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Another "context" thread: social security

 
 
Reply Wed 1 Feb, 2006 08:53 pm
Several people did an excellent job in helping me in my last "put it into context" thread that I thought I would hazard another one.

This one regards social security.

I was reading excerpts from Bush's speech last night and he was talking about social security as an "entitlement".

Now I know that the dictionary definiton of entitlement is "gives rights to" but I also know that idomatically that it means "something you didn't earn; welfare".

I've worked since I was 14 years old. I've paid into Social Security with every paycheck.

I came in at the tail end of the baby boom and certainly the current situation wasn't unexpected by the government.

The baby boom generation has worked and payed taxes, including Social Security taxes for a long, long time.

I know the whole bit about how the current generation is paying for the previous and that the upcoming payers are a smaller generation than the baby boomers -- but the previous generation was smaller than the baby boomers too.

So....

Forgive me for being dense but I'm trying to understand....

Where did all of my money go?
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fishin
 
  1  
Reply Wed 1 Feb, 2006 09:08 pm
"Entitlement" in government-speak is a program that you contributed toward so in the end you are entitled to something back. The same terminology is generally used with things like workers comp, unemployment, and other similar programs. In effect, you have a contract with the government - you pay in during your lifetime and they pay you back at retirement time.

As far as "where did it go?" - for the average U.S. worker the amount you pay into the SS retirement fund is paid back somewhere betwen 4 and 5 years after you retire. After that it is basically welfare. You aren't collecting on what you paid in any more. You are collecting on what current workers are paying in.

Just as an example, I just pulled out my SS Statement dated Nov 5, 2005 and between 1977 and 2004 I paid a grand total of $45,473 into SS. If I retire at full retirement age my monthly check would be $1,852. If you do the math there that comes out to 2 years of retirement to deplete what I'd paid in. Of course I'll be paying for the next 25+ years too but by then the size of the monthly check will have gone up too.

Did people forsee all of this? Yeah, some did. But the politicos convinced people that there would always be more people working than collecting and the problem is always 50 or 60 years down the road. You don't get reelected for fixing problems that for out.
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fishin
 
  1  
Reply Wed 1 Feb, 2006 09:15 pm
Re: Another "context" thread: social security
boomerang wrote:
I know the whole bit about how the current generation is paying for the previous and that the upcoming payers are a smaller generation than the baby boomers -- but the previous generation was smaller than the baby boomers too.


The prior generation being smaller than the Baby boomer generation is the perfect scenario. When thos ein that generation (your parents and mine) retired there were several people working (and paying into the system) for each person that is retired and collecting. If someone that is currently retired collects $1500 a month and you have 15 people working to support them each of the 15 would get tagged for $100/month.

As time progresses and the population shifts for each retiree you might have 4 people working so that same $1500 month would cost each worker $375 month. (by the time you and I retire inflation will have adjusted those numbers upward).
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boomerang
 
  1  
Reply Wed 1 Feb, 2006 09:29 pm
Thanks, fishin'!

That's making sense, I'm still processing it all though.

I'm still 30 years from retirement but I get those statments that tell me...

... if you lose a limb you'll get $blah

... if you die your kid's will get $blah (come on adoption stuff!)

... if you blah you'll get $blah.

Doesn't "entitlement" have a bad connotation? Is that my imagination?

Are we supposed to feel guilty for collecting our "entitlement"?

That's kind of how I feel. We have retirement accounts but I've paid a bundle into SS and I feel like I'm stealing should I ever collect.

Which, of course, brings that whole re-election thing to the forefront.

This whole thing is really nutty.

The whole private account thing obviously wouldn't resolve it -- which is why it got the big blow off, I guess.

My brother has been in the military for the last 30 years (he still is) and his pension has been shifted and shifted and shifted -- it informs a lot of his decisons on whether to stay in or not.

How do these kind of things -- government pensions -- figure into the whole SS thing. Or is that something else entirely?
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boomerang
 
  1  
Reply Wed 1 Feb, 2006 09:33 pm
Oh!

Your second post leads to a real "holy crap" feeling.

That is really disconcerting.

What a huge f*** you to our kids, huh?
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fishin
 
  1  
Reply Wed 1 Feb, 2006 10:01 pm
boomerang wrote:
Doesn't "entitlement" have a bad connotation? Is that my imagination?

Are we supposed to feel guilty for collecting our "entitlement"?


No, you aren't supposed to feel guilty.

The "problem" with these types of programs, IMO, that they start out well meaning enough and then people/groups start tacking them onto things they were never intended to cover. You add a few small groups here, add a few more there, waive a few of the requirements for this group.. All of a sudden you have added a lot of people who are now entitled but the system was never designed with those added people in mind and the funding is never corrected to account for them. Then people shake their heads and wonder why things didn't work out like they were told it would when they supported it.

I should add that "entitlement" was given a bad rap in the 1970s/80s. At the time there were a lot of social programs (that all had a good purpose) that were seen as being heavily abused. I worked in a factory at one point and the Union decided to strike so we all just didn't show up at work and collected unemployment while we were on strike. IMO, it's crazy to pay people unemployment when they have a job and refuse to show up for it. That was one of many reasons for the overhaul of the unemployment rules when Reagan got into office. But yeah, overall the word picked up an undeserved negative connotation.

Quote:
How do these kind of things -- government pensions -- figure into the whole SS thing. Or is that something else entirely?


There are a few different types of government pension programs so it depends on which one teh individual is a part of. For military - they pay into SS while they are on active duty so they are earning points toward SS retirement just like anyone else. The problem there is that SS Retirment is set based on how much you earned over your working career and military folks tend to be toward the bottom end of that.

For Federal Civil Service people that were on the old CSRS system (prior to 1982 or so..) - they never paid into SS and don't collect from it. Current Federal Civil Service employees pay into the FSRS (I think that's the moniker) and a portion of that monthly payment is their SS contribution so they are in the same SS system as everyone else. They both also get a monthly pension check similar to what was the standard in the corporate world up until the early 1980s.

Your brother for example, will get his military retirement check plus SS when her reached retirement age.

Some state and local level government agencies were able to exempt their employees from SS entirely so they are on their own.
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2PacksAday
 
  1  
Reply Wed 1 Feb, 2006 10:02 pm
Fishin' said it perfect.

Also, the money collected was never placed into a specific account earmaked for SS payments. It was basically thown into the general fund, so it got spent right along with the rest of the treasury on whatever the guys in DC saw fit to spend it on. Even if it were placed into an interest bering account from the onstart, it would still fall short of today's needs.

Social Security also includes payments to those that are incapable of working, both physically and mentally. I know of a few familys that all draw checks of this sort, never having paid a dime into SS.
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boomerang
 
  1  
Reply Thu 2 Feb, 2006 09:31 am
Okay. I get it (I think). I get the basics of it, anyway. I'm going to digest this a bit and I might need more help.....

Thanks guys!
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sozobe
 
  1  
Reply Thu 2 Feb, 2006 12:48 pm
SSI (supplemental security income) and SSDI (social security disability insurance) are different systems. With SSDI, you have to have worked and have a certain amount of credits (? not sure of the term). With SSI, you don't need to have reached that threshold, just have a certain severity of disability and meet income requirements.

I think SSI is separate from the regular social security pot, not sure.

Can look all of this up, will be back.
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sozobe
 
  1  
Reply Thu 2 Feb, 2006 12:50 pm
Here we go:

Quote:
Supplemental Security Income (SSI) is a Federal income supplement program funded by general tax revenues (not Social Security taxes):

It is designed to help aged, blind, and disabled people, who have little or no income; and

It provides cash to meet basic needs for food, clothing, and shelter.


(Emphasis theirs)

http://www.ssa.gov/notices/supplemental-security-income/

Quote:
Social Security Disability Insurance pays benefits to you and certain members of your family if you are "insured," meaning that you worked long enough and paid Social Security taxes.


http://www.ssa.gov/disability/
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fishin
 
  1  
Reply Thu 2 Feb, 2006 03:46 pm
sozobe wrote:
SSI (supplemental security income) and SSDI (social security disability insurance) are different systems.


Very true. And I should make clear that all of my comments were directed at the retirement portion of the entire SS schema.
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2PacksAday
 
  1  
Reply Thu 2 Feb, 2006 04:54 pm
Sozobe

What that is saying is "our" money comes from one deduction, "their" money comes from another deduction, then they are both placed into different SS accounts then distributed accordingly. Technically different, but in reality...the same thing....but I see your point.

I found this at Met Life's site, seems like they have lumped all "social security tax dollars" together as I normally do, possibly for simplicity.

------

Few people really know exactly where their Social Security tax dollars are going. Payroll taxes are credited to the two Social Security trust funds: the Old Age and Survivors Insurance (OASI) and the Disability Insurance (DI) trust funds. Money not used to pay benefits and administrative costs is invested in U.S. government bonds. The government uses the money invested in savings bonds to pay for all the services and the projects it provides to U.S. citizens.

For the most part, out of every dollar you pay:

70 cents goes to a trust fund that pays monthly benefits to retirees and their families and to widows, widowers and children of workers who have died
19 cents goes to a trust fund that pays for the health care of all Medicare beneficiaries
11 cents goes to a trust fund that pays benefits to people with disabilities and their families
Less than one cent goes to administering Social Security

-------

I suppose that those figures are fairly accurate, but it's hard to believe that less than 1% is used in administering costs.
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sozobe
 
  1  
Reply Thu 2 Feb, 2006 04:59 pm
OASI and DI are still separate from SSI.

SSDI and SSI are often confused.

The one you are talking about when you mentioned the people who never paid a dime into SS would have to be recipients of SSI (Supplemental Security Income), which is the one that is "funded by general tax revenues (not Social Security taxes)."
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boomerang
 
  1  
Reply Thu 2 Feb, 2006 05:24 pm
Ahhh. Very interesting.

What, though, is OASI?
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sozobe
 
  1  
Reply Thu 2 Feb, 2006 05:48 pm
Quote:
Old-Age and Survivors Insurance Trust Fund
Updated November 21, 2005
Description of the fund The Old-Age and Survivors Insurance Trust Fund is a separate account in the United States Treasury. A fixed proportion (dependent on the allocation of tax rates by trust fund) of the taxes received under the Federal Insurance Contributions Act and the Self-Employment Contributions Act are deposited in the fund to the extent that such taxes are not needed immediately to pay expenses. Taxes are deposited in the fund on every business day.

The trust fund provides automatic spending authority to pay monthly benefits to retired-worker (old-age) beneficiaries and their spouses and children and to survivors of deceased insured workers. With such spending authority, the Social Security Administration does not need to periodically request money from the Congress to pay benefits.

Funds not withdrawn for current expenses (benefits, the financial interchange with the Railroad Retirement program, and administrative expenses) are invested in interest-bearing Federal securities, as required by law; the interest earned is also deposited in the trust fund.


http://www.ssa.gov/OACT/ProgData/describeoasi.html
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fishin
 
  1  
Reply Thu 2 Feb, 2006 05:48 pm
Hrmmm.. Terms are getting confusing here.

OASDI is the total of all Social Security Programs. Within that there are several sub-programs.
- Disability Insurance (DI)
- Hospital Insurance (HI)
- Old Age Retirement (SSI)
- Survivors Insurance (OASI)

OASI and DI are paid from one fund (there used to be seperate funds but they were all combined in 1957.), HI is paid from another (2nd) fund and SSI is paid from another (3rd) retirement fund.

Something tells me this is going to get more complicated! lol
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sozobe
 
  1  
Reply Thu 2 Feb, 2006 05:50 pm
The only ones I really know are SSI and SSDI (and the frequent confusion thereof).

I don't think SSI has anything to do with old age retirement...?
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fishin
 
  1  
Reply Thu 2 Feb, 2006 05:59 pm
You are right! I edited badly when I was typing all that up and cut something out. lol

-Disability Insurance (DI)
- Hospital Insurance (HI)
- Old Age Retirement (Sometimes referred to as "SSRI" but not offically.)
- Supplemental Security Income (SSI)
- Survivors Insurance (OASI)
0 Replies
 
Phoenix32890
 
  1  
Reply Thu 2 Feb, 2006 06:06 pm
Sozobe wrote:
I don't think SSI has anything to do with old age retirement...?


It can. If an elderly person does not have sufficient income, he can apply for SSI. It has nothing to do with retirement, as people of any age can get SSI. It is means based money.
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sozobe
 
  1  
Reply Thu 2 Feb, 2006 06:12 pm
Right. The reference was to fishin's summary (which he corrected -- that makes more sense, thanks fishin').
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