Say no to private Social Security!

Discussion in 'Politics, Religion, Social Issues' started by jadam, Feb 2, 2005.

  1. jadam macrumors 6502a

    jadam

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    #1
    A comic I edited, I got the original online somewhere, it is a rather old comic from the days of Gerald Ford. Anyways here
     

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  2. Dont Hurt Me macrumors 603

    Dont Hurt Me

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    #2
    I would think more would be talking about this. Looks like those over 55 are going to be taking care of, looks like those in their 20s will have saving plans but will this mean those in their 30s and 40s get screwed somehow after paying years into this? I bet so anyone have any comments???
     
  3. mactastic macrumors 68040

    mactastic

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    #3
    As a 32 yo, that's what I'm expecting.
     
  4. Dont Hurt Me macrumors 603

    Dont Hurt Me

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    #4
    Im in the same ball park not old enough nor young enough. If they gave me the option of taking back everything i paid i would take it but we know that wont happen and simply put I dont trust the Republican Party on any issue these days.
    I bet they even come up with a fancy slogan that will be opposite to what it does.
    30 and 40 year olds better take a close look because i feel the shaft is coming.
     
  5. clayj macrumors 604

    clayj

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    You mean, as opposed to the shaft that was (and is) ALREADY coming because the system will be insolvent by the time we (I'm 36) hit retirement age? Personally, I don't see how ANYTHING can possibly make Social Security any worse than it already is for those younger than 40.

    I've NEVER counted on receiving any Social Security; so any plan that extends the life of the system and makes it possible for me to derive some personal benefit from it is welcome by me.
     
  6. mactastic macrumors 68040

    mactastic

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    #6
    In that case, they could just call it Social Security!
     
  7. mactastic macrumors 68040

    mactastic

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    #7
    Not true, but nice use of the GOP 'panic now' rhetoric.

    in·sol·vent ( P ) Pronunciation Key (n-slvnt)
    adj.

    Unable to meet debts or discharge liabilities; bankrupt.
    Insufficient to meet all debts, as an estate or fund.
    Of or relating to bankrupt persons or entities.

    n.
    A bankrupt.

    In 2020 (with no further revisions, which is BS since it just got revised from 2018 to 2020 just recently) the fund would have to start cashing in the bonds that sustain it to make it's payments. It in no way will be insolvent. That fate is, at current projections, at least 40 years away. And if we assume a more realistic number we're probably talking about 60-75 years before that actually happens. And all we'd have to do to push that date back into the next century would be to raise the payroll exemption to $250K or so.
     
  8. Dont Hurt Me macrumors 603

    Dont Hurt Me

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    #8
    Last i checked everything was fine 4 years ago when Bill left office he even had a big surplus, 4 years later we have billions squandered in a screwed up war, a gigantic massive deficit and a president who cant seem to spend enough.Spend spend spend. Has he ever said no to congress on anything? Still has no clue what the veto pen is used for and then has tax payers paying for viagra for old farts. What is going on?
     
  9. blackfox macrumors 65816

    blackfox

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  10. blackfox macrumors 65816

    blackfox

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    This has been discussed rather spiritedly in a couple threads here, but the crux of the issue here is two separate points:

    1. A realization of the purpose of SS and of it's general health projected into the future and it's subsequent ability to fufill it's purpose. It is not designed to make us independently wealthy in our old age, that is the province of responsible personal savings. it is meant to be a bulwark against that fine line between poverty and destitution, recognizing the latters' corrosive effect on a stable society and it's general opposition to the concepts of a enlightened, civil society.

    2. The potential of an alternate plan of SS, in specific, that of the Bush Administration. It is unclear (since no specifics have been mentioned) whether a new plan would be in any way superior to our current system, or indeed the best option to pursue, if consensus leads us to believe there is a major problem. Comparative analysis of comparable privatization schemes by the UK and Chile (the latter which Bush has shown interest in) do not bode well for optimistic assessments of the privatization agenda, but again, w/o a specific plan, it is difficult to make specific criticisms. The math used to formulate the benefits of SS privatization (or semi-) by Bush are seemingly suspect (more on that later).

    With current projections (as many have said) SS will have to dip into it's fund to pay benefits around 2020, and will face a financial shortfall around 2040-50, where it will again, according to estimates, still be able to pay out 3/4 of benefits to recipents.

    The problem with Bush's plan is the manipulation of projection data. In simple terms, Bush projects that an economic slowdown will happen when the last of the baby-boomer retire, slowing revenue to SS, leading to it's insovency. OK, that's possible(perhaps). OTOH, however, the success of Bush's plan hinges on a return of 6-7% on stock investments (over the roughly 3% SS now enjoys). This would have to be accomplished for the next 75 years or so, which seems unlikely. If it did happen, however, the economy would also be growing at a decent clip, making the initial projection about the economic slowdown false, with a healthy economy providing more than enough revenue to keep SS (as is) solvent into perhaps the 22nd Century.

    It is, of course, more complicated than that, and I am no economist. Still, the basic truth is that for Bush's plan to work, it relies on assumptions that negate it's very necessity in the first place, and that conversely, the assumptions given as reason for the reform would also doom Bush's plan to failure.
     
  11. coconn06 macrumors regular

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    #11
    I'm also no economist, but I'm pretty sure the historical average for stock market returns is >10%. The longer the time period the more accurate that prediction becomes. I think it's very reasonable to suggest 6-7% returns over the next 75 years, with a moderate investment strategy.

    And also, if the stock markets are returning less than the historical average over the next 75 years, then this country and our economy has other things to worry about that SS...
     
  12. pseudobrit macrumors 68040

    pseudobrit

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    #12
    You don't get it, do you?

    Social Security was created to keep those "other things" from putting elderly people in the gutter.

    If the economy tanks, sure, we're screwed, but old folks don't starve.

    If the economy tanks AND you've tied Social Security to said economy, we're screwed AND we've got retirees living in cardboard boxes.
     
  13. Laslo Panaflex macrumors 65816

    Laslo Panaflex

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    #13
    Hear, Hear. Has anyone ever heard of "The Great Depression"?

    Also, I am not an economist nor a SS expert, but maybe someone can answer my question. Can someone that reaches retirement still get SS even if they put little or no money into it? If they only put a little in, will they only get a little back? I am assuming that you must pay to get money back (duh) but I have been wrong on such assumptions before.
     
  14. Xtremehkr macrumors 68000

    Xtremehkr

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    #14
    If that trillion dollar cost was instead invested in SS now, how bad would it be with a few years of interest collected. On a trillion dollars. Sure, baby boomers are going to be a burden for a while, but they are not going to live forever.
     
  15. IJ Reilly macrumors P6

    IJ Reilly

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    #15
    You should probably verify this on the Social Security Administration web site, but IIRC, the minimum number of pay-in quarters to qualify for benefits is 60. The level of pay-out is based on (again, IIRC) the highest three years of contribution, and when you decide to start collecting benefits.
     
  16. zimv20 macrumors 601

    zimv20

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    #16
    i think it's closer to 8%.

    there's a trend now, in economist circles, to predict that, in fact, the market will have lower averages moving forward. they point to the market being generally undervalued in the 20th century, but becoming overvalued towards the end.

    paul krugman wrote a column about it recently and its effect on the privatization of SS.

    he also mentioned the inconsistency in the argument of the pro-privatization people. it goes kinda like this:
    1. the market won't do well enough to keep SS solvent
    2. the market will do well enough for private SS accounts to both let people retire and pay for the transition costs
     
  17. IJ Reilly macrumors P6

    IJ Reilly

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    #17
  18. kuyu macrumors 6502a

    kuyu

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    #18
    Actually, the average returns on the market vary by market capitalization. Large-cap stocks have averaged about 10%, mid-cap's about 16%, and small cap's about 25%.

    The great depression was caused, from the market side, by a couple of factors. One, investors bought heavily on margin in an attempt to inflate gains with this leverage. However, margin leveraging also magnifies losses. To alleviate this problem, the government has instituted laws which govern the purchase (or sale if short position is taken) on margin. The maximum margin today is 50%. As well, investors are subject to a margin call if their position in any particular investment falls below 30% (40% at some brokers).

    Two, investors in the 20's and 30's were not nearly as sophisticated as today's investor. They had little to no real time data, news, or understanding of financial markets. With the relatively modern proliferation of derivative-based hedging strategies, investors are able to substancially limit their exposure to market risk by taking on derivative contracts on the opposite side of their original investment. This allows more aggresive investing, day-trading, and keeps risk manageable. The GDP of the US is ~$10 trillion dollars. The value of outstanding derivative contracts is ~$110 trillion dollars.

    Also, the NYSE and Nasdaq both have systems in place that suspend trading for a period of time if dramatic % declines happen. In other words, a depression of the markets can't happen because of the market itself. It's a persistent, organic, stable tool. "Why should we fear to use it?"

    On SS: I think the best comprimise would be to raise the cap by 100% to $180,000/year, but payout 50% more to these beneficiaries. This would allieviate the strain of the transistion to a voluntary private system. That takes care of the 50-60 crowd, the 30-40 crowd, and the rest of us.

    For those who say the market is too risky, find me ONE diversified investor (30+ stocks in different sectors + bonds) who lost money over 25 years. I bet you'll have a hard time doing so because no one has. The plan requires this sort of conservative long-run approach, so... No one will lose money in the long run.
     
  19. IJ Reilly macrumors P6

    IJ Reilly

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    #19
    Actually, it's closer to 6.3% (source provided -- where's yours?).

    And again, for probably the tenth time now, the Great Depression was not caused by margin trading or even by the stock market crash. What caused the Depression was the Federal Reserve tightening money supply in the face of the '29 crash and the subsequent run on the banks. It was the destruction of the nation's banking system that caused the Depression to become severe and to linger. We've learned the lessons of this era, which is why the stock markets can now deflate drastically and not even cause a lengthy recession, let alone a ten-year depression.
     
  20. pseudobrit macrumors 68040

    pseudobrit

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    #20
    Bush will have caused over half the country to endure an 8-year depression by time he leaves office.
     
  21. mactastic macrumors 68040

    mactastic

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    #21
    Ha! John Stewart mentioned that at the same time Bush was swearing his solemn oath of office that about 48% of America were also solemly swearing an oath as well.
     
  22. IJ Reilly macrumors P6

    IJ Reilly

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    #22
    Both of you deserve a good swift kick in the touché.
     
  23. jadam thread starter macrumors 6502a

    jadam

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    #23
    http://www.factcheck.org/article305.html

     
  24. IJ Reilly macrumors P6

    IJ Reilly

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    #25
    And another thing I haven't head mentioned yet. The President said that no one 55 or older would be effected by his proposed changes to Social Security. So here's a pop quiz: What is the age at which a person becomes eligible for membership in AARP?

    Don't cheat now. No fair looking it up.
     

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