Posted on 01/10/2018 8:07:57 AM PST by Oldpuppymax
If youre counting on Social Security to finance your retirement, youre in for a big surpriseand not the good kind.
Let me give you two reasons why.
One: Social Security is going broke.
And, two: Even if it werent going broke, it couldnt possibly cover the cost of a decent retirement.
Lets look at these two reasons in a little more detail, and then Ill propose a solution.
Social Security is going broke.
When this government program was set up in 1935, the average life expectancy was 60. But you couldnt collect your first check until you reached 65. In other words, most people didnt live long enough to receive Social Security. And most of those who did, didnt collect it for very long. Today, the average lifespan is 79. So now, most people do live long enough to receive Social Securityfor 10, or 20, or even 30 years.
Heres another important piece of information: When the program started, the ratio between worker and retiree was 159 to 1. That means for every one person drawing benefits, 159 were paying in. Today the ratio is 2.8 to 1. Get that? Weve gone from 159 workers supporting every retired person to fewer than three workers supporting every retiree. And its going down.
You dont need an advanced math degree to figure this one out: Social Security is spending more than its bringing in. Far more. Its own Board of Trustees has said that it will be bankrupt within twenty years.
That doesnt mean it wont exist. It means that either the government will pay you less than it promised, or it will have to raise taxes to make up the shortfall. Most likely, both.
Sounds about right for an entitlement program...
(Excerpt) Read more at thecoachsteam.com ...
Most likely .gov will just increase the national debt as long as there is a .gov—after that, it won’t matter anymore.
I’ve been saying this for years.
For every 1 retiree 2.8 (Let’s call it 3) are required to support. When those 3 retire, 9 will need to support them. When those 9 retire, 27 workers will be needed to support them. When those 27 retire, 81 workers will be needed to support them.
Right now there are 61 million on SS. Multiply that x3. 183 million. Now when those 183 million retire, as you can see, soon there will not be enough people in the USA to support retirees. Then there will not be enough workers in the WORLD to support retirees.
And people wonder why the Libs want unrestricted immigration.
an idiot.
SS is not part of my retirement plans (3 years and counting). If it is there, great I will do more traveling or upgrade the travel I do.
Anyone under 60 who thinks SS will be there for your lifetime -- forget it. People under 50 who think it will be there AT ALL -- forget it.
Most people should have a big goose egg for SS in their retirement plans.
Yep. I turn 66 in two years. I can live in central KY on SS alone when you factor in mine and my wife’s. And if they were to gut it, well, that would be the least of my problems because the country would be in civil war. The hot kind.
I used to say to my classmates in high school who were worried about US savings bonds not being honored by the government that if that ever happened, that would be the least of their problems.
There are two ways they may try to kick this can down the road:
1. For new recipients, keep moving the eligibility year back, like they’ve been doing.
2. For existing recipients, do math magic to keep the CPI percentage increase behind the REALY cost of living percentage increase. Eventually, SS will become a very small number relative to the actually cost of living. Imagine getting $3,500 a month in SS but the minimum wage is $100 an hour and the cost of living reflects that.
Sound crazy? Hop in your Delorean and go back to 1960 and ask the average person what they think about a $10 an hour minimum wage.
Agree. I’ve worked hard to make it a bonus for us, if it exists.
I'd bet that would get a reaction from Congress.
In other words, stick the knife in and then see which pig politicians squeal the loudest. That will reveal who has their fingers in our pie.
So let’s do a little math.
- Social Security started in 1935.
- You couldn’t collect until age 65, but the life expectancy at the time was age 60. As the article noted, most people didn’t collect, or collected for a short time. And, unlike a legitimate pension, if you die, the government keeps all the unexpended amount you paid in your entire life 00 not your beneficiary.
- When Social Security started, there were 159 workers supporting 1 retiree.
So where did all that money go that so many were paying into (159 to 1) along those who died without collecting much? Any responsible pension (read: legal) would be criminally prosecuted for administering such an absurd racket which fundamentally and structurally flawed.
If I had to bet, I'd bet that you're right. They'll try to print their way out of trouble. There is no other politically safe choice. And why not? That method worked for the Wiemar Republic.
>>I’d bet that would get a reaction from Congress.<<
It was floated by W: allowing a TINY % of SS to be invested by the owners. You would have thought they were talking about clubbing puppies and baby seals in the village square!
LOL. Ask Congress if they pay into the SS system. You may be surprised... and angered. Congress isn’t stupid, just as they exempted themselves from Obamacare, they, long ago, exempted themselves from Social Security.
You do not raise the retirement age and hoping everyone dies as you are stealing from those that were forced to pay into social security.
Our money is being stolen and the govt is the thief.
Look what you could have had.....
How Three Texas Counties Created Personal Social Security Accounts and Prospered
https://www.forbes.com/sites/merrillmatthews/2011/05/12/how-three-texas-counties-created-personal-social-security-accounts-and-prospered/#6f2c92143283
How Privatized Social Security Works in Galveston
http://www.nytimes.com/2011/09/18/us/how-privatized-social-security-works-in-galveston.html
The contributions are pooled, like bank deposits, and top-rated financial institutions bid on the money. Those institutions guarantee an interest rate that wont go below a base level, and could go higher if the market does well. Over the last decade, the accounts have earned between 3.75 percent and 5.75 percent every year, with an average of around 5 percent. The 1990s often saw even higher interest rates, 6.5 to 7 percent.
And those who retire under the Galveston model do much better than Social Security. For example:
A lower-middle income worker making about $26,000 at retirement would get about $1,007 a month under Social Security, but $1,826 under the Alternate Plan, according to First Financials calculations.
A middle-income worker making $51,200 would get about $1,540 monthly from Social Security, but $3,600 from the banking model.
And a high-income worker who maxed out on his Social Security contribution every year would receive about $2,500 a month from Social Security vs. $5,000 to $6,000 a month from the Alternate Plan.
Although both programs offer disability insurance, life insurance and retirement benefits, experts agree the methods and benefits provided by the programs are difficult to compare.
In a hypothetical calculation, Mr. Gornto said, an employee who earned $25,000 annually for 40 years could retire with a 20-year payout of $2,297 a month under the Alternate Plan. Under the same circumstances, an employee making $125,000 annually could retire with a payout of $11,490 a month.
Social Security benefits change depending on the yearly adjustment for inflation, the year of retirement, and the age of the worker. But at a maximum, a worker who retires in 2011 at age 66 could receive $2,366 a month in Social Security benefits.
This is fundamentally the same problem as Universal Basic Income (just supplied, with more complication, to a smaller percentage of the population than 100%):
When everyone gets $X/yr for free, $X/yr becomes the new $0.
In the case of SS, people _have_ put in money and get it back ... but all the additional “free” pyramid-scheme money they also get is inherently devalued, having been obtained (”stolen”) without direct involved effort. Ergo, when someone receives a SS check containing more than they “put in”, they’ve received “easy money” which is of little value. Ex.: mundane retirement homes are priced with the assumption that a buyer/renter will get “free” SS money, so that money is devalued to near-worthless (supply and demand rules), with the real value of the home being applied to what actually-earned income the customer has (as there needs be some kind of friction to limit demand for limited supply).
Lesson:
It’s not just that “socialism works until you run out of other people’s money”, it’s that “socialism devalues other people’s money until it’s worthless to redistribute.”
Because it is a Ponzi scheme.
But, when "those 3 retire," that original 1 retiree will be dead.
When those 9 retire" - likewise.
You are apparently forgetting that yes, people do eventually die.
Assuming that people begin paying into the system at 25, and retire at 65 (i.e., after 40 years), even if they live on average to 85 (i.e., another 20 years), only 2 workers (between 25 and 65) will have to support each retiree (between 65 and 85).
This is a simplification, to be sure, but illustrates the basic flaw in reasoning of your scenario.
Regards,
I would be all in favor of privatizing. Keep traditional social security for the older folks who are on it or soon will be, but privatize for the younger ones. They will make out much better, and if they die before they collect, their heirs would get that money. I liked W’s plan. Too bad it wasn’t given a chance. The dems used the ‘pushing grandma over a cliff’ lie.
I haven’t noticed anyone mentioning the bait and switch that was used to pass social security. It was challenged in the Supreme Court shortly after passage because the Federal government has no authority to create a retirement plan. The Supreme Court then declared that the social security contributions of workers was a “tax” as the government did have the authority to impose taxes. Hence the funds stayed in the “general fund” and were accessible to Congress and spent. There aren’t even any IOU’s because there was never a social security fund in the first place.
This is the same bait and switch that was used on the Obamacare mandate. The Supreme Court said that the federal government has no authority to force anyone to buy a product, therefore it was not a “penalty” but a “tax”.
It’s not just that an individual could do better with investing the money than the government did, it’s that the money was never invested, it was spent to buy votes.
Another factor to consider is that it used to be a good idea to have children to help provide/care for you in your old age. With the introduction of SS, that incentive to reproduce was eliminated. For parents, the incentive to ensure that their children were well educated and successful was eliminated.
The saddest thing is that all of the people who chose to not reproduce or to have fewer children did not save the dollars not spent on child-rearing for their retirement, because the children of the inferior “breeders” would be there to support them.
There is never anything good that comes from outsourcing your personal responsibility to the government. It was a ponzi scheme from the outset and the people implementing it knew it. And, we baby boomers didn’t realize how we were being scammed and didn’t do anything to correct it during our peak earning years.
The author is a visionary. What’s his take on which direction the sun rises?
Yer damn right “the hot kind”
It’s MY damn money, I want it.
Tired of people calling me a fool for wanting what is mine.
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