Comments on: Good Article on Social Security http://allfinancialmatters.com/2007/06/26/good-article-on-social-security/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Fri, 25 May 2012 01:47:17 +0000 hourly 1 http://wordpress.org/?v= By: paul http://allfinancialmatters.com/2007/06/26/good-article-on-social-security/comment-page-1/#comment-116806 paul Thu, 28 Jun 2007 13:16:14 +0000 http://allfinancialmatters.com/?p=1858#comment-116806 I am happy that everyone pays SS taxes. I think it is appalling that not everyone pays taxes- everyone receives benefits! The bleeding hearts who think that I should bear any burden to support the non-productive of the world don't sway me. I do think that the total amount paid should be transparent (i.e the employer paid portion). If that were true, there might be a bigger drive from the public for reforming the Ponzi scheme that it is. I am happy that everyone pays SS taxes. I think it is appalling that not everyone pays taxes- everyone receives benefits! The bleeding hearts who think that I should bear any burden to support the non-productive of the world don’t sway me.

I do think that the total amount paid should be transparent (i.e the employer paid portion). If that were true, there might be a bigger drive from the public for reforming the Ponzi scheme that it is.

]]> By: Foobarista http://allfinancialmatters.com/2007/06/26/good-article-on-social-security/comment-page-1/#comment-116726 Foobarista Thu, 28 Jun 2007 04:15:03 +0000 http://allfinancialmatters.com/?p=1858#comment-116726 It's only "solvent" because the mythical "social security surplus" is a big pile of government bonds. These bonds will start to be paid out of current revenue starting in around 2015 or so. These bonds will take an increasing share of revenue during this time, and allow a decreasing share for other government purposes. Until then, the "budget deficit" is lowered because the "Social Security surplus" decreases the amount that needs to raised from external sources since the government is selling bonds to itself. There is no government "account" with a real "social security surplus" that could be used to fund retirements. It's just a bunch of IOUs against future tax revenues. It’s only “solvent” because the mythical “social security surplus” is a big pile of government bonds. These bonds will start to be paid out of current revenue starting in around 2015 or so. These bonds will take an increasing share of revenue during this time, and allow a decreasing share for other government purposes.

Until then, the “budget deficit” is lowered because the “Social Security surplus” decreases the amount that needs to raised from external sources since the government is selling bonds to itself.

There is no government “account” with a real “social security surplus” that could be used to fund retirements. It’s just a bunch of IOUs against future tax revenues.

]]> By: muntz http://allfinancialmatters.com/2007/06/26/good-article-on-social-security/comment-page-1/#comment-116689 muntz Thu, 28 Jun 2007 01:03:21 +0000 http://allfinancialmatters.com/?p=1858#comment-116689 to rubysdad: you said when the baby boomers retire we'll have to increase taxes or decrease benefits. simply untrue. The earliest baby boomers will start hitting 65 in the next few yrs. However, according to the social security administration's own (nonpartisan) estimates the system, according to conservative estimates is more than solvent through 2043. And even with these CONSERVATIVE estimates it will still be able to pay more than 70% of benefits. Note: if you go back to look at what the conservative estimates have predicted, we've always been more solvent than these estimates have predicted with even slightly less conservative estimates social security is sovlent well into the 22nd century. Is the system responsible for "dependency?" I don't know and neither do you. That is an opinion. What is indisputable are the numbers. to rubysdad: you said when the baby boomers retire we’ll have to increase taxes or decrease benefits. simply untrue. The earliest baby boomers will start hitting 65 in the next few yrs. However, according to the social security administration’s own (nonpartisan) estimates the system, according to conservative estimates is more than solvent through 2043. And even with these CONSERVATIVE estimates it will still be able to pay more than 70% of benefits. Note: if you go back to look at what the conservative estimates have predicted, we’ve always been more solvent than these estimates have predicted with even slightly less conservative estimates social security is sovlent well into the 22nd century.

Is the system responsible for “dependency?” I don’t know and neither do you. That is an opinion. What is indisputable are the numbers.

]]> By: Rubysdad http://allfinancialmatters.com/2007/06/26/good-article-on-social-security/comment-page-1/#comment-116638 Rubysdad Wed, 27 Jun 2007 20:11:43 +0000 http://allfinancialmatters.com/?p=1858#comment-116638 Great discussion everyone. It's true that over 40% of those currently collecting Social Security retirement benefits depend on SS to provide 100% of their monthly income, but the system itself is responsible for some of this dependency. Payroll taxes hit low-wage workers the hardest. If these folks had the ability (after paying for housing, groceries, childcare, gasoline, etc.) to save some portion of their income for retirement many of them would. But payroll taxes currently take one dollar of every eight today's workers earn to pay benefits to today's retirees. When the baby boomers start retiring (and the first ones will be eligible for early retirement in January 2008), we'll eventually have to increase payroll taxes (thereby taking more from low-income workers) or reduce benefits (thereby increasing dependency of retirees). Is Social Security a Ponzi Scheme? You decide (http://en.wikipedia.org/wiki/Ponzi_scheme). Whether it is or isn't, the system is broken and must be fixed. Great discussion everyone. It’s true that over 40% of those currently collecting Social Security retirement benefits depend on SS to provide 100% of their monthly income, but the system itself is responsible for some of this dependency. Payroll taxes hit low-wage workers the hardest. If these folks had the ability (after paying for housing, groceries, childcare, gasoline, etc.) to save some portion of their income for retirement many of them would. But payroll taxes currently take one dollar of every eight today’s workers earn to pay benefits to today’s retirees. When the baby boomers start retiring (and the first ones will be eligible for early retirement in January 2008), we’ll eventually have to increase payroll taxes (thereby taking more from low-income workers) or reduce benefits (thereby increasing dependency of retirees). Is Social Security a Ponzi Scheme? You decide (http://en.wikipedia.org/wiki/Ponzi_scheme). Whether it is or isn’t, the system is broken and must be fixed.

]]> By: muddlehead http://allfinancialmatters.com/2007/06/26/good-article-on-social-security/comment-page-1/#comment-116580 muddlehead Wed, 27 Jun 2007 14:58:24 +0000 http://allfinancialmatters.com/?p=1858#comment-116580 my wife and i are in our 50's. my approach to ss is to not even think about it. whatever we get is a perk or bonus. and, when i do think about where it might fit in, if and when it's there, i'll pay health insurance with it. thinking of it any more than that is unproductive and a waste of time. my wife and i are in our 50′s. my approach to ss is to not even think about it. whatever we get is a perk or bonus. and, when i do think about where it might fit in, if and when it’s there, i’ll pay health insurance with it. thinking of it any more than that is unproductive and a waste of time.

]]> By: Alessandro http://allfinancialmatters.com/2007/06/26/good-article-on-social-security/comment-page-1/#comment-116565 Alessandro Wed, 27 Jun 2007 13:34:47 +0000 http://allfinancialmatters.com/?p=1858#comment-116565 http://www.cashguru.info http://www.cashguru.info

]]> By: Dave http://allfinancialmatters.com/2007/06/26/good-article-on-social-security/comment-page-1/#comment-116482 Dave Wed, 27 Jun 2007 02:33:35 +0000 http://allfinancialmatters.com/?p=1858#comment-116482 I hit the submit button before I was completely through with the above comment. Here is the rest of what I wanted to say: Furthermore, after wading around though the statistics on ssa.gov and setting up a spreadsheet, it appears that over 75% of old age benefits go to people whose average indexed earnings were less than $35,000 per year. I hit the submit button before I was completely through with the above comment. Here is the rest of what I wanted to say:

Furthermore, after wading around though the statistics on ssa.gov and setting up a spreadsheet, it appears that over 75% of old age benefits go to people whose average indexed earnings were less than $35,000 per year.

]]> By: Dave http://allfinancialmatters.com/2007/06/26/good-article-on-social-security/comment-page-1/#comment-116480 Dave Wed, 27 Jun 2007 02:26:52 +0000 http://allfinancialmatters.com/?p=1858#comment-116480 I think Independent George is wrong concerning the distribution of benefits. The formula by which the benefit payment amount is calculated is heavily weighted to lower income wage earners. According to www.ssa.gov, the formula is: For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2007, or who dies in 2007 before becoming eligible for benefits, his/her primary insurance amount will be the sum of: (a) 90 percent of the first $680 of his/her average indexed monthly earnings, plus (b) 32 percent of his/her average indexed monthly earnings over $680 and through $4,100, plus (c) 15 percent of his/her average indexed monthly earnings over $4,100 and not exceeding $8,125. If my calculations are correct, someone with an annual income of $20,000 whose income has just kept up with inflation for the past 35 years, would receive benefits of $16,097, which would replace 80% of his or her income. Someone who has earned at or above the maximum covered earnings ($97,500 this year) would receive a maximum benefit of $27,722. Here is a table of replacement rates: $20,000 --> 56% $40,000 --> 44% $60,000 --> 37% $80,000 --> 31% $100,000 --> 28% $150,000 --> 18% $200,000 --> 14% $300,000 --> 9% I think Independent George is wrong concerning the distribution of benefits. The formula by which the benefit payment amount is calculated is heavily weighted to lower income wage earners. According to http://www.ssa.gov, the formula is:
For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2007, or who dies in 2007 before becoming eligible for benefits, his/her primary insurance amount will be the sum of:

(a) 90 percent of the first $680 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $680 and through $4,100, plus
(c) 15 percent of his/her average indexed monthly earnings over $4,100 and not exceeding $8,125.

If my calculations are correct, someone with an annual income of $20,000 whose income has just kept up with inflation for the past 35 years, would receive benefits of $16,097, which would replace 80% of his or her income. Someone who has earned at or above the maximum covered earnings ($97,500 this year) would receive a maximum benefit of $27,722. Here is a table of replacement rates:
$20,000 –> 56%
$40,000 –> 44%
$60,000 –> 37%
$80,000 –> 31%
$100,000 –> 28%
$150,000 –> 18%
$200,000 –> 14%
$300,000 –> 9%

]]> By: MossySF http://allfinancialmatters.com/2007/06/26/good-article-on-social-security/comment-page-1/#comment-116453 MossySF Wed, 27 Jun 2007 00:20:20 +0000 http://allfinancialmatters.com/?p=1858#comment-116453 Don't think of it was an investment or insurance or welfare. It simply is a necessary tax -- money spent to avoid a revolution where the non-saver majority take your assets by force. Remember the historic backdrop to Social Security. Other nations responded to the economic conditions of the early 20th century with communist and fascist dictatorships. Don't be naive and believe it would have never happen here due to our traditions and beliefs. All that go out the window when consumers can't delude themselves with spending. Don’t think of it was an investment or insurance or welfare. It simply is a necessary tax — money spent to avoid a revolution where the non-saver majority take your assets by force. Remember the historic backdrop to Social Security. Other nations responded to the economic conditions of the early 20th century with communist and fascist dictatorships. Don’t be naive and believe it would have never happen here due to our traditions and beliefs. All that go out the window when consumers can’t delude themselves with spending.

]]> By: Foobarista http://allfinancialmatters.com/2007/06/26/good-article-on-social-security/comment-page-1/#comment-116439 Foobarista Tue, 26 Jun 2007 22:43:13 +0000 http://allfinancialmatters.com/?p=1858#comment-116439 Personally, I count the "employer's share" since it's part of your payroll allocation. So, the SS contribution is more like 12.4%, although you don't see half of it on your check unless you're self-employed, in which case you see the whole thing. Personally, I count the “employer’s share” since it’s part of your payroll allocation. So, the SS contribution is more like 12.4%, although you don’t see half of it on your check unless you’re self-employed, in which case you see the whole thing.

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