6 ms·

Newly retired couples may lose $16,900/year in Social Security in 2033

24 points by ilreb 3mo ago

jauntywundrkind 3mo ago
I've known I can't really rely on Social Security to exist when I retire, in any notable form, but man, this is so dark. And it's just a start. (Edit: I'm not certain either way! But it seems like too great a risk to rely on. And the prognosis seems not great! I have heard for decades needs serious help, and nothing seems to change. More broadly, with a few exceptions, I've seen overwhelmingly obstructionism and destruction of America in lifetime.)
- Schiendelman 3mo ago
  Honestly, the reporting has looked the same around this since the 1980s. I've read books from them referencing how Social Security was going to be bankrupt by the 90s, or the 2000s. The fact is that older people vote way more than younger people, so it stays funded; we will at worst pay for some of it out of income taxes.
  - seanmcdirmid 3mo ago
    The math has been constant, if you were reading reports saying it would hit the breaking point in the 90s or 2000s, you are either misremembering, confusing it with something else, or willfully distorting facts. Anyways, if you make claims like that you should take advantage of internet linking features and just provide your evidence directly vs a “I remember reading” anecdote. There was a point where social security went from surplus to deficit in 2010. That wasn’t insolvency though since the federal government owed them for the previous surpluses they borrowed. 2033 is when the federal government no longer has to pay back money to SS and it is truly insolvent.
    - rpdillon 3mo ago
      Exactly this. The date has been very consistent for many years, and the math checks out. 2033 unless something significant changes.
      - seanmcdirmid 3mo ago
        The date used to be later but COVID drove it forward a bit since they got rid of contributions for some people for a couple of years I think? Generous cost of living increases have also caused the date to creep forward, but I don’t think it has ever moved backward.
    - Schiendelman 3mo ago
      Maybe you are misremembering. The Greenspan Commission was the last time we significantly amended social security to avoid these problems, and it was in the 80s: https://en.wikipedia.org/wiki/Greenspan_Commission https://en.wikipedia.org/wiki/Greenspan_Commission
      - seanmcdirmid 3mo ago
        Greenspan commission wasn’t a prediction. They used a previous pay as you go model that was simply broke at that time (and had been for awhile$, leading to the current pay for the future model. They then made predictions that the new system would be solvent way past 2033.
        Schiendelman 3mo ago
        See my more complete history here: https://news.ycombinator.com/item?id=48961349 https://news.ycombinator.com/item?id=48961349
  - bronco21016 3mo ago
    As others have pointed out, the date has long been mid/early 2030s. You may be remembering that it’s been a hotly debated issue since the 80s. I distinctly remember it being a massive election issue in 2000 between Gore and Bush (the first election I’m old enough to remember in detail). It was the whole “lockbox” vs government funding of private accounts debate.
    - Schiendelman 3mo ago
      In the early 80s, the date was not in the 2030s - not until after the Greenspan Commission and that set of reforms.
  - phil21 3mo ago
    The date was always in the 2030-2040 range since I started reading about it in the 90's. At my first job I planned my retirement around the trust fund running out by the time I retired, and benefits being cut passively via cost of living not matching inflation. This is largely due to congress actually taking action in the early 80's, which pushed this date back to the current 2030ish estimate. As the date draws nearer, it gets more refined. If they had not taken action, those previous articles would have been correct. If congress had done their jobs and done another round of reformation 20 years later in around 2003 we would not be having this discussion now. The date would have either been pushed back or eliminated. It was exceedingly clear what was going to happen back then if no action was taken, and those workers simply did not vote for folks who were going to raise taxes (or reduce benefits) for them. Collectively speaking they would rather have their children pay instead. From my standpoint the reporting has been very consistent on the subject. It's pretty easy math to report on.
    - Schiendelman 3mo ago
      The first projected failure date I know of was 1979, which was reported on in the early 1970s. There were amendments in 1977 that should have helped, but the 1980-81 recessions made it bad again; by 1982 the Trustees said it would be insolvent in 1983. In 1983 the Greenspan Commission and the resulting amendments believed they pushed solvency through the 2050s. In 2005 that was down to 2041, in 2010 it was 2037, and since then it's sat around 2033-2035. In Jane Jacobs' book "Cities and the Wealth of Nations" in 1984, she saw the pattern, and brought up that you'd have to keep amending it forever.
- eYrKEC2 3mo ago
  It's much worse than that. Governments, when faced with shortfalls in the government pension, will absolutely nationalize your 401k or IRA. YOU, while attempting to responsibly take care of yourself, will absolutely be a piggybank to be raided. This has happened in numerous countries. You wouldn't want to be selfish, would you? Sure, you forgo the midlife crisis sports car in favor of the Toyota Corolla you've been driving for years, but that's just tough. Shoulda lived for the now.
  - Grombobulous 3mo ago
    This is just wild hyperbole. Yes, tax rates might go up. You should actually bet on that because tax rates are at a pretty low level historically. But this concept of nationalizing private bank accounts is pretty extreme.
    - bronco21016 3mo ago
      It doesn’t even have to be raiding of accounts. They can modify rules of RMD to drive tax revenue or even entirely change the rules of 401k withdrawals such that if your balance is over a certain amount you pay an extra tax. I don’t think it’s far fetched that 401ks of a certain value start to experience penalties to make up shortfalls. After all, the whole reason they would need to do this is because they failed on the promise of social security. Why not fail on the promise of the 401k?
      - Grombobulous 3mo ago
        It’s far-fetched for a number of reasons: 1. It upsets the most influential voting demographics. I struggle to find any national policy implemented in the last few decades that has truly disrupted the kind of upper middle class voter that has a lot of money in a 401k. 2. If you tax 401ks higher than long term capital gains tax then higher earners just won’t use 401ks/IRAs. 3. 401ks and IRAs are completely detached from the way social security is funded so they aren’t even really the most logical place you would go to fund social security. E.g., why not just raise the social security payroll tax? 5. It’s less logical to do this than to remove the social security tax cap.
- Grombobulous 3mo ago
  This isn’t what my financial advisor told me and I doubt many others would, either. Social Security is almost certainly going to exist in some form. The question is how much retirees will get from it and how that compares to the cost of living. Excessive cynicism is often dangerous because it converts the mundanely pleasant reality into an enthralling doom and gloom scenario. Of course, I’m not really saying that everyone in America is going to have a wonderful retirement. But if you’re like the other software engineers on this forum and you’re maxing out your 401k and have a mortgage, you’re almost certainly going to have a pretty enviable retirement.
  - secabeen 3mo ago
    Indeed. The worst case scenario with no action is a ~30% cut in benefits; that's a long way from a 100% benefit cut.
  - bluefirebrand 3mo ago
    > the mundanely pleasant reality There are a shocking number of people who do not experience anything resembling a mundanely pleasant reality Those of us who do are extremely fortunate
    - Grombobulous 3mo ago
      I completely recognize that. However, a lot of the voices of discontent and cynicism are living very comfortable lives in America relative to others. Even having access to a flushing toilet and consistent electrical service are luxuries. The US social safety net is only embarrassing by the standards of 30 or so of the most wealthy nations. Medicaid, Medicare, and social security, even in a diminished state, are programs that a lot of people lack.
      - bluefirebrand 3mo ago
        > Even having access to a flushing toilet and consistent electrical service are luxuries Globally sure. But we don't measure ourselves by global standards. We measure ourselves by what we have around us, and the norms we were brought up with. No one in North America thinks indoor plumbing with flushing toilets is a luxury it's a basic necessity, and they're right to think so by the standards of their society. The US social safety net is embarrassing by the standards of what lives people in the US expect to have. Saying that their expectations are silly because people in rural Africa don't have indoor plumbing is kind of asinine. They are reasonably setting their expectations based on their neighbours experience not the most baseline human experience.
from_memory 3mo ago
Yes, and the sky may fall tomorrow. The longer I live the more I read these sensationalist headlines designed to gin up angst and antagonize people's peace of mind. Social Security's solvency has been the subject of much debate, but clearer heads point toward a graduation of the current system to include higher earners. That will accommodate the large aging population's demand. Case closed, easy peasy lemon squeezy.
- bdcravens 3mo ago
  A quick check (ie, letting ChatGPT do the math) shows that if all caps on taxation was eliminated, it would help, but not solve the problem completely.
- seanmcdirmid 3mo ago
  If nothing is done it’s a mathematical fact. The problem is that there are no plans to do anything yet, each administration and congress seeing it as too politically volatile to deal with, which means we will have a last minute suboptimal solution. Obviously there are solutions. Maybe if America survives that long we might see one implemented.
  - secabeen 3mo ago
    Sure, if nothing is done. The trust fund redeeming its bonds is little different than the congress appropriating money for Social Security benefits; both come out of the current revenue of the USG. When the trust fund no longer has any bonds to redeem, there's nothing stopping congress from continuing to transfer money into Social Security to pay benefits at existing levels. They'll just have to vote on it rather than it happening automatically.
    - seanmcdirmid 3mo ago
      2033 is when all the bonds should have been redeemed and there is no money left to redeem, just contributions coming in and more payments going out. And yes, congress can do a straight injection from the general fund, it’s just even more deficit spending at that point.
Sabinus 3mo ago
"If we do nothing about this obvious problem for the next decade it will be catastrophic." Ok
jasongi 3mo ago
Can someone explain the legal structures in place in the US that make Social Security "run out"? Because it just sounds like deliberate indirection put in place by the government to cut funding for pensions? In Australia, we have a universal, means-tested pension funded through consolidated revenue (i.e taxes). The pension can't "run out", because it is just a law that says that the government will pay you $X after you turn a particular age, if your assets are below a threshold. But if X were too high the Government would need to raise taxes, borrow money or print money to fund it, like all government spending. Separately, we have superannuation - which I think is similar to 401k except compulsory for employers to pay 12% of your salary into, which are personal retirement savings held in trust to be released at your retirement, but generally these are account-based and in addition to the pension if you are eligible (i.e what you put in is what you get out). There are older "defined benefits" superannuation funds where payouts aren't account-based (I think based on years of service in government roles or something like that) but they have been phased out to avoid the moral hazard of something government-adjacent having pension liabilities they cannot meet with their member's funds. So what exactly is Social Security if it can run out? It sounds like a defined-benefits fund that is run by the government - in which case why has nobody closed it off to new members like Australia did when the writing was on the wall?
- mgh95 3mo ago
  Social security is funded through payroll taxes on employees and emloyers. The "run out" is in the sense of the amount of money going out exceeds that coming in and the saved funds have been depleted. In this sense, it can "run out" that the savings are depleted and the plan is cash flow negative.
  - wahern 3mo ago
    The narrative and word choices are deliberate. Republicans want to get rid of Social Security. So the narrative is Social Security is fundamentally broken, and it can be silently ended through passive negligence without having to take responsibility for ending a popular entitlement. No matter that it was created with the expectation that Congress would periodically adjust the retirement age to keep it solvent, and that it was always intended to provide only a bare minimum benefit, just enough to keep you out of the poor house. Poor houses were real, common things back then, and what the "free market" will result in. Social Security revenue and expenditures can easily be balanced in theory. But neither party wants to do the right thing--Democrats want to expand entitlements, and increasing the retirement age as originally designed is the opposite of their goal.
exabrial 3mo ago
I wish i could just opt out of social security and invest the money myself. I'd pay the long term cap gains tax if this was an option, and I'd come out way ahead. The federal government can only mishandle money. Maybe we need two systems: 1. You may move to be a certified responsible saver. You inherit all risk. But you opt out of the taxes. You must prove retirements assets are being contributed to. 2. Mandatory saving for everyone else (reading other countries, seems like this happens elsewhere). Money is pooled and invested into US companies. Investments must produce at least 8% return annually over 10 year rolling period or something, else corporate assets are forfeited (someone more saavy than I needs to figure that policy out).
- BobbyJo 3mo ago
  Social security was created so that money collected day one could be distributed day one. Allowing people to opt out and invest the money is incompatible with the model as a whole. It's like asking if you can save today's extra heartbeats for when you're older.
  - exabrial 3mo ago
    This is hilarious.
- Terr_ 3mo ago
  > I wish i could just opt out of social security and invest the money myself. I'd like to emphasize that SS/OASDI is not an investment program in the first place, it is an insurance program. The two kinds cannot be directly compared, and have very different mechanics and features. You might already have known that, but the misconception is distressingly common in America--which I blame on misinformation from big-bank lobbyists. > You inherit all risk. But you opt out of the taxes. You must prove retirements assets are being contributed to. Is inheriting all the risk even possible? Suppose someone signs some dark legal contract in blood, like: "I refuse all public assistance, let me die in a ditch because I shall make my own fate." What happens if they commit crime (perhaps out of desperation) and are sentenced to time in jail? Now there are three outcomes which all suck differently: 1. The government caves and supports them anyway with taxpayers funding their jail-food and jail-shelter. This distorts the original incentives, and recidivism is going to be a bitch. 2. They are let go, to commit more crimes? Locals won't stand for that. 3. They are indirectly executed by being forcibly exiled to a walled-off isolated place with no food and no shelter, as their families (quite reasonably) cry about the brutality on TV. Then there's the issue of dependents, and mechanisms for fraud, and both of those are much bigger cans of worms than I want to open in this edit...
JKCalhoun 3mo ago
Imagine my surprise when I realized just a few months ago that I was now old enough to apply for social security. Younger, blue-collar-raised me thought I should hold out on applying for social security until I was 70 so as to get the largest monthly payout. Older, hopefully-wiser me (who has since learned about investing) applied for social security immediately and will stash the disbursements into an index fund until I actually need them. (I'm oversimplifying because there are other factors to consider, but generally, historic returns on the stock market suggest you'll have more by age 70 by investing he disbursements when you're 62 than social security would have paid out if you had waited until 70.) (Wild to imagine a system that was put in place that requires the recipient to guess how long they think they're going to live and choose when to start payments. Some kind of personal prediction market of one…) The wife was on board my starting at age 62 simply because of talk of social security solvency issues like the headline.
- maxerickson 3mo ago
  Another way to look at it is that people who need the money early have the option. The guessing is just if you agonize about ending with an optimal payout.

24 points by ilreb 3mo ago

I've known I can't really rely on Social Security to exist when I retire, in any notable form, but man, this is so dark. And it's just a start. (Edit: I'm not certain either way! But it seems like too great a risk to rely on. And the prognosis seems not great! I have heard for decades needs serious help, and nothing seems to change. More broadly, with a few exceptions, I've seen overwhelmingly obstructionism and destruction of America in lifetime.)

Schiendelman 3mo ago
Honestly, the reporting has looked the same around this since the 1980s. I've read books from them referencing how Social Security was going to be bankrupt by the 90s, or the 2000s. The fact is that older people vote way more than younger people, so it stays funded; we will at worst pay for some of it out of income taxes.
- seanmcdirmid 3mo ago
  The math has been constant, if you were reading reports saying it would hit the breaking point in the 90s or 2000s, you are either misremembering, confusing it with something else, or willfully distorting facts. Anyways, if you make claims like that you should take advantage of internet linking features and just provide your evidence directly vs a “I remember reading” anecdote. There was a point where social security went from surplus to deficit in 2010. That wasn’t insolvency though since the federal government owed them for the previous surpluses they borrowed. 2033 is when the federal government no longer has to pay back money to SS and it is truly insolvent.
  - rpdillon 3mo ago
    Exactly this. The date has been very consistent for many years, and the math checks out. 2033 unless something significant changes.
    - seanmcdirmid 3mo ago
      The date used to be later but COVID drove it forward a bit since they got rid of contributions for some people for a couple of years I think? Generous cost of living increases have also caused the date to creep forward, but I don’t think it has ever moved backward.
  - Schiendelman 3mo ago
    Maybe you are misremembering. The Greenspan Commission was the last time we significantly amended social security to avoid these problems, and it was in the 80s: https://en.wikipedia.org/wiki/Greenspan_Commission https://en.wikipedia.org/wiki/Greenspan_Commission
    - seanmcdirmid 3mo ago
      Greenspan commission wasn’t a prediction. They used a previous pay as you go model that was simply broke at that time (and had been for awhile$, leading to the current pay for the future model. They then made predictions that the new system would be solvent way past 2033.
      - Schiendelman 3mo ago
        See my more complete history here: https://news.ycombinator.com/item?id=48961349 https://news.ycombinator.com/item?id=48961349
- bronco21016 3mo ago
  As others have pointed out, the date has long been mid/early 2030s. You may be remembering that it’s been a hotly debated issue since the 80s. I distinctly remember it being a massive election issue in 2000 between Gore and Bush (the first election I’m old enough to remember in detail). It was the whole “lockbox” vs government funding of private accounts debate.
  - Schiendelman 3mo ago
    In the early 80s, the date was not in the 2030s - not until after the Greenspan Commission and that set of reforms.
- phil21 3mo ago
  The date was always in the 2030-2040 range since I started reading about it in the 90's. At my first job I planned my retirement around the trust fund running out by the time I retired, and benefits being cut passively via cost of living not matching inflation. This is largely due to congress actually taking action in the early 80's, which pushed this date back to the current 2030ish estimate. As the date draws nearer, it gets more refined. If they had not taken action, those previous articles would have been correct. If congress had done their jobs and done another round of reformation 20 years later in around 2003 we would not be having this discussion now. The date would have either been pushed back or eliminated. It was exceedingly clear what was going to happen back then if no action was taken, and those workers simply did not vote for folks who were going to raise taxes (or reduce benefits) for them. Collectively speaking they would rather have their children pay instead. From my standpoint the reporting has been very consistent on the subject. It's pretty easy math to report on.
  - Schiendelman 3mo ago
    The first projected failure date I know of was 1979, which was reported on in the early 1970s. There were amendments in 1977 that should have helped, but the 1980-81 recessions made it bad again; by 1982 the Trustees said it would be insolvent in 1983. In 1983 the Greenspan Commission and the resulting amendments believed they pushed solvency through the 2050s. In 2005 that was down to 2041, in 2010 it was 2037, and since then it's sat around 2033-2035. In Jane Jacobs' book "Cities and the Wealth of Nations" in 1984, she saw the pattern, and brought up that you'd have to keep amending it forever.
eYrKEC2 3mo ago
It's much worse than that. Governments, when faced with shortfalls in the government pension, will absolutely nationalize your 401k or IRA. YOU, while attempting to responsibly take care of yourself, will absolutely be a piggybank to be raided. This has happened in numerous countries. You wouldn't want to be selfish, would you? Sure, you forgo the midlife crisis sports car in favor of the Toyota Corolla you've been driving for years, but that's just tough. Shoulda lived for the now.
- Grombobulous 3mo ago
  This is just wild hyperbole. Yes, tax rates might go up. You should actually bet on that because tax rates are at a pretty low level historically. But this concept of nationalizing private bank accounts is pretty extreme.
  - bronco21016 3mo ago
    It doesn’t even have to be raiding of accounts. They can modify rules of RMD to drive tax revenue or even entirely change the rules of 401k withdrawals such that if your balance is over a certain amount you pay an extra tax. I don’t think it’s far fetched that 401ks of a certain value start to experience penalties to make up shortfalls. After all, the whole reason they would need to do this is because they failed on the promise of social security. Why not fail on the promise of the 401k?
    - Grombobulous 3mo ago
      It’s far-fetched for a number of reasons: 1. It upsets the most influential voting demographics. I struggle to find any national policy implemented in the last few decades that has truly disrupted the kind of upper middle class voter that has a lot of money in a 401k. 2. If you tax 401ks higher than long term capital gains tax then higher earners just won’t use 401ks/IRAs. 3. 401ks and IRAs are completely detached from the way social security is funded so they aren’t even really the most logical place you would go to fund social security. E.g., why not just raise the social security payroll tax? 5. It’s less logical to do this than to remove the social security tax cap.
Grombobulous 3mo ago
This isn’t what my financial advisor told me and I doubt many others would, either. Social Security is almost certainly going to exist in some form. The question is how much retirees will get from it and how that compares to the cost of living. Excessive cynicism is often dangerous because it converts the mundanely pleasant reality into an enthralling doom and gloom scenario. Of course, I’m not really saying that everyone in America is going to have a wonderful retirement. But if you’re like the other software engineers on this forum and you’re maxing out your 401k and have a mortgage, you’re almost certainly going to have a pretty enviable retirement.
- secabeen 3mo ago
  Indeed. The worst case scenario with no action is a ~30% cut in benefits; that's a long way from a 100% benefit cut.
- bluefirebrand 3mo ago
  > the mundanely pleasant reality There are a shocking number of people who do not experience anything resembling a mundanely pleasant reality Those of us who do are extremely fortunate
  - Grombobulous 3mo ago
    I completely recognize that. However, a lot of the voices of discontent and cynicism are living very comfortable lives in America relative to others. Even having access to a flushing toilet and consistent electrical service are luxuries. The US social safety net is only embarrassing by the standards of 30 or so of the most wealthy nations. Medicaid, Medicare, and social security, even in a diminished state, are programs that a lot of people lack.
    - bluefirebrand 3mo ago
      > Even having access to a flushing toilet and consistent electrical service are luxuries Globally sure. But we don't measure ourselves by global standards. We measure ourselves by what we have around us, and the norms we were brought up with. No one in North America thinks indoor plumbing with flushing toilets is a luxury it's a basic necessity, and they're right to think so by the standards of their society. The US social safety net is embarrassing by the standards of what lives people in the US expect to have. Saying that their expectations are silly because people in rural Africa don't have indoor plumbing is kind of asinine. They are reasonably setting their expectations based on their neighbours experience not the most baseline human experience.

from_memory 3mo ago

Yes, and the sky may fall tomorrow. The longer I live the more I read these sensationalist headlines designed to gin up angst and antagonize people's peace of mind. Social Security's solvency has been the subject of much debate, but clearer heads point toward a graduation of the current system to include higher earners. That will accommodate the large aging population's demand. Case closed, easy peasy lemon squeezy.

bdcravens 3mo ago
A quick check (ie, letting ChatGPT do the math) shows that if all caps on taxation was eliminated, it would help, but not solve the problem completely.
seanmcdirmid 3mo ago
If nothing is done it’s a mathematical fact. The problem is that there are no plans to do anything yet, each administration and congress seeing it as too politically volatile to deal with, which means we will have a last minute suboptimal solution. Obviously there are solutions. Maybe if America survives that long we might see one implemented.
- secabeen 3mo ago
  Sure, if nothing is done. The trust fund redeeming its bonds is little different than the congress appropriating money for Social Security benefits; both come out of the current revenue of the USG. When the trust fund no longer has any bonds to redeem, there's nothing stopping congress from continuing to transfer money into Social Security to pay benefits at existing levels. They'll just have to vote on it rather than it happening automatically.
  - seanmcdirmid 3mo ago
    2033 is when all the bonds should have been redeemed and there is no money left to redeem, just contributions coming in and more payments going out. And yes, congress can do a straight injection from the general fund, it’s just even more deficit spending at that point.

Sabinus 3mo ago

"If we do nothing about this obvious problem for the next decade it will be catastrophic." Ok

jasongi 3mo ago

Can someone explain the legal structures in place in the US that make Social Security "run out"? Because it just sounds like deliberate indirection put in place by the government to cut funding for pensions? In Australia, we have a universal, means-tested pension funded through consolidated revenue (i.e taxes). The pension can't "run out", because it is just a law that says that the government will pay you $X after you turn a particular age, if your assets are below a threshold. But if X were too high the Government would need to raise taxes, borrow money or print money to fund it, like all government spending. Separately, we have superannuation - which I think is similar to 401k except compulsory for employers to pay 12% of your salary into, which are personal retirement savings held in trust to be released at your retirement, but generally these are account-based and in addition to the pension if you are eligible (i.e what you put in is what you get out). There are older "defined benefits" superannuation funds where payouts aren't account-based (I think based on years of service in government roles or something like that) but they have been phased out to avoid the moral hazard of something government-adjacent having pension liabilities they cannot meet with their member's funds. So what exactly is Social Security if it can run out? It sounds like a defined-benefits fund that is run by the government - in which case why has nobody closed it off to new members like Australia did when the writing was on the wall?

mgh95 3mo ago
Social security is funded through payroll taxes on employees and emloyers. The "run out" is in the sense of the amount of money going out exceeds that coming in and the saved funds have been depleted. In this sense, it can "run out" that the savings are depleted and the plan is cash flow negative.
- wahern 3mo ago
  The narrative and word choices are deliberate. Republicans want to get rid of Social Security. So the narrative is Social Security is fundamentally broken, and it can be silently ended through passive negligence without having to take responsibility for ending a popular entitlement. No matter that it was created with the expectation that Congress would periodically adjust the retirement age to keep it solvent, and that it was always intended to provide only a bare minimum benefit, just enough to keep you out of the poor house. Poor houses were real, common things back then, and what the "free market" will result in. Social Security revenue and expenditures can easily be balanced in theory. But neither party wants to do the right thing--Democrats want to expand entitlements, and increasing the retirement age as originally designed is the opposite of their goal.

exabrial 3mo ago

I wish i could just opt out of social security and invest the money myself. I'd pay the long term cap gains tax if this was an option, and I'd come out way ahead. The federal government can only mishandle money. Maybe we need two systems: 1. You may move to be a certified responsible saver. You inherit all risk. But you opt out of the taxes. You must prove retirements assets are being contributed to. 2. Mandatory saving for everyone else (reading other countries, seems like this happens elsewhere). Money is pooled and invested into US companies. Investments must produce at least 8% return annually over 10 year rolling period or something, else corporate assets are forfeited (someone more saavy than I needs to figure that policy out).

BobbyJo 3mo ago
Social security was created so that money collected day one could be distributed day one. Allowing people to opt out and invest the money is incompatible with the model as a whole. It's like asking if you can save today's extra heartbeats for when you're older.
- exabrial 3mo ago
  This is hilarious.
Terr_ 3mo ago
> I wish i could just opt out of social security and invest the money myself. I'd like to emphasize that SS/OASDI is not an investment program in the first place, it is an insurance program. The two kinds cannot be directly compared, and have very different mechanics and features. You might already have known that, but the misconception is distressingly common in America--which I blame on misinformation from big-bank lobbyists. > You inherit all risk. But you opt out of the taxes. You must prove retirements assets are being contributed to. Is inheriting all the risk even possible? Suppose someone signs some dark legal contract in blood, like: "I refuse all public assistance, let me die in a ditch because I shall make my own fate." What happens if they commit crime (perhaps out of desperation) and are sentenced to time in jail? Now there are three outcomes which all suck differently: 1. The government caves and supports them anyway with taxpayers funding their jail-food and jail-shelter. This distorts the original incentives, and recidivism is going to be a bitch. 2. They are let go, to commit more crimes? Locals won't stand for that. 3. They are indirectly executed by being forcibly exiled to a walled-off isolated place with no food and no shelter, as their families (quite reasonably) cry about the brutality on TV. Then there's the issue of dependents, and mechanisms for fraud, and both of those are much bigger cans of worms than I want to open in this edit...

JKCalhoun 3mo ago

Imagine my surprise when I realized just a few months ago that I was now old enough to apply for social security. Younger, blue-collar-raised me thought I should hold out on applying for social security until I was 70 so as to get the largest monthly payout. Older, hopefully-wiser me (who has since learned about investing) applied for social security immediately and will stash the disbursements into an index fund until I actually need them. (I'm oversimplifying because there are other factors to consider, but generally, historic returns on the stock market suggest you'll have more by age 70 by investing he disbursements when you're 62 than social security would have paid out if you had waited until 70.) (Wild to imagine a system that was put in place that requires the recipient to guess how long they think they're going to live and choose when to start payments. Some kind of personal prediction market of one…) The wife was on board my starting at age 62 simply because of talk of social security solvency issues like the headline.

maxerickson 3mo ago
Another way to look at it is that people who need the money early have the option. The guessing is just if you agonize about ending with an optimal payout.