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The combination of lower birth rates, not having a socialized retirement system and not having any significant estate tax seems tailor-made to build up an arist

The combination of lower birth rates, not having a socialized retirement system and not having any significant estate tax seems tailor-made to build up an aristocracy over just a few generations. 1. Because birth rates are lower, being directly supported by one's children/grandchildren is no longer feasible. 2. No socialized retirement system. As a result, each individual must accumulate a small fortune in order to retire. Most retirement plans rely on living off of the investment income without touching the principal. Therefore, the amount required to retire is also sufficient for a person to live indefinitely. (Back of the envelope calculation, assuming 3% annual return on investment after inflation, $3M in retirement savings yields about $90k/year perpetually.) 3. Currently, the first $11.18M of an estate is entirely exempt from the estate tax, and the even the top marginal rate is only 40%. At no point would it prevent inheritance of a perpetuity by several descendants. (1) is a long-term demographic change, and I think it's good overall, in terms of the care and attention children can receive. (2) forces the accumulation of wealth, out of fear of societal abandonment in old age. (3) allows those accumulations to persist across generations. I think that the appropriate spots to break this cycle are at (2), by instituting better social safety nets and retirement care, reducing the incentive to indefinitely accumulate, and at (3) by significantly increasing the estate tax.

sokoloff 5y ago
IMO, you’ll never get a social retirement system funded to pay for a median household replacement income in retirement. The average social security payout for recipients is around $1500/mo. The max is around $3100/mo. Median household income in my state is ~$6800/mo. You would need to double social security to pay every 2 average recipient household 88% of the median income. You would need to quadruple it to pay a single recipient 88% of median. Plus, not everyone wants to work to 67 (full retirement age for SS for most workers today). Then, not everyone wants to drop their spending down to that of a median income household. Combine those factors and social retirement systems aren’t going to be the solution to stop people from saving and investing privately to supplement. I can’t see social retirement ever being funded to the level of a middle-class retirement; I think it’s a useful safety net to ensure people who worked their whole lives but didn’t save privately don’t starve, but dramatically expanding it is mathematically difficult to fund.
- ac29 5y ago
  > The average social security payout for recipients is around $1500/mo. The max is around $3100/mo. Nope, the max is around $4200 (or, will be in a few weeks). And that's per person. A couple could receive as much as $8400/month. https://faq.ssa.gov/en-US/Topic/article/KA-01897 https://faq.ssa.gov/en-US/Topic/article/KA-01897

sokoloff 5y ago

IMO, you’ll never get a social retirement system funded to pay for a median household replacement income in retirement. The average social security payout for recipients is around $1500/mo. The max is around $3100/mo. Median household income in my state is ~$6800/mo. You would need to double social security to pay every 2 average recipient household 88% of the median income. You would need to quadruple it to pay a single recipient 88% of median. Plus, not everyone wants to work to 67 (full retirement age for SS for most workers today). Then, not everyone wants to drop their spending down to that of a median income household. Combine those factors and social retirement systems aren’t going to be the solution to stop people from saving and investing privately to supplement. I can’t see social retirement ever being funded to the level of a middle-class retirement; I think it’s a useful safety net to ensure people who worked their whole lives but didn’t save privately don’t starve, but dramatically expanding it is mathematically difficult to fund.

ac29 5y ago
> The average social security payout for recipients is around $1500/mo. The max is around $3100/mo. Nope, the max is around $4200 (or, will be in a few weeks). And that's per person. A couple could receive as much as $8400/month. https://faq.ssa.gov/en-US/Topic/article/KA-01897 https://faq.ssa.gov/en-US/Topic/article/KA-01897