[ARCHIVED THREAD] - Social Security (Page 1 of 2)
Posted: 4/21/2007 7:05:26 PM EDT
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This might be better in the money forums but I think it's related here. It's common knowlege that the SSI system is going broke. It's going to be around for awhile but will eventually be broke. What's your thoughts about where it's going? I suspect that once the baby boomers start retiring, they will want their SSI at all costs. Anyone who runs for election who wants to cut benefits or taxes will have the fight the AARP and similar organizations who defend retirees benefits. As a result, I suspect that we will see an increase in SSI taxes. It's the only way that I can see that the goernment will "save" Social Security. I wonder how that will affect the long term financial health of this country as the young increasingly support the elderly. Not to get into a religious argument but with abortion killing a large percentage of the future tax base as well as the increase of the welfare mentality, there won't be enough people around to pay for all the promised "benefits". Any thoughts?? SS is a scam but unfortunately, many people have based their entire retirement plan on SS. My inlaws did and it's sad that they don't have a better plan. However, their financial sense is basically non-existant. |
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You're assuming SS is a separate frund from the general fund which it was suppose to be. It hasn't been for quite sometime. Yes a point is coming SS will start incurring debt instead of paying for it's self, however unless there is a public outcry to stop enrollment then the voting block will keep it going. As for the people retiring, well bud they just spent a lifetime paying in and want their money back. I don't blame them at all. Me, give me all the money I have paid in and I'll gladly relinquish hte monthly payments at retirement that will never equal what I paid in before I die. Tj |
| I doubt that I'll ever see a social security check when I retired some 20-30 years from now. Since my father is elderly and is having problems with his health, I am awe struck with the cost of healthcare and the potential of him having his assets ceased to cover these expenses at some point in time in the future. |
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Probably the first measure they'll take is means-testing, which is already done in other countries. If you're "rich," you'll get reduced or zero benefits. Which turns it into a stealth progressive tax. I don't like the idea of that. We'll also probably see the income ceiling on FICA taxes raised or eliminated. The LOGICAL thing to do would be to just raise the age where you can collect full benefits. The system was never meant to fund a 20 year retirement; at its inception few people even made it to the original retirement age. The catch is, Social Security also pays the disability benefits. With more overweight, diabetic people with heart blockages, someone in their sixties could qualify for Disability before they qualify for the retirement payments. The system was really meant to pay out much like Disability pays out now: when you're too ill/decrepit/worn out to actually work anymore. Remember also that the real money bleed is Medicare/Medicaid. Hard choices will have to be made on the health care system, especially the nursing home bills. With constant Democrat rhetoric of making the "rich" "pay their fair share," I'm placing my bets on means testing. So you'll likely still be screwed somewhat if you managed to be responsible and prosperous and put aside some money. Still better to have $1000/month out of your own investment portfolio, than have nothing but the $1000/month depending on the government's whim about whether you really "need" or "deserve" it. |
Just as another example of how the system is broken.....I know many people who are able bodied and capable but are on full disability because of some imagined problem. They are also breaking the system. I don't like the idea of supporting the old folks with my SSI payments because those payments are supposed to be there for me. Of course it doesn't work that way. I say cut benefits and raise the minimum age but that's pretty unpopular too!!! |
A simple approach to that is cut off anyone who didn't pay in or you can only draw up to what you paid in. Now that's fair, but wont' happen. Remember many of those old folks you want to cut off, paid in, paid taxes that paid for your schooling, the bridges you cross rivers on, and highways you drive on. It's not their fault that a program designed to hold their money some poltician stole it instead. It was taken cause it had a tremendous surplus as all those baby boomers were paying in while working. Had that money been left alone, we wouldn't have this thread. Tj |
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The SSI system, as it was designed, never would have worked. It has just gone broke faster because it was plundered. It would have gone broke anyway on its own. The SSI system is a corrupt, poorly planned system. I started this thread because I was curious about people's thoughts on SSI, where it's going, and the repercussions of the long term effects upon all of us as polititians look for some way to fix a broken system. |
Except the system was NEVER designed as a "lockbox." From the start, money was taken from current workers to pay for the retirees. During the Depression, it's not like the government had seed money to fund the program right. The equation has changed- the ratio of workers to retirees has shrunk. We've had decades of notice on this problem, have kept our heads in the sand...meanwhile people are buying into/expecting a fantasy retirement of Florida trips and golf...which has been the exception and not the rule through history. Fine if you fund it yourself, but people are expecting this off SOCIAL SECURITY ALONE. No, no, and no. Okay, so I'm young and have energy and am at the beginning of my career and don't appreciate how "tired" one is after decades of working. Tough sh*t, no one's offering me a check for not working. Or if they do, it's even smaller and after making much effort to prove that I can't work or there's no job available. People want to believe that the government will take care of them. The government is content to let them believe that, even if it isn't true. You want "the money that you paid in"? It's gone- paid to the generation before. The price of not facing this earlier should be to circle like vultures over what's left of the system. Young families balancing jobs and babies and education expenses (thank you, state cutbacks/freezes), need to have some of their own money left to live on, too. |
+1 Baby boomer here. Give me the money I've put into the system over the past 45 years and I won't ask anything else of SSI either. FYI: I've heard the same "SS is going broke" for the past forty years. If it is, it's doing it awfully slowly. |
Hell, I'd settle for letting me out of future SSI payments, and I'll call what I've paid in thus far stupid tax. To the OP: Some random guesses on future impacts: Higher progressive taxes through several stealth efforts that tax those actually producing value to the point of all investment moving entirely to other areas (India, Eastern Europe, China) and our economy ultimatly faltering, into a GD II. I'd balance that 1 million rounds of ammo vs eliminating all debt, and building wealth in a diverse portfolio that includes a variety of european and asian pacific growth. I'm sure you'll get taxed to the brink on whatever benefit you have, but at some point, the pendulum will swing and taxes will come back down after enough entitlement programs implode. But drastic implosions won't happen until we have hit depression level poverty and discord. ETA: Fixed some poorly chosen words. |
??? that makes no sense Illegals granted Social Security By Charles Hurt THE WASHINGTON TIMES May 19, 2006 The Senate voted yesterday to allow illegal aliens to collect Social Security benefits based on past illegal employment -- even if the job was obtained through forged or stolen documents. www.washtimes.com/national/20060518-114132-2456r.htm |
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I think the reference to Bush allowing illegals in is that if we let a bunch of illegals in to work, and have them pay social security, we'd have a huge young workforce paying SSI, so it would last a little bit longer. If course, to be fair, we can't collect unless we let them get the benefits too.... But all of the young ones will still get screwed just like natural born Still a screwed up situation, and all flooding illegals in to pay SSI will do is delay things a few years, while costing more in taxes to pay for ER visits for toothaches. |
Social Security is a Ponzi scheme or a pyramid. With demographics forming more of a population diamond than a population pyramid there is no longer a wider base to support the levels above. Bringing in illegals (who supposedly will pay into the system but I'm sure suck WAY more out in reality) is probably an attempt to create the base so the demographics are more of a pyramid than a diamond. |
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I'd like to see it only going to people that paid in...god knows I've paid in an assload. I dread thinking of how much I will have paid in before I can actually get anything. I know several people who get it who never paid a freaking dime (did you know they give it to familes for "handicaped" kids?) It's absurd. To keep this SF oriented I make sure I have back up plans...I have a retirement plan through my job and a separate retirement savings plan. Betting on social security is as bad as waiting for FEMA after an event. |
Actually I don't know if that's a fact or not. It wasn't setup as the pyramid scheme it has become today. Many people who pay in never live to draw a cent. Likewise like a good ran retirement plan, the odds were heavily stacked towards those who made it to retirement being dead before they take out what they paid in. Keep in mind that with every year as folks retire, a larger percentage of them are retiring above the poverty level. My 77 year old mother for example paid taxes this year. Those folks retiring in 2007 are retiring with more wealth by percentage than the year before and this trend has been going on for years. My niece on the other hand 29, I figured her benifits including medicaide was over $43,000 a year at one time and her only contribution was having children. (Finally going to school to be a nurse now and my brother has her out of government housing.) Her mother on the otherhand (divorced my brother a year after she was born) has been on system since. When we thought the gravy train would end, she simply claimed she was nuts and now draws SSI. She's an expert at munipulating the system and honestly if she spent half as much effort at a job would be ten time better off. She passed on the legacy, I shit you not, of welfare to her daughter. It has taken our familly ten years to get her on the track of off the system. Imagine a woman sitting at a dinner table at her daughters sweet 16 birthday and saying, "Now you can get pregnant and get your own apartment." This I heard and this I know for a fact is happening every day in America. Although grouped together medicaid and medicare are two different things with medicare for the elderly not much better than any of our insurance plans, however medicaide is without a doutb the best insurance anyone can have. Votes are bought with medicaide as surely as if it was cash. The population isn't declining. In fact, it's going up. Why isn't there a surplus then? It's simple, fewer people are actually working and contributing. It doesn't have a thing to do with age and the least to blame are those who worked all their lives. What was a plan for those who worked and paid taxes has also become the plan for those who did not. I would ask those young today to join me in my push for an end of this vicious cycle of putting more and more of our population via buying votes out of work and back to work. When a man is thirsts, you give them water. When a man is hungry, you give them food. When a man wants anything else, you give them job for to do anything else they cease being a man. What do we do instead? We give them Coca Cola, credit cards to buy steaks, free housing, medical plans those retired or working wished they had, free housing, free utilities, spending money, and even, yes this happens, money to fix their cars. I will never forget finding a field trip permission slip in my sons backpack. When I asked him why he didn't want to go, he said "It's expensive and besides the ony ones who go are the welfare kids." Yes the system is broken but it isn't by those the system was originally intended to benifit but by those it was never intended to benifit. I'm not a cruel man and this nation is far too great to allow our people especially children to starve in the streets but to have those who don't work living better than those who do is lunacy of the higest order. The really wealthy of this nation are out of touch with reality of the lower incomes and what they see as minimal is over board. We need to go back to the basics. Stand in food lines and living in shelters if far more incentive than a credit card and a HUD house for a person to re-enter the working class. We make it far to easy to be a drain than a contributer. It amazes me how easy the young people of today accept that they will be ripped off one day by thier own government breaking their word. You can ask my son our motto which is a deal is deal. I ask everyone to join me in pushing our polticians to not only hold their end of the bargain (which everyone knows as we are doing it now is stupid) but get back to the original deal. It's unfair to want to change the deal after one party has held their end or holding thier end. The air needs to be cleared and let's put the dollars signs where they are and not hidden in political smoke and mirrors. Medicaide is not medicare and social security is not SSI. Personally I wish the system was never developed for it was probably the first of the social programs that is destroying the familly unit and welfare as it is not only destroys the familly unit but encourages it's destruction. With it's destruction comes more dependency since children no longer take care of their elderly parents and parents no longer help their children in need. I take great pride that nobody in my familly has ever been in a rest home. I take pride in the fact that other than my brothers familly (due to divorce and quite frankly encouraged by a welfare system that gave benifits more than my brother could working as a grocery store clerk early in life) nobody is on welfare. I take pride in the fact my 80 year old mother inlaw lives with me. I take pride in the fact my 77 year old mother pays taxes. I do not begrudge her the $1,400 a month she gets in social scurity that combined she and my father paid into the tax system over 80 years. I take pride that I myself have worked and paid taxes for over 36 years. I take pride I have never had government assitance in any way shape or form. I see no loss of pride by asking the government to hold to thier bargain that I have paid into for 36 years so far with a good ten more to go, a deal is a deal. I wish everyone had pride and understood words like honor, duty, and family. The me generation needs to wake the hell up or one day they will look around and all there will be is them, alone, lonely, and destitute. This isn't us versus them for we are all we and we need to get our act together or one day my son will be bitching about keeping those bitching about keeping the retired now. Push your politicians to make welfare not a vacation for life to be passed down generation to generation but something to dread. Push for the numbers to be in the open and call them what they are. Will the program be around when you young people retire? I don't know but I do know I will fight to see you are not screwed over just as I will fight to see my generation is not. For you see to a true family man, you love your father and your son. There are no instant fixes but giving up isn't the answer either. There is much we can do to fix this. Tj |
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Personal health savings accounts should be implemented IMMEDIATELY!!! Heck, just take 1-5% of your income and let it grow and use that to cover medical expenses. Same for "retirement" income. Raise the age to 67 from 65. Those two things alone would keep folks who actually WORK from going broke paying for indigents in the system. |
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TJ, you're right on the money. When my home state got "strict" on welfare and put time limits everyone suddenly developed an anxiety disorder. I remember watching the news when a woman who got her first job because of the new workfare program, said she was kind of happy and liked going to work because it was interesting. She appeared to be in her late 40's or early 50's and this was the first time she had ever had a job in her life! yeah they were anxious because they were going to have to leave free government housing and get a job. They quickly learned that it's a much better system to be disabled than on welfare. It, at the time, lacked the social stigma of the welfare system. When I talk to people in the course of my work, some of them are proud of the distinction and freely admit an anxiety disorder or some other such cock and bull story. Imagine a 25 year old man of sound body who won't work and is getting paid to sit home and make babies that you and i will have to pay for. I do have a problem with the government giving away tax money to persons who never worked and that we as the nation owe it to these people to make sure no one slips through the cracks. Sorry but hunger is a helluva motivator. Maybe it's not the companies moving offshore that's killing our nation, Could it possibly be that we have a nation of children who suck on the teat and won't grow up or be held accountable? Sorry, but our politicians bought the votes they needed with our wallets and used their power against us. They bought the welfare vote, the senior citizens vote, and the immigrant vote by writing checks out of our checkbooks. People should get thier social security back that they paid in, plus the 30-40 years of interest. Too bad we were used and abused. I figure I'll never see a dime of it. That is unless I have a breakdown and develop an anxiety disorder. As you said, people need to find some decency, self respect and honor and take care of themselves and their kids at a minimum and older relatives too. This system will crash otherwise. Perhaps we need that reality thrust upon us to get back to the can do american spirit. <rant off> |
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TJ excellent post - right on. Same here with old folks home, etc. I went with my dad to the local SS office when it was his time to collect. I was appalled to see that he was the ONLY one of maybe 100 people waiting in line that had gray hair. I guessed the average age to be 20 - 30. SS has become a full-blown welfare program! All these ‘disabled’ people seem to jump out of their chairs easily enough when their number was called. |
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I have to ask, being this is a room of people who are into preparedness and contingency planning-do any of you really think that SSI will be there to pay out? On my SSI summary sheets they list the date they predict when it will bankrupt, and that's sooner than I will ever be able to draw.. I figure there's a reason they are being up front about it... Dave P.S. A big part of the problem is that we pay SSI out for a variety of reasons, not jsut retirees. I have a buddy who's wife cracked out and got their 9 y/o son a $500/mo SSI check because he was a 'slow learner'. He's a normal fucking kid who has a job, car, girlfriend etc. nowadays. Nobody ever called her on it, and when they divorced the court was made aware of the fraud and did nothing about it. |
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When in the history of the human race have so many elderly folk lived in near complete segregation from the younger generations, owning two homes, and shuttled between them? When before the last 40 years in the US and some other EU countries has this occured? Talk to these strange people and you find out that many lived in the Depression, or were children or teens in the 1940s - they have detailed stories of the 1930s through 1950's. But they're not part of our lives and for the most part the Boomers and their offspring don't often have the chance for details of those 3 decades. We sing different songs, know different myths and stores...the "classics" we read (and all the ideas crammed into them of the vices or virtues) are different. Those folk were studying algebra in grade school, doing calculus in their heads, reading in Latin before they reached 8th grade....stuff if the rest of us even got to, we go into in late High school, all while priding ourselves on our modern, "new and improved" educational system.  I see the SSI as just another feel good program that eventually - like all the others- took on a life of its own and led to a huge social shift in expectations and lifestyles; people always prone to take the path of least resistance... and it's a huge shame for the rest of us that our grand or great grandparents are no longer a regular part of our lives and our children's lives. That all their ideas, habits, attitudes, insights etc. are largely lost or kept to themselves - because they can afford to stay to themselves in their age ghettos, they have become almost socially EXPECTED to retire and go off south into their little "communities" and "leave us alone"  to be the boomers or Xers we are told (by who?) to be. |
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I am 35 years old. I have worked since I was young. I put myself through collage. I pay for my children's private school. I have always paid my taxes. I have never taken a government handout. I KNOW I will never receive anything from social security. I know this and plan on it. I would gladly let them keep the tens of thousands of dollars they have collected from my employers and my self, if they will stop taking it. They (of course) will not. So, I am saving for my own retirement without any planned dependence on social security or any other government program. I think most of us here are doing the same. For those who are not, and do not believe the social security program will be able to pay out in the future, perhaps you should do some saving yourselves. |
The people who paid in should get their money back. But even if they never get a dime, it's immoral to force younger people to pay their promised benefits. It's slavery. I lump these useless eaters in with the worst enemies of the nation. The day of reckoning for them, for SS, and for the nation is coming. The SS stood for tyranny in Germany, and it still stands for tyranny today. Why should I be bound by a law that I never had a say in? There needs to be a constitutional amendment that every law on the books has a 5 or 10 year sunset added to it, so we can renew only those we want. And, any law that forces you to pay into a state run pension fund like SS should be declared unconstituional, no one has the right to force you to plan for your retirement and tell you how to spend your money. That's why SS is more galling to me than even income taxes. Income taxes are just armed robbery, but the Social Security program is like "Big Brother" telling me what I must do to retire. Even though I know it's just another tax, the whole nanny state mentality seriously pisses me off. This is the kind of program you get when you allow women to vote. Fifty percent of the population represented by women plus 20 percent who are pansy males form an unbeatable voting block for socialism. Democracy is mob rule without a doubt. That's why we were supposed to have a republic with inalienable rights to life, liberty and property. I curse FDR and all his voters. +1 on saving for our own retirement. For us, SS will be nothing more than a hidden income tax. We will not see a penny, we must plan for ourselves. That's what preparedness is all about. |
Of course, it's wise to do your or own planning. Hell, I'm a mere 10 years away and don't know for certain the government will hold their end of the deal. In fact, they changed everyone of my in writing VA benifits except for a couple within ten years of my ETS. As you can see by this thread, others want them to screw me but then that's like saying screw me too for they will be victim right along with me. You see that's the problem with this country is everyone is too easy to give up and not willing to hold the politicians nose to the grindstone. It's the old magicians trick of watch this hand. While they point at the increased number of people retiring, we're suppose to ignore the increased GNP and increased population. I do not buy the hocus pokus. It's pretty simple to see if you make it only those who paid in draw benifits then it stops being a pyramid. Instead it's the classic screw the working guy and buy votes. Makes you want to puke.  Like I have said, give me what I paid in and I'm out of there, otherwise, hold your end of the deal. You buy a product, you expect delivery and if you can't have delivery, you expect your money back. Tj edit: It just hit me as ironically funny how if the government just ended the program and paid off everyone thier balance how BIG the outcry would be from those that never paid in or paid in so little. |
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I've been paying in for 48 years. Don't forget your employer has been paying the same amount you have each year. Take yours and his, invest it every year and you have a lot more money. I've been paying this so my parents and others could get paid. I start later this year getting paid from your "contributions". Thanks. Would rather have had the opportunity to invest. Oh well. |
I wouldn't blame all the ladies, last summer I hung around a dental hygenist who was a hell of a lot more conservative than i am! (and I'd let the homeless and other rejects starve!  )Libs are libs, soft and stupid and living in a dreamworld with out a real notion that things do have limits. |
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It's funny how many people actually believe the SS promise when the government has backed off on nearly every "promise" that it has made. A promise from the government means nothing. I have a dollar bill that says that it's payable to the bearer in silver upon demand. Anyone remember that "promise"? Anyone who wants the government to live up to the "promise" of SS is living in a fantasy world. Lets take the example of bachp who posted above: He pays $260 a month in SS. His employer also pays $260 a month. Total per year: $6240 Total for 40 years of work: $249,600 If that money had been invested wisely: $500,000 (this is a VERY conservative estimate) Return on $500,000 @ 6%: $30,000 annually Estimate on SSI benefits: $1500 monthly or $18,000 annually How much will you have left when you die with SSI? $0 How much will you have left when you die with private investment? $500,000 I calculated this VERY conservatively. I also didn't take into account inflation so the figures would change proportionally with inflation. You would likely have a better return on your money with the private investment and the figure of $1500 a month for SSI benefits is on the high side. I don't know many people who make that much. Most people I know make about $1200 a month from SSI. With private investment you will have an easy $30,000 annually and NEVER touch your $500,000 that you have invested. So you will have that to pass on to your heirs. With SSI, once you and your spouse are gone, the benefits are over. Anyone think SSI is a good deal?????
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Nitpicks: most financial advisors recommend touching no more than 3-4% as a "safe" withdrawal rate if you don't want to dip into principal (any excess during a good interest rate environment, goes back in the pot to help with inflation). In most places right now, and certainly in recent years, you'd be hard pressed to find a STABLE savings/investment instrument paying 6%. $500K at 4% rate of return is $20K/year. Still better than the guvmint plan- and you can increase your "burn" rate a little if you are not concerned about leaving anything for your heirs. Mind also that Social Security pays out if you die early and leave children behind. So if you die ten years into your "real" working life, having put in $62,400 into the system in this example...and say you have two kids under 5... an old boyfriend of mine mentioned his mother getting almost $1K/month for him and his brother (combined) in survivor's benefits after their dad died (and he was blue collar). $12K/year... at even ten years, the System is paying out a lot more than a hypothetical worker might've paid in. This doesn't even take into account the surviving spouse being able to start taking benefits at 60 rather than 62. Whether you agree with this aspect of SS or not is a different argument, but it shows that doing a simple adding up of your money paid in is NOT the complete story. Since the government shoulders some "risk" your entire working life, it could argue a bit on a reduced return on "principal.  And you bet your ass the pro-nanny state folk are going to trot out the widows and orphans in an emotional appeal against changing the system. Great, but most people can buy adequate life insurance for a tiny fraction of what's being taken in FICA taxes. And on trusting major insurance carriers vs trusting the government, I give equal odds. |
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No buddy I don't think anyone said it was a good deal. In fact, I doubt any of us on this entire forum was around when that was passed so got sucked into it like everyone else. I personally really like Bush's reform plan at least half of that money would go somewhere you can't get screwed out of. What's really tough is being self employed. That self employment tax kind of makes up for the no employer and is pretty steep. I'd much rather be putting that money in my IRA. Tj |
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With the turn of the thread I just felt like saying SS is good for the gov. since they use the money elsewhere. The gov. folks talk about how broke the system is and yet they are not willing to place the blame on those who broke the system, they just want to tax me more so the broken system can limp along a bit further. I have nothing against those who have paid in or those who are drawing. They have put a lot more money into this stupid pyramid scheme than I have put in. All my anger gets directed towards the elected problems that think this sort of concept is acceptable to have in place and to continue onwards in time with. I somewhat wonder what I will think later in life if I have paid in X thousands of dollars or X hundreds of thousands of dollars and I wind up being told there is means testing and since I have a shipping container of rice and beans I am too rich to recieve SS. i really figure I might take that poorly and be a tad upset over such a thing. I pretty much consider it theft and that is a large part of the reason I have zero sympathy for any theif who can be stuffed into the system or stuffed in the ground. But for some reason the gov can do pyramid schemes and theft and not be held accountable. |
Ooh, nicely said. Tj |
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There is one thing that I have never seen discussed ANYWHERE that is probably relevant to the conversation. As you all know, the .gov gave wage earners the right to defer taxes on individual retirement arrangements (IRAs) and other work-related retirement plans (403b, 401k, 457, etc). Now this kind of tax deferral has been going on for over 25 years and people have been building up substantial wealth (I would not doubt trillions of dollars, but someone here can find it for us). Accumulating this pile of money is what everyone has been focused on since the beginning of the programs, with an eye on the money that would be there when you retire. However, a feature of this money is that it MUST be withdrawn and taxes paid on it at a defined age at a rate dictated by actuarial tables. And, of course, when that money is withdrawn, the taxes must now be paid. It is as if the governement designed a system where they are partners in your success by letting you grow the money off the tax books for a time with compound interest, but sooner or later you will HAVE to pay the taxes on this stash. It is always said that part of the rationale for setting money aside in a retirement account is that "you will be taxed at a lower rate, since you will be retired and making less money than when you are in your earning years". Most people have accepted this at face value and think it is a great way to get one over on the government. But is that really true? Previously, eople at retirement age had traditionally been more or less used up, and worn out, physically, at least. Now, most people are not digging ditches or laying pipe, or digging coal where your physical condition was the whole story. Now, we have people working at desk jobs that can be done much longer than manual labor at the time of the Depression when SS was started. I would expect that many people will not be retiring in the same way that Grandpa did when his back was shot, or he had black lung, or a real physical disability. Thus, their incomes will be fairly high, if not at the peak they once enjoyed. Once people get used to a high income and a high standard of living, it becomes hard to just depend on retirement and accept a lower standard of living. My point is that there will be a MANDATED liquidation of retirement assets that will have with it a HUGE tax revenue bonanza for the government, especially since the money has been grown tax-free, for decades in many cases. I don't think there is any way to get out of it without voluntarily lowering your standard of living by retiring or intentionally making less money by taking less hours of work (semi-retirement). Also don't forget the stealth progressive tax effect of the Alternative Minimum Tax, which was paid only by a handful of millionaires when it was started, but is now paid for the first time by millions of people. A million dollars is not what it used to be! We are now on the leading edge of Baby Boomer retirements, and the oldest group born in 1947 is now turning 60 and will have to start to pony up the government's stake in their retirement funds. This will peak in ~ 10 or 15 years from now, I would bet, and I have not seen one commentary on the effect of this phenomenon on our Federal tax revenues. Further, after the taxes are paid, then the people will be spending it on something, perhaps consumer goods well beyond the basics of food and shelter. I once called a money talk show and raised this point, and the host was silent and said, basically, "Good question, never thought of that, let's take our next caller...". I don't know the numbers, but they could be found and someone could probably show the actuarial calculations that go into it. I think one other point is that the real solution is for each worker to fund his own retirement (no immediate transfer of payments from workers to retirees, as was done when this was started). If each worker's money was set aside and invested (i.e., privatized, if you will), more money would be available, and it would not require an exponential increase in contributors. The exponential factor should be the compound interest over time, not the number of workers supporting the recipients. The former is tried and true, and the latter is the proverbial Ponzi scheme. this is where the Bush plan had a lot of merit, even if it was only doing this with a fraction of the SS contribution. I think the solution that the politicians will take, for better or worse, is to start raising the retirement age, while lowering the age of mandatory distributions to be taken. This will keep people contributing to the system longer (as they should in the modern era), and will accelerate the government's reaping of the tax revenues. Further, it will become politically acceptable to call for means testing and we will be told that if you are rich, you don't need SS, and it will become old-age poverty insurance. Further, don't discount the idea that a Value-Added-Tax could be put in place, and it would capture revenues for consumption on consumer goods that rich Boomers will be purchasing in the future. Just some food for thought. |
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Actually good food for thought. Part of my mothers tax burden is the fact at her age she is forced to withdraw whether she needs the funds or not. This extends far beyond 401Ks or IRAs but other traditional investments such as high yeild CDs. Pretty wild when you think about the government insisting you spend money so they can get their cut. This is partially due to inheritance taxes and how they are handled. For the government, it's better for them to spend than save for their children. Keep in mind, every generation a greater percentage of retirees are retiring above the poverty level/tax level. TJ |
My exact point is made in the specific case you cite. I also note that we have gone from the situation in the 1930's where the elderly were the poorest group in society to the point now where they are collectively the wealthiest group. Not that there is anything wrong with that....but it will permit means testing to be proposed on the basis of "class envy" that is always just under the surface in American politics. Maybe the way to get around this is to "semi-retire" and just do enough work to make ends meet, but have a good lifestyle when the retirement funds are counted, too. |
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I don't know about under the surface, that's been pretty open. There was a time when SS (part of the deal too) was not taxable at all no matter what your income. My mom is by no means rich either by anyones standards. My brother is also retired and pay taxes and he's in what I call the gray years. He's not at the forced to withdraw from his IRA yet but due to his pretty decent retirement plan, he's in the bracket and is paying a good five figures in taxes on a income quite frankly at this time, I couldn't even make ends meet on. Tj |
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Very good point about the "means testing". I hadn't thought about that but it makes sense. The government already reduces SSI for veterans because they are drawing a government service retirement check. Makes sense that greed and envy will set in and they will begin to eliminate people who make too much. I wonder if they do that, how long it will be before they start to cut people who don't have a lot of money but who have too many assets....like owning their own house!! I definately think that the government powers that be will not be able to keep their hands off Roth IRA investments. Too much potential tax money there to get their hands on and the greedy/envious Americans out there will demand taxation of those "selfish" people who have "too much money" in Roth IRAs. After all, it's not fair that you have saved money and I haven't. Interesting possibilities. Interesting days ahead. Anyone who is relying on SSI to be there to "take care" of them, might want to rethink that idea.
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I have been self employed my entire life expect for a couple of years of odd job stuff. As a sole proprietor or partner you are subject to paying tax on the full amount you made that year. If you have a feast and famine type of business you can get hit pretty hard during the feast year. Some 20 years ago I incorporated. The good thing here is that you are both an employee and a share holder. This means you can pay yourself a salary (that is in line with the going rate for that job function) and any profit above that is considered a dividend. Dividends are not subject to SS, Medicare, FCIA, etc. |
Yes, that's a good plan just not necessarily in TN. TN has no state income tax unless you incorporate then they have one on the corporation. It comes down to which is the lessor of two evils here. |
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I have a prediction that the government will indeed renege on the promises made on retirement investing. Even if SSI income is paid out when I retire, they may means test it or simply tax it based on my own savings and investments. It will happen, maybe not exactly like that but they will come for the pools of money out there as sure as rain in the spring. They certainly can change the tax rates on those large stores of wealth that you and I are counting on. Why, because it's "Fair" in their book, so the "wealthy" can take care of those who didn't plan for the future. I certainly do not expect the government to be any different than they have been in the past. Short of maybe term limits or a "complete" government reorganization they will continue to sell us out and milk us. |
Well I can assure you that my mom when she was scrimping and saving all those years never dreamed that one day she would be forced to withdraw some of that money so it would be taxed nor that it would make the SS she drawed taxable. Now this guys was a working class couple both factory workers. Forget rich, they're coming after you. Now you can roll over and play dead or fight them. I prefer the later. It isn't in a survivalists nature to just give up. Tj |
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Folks, let's get the terminology correct. SSI is Supplemental Security Income. It can only be drawn upon by those with very low income and/or tangible assets. SSI revenues come from the General Fund, the same as defense and other federal programs we supported by signing a tax return last week. Social Security is the retirement fund for worker's. Revenues come from monthly paycheck deductions from you, "contributions" from your employer and a very poor investment return. |
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I think that there is a tremendous risk in putting money into an asset that is taxed up front with the promise that the .gov won't tax it in the future. Things change, and not always for the better. There is no shortage of people (like Jesse Jackson, for instance) who have already looked at mutual fund assets and made noise about how they would like to tax the holdings for whatever reason. It is not at all hard to imagine taxes on Roth accounts as they are withdrawn and utilized. Think about the principled objection to taxation on dividends (money collected by a business, they pay tax on the gross sales, then distribute the dividends to shareholders who are taxed again on the same money). It just seems "unfair" to so many that someone else can get dividend $ without taxes being paid on it, so they can just tax it. Never mind also, that the stock or investment was bought with after tax $ to start with. If there is a tax bonanza in the next decade, they won't pay down the national debt and straighten out the budget process; they will just add to the list of programs that they already spend money on. Happens in every state that has boom years; when the tax shortfalls inevitably come, they piss and moan about how they can't do on less. |
Good points. The truth is that politicians don't take care of the problem with Social Security (retirement) funding future because they are not supported in dealing with the problem by a majority of the voting polulation. I see people on here saying things like "well, just give me what I put in". But the current group of Social Security (retirement) receivers are taking out MUCH more than they and their employers evere put in. Remember, these people paid 1-3% of their income in the 1950's into SS. Here are the options for increasing Social Security (retirement) solvency: - Increase SS taxes - Decrease payments (cut the money in checks) - Reduce or eliminate SS cost of living increases - raise the retirement ages - 'Means test' payment - Raise or eliminate the income tax cap So, in order to pay the current retireees money, we the current Social Security (retirement) payers have to pay more than we will ever get out. Or, the US Gov can borrow...but that'll have to be paid back (borrowing is a delayed tax). Do you think the currrent retirees want their benefits cut or means tested? Hell no!...so they vote in people who support the current scheme. So, as much as I hate "politicians"...I think we, the American people are to blame. The current generation collecting Social Security (retirement) is getting far more in payments than they ever paid in, and no one (politicians or the American people, generally) is willing to either stop paying them, or tell the younger people "hey, keep paying, but you'll never get your money out" |