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re: Do you consider Social Security benefits in your retirement calculus?
Posted on 3/10/25 at 8:04 am to JumpingTheShark
Posted on 3/10/25 at 8:04 am to JumpingTheShark
quote:It is not a Ponzi. You could argue it's an overpromised annuity.
I think one has to do more mental gymnastics to argue it’s NOT a Ponzi scheme than it is one…
Every penny submitted by a worker/employer is immediately converted to a debt instrument, or obligation to that individual. Over 40-45yrs those obligations add up. Essentially it's like buying bonds. So, unlike a Ponzi, the money is "invested." Now, the ROI offered stinks to high heaven, but there is an ROI.
2
Posted on 3/10/25 at 8:07 am to La Place Mike
quote:
Social Security is not an investment
Very true. If more people realized that, and understood that it was simply a tax, I think it would be far less popular.
quote:
and it is structured like an annuity based on mortality rates from 1983.
Close, but no. Show me an annuity in which I’m in line to receive 91% of my total paid in sum with my first return check and have the chance to receive 925x (not percent, times) of my total paid sum during the life of the annuity. Because that’s what Ms. Ludlow, the first SS recipient, experienced after paying into SS for two years at a grand total of $24.75.
Had the first beneficiaries been paid out in any relation to what they initially paid in, I would be more sympathetic to the annuity argument. But the reality is that SS started by paying retirees out, not with the money they put in but with the money current workers were paying in, and because of that, SS has far more in common with a headless benevolent Ponzi Scheme than it does any other legitimate investment.
Posted on 3/10/25 at 8:12 am to NC_Tigah
quote:
So, unlike a Ponzi, the money is "invested." Now, the ROI offered stinks to high heaven, but there is an ROI.
Non-investment isn’t a requirement for a Ponzi Scheme. In fact, in Ponzi’s scheme, there were legitimate investments. They just didn’t produce enough of a return to pay the initial investors their promised returns or the sums Ponzi himself was pulling out.
Similarly, SS is “invested”, but the returns don’t come close to covering the payouts for earlier “investors”. Only the influx of “new investors” supports the payments to early investors.
Again, it’s not actually a Ponzi Scheme in there’s no Ponzi skimming off the top, but it’s absolutely a pyramid structure in which the money from new entrants into the system pay the returns of the earlier entrants.
Posted on 3/10/25 at 8:12 am to La Place Mike
quote:
Hmmmm....it takes 12.4% of my check to pay out benefits not to me but to please old enough to take it. They paid into it all their lives as well but they only paid about half the rate I have the last 20 years.
Not a Ponzi Scheme and it take 6.2% from your check.
Not if you're self employed.
Boomers paid in at a much lesser percentage over the years. Oh, and they can claim it sooner than I can.
Posted on 3/10/25 at 8:15 am to ronricks
quote:You should be so fortunate as to have the program blow up. I put it that way because the alternative (which is unfortunately what will actually occur) is to expand the program via increased payroll tax to ~15% (7.5% + 7.5%).
No. If you were born after 1973 you won't see a Dime of Social Security and at best it will be greatly reduced and hardly cover anything.
Regarding your Boomer thesis, SS outflows currently outstrip inflow by about 20%. Without change, that 20% deficit will persist unchanged for the next 75-100yrs. So, right now, because ROI is so low, everyone is "underpaying," not just "boomers".
Posted on 3/10/25 at 8:23 am to Billy Blanks
quote:
Boomers paid in at a much lesser percentage over the years
SS will remain in surplus until the oldest boomers are ~90yrs old. Meanwhile, everyone contributing to the system currently is ""underpaying"" by ~20%. For the most part, that underpaying group is not comprised of Boomers.
The "correction" will be to increase payroll contributions by ~20%
Posted on 3/10/25 at 8:26 am to NC_Tigah
What about when Congress neglects it and the obligations go unfunded as they are projected to do?
Posted on 3/10/25 at 8:29 am to NC_Tigah
quote:
You should be so fortunate as to have the program blow up.
I'd prefer they just allow current payees the option of opting out. I can make more with that money investing it myself I don't need the federal government holding it for me.
Posted on 3/10/25 at 8:40 am to VABuckeye
quote:
They also paid into the system all of their lives so let’s not act like they didn’t put into the system as you are. So frick off with the old people line.
Settle down Francis. You are reading that wrong.
Posted on 3/10/25 at 8:40 am to JumpingTheShark
quote:Then SS becomes the best (80%) funded aspect of our debt-ridden budget (~70% funded). Given that, with no restructuring, SS would run 20% deficits for the next >75yrs.
What about when Congress neglects it and the obligations go unfunded as they are projected to do?
But pay attention. Re: "What about when Congress neglects it and the obligations go unfunded," Congress might neglect every other aspect of our deficit driven budget, but it won't ignore SS. Our DC heroes will "save" SS by upping your payroll contributions.
SS is too valuable as a debt vehicle.
Posted on 3/10/25 at 8:42 am to ronricks
quote:100% !
I'd prefer they just allow current payees the option of opting out.
They will not do it though.
Not a chance in Hell.
Because they, not you, are the beneficiaries.
Posted on 3/10/25 at 8:43 am to ronricks
quote:
I'd prefer they just allow current payees the option of opting out. I can make more with that money investing it myself I don't need the federal government holding it for me.
But they can’t do that, because then they wouldn’t be able to afford to pay out earlier “investors”. If an actual annuity stops taking on new investors, it doesn’t matter at all. If SS stops taking in new “investors”, it collapses.
Because while not a Ponzi Scheme, SS has more in common with a Ponzi Scheme than it does any other legitimate investment vehicle.
Posted on 3/10/25 at 8:46 am to Joshjrn
quote:The stable 20% deficits for a century if no corrections are undertaken speak against that premise.
but it’s absolutely a pyramid structure in which the money from new entrants into the system pay the returns of the earlier entrants.
Posted on 3/10/25 at 8:46 am to Street Hawk
Consider we're 25-ish years out or so, we dont count it in any of our calculations for retirement. Easier to rely on yourself and what you do than what might be there from the govt in 25 years.
If we were 10 years or less from retirement, i'd probably include it in that case. Looks like checking the SSA quick calculator we'd be getting about $6.3k/mo in today's dollars if we retired at 65. Certainly not an insignificant amount, but who knows what SS will look like 25 years from now
If we were 10 years or less from retirement, i'd probably include it in that case. Looks like checking the SSA quick calculator we'd be getting about $6.3k/mo in today's dollars if we retired at 65. Certainly not an insignificant amount, but who knows what SS will look like 25 years from now
This post was edited on 3/10/25 at 8:48 am
Posted on 3/10/25 at 8:56 am to Joshjrn
quote:
But they can’t do that
That was my point. Gen X and Millennials are footing the entire bill for Boomer SS retirement payments.
Posted on 3/10/25 at 9:00 am to ronricks
quote:
That was my point. Gen X and Millennials are footing the entire bill for Boomer SS retirement payments.
But they also paid their due for S.S in their working lives.
The system itself has just been messed up for a long time now and nobody has decided to try and fix it yet. Just keep punting it to the next administration to deal with.
People were never meant to live as long as they are now as well as generation changes of # of kids per family change so drastically either. You have to have a dynamic system to account for that and S.S. is well, not that
Boomer generation had like 3-3.5 kids per family on average. We're now under 2. That's a very drastic change on top of people living to almost 80 now on average vs. 70 back in the 60s, high 60s in the 1950s and when S.S. was implemented in the 30s life expectancy was about 60.
This post was edited on 3/10/25 at 9:07 am
Posted on 3/10/25 at 9:08 am to ronricks
quote:
That was my point. Gen X and Millennials are footing the entire bill for Boomer SS retirement payments.
Which boomers did for the previous generation. Unfortuntely, that is how the system works. Broken.
Posted on 3/10/25 at 9:22 am to Street Hawk
People have been saying that since I was 18, I am retired and collecting SS now. It will be there.
Posted on 3/10/25 at 9:25 am to Street Hawk
If not there in 8 years I’ll have to work a touch longer. So I’m factoring it in, but I can make it up w a year or three in work force
Posted on 3/10/25 at 9:54 am to Billy Blanks
Explain this 12.4% you mention.
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