4 ms·

It may not technically be a Ponzi scheme but it is in effect. If you're not able to take out what you put in, you're losing money. If you work 40 years, putti

by spkthed 18y ago

It may not technically be a Ponzi scheme but it is in effect. If you're not able to take out what you put in, you're losing money. If you work 40 years, putting in 12% of your salary (companies have to pay it, otherwise it would be part of your salary) you should get all that 12% back for 40 years. Since most people don't live to 108, SS pays very low monthly payments and pays back about half of a lifetime. If you die however, you don't. Sure there's exceptions but... you can do better on our own. Mutual funds, Money Market accounts... heck, even bonds and CD's would enable you to pass it down. In addition, from 15 on, 12% of your income even if you only make $8 an hour for 52 years and only invest it in something that nets 10% would easily make you a multi-millionaire. You could retire comfortably and still pass it down. Since we're facing massive shortfalls, isn't that about the same as a Ponzi scheme? Also, I've been reading this site for probably close to a year. I greatly appreciate having intelligent people post comments. Sites like Digg or Reddit not only have very biased commenters, they also usually only parrot whatever HuffingtonPost or Keith Olbermann said the night before. It's mindless. Intellectual comments, even if they're not ones I agree with are interesting to read. Kudos to you guys!

tptacek 18y ago
First, the words "ponzi scheme" don't mean "anything where you put X in and get X - n out." Second, Social Security isn't an investment program. The goal of Social Security is to provide each generation of retirees with a baseline level of income. It has succeeded at this task. Third, we're not facing massive shortfalls. We raised taxes on the baby boomers in the early '80s to build up the social security trust fund to pay for their retirement. As it stands, social security is a small part of the entitlements problem moving forward --- Medicare has more than 7 times its liabilities in the projected future. Fourth, this "small payments" thing is a myth. 2/3rds of Social Security beneficiaries derive more than half their income from Social Security; more than 1/3rd of them derive the overwhelming majority of their income from it.
- dantheman 18y ago
  There is no such thing as a social security trust fund. The government uses that money to fund other programs and puts IOUs in there; that means when more are receiving than contributing there will be a massive tax burden on those contributing they get hit with both their normal SS tax, plus the taxes to cover the shortfall.
  - tptacek 18y ago
    If there's no such thing as a social security trust fund --- in which case, Reagan and Greenspan's baby boomer FICA tax hike was a huge scam --- then there's no social security crisis. There's just a general budget issue. But in the general budget, Social Security is dwarfed both by other entitlement programs and by a host of other programs. If you don't believe in the Social Security trust fund, then we should be discussing Medicare. Or out-of-control defense spending. Social Security is irrelevant.
    - spkthed 18y ago
      Well, SS and Medicare are over 40% of the annual Federal budget and will quickly rise as the funding issues start appearing. SS is actually the biggest program and percentage of the annual budget we have. Medicare is second, defense is the third.
      - tptacek 18y ago
        [citation needed] Social Security is 21% of the budget currently. That's: * at par with Medicare and related medical entitlements. * rapidly going to be outpaced by Medicare liabilities * less than we spend on defense * funded from the Social Security trust fund, unlike those other two
    - dantheman 18y ago
      Defense spending is a lot, but it is actually one of the few things that the federal government is supposed to do and it's only 20% of the federal budget whereas medicare and ss are at 60%
- spkthed 18y ago
  On the second point, that baseline is going to drop much, much lower unless they drastically raise taxes. We have what, 8 years until we start taking out more than is going in. On the third note, agreed. Medicare/Medicaid have massive problems. That doesn't mean that SS doesn't have problems too. They do have issues with workers taking more out than putting in. The birth rate continues to decline. On the small payments thing, that maximum SS benefit is what, $1,000 monthly? That is NOT enough to live on. Especially not when you consider the cost of nursing homes, medicine, and all the other costs of living when you are partially or wholly unable to take care of yourself. I don't know about you but I burn $1,000 just on rent, utilities, transportation and food a month. The fact that so many people put so much of their income in it just shows how misled they've been. That's a scary prospect. If you make $50k annually averaged out from 15-65 you've put in $300,000 into SS. That's a fairly average income, well within middle-class. If you live until 90 you have pulled out everything you've taken in. If you die sooner, that money is just gone. Most people don't live until 90. Now, combine that with the fact that right now it's 3.5 people supporting one person and it starts to look like a Ponzi scheme. http://seniorjournal.com/SocialSecurityQ-A.htm http://seniorjournal.com/SocialSecurityQ-A.htm
  - tptacek 18y ago
    On your first point, the "we have until 2018 before the trust fund runs out" factoid is apocryphal. Present estimates put that date into the 2040s. And that's simply the point at which Social Security starts being funded out the general budget, assuming the retirement age isn't adjusted. On your second point, there's "birth rate" and there's "productivity", and those are two hugely different things. On your third point: again, 1/3rd of Social Security recipients derive almost their entire income from it, and fully 2/3rds of recipients derive more than half their income for it. Your anecdote isn't particularly convincing.
    - spkthed 18y ago
      Point one: Right, but, depending upon whose numbers you use in 2018 we stop putting money into the trust fund and start pulling from it. Also, it's not really a trust fund. Excess funding does go into a trust fund but it is then lent to the Treasury and spent. Instead of using the power of time to get a decent rate of return it's basically sitting. Two, I agree, mostly. Since SS depends upon multiple workers for every payee, as the birth rate grows taxes increase or benefits decrease. As either happens it stops being perceived as a retirement plan (which the general public currently does) and starts being perceived as welfare. On the third point, I don't disagree at all on how many people live off of it. Our generation expects a much, much higher quality of living than our parents and grandparents. $1,000 a month is barely enough to pay for the cost of very basic living. Think no vacations, meager meals, no cable TV, no going out for movies, etc. The terrible thing is, if that money had been invested instead of sitting like it has, those people could easily be living on man, many times that. I think far less people would have issues with parking a mandatory 12% of their income into investments than letting the government handle it.

by spkthed 18y ago

tptacek 18y ago

First, the words "ponzi scheme" don't mean "anything where you put X in and get X - n out." Second, Social Security isn't an investment program. The goal of Social Security is to provide each generation of retirees with a baseline level of income. It has succeeded at this task. Third, we're not facing massive shortfalls. We raised taxes on the baby boomers in the early '80s to build up the social security trust fund to pay for their retirement. As it stands, social security is a small part of the entitlements problem moving forward --- Medicare has more than 7 times its liabilities in the projected future. Fourth, this "small payments" thing is a myth. 2/3rds of Social Security beneficiaries derive more than half their income from Social Security; more than 1/3rd of them derive the overwhelming majority of their income from it.

dantheman 18y ago
There is no such thing as a social security trust fund. The government uses that money to fund other programs and puts IOUs in there; that means when more are receiving than contributing there will be a massive tax burden on those contributing they get hit with both their normal SS tax, plus the taxes to cover the shortfall.
- tptacek 18y ago
  If there's no such thing as a social security trust fund --- in which case, Reagan and Greenspan's baby boomer FICA tax hike was a huge scam --- then there's no social security crisis. There's just a general budget issue. But in the general budget, Social Security is dwarfed both by other entitlement programs and by a host of other programs. If you don't believe in the Social Security trust fund, then we should be discussing Medicare. Or out-of-control defense spending. Social Security is irrelevant.
  - spkthed 18y ago
    Well, SS and Medicare are over 40% of the annual Federal budget and will quickly rise as the funding issues start appearing. SS is actually the biggest program and percentage of the annual budget we have. Medicare is second, defense is the third.
    - tptacek 18y ago
      [citation needed] Social Security is 21% of the budget currently. That's: * at par with Medicare and related medical entitlements. * rapidly going to be outpaced by Medicare liabilities * less than we spend on defense * funded from the Social Security trust fund, unlike those other two
  - dantheman 18y ago
    Defense spending is a lot, but it is actually one of the few things that the federal government is supposed to do and it's only 20% of the federal budget whereas medicare and ss are at 60%
spkthed 18y ago
On the second point, that baseline is going to drop much, much lower unless they drastically raise taxes. We have what, 8 years until we start taking out more than is going in. On the third note, agreed. Medicare/Medicaid have massive problems. That doesn't mean that SS doesn't have problems too. They do have issues with workers taking more out than putting in. The birth rate continues to decline. On the small payments thing, that maximum SS benefit is what, $1,000 monthly? That is NOT enough to live on. Especially not when you consider the cost of nursing homes, medicine, and all the other costs of living when you are partially or wholly unable to take care of yourself. I don't know about you but I burn $1,000 just on rent, utilities, transportation and food a month. The fact that so many people put so much of their income in it just shows how misled they've been. That's a scary prospect. If you make $50k annually averaged out from 15-65 you've put in $300,000 into SS. That's a fairly average income, well within middle-class. If you live until 90 you have pulled out everything you've taken in. If you die sooner, that money is just gone. Most people don't live until 90. Now, combine that with the fact that right now it's 3.5 people supporting one person and it starts to look like a Ponzi scheme. http://seniorjournal.com/SocialSecurityQ-A.htm http://seniorjournal.com/SocialSecurityQ-A.htm
- tptacek 18y ago
  On your first point, the "we have until 2018 before the trust fund runs out" factoid is apocryphal. Present estimates put that date into the 2040s. And that's simply the point at which Social Security starts being funded out the general budget, assuming the retirement age isn't adjusted. On your second point, there's "birth rate" and there's "productivity", and those are two hugely different things. On your third point: again, 1/3rd of Social Security recipients derive almost their entire income from it, and fully 2/3rds of recipients derive more than half their income for it. Your anecdote isn't particularly convincing.
  - spkthed 18y ago
    Point one: Right, but, depending upon whose numbers you use in 2018 we stop putting money into the trust fund and start pulling from it. Also, it's not really a trust fund. Excess funding does go into a trust fund but it is then lent to the Treasury and spent. Instead of using the power of time to get a decent rate of return it's basically sitting. Two, I agree, mostly. Since SS depends upon multiple workers for every payee, as the birth rate grows taxes increase or benefits decrease. As either happens it stops being perceived as a retirement plan (which the general public currently does) and starts being perceived as welfare. On the third point, I don't disagree at all on how many people live off of it. Our generation expects a much, much higher quality of living than our parents and grandparents. $1,000 a month is barely enough to pay for the cost of very basic living. Think no vacations, meager meals, no cable TV, no going out for movies, etc. The terrible thing is, if that money had been invested instead of sitting like it has, those people could easily be living on man, many times that. I think far less people would have issues with parking a mandatory 12% of their income into investments than letting the government handle it.