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I'm in the same boat; I view my social security "contributions" as a lifestyle tax from the last generation, and I'd opt out of them in a second if I could. Ins

I'm in the same boat; I view my social security "contributions" as a lifestyle tax from the last generation, and I'd opt out of them in a second if I could. Instead, I'm planning my retirement around Roth IRAs and 401k savings. I think this is definitely a common sentiment amongst us youngsters.

Frondo 10y ago
I thought that way in my early- to mid-20s. I read lots of thoughtful articles about how SS was broke, wouldn't last, etc. As I got a little older, I started reading more about the history of SS, how it's always needed various adjustments over time, how people have always said it's going broke, it's unsustainable, etc. I realized that, for most of its history, the people who have said those things are actually more likely the ones who'd like it to go away entirely. While everyone else just makes the changes necessary to keep it going. After a while, I found I'd move into the "let's just make the changes necessary to keep it going, because it's a good program and has always had its detractors" camp. (which is where I am now.)
- dlp211 10y ago
  To pile on to this. Even is SS makes no changes whatsoever, they can still pay out ~75% of the benefits starting in the late 2020's or early 2030's and all the way through the 2080's or 2090's based on the SS Trustee report. SS is going to be around unless we choose to elect officials that dismantle it. The fear mongering and apathy needs to stop.
  - harryh 10y ago
    It's worth noting that if there are benefit cuts of 25% that it's unlikely that each individual will see a 25% cut. It's more likely (in my opinion at least) that we'll see some sort of means testing where seniors with other income (from 401Ks, private pensions, other savings) see their benefits cut much more than 25% while those with low incomes retain their full benefits. So if you are saving a lot it could, ironically, be a self fulfilling prophecy that you get no social security.
    - pc86 10y ago
      So what you're saying is I can cash in my 401k for a boat.
      - harryh 10y ago
        I dunno. Fishing boat or speed boat?
  - jeremyt 10y ago
    I'm sorry, but this statement is not true. These numbers require the use of the Social Security trust fund. The Social Security trust fund is a "special issue treasury bond" in which money is deposited and then spent by the US government. So, when the trustees say that Social Security can pay 75% of the benefits, what they mean is that there are enough IOUs in the trust fund to pay 75% of the benefits. But when we start redeeming the IOUs, we will quickly discover that the money isn't in existence. We are going to have to raise taxes or cut spending or otherwise get the money from somewhere else. The trust fund is just a very very clever way of obfuscating the fact that the government has no money saved at all for Social Security.
    - dlp211 10y ago
      All you are saying is that the US needs to continue to service its debt without defaulting. Since there is no sign that we will default now or later, this is simply more fear mongering.
    - jellicle 10y ago
      Actually, the 75% number is when there is no trust fund whatsoever and all outgoing payments are funded directly by incoming payments. > But when we start redeeming the IOUs You are aware, I'm sure, that said IOUs have been redeemed every year of SS's existence.
      - jeremyt 10y ago
        Until they aren't. Bear Stearns paid its bills every year until it suddently didn't.
ryandrake 10y ago
SS is not a money transfer from today's young to tomorrow's old--it's a transfer from today's young to today's old. Don't think of it as "savings" you're "contributing" toward.
- grzm 10y ago
  Isn't this similar to investments or savings where you put in money expecting to receive something in the future? That money isn't static, it's actively being used in other ways. For example, money I deposit in my bank account today is going out into loans the bank is issuing today. I'm not taking a position on Social Security, just wondering if the analogy does much useful work.
  - readams 10y ago
    No; investments go toward productive work to create economic value. Social Security doesn't have any element that would actually create wealth. It works exactly like a Ponzi scheme.
    - ryandrake 10y ago
      To be fair, when I buy a company's stock on the public stock market, it's more of a lottery ticket than an investment. It's not as if buying a stock actually puts money into the company's pocket for them to use to "create economic value". Buying a stock puts money into the pocket of whoever last bought that stock so that they can continue gambling.
      - harryh 10y ago
        This is not entirely correct. By buying stock in a given company you increase demand for that company's stock and increase its value. A company's market cap is a very real thing that allows it to engage in economic activity that it would otherwise be unable to execute on.
      - kgwgk 10y ago
        Is buying real estate or a business an investment? You're not creating economic value, just putting money into the pocket of the previous owner.
nickjarboe 10y ago
I don't see why changing the tax rules around retirement accounts (like taxing Roth withdrawals) would be any more difficult than changing Social Security payouts. You never know what may happen in the future. The government could even make owning gold illegal.

Frondo 10y ago

I thought that way in my early- to mid-20s. I read lots of thoughtful articles about how SS was broke, wouldn't last, etc. As I got a little older, I started reading more about the history of SS, how it's always needed various adjustments over time, how people have always said it's going broke, it's unsustainable, etc. I realized that, for most of its history, the people who have said those things are actually more likely the ones who'd like it to go away entirely. While everyone else just makes the changes necessary to keep it going. After a while, I found I'd move into the "let's just make the changes necessary to keep it going, because it's a good program and has always had its detractors" camp. (which is where I am now.)

dlp211 10y ago
To pile on to this. Even is SS makes no changes whatsoever, they can still pay out ~75% of the benefits starting in the late 2020's or early 2030's and all the way through the 2080's or 2090's based on the SS Trustee report. SS is going to be around unless we choose to elect officials that dismantle it. The fear mongering and apathy needs to stop.
- harryh 10y ago
  It's worth noting that if there are benefit cuts of 25% that it's unlikely that each individual will see a 25% cut. It's more likely (in my opinion at least) that we'll see some sort of means testing where seniors with other income (from 401Ks, private pensions, other savings) see their benefits cut much more than 25% while those with low incomes retain their full benefits. So if you are saving a lot it could, ironically, be a self fulfilling prophecy that you get no social security.
  - pc86 10y ago
    So what you're saying is I can cash in my 401k for a boat.
    - harryh 10y ago
      I dunno. Fishing boat or speed boat?
- jeremyt 10y ago
  I'm sorry, but this statement is not true. These numbers require the use of the Social Security trust fund. The Social Security trust fund is a "special issue treasury bond" in which money is deposited and then spent by the US government. So, when the trustees say that Social Security can pay 75% of the benefits, what they mean is that there are enough IOUs in the trust fund to pay 75% of the benefits. But when we start redeeming the IOUs, we will quickly discover that the money isn't in existence. We are going to have to raise taxes or cut spending or otherwise get the money from somewhere else. The trust fund is just a very very clever way of obfuscating the fact that the government has no money saved at all for Social Security.
  - dlp211 10y ago
    All you are saying is that the US needs to continue to service its debt without defaulting. Since there is no sign that we will default now or later, this is simply more fear mongering.
  - jellicle 10y ago
    Actually, the 75% number is when there is no trust fund whatsoever and all outgoing payments are funded directly by incoming payments. > But when we start redeeming the IOUs You are aware, I'm sure, that said IOUs have been redeemed every year of SS's existence.
    - jeremyt 10y ago
      Until they aren't. Bear Stearns paid its bills every year until it suddently didn't.

ryandrake 10y ago

SS is not a money transfer from today's young to tomorrow's old--it's a transfer from today's young to today's old. Don't think of it as "savings" you're "contributing" toward.

grzm 10y ago
Isn't this similar to investments or savings where you put in money expecting to receive something in the future? That money isn't static, it's actively being used in other ways. For example, money I deposit in my bank account today is going out into loans the bank is issuing today. I'm not taking a position on Social Security, just wondering if the analogy does much useful work.
- readams 10y ago
  No; investments go toward productive work to create economic value. Social Security doesn't have any element that would actually create wealth. It works exactly like a Ponzi scheme.
  - ryandrake 10y ago
    To be fair, when I buy a company's stock on the public stock market, it's more of a lottery ticket than an investment. It's not as if buying a stock actually puts money into the company's pocket for them to use to "create economic value". Buying a stock puts money into the pocket of whoever last bought that stock so that they can continue gambling.
    - harryh 10y ago
      This is not entirely correct. By buying stock in a given company you increase demand for that company's stock and increase its value. A company's market cap is a very real thing that allows it to engage in economic activity that it would otherwise be unable to execute on.
    - kgwgk 10y ago
      Is buying real estate or a business an investment? You're not creating economic value, just putting money into the pocket of the previous owner.

nickjarboe 10y ago

I don't see why changing the tax rules around retirement accounts (like taxing Roth withdrawals) would be any more difficult than changing Social Security payouts. You never know what may happen in the future. The government could even make owning gold illegal.