Social Security Crisis?

[shostakovich]

George Bush has already perverted Medicare to a benefit for HMOs and Pharma. He is about to (try to) cripple Social Security so that it benefits companies in the stock market for sure while questionably helping the worker as it surely weakens S.S.s ability to cover its obligations.

The president has said he is open to ALL options for "strengthening" S.S., while precluding the one obvious solution that WORKS: increase withholding.

There is a real crisis in the country, and that is the debt. His permanent tax cuts exacerbate that crisis. He has pledged to cut the deficit in half in his second term. He lied to get elected. There is no way he can do it, and, moron though he is, he knows it. If our economy feels pretty good now, it is largely BECAUSE of the debt.

Crisis in S.S.? Fixable.
Crisis in the economy? Invisible to many.
Crisis in Iraq? You bet.
Crisis in the government? George Bush.

Unrepentant Bushbasher.

[PH]

hmm..this is a topic that is getting a lot of coverage lately because like the seasons its easy to forcast...SS has 40 million participating now..the boomers are coming of age to benefit from this pool and by the time their fully exercised it will add another 20 million..when President Roosevelt passed the social security act, he felt 62 years of age was a long enough time to finally get Fed (your money) relief..the mean mortality rate(MMR) was 48 years of age...a good bet at the time...but times have changed....the MMR now is 62 years of age and going up steadily...boomers live longer AND make more money than their predecessors...do the math...yeah I would say this is a crisis that will take drastic measures...and playing the stock market is a option but its high risk...the low risk gambit is taxes...and then raising the exercise age to 72 years of age, people already passed the age of 50 will be exempt to let it flow easier..these are the two front runner solutions...I'm sure there will be other suggestions from a lot politians and "spokespeople"....this is an issue all presidents have evaded till now.....Pres. Bush made campaign promises to fix this fiasco..we shall see..may you live in interesting times, indeed....BTW Roosevlt was 62 when he died [/QUOTE] art is never finished, just ignored [QUOTE]

[Marye]

Oh yes, Boomers will live longer. They are eating better, taking care of themselves and exercising regularly. Tsk... tsk. It's a nightmare.

Now, being a boomer myself (and living in Canada), I have done my part to make sure I check out on time with little lingering about. I smoked for 20 years, I carry some extra weight so my heart has to work harder. And I eat meat, work long hours surrounded by stress and I think exercise is a swear word.

But I digress...back to the subject at hand... Bush and Social Security.

Discuss

[rwcrooks]

Marye,

Don't worry about carrying a little extra weight. Remember that in times of famine, those people who carried the extra weight helped to ensure the survival of the species!

[barfle]

As one of those boomers (and fairly close to the leading edge), I know that I've been paying into the fund all my professional life. I also know that the fund has been tapped for general government operating expenses, so the idea of a "fund" is little more than fantasy.

FDR made some promises that may have made sense at the time, but he didn't foresee the baby boom, so the planning was deficient. Nonetheless, the promises have been made.

Now I think everyone knows how I feel about gummint handouts. I would be happy to receive my own payments back, with no compensation for inflation, how much that money could have made had it been intelligently invested, or the fact that I intend to live well into three digits.

I don't know what I'm going to get out of SS. Lots of people are trying to figure out how to tax GenXers and other productive workers so they can send me more money than I deserve until I die. Whether or not they'll succeed remains to be seen.

In the meantime, I've made my financial planning so that I'm not dependent on SS payments. To be sure, my standard of living will be better with the payments than without, and I'm also not so much of a dogmatist to keep my hands in my pockets when someone is handing out money.

IMNSHO, retirement planning is an individual's responsibility. I don't necessarily feel anyone is entitled to a comfortable retirement simply because they've continued to breathe for 6.5 decades (or any other arbitrary number). It's a phenomena many of us feel we deserve, and I know I'm looking forward to it, but all I really feel I deserve is my own money back.

The idea of allowing people to invest some of their SS funds in vehicles that may pay much higher dividends (or may lose the bunch) is a bit scary to those who feel the "security" in "Social Security" actually has meaning.

The Cato Institute has published several papers on the topic. SS as we know it is not sustainable. It needs to be revamped, and no doubt there will be people who feel they won't be getting what they deserve. I would naturally disagree with them.

[GreatCarouser]

This is from MoveOn.org and is an addendum to an online petition they are sending to members of Congress:

"° Social Security provides monthly benefits to some 44 million Americans who are retired, disabled or the survivor of a deceased parent. It provides most of the income for older Americans--some 64 percent of their support. It has lifted generations of seniors out of poverty.

° Social Security is not in crisis. That is an outright lie perpetrated in order to create the urgency for radical changes. Under conservative forecasts, the long-term challenges in Social Security do not manifest themselves until 2042. Even then Social Security has 70 percent of needed funds. That shortfall is smaller than the amount needed in 1983, the last time we overhauled Social Security. George Bush's Social Security crisis-talk is an effort to create a specter of doom -- just like the weapons of mass destruction claim in Iraq.

° Phasing out Social Security and replacing it with privatized accounts means one thing: massive cuts in monthly benefits for everybody. Social Security privatization requires diverting taxes used to pay current benefits into privatized accounts invested in risky stocks. Without that money Social Security benefits will inevitably be cut -- some proposals even cut benefits of current retirees. These benefit cuts are inevitable, since diverting Social Security money into privatized accounts means less money to pay current and future benefits.

° Every serious privatization proposal raises the Social Security retirement age to 70. That might be fine if you're a Washington special interest lobbyist but it is incredibly unfair to blue-collar Americans with tough, physical jobs, or for African Americans and Latinos with lower life expectancies.

° Privatization means gambling with your retirement security. There is probably an appropriate place for a little stock market risk in retirement planning -- but it isn't Social Security. Privatization exposes your entire retirement portfolio to stock market risks -- and the risk that you'll outlive any of your savings at retirement. You can't outlive your Social Security benefit.

° So who does benefit? Wall Street. Giant financial services firms have been salivating for decades over the prospect of taking over Social Security. Wall Street would make billions of dollars in profit by managing the privatized accounts -- money that would come directly from your benefits.

° Action is urgently needed today. President Bush and Republican leaders in Congress are joining forces with the financial services industry for a major campaign to convince the public there is a major crisis and pressure members of Congress to vote for privatization. Action is needed now before it is too late..."

What was the government paying for toilet seats a few years back? Social Security has always been an investment along the lines of a fixed annuity. Without arguing the morality/Constitutionality of 'forced participation' it has worked out pretty well providing fund members with income or a supplement once they reach payout age. The biggest problem with Social Security IMNSHO is the fund isn't shielded from pilferage/borrowing by our elected leaders. If this were say the Teamsters Union Pension Fund wouldn't Bush et al be under indictment for RICO or malfeasance? Not that our current President is the only culprit. Using Social Security as a money pit for projects certainly didn't begin with this administration.

I wish our 'leaders' would take a hint from the Teamsters. I wish they'd build a big casino in Vegas with some of the fund money. That ought to provide a fabulous return... as long as we could control the 'skim'.... maybe it wasn't such a great idea after all?

[Nicole Marie]

It needs a revamp but not into risky stocks as Bush would have it.

[Shapley]

I've been hearing that it's in crisis for as long as I can remember.

Ronald Reagan and George W. Bush are the only presidents with the guts to deal with it, and when they propose to do so, we're suddenly told it's not in crisis any more.

If President Bush leaves office without changing it, he'll be blasted for having failed to solve the crisis by the same people who're now telling us there isn't one. Damned if you do and damned if you don't.

It's time for the government to fix FDR's pyramid scheme we call Social Security, or get out of the retirement business altogether. Personally, I wish they'd get out of the retirement business altogether, but I don't see that happening. It used to be called supplemental retirement income, but too many people ignored the word supplemental, and expect to be able to live off of SS payments alone. Personal responsibility has gone the way of the whale. Privatization is the means of getting people, incrementally, back in charge of their own retirement.

I need another beer.

V/R
Shapley

[shostakovich]

From Barfle: "IMNSHO, retirement planning is an individual's responsibility."

I share your feelings on this exactly, but I doubt the majority have the discipline necessary, assuming they have the opportunity. Forced withholding is necessary.
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From Shap: "If President Bush leaves office without changing it, he'll be blasted for having failed to solve the crisis by the same people who're now telling us there isn't one. Damned if you do and damned if you don't."

I'm happy to blast him any time of the day or night. SS has a fixable problem. It is not in crisis. It is a good time to "fix" it. Bush has the opportunity. So far, so good. It's his solution (privatization) that is scary and WILL foment a crisis (for the recipients, not for Wall Street). He's a bastard because that's what he's driving for.

A reasonable and simple solution is to gradually raise the SS tax and the age limit, since we do have higher longevity. The second part poses its own problem since it will increase the number of workers waiting for the (not very) golden years.
I think Alan Greenspan suggested the same combination as a "solution", and fell from grace with the administration.
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Also from Shap: "It used to be called supplemental retirement income, but too many people ignored the word supplemental, and expect to be able to live off of SS payments alone. Personal responsibility has gone the way of the whale."

You are exactly right here, and many people will be unpleasantly surprised. I think we should also be concentrating on saving the whales. Instilling personal responsibility into the general public is a lost cause.

BUT
"Privatization is the means of getting people, incrementally, back in charge of their own retirement."

People being people, most need a keeper of the funds, especially when "spend now" is the everpresent retailers' message, endorsed by the government.
To be continued (no doubt) ------

<small>[ 01-14-2005, 02:36 PM: Message edited by: shostakovich ]</small>

[Nicole Marie]

I agree with you too Shap. I'm 27 and fully aware (for several years now) that there will be some terrible form of SS by the time I retire and it will not be enough for me to live. Folks need to do research and invest early. I'm glad I have a ROTH, 401K and real estate! If SS is around when I retire, it will only amount to a nice suprise of extra cash each month.

[barfle]

I'm inclined to blame a fair amount of people's failure to plan for their post-employment years is because of their belief in the SS system.

Almost every employer these days has a program where you can allot a certain sum every month to your own savings. I used to do this for my income taxes until my intelligent planning was penalized by the IRS (and not just charged interest on my non-withheld funds, PENALIZED. It's no longer cost-effective to use your brain). I still put the maximum I can into tax-deferred savings, and about half that much into regular savings. And I'm doing all the work remodeling my basement myself (not spending that money on labor, while improving the value of my real estate).

Deciding to save a few bucks isn't hard to do, but until I realized that SS was NOT something I could depend on, my "retirement fund" was just my house (which I've done fairly well on, but it won't fund me until I'm 110).

One thing a "safety net" encourages is people jumping. The problem with SS is that it's so full of holes, it won't save anyone's bacon on its own.

[Shapley]

Actually, I've always thought too many people confuse the safety net for a hammock.

Now, where did I put that beer?

[shostakovich]

From Nicole: "I agree with you too Shap. I'm 27 and fully aware (for several years now) that there will be some terrible form of SS by the time I retire and it will not be enough for me to live."

It is not enough to live on. That's now and in the future. I assume it was always true.
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From Barfle: "I'm inclined to blame a fair amount of people's failure to plan for their post-employment years is because of their belief in the SS system."

I think you have something there. Sensible people do not rely on SS alone. They now supplement that with other investments. If privatization takes place, people will only be doing what they should be doing anyway and lousing up SS in the bargain.
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From Shap: "Actually, I've always thought too many people confuse the safety net for a hammock."

Well put.
Shos

<small>[ 01-14-2005, 07:23 PM: Message edited by: shostakovich ]</small>

[analog]

Back to the future?

The 1935 act established SS as a savings program, gov't paid 3% interest and returned it to employees at 65, or to the employees' heirs.

1939 revisions made it more closely resemble insurance.
History at SS's site:

http://www.ssa.gov/history/reports/1939no2.html

<small>[ 01-14-2005, 11:23 PM: Message edited by: analog ]</small>

[BigJon]

A somewhat balanced article that glosses over some of the details. http://www.businessweek.com/magazine/content/05_04/b3917001_mz001.htm

I read recently an article on folks who have all sorts of domestic and financial problems. The author labeled them "disorganized in thought" and said they were unlikely to become more organized. Sometimes the problem of my fellow man make me weep.

BigJon

[analog]

Good article in business week , thanks.

This line from it caught my eye :
"Currently, ...., there's a surplus in the SSA accounts (although Congress spends every penny of it each year on other federal programs)."

That line agrees with what a 92 year old friend of mine recalls from the 30's - he says: "When they started Social Security they were astounded how fast the money piled in. It took the politicians no time at all to figure a way to change the law and get their hands on it - Social Security is a tax not a savings account".

I hope they are not out this time to rescue social security by a raid on existing 401's.

But i digress.

What i wanted to ask - is there a link to that article on the "disorganized in thought" ?

<small>[ 01-16-2005, 11:30 AM: Message edited by: analog ]</small>

[hal 9000]

:p

[Trumpetmaster]

Since the time I was a Kid (I'm 47 now) my parents said don't rely on SS.
SS was the only source of income for my grandparents and it was never enough.
That was back in the 70's.

I heard one of the reforms that Bush wants for SS is to dramatically reduce the amount of money you receive when you enter the system. Not a good thing but he is already re-elected.

My motto - Play Lotto.

Regards, Howard

[haggis]

"The 1935 act established SS as a savings program, gov't paid 3% interest and returned it to employees at 65, or to the employees' heirs."

The heirs? really? It's always been my understanding that in few limited exceptions (minors, etc) that when you died SS payments ceased.

I've been paying into SSA since 1965. by the currrent rules when I start drawing SS in six years I will depleted my total "contributions" in less than 10 years. Any payments I draw after that will be coming out of a (then) current worker's salary.

So, I think for those who are younger than me, an overhaul is probably due. The system is almost 70 years old, no other government program has existed that long without some adjustments.

[analog]

From that SS history site, chart of provisions in the 1935 bill:

<http://www.ssa.gov/history/1935chart1.html>

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5. Upon death of individual before age of 65, his estate receives payment equal to 3.5 percent of his total wages received after December 31, 1936; if he dies after age of 65, his estate receives the same amount less any benefits paid to him during his lifetime (sec. 208).

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Their intent was to see that a fellow got back a little more than he put in.


Before we baby-boomers receive all the blame, remember that it's not just old folks drawing SS. Surviving children, certain immigrants from Cuba, Haiti, & some SE Asian countries qualify as well. Not saying they shouldn't get help. The point is - SS is social insurance, not an old age pension plan. Now it's consuming 12% of payroll?