Social Security Reform

[tempestuousepulchre]

I was discussing this issue months ago in one of my classes and didn't, at that time, think much of it; now, however, i have this sudden urge to talk about the complexities of the situation so that maybe i can have a better understanding of what's really going on in our country. The issue as i understand it is this: They baby-boomer population is far greater than that of other generations. Their inevitable retirement will require payments that exceed that which the present generation of workers can afford. It seems that someone is going to end up being wronged. One solution is to give people their retirement money in advance so that they can choose what it is that they want to do with it. How does this solve anything? Theory has it that most people will fuel the economy by spending their retirement money instead of investing. I understand that this solution exploits the detrimental tendencies that people have, but how else are we to fairly solve the situation? It seems very catch-22. I'd really like to hear what everyone else has to say so that perhaps i can more completely understand the situation.

[StoneGold]

My editorial contribution for the day.

http://www.stevelowry.com/images/damned_cover.jpg


And I used to get paid for that.

[MatthewC]

Hi! I too think this is an interesting subject.

The issue as i understand it is this: They baby-boomer population is far greater than that of other generations. Their inevitable retirement will require payments that exceed that which the present generation of workers can afford. It seems that someone is going to end up being wronged.

It's not so much a question, in my mind, of afford/not afford.

It's like any other government service paid for by taxes. In this case, the service is paying to support the elderly population so they don't, you know, die in the streets.

It's all a matter of trade-offs. You pay more money for the 'support the elderly' service, you have less money to build roads, fund schools, and conduct hunts for WMD in desert nations. The present generation of workers can 'afford' it; it's just a question of what else we won't be able to afford because we're paying for that.

One solution is to give people their retirement money in advance so that they can choose what it is that they want to do with it. How does this solve anything? Theory has it that most people will fuel the economy by spending their retirement money instead of investing.

But how does that solve anything? Right now the social security tax is going to support the _current_ generation of seniors. So basically you'd have to tax the boomers double; money to support the current seniors and then tax them 'their' retirement money, which you turn around and give back.

If you don't, then where is the money to pay out current retirement benefits to come from?

On solution I've heard that I like is to raise the retirement age. Say that we now expect people to work till 70 instead of 65.

[Shellhead]

Life expectancy has increased in recent decades, so I think that it would be very reasonable to raise the age for Social Security eligibility, and also continue the current practice of allowing earlier retirement for a reduced benefit.

My parents are in their early 60's, but they still work. I wish they could retire soon, but realistically, they can't and won't. Before modern times, old people planned on moving in with their kids when they got too old to fend for themselves. But the modern nuclear family model in western societies discourages that practice, instead expecting seniors to somehow save enough for retirement and eventually move into some sort of supervised care living arrangement. As american prosperity fades in the coming years, we may see a return to the old ways.

[K'Nort]

Gen-Xers were given a pretty strong expectation growing up that there just plain would be no Social Security by the time they were seniors. I'm noticing, however, that the whole dot-com prosperity thing in the 90s gave pundits -- and thus the next generation, the Millenials or whatever -- the idea that maybe Social Security can be dragged out after all. I'm still not counting on it.

And no one is wronged per se when it ends. Social Security isn't in the Constitution. It's one of those govt programs that is a nice gesture when feasible, but not an entitlement.

A major risk of letting people invest their own retirement funds has nothing to do with self-discipline. Regardless of best intentions and sincerity, the stock market can be a very volatile thing. And if it totally crashes and everyone loses their investments, then what? The trade-off incentive just isn't there.

Like Shell said, a huge factor is retirement age. When this program was set up, most people didn't live long enough to collect. And no one 'retired' until they were physically incapable of working. (Unless they were really rich but that's statistically insignificant.) The important part is that it was meant as an emergency safety net for seniors who had no other way to survive. And even then, just to cover necessities. Not some way of funding your "golden years."

[Alex]

And no one is wronged per se when it ends. Social Security isn't in the Constitution. It's one of those govt programs that is a nice gesture when feasible, but not an entitlement.

Yeah, nice gesture
"We're going to take money from you, spend it on our shit, maybe give it back to you, and you don't have a choice, because we can't trust you to take care of yourself.
Afterall, what are governments for if not to force people to take care of themselves?"

[Tages]

It's like any other government service paid for by taxes. In this case, the service is paying to support the elderly population so they don't, you know, die in the streets.
I remember what it was like before SSI. That happened all the time.

People above 65 constitute the wealthiest age bracket in the country.

[Tages]

Yeah, nice gesture
"We're going to take money from you, spend it on our shit, maybe give it back to you, and you don't have a choice, because we can't trust you to take care of yourself.
Afterall, what are governments for if not to force people to take care of themselves?"
...marry me.

[K'Nort]

Yeah, nice gesture
"We're going to take money from you, spend it on our shit, maybe give it back to you, and you don't have a choice, because we can't trust you to take care of yourself.
Afterall, what are governments for if not to force people to take care of themselves?"

Well it's not like I'm saying that when they drop Social Security they can nevertheless keep deducting it from paycheques. But they are allowed to drop it.

And I do think they're certainly for enabling people take care of themselves rather than doing it for them.

[Iangould]

I remember what it was like before SSI. That happened all the time.


Actually, they did.

[Iangould]

A major risk of letting people invest their own retirement funds has nothing to do with self-discipline. Regardless of best intentions and sincerity, the stock market can be a very volatile thing. And if it totally crashes and everyone loses their investments, then what? The trade-off incentive just isn't there.



Also, it's hard, and complex and has substantial costs attached.

Coming next, medicare reform: People are empowered to take control of their lives by performing major sugery on themselves.

[Brian M.]

How about the dam Government educated people on investing and saving the money. I want less government in my life. I want to be in control of the money I save. Bush had a good idea with personal savings accounts, it wasn't a perfect idea but it was a good start. Forcing people to save thier money isn't a bad thing.

[StoneGold]

How about the dam Government educated people on investing and saving the money. I want less government in my life..
Wow, contradicted yourself in exactly two sentences. I'm impressed.

[Alex]

...marry me.
You don't want to marry me, i've only slowly become more and more anti goverment control in my life.
It went Liberal who didn't know anything about politics- Republican who knew about politics but wasn't a real republican because no one in the party was actually representing what the party was about-independent-guy with beleifs but probably will never vote again because the libertarians can't find a good candidate.
I'm a sad, conflicted man Tages.

[Tages]

Actually, they did.
Amazing, my grandparents don't seem to recollect it, and I've seen nothing to suggest that this was the case. You'll forgive me if I'm skeptical of this apocalyptic scenario wherein selfish, greedy Americans, left free of the guiding hand of their benevolent elected officials, turn the elderly out into the streets in droves and watch them starve and die of disease in gutters while they blow the money on plasma televisions.

As I said, Americans age 65 and above constitute the wealthiest age bracket in the country. Social Security constitutes a net transfer of wealth from segments of society that live shorter to those with longer average lifespans in addition to the more obvious young-to-old transfer.

Also an interesting tidbit about SSI: the Roosevelt Administration originally planned on the program being able to completely pay off the national debt by sometime in the 1960s. Needless to say, this has not happened.

[Tages]

You don't want to marry me, i've only slowly become more and more anti goverment control in my life.
It went Liberal who didn't know anything about politics- Republican who knew about politics but wasn't a real republican because no one in the party was actually representing what the party was about-independent-guy with beleifs but probably will never vote again because the libertarians can't find a good candidate.
I'm a sad, conflicted man Tages.
There there, here's a lollipop with the words "Cool Guy" written on them in sugar.

[Alex]

Well it's not like I'm saying that when they drop Social Security they can nevertheless keep deducting it from paycheques. But they are allowed to drop it.

And I do think they're certainly for enabling people take care of themselves rather than doing it for them.
The vague investment plan is still a form of government control.
It's putting your money in a system thats basicly the same.
You could, theoreticly, earn more money, but you still have the same risk of not getting it.
A better idea, is let me keep my whole paycheck, and...i don't know...
Put the moneyin the bank?
Or maybe invest it myself! Without the government helping me invest it.

[Iangould]

Amazing, my grandparents don't seem to recollect it,

Did they live in Appalachia? How about Oklahoma? I'm assuming it's a fair bet they weren't southern sharecroppers.

You'll forgive me if I'm skeptical of this apocalyptic scenario wherein selfish, greedy Americans, left free of the guiding hand of their benevolent elected officials, turn the elderly out into the streets in droves and watch them starve and die of disease in gutters while they blow the money on plasma televisions.

Take a look at India or Brazil some time.

Also an interesting tidbit about SSI: the Roosevelt Administration originally planned on the program being able to completely pay off the national debt by sometime in the 1960s. Needless to say, this has not happened.

Damn that longer life expectancy.

[Tages]

Did they live in Appalachia? How about Oklahoma? I'm assuming it's a fair bet they weren't aouthern sharecroppers.
Midwesterners, mostly.

Take a look at India or Brazil some time.
India and Brazil are developing countries with a fraction of our per capita GDP. The comparison is absurd.

Damn that longer life expectancy.
And the federal government since Harding being generally disinterested in reducing the national debt, along with the general tendency for government programs to expand and endure decades beyond their expected limitations.

[Shellhead]

You don't want to marry me, i've only slowly become more and more anti goverment control in my life.
It went Liberal who didn't know anything about politics- Republican who knew about politics but wasn't a real republican because no one in the party was actually representing what the party was about-independent-guy with beleifs but probably will never vote again because the libertarians can't find a good candidate.
I'm a sad, conflicted man Tages.

Bi-political... like bi-sexual, only different. :0

[Alex]

Bi-political... like bi-sexual, only different. :0
I'm in support of bi-political rights.
It's why i can't join a party.

[K'Nort]

The vague investment plan is still a form of government control.
It's putting your money in a system thats basicly the same.
You could, theoreticly, earn more money, but you still have the same risk of not getting it.
A better idea, is let me keep my whole paycheck, and...i don't know...
Put the moneyin the bank?
Or maybe invest it myself! Without the government helping me invest it.

And you're willing to not ask for help if you lose it all? Even if it's due to circumstances beyond your control? Banks fail.

[Alex]

And you're willing to not ask for help if you lose it all? Even if it's due to circumstances beyond your control? Banks fail.
Asking for help is one thing, having a crutch is another.
I don't want the government there to pick up the pieces because it makes me more inclined to knock them over, since i have a ready made backup.

[K'Nort]

You'll forgive me if I'm skeptical of this apocalyptic scenario wherein selfish, greedy Americans, left free of the guiding hand of their benevolent elected officials, turn the elderly out into the streets in droves and watch them starve and die of disease in gutters while they blow the money on plasma televisions.

Take a look at India or Brazil some time.

Do you mean they have some sort of growing rich-poor gap and little or no social services? That's what it sounds like but I'm not up on either place.

[Iangould]

Do you mean they have some sort of growing rich-poor gap and little or no social services? That's what it sounds like but I'm not up on either place.

I mean they have very limited pension schemes; a wealthy elite that can and does buy plasma screen TVs - and elderly beggars dying in the streets on a regular basis.

The income levels in Brazil BTW probably aren't that far away from what they were in the US at the time Social Security was introduced.

[Calybos]

Social Security's a great idea. It's what a civilized society does to shield its oldest and weakest members from the abuses of rampant, unregulated capitalism, and provide them with a modicum of decent care and dignity.

As to how to fix it: remove the freakin' cap on deductions for higher income levels. Problem solved.

As Wanda Sikes put it: "Social Security critics say we don't need the government to provide a safety net for us, because we're smart enough to handle our finances ourselves. Riiight. Last year, Americans spent $48 billion on lottery tickets. Now THERE's a retirement plan."

[Shellhead]

Social Security's a great idea. It's what a civilized society does to shield its oldest and weakest members from the abuses of rampant, unregulated capitalism, and provide them with a modicum of decent care and dignity.

As to how to fix it: remove the freakin' cap on deductions for higher income levels. Problem solved.

As Wanda Sikes put it: "Social Security critics say we don't need the government to provide a safety net for us, because we're smart enough to handle our finances ourselves. Riiight. Last year, Americans spent $48 billion on lottery tickets. Now THERE's a retirement plan."

Good points, especially regarding the deduction cap. But in the old days, civilized people let their elderly parents stay with them, because most people were unable to save up enough money to retire and live off savings.

[K'Nort]

Good points, especially regarding the deduction cap. But in the old days, civilized people let their elderly parents stay with them, because most people were unable to save up enough money to retire and live off savings.

I'm fine with society in general looking out for the elderly who weren't fortunate enough to end up with civilized kids. And hell, they don't all have kids. And that number is growing. People without children or even nieces and nephews. Who has any sort of obligation to take care of them?

[Shellhead]

I'm fine with society in general looking out for the elderly who weren't fortunate enough to end up with civilized kids. And hell, they don't all have kids. And that number is growing. People without children or even nieces and nephews. Who has any sort of obligation to take care of them?

That's a tough question, and I hope the eventual answer doesn't involve Soylent Green.

[Calybos]

Okay, THAT's a good one! Made me laugh.

[tempestuousepulchre]

Social Security's a great idea. It's what a civilized society does to shield its oldest and weakest members from the abuses of rampant, unregulated capitalism, and provide them with a modicum of decent care and dignity.

As to how to fix it: remove the freakin' cap on deductions for higher income levels. Problem solved.

As Wanda Sikes put it: "Social Security critics say we don't need the government to provide a safety net for us, because we're smart enough to handle our finances ourselves. Riiight. Last year, Americans spent $48 billion on lottery tickets. Now THERE's a retirement plan."


The lottery bit is a good example of why it's probably not in the best interest of people for Social Security to be done away with. People of the middle and lower classes are the ones most benefited by the program because the wealthy are usually adept at producing more money from what money they have. Although it is true that the wealthy fuel the economy quite a bit, their expenditures are usually well-advised (for example, they will ascertain that they have sufficient money for retirement before buying their $20,000 shower curtains. Removal of social security will eliminate the present safety net designed for those who aren’t as well-advised in matters of investment. The results will eventually prove beneficial for the wealthy, primarily businesspeople because the money that would have been spent incrementally after retirement is now fueling the economy. The removal of social security is not something that will benefit the middle and lower classes, the question, however, is whether there is a better way to deal with the issue than the one I mentioned. I like shellhead’s suggestion for increasing the retirement age. I would, of course, have to look at the details. Although I agree to some degree with k’nort in the claim that the stock market is very volatile, I think the reason most people wouldn’t invest is because people, especially of the lower class, don’t have the resources or knowledge, readily available to the wealthy, to make well-advised decisions.

[Rik Levins]

I seem to recall hearing somewhere that the next generation (after Gen X) is the most numerous yet, even more populous than the Baby Boomers. If that's true, then where's the problem?
Or am I misremembering...?

[JTLauder]

There's another catch in this whole Social Security problem: Government workers pay no social security tax--at all.

Does that mean they get no social security when they retire? Unless they have worked for non-government companies to have contributed social security tax at some point--yes, they do not get any social security.

BUT they get a government pension--a VERY generous pension based on their salary, which is usually significantly higher than equivalent jobs outside the government. SOOOO....not only do they not have to pay taxes to fund the dwindling social security program, they are siphoning tax money from elsewhere.

[Calybos]

So are you suggesting that we need to restore private pensions to their former status, equivalent to government pensions?

Or that government workers should pay into SS the way everyone else does?

[JTLauder]

I'm not smart enough about national economics to make any kind of suggestion in either direction. I'm just saying, that the current setup with government workers not contributing to SSI yet still draw a government pension without having to pay any money into it is part of the problem. But no one ever seems to mention that.

Or maybe I'm just ranting about how much government workers are overpaid.
I know one city worker who retired at 55 just so she can draw her pension. She was a director for her department with a very tight reign over her domain, so obviously there were things she knew that no one else knew how to do. So a few months after "retirement", she offered her services as a consultant. So not only is she drawing her huge fat pension check, she's getting paid even more now as an expert consultant.

[StoneGold]

I'm not smart enough about national economics to make any kind of suggestion in either direction.
Like any of the rest of us are.

[SOGG]

I'm not smart enough about national economics to make any kind of suggestion in either direction. I'm just saying, that the current setup with government workers not contributing to SSI yet still draw a government pension without having to pay any money into it is part of the problem. But no one ever seems to mention that.

Or maybe I'm just ranting about how much government workers are overpaid.
I know one city worker who retired at 55 just so she can draw her pension. She was a director for her department with a very tight reign over her domain, so obviously there were things she knew that no one else knew how to do. So a few months after "retirement", she offered her services as a consultant. So not only is she drawing her huge fat pension check, she's getting paid even more now as an expert consultant.

US Federal Government workers may elect to pay into either social security OR the federal retirement system. Local gov't employees may have alternative retirement plans. Galveston, Brazoria, and Matagorda counties are exempted from paying social security, instead paying into an alternative pension scheme.

Source (http://www.ssa.gov/)

[JTLauder]

US Federal Government workers may elect to pay into either social security OR the federal retirement system. Local gov't employees may have alternative retirement plans. Galveston, Brazoria, and Matagorda counties are exempted from paying social security, instead paying into an alternative pension scheme.

Maybe it's different in each local government agencies. I know a lot of people who work in our city and county offices--and they don't pay SSI and they don't have to pay anything into their pension packages either. They get everything for free when they retire. But then they are all unionized too. They are always waving their benefits packages and their elevated salaries in my face while at the same bragging about how incompenant everyone they work with are and how little work they have to do, and it doesn't matter because no one can get fired outside of committing an obvious crime. And there's a reason why you can't ever reach anyone on a Friday--because half of the offices don't work on Fridays. Maybe I am crazy for not giving in and refusing to work for any government agency.

[SOGG]

Maybe it's different in each local government agencies.
<snipped for space>


Maybe. But that site's all I got...