Social Security - Help me understand better

The amount that you pay into it goes directly to the current beneficiaries (i.e., retirees). This works well as long as you have stable age demographics, which we do not. Because of an aging of the population, the share of retirees is growing relative to the share of people paying into it, making the program unsustainable under current tax rates ($ inflows) and benefits ($ outflows).

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BTW, not a fan of it, would rather control my own destiny. Appreciate the dialog.

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So would most productive members of society. The reason SS is going bankrupt is because 49% of the population pays no income taxes. Meaning, they do not contribute to social security. Therefore, SS is a net drain, and by thte time i retire, i doubt i'll even get what i've been putting in.

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BTW, not a fan of it, would rather control my own destiny. Appreciate the dialog.

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Short version of my response..

The single biggest problem with SS is the dark nasty secret that our government has been borrowing from the funds for so long that there is no chance of it ever being paid back...

This is the single reason there are long term fiscal problems with SS...

but yeah I would rather be in control of my own "retirement" resources...

When social security was created, the retirement age was equal to the average adult life expectancy. Thus, those who survived past it were a relatively small percentage of the population. There were 12 working individuals for every one beneficiary.

Today, the average adult life expectancy is 15-20 years BEYOND retirement age, and the ratio of workers to beneficiaries is closer to 3 workers for every 2 beneficiaries. The system is unsustainable and collapsing in on itself.

You get more out than you paid in by living for a long time. It is easier for the lower earners to do this because they get a larger check stated as a percentage.

SSI currently has a trust fund of nearly $3T. It grew for years, but is now declining. That is because SSI taxation income is now less than the payouts. The trust fund will be depleted by 2035 or so, at which point there will only be SSI taxation income to pay for benefits. This will reduce benefits to approximately 80% of current levels by that date if nothing is done to shore up the program.

Theoretically, some amount of SSI will be paid out in the future, but it will gradually decline as a percentage of what it is today after 2035 unless something is done.

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For those who are very educated in this. how do you get more SS payout than you put in? Im not trying to do it, trying to understand why its so messed up without a simple "the govt controls it thats why".

Reading the rules, Im trying to understand why the program can't be better or terminated/transferred into other things now that roth and 401k programs are so mature without effecting certain people.

If more people are retiring, shouldn't more people have already contributed? Is it all due to inflation? Who comes out ahead with so many falling short of what they put in? The hot young wife that never worked who collects on her dead husband?

BTW, not a fan of it, would rather control my own destiny. Appreciate the dialog.

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So you'd best be controlling your own destiny anyway...there is nothing stopping you from doing so. Most people have some additional retirement savings although very few have adequate retirement savings.

The basis for Social Security has always been, and is today, exactly what it says in the name...a basic level of social security in the form of income to those who can not earn a living wage....the elderly, the disabled, the widowed and the orphaned. Roths and 401Ks do not provide for those people unless they are someone else was fortunate to pay into one of them long enough and with enough money to provide for them when that person is no longer around. If you live long enough and are fortunate you will get more out than you put in. Most people do so in a couple of years. Some do so in one check. Some never do but most do in a couple of years. Currently on average a person who retires at 70 will break even at age 80 and a few months. Many never make that. The life expectancy of ALL people born in any given year is around 78 or so right now. Folks are free to save as much or as little for their retirement as they can afford....but orphans, many disabled, widowed and old people can't or did so in siffucient amounts to pay their nut and those people will either pay their nut themselves, we will pay it for them, they will die or they will commit a crime to survive....SS ain't perfect but is better than any alternative anyone has ever dremaed up because it provides for those who never had an opportunity to do so for themselves....

Also, disability payments are part of the Social Security program. This has expanded massively over the past 20 years and is now commonly seen as a type of “welfare replacement”. Anyone know how this has affected the long term solvency of the program?

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Reading the rules, Im trying to understand why the program can't be better or terminated/transferred into other things now that roth and 401k programs are so mature without effecting certain people.

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This was the only thing Republicans ever floated changing about SS. They were simply for giving people the option to opt out and have those funds diverted into their own type of investment.

On cue, the Democrats started the "They're going to take your SS away"


Democrats are, and will always be, big government. Making that change takes power and control from Congress and the US Government. Something they will never stand for. Democrats love Big Brother telling them what they need.

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For those who are very educated in this. how do you get more SS payout than you put in?

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Think about that question for a moment.
If you invest $1000 in an account at 5% interest, 50yrs later it totals ~$60,000.
How do you get more payout ($60,000) than you put in ($1000)?

For individuals retiring this year, and assuming they live 25yrs (90y/o), their SS payout will be roughly 3/4ths what a US Treasury account held over the same period would total.

If one dies at 80y/o, SS payout would be roughly 1/2 the value of a personal US Treasury account.

If one dies prior to any SS payout, the value would obviously be 0% that of a US Treasury account (which could be passed on as inheritance).

In general SS ROI <3%. Inflation has averaged ~3.8%.

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Reading the rules, Im trying to understand why the program can't be better or terminated/transferred into other things now that roth and 401k programs are so mature without effecting certain people.

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Maybe you are too young but GWBush tried to get legislation to allow current workers to invest some of their SS contributions into higher yielding investments. The dems would not allow any changes in SS and accused Rs of "risking the retirements" of seniors in the "risky" stock market. The whole plan died.
Now I can't remember how it was to work in that the inflow into SS just turns around and outflows to retirees as it works now. There never has been a Trust Fund and any overages above needed liabilities in the past were just absorbed into the general fund and spent.
As a retiree, I'm glad I stuffed so much money into the stock market. I'll bet on American business every day.