The coming Social Security fight could be 1983 all over again

[joestein]

Long story short - you do what the Sununu bill did back in 2006. You take 2-2.5% of current contributions and start funding personal retirement accounts for the emerging system, after drawing a line in the sand after which the current system no longer intakes new retirees. So anyone older than say age 55 will remain in the current system, anyone younger is ineligible and the minority of funds set aside start funding the personal retirement accounts for younger workers who have more time to benefit from the time value of money and compound returns. As retirees age out of the old system (meaning as people pass on), the current system requires less funding over time, and recovered funding is gradually redirected into the new personal retirement account system. The transition would likely take 15-20 years, but at the end, the majority of retired Americans owns a real personal retirement account with real money that is part of their wills and estates if not fully depleted of course, and bonus, it’s completely out of the hands of the politicians in the process. The few remaining on the current system by that time that haven’t aged out will not be a significant issue to continue to fund until the legacy system literally has zero retirees. You could also offer those over age 55 the option to move to the new system if they so choose for whatever reason, and perhaps even provide incentives for those in the earliest age brackets (such as those 55-60) that may rather elect to move to the new system - like a lump sum contribution instead of the monthly payouts that would come at FRA.

Since we have waited so long, we likely cannot do this without increasing taxes to fund the transition, which we would not have had to do back in 2006 had we been prescient enough and wise enough to do so back then. Hindsight is always 20/20 of course. Even if we had to increase payroll taxes to do this, I’d be 100% in support of it, given the current system fundamentally works based upon the now false assumption that our population is increasing and there will be more workers than retirees, to say nothing about robotics, AI and automation replacing a significant proportion of the current human employment base.


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I dont think you would be able to fund SS with 4-5% of FICA for workers under 55 or whatever the line would be. We are already underfunded on an annual basis and need to cash in those Treasury IOUs. We would go through the remaining IOUs even faster and have larger SS deficit annually. The 15-20 years you mention would be painful from a fiscal standpoint. Yes - it would probably be better afterwards. But we would have to fund it in the meantime. I wonder if a $ amount could be placed on it. If we are already going to be short $300 billion a year - maybe it is $600 billion or more when you take 2 - 2.5% of current contributions from those 55 and younger and put it in personal accounts.

 

[joestein]

You hit the nail on the head. I am shocked at the retired people who held professional jobs and say they have no savings other than their homes and live off of ss

It is sad, but the vast majority of people spend every penny they can beg, borrow or steal. They are too concerned with keeping up with the Jones (except these ones are on Instagram) and can't get past instant gratification.

It is parenting? or is it a bad education system that doesn't teach personal finance and responsibility? Maybe it is the internet? creating too much jealousy among many people. Who knows?

edit: I will say that my parents never spoke to me about the importance of saving or the magic of compounding interest/returns. They spent every penny they got their hands on and overspent plenty. My mom would tell my wife that she doesn't look at prices and just buys what she wants. We got married at 25/24 and only had a boatload of debt to our name. I guess the shock of it turned us frugal. I thought we would never pay it off in our lifetime. But we did and saved for a home in 6 years. We lived bare bones.

 

[easyrider]

It is parenting? or is it a bad education system

Monkey see, monkey do. Kids see things on social media or TV and desire those things. Many grown ups do too, lol. I'm not sure how any parent or teacher can compete with a smart phone once a kid hits a certain age.

Bill

 

[AnnaS]

It is sad, but the vast majority of people spend every penny they can beg, borrow or steal. They are too concerned with keeping up with the Jones (except these ones are on Instagram) and can't get past instant gratification.

It is parenting? or is it a bad education system that doesn't teach personal finance and responsibility? Maybe it is the internet? creating too much jealousy among many people. Who knows?

Feel the same.

Parenting. Some see what the parents do and some don't or some don't preach. Like you said, who knows.



Three kids and each one does things differently. Different personalities etc. Different thinking spouses, etc.

I was taught to save, save. Are all my siblings the same? No. I try to tell my kids (adults) the same. What you save is there for you tomorrow, emergency, enjoy, etc.

Everything is about now. Instant satisfaction. Buy/order now......hoping to pay later. They don't look at prices, compare. I make so many remarks when I see what they paid for any item. They are learning slowly but their phones make it so easy to look up and hit the order button.

I think about so many deaths (many seniors) during those few "C" years.....Social Security saved a lot of money not paying those poor souls.

 

[emeryjre]

Same Family
4 children
1st child: spends it as fast as it comes in, not old enough to have a credit card yard, parents are telling her she will never get one from them for college because they do not trust her spending habits can be brought under control

2nd child: 2years younger still has the first money she received as a birthday gift and was allowed to make her own decision about how to spend it. Thinks long and hard before buying anything. Favorite place to shop is at the discount and repurposed clothing store, etc., etc.

3rd child: Only 10 years old, but is already a saver and talks about being a saver on a regular basis

4th child: 7 years old and wants to know why she can't have everything she wants in a store

Same Parents. Different Kids

 

[PigsDad]

The problem with all the retirement accounts is they are basically random where you end up with based on the dates you switch over from "growth" to "distribution". Many people's retirement accounts get dropped by 50% when there's a market correction like in 2008. Mine's been basically flat since 2020, the only growth has been my contributions.

The S&P index is up 92% in the last 5 years -- what the heck is your retirement account invested in where you have had flat growth in the last 5 years??? You seriously need to change something, if you can.

Kurt

 

[jp10558]

Grok is the most accurate IME and is right far more than it is wrong and does a very good job of referencing source data directly and providing clarity when the guidance is based on less than reputable sources. Glad to know there are folks like you who buy into the conspiracy theories though, thanks for playing!

One example: https://x.com/i/grok/share/5cFHyZ4TfSSQ6rTimZ7uWzcFI

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The biggest problem with AI IMO is that it's not like you can find one that's stable and going to be similar tomorrow as it was today - and most people think OpenAI / GPT, which has had some of the craziest swings recently. Given that each week there's a tweak, a new release, a new company offering - you can't yet very well pick one and have much confidence that it'll remain "about the same" for any period of time. For instance, IIRC, Claude 3.5 was better at coding than 3.7 for a bit, then there 4.0 now which is just better all around? but Sonnet or Opus? Qwen qwq whatever was useless, but Qwen 32B is competitive with Gemini 2.0 Flash, and 235B is in some benchmarks top 3 this week. Then there's the constant cost differences - the flagship models are either rate limited or extremely expensive - so there's also the question of if you want to spend $0.001 for an answer from Qwen 32B or $0.05 for the same answer from Claude 4.0 Sonnet, or maybe $1 for GPT O3 whatever the latest insanely priced thing is.

 

[emeryjre]

AI is in its barely walking phase
Falls down on a regular basis
Has to have support to get back up
Diaper fills up regularly with a #2
It will only take 100 Billion more in spending to get it to where it can walk
The parental bias will be coming out
Will it be leaning left or right as it walks
But it will still not be out of diapers

 

[jp10558]

It is sad, but the vast majority of people spend every penny they can beg, borrow or steal. They are too concerned with keeping up with the Jones (except these ones are on Instagram) and can't get past instant gratification.

It is parenting? or is it a bad education system that doesn't teach personal finance and responsibility? Maybe it is the internet? creating too much jealousy among many people. Who knows?

edit: I will say that my parents never spoke to me about the importance of saving or the magic of compounding interest/returns. They spent every penny they got their hands on and overspent plenty. My mom would tell my wife that she doesn't look at prices and just buys what she wants. We got married at 25/24 and only had a boatload of debt to our name. I guess the shock of it turned us frugal. I thought we would never pay it off in our lifetime. But we did and saved for a home in 6 years. We lived bare bones.

The problem is 2 fold. Many people who don't have a great support system literally cannot save money, they may be skipping meals if they've got a minimum wage job. Then there's people with various debt from doing what they were told was a good idea - college. Then there's all the people with medical issues who spend a crap ton of money even with insurance, and many don't have insurance because reasons. It's great to say save for retirement but when they're starving now and about to get evicted, they don't give a damn about 50 years from now when they're wondering if they're going to die this week. This isn't exactly uncommon in the rural area I'm in, and the reporting about cities doesn't make those sound better for a noticeable amount of people.

Even talking reasonably OK middle class people - It's not crazy to look at the world and say - I have x% confidence I'll be alive when I would be 66. I have y% confidence that whatever I could save would be enough to pay for everything. If you're going to likely end up at $0 before very close to the end of your life, you have to do a lot more thinking about where you'd realistically need to be vs quality of life expected and it might well make sense to say, well - what difference does it make to me if I'm asking for full support at 67 or 73 or 80? On the flip side of all this - I'm acutely aware that most of my relatives once they retired quickly stopped doing that much that would be considered fun. A lot of that was mindset sure, but a lot of it was health too. Very few people I've known have said "I wish I'd done less in life so I'd have a bigger bank balance for the last year or 4 of my life". And that's assuming they're people who lived "a normal life" - several died in their early 70s, which meant if they had saved up a lot, they probably wouldn't have actually gotten any value from it at any reasonable draw down rate. But there's also plenty of people (not that I know that well) who die for whatever reason at 40,50,60... We just don't know, and so it's not entirely irrational to value enjoyment now that I know I'll have vs some probability of retirement funding, that I may never live to see or may be too sick to enjoy.

The final pain point, one that SS doesn't solve either - is that so many things you might reasonably want to save for are increasing in cost so fast that unless you somehow ride something like an nVidia wave and don't follow the crash, the normal rate of return isn't going to keep up. Assisted living costs, medical costs, if we get more high inflation. Having saved 10% of the cost, maybe getting to 30% with a good investment system, isn't that much of a consolation when you still can't actually pay for the services. But now you've also got the added insult that you've basically taken 10% of your funding from things you could have paid for and enjoyed.

 

[CalGalTraveler]

I find AI helpful to deciphering legal documents such as 401k plan documents in plain English. I can later follow up with live humans to verify with pointed questions before making distributions that have tax ramifications.

My DH and I always maxed out our retirement funds. We would always try to put into college funds etc. We would try to live within our means.

We are now considering delaying Medicare for a few years in order to fund an HSA from an employer health plan from Pre-tax 401k distributions. So far, the HSA allows Family and catchup up to $9000. If the info is correct we can pull $9000 from a 401k rollover into an IRA and then we can deduct the $9000 from taxes for the subsequent distribution and HSA contribution. That effectively become a tax free pre-tax 401k withdrawal. If we can do that for a few years. then we can reduce our RMA obligation when we turn 73. (I know $9k is small but every bit helps. We are also going to convert some 401k pre-tax to Roth without going into the next tax bracket over the next few years.)

If the bill is passed by Congress, Medicare recipients will also be able to contribute to an HSA. My DH will be able to make this 2-player to reduce our pre-tax 401ks to reduce RMDs at 73.

Still researching but so far this may work.

 

[Sugarcubesea]

You hit the nail on the head. I am shocked at the retired people who held professional jobs and say they have no savings other than their homes and live off of ss

@rapmarks, I so agree, my former manager was a Director of the automotive supplier that we both worked at and she is singing the blues, she always lived beyond her means and never changed in retirement, she had to sell her big house in MI and her 2nd house in AZ to move to a small retirement community in AZ and lives off the pension that our old company offered us but froze it midway thru our employment so she is only getting like $2K a month from that and $2,500 from SS as she wanted to retire at age 60

 

[emeryjre]

I find AI helpful to deciphering legal documents such as 401k plan documents in plain English. I can later follow up with live humans to verify with pointed questions before making distributions that have tax ramifications.

My DH and I always maxed out our retirement funds.

We are now considering delaying Medicare for a few years in order to fund an HSA from an employer health plan from Pre-Retirement 401k distributions. So far, the HSA allows Family and catchup up to $9000. If the info is correct we can pull $9000 from a 401k rollover into an IRA and then we can deduct the $9000 from taxes for the subsequent distribution and HSA contribution. That effectively become a tax free pre-tax 401k withdrawal. If we can do that for a few years. then we can reduce our RMA obligation when we turn 73. (I know $9k is small but every bit helps. We are also going to convert some pre-tax to Roth without going into the next tax bracket.)

If the bill is passed by Congress, Medicare recipients will also be able to contribute to an HSA. My DH will be able to make this 2-player to reduce our pre-tax 401ks.

AI in some areas of research is very helpful
I have found that in legal areas, such as a query for court cases citing "ceilings and floors can be considered party walls", the number of court cases returned has declined dramatically in the last several weeks
The Legal research community does not want to have its influence diminished, so legal queries are moving behind paywalls and require a paid subscription
Not keeping up in AI is ONE of the reasons behind the decline in Apple stock price
AI is having an impact on employment at this point
AI will have a HUGE impact on employment going forward
AI has me questioning ANY video I see attempting to make a political statement

 

[joestein]

I think you missed my point - Let's say you have 2 people paying taxes, one earns $100,000, one earns $10,000. You have the same tax rate for both, 7%. 7% of the first is $7,000 - 7% of the second is $700. Total taxes is $7,700 for the year. The lower earner paid 700/7700 = ~9% of the taxes, and the higher earner paid 91% of the taxes. Would you say this meant the flat 7% is unfair?

So I'd expect to see the higher percentage pay higher than 72% of taxes, just based on math (depending on what percentages we're talking about).

The other part is life isn't fair, and neither is government. I'd argue that what's important is to decide what we want as a country to be like. The idea that people who earn more pay more isn't that crazy. At least to me, I tend to think that it's fine to kick in more towards the common good if it hurts me less - i.e. if you make $100,000 kicking in a thousand more a year is a lot less of a real ask than asking someone who makes $10,000. It also seems to me that there are diminishing returns on money for each individual person that higher taxes in a progressive manner works well, and did work well in the past. I think "game the system and pay as little as possible" is what humans would do, but certainly isn't much of a moral stance to me - yes, let's mooch the most and contribute the least possible. Of course, I don't think redistribution is inherently wasteful - like someone else posited, you want velocity of money, money in a modern money bank doesn't actually help the society very much because it doesn't accomplish anything.

No, I didn't miss your point, I corrected your "facts". I dont think I mentioned flat tax anywhere, nor suggest that the "rich" should pay the same level of tax as the "poor". However, you can't have the top 10% of a country supporting the other 90% - it is not sustainable.

We have moved to a point where the majority of the country pay no tax. What makes a successful tax base is a BROAD tax base. Which is why I would support a move back to the Clinton era taxes. However, I also realized that our gov't would just mismanage the extra money and spend it, rather than pay down the debt.

Maybe we need AI to take over, it will be smarted and more ethical than people.

 

[joestein]

The problem is 2 fold. Many people who don't have a great support system literally cannot save money, they may be skipping meals if they've got a minimum wage job. Then there's people with various debt from doing what they were told was a good idea - college. Then there's all the people with medical issues who spend a crap ton of money even with insurance, and many don't have insurance because reasons. It's great to say save for retirement but when they're starving now and about to get evicted, they don't give a damn about 50 years from now when they're wondering if they're going to die this week. This isn't exactly uncommon in the rural area I'm in, and the reporting about cities doesn't make those sound better for a noticeable amount of people.

Even talking reasonably OK middle class people - It's not crazy to look at the world and say - I have x% confidence I'll be alive when I would be 66. I have y% confidence that whatever I could save would be enough to pay for everything. If you're going to likely end up at $0 before very close to the end of your life, you have to do a lot more thinking about where you'd realistically need to be vs quality of life expected and it might well make sense to say, well - what difference does it make to me if I'm asking for full support at 67 or 73 or 80? On the flip side of all this - I'm acutely aware that most of my relatives once they retired quickly stopped doing that much that would be considered fun. A lot of that was mindset sure, but a lot of it was health too. Very few people I've known have said "I wish I'd done less in life so I'd have a bigger bank balance for the last year or 4 of my life". And that's assuming they're people who lived "a normal life" - several died in their early 70s, which meant if they had saved up a lot, they probably wouldn't have actually gotten any value from it at any reasonable draw down rate. But there's also plenty of people (not that I know that well) who die for whatever reason at 40,50,60... We just don't know, and so it's not entirely irrational to value enjoyment now that I know I'll have vs some probability of retirement funding, that I may never live to see or may be too sick to enjoy.

The final pain point, one that SS doesn't solve either - is that so many things you might reasonably want to save for are increasing in cost so fast that unless you somehow ride something like an nVidia wave and don't follow the crash, the normal rate of return isn't going to keep up. Assisted living costs, medical costs, if we get more high inflation. Having saved 10% of the cost, maybe getting to 30% with a good investment system, isn't that much of a consolation when you still can't actually pay for the services. But now you've also got the added insult that you've basically taken 10% of your funding from things you could have paid for and enjoyed.

The historical return of the S & P 500 before inflation is 10.8%, after inflation it is 7.2%. SO it absolutely keeps up with inflation.

SS is also adjusted for inflation each year. It was never meant to be a sole provider of retirement money - it is a supplement and a back stop.

And yes.. it is not unreasonable for people to save for the future. There can be many reasons why people don't do 'fun stuff' after they retire. money is certainly one of them. But the idea that you shouldn't be saving for the future because you might not be around to enjoy it doesn't really work. Those who follow it are free to enjoy the benefit of being broke all the time.

As for evictions is rural NYS - there are a ton of gov't benefits as well as plenty of publicly supported food pantries and such.

As I like to say.... we all make our bed and then have to sleep in it. Even though we have been pretty successful, life is not easy, it has not been a bed of roses for myself or my wife, we have had challenging issues all our life and when confronted with one we work hard to overcome - which is why we have been successful.

 

[Tia]

Under federal law, the employers are required to check documentation before hiring an individual
The law is not evenly applied
But the requirement is there
I know it was in place in 1995
I know it is still there in 2025

I do not know the details but at least 15 years ago a coworkers spouse worked at a international company who had an employee that was deported. Same employee came back later with a different name working for the same company.

Reynolds Polymer

 

[HitchHiker71]

I dont think you would be able to fund SS with 4-5% of FICA for workers under 55 or whatever the line would be. We are already underfunded on an annual basis and need to cash in those Treasury IOUs. We would go through the remaining IOUs even faster and have larger SS deficit annually. The 15-20 years you mention would be painful from a fiscal standpoint. Yes - it would probably be better afterwards. But we would have to fund it in the meantime. I wonder if a $ amount could be placed on it. If we are already going to be short $300 billion a year - maybe it is $600 billion or more when you take 2 - 2.5% of current contributions from those 55 and younger and put it in personal accounts.

So your answer is we should just keep dumping money into a failing system today, with no end in sight except onerous taxes as the answer? Again, the underlying requirement of ALL pension/redistribution systems is to have significantly more workers than retirees, which is NOT going to be the case due to simple, logical, demographics heading in the wrong direction. Math doesn't lie, demographics is destiny, as the vast majority of economists tell us. You cannot work around it long term. Whatever the ratios are for converting to an actual real personal retirement account based system need to be, that's just mathematics as well, perhaps the age is 50 and over vs 55, that was just an example. The overall point is, the current system is unsustainable, particularly with robotics and automation in mind. It is also essentially an income tax base, it's based on labor, and if 20 years out 50% of the jobs today are gone due to automation, the acceleration of the failure of the current system is going to come even faster. AI is already resulting in layoffs in the tens of thousands in the tech sector now, and we will see other sectors affected as well. The tech sector is busy eating their own dog food now with AI, eliminating jobs now, and is preparing to advise other sectors in how to do the same and adapting their technologies to foster this same outcome. It's already happening, it's a question of when not if. We would be wise to adapt our outdated social safety net systems now, rather than waiting until a crisis point.

 

[emeryjre]

The US is governed by Crisis
Seldom are decisions made to anticipate the future
The decisions made over the last 30 years in the energy industry are a great example of start/stop, start/stop
We jump from one shortage of electricity to another in a hopscotch manner
The same can be said for health care, transportation, immigration
Social Security is just another example of a start/stop planning

 

[easyrider]

However, you can't have the top 10% of a country supporting the other 90% - it is not sustainable.

What's not sustainable is the merger of corporatism and government, imo. This is our current system which favors large corporations over small businesses because of the concentration of wealth allowing the large companies to lobby for regulations that hamper growth to small business.

Even though the top 10% might be supporting the bottom 90% , the top has the advantages of tax laws to shelter their income with many receiving more government incentives than they pay in taxes.

Bill

 

[rickandcindy23]

It is sad, but the vast majority of people spend every penny they can beg, borrow or steal. They are too concerned with keeping up with the Jones (except these ones are on Instagram) and can't get past instant gratification.

It is parenting? or is it a bad education system that doesn't teach personal finance and responsibility? Maybe it is the internet? creating too much jealousy among many people. Who knows?

edit: I will say that my parents never spoke to me about the importance of saving or the magic of compounding interest/returns. They spent every penny they got their hands on and overspent plenty. My mom would tell my wife that she doesn't look at prices and just buys what she wants. We got married at 25/24 and only had a boatload of debt to our name. I guess the shock of it turned us frugal. I thought we would never pay it off in our lifetime. But we did and saved for a home in 6 years. We lived bare bones.

Excellent post, and all so very true. We were broke when we got married, and we still live frugally. We eat home all of the time. Rarely do we go out. I like finding ground beef on sale and making a good meatloaf to have the next day as leftovers. We have my stepdad with us for meals while at home. I might be more on the cheap side.

When we are in Orlando, we do eat out every day but we take sandwiches into the park for lunch (and a soda for each of us).

 

[HitchHiker71]

The problem is 2 fold. Many people who don't have a great support system literally cannot save money, they may be skipping meals if they've got a minimum wage job. Then there's people with various debt from doing what they were told was a good idea - college. Then there's all the people with medical issues who spend a crap ton of money even with insurance, and many don't have insurance because reasons. It's great to say save for retirement but when they're starving now and about to get evicted, they don't give a damn about 50 years from now when they're wondering if they're going to die this week. This isn't exactly uncommon in the rural area I'm in, and the reporting about cities doesn't make those sound better for a noticeable amount of people.

Even talking reasonably OK middle class people - It's not crazy to look at the world and say - I have x% confidence I'll be alive when I would be 66. I have y% confidence that whatever I could save would be enough to pay for everything. If you're going to likely end up at $0 before very close to the end of your life, you have to do a lot more thinking about where you'd realistically need to be vs quality of life expected and it might well make sense to say, well - what difference does it make to me if I'm asking for full support at 67 or 73 or 80? On the flip side of all this - I'm acutely aware that most of my relatives once they retired quickly stopped doing that much that would be considered fun. A lot of that was mindset sure, but a lot of it was health too. Very few people I've known have said "I wish I'd done less in life so I'd have a bigger bank balance for the last year or 4 of my life". And that's assuming they're people who lived "a normal life" - several died in their early 70s, which meant if they had saved up a lot, they probably wouldn't have actually gotten any value from it at any reasonable draw down rate. But there's also plenty of people (not that I know that well) who die for whatever reason at 40,50,60... We just don't know, and so it's not entirely irrational to value enjoyment now that I know I'll have vs some probability of retirement funding, that I may never live to see or may be too sick to enjoy.

The final pain point, one that SS doesn't solve either - is that so many things you might reasonably want to save for are increasing in cost so fast that unless you somehow ride something like an nVidia wave and don't follow the crash, the normal rate of return isn't going to keep up. Assisted living costs, medical costs, if we get more high inflation. Having saved 10% of the cost, maybe getting to 30% with a good investment system, isn't that much of a consolation when you still can't actually pay for the services. But now you've also got the added insult that you've basically taken 10% of your funding from things you could have paid for and enjoyed.

This right here is the argument for a forced personal retirement account instead of a forced redistribution system. Whether anyone realizes it or not, they are paying 12.6% of their income into today's redistribution forced supplementary retirement system. Let's take the average income today, which is $62k per year. 12.6% of $62k is $7812 per year. Let's assume a 40 year lifetime workspan. That results in $1.678m in compounded savings with monthly savings deposits. Assuming a 4% draw, that's $67,120/year or $5593/month in withdrawals. This is using simple math, assuming zero compensation increases, inflation, etc., but that's significantly more than the same person would receive from SS in comparison, and it's willable monies in an actual real account that the person owns. Not the politicians, and this approach doesn't have the core "more workers than retirees" requirement that every pension and redistribution system has today. Undoubtedly there are people that won't be able to work for some reason, and that's why we have SSD programs that are separate from the retirement system, that we'd likely still have to have on some level. If the person above wanted to make additional contributions to their personal retirement account then they could elect to do so, on top of the base required percentage - which would likely actually fall down to around 10% instead of the 12.6%+ that would be required to keep the outdated system intact that we have today.

 

[HitchHiker71]

The historical return of the S & P 500 before inflation is 10.8%, after inflation it is 7.2%. SO it absolutely keeps up with inflation.

SS is also adjusted for inflation each year. It was never meant to be a sole provider of retirement money - it is a supplement and a back stop.

And yes.. it is not unreasonable for people to save for the future. There can be many reasons why people don't do 'fun stuff' after they retire. money is certainly one of them. But the idea that you shouldn't be saving for the future because you might not be around to enjoy it doesn't really work. Those who follow it are free to enjoy the benefit of being broke all the time.

As for evictions is rural NYS - there are a ton of gov't benefits as well as plenty of publicly supported food pantries and such.

As I like to say.... we all make our bed and then have to sleep in it. Even though we have been pretty successful, life is not easy, it has not been a bed of roses for myself or my wife, we have had challenging issues all our life and when confronted with one we work hard to overcome - which is why we have been successful.

My overall point is that if we're already "forcing" people to save 12.6% of their annualized income on a monthly basis into a system that is dying and unsustainable, we should move to personal retirement accounts and force them to save into those accounts on an individualized basis. That way they own their forced savings. The legacy SSA we have today is dying, and since it is based entirely on more workers than retirees - the system started with a 15:1 ratio and is now down to 2.7:1 in 2023 and falling further every year - hence it is unsustainable long term with a continuously falling TFR (Total Fertility Rate) ratio of under 2.1 here in the US - which is also falling every year for the past 25 years at least - and is currently at all time lows of 1.62 as of 2023 and continues to fall each year. I cannot emphasize enough that demographics is destiny on things like this, and with the numbers definitively heading in the wrong direction, slight adjustments to the current SS system aren't going to solve the problem without taxes becoming onerous over time. The solution is to change the entire system, not to double down on a failing system yet again, IMHO.

 

[emeryjre]

This right here is the argument for a forced personal retirement account instead of a forced redistribution system. Whether anyone realizes it or not, they are paying 12.6% of their income into today's redistribution forced supplementary retirement system. Let's take the average income today, which is $62k per year. 12.6% of $62k is $7812 per year. Let's assume a 40 year lifetime workspan. That results in $1.678m in compounded savings with monthly savings deposits. Assuming a 4% draw, that's $67,120/year or $5593/month in withdrawals. This is using simple math, assuming zero compensation increases, inflation, etc., but that's significantly more than the same person would receive from SS in comparison, and it's willable monies in an actual real account that the person owns. Not the politicians, and this approach doesn't have the core "more workers than retirees" requirement that every pension and redistribution system has today. Undoubtedly there are people that won't be able to work for some reason, and that's why we have SSD programs that are separate from the retirement system, that we'd likely still have to have on some level. If the person above wanted to make additional contributions to their personal retirement account then they could elect to do so, on top of the base required percentage - which would likely actually fall down to around 10% instead of the 12.6%+ that would be required to keep the outdated system intact that we have today.

Many Government employees have a separate retirement plan that was paid into by employee/agency
Why are many of these plans underfunded in relationship to benefits owed to plan assets
Using your concept, the plans should be overfunded and very solvent

 

[bizaro86]

Many Government employees have a separate retirement plan that was paid into by employee/agency
Why are many of these plans underfunded in relationship to benefits owed to plan assets
Using your concept, the plans should be overfunded and very solvent

Those plans are underfunded because the governments and unions put less into them than it costs to provide the benefits, exactly the same reason as social security.

 

[easyrider]

This right here is the argument for a forced personal retirement account instead of a forced redistribution system. Whether anyone realizes it or not, they are paying 12.6% of their income into today's redistribution forced supplementary retirement system. Let's take the average income today, which is $62k per year. 12.6% of $62k is $7812 per year. Let's assume a 40 year lifetime workspan. That results in $1.678m in compounded savings with monthly savings deposits.

Yup, this would be the way to go especially if any of the residuals are given to the heirs. One of the things that's a bummer with SS is when you die so does the benefit.

Bill

 

[ScoopKona]

If they do nothing automatic cuts will kick in.

And this is precisely what is going to happen. I'm fairly certain of this outcome because we've known about the problem since the 1980s and nothing positive was done about it. (Plenty of negative things done. Nothing positive.)

There is no fixing this. That ship sailed (empty) in 2000. We have kicked this can down the road for so long we are a couple decades past the point of being able to do something meaningful. Thankfully, this looming crisis was all done in the open. So anyone who paid attention could create their own retirement scheme.

I'll be amazed if when I'm allowed to finally draw, it amounts to any more than beer money.