Social Security, the easy way to fix it...

Discussion in 'Social Security' started by Darkbane, Jun 13, 2015.

  1. Kode

    Kode Well-Known Member

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    When you invest in a T-Bill or buy a house or car, dollar bills are not involved. It's all entries in a ledger. Try again. And you didn't answer straight. "Straight" would be yes or no. You hedged and modified the subject.
     
  2. Ndividual

    Ndividual Well-Known Member

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    Dollar bills are involved. Recognize as fact that the 'entries' in a ledger represent dollar bills. The last car I bought was purchased using real dollar bills, although I could have written a check which could then have been presented to a bank and exchanged with real dollar bills.
    Actually the subject of the thread was fixing Social Security.
    Some facts relative to OASI:
    The OASI trust fund represents the surplus OASI revenue collected. Agree?
    The surplus is spent by government, being replaced by a T-Bill which pays interest. Agree?
    The Interest payment is a government obligation, and until the T-Bill is actually redeemed remains a ledger entry of debt owed by the government. Agree?
    When the T-Bill is redeemed, both the original principal invested and accumulated interest become debt owed by the public, taxpayers. Agree?
    From the ssa.gov site:
    The OASI trust fund in 1980 was $22,823,000,000and has grown to $2,801,349,000,000 as of 2016.
    The interest paid on the OASI trust T-Bills from 1980 to 2016 has varied from a high of 11.8% to a low of 3.1% paid in 2016.
    The total interest accumulated and owed the OASI trust fund since 1937 is $1,918,620,000,00.

    It is my opinion that fixing anything requires each of us first equally understand the intricate details of what we're trying to fix.

    Should I expect you to answer my questions satisfactorily with a simple yes or no?
     
    Last edited: Jul 18, 2017
  3. OldManOnFire

    OldManOnFire Well-Known Member

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    Why do you call it forced? You probably believe income taxation is forced?

    This is not complex...people pay a certain amount of FICA today which will ASSURE they themselves will receive retirement benefits and health care down the road. And what they pay today is much less than what they receive down the road.

    Can a private account net more ROI...sure it can...BUT there are no guarantees of this! And let me guess you think the private accounts need to be government backed in case something bad happens? And conversely if something bad does happen, and there's not enough money in private accounts to live well outside of poverty, government will be forced to step in because we can't have millions of Americans standing in soup lines!

    I don't see how a private account can be considered 'personal wealth'? If it's intended only for retirement then there is no access to the cash...it must be distributed over the life of the recipient...
     
  4. OldManOnFire

    OldManOnFire Well-Known Member

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    I remember some periods of time in 1990 and again in 2000 in which almost overnight I lost a lot in stock market crashes. Some of the stocks disappeared, some whimpered for years, and some eventually provided great ROI. If during those times these were my private retirement account providing my income I would have been in big trouble trying to meet my liabilities. I could not depend on government to bail me out...I was on my own to deal with the financial downturns. No matter that a private account 'might' provide a better ROI, in the end and in reality, I don't see how it is possible to expect all Americans to not only create the investments but also be able to live when the markets head south? Further, today the median income is about $35K so after all living expenses how much is available for investing in a private SS account? If it's 6.2% this is only $2170 per year, and 30-40 years out if they require $4000/month to live, or $48,000/year, how will you invest the $2170 in order to provide $48,000 at retirement? In risky equities??
     
  5. OldManOnFire

    OldManOnFire Well-Known Member

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    A question I have asked many times on this topic which no one can answer is what will be the impact to the stock market if billion$-trillion$ in FICA monies are suddenly dumped into it? It would be inflated on steroids...
     
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  6. maat

    maat Well-Known Member Past Donor

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    SS was initially an old age ins. It has caps and distributions based on ones contributions. Raising the caps is a scheme to redistribute from one person to another. IMO, all schemes that take from one person to give to another are immoral. I have zero problem with taxation for enumerated government duties.

    No, it is not the governments place to insure individuals any necessities. Charity should be left to individuals, friends, charities and states.

    Private accounts eliminate government pilfering and generational theft. Regulations can determine when account holders can access accounts. Private accounts also allow funds be given to heirs.
     
  7. Deckel

    Deckel Well-Known Member Past Donor

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    Essentially the only safe way to privatize would be to require the bulk of the money be placed on government bonds in which case it wouldn't do much better and could still do worse if those government bonds originated out of Illinois or California. If individuals were allowed to manage the funds themselves under a brokerage account arrangement, Walmart stock would go to $8K a share because everybody would want to own Walmart stock
     
  8. maat

    maat Well-Known Member Past Donor

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    A transition period would not have the sudden impact effect on stocks. Large investment groups can provide simple investment products, much like 401's.

    It is funny how everyone claims people should be investing at least 10% of their incomes in addition to SS, but we can't switch SS to private accounts. Yes, we can transition from the failing ponzi to a private system that would truly benefit everyone.
     
  9. maat

    maat Well-Known Member Past Donor

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    Nonsense. Stocks/ mutual funds are not limited to US companies. Private accounts can invest worldwide. Sure, there would still be some in treasuries, but not the mass dump you think.
     
  10. Deckel

    Deckel Well-Known Member Past Donor

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    I didn't say anyone should invest in the market. I said I do invest in the market. It is money I can afford to lose. A lot of people cannot afford to lose any of their social security, particularly women who traditionally receive less due to child rearing
     
  11. Deckel

    Deckel Well-Known Member Past Donor

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    Just because a private investor can does not mean the privatized social security system would allow for that. Professor Trump wants everybody to buy American after all.
     
  12. OldManOnFire

    OldManOnFire Well-Known Member

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    SS remains a retirement program today?

    All taxation moves money from one person to another.

    There is nothing written in the Constitution that says "it is not the governments place to insure individuals any necessities"?

    In those private accounts will be the requirement to buy US treasuries...where do you think all of that money will go?
     
  13. OldManOnFire

    OldManOnFire Well-Known Member

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    Buying equities also implies there are equities to be sold. There are only so many equities in the public arena and companies are not going to release more and more stock. So I still don't see where billion$-trillion$ can be invested providing much more ROI than is achievable with US treasuries? And what kind of restrictions will be placed on these private accounts, for example, if I wanted to buy 1000 shares of DeckelInc during their IPO? How much risk can the government allow Americans to take with billion$-trillion$...not very much...
     
  14. OldManOnFire

    OldManOnFire Well-Known Member

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    The difference is your 10% is voluntary while the private accounts will be mandatory. A small percentage of people will voluntarily save 10% compared with mandatory savings by everyone...
     
  15. OldManOnFire

    OldManOnFire Well-Known Member

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    Yeah...gobble up those North Korean stocks that are promising 20% ROI...
     
  16. maat

    maat Well-Known Member Past Donor

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    I think the father of the Constitution thinks differently than you. Read my sig.
     
    Last edited: Jul 19, 2017
  17. maat

    maat Well-Known Member Past Donor

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    Doesn't matter. My guess is some will stop investing also. There would not be the huge sudden impact you think.
     
  18. maat

    maat Well-Known Member Past Donor

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    Typical hyperbole nonsense.
     
  19. Ndividual

    Ndividual Well-Known Member

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    The OP seems to imply Social Security is broken, which I fail to see being true.
    The government imposed Social Security program is one in which current income earners are taxed allowing government to provide a benefit to previous income earners.
    By law it cannot pay out more than it acquires. The benefit amount paid out is calculated based on past income, and using their calculator I find the following maximum and minimum for someone who worked 40 years paying in the most and the least:
    40 years 1977-2016
    Max paid in each year, benefit calculation = $2639/mo $31,668/yr $15.19/hr equivalent SS benefit
    In the above instance, $346,291 would have been provided SS which would be the equivalent of about 11 years of expected benefit return.

    Min Wage over 40 years = $926/mo $11,112/yr $5.33/hr equivalent SS benefit
    None of my spreadsheets have calculated the SS tax paid by min wage earners relative to the number of years of benefit return. Perhaps someone might have that info?

    Interesting using their calculator that earning and paying SS tax on a lower income produces the following benefits:
    Constant $4300/yr income = $643/mo $7,716/yr
    Constant $1200/yr income = $183/mo $2,196/yr
    In the above examples I think it's obvious that even at the current SS tax rate each months benefit check would exceed the annual SS tax paid.

    The simplest solution to keeping SS solvent would be to allow the tax rate to float, adjusting it upward or downward as necessary, eliminating completely the maintenance and interest earnings of a trust fund.
    Something else that needs to be recognized is the fact that when the SS program was created the eligibility age was greater than life expectancy so raising the eligibility age to about 78 would require people to work longer funding the program and live shorter periods benefiting from it. And another 'solution' would be to raise/eliminate the ceiling upon which the tax is applied, which could really produce some difficult, if not impossible consequences to be resolved.
     
  20. OldManOnFire

    OldManOnFire Well-Known Member

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    You should quote from the Constitution...
     
  21. OldManOnFire

    OldManOnFire Well-Known Member

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    Okay...
     
  22. OldManOnFire

    OldManOnFire Well-Known Member

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    The federal government IS NOT going to allow Americans in their theoretical private accounts to invest in anything they wish...
     
  23. maat

    maat Well-Known Member Past Donor

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    I didn't suggest they would. Yet, there can be some diversity based on age. Large investment groups would likely have to provide qualified plans. Anything is better than the failing ponzi we have now.
     
  24. Kode

    Kode Well-Known Member

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    Anyone who thinks SS funds should be invested in equities instead of fixed assets should see this video:

    https://www.pbs.org/wgbh/frontline/film/the-pension-gamble/

    Pensions were doing fine in the 80s and 90s. Then we had the dot-com bubble burst and Pension assets did what the market did: they crashed. But the month-to-month need to pay out monthly benefits to millions of retirees remained, so that at the bottom one dollar in the pension fund was a fraction of what it had been worth prior to the crash. Yet it had to be paid. That meant paying out the equivalent of a far greater portion of the Fund than it had been, thus depleting the fund further and faster than prior to the crash. And any attempt to restore the Fund was thwarted by the need for payouts. Money in/money out. Big losses resulted for the pension plans and recovery was difficult.

    Then we had the 2008 crash which did it again. By now the pension plans were seeing lots of red ink on the horizon, and they decided to take desperate steps with high risk investments. They turned to hedge funds. And the hedge funds took huge commissions and fees, but they didn't provide the needed returns. And that resulted in a repetition of pension funds going bankrupt or terminating operation.

    That is what you are asking for with your SS funds if you call for its investment in equities. And that is why SS was designed to invest in fixed, secure assets. The problem it created was one of congress being able and willing to spend the proceeds of sale for Treasury securities to the SS Trust Fund. THAT, and that alone.... spending by congress,..... is the only reason it is said (falsely) that SS is a cause of increasing national debt. It is not. The spending of the proceeds of sale is the cause.
     
  25. Robert

    Robert Well-Known Member Past Donor

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    Government workers get to pick where their retirement funds come from. How are they doing?

    Clinton had two sour parts of his presidency where the economy tumbled. Why do Democrats never speak of those two times?
     

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