I didn't realize just how lousy a deal Social Security is . . .

Aloha Hoosier

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until I did some quick calculations this morning. I'm 59 and I'm thinking about retiring (again) at 62, give or take. So I logged into my social security account and saw that if I elected to get payments at 62 I'd bet almost $2100 a month and if I delayed to 70 I'd get almost $3100 a month. I and my employers have contributed more than $310,000 so far. If I stuffed that money in a closet every year and didn't earn a penny of interest I could take out $2100 a month for 12 years and $3100 a month for 8 years. If that was the case, SS looks OK. However, using an investment calculator and a conservative interest rate of 6% (well less than an investment in the stock market would average over 40 years) and under estimating my average contribution per year, my account would be worth more than $7 million. Using a ridiculously conservative rate of 3%, it would be worth $3.5 million. If I withdrew $2100 per month I'd be able to do that for 138 to 273 years (3% return and 6% return amounts) and $3100 a month for 94 to 185 years. Of course if I had either amount of that I'd probably take out much more. I could take out more than I actually currently make each month if I wanted to and it would still last many more years than I have left on earth. I could throw in a couple of long international vacations each year too without sweating it. I could play Pebble Beach a few times every year to boot. Obviously, I make and contribute more than most Americans (currently, but most of my life my income was below to just above average), but even halving the calculations the account would be worth far more than what the average American will receive in benefits for the remaining 15 to 20 years of his/her life. Doing the calculations with the average American's income also shows Social Security is a lousy deal as well.

I've said it many times, and I'm more convinced than ever, that Social Security is a good idea, but it was set up in a ridiculously inefficient way making it a lousy deal for the majority of Americans. Thrift Savings Plans (TSP) for all Americans would be far more efficient and would prove lucrative to probably 80 to 90 percent of Americans. It would also be sustainable and not threaten insolvency for our federal government. The remaining 10% could be provided minimum Social Security safety net benefit.

My TSP is worth nearly $400K to date and I couldn't even have one until at least half my military career was over because military weren't eligible for them until then. If I had been able to contribute since I joined the military in 1985 it would probably be worth a couple mil. If I could have contributed from my first paycheck until now - it would be worth millions (see first paragraph). Once again, Social Security is a lousy deal for the vast majority of us.
 
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NPT

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Is the $310,000 including what your employer contributed? If not that seems really high.
 

Aloha Hoosier

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Is the $310,000 including what your employer contributed? If not that seems really high.
No, it includes employer contributions, which I should have stated and I edited it so it is stated. I'm assuming that if we switched to TSP for all, the employer contributions would switch to TSP too. My part is almost half of the $310K.
 

Aloha Hoosier

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I recommend everyone log in and see what has gone into your SS account and how much you'd get and do some calculations for yourself. It would be interesting to see if it's also a lousy deal for most or all of the posters here.
 
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Marvin the Martian

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I have played a lot with the calculator trying to guess when I can retire. It is a great tool.

Social security had a specific purpose, to provide something to people at a time almost no one had retirement accounts. It also was built to withstand a total market collapse, something very fresh in the minds of it's creators.

And largely the first problem still exists, a lot of Americans have no account or too little in it l. https://www.google.com/amp/s/www.cn...t-americans-have-tiny-retirement-savings.html
 

CO. Hoosier

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I have played a lot with the calculator trying to guess when I can retire. It is a great tool.

Social security had a specific purpose, to provide something to people at a time almost no one had retirement accounts. It also was built to withstand a total market collapse, something very fresh in the minds of it's creators.

And largely the first problem still exists, a lot of Americans have no account or too little in it l. https://www.google.com/amp/s/www.cn...t-americans-have-tiny-retirement-savings.html
Nobody has a vested SSA “account” as that term is ordinarily used. It isn’t “property”. It’s merely a government benefit and the benefit increases as you work longer and earn more. The whole idea of “lock boxes” and social security as an investment is just political mumbo jumbo. Remember too that Social Security provides benefits in addition to retirement such as disability income and support for minor kids if a covered parent dies.

In contrast, most state systems that are allowed as an alternative to Social Security are vested accounts and have some attributes of property.

As a comparison, my stoker’s teacher retirement benefit is approximately the same as my social security even though she has about half my years of service and less working income.
 

Marvin the Martian

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Nobody has a vested SSA “account” as that term is ordinarily used. It isn’t “property”. It’s merely a government benefit and the benefit increases as you work longer and earn more. The whole idea of “lock boxes” and social security as an investment is just political mumbo jumbo. Remember too that Social Security provides benefits in addition to retirement such as disability income and support for minor kids if a covered parent dies.

In contrast, most state systems that are allowed as an alternative to Social Security are vested accounts and have some attributes of property.

As a comparison, my stoker’s teacher retirement benefit is approximately the same as my social security even though she has about half my years of service and less working income.
So is the Colorado teacher plan separate from PERA? I know it has significant underfunding issues.
 

mcmurtry66

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Nobody has a vested SSA “account” as that term is ordinarily used. It isn’t “property”. It’s merely a government benefit and the benefit increases as you work longer and earn more. The whole idea of “lock boxes” and social security as an investment is just political mumbo jumbo. Remember too that Social Security provides benefits in addition to retirement such as disability income and support for minor kids if a covered parent dies.

In contrast, most state systems that are allowed as an alternative to Social Security are vested accounts and have some attributes of property.

As a comparison, my stoker’s teacher retirement benefit is approximately the same as my social security even though she has about half my years of service and less working income.
.
Good point on ssi/ssd etc. it’s an intergenerational transfer. I thought it was supposed to be dry by now
 

twenty02

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As mentioned..... there's more insurance as part of SS, than just the retirement benefit. It's also somewhat a form of life insurance and disability insurance.

It's also a transfer program.... not a forced savings program. Current workers pay the benefits for current retirees. For decades there has been excess revenue that exceeded the benefits paid.... and such excess was invested in govt bonds. There is now some $3 trillion in the trust fund today ($3T worth of Treasury bonds actually).....a record high. But...

These funds will slowly be depleted over the next 15 years or so as benefits begin exceeding revenue. Projections have the trust fund balance being drawn to $0 around 2035. Even after that, some 80% of benefits would still be paid.... even if nothing is done.
 

CO. Hoosier

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So is the Colorado teacher plan separate from PERA? I know it has significant underfunding issues.
K-12 teachers have a different system within PERA. Groups of public employees, such as higher Ed and state patrol also are sarate. Yes PERA is not very sound. As with most systems that are public and run by inept bureaucrats and politician, benefits were increased during the times of high interest rates. Now they are trying to repair the damage without cutting those benefits.
 

Stuffshot

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until I did some quick calculations this morning. I'm 59 and I'm thinking about retiring (again) at 62, give or take. So I logged into my social security account and saw that if I elected to get payments at 62 I'd bet almost $2100 a month and if I delayed to 70 I'd get almost $3100 a month. I and my employers have contributed more than $310,000 so far. If I stuffed that money in a closet every year and didn't earn a penny of interest I could take out $2100 a month for 12 years and $3100 a month for 8 years. If that was the case, SS looks OK. However, using an investment calculator and a conservative interest rate of 6% (well less than an investment in the stock market would average over 40 years) and under estimating my average contribution per year, my account would be worth more than $7 million. Using a ridiculously conservative rate of 3%, it would be worth $3.5 million. If I withdrew $2100 per month I'd be able to do that for 138 to 273 years (3% return and 6% return amounts) and $3100 a month for 94 to 185 years. Of course if I had either amount of that I'd probably take out much more. I could take out more than I actually currently make each month if I wanted to and it would still last many more years than I have left on earth. I could throw in a couple of long international vacations each year too without sweating it. I could play Pebble Beach a few times every year to boot. Obviously, I make and contribute more than most Americans (currently, but most of my life my income was below to just above average), but even halving the calculations the account would be worth far more than what the average American will receive in benefits for the remaining 15 to 20 years of his/her life. Doing the calculations with the average American's income also shows Social Security is a lousy deal as we

I've said it many times, and I'm more convinced than ever, that Social Security is a good idea, but it was set up in a ridiculously inefficient way making it a lousy deal for the majority of Americans. Thrift Savings Plans (TSP) for all Americans would be far more efficient and would prove lucrative to probably 80 to 90 percent of Americans. It would also be sustainable and not threaten insolvency for our federal government. The remaining 10% could be provided minimum Social Security safety net benefit.

My TSP is worth nearly $400K to date and I couldn't even have one until at least half my military career was over because military weren't eligible for them until then. If I had been able to contribute since I joined the military in 1985 it would probably be worth a couple mil. If I could have contributed from my first paycheck until now - it would be worth millions (see first paragraph). Once again, Social Security is a lousy deal for the vast majority of us.
Sounds like you may understand the math of investments and rates of return better than most. But I didn't see the word, "tax," in your post nor did I see anything about paying for others' benefits. SSS benefits are taxable as income of course, therefore lower than it initially looks like, and that always disappoints people (kinda like your first paycheck in high school from a burger joint when you see the withholding taxes on the paycheck stub).

I wish the government had actually been putting my personal "contributions" all those years into a special account just for me, but somewhere along the way I realized that my SSS "contributions" were just a another tax that went into some nebulous 4th-dimension place that had only the most tenuous connection conceivable to me.

I always assumed my "contributions" were going to pay for somebody else's benefits, not just me. You and I are both disappointed but perhaps for different reasons.
 

HooDatGuy

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until I did some quick calculations this morning. I'm 59 and I'm thinking about retiring (again) at 62, give or take. So I logged into my social security account and saw that if I elected to get payments at 62 I'd bet almost $2100 a month and if I delayed to 70 I'd get almost $3100 a month. I and my employers have contributed more than $310,000 so far. If I stuffed that money in a closet every year and didn't earn a penny of interest I could take out $2100 a month for 12 years and $3100 a month for 8 years. If that was the case, SS looks OK. However, using an investment calculator and a conservative interest rate of 6% (well less than an investment in the stock market would average over 40 years) and under estimating my average contribution per year, my account would be worth more than $7 million. Using a ridiculously conservative rate of 3%, it would be worth $3.5 million. If I withdrew $2100 per month I'd be able to do that for 138 to 273 years (3% return and 6% return amounts) and $3100 a month for 94 to 185 years. Of course if I had either amount of that I'd probably take out much more. I could take out more than I actually currently make each month if I wanted to and it would still last many more years than I have left on earth. I could throw in a couple of long international vacations each year too without sweating it. I could play Pebble Beach a few times every year to boot. Obviously, I make and contribute more than most Americans (currently, but most of my life my income was below to just above average), but even halving the calculations the account would be worth far more than what the average American will receive in benefits for the remaining 15 to 20 years of his/her life. Doing the calculations with the average American's income also shows Social Security is a lousy deal as we

I've said it many times, and I'm more convinced than ever, that Social Security is a good idea, but it was set up in a ridiculously inefficient way making it a lousy deal for the majority of Americans. Thrift Savings Plans (TSP) for all Americans would be far more efficient and would prove lucrative to probably 80 to 90 percent of Americans. It would also be sustainable and not threaten insolvency for our federal government. The remaining 10% could be provided minimum Social Security safety net benefit.

My TSP is worth nearly $400K to date and I couldn't even have one until at least half my military career was over because military weren't eligible for them until then. If I had been able to contribute since I joined the military in 1985 it would probably be worth a couple mil. If I could have contributed from my first paycheck until now - it would be worth millions (see first paragraph). Once again, Social Security is a lousy deal for the vast majority of us.
Quit your bellyaching we all know you’re sitting on that fat Navy pension.
 

twenty02

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The TSP is one heck of a deal. I’m already 6 figures into mine and have a heck of a lot of years to go. Cant wait to see what that thing looks like in about 2045.

Raging bull markets make everything look like titties and cream.

(Nothing wrong with TSP, but it's just a 401k system that buys index funds. Something most plans are fortunately doing today)
 
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UncleMark

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Social security had a specific purpose, to provide something to people at a time almost no one had retirement accounts. It also was built to withstand a total market collapse, something very fresh in the minds of it's creators.
Social Security couldn't have gotten off the ground as an actual vested retirement account without a huge injection of money from the very beginning. There would have been no money to pay the first recipients if the contributions were being socked away. Without that huge initial investment, the only way it could even exist was as a transfer scheme. The biggest problem was it was sold as a retirement program where benefits were tied to "contributions", when that really wasn't the case.
 

JamieDimonsBalls

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Raging bull markets make everything look like titties and cream.
a66018f26db5b1bda2e93deceb75fc20.gif

Stonks only go up
 
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Courtsensetwo

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Social Security couldn't have gotten off the ground as an actual vested retirement account without a huge injection of money from the very beginning. There would have been no money to pay the first recipients if the contributions were being socked away. Without that huge initial investment, the only way it could even exist was as a transfer scheme. The biggest problem was it was sold as a retirement program where benefits were tied to "contributions", when that really wasn't the case.
My grandparents never paid in a dime but were covered.
 

VanPastorMan

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until I did some quick calculations this morning. I'm 59 and I'm thinking about retiring (again) at 62, give or take. So I logged into my social security account and saw that if I elected to get payments at 62 I'd bet almost $2100 a month and if I delayed to 70 I'd get almost $3100 a month. I and my employers have contributed more than $310,000 so far. If I stuffed that money in a closet every year and didn't earn a penny of interest I could take out $2100 a month for 12 years and $3100 a month for 8 years. If that was the case, SS looks OK. However, using an investment calculator and a conservative interest rate of 6% (well less than an investment in the stock market would average over 40 years) and under estimating my average contribution per year, my account would be worth more than $7 million. Using a ridiculously conservative rate of 3%, it would be worth $3.5 million. If I withdrew $2100 per month I'd be able to do that for 138 to 273 years (3% return and 6% return amounts) and $3100 a month for 94 to 185 years. Of course if I had either amount of that I'd probably take out much more. I could take out more than I actually currently make each month if I wanted to and it would still last many more years than I have left on earth. I could throw in a couple of long international vacations each year too without sweating it. I could play Pebble Beach a few times every year to boot. Obviously, I make and contribute more than most Americans (currently, but most of my life my income was below to just above average), but even halving the calculations the account would be worth far more than what the average American will receive in benefits for the remaining 15 to 20 years of his/her life. Doing the calculations with the average American's income also shows Social Security is a lousy deal as well.

I've said it many times, and I'm more convinced than ever, that Social Security is a good idea, but it was set up in a ridiculously inefficient way making it a lousy deal for the majority of Americans. Thrift Savings Plans (TSP) for all Americans would be far more efficient and would prove lucrative to probably 80 to 90 percent of Americans. It would also be sustainable and not threaten insolvency for our federal government. The remaining 10% could be provided minimum Social Security safety net benefit.

My TSP is worth nearly $400K to date and I couldn't even have one until at least half my military career was over because military weren't eligible for them until then. If I had been able to contribute since I joined the military in 1985 it would probably be worth a couple mil. If I could have contributed from my first paycheck until now - it would be worth millions (see first paragraph). Once again, Social Security is a lousy deal for the vast majority of us.
GWB tried to get a deal where people could take just a portion of their SS contribution and put it in a private account so it would grow more and they could pass it along to their children as an inheritance. The left went nuts.
 
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Bulk VanderHuge

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GWB tried to get a deal where people could take just a portion of their SS contribution and put it in a private account so it would grow more and they could pass it along to their children as an inheritance. The left went nuts.
Actually, the Pubs went nuts. They couldn't agree on how to fund the temporary hole in the budget (cut benefits to the elderly, raise taxes, cut spending somewhere else, or go with a huge increase in the deficit) and infighting led to inaction, which led to the disapproval rating of the plan to soar to 64% across the country.
 
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Marvin the Martian

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Actually, the Pubs went nuts. They couldn't agree on how to fund the temporary hole in the budget (cut benefits to the elderly, raise taxes, cut spending somewhere else, or go with a huge increase in the deficit) and infighting led to inaction, which led to the disapproval rating of the plan to soar to 64% across the country.
That is the problem, any move of money out of the system causes the current system to collapse worse faster. So how can we make sure pasto's older parishioners keep collecting money while reforming for younger without raising taxes?
 

Aloha Hoosier

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That is the problem, any move of money out of the system causes the current system to collapse worse faster. So how can we make sure pasto's older parishioners keep collecting money while reforming for younger without raising taxes?
It's really hard to fix a Ponzi scheme when it goes bad. See Bernie Madoff. Of course his was illegal and participation was voluntary, but Social Security is legal and mandatory. Fixing Social Security will be hard, but it should be done.
 

Aloha Hoosier

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Actually, the Pubs went nuts. They couldn't agree on how to fund the temporary hole in the budget (cut benefits to the elderly, raise taxes, cut spending somewhere else, or go with a huge increase in the deficit) and infighting led to inaction, which led to the disapproval rating of the plan to soar to 64% across the country.
Republicans were at least willing to discuss it. Democrats refused to do even that. Our politicians are universally spineless.
 

Jg48

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I am in my 70s. I did not take social security until I I maxed it out. I worked into my seventies and did not need the additional income. I was more interested in the monthly the cash flow I would get than how much I would get over time. The difference in monthly income is significant. I also created a 401K. The two together put me in good shape for retirement.
I can't emphasize enough to you younger guys to develop a plan for retirement. One day you're young and invincible.... the next you're an old man. It happens in the blink of an eye. I have to give my wife most of the credit for our retirement, in that regard, She was the ant and I was the grasshopper.
 

hoot1

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It can be argued that Social Security is more important to all too many these days than the time when employers took responsibility for retirees by offering defined benefit pensions. Workers are increasingly responsible for their own retirement with many not doing a good job of it. Not planning for retirement and actually saving/investing even with 401 k accounts available to them leaves some admitting their retirement future as "not good".

Also changes in Social Security by our elected politicians isn't something they may see as a priority as the program is highly popular as this article points out. The article in part states the following,

Now in its 85th year, Social Security enjoys over 90 percent support among Democrats, Republicans and independents, according to an AARP survey of 1,441 people ages 18 and older.

The survey, conducted between July 14 and July 27, found near-universal support for Social Security: 96 percent of those polled regardless of affiliation said Social Security was either the most important government program or an important one compared with other government programs.

 

DANC

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Actually, the Pubs went nuts. They couldn't agree on how to fund the temporary hole in the budget (cut benefits to the elderly, raise taxes, cut spending somewhere else, or go with a huge increase in the deficit) and infighting led to inaction, which led to the disapproval rating of the plan to soar to 64% across the country.
Actually, you're wrong. The Democrats demagogued this issue just like they do everyting.

And the lapdog media fed the lies, thus leading to the unpopularity of the idea.

Democrats have never been for privately managed retirements funds.
 
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DANC

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It can be argued that Social Security is more important to all too many these days than the time when employers took responsibility for retirees by offering defined benefit pensions. Workers are increasingly responsible for their own retirement with many not doing a good job of it. Not planning for retirement and actually saving/investing even with 401 k accounts available to them leaves some admitting their retirement future as "not good".

Also changes in Social Security by our elected politicians isn't something they may see as a priority as the program is highly popular as this article points out. The article in part states the following,

Now in its 85th year, Social Security enjoys over 90 percent support among Democrats, Republicans and independents, according to an AARP survey of 1,441 people ages 18 and older.

The survey, conducted between July 14 and July 27, found near-universal support for Social Security: 96 percent of those polled regardless of affiliation said Social Security was either the most important government program or an important one compared with other government programs.

Of course they're all for it - they've paid into it all their lives.

Now, where's the poll for the IRA and 401k programs?
 

ce36ei

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A lot of the people I work with dont contribute hardly anything to their TSP. It’s insane. We’re talking people making easily at least 80k+ a year with a very low cost of living. Most everyone in my generation won’t be able to retire. It’s crazy how ignorant/stupid they are as a whole with this whole retirement thing.
 

IUJIM

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It's really hard to fix a Ponzi scheme when it goes bad. See Bernie Madoff. Of course his was illegal and participation was voluntary, but Social Security is legal and mandatory. Fixing Social Security will be hard, but it should be done.
The first thing is to raise the benefit age. In 1930, the average life expectancy for a man was 58. For women, 62. Yet the retirement age for SS was 65. Now, that is not a real good example, for several reasons. A better number to use would be the average life expectancy at age 65. Since its inception, the number has increased by about 5 years. Retirement age has increased by 1.5-2 years. So, raise full retirement age to 70. Pretty simple.
 

Bulk VanderHuge

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Actually, you're wrong. The Democrats demagogued this issue just like they do everyting.

And the lapdog media fed the lies, thus leading to the unpopularity of the idea.

Democrats have never been for privately managed retirements funds.
Let’s just agree to disagree, and you can go about your merry way being wrong. :)
 

DANC

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The first thing is to raise the benefit age. In 1930, the average life expectancy for a man was 58. For women, 62. Yet the retirement age for SS was 65. Now, that is not a real good example, for several reasons. A better number to use would be the average life expectancy at age 65. Since its inception, the number has increased by about 5 years. Retirement age has increased by 1.5-2 years. So, raise full retirement age to 70. Pretty simple.
The problem with that is, although life expectancy has increased, the shape of people able to work hasn't changed much. People then were not as obese as people are today (and I count myself amoung that crowd).

Expecting someone to work until 70 to collect their SS - especially those in the trades and manual labor - isn't realistic.

Required contributions to a retirement plan is the only real alternative, but the Democrats would never allow SS to be privitized.
 
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UncleMark

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The first thing is to raise the benefit age.
No, the first thing to do would be to raise or remove the cap on earnings that are subject to the payroll tax. It's beyond comprehension that a flat rate funding scheme is made regressive by exempting higher earners from paying the same proportion of their earnings into the system.
 

DANC

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No, the first thing to do would be to raise or remove the cap on earnings that are subject to the payroll tax. It's beyond comprehension that a flat rate funding scheme is made regressive by exempting higher earners from paying the same proportion of their earnings into the system.
We agree. How about that!
 
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UncleMark

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People then were not as obese as people are today (and I count myself amoung that crowd).

Expecting someone to work until 70 to collect their SS - especially those in the trades and manual labor - isn't realistic.
Exactly. The actual working class would be put in a world of hurt. My UPS driver at my last job was a young 50 something guy who had worked his ass off for 20+ years and was counting the days before he could start drawing his pension; his body was giving out on him.
 
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Marvin the Martian

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The first thing is to raise the benefit age. In 1930, the average life expectancy for a man was 58. For women, 62. Yet the retirement age for SS was 65. Now, that is not a real good example, for several reasons. A better number to use would be the average life expectancy at age 65. Since its inception, the number has increased by about 5 years. Retirement age has increased by 1.5-2 years. So, raise full retirement age to 70. Pretty simple.
The life expectancy at 65 is the best possible number. The question is, what age group do we raise it for? Should we send Mark back to work? The person retiring at the end of this year?

I see no problem with raising the age, but what age do we want to settle on for what they will see as getting screwed. That is where the politics gets really tough.

The financial problems of social security were more manageable the longer out they were dealt with. Raise a small amount here, cut a small amount there, and time compounding solves the rest. Our problem as a society is we cannot do anything until the crisis is here. Once the lookout sees the iceberg, avoidance requires extreme measures.
 

DANC

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Exactly. The actual working class would be put in a world of hurt. My UPS driver at my last job was a young 50 something guy who had worked his ass off for 20+ years and was counting the days before he could start drawing his pension; his body was giving out on him.
My friend from HS was a real jock and always in great shape. He worked for UPS. By the time he was in his late 50s, his body was shot. His back was so bad he could barely move.

My dad was an electrician and in good shape most of his life. But by the late 50s and early 60s, he couldn't do it anymore because he just couldn't get up and down. And, like everyone else who quit smoking at the time, put on weight. He went downhill fast.
 

Marvin the Martian

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The problem with that is, although life expectancy has increased, the shape of people able to work hasn't changed much. People then were not as obese as people are today (and I count myself amoung that crowd).

Expecting someone to work until 70 to collect their SS - especially those in the trades and manual labor - isn't realistic.

Required contributions to a retirement plan is the only real alternative, but the Democrats would never allow SS to be privitized.
I used to wonder if a different age for blue collar and white collar would work. But someone would just leave their white collar job to a blue collar job for 6 months to retire 5 years earlier.

But some formula where some professions accumulate points faster would make sense. We really should not encourage 70 year old roofers.
 
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