Actuarial Outpost
 
Go Back   Actuarial Outpost > Actuarial Discussion Forum > Pension - Social Security
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

DW Simpson Global Actuarial & Analytics Recruitment
Download our 2017 Actuarial Salary Survey
now with state-by-state salary information!


Reply
 
Thread Tools Search this Thread Display Modes
  #21  
Old 11-10-2011, 10:22 AM
bdschobel's Avatar
bdschobel bdschobel is offline
Past SOA President
SOA AAA
 
Join Date: May 2004
Location: Sunrise, FL
Studying for FSA '76
College: MIT '74
Posts: 15,392
Default

Quote:
Originally Posted by echo View Post
Have you calculated how much money would be required to fully fund SS? How does that compare to the size of the credit & stock markets? I thought I'd read that the funding amount would be comparable to or larger than the private markets....
Yes, that's correct. The PV of all accrued benefits is roughly $17 trillion. The value of all stocks traded on American exchanges is something like $13 trillion.

Bruce
Reply With Quote
  #22  
Old 11-10-2011, 10:24 AM
DanielSong39 DanielSong39 is offline
Member
SOA
 
Join Date: Sep 2009
College: Caltech, Class of 2000
Posts: 6,753
Default

Quote:
Originally Posted by echo View Post
Have you calculated how much money would be required to fully fund SS? How does that compare to the size of the credit & stock markets? I thought I'd read that the funding amount would be comparable to or larger than the private markets, although things may have changed over the years. Assuming that's true, prefunding would drive down rates/investment returns. Might also inflate a few bubbles.

I'm not so sure prefunding something like SS makes any sense. How well has the SS trust fund worked? I certainly wouldn't call it a success.
echo,

This has been through Congress time and time again the last few decades. There have been many, many proposals to privatize portions of Social Security. However, they have all been shot down.

The government wouldn't invest the money for them. Instead, there would be a system where individuals would make the investment decisions on their own.

If individuals are given the opportunity to fund their own requirement and a system to do so but blow it, they have to bear the consequences and rely on the generosity of others. They're entitled to nothing.

I'd like to have a system that places greater weight on personal responsibility and generosity. I'm sure many people would meet the challenge and come through.
Reply With Quote
  #23  
Old 11-10-2011, 10:25 AM
bdschobel's Avatar
bdschobel bdschobel is offline
Past SOA President
SOA AAA
 
Join Date: May 2004
Location: Sunrise, FL
Studying for FSA '76
College: MIT '74
Posts: 15,392
Default

Quote:
Originally Posted by DanielSong39 View Post
I understand what you're saying, and I should've made myself more clear.

What I really want is a side-by-side comparison.

Column A: Actuarial value of Social Security taxes you pay in
Column B: Actuarial value of Social Security payouts you receive

And I'd also like to see an effort to keep these values somewhat similar.

Obviously the two numbers won't be completely equal for all people. But the comparison should still be there so that the system will become more transparent. In addition, the sum of Column A should be slightly greater than the sum of Column B in order to account for risk and for the system to remain solvent.

I want a system that is both solvent and somewhat fair. A system in which one generation gets several times more than they put in, another generation gets much less, and future generations gets pennies on the dollar while the system is trillions of dollars in red ink is neither solvent or fair.
Social Security was designed with a number of built-in transfers: from rich to poor, from single to married, from those who die young to those who live a long time. It was never intended to be a "get-what-you-pay-for" DC plan. You basically want to start over from scratch. It's a pipe dream.

Bruce
Reply With Quote
  #24  
Old 11-10-2011, 10:26 AM
bdschobel's Avatar
bdschobel bdschobel is offline
Past SOA President
SOA AAA
 
Join Date: May 2004
Location: Sunrise, FL
Studying for FSA '76
College: MIT '74
Posts: 15,392
Default

Quote:
Originally Posted by DanielSong39 View Post
This has been through Congress time and time again the last few decades. There have been many, many proposals to privatize portions of Social Security. However, they have all been shot down.
They weren't "shot down." They fell apart because of their own internal inconsistencies. You simply can't get there from here. Remember those 54 million beneficiaries, OK?

Bruce
Reply With Quote
  #25  
Old 11-10-2011, 11:03 AM
MountainHawk's Avatar
MountainHawk MountainHawk is offline
Member
CAS AAA
 
Join Date: Dec 2001
Location: Salem, MA
Studying for Nothing!!!!
College: Lehigh University Alum
Favorite beer: Yuengling
Posts: 64,850
Default

Quote:
Originally Posted by Jack View Post
Means testing is a bad idea as it removes the insurance element. It will kill social security.

The complaints about insolvency are hyperbole. Social security can be continued with adjustements that reflect the demographic changes. (Older qualifying ages, removing the social security max for the revenue side. some reduction in benefit)

I'm 45 years old and have been paying into social security since 1982 and for every year since I was 27 have been paying the max. I'm counting on social security to fund about 20-30% of my retirement. I'm not alone. Further more it's the only real inflation hedge available to retirees.

It's hard to understate how successful social secuity has been in essentially eliminating old age income insecurity.
I'm 35 (today!) and am counting on SS to fund 0% of my retirement, as are many other my age.
__________________

Play in the AO Prediction Game now!



1
Reply With Quote
  #26  
Old 11-10-2011, 11:39 AM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 84,215
Blog Entries: 6
Default

Quote:
Originally Posted by MountainHawk View Post
I'm 35 (today!) and am counting on SS to fund 0% of my retirement, as are many other my age.
This.

As the trouble is hitting right now, and there are going to be some benefit cuts to Boomers, because they're living too long and had too few kids. If there are not enough taxpayers to pay for all the goodies, and there isn't enough capital elsewhere willing to pay for the goodies, then goodies are going to be cut.

I think it's going to morph from "social insurance" to an outright welfare program for seniors.
__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #27  
Old 11-10-2011, 12:53 PM
DanielSong39 DanielSong39 is offline
Member
SOA
 
Join Date: Sep 2009
College: Caltech, Class of 2000
Posts: 6,753
Default

Quote:
Originally Posted by bdschobel View Post
Social Security was designed with a number of built-in transfers: from rich to poor, from single to married, from those who die young to those who live a long time. It was never intended to be a "get-what-you-pay-for" DC plan. You basically want to start over from scratch. It's a pipe dream.

Bruce
Unfortunately, as it is currently structured, Social Security is insolvent.

If having a solvent and fair Social Security is a pipe dream, this will cause many, many problems in the near future.
Reply With Quote
  #28  
Old 11-10-2011, 12:55 PM
bdschobel's Avatar
bdschobel bdschobel is offline
Past SOA President
SOA AAA
 
Join Date: May 2004
Location: Sunrise, FL
Studying for FSA '76
College: MIT '74
Posts: 15,392
Default

"Fair" is a completely subjective evaluation. I believe that the current system is already fair. And it can be made solvent easily enough.

Bruce
Reply With Quote
  #29  
Old 11-10-2011, 12:59 PM
MountainHawk's Avatar
MountainHawk MountainHawk is offline
Member
CAS AAA
 
Join Date: Dec 2001
Location: Salem, MA
Studying for Nothing!!!!
College: Lehigh University Alum
Favorite beer: Yuengling
Posts: 64,850
Default

Quote:
Originally Posted by bdschobel View Post
"Fair" is a completely subjective evaluation. I believe that the current system is already fair. And it can be made solvent easily enough.

Bruce
Older people see it as "fair". Younger people see it as a ponzi scheme. This is not a coincidence.
__________________

Play in the AO Prediction Game now!



1
Reply With Quote
  #30  
Old 11-10-2011, 01:10 PM
Take 2's Avatar
Take 2 Take 2 is offline
Member
SOA AAA
 
Join Date: Sep 2001
Location: second estate
Favorite beer: Hires Root
Posts: 5,055
Default

We will all pay for my generation's decision to make the next generation smaller.
__________________
there is no situation so bad that
getting upset won't make it worse
Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 03:17 AM.


Powered by vBulletin®
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.33155 seconds with 9 queries