SS calculator

[oboe]

That's kind of harsh, Lazs.     Quite a few companies don't offer retirement benefits at all.    Minimum wage is what, $5.15 an hour?  Below the poverty line anyway.    How much of your below poverty wages are you going to set aside out of each check to save for retirement?   Your check already doesn't cover basic necessities like food, clothing, medicine, and adequate housing.
If you don't have enough for today's needs, why should you save for 30 years down the road?

[Krusher]

This SS calculator shows a different POV

[Krusher]

Originally posted by oboe
That's kind of harsh, Lazs.    

reality is harsh sometimes

[lazs2]

oboe... are you saying that there are people that work 30 years for five bucks an hour?  Most people make 3 times that or more when they get out of their teens or twenties.

If you made 5 bucks an hour and put 2 bucks a week into a 401 you would have more when you retired than all the SS sucked out of you would give you.

This is really silly.  No one makes minimum wage their entire life... if there are such people they could not possibly retire in any case.. they would have to die on the job.    How can you live on 5 bucks an hour in any case?   even if you could... would your SS benifiet have to be.... 100% of that to live on or what... 90% ??? who gets 100% of their wages from SS when they retire?

SS is useless.   I have allways figured that it was a really bad deal that my pay my phone bill and the electric bill when I retire.

lazs

[oboe]

I don't intend it to sound silly.  It should be a serious discussion.

But I think there are many people who work their whole lives at mediocre salaries and jobs who don't offer retirement benefits (my older brother being one of them).   When you've got a house payment, car payment, and gotta put food on the table and buy clothes for the kids there's not a lot left over to think about stashing away for 30 yrs down the road.   I think many people are in this situation.   (I think someone from the SSA estimated its nearly 1/3 of all workers).

You may not think highly of SS, but its going to be virtually ALL some people have in their retirement, sadly.

btw in your example, $2/wk saved for 52 weeks/yr for 30 yrs results in a future value just short of $7,000.     And odds are someone with that small amount of money to invest will not have enough to make the minimum balance needed to start a typical investment account, and not all companies offer 401Ks.   They might have to stick it in a traditional FDIC bank savings account, which pay less than 1% interest.

How can anyone possibly live on $5/hr?   I don't think its possible.   I read this morning that the Senate defeated 2 bills that attempted to increase the minimum wage.

[Toad]

So what would be wrong with holding an individual's social security contributions from both employer and employee in distinct "named" accounts?

These could even be in T-bills like they are now. However, the Feds couldn't play as fast and loose with the numbers.

When an individual retired, he'd have a known quantity IN HIS NAME.

[oboe]

Toad,

Every year I get a statement from the SSA that shows my contributions to SS and my expected payout after I retire.   Not sure what would be gained from the expense modifying the system to include my employers' contributions and holding the sums in distinctly named accounts.

I do believe a change like this would destroy the nature of SS as "social insurance".    (Insurance being the sharing of risk by a group of people).   But perhaps that is really the purpose behind the proposed private account changes after all?

[Toad]

Well, for one, I think it would introduce more accountability and honesty in the government's handling of the SS money.

Beyond that, it's a "known" quantity; if a guy worked all his life and had ...whatever... $100K in his personal account, it'd be pretty hard for the Feds to say..."Whoa, there! we're not going to be able to pay the benefits we said we would. We're only going to give you $50K." Think of it as "insuring" the benefit amount at some value.

Also it highlights the entire "shell game" nature of this system. As you say, it's "insurance" where we've all collectively promised to pay far, far, far more in insurance settlements than we collect in premiums.

How's that work, exactly?   How long can that go on?

[oboe]

I'm no expert in SS, but I *think* the problem is part demographic and part political.

Back when it was set up, with 16 workers per retiree, and retiree's expected to live oh, say 4 or 5 yrs after retiring, on average, the system collected more than was necessary to pay the benefits.

Along came the baby boom, and when they started working enmasse, then SS was really rolling in the Benjamins.   I think shortly after this was when the SS fund was mingled into the general fund (Nixon?) to help fund government spending.    That was a huge political mistake I think, and probably reinforces your distrust of the system?

Now as the baby boomers retire, fewer and fewer workers are in the workforce supporting retirees (I think we are down to 3 to 1) and retirees are living longer and longer after retiring (I think we are up to 7 or 8 yrs, on average).    I don't blame the SSA or the government for these demographic realities, but I do expect them to recognize them and make adjustments to ensure the system's viability, though not necessarily at current benefit levels for all retirees.

Your example 100K account probably isn't enough for a typical retiree.   That's less than $15,000/yr for 8 yrs.   What is that individual going to do after it runs out?

[Toad]

What's the government going to do when the money they collect isn't anywhere near enough to pay him?

It's all a shell game. And there is NO PEA under any of the shells.

[oboe]

After the projected exhaustion of the trust fund in 2042, SS would still be able to pay 70% benefits to retirees.   That's bad, and that's the cut we look at if nothing is done.   But its not what I would call "flat-busted" as Bush is fond of saying.

btw, I only trust these long term forecasts so far.   Lots can happen between now and then.   For example, it probably doesn't take into account the expanded offshoring of US jobs and the resultant depression of wages here.   That's going to hurt SS collections too, (and also the ability of people to save on their own for retirement).

[Toad]

The government is never right on its short-term fiscal forecasts. They are wide of the mark on the "worse case" side.

Why do you think their long range forecast will be anywhere near what you just posted?

Step back and look at it objectively, considering inflation and changes in technology and lifestyle, and it's clear that benefits are going to be cut significantly or else SS taxes are going to have to go way, way up.

To me, it's a question of accountability. If I put $100k (or whatever) into this system, where's my guarantee I'll get at least that much out?  I want a guarantee not a politician's promise.

Put it in my name, pay me interest... at least at T-bill level if nothing else. Then when I retire.. I want it back.

I much prefer a retirement account than an insurance policy with terms that can be rewritten every time Congress is in session.

[Martlet]

Originally posted by Toad
The government is never right on its short-term fiscal forecasts. They are wide of the mark on the "worse case" side.

Why do you think their long range forecast will be anywhere near what you just posted?

Step back and look at it objectively, considering inflation and changes in technology and lifestyle, and it's clear that benefits are going to be cut significantly or else SS taxes are going to have to go way, way up.

To me, it's a question of accountability. If I put $100k (or whatever) into this system, where's my guarantee I'll get at least that much out?  I want a guarantee not a politician's promise.

Put it in my name, pay me interest... at least at T-bill level if nothing else. Then when I retire.. I want it back.

I much prefer a retirement account than an insurance policy with terms that can be rewritten every time Congress is in session.

And one that you can leave to your family if you die before the payout.

[Toad]

Yeah.. that too.

I deposit $XXX,XXX into SS, my wife pre-deceases me and I kick off before collecting a single cent from SS......... what do my kids get?

Zippo from SS from my $XXX,XXX.

[oboe]

Originally posted by Toad
The government is never right on its short-term fiscal forecasts. They are wide of the mark on the "worse case" side.

Why do you think their long range forecast will be anywhere near what you just posted?

Step back and look at it objectively, considering inflation and changes in technology and lifestyle, and it's clear that benefits are going to be cut significantly or else SS taxes are going to have to go way, way up.

To me, it's a question of accountability. If I put $100k (or whatever) into this system, where's my guarantee I'll get at least that much out?  I want a guarantee not a politician's promise.

Put it in my name, pay me interest... at least at T-bill level if nothing else. Then when I retire.. I want it back.

I much prefer a retirement account than an insurance policy with terms that can be rewritten every time Congress is in session.

I am trying to look at it objectively.    It doesn't help to look at it any other way.    I reasonably expect benefits to be reduced and taxes increased.   The sooner we do it, the better.  And I have a healthy skepticism for all the long term forecasts, which I why I advocate, small, simple, cheap, and effective changes started as soon as possible, not the huge investment of borrowing 2-3 trillion dollars more to privatize the system.    Private accounts already exist in the form of IRAs.   Encourage and reward people to make use of those.

It sounds like you just do not approve of social insurance or Social Security the way it was set up to work.    What you describe is simply everybody saving for their own retirement on their own - like it was before SS.    We had lots and lots of old people living in poverty before SS.    In fact, the plight of old people then was one of the drivers to starting the whole social security system.   I think it might be a mistake to ignore that lesson of history.