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I know a lot of people are inclined to believe there is something wrong with Social Security, and that it won't be there for them. I'd like to offer some facts, as I understand them, about the state of Social Security.
When Social Security was created, average life expectancy was 65. Since retirement was also 65, most people would turn 65, collect for a few months, and die. Today people are living to 80, which puts a huge strain on the system.
Average life expectancy is a totally irrelevant statistic. 65 is an AVERAGE which includes the high infant and childhood mortality rates of the day. Very few people actually DIED at 65, statistically speaking. The IMPORTANT question is, once you made it to 65, what was your life expectancy? The answer: 12 more years.
Today, although the AVERAGE life expectancy is higher, a 65 year old can expect to live 15 more years. This reperesents a mere 3 year increase. As you know, the rietirement age has already been adjusted to account for this.
When Social Security first started, there were 16 workers for every person collecting. Now there are only 2 or 3. That puts a strain on the system.
WHO cares what the ratio was in year one? This is an irrelevant statistic. Five minutes after the first guy started collecting the ratio must have been a MILLION to one. The system was DESIGNED for a 2 or 3 to one ratio.
Social Security just flat out won't be there for me when I need it.
The most recent Social Security trustees’ report shows that the system can pay all scheduled benefits until 2042. After that, some minor tweaking, such as raising the cutoff from $90,000/yr to something a bit higher, will take care of it.
Barbara B. Kennelly, head of the National Committee to Preserve Social Security and Medicare, says private accounts change the intent of Social Security. "What the president’s plan does is take Americans out of the community pool, where we share the risk, and put each of us into our own pool of one to fend for ourselves," she says. "That’s fine if you’re rich.
While #1 fact may be correct I have a hard time believing fact #2. It is just a fact that a larger percentage of our working population will be retiring in the next 20 years. My parents are a part of that generation which had the largest population increase in our history. There just aren't enough workers out there to meet the demands of their collective retirement at once. A 2 to 3 ratio may not exactly mean much either because what if those two workers who are putting money in to the system don't equal the amount of the person who is retired and getting his money. Then it has to be pulled from another person. The chain continues and when all the baby boomers are dead in 40 years our current generation won't have enough kids (unless there is another boom) to support ourselves.
Personally I'm counting right now on having very little social security so that I save more by myself for retirement. With wise investing and using things like Roth IRAs and for myself SEP IRAs then by retirement comes SS will be a nice supplement to the 4 million or so saved.
Couple other quotes from another source.
"Not a sole retirement plan. Social Security was never meant to be the sole source of income in retirement. It is often said that a comfortable retirement is based on a "three-legged stool" of Social Security, pensions and savings. American workers should be saving for their retirement on a personal basis and through employer-sponsored or other retirement plans.
Social Security's financing problems are long term and will not affect today's retirees and near-retirees, but they are very large and serious. People are living longer, the first baby boomers are five years from retirement, and the birth rate is low. The result is that the worker-to-beneficiary ratio has fallen from 16-to-1 in 1950 to 3.3-to-1 today. Within 40 years it will be 2-to-1. At this ratio there will not be enough workers to pay scheduled benefits at current tax rates.
Social Security is not sustainable over the long term at present benefit and tax rates without large infusions of additional revenue. There will be a massive and growing shortfall over the 75-year period.
Social Security's Chief Actuary projects that in present-value dollars the total net Social Security cash flow for years 2004 through 2078 is projected to be nearly -$5.2 trillion. When the trust fund balances of $1.5 trillion at the beginning of 2004 are added to this value, we get a financial shortfall (or unfunded obligation) for the 75-year period of $3.7 trillion. This unfunded obligation indicates that if an additional $3.7 trillion had been added to the trust fund at the beginning of 2004, the program would have had adequate financing to meet the projected cost of benefits scheduled in current law over the next 75 years. See the Trustees Report"
There is lots more
"Personally I'm counting right now on having very little social security so that I save more by myself for retirement. With wise investing and using things like Roth IRAs and for myself SEP IRAs then by retirement comes SS will be a nice supplement to the 4 million or so saved. "
-- good idea. I have no qualms with that.
"Social Security's financing problems are long term and will not affect today's retirees and near-retirees, but they are very large and serious. "
-- The fact that they are long term gives us plenty of time to make a slight tweak in order to totally avert them.
"People are living longer"
-- Actually they are NOT living longer by much. this is a misleading statement that I addressed in point (1)
"the first baby boomers are five years from retirement, and the birth rate is low. The result is that the worker-to-beneficiary ratio has fallen from 16-to-1 in 1950 to 3.3-to-1 today.
-- Which is fine. 3.3:1 is no crisis.
"Within 40 years it will be 2-to-1.At this ratio there will not be enough workers to pay scheduled benefits at current tax rates."
-- so we'll make a tiny tweak to current tax rates in 40 years. This is not a crisis.
"Social Security is not sustainable over the long term at present benefit and tax rates without large infusions of additional revenue. There will be a massive and growing shortfall over the 75-year period."
-- unless we make a little tweakeroo oh, about 40 or 50 years from now.
Social Security's Chief Actuary projects that in present-value dollars the total net Social Security cash flow for years 2004 through 2078 is projected to be nearly -$5.2 trillion. When the trust fund balances of $1.5 trillion at the beginning of 2004 are added to this value, we get a financial shortfall (or unfunded obligation) for the 75-year period of $3.7 trillion.
-- then stop scaring people by tallying up a 75 year span with no adjustments. Even by the most conservative estimates it is solvent through 2042. In 2042, we'll raise the cap from $90,000 to, say $120,000 and it's A-OK for a century. This is by no means a crisis.
This unfunded obligation indicates that if an additional $3.7 trillion had been added to the trust fund at the beginning of 2004, the program would have had adequate financing to meet the projected cost of benefits scheduled in current law over the next 75 years. See the Trustees Report"
There is lots more
Every time you say "tweak the tax rate", I twinge. The problem with the current system is that you must increase taxes in order to cover the increased ratio of supportees to supporters. Solutions to this problem look to leverage the historcally higher return from the market to cover the shortfalls. You're stating the very reason that new systems are being generated: some people don't want to pay higher taxes and feel that Social Security can be just as secure with alternate funding.
A country is like a country club. Taxes are like dues.
Social Security is like insurance. The risk is supposed to be shared over a pool. In what way do individual accounts guarantee security?
Thanks for the spam. While I would question why you drop this ridiculous apology for the Bush administration's follies here in our laps. [Edited for me being a ass]
Last edited by chukw; January 12th, 2005 at 02:29 PM.
It's not at all spam. It's very much on my mind because it's very much in the news. It may seem non sequitur to you because it's not high on your list of topics of interest, but it's a perfectly appropriate topic for The Lounge.
If I seem like I'm an apologist for Bush administration follies, I must have expressed myself very poorly. I mean quite the opposite.
You'll notice in eatpoo I posted in The Toilet, which is designated for " 18+ Politics, religion, Flamewars Where all the dirty poo goes "
I'm a big fan of your comic, The Bag , btw chuck. I remember it fondly from my college days.
In my favorite panel, Thadius Strontium-90 takes The Bag back to his home in the Mofo Zone, The Bag whispers, "Hey Thad, your mother wears army boots!" to which Thad replies, "I know, aren't they great?" (and sure enough she's in the kitchen fixing them a snack with these big-ass boots sticking out from under her housecoat)
I don't know why I bite at these, especially when I'm not an advocate of any particular solution (as I'll be living off my lottery winnings... any day now...). I just get nervous when anyone suggests throwing money at a problem as the only solution (especially when no one knows how much money it will take). Many education issues fall in the same category.
Chuck, man... there are some decaffeinated brands that are just as tasty... (I thought the lounge was open to a range of subjects and like your work, too)
The problem, Dogfood, is not enough caffiene, apparently- thanks for the wake-up slap, and the compliment! OK, I is a ass! Sorry for being a knee-jerk, but your arguement, jfrancis,just seems to support that "there's nothing wrong with SS" arguement that goes around today. I don't know enough specifics about the case, so your posting of an arguement without general background threw me. The fact that Bush wants to dump it into the stock market has me riled- just another way for him to help our money find its way into the pockets of the uber-wealthy even faster than its naturally bound to under the current social structure (serfs and lords- that's the future he must envision for us). I guess you're basically saying that it ain't broke so we needn't fix it? If so, my bad. I checked out your site and you seem to be the kind of person who likes to go straight to data without much preamble. You have me at a disadvantage- did you know me back at dear ol' Duke? I'm fully prepared to be embarassed at not recognizing your intial and surname- my memory must be back in the MoFo zone...
As far as the Toilet post,I guess you've learned the hard way about their brand of "political" discussion. I haunt there for the funny stuff, and to keep an eye on who's naughty and who's nice.. Sorry to drag it here. I'll erase it!
We spoke once or twice at The Coffeehouse, but you wouldn't know me. In fact, we didn't really overlap much if at all. I read most of your comics on microfilm at the library.
Last edited by jfrancis; January 12th, 2005 at 03:53 PM.
I go for a cleaning 2 times a year and it costs $100 and $120 with xrays for a cleaning. Not too much if you ask me, and I have NO dental insurance at all. If I had dental insurance it would probably be around $15. A ticket to belgium would be in the hundreds. If she needs more work then perhaps a $2 toothbrush, a .50 floss, and 2 minute brushing every morning and night be be a nice preventative measureOriginally Posted by Jens
Unfortunately this country club is a bit crooked. Instead of one nice due we get stuck with paying taxes on gas, goods, services, income, property, cars, loans, city, state, federal, business taxes, self employment taxes, etc and really for what in the end? For the right to own the things we have paid for like houses and cars? The right to buy our own healthcare? The right to send in SS money and have it be an IOU? I can't help but feel screwed every time I notice a few hundred is missing from my check and I feel like I am getting very little in return.Originally Posted by jfrancis
I'd rather invest all my money rather than have the government, who has no comprehension of fiscal spending, using my money for whatever they deem necessary and then promise to pay it back when I am 65.
MY problem with social security is that they take ALOT out of my checks, and I'm probably going to see a fraction of that (if any)..
I would rather have my personal social security (or even just part of it) go into an account (like an IRA) that I can manage myself, and even invest it in very low risk investments. In all honesty I'd rather there not be a SS system, and let me invest my money myself... I'd be hundreds of thousands (maybe into the millions) richer when I retire, and I wouldnt have to throw my non-social security money into an IRA and a 401K for my retirement. Unfortunately, the government likes to use our SS money for other things, so they would never let me have all of my own money
It just pisses me off that they are throwing away my hard earned money, when I could manage it myself and make 10x the money for my retirement, just because most people can't manage thier own money and would be screwed when they get too old to work.
Originally Posted by Jens
She must have some horrendous teeth..
All we have to pay here (with insurance) is a small co-pay...
Chuck, it's all good. It reminds me of the Calvin and Hobbes cartoon, where Calvin is in a roadside stand selling "kicks in the butt, $1" and Hobbes asked if anyone has bought one, with Calvin responding, "No, and most people I know need this".
Jens, I have a friend who used to fly for an airline in Northern Europe, but lived in the US (paying $400 to fly back and forth, each time, three times a month), because so much of his pay would go to taxes, else. Another of my friends loves living in Belgium (I don't know how his teeth are, though).
Neil, the social security tax is seperate from the rest (I want to know where my fica is, though; I've been paying a lot for it).
Dragon, I agree to an extent (perhaps something more secure than the open market), but the investment should be mandatory, lest the short-sighted spend that money on a new 24x24 Intuos VIII.
If the government said, "take 2/3 of the money we normally put into social security and invest it however you want. Or spend it if you want. If you F up, well, then enjoy the cat food." I'd be okay with that.
The way this thing is actually going down, though, is it is being set up as a MASSIVE NEW GOVERNMENT PROGRAM. The GOVERNMENT TRUSTEES will be picking what they will invest in and what they won't.
You may think you can invest better than the government can, but you won't even get the chance.
This plan is not at all what you picture it to be.
I'm not saying that they should jsut give us all of our money and let us go wild with it in risky stocks... but we should be able to invest it in lower risk funds (that are approved by the government, of course) that have a decent rate of return (maybe a market matching fund?) over the long term...
I just don't like the system they have now at all, and would really like to see a change and hopefully much better returns for everyone..