Social Security not a cause of, and not a solution to, national debt
It’s not, or at least it shouldn’t be, about Social Security.
Social Security is neither the cause of nor the solution to our nation’s financial problems.
Nonetheless, a bipartisan presidential commission looking for ways to reduce our national debt is making noises about dragging Social Security into the squabble. The Republican co-chair of the commission, former U.S. Sen. Alan Simpson, fed that impression in an email last month when he referred to Social Security as “a milk cow with 310 million tits.” Simpson also argued in that email that Social Security is in trouble unless it can be made sustainable and solvent over the long term.
Fortunately, that is an exaggeration of the program’s condition. The facts are as follows:
1.) With no changes in taxes or benefits, Social Security can continue to pay 100 percent of all promised benefits between now and 2036. It can do so by tapping a $2.5 trillion trust fund created precisely to cover the retirement years of the Baby Boom generation.
2.) Beginning in 2037, and for every year thereafter, Social Security would be able to pay recipients only 76 percent of promised benefits.
3.) That post-2037 gap could be closed with relatively minor fixes. For example, raising combined SSI payroll taxes from 12.4 to 14.4 percent would cover the bill entirely. A combination of a slight payroll tax increase, applying the tax to earned income above the current tax ceiling of $106,000 and adjusting scheduled cost-of-living increases could also eliminate the gap relatively painlessly.
If those are the kind of fixes that Simpson envisions — if his goal is to fix Social Security solely for the purpose of fixing Social Security — then that’s a discussion worth having.
However, if Simpson and others are after larger game — if they hope to tap the $2.5 trillion owed to Social Security as a way to address the nation’s larger fiscal problems, for example — they’re going to have an all-out fight on their hands.
Take a look at the chart above, from Stephen Goss, the chief actuary of the Social Security Administration. It documents, as a percentage of GDP, the amount of money collected each year in Social Security taxes above and beyond what Social Security paid out that year.
Note the year 1983. That year, a commission appointed by President Ronald Reagan recommended significant increases in Social Security payroll taxes in order to make the program actuarially sound. The idea, embraced by Congress, was that the additional revenue would be used to build a surplus in the Social Security Trust Fund so that when the Baby Boom generation began to reach retirement age, the money would be there.
Today, that surplus would amount to $2.5 trillion. But notice that word “would.” For more than 25 years, while working people were told that they were paying extra taxes to ensure their retirement security, that surplus tax revenue was actually being siphoned off to run general government operations. In effect, higher Social Security taxes were being used to offset revenue that had been lost to the government when Reagan cut income and corporate taxes, disguising the true fiscal impact of those cuts.
Today, technically, a surplus of $2.5 trillion now sits in the trust fund, ready to be used for Social Security. In reality, the trust fund contains government IOUs that taxpayers today and tomorrow will have to redeem, probably through payeing higher taxes. So here’s the question now before the body politic:
Will taxpayers — and politicians — honor the $2.5 trillion debt that is owed to Social Security and those who paid into it? Or, will they breach that trust by claiming that the debt is too big to be repaid in its entirety, and that benefit cuts will be required?
There’s no question that the nation’s longterm financial crisis is serious. Eventually, it will have to be addressed both through cuts in spending — including entitlements — and through tax increases. However, as long as it is made actuarially sound, Social Security ought to be exempt because it has been and continues to be a self-funding program, requiring no input from the general treasury other than repayment of what the treasury has borrowed.
To repeat, Social Security is not to blame for our financial problems. And it should not be treated as a piggy bank to be raided and not repaid, at the expense of those who count upon it.
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670 comments Add your comment
godless heathen
September 7th, 2010
2:17 pm
“It was never intended as strictly a savings program.”
It’s a welfare program, in other words.
Jackie
September 7th, 2010
2:17 pm
@RW(original)
I did not speak precisely in that the Chamber of Commerce website had information pertaining to the right-wing effort to destroy the Obama Administration.
Maybe this posting will help in clarifying what the Chamber is doing to help in adding to the problems heaped upon the American public.
http://mommylife.net/archives/2009/10/obamas_enemies.html
Union
September 7th, 2010
2:18 pm
afternoon all.. i like the year 2037.. of course.. thats just a myth.. kind of like some of the other posts on here. as jay likes to bring the cbo into the discussion all of the time… the cbo had stated in 2009 that the ss “tipping point” would not occur until at least 2016… well.. that has come and gone now.. 6 years earlier than expected..
Kamchak
September 7th, 2010
2:19 pm
I appreciate that honest answer, Kam. To be honest in return, I was surprised that McCain did as well as he did given his poor campaign, lack of personal charisma, and disastrous choice of a running mate.
I think Hillary possesses the greatest political mind of our time, so quite naturally she would understand just exactly how polarizing and unelectable she is. The contentious contest that was the Democratic primary was pure theater choreographed to take a momentum into the general election while McCain was resting on his laurels after breezing through the Republican primary.
But it’s also clear that the Republicans didn’t want the White House.
Why else would they hang an albatross like Caribou Barbie around their neck?
Fang1944
September 7th, 2010
2:19 pm
An article in the current Newsweek points out that the money needed to fix Social Security is just about the same as the tax cuts for the rich that Obama wants to eliminate.
godless heathen
September 7th, 2010
2:20 pm
@G.W. “How long does it take to get that principal stashed away assuming you take 6.2% of your current earnings and stash it away while earning a whopping risk-free average annual yield of let’s say 5%, just for fun. Shall we do the numbers.”
Harry did the numbers, you just don’t like the answer.
Deep throat
September 7th, 2010
2:20 pm
Harry 1:48, the sad thing about your retirement plan is your not factoring the Oblunder factor, which is he will want to tax you and give your money to some one who did not save for retirement
Del
September 7th, 2010
2:22 pm
The Democrats began raiding the Social Security Trust under LBJ. The government is in no position to pay up on the IOU’s. Social Security isn’t in trouble?
Jackie
September 7th, 2010
2:22 pm
@godless heathen
The conversation had nothing to do with FICA; it was about Social Security.
Secondly, you should read and understand what you are talking about before you make specious claims about what you know and what others don’t know. Time your time and read the big words for understanding.
http://en.wikipedia.org/wiki/Federal_Insurance_Contributions_Act_tax
Scout
September 7th, 2010
2:22 pm
Sorry Jay:
I know you can read ……………..
#2) Throw out the false and opine about the truth.
Snopes listed my Social Security Post as a “Mixture of True and False Information”.
That said:
“For the past few years http://www.snopes.com has positioned itself, or others have labeled it as the ‘tell-all, final word’ on any comment, claim and e-mail. But for several years people tried to find out who exactly was behind snopes.com.”
“Only recently did Wikipedia get to the bottom of it – kinda makes you wonder what they were hiding. Well, finally we know. It is run by a husband and wife team – that’s right, no big office of investigators and researchers, no team of lawyers. It’s just a mom-and-pop operation that began as a hobby. David and Barbara Mikkelson in the San Fernando Valley of California started the website about 13 years ago – and they have no formal background or experience in investigative research.”
“According to snopes.com, snopes.com is completely accurate and legit. Therefore, it must be so.”
“You be the judge of the “authoritative source.”
Disgusted
September 7th, 2010
2:24 pm
I think Hillary possesses the greatest political mind of our time, so quite naturally she would understand just exactly how polarizing and unelectable she is.
I remain convinced that Hillary lost the primary for one reason: her vote in favor of the war powers resolution. Barack Obama clubbed her over the head with that vote every time she appeared to be gaining some momentum.
jm
September 7th, 2010
2:25 pm
Fear mongering about modifying entitlement programs make these government programs “third rails”. That fear mongering may be the undoing of this republic if the deficit / debt commission is not permitted to make reasonable judgments on how to reform how our government works.
Its not like Obama stacked the commission with Republicans. Good grief.
RW-(the original)
September 7th, 2010
2:27 pm
I did not speak precisely in that the Chamber of Commerce website had information pertaining to the right-wing effort to destroy the Obama Administration.
Really Jackie? Here are your words.
Check out the Chamber of Commerce and any other conservative web site. They have more-or-less indicated they are trying to destroy the Obama Administration before America is destroyed.
Union
September 7th, 2010
2:27 pm
well.. the question i always found so curious was.. if ss was such a good plan.. why were county and federal employees given the option of opting out?
Harry Callahan
September 7th, 2010
2:30 pm
G.W.
September 7th, 2010
2:13 pm
“How long does it take to get that principal stashed away assuming you take 6.2% of your current earnings and stash it away while earning a whopping risk-free average annual yield of let’s say 5%, just for fun. Shall we do the numbers.”
G.W., let’s try some reading comprehension, K? I already did the numbers. 6.2% of your income, plus the mandatory employer match, at 5% over 45 years, equals $832K.
Union
September 7th, 2010
2:31 pm
@jackie.. so you decide to host a “job creations’ summit.. do you invite the representatives of the largest employers in the country to get their input? no.. you instead invite the union heads.. who would rather see a job lost than not to have it their way..
Harry Callahan
September 7th, 2010
2:31 pm
Kamchak
September 7th, 2010
2:19 pm
“I think Hillary possesses the greatest political mind of our time”
There’s your sign, sport.
Paul
September 7th, 2010
2:31 pm
Man oh man, I just looked over at Ms. Tucker’s. Talk about a fun topic! Here’s to hoping something similar will pop up here. Not that this isn’t a fun topic, Jay, but SS as an element of national debt compared to a minister burning Korans and the Muslim world rioting and Gen Petraeus getting into the act?!!?
Harry Callahan
September 7th, 2010
2:34 pm
Union
September 7th, 2010
2:27 pm
“well.. the question i always found so curious was.. if ss was such a good plan.. why were county and federal employees given the option of opting out?”
Same reason federal employees are exempt from Obamacare…
G.W.
September 7th, 2010
2:35 pm
@G.W. “How long does it take to get that principal stashed away assuming you take 6.2% of your current earnings and stash it away while earning a whopping risk-free average annual yield of let’s say 5%, just for fun. Shall we do the numbers.”
Harry did the numbers, you just don’t like the answer.
If you made an average of 50,000 annually and packed away 6.2% at the beginning of each year with an annual yield on your savings of 5%, you would have saved about 216,000 over thirty years.
Bruno
September 7th, 2010
2:35 pm
How long does it take to get that principal stashed away assuming you take 6.2% of your current earnings and stash it away while earning a whopping risk-free average annual yield of let’s say 5%, just for fun. Shall we do the numbers.
Here’s the math for you, G.W., since your three GT degrees have let you down again. The parameters that Harry Callahan laid out are as follows:
P = 40,000 x 12.4% = 4960, I = 5%, N = 46 (65-20 + 1). Plugging these numbers into the compound interest formula gives a final vale F of $836,678. My figure is different from harry;s because, even though he is a sellf-described math geek, he forgot to include the endpoint of the span from 20 to 65 in determining his value for N.
Curious Observer
September 7th, 2010
2:35 pm
well.. the question i always found so curious was.. if ss was such a good plan.. why were county and federal employees given the option of opting out?
They already had retirement plans, and exempting governmental authorities from making SS contributions made SS more palatable. It wasn’t until Newt and the Contract on America that a revised, much less generous federal pension plan and mandatory SS participation for new federal employees passed. If they’re lucky, newer federal employees draw half as much pension as those in the old Civil Service Retirement System. Thus, participation in SS and the federal 401k, the Thrift Savings Plan, became essential for federal employees if they hoped to survive retirement.
Gordon
September 7th, 2010
2:35 pm
The trust fund is just an accounting mechanism to keep track of how much money one part of the government (Treasury) owes another part of the government (SSA). If Jay or anyone else actually believes Social Security isn’t a major problem and there really is a trust fund, then why doesn’t the government just set up a trust fund for all its expenditures? We could have a defense, trust fund, for example, where the government designates a certain percentage of your taxes go. Then they “borrow” from the trust fund an put special government bonds in place of the actual assets. Then, magically, the trust fund will pay for everything in the defense budget.
You can’t spend and save the same dollar. Social Security is absolutely part of the problem. That doesn’t necessarily mean there should be Social Security cuts, but please don’t pretend the “trust fund” solves anything.
Jay, you’re too smart for this.
Scout
September 7th, 2010
2:35 pm
“I suspected that many media outlets would tilt to the left because surveys have shown that reporters tend to vote more Democrat than Republican,” said Tim Groseclose, a UCLA political scientist and the study’s lead author. “But I was surprised at just how pronounced the distinctions are.”
“Overall, the major media outlets are quite moderate compared to members of Congress, but even so, there is a quantifiable and significant bias in that nearly all of them lean to the left,” said co‑author Jeffrey Milyo, University of Missouri economist and public policy scholar.”
“Of the 20 major media outlets studied, 18 scored left of center, with CBS’ “Evening News,” The New York Times and the Los Angeles Times ranking second, third and fourth most liberal behind the news pages of The Wall Street Journal.”
http://newsroom.ucla.edu/portal/ucla/Media-Bias-Is-Real-Finds-UCLA-6664.aspx?RelNum=6664
Harry Callahan
September 7th, 2010
2:36 pm
Union
September 7th, 2010
2:27 pm
“well.. the question i always found so curious was.. if ss was such a good plan.. why were county and federal employees given the option of opting out?”
Same reason Obama collects millions from teachers unions and puts his own kids in private school…
jm
September 7th, 2010
2:36 pm
The older I get, the more I realize the “new deal” is really just the “raw deal.” While SS was designed with good intentions, government is so rigid it can’t ever anticipate things in a rational way, even something as simple as longer life expectancies and changing birthrate demographics.
The list of government programs gone awry include welfare for decades (prior to the Clinton fix), Social Security, Medicare, irrationally earmarked highway spending, the postal service (the most recent program to begin blowing up), farm subsidies. Hell, the government generally even does a poor job taking care of those injured in the defense of our country, those people who have given the most to our country. It can’t even properly monitor something as simple as food safety, much less something as complex as oil drilling, apparently.
Meaning, government should just be there to provide a solid safety net for the poorest among us, and otherwise let the rest of us fend for, and care for, ourselves. So we can get on with our lives and make this a better country for everyone.
Harry Callahan
September 7th, 2010
2:38 pm
G.W., nice try on attempting to ignore the mandatory employer match on the 6.2% SS tax, but…it’s only y our side of the aisle that is gullible enough to buy that one…
G.W.
September 7th, 2010
2:40 pm
Of course if Harry wants a mandatory payment of 6.2% of some level of income from his employer, then he sounds like a socialist or something. I mean that’s like mandatory healthcare! Good Gawd man.
Bosch
September 7th, 2010
2:40 pm
Paul,
No, Paul, No, I don’t wanna talk about Muslims and have Scout telling us for the bajillionth time that to ignore them we do at our own peril.
Mick
September 7th, 2010
2:41 pm
**Same reason Obama collects millions from teachers unions and puts his own kids in private school…**
Now, now harry, don’t go off the rails with everything as you are want to do. It’s probably more a matter of security than anything else.
Bruno
September 7th, 2010
2:42 pm
“G.W., nice try on attempting to ignore the mandatory employer match on the 6.2% SS tax, but…it’s only your side of the aisle that is gullible enough to buy that one…”
Harry, it’s really sad how little ability 3 degrees from GT confers these days. BTW, I’ll let you off the hook for forgetting to include the endpoint for your given time span.
G.W.
September 7th, 2010
2:43 pm
Harry,
Nice try also on thinking that people work 45 years while making whatever you claim your voluntary 6.2% of income plus 6.2% mandatory contribution to your savings are.
Gordon
September 7th, 2010
2:43 pm
Jay wrote the following at 2:03:
“Furthermore, if, as you claim, there are no assets in the trust fund, then China and Japan and a whole lot of people who bought T-bills also have no assets, because the debt we own those creditors is just as real as the debt we owe Social Security. People have been paying extra to SS for more than 25 years, and now you and others want to pretend that it never happened.
Except that it did.”
Here’s the difference: If you, I, Jay, a corporation, or China buy a T-bill, it is an accounts receivable on our books and an accounts payable on the government’s books. The bonds in the file cabinet in West Virginia that people call the Social Security Trust Fund is an accounts receivable for the government and an accounts payable for the government. The net effect is nothing.
I’ll say it again: you can’t spend and save the same dollar no matter what Jay Bookman says.
barking frog
September 7th, 2010
2:44 pm
Hilary Clinton did not get elected President because
she is a woman.
Scout
September 7th, 2010
2:44 pm
“Lions and Tigers and Bears, Oh My !”
Headline (CBS): “Polls Offer Grim Outlook for Democrats in November”
http://www.cbsnews.com/8301-503544_162-20015666-503544.html?tag=stack
Scout
September 7th, 2010
2:45 pm
Obama: “They Talk About Me Like a Dog”
Well, he did refer to himself as a “mongrel”.
G.W.
September 7th, 2010
2:45 pm
And what does this self-proclaimed genius, Bruno, have to show for his fifty years on this earth? Nothing. Perhaps you would do better by concerning yourself with your own failings in life and not worrying about others so much.
Paul
September 7th, 2010
2:47 pm
Bosch
You saw right through me.
Nuts.
Harry Callahan
September 7th, 2010
2:47 pm
I changed my experiment to make it more real-world…
Since most of us start out at a low salary, and earn pay increases along the way, I amended my spreadsheet to show a $25,000 starting salary at age 20, and a 2% annual pay increase, resulting in a final salary at age 65 of $91,000.
Under this scenario, with the same 5% annual rate of return, your retirement sum is $838,904, and you can spend $41,945 annually, regardless of how long you live, and never touch the principal, which can be passed on to your kids and/or grandkids.
Or, you can stick with the government plan and get used to that double-wide…
Bruno
September 7th, 2010
2:47 pm
Jay–Are you going to miss me if I start working soon?? Who’s going to keep you honest??
I know Taxpayer aka John McCain aka G.W. isn’t going to miss me. Then he can throw his “fuzzy math” around and no one will be here to challenge him. I’ll have to designate Harry as my stand-in.
Scout
September 7th, 2010
2:48 pm
Headline (CNN): “Democrats to the president: Get a clear message”
“From union activists to Democratic members of Congress, the message to the White House is clear: They want President Obama to present a clearer, more coherent message about his plans to turn around the economy.”
http://politicalticker.blogs.cnn.com/
Matti
September 7th, 2010
2:49 pm
Math is a fuzzy as you make it, Dude. You’re no exception.
Paul
September 7th, 2010
2:51 pm
G.W.
Haven’t you heard? It’s Libs that are supposed to engage in personal attacks to divert attention from the issues or for when they can’t make a coherent argument. Not Cons.
Harry Callahan
September 7th, 2010
2:52 pm
G.W.
September 7th, 2010
2:43 pm
Harry,
“Nice try also on thinking that people work 45 years while making whatever you claim your voluntary 6.2% of income plus 6.2% mandatory contribution to your savings are.”
G.W., please see my amended analysis above. By the way, while my scenario assume a 2% annual increase, in 13 years at my present private sector place of employment our annual cost-of-living pay increase has never been less than 3%, and at age 47 I earn substantially more than the $91K assumed ending salary in my scenario.
I hope the social life at Tech is good, because you didn’t learn jack about math. Jusy sayin’ …..
Scout
September 7th, 2010
2:52 pm
How’s that “Hope & Change” working out for the economy ?
Harry Callahan
September 7th, 2010
2:54 pm
Anybody else note that Bookman, Kamchak, and Granny Godzilla all disappeared as soon as we started the math excercises?
Scout
September 7th, 2010
2:56 pm
Headline (ABC): “Bob Woodward’s New Book, ‘Obama’s Wars,’ to be Released Sept. 27″
Hummmmm …………. this can’t be good for the Dems. come November. I guess Woodward couldn’t be bought off.
Bruno
September 7th, 2010
2:56 pm
Big wet doggy kiss to you, Matti.
Gotta run. Love, Mischling.
jm
September 7th, 2010
2:57 pm
Jay, I refer you back to one of your older posts. I understand your sentiments here, but the discussion on SS requires not engaging in fear mongering. And now, until the Dem Party and anyone else defending SS stop believing in magic, adult discussion is impossible….
“Until GOP stops believing in magic, adult discussion is impossible”
http://blogs.ajc.com/jay-bookman-blog/2010/08/03/until-gop-stops-believing-in-magic-adult-discussion-is-impossible/
(incidentally, I think I agree with 100% of this earlier post by Jay)
To quote:
“That’s a critically salient point. When we increase government spending, we finance it by borrowing more money. Everyone gets that part. But the second part of Greenspan’s observation shouldn’t be controversial either: Tax cuts are financed the exact same way, by borrowing more money and adding to the deficit.”
“Every dime that taxpayers send Washington is spent, and once money is spent it cannot be “returned.””
Mick
September 7th, 2010
2:58 pm
**Headline (ABC): “Bob Woodward’s New Book, ‘Obama’s Wars,’ to be Released Sept. 27″**
Didn’t buy or read any of his books about bush, I’ll do the same concerning obama.
G.W.
September 7th, 2010
2:59 pm
Harry,
How many people start out making $25,000 at the ripe young age of twenty and continue to work every year while enjoying a yearly raise of any sort all the way to the retirement age of 65. I think you might have a hard time pitching that one, for openers, given the number of people that cannot even land a minimum wage job right now. Let’s see, minimum wage would pull in a whopping 52 weeks x 7.25/hour x 40 hours/week or $15,080. Then again, there’s always overtime.
Bruno
September 7th, 2010
3:00 pm
Oops, gotta throw this last story out from Yahoo:
“School bearing Al Gore’s name built on contaminated site”
http://news.yahoo.com/s/yblog_upshot/20100907/od_yblog_upshot/school-bearing-al-gores-name-built-on-contaminated-site
Bruno
September 7th, 2010
3:02 pm
“The Los Angeles-area Carson-Gore Academy of Environmental Sciences, named after Gore and pioneering environmentalist Rachel Carson , was built atop an environmentally contaminated piece of real estate, the Los Angeles Times reports. Some are now raising concerns that the $75.5 million school — which sits across the street from an oil well — may pose long-term health risks to its students, faculty and staff, as the groundwater beneath it is contaminated by chemicals.”
jm
September 7th, 2010
3:06 pm
Jay, if I may add an insight with which you’re probably already familiar. Part of the reason the GOP doesn’t play ball with Dems, is because if they don’t do anything, government (and unfortunately the US economy) will naturally self destruct from government over-spending.
Therefore, it is incumbent upon Democrats to behave responsibly and manage some of the crazy programs they created in a manner that is sustainable for the US economy. We all lose if the government’s finances blow up. So the only course is to enact reasonably conservative fiscal measures, even if you’re a democrat and might find such reforms distasteful. If not, all the benefit programs will disappear permanently and we all get to go back to the proverbial stone age (or something that would feel similar). Game theory 101….
G.W.
September 7th, 2010
3:07 pm
Harry,
By the way, back when I was 47, I also earned substantially more than $91k per year in salary as well. But that was then. This is now. Now, I just reap the benefits. Math may have had a small role in it. Like any tool.
Harry Callahan
September 7th, 2010
3:07 pm
G.W….
I changed the starting salary to $15,080, which changes the ending salary to $54,828, changes the retirement amount to $506,027, and changes the annual retirement income to $25,301.
Please note that $25,301/12 = $2,108 which I believe is still better than the Social Security max payment, and you still would have the $506K to either tap into or leave to your estate.
Also please note that, under this scenario, you only reach $40K/year of income at age 57, which is much later than most Americans achieve on average, so this is pretty much a worst-case scenario.
I hope you’re not a math major.
Jefferson
September 7th, 2010
3:07 pm
People don’t save money.
If your Median HOUSEHOLD income is $40K, there more than likely more than 1 working and you won’t be saving much money after taxes.
5% is no lock, timing is everything when involved with markets.
People don’t save money.
Harry Callahan
September 7th, 2010
3:08 pm
Or, said another way, G.W., social security is a rotten deal for ANY working person. Sorry if that’s not what liberals want to hear, but it is fact.
Harry Callahan
September 7th, 2010
3:09 pm
LOL at Jefferson…people don’t save money…stupid is as stupid does…
jm
September 7th, 2010
3:09 pm
Jefferson – they would if forced into a Chilean style savings plan. Ie, savings become mandatory.
Paul
September 7th, 2010
3:10 pm
Harry
“Anybody else note that Bookman, Kamchak, and Granny Godzilla all disappeared as soon as we started the math excercises?”
Ummm…. maybe they weren’t interested in a future-year money management discussion that doesn’t include discounting?
jm
September 7th, 2010
3:11 pm
The solution to social security: http://en.wikipedia.org/wiki/Chile_pension_system
Harry Callahan
September 7th, 2010
3:11 pm
Paul…Ummmm….maybe they weren’t interested in seeing the liberal sacred cow Social security exposed for the complete joke that it is?
Jefferson
September 7th, 2010
3:12 pm
Harry, Then LOL at yourself.
Harry Callahan
September 7th, 2010
3:12 pm
Paul…Ummmm…maybe the 5% annual yield I assumed is artifically low, and we could have used 8% – 9%, adjusted down for inflation, and arrived right back at 5% ???
stands for decibels
September 7th, 2010
3:13 pm
hot dang. that Harry C. has some good news.
Now, lately I thought that the only kind of guaranteed return you could get was around 2.5, maybe 3.0 percent or so on a 5-year CD with around 100K minimum deposit.
But you can get 5%! Guaranteed! any old time you want!
Yee. haw.
Harry Callahan
September 7th, 2010
3:13 pm
Jefferson, LOL at me if you wish, but I have substantial savings set aside.
JohnD
September 7th, 2010
3:14 pm
Stands for Decibels @12:01 If I take my lifetime earnings, project that I make the same thing for the next twenty years as I do today, invest 12.4% of my earnings at 1% interest and then take that amount and divide by 20 (estimated payout period) with *no* additional earnings, I get 24,088.74 per year, which is slightly more than the $23,136 that my last SS statement showed that I would receive retiring three years later.
Harry Callahan
September 7th, 2010
3:14 pm
stands for decibels…why don’t you look into the historic return rates on stock market investments and get back to us?
Paul
September 7th, 2010
3:16 pm
Harry
“Ummmm…maybe the 5% annual yield I assumed is artifically low, and we could have used 8% – 9%, adjusted down for inflation, and arrived right back at 5% ???”
I kinda think that shows why they weren’t interested in pursuing the discussion.
BTW – lotsa math whizzes don’t make the best financial analysts -
stands for decibels
September 7th, 2010
3:16 pm
I asked this earlier:
See how well you do in the private marketplace investing in something that pays you a guaranteed annuity for the rest of your life.
Really should’ve added “with COLAs each year” in there.
Anyhow, still waiting for someone to provide me with real life examples for comparison.
Harry Callahan
September 7th, 2010
3:16 pm
JohnD…I’m afraid you’re making the same mistake I did…you’re trying to introduce logic into what is to liberals a discussion of religion/faith…that people are hopeless and stupid, and government is always the best (only?) option.
Jefferson
September 7th, 2010
3:18 pm
Harry, I said you could LOL at yourself, I could care less what you have nor am I laughing at you or calling you stupid. What you say won’t work in reality, that’s all.
Paul
September 7th, 2010
3:19 pm
sfd
“Anyhow, still waiting for someone to provide me with real life examples for comparison”
Your patience would give the Dalai Lama a run for the money -
PS – Don’t forget to add in, “and if you die in five years, add in the amount of survivor benefits the wife and kiddies get…..” and compare that to what you’ve saved in five years.
Scout
September 7th, 2010
3:19 pm
Mick:
That is so very fair of you.
Remember now, no reading of any books about socialism OR democracy !
Jay
September 7th, 2010
3:19 pm
Gee Harry, did you happen to factor inflation into your “real-life” equation?
For example, somebody who retired in 2009 would NOT have been making $25,000 as a starting salary 45 years earlier, back in 1954. In equivalent dollars, they would have been making less than $3,200. That puts a very big hole in your number, does it not?
stands for decibels
September 7th, 2010
3:20 pm
why don’t you look into the historic return rates on stock market investments and get back to us?
I have. There’ve been times when it sucked, times when it didn’t.
What you don’t seem to grasp is that SS was intended as a hedge against that investment. You want to invest above and beyond that safety net, swell. (I do). If you can parlay those dollars into a nice income for retirement, great.
Harry Callahan
September 7th, 2010
3:21 pm
Paul, so it’s your assertion that money invested into Social security will yield a higher return than money invested privately? LOL…
If true, you’re right, Social Securityprobably is YOUR best option…
stands for decibels
September 7th, 2010
3:22 pm
Anyone else chortle when Scout decided @ 2.22 to copy/paste a cheezy, unsourced email forward in reply to charges that he’d simply copy/pasted a cheezy, unsourced email forward @ 11.10?
Harry Callahan
September 7th, 2010
3:23 pm
Jay, see above. But if you want to go with Social Security, that’s your option buddy.
jm
September 7th, 2010
3:24 pm
Jay seems to like charts. How bout this chart? (Link below; I know Heritage is a conservative think tank, but this is reasonably accurate). Even at 20% tax revenue / GDP, entitlements consume al tax revenue by 2065. Or you can double taxes and everyone stops working. Obviously, something has to be done to fix SS.
http://www.heritage.org/Research/Reports/2010/08/~/media/Images/Reports/2010/SolutionsforAmerica/Vol3_750px.ashx
http://www.heritage.org/Research/Reports/2010/08/The-Entitlement-Crisis
Scout
September 7th, 2010
3:25 pm
stands for decibles:
LOL ! …………… and, rest assured I am going to CHORTLE at you come November !
Carlosgvv
September 7th, 2010
3:27 pm
Many of you are more or less young and full of vinegar. You think you are to good and smart to ever need social security. When you’re 65 and life has worked you over and the only thing between you and the street is social security, you’ll sing a different tune.
G.W.
September 7th, 2010
3:27 pm
Harry,
Feel free at any time to identify any errors in my math. By the way, how many people actually save 12.4% of their income every year. Also, that was good of you to modify that starting annual income. Personally, I would have started with the 25k per year at the ripe young age of say 25 and extended the calculations for a thirty year employment. After all, with your scenario it is not as though there is something magical about working until you are “social security” retirement age. And the thought of using 8 or 9 percent annual yields! Come on now. This isn’t being done to determine full funding requirements for a company pension fund.
Bruno
September 7th, 2010
3:28 pm
According to snopes.com, snopes.com is completely accurate and legit. Therefore, it must be so.
Scout–Substitute the phrase “the Bible” for “snopes.com” in your above statement, and we can call it a wrap.
Harry Callahan
September 7th, 2010
3:29 pm
Jay (and others)…
Do your heroes like Warren Buffet, George Soros, and the Kennedy’s know that it’s impossible to invest at a rate of return higher than inflation? LOL…
Paulo977
September 7th, 2010
3:29 pm
For some who picked Obama over Clinton …so what is your point?
Bruno
September 7th, 2010
3:30 pm
Taxpayer aka G.W.–For someone who spends all day every day mocking people on a blog, you sure have a thin skin.
jm
September 7th, 2010
3:30 pm
A useful link concerning social security reform:
http://www.wharton.universia.net/index.cfm?fa=viewfeature&language=english&id=937
Paul
September 7th, 2010
3:30 pm
Harry
“Paul, so it’s your assertion that money invested into Social security will yield a higher return than money invested privately? LOL…”
Please show me where you got THAT out of anything I wrote? I simply said math whizzes don’t always understand principles of financial or cost analysis and that analyses of that nature that don’t include discounting aren’t accurate.
I know you may be feeling a bit embarrassed, but no need to go personal, ‘k?
Kamchak
September 7th, 2010
3:32 pm
Anybody else note that Bookman, Kamchak, and Granny Godzilla all disappeared as soon as we started the math excercises[sic]?
If you torture numbers enough Commie, you can make ‘em say anything.
Gordon
September 7th, 2010
3:32 pm
It does need to be pointed out, Harry, that Social Security does provide insurance. It’s not just old age income. The other thing that needs to be pointed out is that we live in a society that will offer a meager existence to someone who refuses to save money for themselves. I’m glad of that. We all know it is a horrible investment, but that is not what it was intended to be.
The problem with it is that it is under the control of politicians, not accountants. People can foolishly believe it is in good shape because of the “trust fund”, and they can foolishly believe that the government actually owes them something because of some agreement, but neither is true. Watch how quickly those “promises” disappear once the government really starts running out of money.
Scout
September 7th, 2010
3:32 pm
P.S. stands for decibels :
I am sure you can find that UCLA study if you Google it ……………
Harry Callahan
September 7th, 2010
3:32 pm
G.W.
September 7th, 2010
3:27 pm
“Harry,
“By the way, how many people actually save 12.4% of their income every year.”
My company matches up to 6% in our 401(k), so I do 6% and they throw in 6%. And I save another 10% on top of that. But if $1500/month from Social security will support you in the lifestye you’re accustomed to, good for you. Low expectations are good for people who can’t/won’t help themselves, it leads to less disappointment.
Scout
September 7th, 2010
3:33 pm
Bruno:
The Bible is the one thing on this earth that doesn’t need ANY help from me !
“Heaven and earth will pass away, but My Words will last forever.”
Harry Callahan
September 7th, 2010
3:34 pm
LOL at Paul…I’m supposed to be embarassed for pointing out that Social Security (like all government programs) is a complete joke and ripoff of working people?
We’ll see who’s embarassed on Nov 3.
Palin fan
September 7th, 2010
3:35 pm
Sorry, Jay. But on August 28th at the Lincoln Memorial, America spoke. We are:
T axed
E nough
A lready!
Harry Callahan
September 7th, 2010
3:35 pm
Kamchak
September 7th, 2010
3:32 pm
“If you torture numbers enough Commie, you can make ‘em say anything.”
Right you are, sport. You can even make them say that Social Security is a great, perfectly safe investment.
Jay
September 7th, 2010
3:35 pm
Harry, you’re ducking the truth and you’re smart enough to know it.
You know that your model is fatally flawed because it assumes the 1954, 1955, 1956, etc. salaries were being paid in 2009 dollars.
Your numbers are bogus Harry, and you know it.
Paul
September 7th, 2010
3:36 pm
Harry
“it’s impossible to invest at a rate of return higher than inflation”
You sure you don’t want to retype that? ‘Cause if you don’t, it would appear to be game – set – and match.