Social Security

[keith]

Originally Posted by gojujay

Question: For those people wha are adding up "their " contribution, are they including the part that the employer "contributed"? Some may disagree, but the employee is actually paying both contributions. The cost to the employer is the same, only the net pay to the employee is different. People seem to forget this.

This is true but the related point is that because of the way the budget is constructed it is wrong to ring fence SS contributions (employer or employee) as different from other taxes - they are after all treated as general revenue by the government just like income tax. This is why SS gets to be in crisis much sooner than the date of the depletion of the 'surplus'.

SS taxes are really just a subset of income taxes.

[Inquartata]

Originally Posted by Bayou Bum

The simple question is: Why can't I make decisions for myself?

You can. There is a religious exemption from Social Security, for individuals belonging to faiths which do not countenance public insurance payments and such like, viz. Christian Scientists. I believe that members of the clergy may likewise avail themselves of said exemption, and may elect to exempt employees of their churches as well. It's only necessary to file Form 4361 ( I think ) with the IRS.

[jeff]

That's interesting.... ya learn something every day (if you're lucky)

[Bayou Bum]

Wow, I'm feeling a religious experience right now.
Thanks

[mrbiggs]

Originally Posted by Bayou Bum

The simple question is: Why can't I make decisions for myself? If you like the current system, fine, but why can't I have the option of investing a portion of my withholdings into something else? I'm currently paying the maximum and paying both employee and employer contribution because I am self employed. By the time I retire, I will have paid in hundreds of thousands into SS and will never see it.

You can't make decisions for yourself because the question remains, what if you make the wrong decision? As of now, the government invests the social security money as a whole. That means that if an individual's money happens to be invested badly, then it will be covered by the government. But if YOU lose all your money, we can't let you starve. That means that we make up for your losses, that means more spending, and the solution to social security lands us in worse debt than before.

[Epee_Pox]

Originally Posted by mrbiggs

You can't make decisions for yourself because the question remains, what if you make the wrong decision? As of now, the government invests the social security money as a whole. That means that if an individual's money happens to be invested badly, then it will be covered by the government. But if YOU lose all your money, we can't let you starve. That means that we make up for your losses, that means more spending, and the solution to social security lands us in worse debt than before.

What huh? The government doesn't invest SS money. It takes the SS money as it is paid in, and uses it to pay current expenses.

Bush's plan doesn't let YOU make the wrong decision. Investment of the retirement funds would be controlled by the government, as you seem to think the government already does.

[mrbiggs]

Originally Posted by Epee_Pox

Bush's plan doesn't let YOU make the wrong decision. Investment of the retirement funds would be controlled by the government, as you seem to think the government already does.

Apparently, I have no idea what I'm talking about.

Okay, then what's the difference between Bush's plan for "privatizing" it, what's really going on, and my imaginary social security plan?

[gojujay]

Originally Posted by keith

This is true but the related point is that because of the way the budget is constructed it is wrong to ring fence SS contributions (employer or employee) as different from other taxes - they are after all treated as general revenue by the government just like income tax. This is why SS gets to be in crisis much sooner than the date of the depletion of the 'surplus'.

SS taxes are really just a subset of income taxes.

The name should be changed to The Tax for the Poor, that's the way the Federal Govt. is using the money anyway... Oh yeah that name would probably bring about a mutinous change in the program as it implies a socialist redistribution of wealth

[Epee_Pox]

Originally Posted by mrbiggs

Apparently, I have no idea what I'm talking about.

Okay, then what's the difference between Bush's plan for "privatizing" it, what's really going on, and my imaginary social security plan?

What's really going on: Gov't takes money from workers. Uses that money to pay retirement benefits to people who used to pay into the system. Also uses that money to pay general govt expenses, with an IOU promising real hard to pay it back one day.

What Bush proposes: Let people currently receiving SS continue to receive it as if nothing changed. Let people who want to, keep paying in and receive payments later as if nothing changed. Also let people who want to, put a portion of their SS payments into investment accounts managed by the govt, which accounts are owned by the individual and can be inherited like any other investment.

[gojujay]

Originally Posted by mrbiggs

You can't make decisions for yourself because the question remains, what if you make the wrong decision? As of now, the government invests the social security money as a whole. That means that if an individual's money happens to be invested badly, then it will be covered by the government.

That's right. You can't be entrusted with your own well-being, therefore the Nanny Govt. MUST take care of you.

Originally Posted by mrBiggs

But if YOU lose all your money, we can't let you starve. That means that we make up for your losses, that means more spending, and the solution to social security lands us in worse debt than before.

I think people confuse Government with Society. Govt. is a reflection OF Society, but it seems to me that people want Govt. to take the place of Society. Talk about an abrogation of responsibility...

[gojujay]

Originally Posted by Epee_Pox

What's really going on: Gov't takes money from workers. Uses that money to pay retirement benefits to people who used to pay into the system. Also uses that money to pay general govt expenses, with an IOU promising real hard to pay it back one day.

What Bush proposes: Let people currently receiving SS continue to receive it as if nothing changed. Let people who want to, keep paying in and receive payments later as if nothing changed. Also let people who want to, put a portion of their SS payments into investment accounts managed by the govt, which accounts are owned by the individual and can be inherited like any other investment.

And let's drop the charade and have Government make up any SS shortfalls that result from the genereal fund. They would anyway...

[esskreemr]

Originally Posted by Bayou Bum

The simple question is: Why can't I make decisions for myself?

Would you have invested in Enron or Worldcom? How about ImClone. There is no guarantee that a 401k will produce any income. There is a chance that you could lose it all. Even a modest risk will produce people who have worked their whole lives but can't retire because their investment portfolio bottomed out.

[Epee_Pox]

Originally Posted by esskreemr

Would you have invested in Enron or Worldcom? How about ImClone. There is no guarantee that a 401k will produce any income. There is a chance that you could lose it all. Even a modest risk will produce people who have worked their whole lives but can't retire because their investment portfolio bottomed out.

That's why you don't invest all your money in one company, one industry, one market, or even one kind of investment. This revolutionary new idea is called "diversification," I am told, and over the long term it works pretty well.

[esskreemr]

Originally Posted by Epee_Pox

What Bush proposes: Let people currently receiving SS continue to receive it as if nothing changed. Let people who want to, keep paying in and receive payments later as if nothing changed. Also let people who want to, put a portion of their SS payments into investment accounts managed by the govt, which accounts are owned by the individual and can be inherited like any other investment.

The whole proposed SS changes have been hyped up. The percentage that you will actually have control of is small something like 1-2%. The problem is that THIS DOES NOT FIX THE TRUE PROBLEM!! All it does is reportedly cost taxpayers billions of dollars but doesn't address the fundamental problem: the raiding of the social security funds. It's like a band aid over a crack in a 100ft dam. It's a smokescreen to make a few people lots of money but not fix the problem.

That's the real issue I have. It's merely another foot in the door for corporations to put their hands on worker's futures.

[Larrison]

Originally Posted by esskreemr

Would you have invested in Enron or Worldcom? How about ImClone. There is no guarantee that a 401k will produce any income. There is a chance that you could lose it all. Even a modest risk will produce people who have worked their whole lives but can't retire because their investment portfolio bottomed out.

if you look at how other countries have set up their worker-owned social security plans, they typically allow you to invest in only large index funds. That is, you can't invest in an individual stock or bond or REIT or option, etc. You also can't make speculative investments (eg, derivatives, options, buy/ sell on margin etc.). Like the current Social Security, you can't pledge the fund among as surety on a loan, borrow money against it, and it can't be garnished. It's fundamentally a buy-and-hold strategy. The companies which can offer such funds, have to compete on providing the lowest cost service, since they will be little to no active stock trading.

And if you want the lowest cost, lowest risk option, you can always chose to invest 100% of your funds in T-bills, which is what the government does now. (Eg, you and your employer pay funds as taxes to the government, which uses those monies as income in the current budget, and issues you an IOU (T-bill) for how much you put in -- redeemable at a later time out of future government budgets).

[jeff]

Originally Posted by Epee_Pox

That's why you don't invest all your money in one company, one industry, one market, or even one kind of investment. This revolutionary new idea is called "diversification," I am told, and over the long term it works pretty well.

There's an even spiffier concept called "asset allocation", in which you increasingly put your assets in conservative investment properties as you age - things like government bonds.

That said - esskreemr's point still holds: somebody could have invested as wisely as they possibly could and still been cleaned out in a recession. Instead of referring to fraud cases like Enron or Worldcom, we can see the same sort of thing happened with investors in Cisco (at one point the largest market cap of all), EMC, Sun and other tech companies. This stuff is easy to get wrong, and very dependent on timing.

[scrapinpeg]

Yup. Moving from riskier investment strategies to more conservative asset protection as one ages is not uncommon. And any SS ownership investment funds should offer contributors the option of allocating say 10% risky, 80% medium, 10% safe -- or whatever -- and the option to change periodically.

Still don't understand why ess's point pertains to investments that are diversified managed funds over time.

[Have At You]

So the Democratic party has finally revealed its plan to fix Social Security.

From what I can tell, they agree with Bush that private accounts are the way to go. But in typical Democrat fashion, they'd fund it by increasing taxes on "the rich," and maintaining government control of the money (because we know better than you do what's good for you).

And on the business end, they'd give matching dollars to retirement accounts workers get through their employers. Get the same result as the Bush plan at the end of the day (Bush uses tax breaks as the incentive, rather than cash handouts) but again keeps government in control of the money instead of the individual.

It looks to me like they've agreed with Bush's position, and are just proposing the big-government method of doing the same thing.

So what do you think? Good? Bad? Indifferent?

[Inquartata]

Unfortunately, these days the solutions coming out of BOTH Parties seem to be "big government" ones...

[gojujay]

Originally Posted by Inquartata

Unfortunately, these days the solutions coming out of BOTH Parties seem to be "big government" ones...

Which is why I no longer affiliate myself with either of them...