Steppenwolf, I'm not ready to concede that Schillings figures are not applicable to today, and I think the writer of the article you posted missed the mark a bit. Yes, revenues as percentage of GDP did rise dramatically toward the end of Clinton's last term, but at a huge price of recessive taxation and, by some estimates, triggering a recession that was already kicking in in year 2000.
As you can see, GWB's tax cuts returned the ratios to pretty much what they have always been and we are pulling out of the recession with greatly increased overall revenues. (Yes, the budget itself is way out of sight but that's a discussion for another thread.) So I don't think your writer's dog won't hunt here.
C.I., I have no problem with the system allowing the status quo for those who want it now, but the fact is, a few decades from now, the entire U.S. budget won't cover the 10 to 12 trillion dollar obligation we have promised to social security retirees. So if we don't start slowly changing the system now, it will be impossible by then.
At 7% return, investments will double about every 12 years - at 10% every 7.2 years - at 15% about every 5 years. Given the track record of the market over the last 60 years, that should be a piece of cake for just about anybody. I can't see why free people should not be allowed to take the relatively small risk if they choose to take it.
cicerone imposter wrote:Steppenwolf, We already have the ability to have "private investment accounts" through Individual Retirement Accounts. Most workers are allowed to invest $3,000/year into their IRAs, but not many do. Forced investments through the reduction of social security hardly seems like a successful program; many will result in reduced social security benefits, and the investments do not guarantee their investments will gain value. IMHO, a slow program to convert the present system to 1) reduced benefits by increasing the retirement age, 2) allow for converstion to private accounts over a long time span - say 25 years, and 3) still maintain a form of social security that provides for "guaranteed" income in old age which keeps up with inflation.
Only select jobs offer group IRAs (mostly for higher income individuals), and it's quite difficult to set up your own. Moreover, although no definite plans have been released, it was my understanding that the private accounts would only be optional. I also agree with your suggestions (1-3), but I don't see them as contradicting current proposals. Am I wrong?
steppenwolf, Wrong! All workers without company sponsored retirement plans can personally invest in an IRA. It's not for "higher income individuals." It's not difficult to set up. You can go to almost any bank or investment institution to set up one. Here are the IRS rules on Individual Retirement Accounts. We started ours when it first became available. Good luck.
http://www.irs.gov/pub/irs-pdf/p590.pdf#search='irs%20IRA'
cicerone imposter wrote:steppenwolf, Wrong! All workers without company sponsored retirement plans can personally invest in an IRA. It's not for "higher income individuals." It's not difficult to set up. You can go to almost any bank or investment institution to set up one. Here are the IRS rules on Individual Retirement Accounts. We started ours when it first became available. Good luck.
http://www.irs.gov/pub/irs-pdf/p590.pdf#search='irs%20IRA'
Lol, yes I realize that it's
available to everyone. My point was that not all employers set it up for you as a "group" (particularly in low wage jobs)--perhaps my original sentence was confusing. I'll also take it from you that it's easy to set up through your bank without your employer. However, SS and IRAs are categorically different. Irrespective of whether we have private accounts, SS taxes will be taken out of our paychecks. Giving you the option of partially privatizing your SS money thus doesn't require setting aside additional funds. I therefore believe that it's
de facto harder for low income individuals to set up IRAs than to manage privatized SS accounts, not that they actually are prohibited from doing so
.
Steppenwolf, I've always been under the understanding that it's not how much you earn that matters, but how you live within your means. I have lived at a time in my life when I lived from paycheck to paycheck without the possibility of putting away anything for a rainy day, so I know exactly what you're saying. But I'm addressing those folks that seem never to have that extra dollar to save even when earning above poverty level income. We have middle-class families in Silicon Valley that earn on the average some of the highest salary in our country, but they don't have any savings - and live paycheck to paycheck. They have no excuse not to be saving for their retirement. They just haven't learned how to live within their means.
I can't disagree with that, cicerone. I also know quite a few people who don't seem to realize that the future is inevitable, and that you might as well plan for it.
Steppenwolf, BTW, I like your above response to Fox concerning reliance on the OMB for accurate projections of revenue and expenses.
Credit cards and greed affect the rich just as much as they do the poor; paycheck-to-paycheck is a way of life for many rich people that I know...
In many cases, I think it can be much worse. Once a person has dedicated a significant proportion of their time/interest to the goal of acquisition of wealth/goods, the desire to have MORE wealth and goods can only grow along with the accounts that were worked so slavishly for.
The temptation to buy a house or boat that isn't really in your price range, even though you are rich, affects the rich perhaps much more than the poor. The recent massive surge in home prices in many major cities in America is a sign of how this has happened; people are willing to pay more, the price goes up, etc...
Credit is a trap. I don't use it; if I could, I'd sever myself from the system completely.
Cycloptichorn
C.I., in case you missed it, I posted the OMB figures for the last several decades and for their projections into the future, such projections being always iffy. CATO is the LEAST partisan think and analysis group out there, but at least Greenspan and other non partisan sources are agreeing with their version. But please guys don't make this a partisan discussion. There are other threads for that.
If you disagree with Spillman say why, not that he's out of date. If you disagree with CATO, say why, not that they are partisan. I think some other sources that have been posted are very partisan, but partisanship is irrelevant for this discussion. I hope all are capable of seeing that the OMB grid that I posted shows percentages but not dollar amounts, so we cannot know the significance of the percentages without also posting the dollar amounts each represent. I am only saying that the current percentages are comparable with the majority of the recorded history on the subject.
Everybody repeat after me: 1) Good information is good information no matter who puts it out, and 2) a good idea is a good idea no matter who comes up with it.
Since it has kept coming up so far, could those with a thought on the matter address any reason you might have for not allowing people who are willing to assume modest risk with their retirement $ to do so on their own behalf?
I have disagreed with the OMB whether the administration is/was democratic or republican. As a matter of fact, I disagree with most things our government does and says. It's not partisan; I just don't trust our governments, and that includes state and local.
Well that's fine C.I. Then maybe you also agree that government can't be trusted with our retirement money and letting people direct their own fate isn't such a bad idea?
Projectionss of revenue and expense for the next five years is impossible, because there is no economic tool that will provide for such projections. It's simple economics; those who claim to know how the economy of our country will do for the next five years is not playing with a full deck.
I specifically said any projections were 'iffy'. But let's focus on the question at hand. Because of the recommendations of so many economists that I trust and respect--though not one has any kind of accurate crystal ball--I am personally leaning toward some kind of privatization plan to stablize and protect social security.
Can any of you come up with a good reason that Americans who chose to risk some or all of their retirement benefits in return for a probable if not guaranteed higher return should not be allowed to do so?
Re: Our retirement money. I'm not worried one iota at my age. There is sufficient "trust fund" social security monies to fund the program for the rest of my life. There really is no immediate worry or shortfall in the social security fund; only the president's message makes it seem urgent. If you wil bother to do a search on the social security trust fund, you will find that there is enough money to fund social security for over 35 years before income will be less than payments. I think the year 2042 comes to mind, but you're welcome to find the actual year when money will begin to dwindle in the fund. Whatever the year that happens, I'll be long gone.
Social Security Trust Fund
From Wikipedia, the free encyclopedia.
The Social Security Trust Fund is the United States federal government's means of accounting for workers' paid-in contributions to the Social Security system that are in excess of current payments to beneficiaries. This excess, the amount not yet needed for Social Security purposes, is invested in securities issued by the government, and those securities constitute the assets of the Trust Fund.
The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system. In the early 1980s, however, projections indicated that the eventual retirement of the numerous members of the post-World War II baby boom would cause expenses to exceed revenues. Accordingly, the Social Security tax was increased in 1983 so that it would be greater than necessary to pay for current expenditures, thus accumulating a reserve that could be drawn upon when necessary. The surplus is accounted for in the Social Security Trust Fund. As of the end of calendar year 2004, the accumulated surplus stood at approximately $1.7 trillion. [1] (http://www.ssa.gov/OACT/STATS/table4a3.html) Projections are that current receipts will continue to exceed expenditures until 2018 or 2019. Thereafter, there will be a shortfall that will be made up by withdrawals from the Trust Fund, although the Trust Fund will continue to show net growth until 2025 because of the interest generated by its bonds. [2] (http://www.philly.com/mld/philly/news/columnists/larry_eichel/10671774.htm) The Trust Fund will gradually be drawn upon to cover the difference between tax receipts and benefit payments. It will be completely depleted by 2042 (according to the Social Security Administration) or 2052 (according to the Congressional Budget Office).
I am as concerned about the next generation as this one, and both the previous administration and the current administration have put similar scenarios out there. Bill Clinton was quite convinced that Social Security would be in serious deficit before he dies and GWB has come to the same conclusion. So let's keep the issue of whether there is or is not a problem non partisan.
Again, why shouldn't Americans be allowed to assume voluntary risk re their own money in respect to their retirement?
Quote:$5.8 trillion[3]: This is the sum of the payments, in 2003 dollars, that the government will have to repay to the Trust Fund between 2018, when Social Security's cash flow goes negative, and 2042, when the Trust Fund's bond holdings are finally spent. In other words, this is the total cost to keep Social Security going even before the Trust Fund is empty.
Behind Social Security's Big Numbers
Fox, If you will go back on this thread, you will find my recommendations for improving the social security plan. In it, it includes a long term plan to divert some monies into personal investment accounts. Nothing I have written subsequently conflicts with my recommendations - as far as I'm aware.
Well that's good to hear C.I. I guess we all sometimes make statements or post stuff that seems to contradict what we said before.
I think to solve the problem of social security or really to solve any mega-bureaucratic issue of government, we're all going to have to think outside the box.
For instance: Has it every occurred to you that if social security was such a great thing, people wouldn't have to be forced by law to participate in it?
