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Will someday Social Security invest in the stock market?
- Thread starter crgarcia
- Start date
Vinny says:
But I know my wish of no more SS taxes will probably never happen. One can dream though.
Vinny, for your sake and mine let's hope it never happens. The US SS system has been a huge success. The present administration has put out so much misleading and downright false information about social security it makes me sick. Here are a few facts: 1. Unlike the very serious problems with runaway costs in the medicare program, the problems with future funding for social security are trivial and can be very easily fixed, assuming the fix is not put off for too many more years.
Second, and most important, social security is a social insurance program. For it to work as intended there must be wide participation. We can not permit individuals to opt out. And why would you want too? It's a tremendous benefit to everyone. Because of the shared cost feature, those who die relatively soon after their benefits begin subsidize those who live longer. The very important consequence of this is that, at a fixed benefit level, to guarantee that you will not run out of money no matter how long you live you do not have to contribute as much during your working years as you would have to contribute to a private plan such as a 401K to receive the same monthly benefit and be guaranteed that you will not exhaust your principle. (You might want to re-read the last sentence and let it sink in!) What i am saying, and this is extremely important for everyone to understand, is that because of the shared cost feature, your costs of assuring your benefits are LESS than they would be for a 401K with the same guarantee of never running out of money! This is the genius of Social Security and the feature that makes it possible for those in the lowest income strata to afford a retirement, meager as it may be. (I may have also slightly exaggerated the cost saving benefit for those making the maximum contribution, who may end up slightly subsidizing those at the low end -- but that's the socially responsible thing to do.)
So what is the trade-off for this lower cost? It's the absence of an estate. When you die any residual from your SS contributions goes to others, whereas with a 401K any residual becomes part of your estate. But that's a great trade-off in my opinion. We get to have our cake and eat it too, because we all have the option of building a private retirement fund, and on top of that we enjoy, via Social Security, a low cost, fail-safe, back-up retirement fund that we can use to supplement any other plan we choose. Also, by contributing to social security we are doing the socially responsible thing -- we are helping to assure that those less fortunate than we will not be destitute and on the streets in their old age. But the plan can only work if there is wide participation. I love social security, and i don't what to hear any more crap from either our dim-wit President or lobbyists for Wall Street about privatizing it. That would be an unmitigated disaster for the average American.
But I know my wish of no more SS taxes will probably never happen. One can dream though.
Vinny, for your sake and mine let's hope it never happens. The US SS system has been a huge success. The present administration has put out so much misleading and downright false information about social security it makes me sick. Here are a few facts: 1. Unlike the very serious problems with runaway costs in the medicare program, the problems with future funding for social security are trivial and can be very easily fixed, assuming the fix is not put off for too many more years.
Second, and most important, social security is a social insurance program. For it to work as intended there must be wide participation. We can not permit individuals to opt out. And why would you want too? It's a tremendous benefit to everyone. Because of the shared cost feature, those who die relatively soon after their benefits begin subsidize those who live longer. The very important consequence of this is that, at a fixed benefit level, to guarantee that you will not run out of money no matter how long you live you do not have to contribute as much during your working years as you would have to contribute to a private plan such as a 401K to receive the same monthly benefit and be guaranteed that you will not exhaust your principle. (You might want to re-read the last sentence and let it sink in!) What i am saying, and this is extremely important for everyone to understand, is that because of the shared cost feature, your costs of assuring your benefits are LESS than they would be for a 401K with the same guarantee of never running out of money! This is the genius of Social Security and the feature that makes it possible for those in the lowest income strata to afford a retirement, meager as it may be. (I may have also slightly exaggerated the cost saving benefit for those making the maximum contribution, who may end up slightly subsidizing those at the low end -- but that's the socially responsible thing to do.)
So what is the trade-off for this lower cost? It's the absence of an estate. When you die any residual from your SS contributions goes to others, whereas with a 401K any residual becomes part of your estate. But that's a great trade-off in my opinion. We get to have our cake and eat it too, because we all have the option of building a private retirement fund, and on top of that we enjoy, via Social Security, a low cost, fail-safe, back-up retirement fund that we can use to supplement any other plan we choose. Also, by contributing to social security we are doing the socially responsible thing -- we are helping to assure that those less fortunate than we will not be destitute and on the streets in their old age. But the plan can only work if there is wide participation. I love social security, and i don't what to hear any more crap from either our dim-wit President or lobbyists for Wall Street about privatizing it. That would be an unmitigated disaster for the average American.
Quote from piezoe:
Vinny says:
But I know my wish of no more SS taxes will probably never happen. One can dream though.
Vinny, for your sake and mine let's hope it never happens. The US SS system has been a huge success. The present administration has put out so much misleading and downright false information about social security it makes me sick. Here are a few facts: 1. Unlike the very serious problems with runaway costs in the medicare program, the problems with future funding for social security are trivial and can be very easily fixed, assuming the fix is not put off for too many more years.
Second, and most important, social security is a social insurance program. For it to work as intended there must be wide participation. We can not permit individuals to opt out. And why would you want too? It's a tremendous benefit to everyone. Because of the shared cost feature, those who die relatively soon after their benefits begin subsidize those who live longer. The very important consequence of this is that, at a fixed benefit level, to guarantee that you will not run out of money no matter how long you live you do not have to contribute as much during your working years as you would have to contribute to a private plan such as a 401K to receive the same monthly benefit and be guaranteed that you will not exhaust your principle. (You might want to re-read the last sentence and let it sink in!) What i am saying, and this is extremely important for everyone to understand, is that because of the shared cost feature, your costs of assuring your benefits are LESS than they would be for a 401K with the same guarantee of never running out of money! This is the genius of Social Security and the feature that makes it possible for those in the lowest income strata to afford a retirement, meager as it may be. (I may have also slightly exaggerated the cost saving benefit for those making the maximum contribution, who may end up slightly subsidizing those at the low end -- but that's the socially responsible thing to do.)
So what is the trade-off for this lower cost? It's the absence of an estate. When you die any residual from your SS contributions goes to others, whereas with a 401K any residual becomes part of your estate. But that's a great trade-off in my opinion. We get to have our cake and eat it too, because we all have the option of building a private retirement fund, and on top of that we enjoy, via Social Security, a low cost, fail-safe, back-up retirement fund that we can use to supplement any other plan we choose. Also, by contributing to social security we are doing the socially responsible thing -- we are helping to assure that those less fortunate than we will not be destitute and on the streets in their old age. But the plan can only work if there is wide participation. I love social security, and i don't what to hear any more crap from either our dim-wit President or lobbyists for Wall Street about privatizing it. That would be an unmitigated disaster for the average American.
One of the better posts here. There is no doubt social security is a brilliant idea. It's a social insurance.. I'd rather pay a few grand per year to an account to pay for middle america's retirement.. It's either that or I put 4 turrets with 50 caliber guns on top of my mansion to keep them stealing my shit.
Not only that.. It's a small price to pay to live in America and reap the benefits of the land of amazing opportunity.
Quote from Matt24SPFL:
One of the better posts here. There is no doubt social security is a brilliant idea. It's a social insurance.. I'd rather pay a few grand per year to an account to pay for middle america's retirement.. It's either that or I put 4 turrets with 50 caliber guns on top of my mansion to keep them stealing my shit.
Not only that.. It's a small price to pay to live in America and reap the benefits of the land of amazing opportunity.
I'm all for helping people out that really need social security, like the disabled or poor widows. They should eliminate SS taxes, and pay out monies to the disabled and poor widows from federal income taxes collected; of course our government would have to figure out ways to trim spending in other areas.
One option that would be great is for the IRS to give back, right when you turn 65, everything that you paid into SS plus what the employer paid plus all the gains in one lump sum. That way if you die early, you'll at least get back everything you put into it for your wife to enjoy.
Quote from gnome:
NO! Politicians won't be able to steal the money if it's invested in the markets, so it will never be allowed.
You're right. Gore was right. Understating the deficit by slipping IOUs into the SS slush fund would get a CEO a quick trip to jail but they keep right going on with this charade.
Great post piezoe.Quote from piezoe:
Here are a few facts: 1. Unlike the very serious problems with runaway costs in the medicare program, the problems with future funding for social security are trivial and can be very easily fixed, assuming the fix is not put off for too many more years...
The one thing that SS needs IMO is automatic adjusting features (ex: increasing retirement age as life expectancy increases) so that individual politicians don't need to summon the fortitude to step up and touch the 3rd rail (e.g. sponsor legislation to push out the retirement age or any other change that AARP would protest) Then it could just run on auto-pilot and (most) everyone would be happy.
I agree that SS is important and overall has been a success, but there are certainly some fixes that will have to happen (sooner rather than later hopefully) in order for it to continue working.
I just wish that some of the money would be privitized and consequently, growing at a higher rate.
I just wish that some of the money would be privitized and consequently, growing at a higher rate.
Quote from GTS:
Great post piezoe.
The one thing that SS needs IMO is automatic adjusting features (ex: increasing retirement age as life expectancy increases) so that individual politicians don't need to summon the fortitude to step up and touch the 3rd rail (e.g. sponsor legislation to push out the retirement age or any other change that AARP would protest) Then it could just run on auto-pilot and (most) everyone would be happy.
YES.. It does need an adjusting feature in regards to the increasing life expectancy.
90% of those individuals reaching retirement age simply do NOT have enough money to retire. It's a scary situation coming up here within the next 10 years....
Do you guys think they will impose a bill to regulate the outsourcing of jobs? What are we going to do round up all the poor 'retired' folks and put them in concentration camps"?"?
It's not like there's an account with all of your life-to-date contributions in it that's waiting to be invested -- there's no pot of cash.
It's not guaranteed; it's an entitlement program that's funded by payroll taxes (think just-in-time inventory). They can't afford to let people start building piles of cash from their SS contributions because they have to pay current recipients.
It's not guaranteed; it's an entitlement program that's funded by payroll taxes (think just-in-time inventory). They can't afford to let people start building piles of cash from their SS contributions because they have to pay current recipients.
Quote from JangoFolly:
It's not like there's an account with all of your life-to-date contributions in it that's waiting to be invested -- there's no pot of cash.
It's not guaranteed; it's an entitlement program that's funded by payroll taxes (think just-in-time inventory). They can't afford to let people start building piles of cash from their SS contributions because they have to pay current recipients.
Just in time payments is how a pyramid scheme runs. Just sayin' is all.