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  #11  
Old 11-10-2011, 06:28 AM
DanielSong39 DanielSong39 is offline
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I would be happy if the funds for the safety net for seniors came from the money they put into the system.

I'm sure there is a way to determine the amount of money they put in by using past tax returns and tax rates and accumulate that amount using interest rates from US government bonds. The safety net comes out of the pooled money.

I would be happy if what people put in was what they got out. It should be simple enough in principle and that's roughly how the 401K works.
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  #12  
Old 11-10-2011, 08:05 AM
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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.
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  #13  
Old 11-10-2011, 08:06 AM
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Quote:
Originally Posted by DanielSong39 View Post
I would be happy if the funds for the safety net for seniors came from the money they put into the system.

I'm sure there is a way to determine the amount of money they put in by using past tax returns and tax rates and accumulate that amount using interest rates from US government bonds. The safety net comes out of the pooled money.

I would be happy if what people put in was what they got out. It should be simple enough in principle and that's roughly how the 401K works.
That's not how insurance works.
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  #14  
Old 11-10-2011, 08:20 AM
DanielSong39 DanielSong39 is offline
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That is how insurance works. People put money into the pool. The money comes out of the pool. If you overdraw from the pool, this causes problems.

When the government itself admits that the current system will cause massive overdrawing of the pool and an unsustainable spiraling of benefits in the near future, it's obvious that the current system is not working.
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Old 11-10-2011, 08:34 AM
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I go back to my proposal in political. I think we should scrap SS (and all other forms of federal welfare), and just tax people via the following formula:

Tax = 28% * Income - Federal Poverty Level, where income is defined as it is today (including all forms of income -- wages, cap gains, dividends, etc). This gets us the same net income tax we got in 2009, so it's not an overall tax cut (though it is a significant redistribution of who pays the taxes). It guarantees every person living in America an income of the Federal Poverty Level, and 28% does not seem that onerous of a tax burden for the incredibly wealthy.
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  #16  
Old 11-10-2011, 09:39 AM
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Originally Posted by DanielSong39 View Post
If Social Security was changed into a voluntary, direct contribution, 401K-like plan I would have zero complaints.
Maybe you would have no complaints, but how about the 54 million people who get benefits every month from Social Security? Their benefits are funded primarily by your taxes. If your taxes go somewhere else, then how do those millions of people get paid? With general revenue? You pay that, too.
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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 adjustments 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 security has been in essentially eliminating old age income insecurity.
Yup, yup and yup again. Can't add anything to this excellent post.

Bruce
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  #17  
Old 11-10-2011, 09:56 AM
DanielSong39 DanielSong39 is offline
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The most common argument I hear for Social Security is that they put the money into the system while they were working, so they are entitled to whatever benefits they receive.

A means test would either support or kill that argument. I just want to see the truth. Or are people so afraid of the truth that they will do whatever it takes to avoid it?

I would like to see a system in which people get out what they put in, and leave room for generosity to make up for the shortfalls that may exist. Such generosity should be voluntary and should be a private decision made by each citizen - or it ceases to be generosity.
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  #18  
Old 11-10-2011, 10:04 AM
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You need to study risk pooling. Everybody can't get out the value of what they put in -- and simultaneously give poor people a little more (unless that money comes from somewhere else). The system that you envision is an impossibility.

Bruce
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  #19  
Old 11-10-2011, 10:13 AM
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Quote:
Originally Posted by DanielSong39 View Post
I would be happy if the funds for the safety net for seniors came from the money they put into the system.

I'm sure there is a way to determine the amount of money they put in by using past tax returns and tax rates and accumulate that amount using interest rates from US government bonds. The safety net comes out of the pooled money.

I would be happy if what people put in was what they got out. It should be simple enough in principle and that's roughly how the 401K works.
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.
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  #20  
Old 11-10-2011, 10:19 AM
DanielSong39 DanielSong39 is offline
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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.
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