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

[dvcgirl]

Try working as an independent contractor - paying 15.3% really makes you think twice about SS - and ouch! when it comes to tax time. It is not fun.

I'm definitely trying to plan my own retirement savings/financial future: I own my own home (reasonable mortgage right now), I deposit regularly into savings (no fancy plans yet, though), and I'm in grad school to hopefully get myself a higher salary!

I own my own business, so I pay both sides of as well....agreed, not fun. At least we can deduct half of it. However, one good thing about being a sole proprietor is the solo 401K. I can put away the first 15K and then an additional 20% of all of my profits on top of that. We have been able to shovel a fair amount of money into tax-deferred status this way. So while we get hammered in taxes, well, being a saver we get some back this way.

 

[MrsPete]

MrsPete,

I'm not trying to take a swipe at you, but this quote provided a convenient place to put in a comment I've been thinking since I started reading this thread.

The main problem with Social Security (and retirement in the US in general) is the length of time people are living in the US in the 21st century.

I don't have all the exact numbers in my head, but when Social Security was set up, the retirement age of 65 was set to just a few years below the live average life expectancy (I think it was about 68-70 at that time).

I know you're right, but I'm not willing to die sooner just to help out the country!

Seriously, the system was flawed from the beginning, and what we're seeing now are the inevitable problems. It needs an overhaul, but that's difficult to do without screwing those of us who are already "well into" the system.

Also, just for clarification: I'm 40. I expect to retire after thirty years of teaching at 57. At that point I'll be eligible for a full pension, but not for social security. When will that kick in for a person my age? 67 or so?

 

[ducklite]

Just think...ducklite's son is contributing 10% of his salary to retirement while paying 15.3% to SS (7.65% from his check and 7.65% that his employer cannot offer to him because the employer has to pay the government).

So...he's paying 10% into something he will use as retirement in the future and 15% into something he will probably never see returned to him in his lifetime.

Of course...he's probably also paying around 10% of his salary into Federal Income Tax....at least a few % into state income tax (if his state collects)....as well as another 8 to 10% or more in sales tax every time he purchases something.

Anyone ever think we might be taxed to high?

Speed

Ahahaha...not this year! Stupid government isn't getting a dime from him over an above what they've already taken, and will have to give him back all the "income" tax he's paid! He has a $12K CD coming due in March that he's been paying taxes on the interest being earned all along. He'll take $4500 and fully fund a 2006 IRA, and $4500 and fully fund a 2007 IRA. Take away the taxes, pre-tax health insurance, and 401K contributions, then subtract out the IRA investment, and take his personal deduction off what's left, and he's negative for the year in income--earned or otherwise. I wish we had a raspberry emoticon to use here towards the IRS.

Anne

 

[MrsPete]

I am 37. If Social Security ends in 30 years I will be 67. I will have paid into the system for 52 years and yet I will not see a dime of that money. I really don't think I will see the worst of it. I think people younger than me will have it worse than me. I just think the focus needs to be on fixing the system and not who is more entitled or who is going to have it worse.

I'm three years older than you, and I think we'll get SOMETHING from Social Security -- it just won't be as much as previous generations have collected. I think we will never see ALL of our Social Security money back, and I know we'll never have the benefits we would've had if we'd been free to invest that money from a young age, but I think we'll get SOMETHING.

 

[MrsPete]

Ahahaha...not this year! Stupid government isn't getting a dime from him over an above what they've already taken, and will have to give him back all the "income" tax he's paid!

Good for him! But I doubt that's something he can do year after year after year.

 

[dvcgirl]

I'm three years older than you, and I think we'll get SOMETHING from Social Security -- it just won't be as much as previous generations have collected.

Yes, I think we'll see something too. But our taxes will go up and our benefits will go down....even more for those of us who have saved. To fix the entire mess, get it solvent and keep it that way they'd need to double the relevant taxes and cut the benefits in half. I'm thinking that won't fly with taxpayers...

 

[ducklite]

Good for him! But I doubt that's something he can do year after year after year.

Very true. As soon as he's able to go f/t with work, things will change drastically, especially be cause he'll get a promotion with a substantial raise to go with it. But he'll continue to max out his IRA and 401K contributions every year. Like I said, do it now while he's young and has minimal financial responsibilities and will never miss it.

Anne

 

[speedyf]

I'm three years older than you, and I think we'll get SOMETHING from Social Security -- it just won't be as much as previous generations have collected. I think we will never see ALL of our Social Security money back, and I know we'll never have the benefits we would've had if we'd been free to invest that money from a young age, but I think we'll get SOMETHING.

I hope so....of course the age will probably be at least 70 to collect fully and probably 67 to start collecting a lesser amount early. Hopefully, I won't get hit by a bus when I turn 67 and 1 day...lol. Then...all my money will be "lost". If I had instead invested that money from a young age.....after the bus would hit me, my children would get to fight over that money while making my final arrangements

Speed

 

[tedhowe]

I know you're right, but I'm not willing to die sooner just to help out the country!

The answer I'm proposing isn't that you should be willing to die sooner, but rather that you should be willing to work longer.

The "entitlement" that people seem to be most stuck on is that of having 20 - 30 years of retirement on the government's (i.e. the younger taxpayers') dime.

It is a great and wonderous thing that the advances in medical science and the pharmaceutical industry have extended the average life expectancy in the US so much in just 3 generations, but with how slow the government is to react to things, THAT is the real problem with both Social Security AND medicare. All of that life-extending medical care costs a lot of money, both in terms direct medical expenses and increased payout times for Social Security benefits.

Should the extended lifetimes of Americans be ALL work? No, but, IMO they should not be ALL play either - at least not for those who can't retire early without depending on social security.

 

[MrsPete]

The answer I'm proposing isn't that you should be willing to die sooner, but rather that you should be willing to work longer.

My pension won't be based upon my age, but rather my years of service. I can collect a full pension (and health care benefits) after thirty years of service. I may work at something else after I finish my thirty years, but even if I do, I'll have completed that "contract" and will have earned my pension.

I assumed that most pensions were based upon years of service -- is that not true? Are some pensions based upon age? At first glance, that doesn't make much sense to me.

 

[ducklite]

Should the extended lifetimes of Americans be ALL work? No, but, IMO they should not be ALL play either - at least not for those who can't retire early without depending on social security.

By the same token I don't like being penalized if I want to retire earlier but not colelct until I'm 70. The way the system works now is that your benefit is calculated based on your last year of work before you collect.

I'll be there are a LOT of baby bookers like myself who would be happy to retire at 62 and live off our savings if SS would base the benefit on our final year of employment's income, rather than the income the year before we begin to collect.

I'm not going to do the math, but I've got to believe that the government will make out in this type of scheme.

Anne

 

[tedhowe]

My pension won't be based upon my age, but rather my years of service. I can collect a full pension (and health care benefits) after thirty years of service. I may work at something else after I finish my thirty years, but even if I do, I'll have completed that "contract" and will have earned my pension.

I assumed that most pensions were based upon years of service -- is that not true? Are some pensions based upon age? At first glance, that doesn't make much sense to me.

I think you are correct that pensions are generally based on years of service, and I'm not saying that that is a problem. Pensions are entirely different from Social Security.

But I think part of the problem with pensions in corporations is that there were actuarial assumptions made when the benefits were defined, and the advanced in medical technology have blown those assumptions out of the water.

We're about the same age, (I'm 38) so we're really in pretty much the same boat when it comes to social security. I don't have a traditional pension plan at my employer, and most of the employers I am likely to work for don't have them either. (My wife's employer does have a pension plan and that's definitely a plus).

In my mind, that doesn't change the fact that the attitude about when is "normal" or "typical" for people to retire has to change because we are living so long.

If people can retire without the benefits of social security and medicare before age 67, then that's great. More power to them and I hope they enjoy their golden years, but to expect that Social Security should start at 65 (or 67 or 70) when the average lifespan is approaching (or by that time may have exceeded) 85 is asking for a lot from the government.

 

[disneysteve]

The problem is that they spend a fortune marketing new drugs. Frankly half the new drugs on the market do nothing that existing drugs already do. They just have fancier names and are maybe more convenient. A one a month birth control patch instead of a daily pill for example. It does the same thing, and the only benefit is convenience. I'd be happy to pay a lot less for a little less convenience.

This is true to an extent, but in the 15 years I've been a practicing physician, I've seen many dramatic improvements in the treatments available for a variety of conditions: infections, stomach problems, cancer, depression and yes, diabetes and asthma too. We haven't found cures, but we've certainly come a long way in developing safer and more effective treatments. Actually, for certain cancers, we have found cures. Are they more expensive? They sure are. And that's a big part of that longer lifespan we keep talking about. Could we go back to the treatments we were using 20 or 30 years ago and reduce health care costs? Sure. But then we'd also go back to the shorter lifespans that prevailed then. I don't know about anyone else, but I'm not willing to do that.

As for cost vs. convenience, that isn't so simple either. When we prescribed antibiotics that had to be taken 4 times a day for 10 days, the compliance rate was probably 30% at best. Now, with a once a day pill for 5 days, compliance approaches 100%. Which do you think provides a better outcome and, ultimately, more cost efficient care?

 

[ducklite]

This is true to an extent, but in the 15 years I've been a practicing physician, I've seen many dramatic improvements in the treatments available for a variety of conditions: infections, stomach problems, cancer, depression and yes, diabetes and asthma too. We haven't found cures, but we've certainly come a long way in developing safer and more effective treatments. Actually, for certain cancers, we have found cures. Are they more expensive? They sure are. And that's a big part of that longer lifespan we keep talking about. Could we go back to the treatments we were using 20 or 30 years ago and reduce health care costs? Sure. But then we'd also go back to the shorter lifespans that prevailed then. I don't know about anyone else, but I'm not willing to do that.

As for cost vs. convenience, that isn't so simple either. When we prescribed antibiotics that had to be taken 4 times a day for 10 days, the compliance rate was probably 30% at best. Now, with a once a day pill for 5 days, compliance approaches 100%. Which do you think provides a better outcome and, ultimately, more cost efficient care?

I guess the thing that irks me is the billions that the pahmacuetical companies spend in promoting the new drugs. If it's that good, then letting the doctors know via a one-sheet should be really all it takes.

Anne

 

[snowwite]

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

I have a 1964 birthday which is the tail end of the boomers and I am angry to think I have paid all this time for someone else's retirement.I thought the money I put in was for me to collect later!

 

[disneysteve]

I guess the thing that irks me is the billions that the pahmacuetical companies spend in promoting the new drugs. If it's that good, then letting the doctors know via a one-sheet should be really all it takes.

I will agree 110% that drug companies should be banned from direct-to-consumer advertising. There are all kinds of problems with that. As for advertising to doctors, that's a different story. A drug company has just as much right to promote their business and their products as any other company. If you really look at the data, promotional expenses make up a relatively small part of drug costs. Research and development of new products is what really burns through money. Pfizer just lost a drug that was pretty far along in development. That cost the company at least $800 million dollars. It costs at least $1 billion dollars to get a new product from discovery to market, and most discoveries don't end up in feasible products (like the Pfizer drug). So billions get spent on research that doesn't even pan out.

 

[mickeyfan2]

As for cost vs. convenience, that isn't so simple either. When we prescribed antibiotics that had to be taken 4 times a day for 10 days, the compliance rate was probably 30% at best. Now, with a once a day pill for 5 days, compliance approaches 100%. Which do you think provides a better outcome and, ultimately, more cost efficient care?

And it helps to reduce the number of drug resitant germs.

 

[MrsPete]

If people can retire without the benefits of social security and medicare before age 67, then that's great. More power to them and I hope they enjoy their golden years, but to expect that Social Security should start at 65 (or 67 or 70) when the average lifespan is approaching (or by that time may have exceeded) 85 is asking for a lot from the government.

That's exactly what I plan to do: Retire at 57 with my savings and my pension. I never expected Social Security to kick in early just because I choose to retire early. That's not reasonable.

 

[MrsPete]

As for cost vs. convenience, that isn't so simple either. When we prescribed antibiotics that had to be taken 4 times a day for 10 days, the compliance rate was probably 30% at best. Now, with a once a day pill for 5 days, compliance approaches 100%. Which do you think provides a better outcome and, ultimately, more cost efficient care?

When I was a kid, my mom never made us "finish" the medicine. Once we felt better, she thought it just didn't make any difference if we stopped on day 7 or 8 (even though the doctor said we were supposed to take it for 10 days). My senior year in high school I had an allergic reaction to penacillin. During college I became allergic to several other drugs -- really, I'm allergic to all the common drugs.

I think these things are connected, so I do think that making compliance easier is a good thing.

 

[runwad]

As another poster has stated earlier, I too am far more concerned with Medicare than SS. What good is an 1100 SS check if you have to spend 1200 for medical insurance?? I think that is what will keep people working longer, health benefits not their SS checks those aren't going to provide too much anyway.