entitlement

[ttocswob]

Curious - just skimmed a relevant post on the topic:

Social Security is NOT An Entitlement from the Government - Contrary to the Propaganda MSM and the Government are Spewing right now! Here are the FACTS about Social Security!

Among other things, she points out that since its inception, SS has taken in 13.8 trillion, and only paid out 11.3 trillion. Interesting...

(I don't vouch for any of this, just throwing a little gas on the fire!)

Edited July 29, 2011 by ttocswob

[Jonnin]

Curious - just skimmed a relevant post on the topic:Social Security is NOT An Entitlement from the Government - Contrary to the Propaganda MSM and the Government are Spewing right now! Here are the FACTS about Social Security! Among other things, she points out that since its inception, SS has taken in 13.8 trillion, and only paid out 11.3 trillion. Interesting...

This is correct, dollar for dollar, assuming zero inflation.

[Guest nicemac]

It's high time the government did away with Social Security, instead they should only require that each citizen open an IRA or a 401K or some type of retirement account, and that employers take out the money that they would normally take in Social Security and put into the employee's IRA or 401K.

No, no, no. They should not require anybody to do anything of the sort. If I want to put my money into savings, I will (I do). If you don't, the government shouldn't force it. You reap what you sow.

Edited July 29, 2011 by nicemac

[Guest Lester Weevils]

Its beautiful until you have no kids, or the modern divorce family where you have 8 step-parents, or any of a dozen other scenarios beyond "the 1950s family of 4" utopia. Its horrible once you get some real world circumstances going.

Hi Jonnin

I was suggesting it as an SS alternative for the youngsters who are so anti-SS. Just cancel SS and pass a law that the youngsters have to take care of elderly parents. Any childless geezers could be taken care of on means-tested welfare.

The SS is basically like a third-party evened-out implementation of "the way its always been". The aggregated "kids" of working age take care of the aggregated "parents" beyond working age. It has worked that way in practice, but the perception is muddled because SS was billed as a "retirement savings plan" in the past. A retirement savings plan it ain't. A pay-as-you-go kids taking care of parents, it is.

I'm not advocating SS, just discussing it. It was a mistake to ever collect more tax than SS had to pay out in any year. Any taxes over-and-above each year's benefits payments were basically pilfered to pay for other stuff and they are all gone.

Even in the old days, demographics had similar effects--

1. A child in a big family gets less "stuff" growing up because the parent's income has to be divided among more siblings. A child in a small family gets more "stuff".

2. After growing up, a child in a big family doesn't have to contribute so much to taking care of elderly parents, because there are many siblings to help share the load. But a child in a small family has to shoulder a bigger burden, thereby "paying back" the advantage of getting more "stuff" when he was a kid.

The demographics of the current SS crunch are basically an entire culture that switched from big families to small families. Most of the current young adults got a lot more "stuff" when growing up, but they don't like the idea of having a bigger bill to take care of mom and dad.

Not that I blame them. Nobody likes to pay big bills.

Edited July 29, 2011 by Lester Weevils

[Jonnin]

I understand, just noting that the idea fails in reality, do you really think the move-back-in-with-a-kid-at-35 crowd will have the ability to support their mom & dad & stepmom in 10-15 years while sending their now 2+ kids to college and possibly feeding/supporting some grandkids?! The idea sorta works for folks that have some decent income and resources within the family. It fails utterly for the lower income (over 50% of the population) crowd.

[Guest nicemac]

I understand, just noting that the idea fails in reality, do you really think the move-back-in-with-a-kid-at-35 crowd will have the ability to support their mom & dad & stepmom in 10-15 years while sending their now 2+ kids to college and possibly feeding/supporting some grandkids?! The idea sorta works for folks that have some decent income and resources within the family. It fails utterly for the lower income (over 50% of the population) crowd.

It would fail because people make choices to do other things rather than care of their families. You don't have to have a huge income to take care of your family. I work for non-profit ministry (read: don't make much) and have five kids at home. My wife homeschools the kids. If I had to start taking care of my parents, I would make adjustments to make that work. I see people (even relatives) that don't make make squat, smoke two packs a day (what, $10), have a plasma with Directv premium (maybe another $100) and have a $125 per month iPhone but moan about the cost of everything. They can barely put gas in the 4x4 they have to have to pull their bass boat (both financed), so there is no way they can take care of mom and dad. They are poor, whaa, whaa, whaa.

I have been to China and to Africa. I have seen poor. (Very) few people here are poor. In both places, the elderly live with their children–there are no nursing homes. The average income in rural Chine is $300 per year. Three and four generations live in the same (really small) house because they are committed to take care of their elderly. That doesn't happen here because we are selfish and spoiled.

Why do people think they have to pay for their kids college? I paid for my own college, my wife paid for her own college and my oldest son is totally paying for his own college expenses by working part time-without a loan.

[Guest GunTroll]

^ +1 . Wish I had more to add but it has already been said. If you need those SS checks to live on..... you choose poorly at one time in your life. You put your faith in the GOV before both fellow man and God. Fail.

[Guest Lester Weevils]

I understand, just noting that the idea fails in reality, do you really think the move-back-in-with-a-kid-at-35 crowd will have the ability to support their mom & dad & stepmom in 10-15 years while sending their now 2+ kids to college and possibly feeding/supporting some grandkids?! The idea sorta works for folks that have some decent income and resources within the family. It fails utterly for the lower income (over 50% of the population) crowd.

Hi Jonnin

It may not be an elegant solution, but hardly anything in life is especially elegant. As nicemac points out, it has historically been the de facto solution because that plan is about as good as it gets.

I think many people put too much faith in the curative properties of savings and investment. I'm not saying that savings and investment are bad but our expectation of investment returns have been shaped by centuries of growth and expansion. In many ways investment returns ride the same demographic wave as did social security. Investment returns are also somewhat a "pyramid scheme". As population growth flattens then investment returns can be expected to flatten as well.

We live in a world ruled by entropy and thermodynamics. You can't get something for nothing and you can't realistically even expect to get back what you put in. Entropy may appear to have been foiled for brief periods in special circumstances, but entropy is more inevitable than death and taxes.

There is no good method of long-term wealth storage. Any more than there is a sure-fire method of long term food or energy storage. If you want to eat, you have to keep making food all the time. If you want lights and air conditioning, you have to generate electricity all the time.

For instance, look at the Raccoon Mountain Pumping Station--

TVA: Raccoon Mountain Pumped-Storage Plant

A massive impressive piece of engineering that is only good for storing a few hours of local surge power. We can't currently build storage big enough to run the city on power generated last month or last year. If we want power today we have to generate it today.

So that is why savings may help a person in his old age, compared to no savings at all. But the thermodynamic losses are ultimately too great and basically if an old person is to survive past working years, it will have to be on "fresh produced" wealth, not wealth hoarded from back in 1950. Some people will succeed hoarding wealth from 1950 and some will not. Entropy evens it all out and on average it isn't very practical, though it helps.

====

I have never paid taxes with a good attitude, but on the other hand if I had a choice between paying SS taxes and taking the folks into my home, then I'll pay more than I currently have to pay and consider it a bargain. We love em, but not THAT much! Most old folks probably feel the same way. They would go without to an extreme before they would want to live in the kids spare bedroom.

[hotsauce]

Stimulate the economy by giving workers back all the money they paid in and the money that the employer paid on their behalf. End Social Security taxes or insurance what ever you want to call it. Cut government waste no more free rides for illegals, ex. (no food stamps, no free education, and no free healthcare). Stop all payments to foreign countries with the exception of repayment of debit. Ooops, that would be to politically incorrect.

[dou44]

i may not get any ss but idid get a letter a few months ago saying that my retirement check will be cut .big thanks for staying in the military for 21 years.hearing is shot and i feel way older than what i am.let the big shots in goverment who bring home a big check get cut and see how they like it.also as to my hearing i am suspose to draw some off it ,but my medical records cannot be found.

[Guest 6.8 AR]

They used to have a "surplus"(I just got out of a lecture by the SS admins) The surplus was invested in Treasury Bonds. 2009 was the first time the outgo exceeded the income and they cashed some bonds. Whenever there's a surplus they invest it. unless he's a typical Gov liar.

He lied to you whether "he" knows it or not.

There never was anything set aside. Like what

was said before, it has been and still is a Ponzi

scheme.

Sent from my iPhone using Tapatalk

[Smith]

Curious - just skimmed a relevant post on the topic:

Social Security is NOT An Entitlement from the Government - Contrary to the Propaganda MSM and the Government are Spewing right now! Here are the FACTS about Social Security!

Among other things, she points out that since its inception, SS has taken in 13.8 trillion, and only paid out 11.3 trillion. Interesting...

(I don't vouch for any of this, just throwing a little gas on the fire!)

So where is this money? It doesn't exist. Mainly because the Feds have been borrowing from it and are now borrowing from future expected income. IF they had never touched it like they said they would it MIGHT still be serviceable, but that point of no return past long ago. They are stealing from the Ponzi scheme. Madoff's got nothing on these guys.

[analog_kidd]

One of the problems is that a few decades ago we tranistioned from a society where most employees expected to get a pension to one that utilizes a 401k style savings plan. The pension plus SS may have been enough for many to live of of. Now, most employers are dumping the pensions adn providing 401k. Most Americans have not transitioned away from the idea of someone else taking care of them, to thinking about providing for themselves.

I worry that SS will dry up, and there will be millions of people retiring and they have not saved at all. Then what really worries me about that is the Government (and the citizens whou didn't plan) will say "it's not fair that all of the wealthy people have 401k's and IRA's and I have nothing." The government will then decide that those who have saved have more than enough and should share. We see that happening in our society right now. Work hard, start a business, and you get taxed heavily to pay for the benefits of those not willing to take the risks.

Part of the problem we have today is proper education. Kids leaving high school these days know all about the basics, but ask any of them how compound interest works, or what a 401k or IRA is, and they'll give you a blank look. Sad think is, most folks probably don't figure that out until they are 35-40, which by then is too late. They have missed the most powerful stage of contribution.

Here's an idea I think would be a great one. On average, a well invested IRA will double itself every 7 years. Not always, but generally speaking this has been the case. The idea is, at birth, open an IRA for the child. Instead of friends and family buying toys and what not, contribute to the IRA till it is worth $1000. Here's how that would play out for that child over the course of their life:

Age Value

0 $1000

7 2000

14 4000

21 8000

28 16000

35 32000

42 64000

49 128000

56 256000

63 $512000 !!!

So by the time the child retires, they have half a million dollars in savings, and nobody has added a single dollar since the initial contribution. Now, who know how the economy will turn out in the future, but what if I'm only half right? It's still a good investment.

[bvarnell]

Great idea, as long as you're getting a 10% annual return for 63 yeare. Not going to happen, and it doesn't take inflation into account.

Think about how much $500k was worth in 1950. You could buy a nice house for $5 to $10,000.

[Guest Lester Weevils]

Yes saving is a good thing. Better to have something than nothing.

Consider inflation. Since I was born, prices have risen between a factor of 10 to over 20 on most items. In 1950 the $1000 seed money would buy 8,333 loaves of bread. In 2008 a feller born in 1950 would have reached $312,078 on your plan. In 2008 that $312,078 would buy 111,852 loaves of bread.

So the dollar investment may have increased by a factor of 512, but the purchasing power (in loaves of bread) only increased by a factor of 13.4.

Inflation comes and goes. The biggest inflation humps were in the 1960's and late 1970's. Inflation going forward will most likely see big humps as well.

It also seems risky to predict future investment gains based on past performance. Many investment returns we consider "normal" are the effect of demographic expansion which is tailing off. Another "ponzi scheme" effect just like social security.

If social security had been enacted in 1776 at the founding of the nation, and the tax had never been any higher than that required to take care of old folks (rather than the foolishness of taxing more than current benefits and squandering the surplus)-- Social Security would have remained a tolerable tax burden all the way up til now, because there were always larger numbers of workers in each generation. It would have run as a pay-as-you-go system for 237 years before getting into demographic troubles.

I'm not saying SS is wonderful. Just proposing that the same conditions which made SS "work" up til now even over-charging for several generations, are the same conditions leading to historical investment returns. The same thing that is now breaking SS will most likely break future investment returns expectations in a similar fashion.

Still as you say it is better to save than not.

Investment also involves matters of personal trust and confidence. Ferinstance I've never felt comfortable giving away hard-earned dollars to buy computer bits on-file somewhere in wall street.

[Guest Lester Weevils]

I think the most "optimistic" savings returns one might hope for, is breaking even with inflation. So if one figures one could "get by" on $1000 a month current dollars, and one figures on possibly living 10 years after no longer being able to work, then one would need to save at least $1000 per month (inflation adjusted) for 10 years.

Different items inflate at different amounts, but for instance from 1950 to 2008 the price of bread has experienced a "straight line" inflation rate of 5.57% per year. ((($2.79 / $0.12) ^ (1 / 58)) - 1) * 100%

So the first year one would save $12,000. The tenth year one would be saving $20,642, and the twentieth year one would be saving $35,510 per year.

While hoping against hope that some Bernie Madeoff wannabe with an expensive suit and fancy office hasn't been stealing you blind.

I'm not intentionally being negative. Just trying to figure the numbers.

[G27]

Also remember that whil the 'average IRA doubles every seven years' might be true, historically, all investments follow the 'rule of 72' - 72/(avg interest rate) = number of years to double your money. IOW, to double every seven year, that assumes just over 10% annual growth, which has been the average about 70 of the last 80 years (the last decade has been pretty much stagnant).

I would suggest that investing young is important, but assuming growth in today's world isn't necessarily wise. The stock market is no longer really tied to the economy as it once was - it's essentially become a big casino.

I'd further suggest that we won't see sustained 10+% annual growth again for decades, possibly not in our lifetimes at all...

[gregintenn]

Entitlement? I PAID cash for my Social Security insurance! Our benefits aren’t some kind of charity or handout! Congressional benefits—premium federal health care, outrageous retirement packages, 67 paid holidays, three weeks paid vacation, unlimited paid sick days—now THAT’S welfare! And they have the nerve to call my retirement an entitlement!

bajabuk,

You've been spouting socialist propaganda on this forum ever since you came here. Anytime government confiscates money, and hands it back out to certain individuals, and you take the handout, it is an entitlement. "Socialism" and "Social security" even derive from the same root word; "social". You are now knee deep in the socialistic heaven you espouse. Be happy and enjoy it. You've robbed your children and grandchildren a decent future in order to secure a few bucks for yourself. Quit your whining!

[Mike.357]

i don't think expecting the .gov to follow through with what was promised 40 or more years ago makes a person a socialist.

Especially if they paid in all those years.

We have lots and lots in this country who pay in jack squat and get a monthly handout. People who never paid a dime get it.

That's whats F'd up.

[Links2k]

i don't think expecting the .gov to follow through with what was promised 40 or more years ago makes a person a socialist.

Especially if they paid in all those years.

We have lots and lots in this country who pay in jack squat and get a monthly handout. People who never paid a dime get it.

That's whats F'd up.

I agree. I guess that makes three socialist.

[gregintenn]

Social security should have been fought and defeated when it was first proposed.

[Mike.357]

Social security should have been fought and defeated when it was first proposed.

no argument here

[Guest 6.8 AR]

It really doesn't matter anymore. SS is soon to be toast.

There are several things one could rely on. You used to have a job for a long time,

maybe retire in it. Few of those around now. We all thought SS was there for

retirement, well a supplement. I never thought I could live on what the tables show

I would have received, and eventually I realized it probably wouldn't happen.

To those of you who are receiving SSI, enjoy it while it lasts and don't bitch when

it dries up. Go out and buy a lottery ticket.

I hear China has a great retirement plan, too.

[Links2k]

Social security should have been fought and defeated when it was first proposed.

Agreed

[Guest Lester Weevils]

Social security should have been fought and defeated when it was first proposed.

At the very least it would have worked better from then til now if the law had been written to only collect what is necessary for current benefits. It was set up as a pay-as-you-go just like any other welfare, but advertised as a savings plan.

Would have also worked better without "feature-creep" expansion.

At the time of Reagan's SS tax hike in the 1980's, SS had hit a few years of paying out more than it collected (exacerbated by the recession). So by the 1980's the SS tax would have had to rise about as high as Reagan's "adjusted" rate to "save social security".

But the Reagan rate hike and subsequent rate hikes were "too much" and put the fund "into the black" until just the last couple of years. Where "in the black" translates to "stealable extra funds collected via flat tax on the poor and middle class which doesn't fully apply to the rich". The guy who makes $110,000 pays 15.3% but the guy who makes $1,110,000 only pays about 1.53%.

If it had always been a flat-tax pay-as-you go "welfare for old folks" where everybody pays the same rate, then the rate would have been much lower over most of the time since the 1930's.

Also current geezers wouldn't have had so much money tied up that they might never get paid-back in-kind. Causing less bitterness. And wise geezers would have had more money available to invest in prior years if the SS rate had not been so high. And wise geezers would have easier seen the "writing on the wall" with the demographic changes.

But I agree with Mike.357, it isn't socialist to expect what was promised. If you have a bank, stock, or bond default on you for a quarter million bucks, I'm guessing you would be royally peed-off. The USA credit rating has been hyped as lots better than any bank or stock. So why is it wrong to be royally peed-off by a gov default?