Wouldn't this fix the soc. security problem?

[DanS]

The US has a good demographic profile, due to high birth and immigration rates. While the number of retirees will go up disproportionally to the working population increase, it will present less of a 401(k)/pensions/social security problem than some fear. The numbers that the government uses are required to be conservative. But each year they revise some of the problem away.

That said, people will have to work longer. Overall, this is a good thing, because it indicates that people are living a lot longer than they once did and are able to work. So we can't retire at age 50 and live a posh work-free lifestyle for 35 years. But that wasn't very realistic thinking anyway.

[Dis]

and the simple way to fix social security is to raise the contributions people put into it. But don't raise the amount of money they are due (due to the higher contributions) when they retire. Keep it at the same rate as before.

Essentually this is just a tax increase to subsidize the social security system.

It will work, trust me. Of course I don't like tax increases, but what choice do we have?

[DanS]

Well, if people have to pay in longer before receiving benefits, then that is essentially raising the contributions (payroll taxes), even if you don't raise the rates. That's what we're going to end up doing.

[Spiffor]

Originally posted by Dissident
It will work, trust me. Of course I don't like tax increases, but what choice do we have?

-Work longer
-Stop paying a pension to the elderly
No easy choices. I personally prefer the one you support

[Dis]

Originally posted by DanS
Well, if people have to pay in longer before receiving benefits, then that is essentially raising the contributions (payroll taxes), even if you don't raise the rates. That's what we're going to end up doing.

the reason I don't like that is my family doesn't have a history lf long living males . I would like to actually see my social security benefits

[pchang]

My family has a history of living into their 90s.

[Spiffor]

Originally posted by pchang
My family has a history of living into their 90s.

The evil SS leechers!

[Kidlicious]

Originally posted by Velociryx
Kid: A trust is like any other investment. It doesn't just "sit there." It is used to buy stocks, bonds, or other financial instruments. I can make two phone calls right now and set up a trust with American Century, with whom I already have an account.

Within seconds after depositing the money, it's gone off to the market to buy stuff. It's not just sitting in a room under lock and key.

-=Vel=-

That's exactly what happens to your SS contributions. They are used.

[Kidlicious]

Originally posted by pchang
Spiffor's explanation is a bit confusing. Here is another one:

When you buy shares in a company, you would like to think that the value of those shares is some portion of the value of the company. In reality, the value of those shares is whatever someone else is willing to pay to buy it from you.

Consider some far off future where tons of retirees start collecting from their pension fund. The pension fund must start selling shares to collect enough money to distribute. This works as long as there are enough buyers. But, if most of the population is retirees, there will not be enough buyers. The price of those shares will fall and the pension plan may not have enough money to pay the retirees (There are things like annuities and pensions which guarantee a certain payout). 401Ks and things like that will just see their value collapse and the retirees' collections will suffer a corresponding collapse.

edit:
BTW - My sig is about 5 years old.

And the retirees will be selling shares too, right?

[Velociryx]

That's exactly what happens to your SS contributions. They are used.

Yes...used to pay out for somebody else...or used to fund a porkbarrel project.

Fundamental difference, and one I'm not happy with.

-=Vel=-

[Kidlicious]

SS reform or not. pchang brings up an excellent point about financial markets in the coming decades. Right now you would think that the baby boomers are trying to save, but after they retire they will stop, and they will sell all of their investments. Well eventually.

edit: decade to decades.

[Kidlicious]

Originally posted by Velociryx
That's exactly what happens to your SS contributions. They are used.

Yes...used to pay out for somebody else...or used to fund a porkbarrel project.

Fundamental difference, and one I'm not happy with.

-=Vel=-

Eh. Your just trying to appeal to our emotions again. They are used to fund the govt. If we didn't use them we would have to raise taxes. It's an opportunity cost that I'm talking about.

[Velociryx]

Why would they sell off their investments?

I know a load of people who are investing heavily in dividend-paying funds, coupon-bearing bonds for diversification, trusts to leave their grandkids, etc. and so on.

Sure, there will be some selling. That goes without saying, but it's a Chicken Little tale to believe that there's going to come a day when the only sound you hear from the market is the vast sucking sound of money being withdrawn.

Add to that the fact that there's a ton of people in other countries interested in investing in our secondary markets, and I don't think the particular problem you're alluding to is going to be as dire as some make it out to be.

-=Vel=-

[Velociryx]

Opportunity cost? LOL...oh. Okay then.



-=Vel=-

[Arrian]

Each thing in its place. Social Security should not be a government slush fund. If that's allowed, then it's easier for the government to get more of our money to waste. "Oh, SS is in trouble, we must help!" And of course we will ante up for that. If, instead, they had to be honest and say "we need more money to fund the aquisition of 100 new bombers" or "we need more money for welfare" or whatever, then we could fairly assess whether or not taxes should rise.

I'd like to unravel the government's crazy accounting, and keep funds intended for a certain thing restricted to that certain thing.

-Arrian