"Entitled Selfishness": Great article on the dismal future of Social Security

[dvcgirl]

A lot of people don't realize it (because they don't earn enough to notice), but the SS tax has increased every year. The tax rate may be the same, but the amount of income subject to the tax keeps going up. I think it is $97,500 this year. I recall when it was somewhere in the mid to upper 80K range. That cap rises a lot faster than incomes rise, so with each passing year, higher wage earners pay a larger percentage of their income to SS. This is one way they've been getting the higher wage earners to pay a larger share without actually raising the tax for everyone.

And I've seen some proposals where they take that cap right on up to 130K from where it is now. Let's hope we don't see that.

I don't know, it's quite a daunting task that Congress has in front of it on this one. I mean, just look at the responses and anger in this thread regarding the topic. I just don't see how they'll be able to truly fix this problem when a vote by a congressman or senator for any one of these "fixes" would surely mean being booted out of office the next term.

And yet the Entitlement problem is worsening by the day in a time when a sort of Financial Perfect Storm is setting up on the horizon..... rising levels of debt, weakening US dollar and pitiful retirement savings/diappearing pensions. And with a republican president and democratic congress, you can rest assured that this problem will have another two years to stew....

 

[C.Ann]

I mean, just look at the responses and anger in this thread regarding the topic....

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I'm not sure what you are referring to as "anger", but when the government takes money out of your paycheck for years and years - with the "promise" of returning at least a portion of it back to you when you reach a certain age - why shouldn't a person feel angry at the prospect of not receiving what they were promised?

 

[dvcgirl]

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I'm not sure what you are referring to as "anger", but when the government takes money out of your paycheck for years and years - with the "promise" of returning at least a portion of it back to you when you reach a certain age - why shouldn't a person feel angry at the prospect of not receiving what they were promised?

Oh, don't misunderstand me....I'd be pretty darned peeved too if I don't receive SS.....just pointing out that this problem is going to be awfully difficult to solve by a bunch of politicians who depend on us to vote them into office . And so what will happen....well, I'm betting that nothing happens for quite awhile. And that will only prolong the inevitable pain....

 

[seashoreCM]

If you ask me, Social Security can and should keep going with no changes from what was published in brochures over the years. About 30 years will pass before the lockbox (which we impute, or pretend, to exist, becomes empty). The entirety of society should share the burden, if any, by letting that burden show up as inflation if money is printed if needed.

Incidentally, inflation is defined formally and correctly as "too much money chasing too few goods." I don't see anything that we are likely to have a shortage of. Without a shortage, it is impossible to have too few goods. Without too few goods it is impossible to have too much money chasing too few goods. So it is impossible to have inflation.

Disney hints:
http://members.aol.com/ajaynejr/disney.htm

 

[Amii]

I'm a tail-end boomer. While I'm not planning on *needing* social security to retire, I'm going to be mighty PO'ed if I've paid into it for 50 years and there's nothing there for me when I retire. As of right now, I've personally paid about $100,000 into it over the past 30 years. That's a lot of money that had I been able to invest it on my own, it would have netted me a nice nest egg at retirement.

Frankly it's highly doubtful that I'll live long enough after I retire at 67 to come close to recouping with the governemnt has taken from me all these years with the promise of a payout in my senior years. The end year boomers are the ones who will have paid in the longest and gotten nothing for it--the ones who will get screwed.

Anne

Everyone will get screwed if Social Security is not fixed. I don't think anyone can say for sure who will get screwed the most. Maybe if more people put effort into finding a way to fix it and less time complaining about who will get screwed the most no one will get the short end of the stick.

 

[smiller]

BTW--If the feds want to give me back every dime I've paid into social security and never collect a dime of it from me again, I'd be happy to sign off on ever receiving a penny from them after I retire. They can even keep my employers share, as well as any accrued interest. I'd still be better off.

Anne

I've felt this way for years! And I'm only 25; I never got into the whole, "Gee, let me give my money to the government so they can screw around with it for a while and maybe give it back to me when I'm 80" kind of mindset.

Sorry for the negativity. But if I want to sign off on any future government hand-outs, I should be able to control my own money! (On the other side, I'm happy to pay taxes to things that benefit everyone in this county - roads, military, foreign relations, etc.)

 

[Diabolicdesire]

BTW--If the feds want to give me back every dime I've paid into social security and never collect a dime of it from me again, I'd be happy to sign off on ever receiving a penny from them after I retire. They can even keep my employers share, as well as any accrued interest. I'd still be better off.

Anne

My thoughts exactly. I believe SS should be an option, not a requirement. Even if that money sat in the bank making 0% interest until I am of retirement age it would still be more money than I expect I will ever recoup from SS.

 

[ducklite]

Everyone will get screwed if Social Security is not fixed. I don't think anyone can say for sure who will get screwed the most. Maybe if more people put effort into finding a way to fix it and less time complaining about who will get screwed the most no one will get the short end of the stick.

I take it you are younger. Those who paid into for 50 years and then will get nothing out of it will most definitely be screwed worse than those who paid into it for fifteen years. If it ends in 30 years as is predicted, I will have paid probably $300,000 into it over my 50 working years, and will get about six years out of collecting it. Those who have only paid into it for five years--particularly their lowest earning five years as young adults will be far less impacted by the loss.

The way to fix it is easy. Choose a date in the next 20-30 years that it will no longer exist, give those who have paid into it thus far who won't be retired yet (and pro-rate for those who will) all the money they've put into it back in the form of one lump sum which must be invested in an IRA immediately (not at retirement). The require all employees to fund 401ks with the money that would have been contributed to SS, with an emplyer match of the same amount.

Put the money back into the private sector to better stimulate the economy.

Take the Medicare portion of the contribution and treat it the same way, only it will go into a long-term health care spending account that can be tapped into at retirement to buy health insurance through the private sector.

Pay the equivelent of SSDI benefits out of the general fund. I do believe that the government does somehow need to provide for the disabled.

Now sure why it's so difficult.

BTW--I vote and I write my politicians, so I AM proactive in trying to shape the future of our country.

Anne

 

[gina2000]

To me, alot of you are missing the bigger picture. I know many, many people who have retired with full, lifetime medical benefits. Guess what? After a few years, every single corporation that has offered this to retirees (including early retirement packages which were incentives to get people out) has renegged to a large degree. First it's a co-pay. Then it's a small monthly fee. For everyone I know, it has ballooned to a few hundred dollars a month to pay for basic benefits. And very often, those benefits are secondary coverage, not primary. Imagine how much more people would be paying if the benefits were primary care benefits?

Corporations keep shifting the burden of retirement onto the individual and the Federal Government. The Federal Government cannot handle the burden and it is gradually being shifted to individuals. That's all well and good but when a full 30% of your salary has been quoted as benefits, then you have to figure that your salary isn't anywhere near what your understanding of it is.

Medical benefit costs are out of control. People who are retired can't afford them. Who do you know that can afford a few thousand a month in medical benefit payments? Everyone I know who thought they could is now returning to the work force to pay for them. Everyone. Even those people who have huge nest eggs and retired early. So where does that leave the retireee?

There is a huge shift in corporate responsibility and no one ever talks about it. Yeah, it's wonderful that they're all lowering costs and reducing overhead, but in the long run, you're still paying for it....you get cheap goods now but astronomical living expenses later. Think about it.

 

[Homer Simpson]

Does anyone else NOT pay into Social Security?

I work for our local municipality and none of us at work contribute to Social Security. We pay into the State Pension system. I also contribute on my own into a 457 Deferred Compensation plan at work, but I haven't paid into Social Security since a part time job in college.

Just wondering if there's anyone else here that doesn't pay into Social Security....

 

[ducklite]

To me, alot of you are missing the bigger picture. I know many, many people who have retired with full, lifetime medical benefits. Guess what? After a few years, every single corporation that has offered this to retirees (including early retirement packages which were incentives to get people out) has renegged to a large degree. First it's a co-pay. Then it's a small monthly fee. For everyone I know, it has ballooned to a few hundred dollars a month to pay for basic benefits. And very often, those benefits are secondary coverage, not primary. Imagine how much more people would be paying if the benefits were primary care benefits?

Corporations keep shifting the burden of retirement onto the individual and the Federal Government. The Federal Government cannot handle the burden and it is gradually being shifted to individuals. That's all well and good but when a full 30% of your salary has been quoted as benefits, then you have to figure that your salary isn't anywhere near what your understanding of it is.

Medical benefit costs are out of control. People who are retired can't afford them. Who do you know that can afford a few thousand a month in medical benefit payments? Everyone I know who thought they could is now returning to the work force to pay for them. Everyone. Even those people who have huge nest eggs and retired early. So where does that leave the retireee?

There is a huge shift in corporate responsibility and no one ever talks about it. Yeah, it's wonderful that they're all lowering costs and reducing overhead, but in the long run, you're still paying for it....you get cheap goods now but astronomical living expenses later. Think about it.

Anyone who is depending on their employer's pension to cover thier retirement has been living in a hole since the Enron mess. I don't believe that it is a corporations responsibility to provide for thier employees retirement. Not everyone is covered by a pension, and the savvy ones who are had better realize it might be different in 20 years when they are ready to retire. IMHO it's a matter of personal responsibility, and frankly if people don't want to take responsibility for themselves by saving towards retirement, they can eat cat food.

It bugs me to no end when I hear people say "oh, my job gives me a pension." How many pension funds have been raided. That's another topic, better controls over pension finds, although S-OX should help with that.

My former employee has a mension fund, and when I left I was given the option of taking a lump sum to put in an IRA, or waiting to collect the pension when I retire. I took the cash. Anybody with common sense would have.

Anne

 

[stemikger]

If I don't get it, I'm going to get very angry. You won't like me when I'm angry.

LOL.

Now seriously, it would be sad of they penalize the responsible people for being responsible and take care of the reckless careless people. But then again, Welfare cheats get taken care of all the time. I think there will be riots in the streets if they change it too drastically.

 

[Reflection]

The way to fix it is easy. Choose a date in the next 20-30 years that it will no longer exist, give those who have paid into it thus far who won't be retired yet (and pro-rate for those who will) all the money they've put into it back in the form of one lump sum which must be invested in an IRA immediately (not at retirement). The require all employees to fund 401ks with the money that would have been contributed to SS, with an emplyer match of the same amount.......

I agree with all of what this, as well as the suggestion that the employer match (the monies the employer had to pay into the fund) salso hould be placed in the IRA or 401k.

 

[dvcgirl]

To me, alot of you are missing the bigger picture. I know many, many people who have retired with full, lifetime medical benefits. Guess what? After a few years, every single corporation that has offered this to retirees (including early retirement packages which were incentives to get people out) has renegged to a large degree. First it's a co-pay. Then it's a small monthly fee. For everyone I know, it has ballooned to a few hundred dollars a month to pay for basic benefits. And very often, those benefits are secondary coverage, not primary. Imagine how much more people would be paying if the benefits were primary care benefits?

Corporations keep shifting the burden of retirement onto the individual and the Federal Government. The Federal Government cannot handle the burden and it is gradually being shifted to individuals. That's all well and good but when a full 30% of your salary has been quoted as benefits, then you have to figure that your salary isn't anywhere near what your understanding of it is.

Medical benefit costs are out of control. People who are retired can't afford them. Who do you know that can afford a few thousand a month in medical benefit payments? Everyone I know who thought they could is now returning to the work force to pay for them. Everyone. Even those people who have huge nest eggs and retired early. So where does that leave the retireee?

There is a huge shift in corporate responsibility and no one ever talks about it. Yeah, it's wonderful that they're all lowering costs and reducing overhead, but in the long run, you're still paying for it....you get cheap goods now but astronomical living expenses later. Think about it.

Yep, all very good points. My in-laws, who were very well prepared for retirement, are complaining about the rising cost of medicare. Their costs have doubled just in the past two years. Health care is a huge part of the picture here, not just on the problems within Medicare, but across the board. . Premiums are out of control for workers as well, eating into the average worker's ability to save.....if they were even trying to save in the first place. Most aren't.

And this escalating health care issue is hitting at a time when pensions are disappearing shifting the responsibility to the individual. And, on top of all of that, we're beginning to get a really good look at how 401Ks are doing for the first 25 years of their exsistance. Not too good. Now, by not good, I mean, on average people are not doing the work. They're not saving enough, and too many are investing far too conservatively to have enough. Many of us here in this thread probably have been doing the work. I know I have, but I know far too many who haven't been.

If your retiree friends are hurting now, just imagine how much worse it will be for those of us who come down the road. Keep in mind, we're living a lot longer thanks to medical science, but we're not exactly the healthiest lot any longer. It's getting more and more expensive to keep our increasingly large butts alive .

We are definitely paying for this big shift in corporate responsibility, no doubt about it. And it comes at a time when Americans were living "too large" to begin with....spending every red cent they make on things that they can't afford. Now tell them that not only can't they have all that "stuff" they've been buying, but they need to ramp up their retirement savings bigtime because SS is going to be about 25% less than they've been told. Oh, and they'll need to learn how to properly invest it. And remind them that it's likely they'll need to cut back even further because their taxes are likely to go up. The good news....they'll have an extra few years to save because they won't be able to collect SS until age 70 anyway...

 

[gina2000]

Ducklite, I don't disagree that it's a matter of personal responsibility but I do think that changing the rules after an employee has given many years to a corporation with the understanding that a percentage of their salary is in retirement benefits is a crock. Or having an employee take an attractive package to get them out and reduce overhead and then change their retirement benefits a few years down the road. Another crock. Sorry, it's a matter of integrity. If I didn't stand by my word, people would think ill of me. When a corporation does it? Oh, well......

 

[meandtheguys2]

I don't disagree that it's a matter of personal responsibility but I do think that changing the rules after an employee has given many years to a corporation with the understanding that a percentage of their salary is in retirement benefits is a crock. Or having an employee take an attractive package to get them out and reduce overhead and then change their retirement benefits a few years down the road. Another crock. Sorry, it's a matter of integrity. If I didn't stand by my word, people would think ill of me. When a corporation does it? Oh, well......

My uncle's company screwed everone out of their retirement benefits. They should have been living fat and sassy now, but they are struggling. The retirement package was a part of their contract. Lotta good that did.

 

[dcfromva]

The problem I have is there seems to be is a disconnect between the beginning of a worker's career when promises are made and and the end when folks are ready to collect benefits. Even the government's own retirement system FERS describes SS as a retirement benefit. (FERS has 3 parts: SS, a small pension and a 401K plan)
At the end of paying for something which was advertised as a retirement benefit, it seems strange to me that it is being described as "selfish" to collect benefits.

-DC

 

[MrsPete]

My thoughts exactly. I believe SS should be an option, not a requirement. Even if that money sat in the bank making 0% interest until I am of retirement age it would still be more money than I expect I will ever recoup from SS.

That would be ideal. Let those who want to give their cash to the government to hold until retirement continue to do so. I'd guess that LOTS of people would choose to do this -- look at how many people use their yearly tax refund as a "savings account". Let those of us who prefer to manage our own affairs keep our money, make our own decisions, and take our own chances.

The problem: That'll never happen because the money that I'm paying in this month is BEING USED this month. It's going to my grandmother's generation. In fact, as the boomers approach retirement age, they're going to need MORE MONEY. Letting us young workers opt out simply won't happen.

 

[Kay1]

Ducklite, I don't disagree that it's a matter of personal responsibility but I do think that changing the rules after an employee has given many years to a corporation with the understanding that a percentage of their salary is in retirement benefits is a crock. Or having an employee take an attractive package to get them out and reduce overhead and then change their retirement benefits a few years down the road. Another crock. Sorry, it's a matter of integrity. If I didn't stand by my word, people would think ill of me. When a corporation does it? Oh, well......

I so agree, Gina. People chose one job over another because of pension plans. For years we were told of the three-legged plan to retirement - savings, SS, and the company pension and made important life decisions based on trust. Responsible decent workers followed rules and laws and did their part but are suddenly considered greedy, irresponsible suckers who deserve to eat cat food because they dared believe their government and their employer intended to uphold their end of the bargain?

I don't think so.

 

[MrsPete]

I left I was given the option of taking a lump sum to put in an IRA, or waiting to collect the pension when I retire. I took the cash. Anybody with common sense would have.

I don't know that that's ALWAYS the right choice. I work for the state, and the teachers' pension plan is about as safe as anything out there.

My great-grandmother lived to be 95, her sister lived to be 93, my grandmother is amazingly healthy today at 94 . . . I expect to retire from my teaching job at 57, and I could easily collect my pension for 35-40 years. On a teacher's salary, it'd be awfully hard for me to save enough to equal what I will likely collect.

While I fully expect to collect my pension, I'm not "putting all my eggs in one basket". My husband and I also have 401Ks and personal savings as well as a paid-for house. And Social Security. If my pension were to disappear, it would definitely hurt my retirement plans, but I wouldn't be eating cat food.

I don't think I'm lacking in common sense in these decisions.