Maybe. I find that people who complain about welfare definitely disregard the perks they get as "welfare". First real paycheck job I had was with people who sat around and complained about them having to work to pay for black people's welfare and those that were doing all the complaining were getting more back than they paid in all year because of the EITC.
What do you not get about mandated private accounts? Wishes and bugs are what SS accounts pay to their heirs.
All of those 'war profits' you refer are taxpayer dollars so you're just taxing the taxpayers more...
What you and others never answer is where would billion$ and trillion$ in cash be stored and/or invested? Can't be in banks because it's not insured. Can't imagine forcing billion$ into the US stock market? If you stopped FICA today where would billion$ and trillion$ come from to pay millions of SS recipients for the next 20-40 years? Today's SS program is a Ponzi scheme that requires funding from current dollars for decades to come. One thing I would suggest to provide a few more SS dollars is when the government borrows excess SS dollars, why not place the interest rate at 25%...
Some of the money would go to insurance policies(term life, disability). Some into bonds and low risk mutual funds and some would replace current savings for consumption. Also, SS cannot be transformed over night. It will take years to privatize, what helps eliminate the shock.
and those funds can be rebated back to the public rather than allow the wealthy elites to shelter all that money in tax free overseas accounts
That won't really solve the problem of those who don't or can't earn enough in their working life to fund retirement.
First a lot of those who will end up in trouble probably aren't getting a regular paycheck. And you are making the assumption that people pay 12.4 on gross income. Also you are making the assumption that if SS is eliminated the savings to employers will be passed on to the employees. Also if I remember my self employed days correctly the 12.4 % includes both SS and Medicare so I am assuming you want to eliminate Medicare as well as SS.
SS is based on your contributions. If you have less than 10 quarters you do not qualify for benefits. It is not a program for those who do not contribute other than spousal benefits. Medicare is an additional 2.9% that totals 15.3% when both combined. As to the employers portion, it would be mandated same as is now.
In its first year only one person had enough household income to pay the individual income tax The income tax was never intended as a tax on all income earners. Its aim is to tax only those who can afford to pay it. If the wealthy are paying 85% of income taxes then the income tax is not working as intended. I would like the income tax to return even closer to its intended purpose. A start would be to exempt the first $50,000 of household income from the income tax and apply a single tax rate to all income above that amount without regard to its source. I would eliminate all tax exemptions, tax credits, and other tax loopholes that fewer than 10 million people claim in their tax filings. This would most likely raise the share if the income tax that the wealthy pay to 100% and return the income tax to its original purpose.
Correction: I stated earlier that one had to have 10 quarters to qualify for SS benefits. It is ten years(40 quarters). This means that you could work 9 years and 3 months and not qualify for benefits. Yet, with mandated private accounts, you would have put those contributions into private investments that would grow for however long until you were 65.
Using the ssa.gov calculator, A person who earned $4000 per year for 50 consecutive years, retiring at age 67, would receive a SS benefit of $964/mo. or $11,568/yr.. A person who earned $8000 per year for 50 consecutive years retiring at age 67 would receive a SS benefit of $1,387/mo. or $16,664/yr. A person who earned $80,000 per year for 50 consecutive years retiring at age 67 would receive a SS benefit of $2,804/mo. or $33,648/yr. And a person who earned $800,000 per year for 50 consecutive years retiring at age 67 would receive a SS benefit of $2,916/mo. or $34,992/yr. If you calculate the FICA tax collected from each of the above incomes over the 50 years, I think it would show that low income earners reap the greatest reward from SS benefits, recouping all their payments over a short period of retirement, and even much more. What is the point of this thread anyway? Or is there a point to be made?
I would like to hear from a financial analyst that can tell us the impacts of placing billion$ and trillion$ of dollars into stocks and bonds, etc.? Either each person's private account is insured or not for the full amount...if insured who is doing the insuring and who pays for this? My guess is it will take a minimum of 40 years and during this entire time those who pay into FICA must pay for both the current SS recipients and pay into their own SS funds...this means instead of each person and business paying 12.3% they would need to pay perhaps 25%...IMO this is not possible...
Income tax since 1913 was a tax on personal and business income...period. Over the years, due solely to politics, the tax rates and taxable dollar amounts have increased and decreased according to the political winds. At $50K you want approximately 100 million workers to pay zero income tax...this would be not only stupid but disingenuous to being an American citizen. Are you including FICA in your income tax comments? Please provide a comment why you believe every adult worker with income cannot provide $100 per year in personal income taxes?
You should have no problem finding an investment expert that could tell how privatization would look in the markets and economy. But, to assume there is a way to fully insure the accounts themselves is not reasonable or doable. Not even the government can do this. If you have any investment knowledge you would know that diversity spreads risk. These accounts would be diversified in bonds and mutual funds that invest in 100's of blue chip company's. The likely hood of loosing ones nest egg is near impossible and could really only happen an earth shattering event. These accounts would also likely be age sensitive meaning the closer to old age the less risk the portfolio. This is how you insure in the real world. An added feature might be nest eggs/partial nest eggs redirected into annuities at retirement. However this is done it should not punish one generation. To suggest the young pay drastic higher taxes is ridiculous. Everyone should share the pain. And again, it would be great if the country voluntarily chose to forego benefits. I would be the first to forego my 35 years of contributions in a privatization. I don't expect many would do the same and some means testing would speed the process. One way or the other, our system will crash if something responsible is not done. Sadly, I believe today's Americans are too vested in these liberty killers and will lead us to a communist downfall instead of a rebirth in liberty and individual prosperity.
I do not see why there couldn't be a private solution that addresses the concerns of they who do not trust the markets. There is nothing preventing individuals from investing in government bonds inside their private accounts.
In bold above these sound like 'famous last words'. There is always 'some' risk to investing. Regarding the stock market, if suddenly billion$ in FICA cash was being spent buying equities, it would drive up the price of stocks, IMO a false price. Regarding people holding cash in their accounts, today FDIC only insures for $250K. I didn't say anything about the 'young' paying more? I said ALL people and business paying FICA today would have to continue paying FICA for 30-40 years, and, in parallel, invest in their own private retirement accounts. This absolutely requires people and business to pay double. No matter the amount of SS payouts today, to the 60 million Americans who receive something, these payouts are guaranteed by the government. How in private SS accounts can you provide equal security?
Yes, all investing incurs some risk. Yet, governments are not security Gods. You cannot rightfully assume that SS benefits are secure for the long haul. As with many states pensions, SS is underfunded and going broke. Cash can be government bonds, your beloved security. I have zero faith in future government promises, you are welcome to invest all of your private funds with them. In post 65, you suggested that workers and employers would have to pay around 25% taxes during a forty year phase out. This suggest that they would have to absorb the cost of the privatization, which is not reasonable. Current recipients and future recipients would have to absorb some of the loss. The reality is that the system is way in the red and getting far worse. Keeping the current system will lead to much higher taxes and still reduced benefits and solve nothing. There will have to be sacrifices by recipients and future payers. We cannot afford to pay all the promises.
" If you have any investment knowledge you would know that diversity spreads risk. These accounts would be diversified in bonds and mutual funds that invest in 100's of blue chip company's. The likely hood of loosing ones nest egg is near impossible and could really only happen an earth shattering event. These accounts would also likely be age sensitive meaning the closer to old age the less risk the portfolio. This is how you insure in the real world. An added feature might be nest eggs/partial nest eggs redirected into annuities at retirement." The most recent crash pretty much disproves that theory. Used to be diversity minimized risk but for the last couple of decades most assets seem to move in the same direction. Gold no longer is a safe haven . Diversifying in overseas investments is no guarantee either. Suspect globalization has tied assets more closely together than ever before. And allocating assets between stocks and bonds no longer provides the security that it used to provide. In point of fact they have shown an alarming tendency to kve in the same direction recently An nobody with the slightest clue about investing would ever advocate for annuities. .
Why should one need to put their saved money into bonds or mutual funds? Why not just put a little of each paycheck aside as a nest egg for the future? Wouldn't that be the most secure strategy of all?
Age sensitive investments guard nest eggs from these major events. It is not wise to be strictly in bonds and mutual funds nearing retirement. Yet, when I say bonds, those would include government "secure" bonds. And in most cases, set backs recover quickly. Btw, this hard recession was caused by improper market forces. We clearly need to eliminate government participation and just have proper regulating. SS is not sound. It will destroy the country as it was created. We can either man up now with a liberty based solution or allow our posterity to suffer a collectivist downfall. What we are seeing is the end stage of a typical Ponzi. They always start out well funded and looking secure. Eventually, the money runs out and the investors dry up. This one has survived this long only because it has had forced participation and continued raising of taxes. The boomer generation will collapse it. Since 2012, it(the entitlements combined)has run deficits that total more than a trillion dollars. This trend will continue for decades. It cannot be fixed. It has to be reconciled and replaced.
If people who could save actually did it would probably make it possible to replace SS with some kind of government safety net for those who never earned enough to save. But that isn't happening now and I doubt human nature is going to change much.