Social Security Alternative

[Sava]

Originally posted by Sikander


Why don't you borrow money from a "greedy" Credit Union, or your "greedy" parents, or enter into a land contract with a "greedy" elderly person when you buy your house? You don't need a bank at all. People expect something when they lend you money, namely at least as much more money as they could have earned from another conservative investment. Perhaps your parents can afford to offer you a gift, everyone else needs to make a living. Almost everyone needs to use the power of capital in order to replace their own ability to do "honest" labor as they get older. They aren't any greedier than a young man who is looking for a job.

now I remember why you're on my ignore list.

[Wraith]

Well, you idea has already been picked apart. Hopefully I have time to comment on the rest of the thread this morning.

--"so to free up that money in order to do other things with it, you'll have to:"

Personally, I like Harry Browne's plan. Sell off all the land the federal government owns (the Constitutionality of such ownership is questionable at best) and use that money to set up private accounts for people already on Social Security and those about to start on it. Phase out SS for the rest of the country.

--"If you've got a problem with social security, then you should be advocating people deal with it themselves."

I do, but it'd be nice to have that extra money to work with that's currently going to SS, you know? Especially when it's highly unlikely that I'll ever be able to collect any of it when I do get to retirement age. That extra 12+% could go a long way right now.

--"just because the principle may be flawed doesnt mean in actuallity the process is or would be."


So you're agreeing that SS is flawed in principle? Are we talking as in morally flawed here? I'd agree with that. It's a bad implementation too. Mr. Ponzi would be proud.

--"David- You're accusations of theft indicate an unwillingness to live for your fellow man."

I say "Damn straight!" to this. I live for me, not for you. If you want me to live for you, then you want me to be your slave, and I won't do it.

--"But who are we to put Natural Laws above God's laws?"

I think you are not very familiar with the formulation of the Natural Rights arguments...

--"Forcibly take 15% of rich persons money. I love it."

It isn't just rich people. Don't forget how much this impacts the lower middle class.

--"That is, the nature of the giving of my money is done voluntarily."

Interesting. I suppose the fact that you'd be jailed if you didn't "voluntarily" hand it over is meaningless.
Of course, you don't actually hand it over. They take it from your paycheck before it ever gets to you. This carries very interesting implications...

--"But what they actualy entail is strict individualism."

You're just now noticing this? Of course. It's one of the best points of the whole natural rights and capitalism argument.

--"On the contrary, from a proper vantage point taxation is objectively liberating!"

Hehehe..

War is Peace
Freedom is Slavery
Ignorance is Strength

--"If you give willingly, and happily and in doing so love the fact that you are supporting the lives of others, that is not theft, that is cooperation"

You've perhaps herd of something called a charity? You know, like Red Cross? I can quite easily help support others without having the government involved. You don't seem to understand that our objections are to the use of force, not to charity.

--"Stupid people should be allowed to have their monies deposited into a conservative investment scheme run by the Government,"

I hope you mean only T Bills and the like here. I really do not want our already heavily corporate influenced government investing in the stock market.

Wraith
"Wherefore being all of one mind, we do highly resolve that government of the grafted by the grafter for the grafter shall not perish from the earth."
-- Abraham Lincoln as told by Mark Twain

[Sikander]

Originally posted by Sava
I agree Sikander... what are your thoughts on the mortgage idea? It's not a total solution, but rather a more efficient use of the interest. It could be used in conjuction with other programs.

It might be an improvement, but the fact that it is tied to buying property limits it's applicability to large segments of the population, especially the urban poor.

[Sikander]

Originally posted by Sava

now I remember why you're on my ignore list.

Did someone say something?

[Sava]

Sorry Sik, I got nothing against you, I just get frustrated when people argue about politcal ideologies instead of focusing on the topic.

[Arrian]

Wow, talk about the pot calling the kettle black!

-Arrian

[Adam Smith]

There is a much simpler way to use mortages to fund retirement for a large segment of the population...simply take out a reverse mortgage on your home. You pay the mortgage for 30 years, building up equity, the house is fully paid, and you own it. You hit 65, take out a reverse mortgage, draw down the equity, and now the house pays you a couple thousand dollars a month. Reverse mortgages are becoming much more common as the population ages.

[DinoDoc]

Originally posted by monkspider
We poor folk are going to be saving that money for bread, not for a pie in the sky retirement fund Ashie.

I'd rather not pay into a Ponzi scheme, monk. I have better things to do with my money.

[DanS]

To state the obvious, 15.3% of our wages (7.65% worker share; 7.65% employer share) go to social security. This includes a variety of social insurance, such as paying children whose parents die and paying disabled people a certain wage.

I agree with Sikander. By and large, Social Security should be nothing more than a safety net. Certainly not a pension scheme like we have now. A silver lining is that old poor people could be more adequately cared for, if we moved toward a safety net-only system.

A couple of other benefits would accrue over time. (1) The government's budget would no longer be dominated by nondescretionary spending; and (2) the working poor's taxes would be drastically reduced after such a system were phased in. Remember that about 50% of households pay no federal income taxes at all, but all pay a hefty 15.3% social security tax right off the top.

[dudemanjack]

Originally posted by MRT144
even if someone made 45k a year for 40 years and put 7.5% of that away before taxes and returned 5% tax free for 40 years and this was all compounded the person would be left with 206K in the fund. this wouldnt maintain their lifestyle for even 10 years.

i agree social secuirity is broken, but there is no alternative that helps people who dont make money

You would actually have $407,700 with that insanely low return on your money. With a 8% return (still conservative), you would have $874, 315. Divide that by 20 and it is $43, 715 per year (and that doesn't even include interest you would earn during retirement).

If you save $200 per month ($2,400) per year, starting at age 22 and ending at age 65 (43 years), with a 10% annual return (average return in the stock market), you would have $1,421,761. Not bad, eh?

[DanS]

Figure a 5% real return. Anything above that isn't very realistic over the long run.

[dudemanjack]

The longer the investment, the more of a reality 10% is

[DanS]

Refresh your numbers, dudemanjack. Include recent experience, and the 8% number is solid (5% real; 3% inflation). 10% is way too enthusiastic.

Insert more pension funds into the financial system, and the return will be slightly lower than 5% real over time.

That said, even 5% real is a huge improvement over what we have now with social security.

[GePap]

Hmmm. I wonder why every major advanced industrialized democratic state over the last century has eventually enacted Social Security laws?

It must be a communist conspiracy!

I love it when an argument blatantly and willfully ignores history so much as the SS debate. Yes, SS is a welfare program, one supported by the majority of the public, and specially the public that votes. Since the US is a democracy, well, take it or leave it. Move to Somalia if you really believe its everything is your own dam responsibility.

The simplest method to keep Social security in solvency is to raise the age of retirement, and to keep continually adjusting it as life expentency grows. This way, individuals will have to work longer to gain these benefits. Individuals already can retire at any time if they have the private funds to do so, but if they want the public funds, they just will have to keep working longer.

Public welfare programs were ennected both out of progressive ideologies, and as a way of keeping society content. Modern democracies beat socialism by incorporating into themselves some of its less radical ideas, to prevent the growth of revolutionary fervor. Thank Bismarck for that bit of thinking.

[Spiffor]

To answer JohnT : yes, here in France, Social Security encompasses retirements, disease insurance, and help to poor parents. 40% is the total of the wage mass which goes to the SS, about 15% for the employee and 25% for the employer (well, all that money would have gone to the employee if there has been no SS)

On topic : I'm extremely pessimistic about rents, and I'm pretty sure my only way to live when I'll be old will be my savings and my children. Whether the money is capitalized by the welfare state or by the banks won't change anything fundamentally :
There are more and more older people ; in order to let them live, they have to take resources from the society without producing any wealth (this is absolutely normal in my morals).
Whether we give them money directly through SS, or let people save for their old age doesn't change anything fundamentally.
You could say "If they saved money, then they don't suck current resources", but such a statement would forget something essential in the banking system : when you put a dollar to the bank, it's reinvested immediately by the bank; and when you take your savings, you're taking from the Bank's capital at this very moment. Imagine hordes of retirees want to take back their savings in 2040 : it's 2040's resources they'll take.

I assume everyone understands that interests are not wealth production, merely an allocation of existing wealth. That's why I'm sure the interests coming from banks or stock markets won't last enough in this shape to allow retirees to live from them. The rents will know a dramatic crisis if the demography doesn't raise significantly soon, and whatever the way you allocate the capital won't change this.