with the saving of similar in the tax burden on the citizens that pay taxes.  A great economic boom for the middle class that would have more benefits than a war economy.  It would also make our military much stronger and bring peace to a very troubled world. 

This may be what Jesus has in mind for the Millennium?

 

The Traveler

Isn't Negative income tax just another coin, or another side of the coin of Universal Basic Income? 

Experiments showed (on a quick look up) that it only returned a postive $1 for every $3 taxed on it.

It may be different if we restricted it only to those who were able to qualify for Social Security, but we'd still need a Social Security Tax in order to provide for it.

However, it is a considered by some a form of UBI, which many also consider another form of Socialism.

Personally, I'm not sure what I think of UBI or other ideas similar to it right now.  Some of the ideas sound off to me, so I don't think I'm in favor of it, but at the same time...in regards to Social Security, that's the only form of income some people have.

ON the otherhand, if we instituted Negative Income Tax, I probably would still be taxed on SS in my paycheck, but may not get a check from the government anymore in that sort of payment scheme. 

[Traveler]

4 hours ago, JohnsonJones said:

Isn't Negative income tax just another coin, or another side of the coin of Universal Basic Income? 

Experiments showed (on a quick look up) that it only returned a postive $1 for every $3 taxed on it.

It may be different if we restricted it only to those who were able to qualify for Social Security, but we'd still need a Social Security Tax in order to provide for it.

However, it is a considered by some a form of UBI, which many also consider another form of Socialism.

Personally, I'm not sure what I think of UBI or other ideas similar to it right now.  Some of the ideas sound off to me, so I don't think I'm in favor of it, but at the same time...in regards to Social Security, that's the only form of income some people have.

ON the otherhand, if we instituted Negative Income Tax, I probably would still be taxed on SS in my paycheck, but may not get a check from the government anymore in that sort of payment scheme. 

Thanks for your interest.  For best results and understanding I suggest you get your answers directly from the source – Milton Friedman.  Google will provide you with better information than I can.  When and if implemented properly there would be an immediate (at a minimum) surplus of 28% taxes.   The main idea of a negative income tax is that it is not an all or nothing.  Rather there is always an incentive to work and earn money in order to have an increase in disposible income.  The negative income tax would be on an sliding scale.  Also as I understand Milton Friedman there would still be opportunity for private charity in extreme cases.  This would help prevent an intitlement attitude. 

If I could add anything it would be that all income is taxed – even the income of the poor.   The reason I believe this is necessary is because then all citizens would have skin in the tax game (similar to tithing) and DC would be held more to account whenever they asked for more taxes.  I also believe that the extreme benefits that elected officials grant themselves would become much more unpopular.

 

The Traveler

[Emmanuel Goldstein]

Babylon is going to Babylon. 🤷‍♂️