Wouldn't this fix the soc. security problem?

[Velociryx]

Kid, the *reason* it would break is because it's a Ponzi scheme....meaning that it's already broken.

Yes, I'm for a social safety net.

No, not in its current form, and IN its current form, I'd opt out in a heartbeat if I could.

I do not mind paying my share of taxes to support some minimum standard of living for those who aren't as well off, so don't even go there...

-=Vel=-

[Dauphin]

Originally posted by Kidicious


You want to give up your survivor benefits?

If you are paying into a private scheme you get that anyway.

[Kidlicious]

Originally posted by Spiffor

Give money to a financial organism that promises to give it back to you when you ask / can.

Our whole economy can be considered a ponzi scheme: you give, and when you'll ask your money back, the money you'll get will come from the next generation.

But investment is a function of spending, not savings. Investment = savings as long as spending is adequate only.

If we keep paying off the current retirees and save for our own retirement that will increase the savings rate drastically whil decreasing our disposable income.

[Ogie Oglethorpe]

Re: Wouldn't this fix the soc. security problem?

Originally posted by Albert Speer
instead of taxing only the first $68,400 of income at 12.4%, why not keep taxing beyond this relatively low 68K?

wouldn't that generate enough revenue to at least partially fund soc. security?

(not the mention the fact that the present situation makes soc. security taxes an unfair burden on the poor)

Why stop there? It should be a progessive tax scheme wherein incomes at 250,000+ should be taxed at double or triple the rate.

Wait, got a better idea. For those who have actually taken the initiative to invest in their future and have 401K's and IRA's we should immediately tax the current value of them as a one time event (because its not fair that tye have it and some don't) and apply it all to social security. Problem solved. Better to patch the broken system then to fix the system ehhh?

[Kidlicious]

Originally posted by Dauphin


If you are paying into a private scheme you get that anyway.

That would surely make the private sceme less efficient. The cost of public SS is only about 2%.

[rah]

Re: Wouldn't this fix the soc. security problem?

Originally posted by Albert Speer
instead of taxing only the first $68,400 of income at 12.4%, why not keep taxing beyond this relatively low 68K?

wouldn't that generate enough revenue to at least partially fund soc. security?

I believe they're one step ahead of you and it's been continually raised to somewhere in the mid 80k range.

[Patroklos]

Why not just have it be a trust fund, where it all goes into your private fund (you have to deposit said amount a la govermnet law) and you get the same money back. We can even give a range of percentages, so that you can go a little less than today or more if you are smart.

Of course the problem is we spend it now on unrelated stuff (who did that EVER fly). That and when it started we let the then current senior citizens collect, forever disassociating the end user with the depositer.

I like the fact the biggest obsticle to changing it is the senior citizens who created the ****ed up thing, knowing

a) they weren't going to pay a lifetime worth of SC to get the benefit

b) it was an unstable and unmaintainable sytem from the getgo.

[GePap]

The idea that society will simply give in and let people suffer in their old age due not saving wisely is absurd- not only ethically, but common sense should show it for the fraud it is:

Society will not simply allow people to waste away and die- ion the end the state will end up taking care of such people through welfare payments because we are thankfully beyond the point of allowing million of poor indegent old people starve on the streets anymore than we let people who got hurt because they were not wearing their setabelts die for their own stupidity.

[rah]

Just checked, for 2004 it's $84,900 up to which you pay 6.2% (if you're not self employed) and your employer pays the other 6.2%

[Flubber]

Originally posted by Velociryx
Good analogy, the insurance one.

And I agree, even if I still don't like it...

-=Vel=-

The insurance analogy is not quite apt since we make people carry insurance to protect OTHER people fro the damage we may do to THEM.

The social security program is a social safety net which insures that you will have some base level of income thereby protecting yourself from your own failure to plan

[Ming]

SS is a pyramid scheme that is in the process of collapsing. If a private company offered the same deal, they would be prosecuted by the state

There is now way I will ever see the bulk of the money that I've been forced to pay into the system. Unfortunately, there isn't much that can be done about it. I would like to see a percentage of the money I put in applied to a private pension plan that is MINE alone.
The rest of my payment can be applied to the current generation of people getting money, and help keep the system going, but in the future, I would be able to get normal beniffits (whatever the hell they will be by the time I retire) but also be able to beniffit directly from funds I've generated in the private portion.

I have no problem with a FORCED savings plan for retirement. If people are broke when they retire, the government will end up having to give them handouts anyway, so might as well try to reinvent SS so that it can actually work.

[Patroklos]

Why stop, since obviously no one can be relied on or held responsible. Lets confiscate everyones entire income, and give them social security for the entire lives.

[Dauphin]

Originally posted by Flubber


The insurance analogy is not quite apt since we make people carry insurance to protect OTHER people fro the damage we may do to THEM.

The social security program is a social safety net which insures that you will have some base level of income thereby protecting yourself from your own failure to plan

Actually I was thinking it more along the lines of you don't have to pay for other people who didn't plan and still claim benefit (for reasons similar to what GePap stated) if you get them to prepare properly. Its akin to making other drivers insure their car so you don't have to pay for the accident of their making out of your pocket.

[Patroklos]

I have no problem with providing for stupid people (or unlucky) when they are old. Butwhy not provide for them with their own money? Forced savings plans, or rather trusts so they can't pillage it early.

If you **** it up after you get access to the trust at 65 or whatever, well screw you ******.

[Spiffor]

Originally posted by Dauphin




I don't know how it works in France or Germany but my understanding of the system in the UK is this:

When you pay National Insurance taxes the money just gets lumped together with all other taxes pretty much. The government then allocates its spending budgets, a portion of which is to pay for health, transport, defence etc. including pensions. There is no investment of moneys in funds that will grow the pension pot, moneys paid to pensioners comes from moneys paid in by people currently working. It goes in and out immediately. There is no matching between money paid in by person A during their working life and money withdrawn by person A on retirement.

Pretty much the same in France (I'm not really sure for Germany), except that the welfare budget is entirely separate from the State's, and that rich people get a somehow higher retirement than poor people. Far, very far from being purely proportional though.
Contributors are supposedly guaranteed to get a retirement, in turn, when they reach the age.

When you pay private schemes the money gets invested in stocks, shares, funds or other capital investments that get a return on investment. The value of the fund increases with fund growth and contributions. When you retire the value of the fund determines the amount of your pension payout. There is a direct correlation between what money was invested by person A and what was paid out to person A.

And it is the same mechanism as with public schemes:
When you pay your SS tax, you obtain the right to get a pension in your old age. The money you have the right to claim isn't proportional to what you paid, but that's another matter.
When you invest money in a retirement fund, you get a right to claim this money back, when you're of age. This money will be proportional to what you contributed, but the proportionality issue is not the thing I'm caring of right now.

I'm caring about the long term viability of both systems. In both cases, the money you pay will be immediately used, and in both cases, you get the right to claim (some of) it later.

- Say there are too many old people in a public system. The system either reduces pensions (=withdraws its promise of retribution), or taxes the economy like hell to sustain it.
- Now, say there are too many old people in a private system. The pension funds will either have to reduce pensions (=withdraw its promise of retribution, which will be a breach of contract), or demand more and more ridiculous dividends from the companies they own and draw money from.
- Same with the banks: when too many old people demand their money back, the only way the banks can give this money will be to raise loan interest rates, to have sufficient income to pay all those old people, like they rightfully claim.

The belief a private system is more long-term viable than a public one is false. In both cases, you have more and more people getting paid by doing nothing (the retirees), more and more people getting paid by not producing wealth. And thus, in both cases, you have more and more people leeching off the economy.
Whether the redistribution of money -from those who work to those who don't- is made publicly or privately doesn't change anything wrt viability: one day, the economy isn't able to sustain all those old people.

I see a clear difference between the two schemes. The former sees the children pay for the parents living, the latter sees the retiree live off the assets they built up over their working life.

This is a misconception. This kind of misconception is very common, and I have to explain it often. This misconception comes from the idea that banks / stocks etc... manage YOUR money, and that it remains YOURS from the beginning to the end.

They don't. They invest that money in various things that are more or less risky. Your money basically disappears immediately, as it is used in some investment made by the fincancial institute, or as it is used to pay wages, or dividens for other people, etc.

What these institutions give you is a right to claim a certain amount of money later. When you demand money, you get it. Assuming the financial institution is healthy. If there was a major economic crisis, if the institution you ivested in becomes bankrupt, you lost everything. Just like those people in the Enron debacle. Because the pieces of paper, or electronic notices they sent you, aren't worth jack if the system is bankrupt.

Just like with public schemes.