Maybe The Old Deal Was A Better Idea
The deal where we each pay for ourselves.
Social Security will be paying out more benefits than it takes in by 2017, and bankrupt by 2041 -- or so government predictions go -- and what then? Should we save Social Security?
My fellow fascist from my French class (at least that's how the others see us realists) agrees with me and with Yaron Brook from Ayn Rand Institute, quoted below, that Social Security should be no more:
"The basic principle behind Social Security is that individuals have a right to unearned retirement income. To pay for these unearned benefits, the government seizes money from workers and transfers it to the elderly. This is a perverse injustice. Why should a twenty year old who is struggling to make ends meet have to finance someone else's retirement? Why is it parasitical for a young person to live on the dole, but an inalienable right if he waits until he's 65? Why should those who conscientiously save for retirement be forced to sacrifice a chunk of their income to support those who were not as responsible?"There is no such thing as a 'right' to someone else's labor or money. The 'needs' of the elderly do not justify turning the young into part-time slaves. Instead of looking for ways to save Social Security, we should be designing a plan to phase it out entirely.
"Some claim that without Social Security the streets would be lined with senior citizens unable to pay for their homes or their food. But this fantasy ignores the fact that, before Social Security, there was no epidemic of starving old people. Individuals planned and saved for their own retirement. Those few who genuinely couldn't support themselves relied on their families and on private charity--they did not demand the government reach into other people's pockets to provide them with goodies.
"Social Security should not be saved--it should be abolished."
Just call me a personal responsibilitarian: My money in my pocket, your money in your pocket, and this lady paying her SIX kids' health care costs instead of gambling that the rest of us will pick them up. Oops, seems she can't pay...she's spending $400 a month on Starbucks, $240 on tans and manicures, and...and, it gets much, much, much worse..
My position: Sorry, but if your kids have no health insurance, you have no business in Starbucks unless you're wearing a green apron and asking "Would you like soy with that?"
The problem you have is: all of the people who have paid into Social Security for years. If a politician were to tell them (us!) - sorry, it was all for nothing - well, his/her chances of election would be rather slim...
I think the only realistic way out of this mess is to continue to guarantee Social Security to anyone who is over age X, to abolish it for anyone younger, and to let time take its course.
For those under age X, one will have to to replace Social Security with a mandatory retirement program - essentially personalized Social Security. Why? It's all well and good to say that people should look out for themselves, but it will be polically impossible to let them starve on the street if they don't. That's what started Social Security in the first place...
bradley13 at October 24, 2007 4:54 AM
"Why should a twenty year old who is struggling to make ends meet have to finance someone else's retirement?"
Praise be to Yaron Brook!!
"Why should those who conscientiously save for retirement be forced to sacrifice a chunk of their income to support those who were not as responsible?"
I'm pretty poor right now (being in my 20s is SO financially lame). And yet, I manage to get myself excellent health care, in addition to putting $60/month into my company-matched 401k (don't groan, Amy!) and $50/month into an IRA. That's how everyone should do it - carve out money from somewhere. Make it work. Put in an extra two hours a month and bank it like you never had it in the first place. The chunk of change taken from my paycheck for SS makes me gag.
There is nothing inherently special about being old. I "respect my elders" but I don't think that funding retirement has an important function w/in society...as does police protection and public education. This isn't about people starving after age 65, it's about people being irresponsible and not planning for the future.
They paid into the system and now they get out of the system...but people should have the freedom to put aside exactly how much they want based on exactly how much they will need.
Old people get sick and can't work - which is exactly why I manage to save as much as possible despite the fact I can barely afford anything else (after the bills get paid).
"but it will be polically [sic] impossible to let them starve on the street if they don't. "
I hate people. Not you bradley. But people who have steady a steady income for years need to fucking forgo a new a/c unit and put the money AWAY.
Gretchen at October 24, 2007 5:27 AM
Great post.
I happened to be home from work early the day of that Oprah show and had flipped the tv on for background noise as I was straigtening up the apartment. I ended up stopping what I was doing and watching the entire episode, appalled by this woman. She acted like what she had been doing was no big deal. It was absolutely disgusting.
Funny about your last point...the finance expert Oprah brought in (Suze Orman) actually told this woman that she should be working at Starbucks to get health care for the kids.
Angela at October 24, 2007 5:55 AM
Yaron is great.
Exactly Bradley, you pick an age like 45 and older and they get full benefits. A 44 yr old gets 90%, 43 yr old gets 80% etc down to the 35 yr old who gets 10% and it gets phased out. Still expensive for the next 60 years, but it has got to go.
Personally I'd start older and phase it out faster, but people really did contribute and are surely counting on it.
newjonny at October 24, 2007 6:04 AM
If they want to take away the Social Security I'm depending on, first pay me back -- with interest -- all the money that has come out of my pay over the years. I'm gonna need it. Fortunately, I also have a pension plan so I'm not entirely dependent on Social Security but still I must disagree with this assessment and also be the voice of poverty on this one. The government came up with these figures by projecting to infinity and beyond and assuming that population balance in the working versus retired won't shift in 50 years -- something they can't know and given all the baby boomers that had children in the 80's and 90's just entering or about to enter the workforce that's pessimistic on their part. Also those supposedly worthless IOU's - treasury bonds. Private savings does not work for those whose incomes are so low that they live pay to pay. To say, no you have to leave this money in the bank for the next 30 or 40 years when your baby's crying for food just is not realistic. And yeah, if you're lucky, you'll have family but I've only my daughter, also a single mom, and private charity? Yeah, right. I can always eat at the soup kitchen, I guess. That's what I deserve for being honest, hardworking and law abiding and putting my child's needs in front of my own all these years and struggling to work instead of being on welfare and a drain on society. Bottom line, is Social Security is the one thing that has been working all these years. It is so successful that other countries have modeled programs after it. If ain't broke (and it isn't) don't "fix" it. This whole ruse is just yet another Bush attempt to rob from the poor to give to the rich.
Donna at October 24, 2007 6:04 AM
Whoa,
See that. you should certainly get your money back. It would be unjust to stiff someone who has been contributing and has fewer than 20 or 25 years to address their retirement.
But social security is broke and it is a giant pyramid scheme. Yaron hits is squarely when he asks why a 20 year old should sacrifice his paycheck to a 65 year old. That is a gross injustice.
newjonny at October 24, 2007 6:13 AM
Sorry about the double post. But I did forget to mention that yeah that woman in the example is disgusting but that's got nothing to do with Social Security and she certainly shouldn't be the yardstick by which to judge the working class. Key word working, not con artist. She's a con artist; I'm working class. I'm not going to be looking for charity unless I am in desperate need of it.
Donna at October 24, 2007 6:14 AM
Okay, here's another email my dad just sent me:
(Jody, don't beat me up, this one's a good one!)
"Social Security History
Franklin Roosevelt, a Democrat, introduced the Social Security (FICA) Program. He promised:
1.) That participation in the Program would be completely voluntary.
2.) That the participants would only have to pay 1% of the first $1,400 of their annual Incomes into the Program.
3.) That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year.
4.) That the money the participants put into the Independent "Trust Fund" rather than into the General operating fund, therefore would only be used to fund the Social Security Retirement
Program, and no other Government program.
5.) That the annuity payments to the retirees would never be taxed as income.
Since many have paid into FICA for years and are now receiving a Social Security check every month -- and then finding that they are
getting taxed on 85% of the money they paid to the Federal government to be "put away" --you may be interested in the following:
Q: Which Political Party took Social Security from the Independent "Trust Fund" and put it into the General fund so that Congress could
spend it?
A: It was Lyndon Johnson and the democratically Controlled House and Senate.
Q: Which Political Party eliminated the income tax Deduction for Social Security (FICA) withholding?
A: The Democratic Party.
Q: Which Political Party started taxing Social Security annuities?
A: The Democratic Party, with Al Gore casting the "tie-breaking" vote in the Senate, while he was Vice President of the US.
Q: Which Political Party decided to start giving annuity payments to immigrants?
A: That's right! Jimmy Carter and the Democratic Party. Immigrants moved into this country, and at age 65, began to receive Social Security
payments! The Democratic Party gave these payments to them, even though they never paid a dime into it!
Then, after doing all this violating of the
original contract (FICA), the Democrats turn around and tell you that the Republicans want to take your Social Security away!"
Now, if all this is true (and my dad says he looked it up) we're in a world of shit thanks to the party leaders who allowed this to happen. Thing is, how does this get fixed? o_O
Flynne at October 24, 2007 6:23 AM
You missed my point, newjohnny. That being that if you're making under a certain amount, you literally are going hungry just before payday and there's no way you are going to have nothing but a bowl of Ramen noodles for supper with even the amount of Social Security from one check sitting in the bank let alone all the hundreds, thousands, that I've accumulated now. My daughter is recovering from a severe illness right now. She was in the hospital a few months ago and nearly died. She is slowly getting back to work and still recovering. I have borrowed against my pension plan to help and we're still struggling. There is plenty my grandson is doing without. It is damned good I can't touch my Social Security.
Donna at October 24, 2007 6:24 AM
Flynne, great post! Now that's the only fixing should be done. Get back to FDR's original thinking (and, yeah, I'd sign up if voluntary even if I couldn't touch but I'd have to have guarantees it'd be there for me on the level as my pension plan) updated (income wise) for inflation. My first "fix" for Social Security would be don't let others raid it. That's the only reason it's in any jeopardy.
Donna at October 24, 2007 6:30 AM
The government has taken loads of my money and spent it on things I didn't want, didn't need and that turned out to be completely wasteful. I'm not complaining; a certain level of taxation is a necessary evil.
But Soc.Sec. is a sunk cost that I'm willing to write off if it means I can get at least one govt. finger out of my pocket. Abolishing Social Security would be a painful transition for millions of people but future generations would build monuments to us for doing it (and those monuments would be paid for by private subscription.)
martin at October 24, 2007 6:39 AM
"My fellow fascist from my French class (at least that's how the others see us realists)"
Amy, you were asking yesterday about labels and I have to say that the most accurate labels tend to be the ones others give us, not the ones we choose for ourselves. And if those labels sound unbecoming at first, you have to look at the person who gave it to you and mentally convert to gushing flattery. If hippies aren't calling me "fascist," I'm not getting my message out there.
martin at October 24, 2007 6:45 AM
It doesnt Flynne, I hate to sound like a conspiracy theorist but this is what both parties are working for.
Free trade agreements,
continental super highways,
the euro gaining value over the dollar in leaps and bounds,
visa fast pay,
direct deposit,
direct withdrawl,
no child left behind(which punishes poorly preforming schools by REDUCING their resorces)
new bankrupcy laws making it impossible for citizens to dump debt but allows corperations to dump their debt and pensions on the public
costy wars that can never be won - how do you defet a tactic and an emotion? You may as well declare war joy and chocolate
it really is designed to create a world wide corporatocracy, a world run by business - where everyone works until they die and wealth is consolidated - which if you stop to think about it makes no sense cause you cant take it with you when you die.
This is why I look forward to asteriods, super volcanoes, bird flu pandemics and world wide wars.
Society can only progress so far until it starts grinding itself down under its own stupidity - the only way for society and humanity to progess forward is by occasionally purning lifes tree.
Had the cheap labor of the dark ages not been wiped out by the plauge society would not have progressed in to the modern era - there would have been no need for inovation.
It is only a matter of time, if not by sickness or some freak natural disaster or some globe spaning war it will be by our own hands - its inevitable
lujlp at October 24, 2007 6:53 AM
Donna - I absolutely agree that you deserve a hand when you reach retirement after struggling all these years and paying into the system.
However.
"Soc.Sec. is a sunk cost": Yes. The money is taken out and I don't consider myself as ever having it at all. The problem is that the way it works right now is stupid, and I'm not sure I believe in having my paycheck dirtied by the grubby hands of Uncle Sam.
Donna: Let's say you've had $15/month deducted for SS over the years. What if you could take that money and beat out inflation and make that money grow by 7%/year in real terms? Right now, when you retire the amount paid out is adjusted to cover increase in living costs due to inflation - your money doesn't actually *grow*.
Maybe I just am not educated on this topic: but it seems pretty obvious that having your money beat inflation is much better than merely meeting it.
I don't have *the* answer but the system, as is, is broken.
It doesn't take a lot of smarts for a person to create a retirement plan and have the money invested for them - even low risk beats inflation. It's not just for rich people! It's a way to guarantee you'll have the money someday and that it's future present value will be greater than the shitty SS check the government oh-so-kindly gives you.
This isn't about fucking over the poor people. Anyone who is contributing to SS right now would be better served if they were able to opt out and do what they want -OR- opt into a program where their money works its ass off. Donna, you pay anyway: if the decision to put money aside is tough for you (b/c the baby is crying...understood!) then opt-in at the age of 18 and never look back. You wouldn't miss the money any more than you would now.
Gretchen at October 24, 2007 7:05 AM
Flynne, absolutely fantastic comment. Love the education you gave us.
A somewhat older woman friend of mine made this point to me. Her husband, who did very well in business, died relatively young. Of all the money he paid into SS over his working life, she got $250 and and a bit for burial. "Bupkis!" as she put it. She pointed out how much they both would've had, and she would've had upon his death, if he'd just been allowed to invest the money he was forced to throw down the government hole.
Amy Alkon at October 24, 2007 7:13 AM
The problem is that if the younger people (I'm 28 so you can guess which way I'm biased) stop paying then SS will run out much faster. So if I don't put in I'm not the one who's going to get hurt, hell I'm planning for the future assuming that there will be no SS benefits. All those people who are over 65 will be utterly screwed. So those of us yoots will have to put in so the the older people can survive. Now I don't like this in the least but, these people put into the system with the expectations that the system would take care of them. If we stop SS it's not the system that gets nailed, it's those who trusted it.
I'm not sure there is a simple answer. Personally I'd love to keep my SS money mainly in my IRAs. To do this would it be right to let all those poor trusting people burn?
vlad at October 24, 2007 7:33 AM
When SSI was first started, the average life expectancy was 62 for men and 63 for women. With benefits paying out at age 65, very few people would actually get benefits, and that's the way it was supposed to work. It wasn't a retirement plan, it was more like "old age insurance" to keep people "unfortunate" enough to outlive their ability to provide for themselves off a cat food diet.
If it had been managed by a private company, the payout age would have increased as life expectancies grew, and people would have the option not to participate if they didn't like it.
I agree that it stinks to stiff people out of money they have paid in, but THAT HAS ALREADY BEEN HAPPENING FOR YEARS!!! The old buzzards in their 80's have made out like bandits on this thing. My grandparents got back EVERYTHING they ever paid in within a single year, then continued to draw benefits for twenty more. Where do you think that money comes from? We're getting stiffed out of the money we have paid in every single day, RIGHT NOW. How does this fact seem to elude so many people?
My parents, who are in their 60's, will probably break about even on it, and people in thier 40's and younger are getting totally hosed. When Donna praises how well Social Security has been "working" all these years, and what a shining example it is for other countries to follow, I have to conclude that she is really, really bad at math. That is no different than living beyond your means on high-interest credit, amassing huge amounts of debt, and then looking around at all your stuff and marveling at how well it has been working.
The entire system has gotten everyone to the point where they feel entitled to spending the last thirty years of their lives not working. A far cry from the old-age insurance plan it started out to be. And you know what really sticks in my craw? The number one correlator of wealth in this country is ... AGE! Overwhelmingly, the older you are, the richer you are, and the younger you are, the poorer you are. SSI is a direct transfer of wealth from young, poorer, working people to wealthier, older, non-working people. No wonder the oldsters want to keep it around.
Pirate Jo at October 24, 2007 7:34 AM
""Bupkis!" as she put it. " That pretty much sums up SS perfectly. You can not live on it unless you sell your home and move to a smaller one, or do a reverse mortgage. I'm at a complete lose as to what people who do not own a home would do in these situation if the have not been saving all this time.
vlad at October 24, 2007 7:48 AM
"Okay, here's another email my dad just sent me:
(Jody, don't beat me up, this one's a good one!)"
Don't worry, Flynne. I still feel a runty oik about last time.
And as everyone says, some great points.
Jody Tresidder at October 24, 2007 7:59 AM
in addition to putting $60/month into my company-matched 401k (don't groan, Amy!
I think this is great.
Amy Alkon at October 24, 2007 8:27 AM
Personal retirement savings are just an alternative, and risky, way of taxing yourself. Risky because if you unexpectedly live to 100, you'll probably run out, whereas the SS cheque will keep coming.
In countries where Soc. Sec. has never existed, young married couples expect to be supporting various parents, sick uncles and the like. Another way of taxing the young and fit in favour of the old and unfit. I don't see this as "a perverse injustice" -- just normal human decency.
Stu "El Inglés" Harris at October 24, 2007 9:06 AM
Right Stu, saving for yourself is risky and SS is safe. People who live to 100 have an unearned and evidently unlimited claim on my life and work?
Why?
newjonny at October 24, 2007 9:20 AM
It's all well and great to save for retirement if you make enough to save and are educated on how to do so and then have no major catastophe before you get too old to work (or after for that matter). If, like me and most everyone I know, the extra money would only be enough to make you a little less hungry at the end of the month or afford a car instead of dealing with drunks and weirdos on the bus or buy K-mart clothes instead of Salvation Army clothes etc etc etc etc then you all have a point. Right now I'm thinking you are clueless as to what true poverty is. If I have a few extra bucks a month, they're going to something needed now. Because of my daughter's illness, I barely had the means to buy a winter coat and only supplemented it with boots rather than using worn out boots that were leaking last year. Of course, I could throw my ill daughter and my innocent four year old grandson to the wolves and let all you taxpayers pick up the tab instead since you bitch about something I have paid into existing for me that I've paid to in good faith for years (33 1/2 now) but would not have been able to if not taken from my pay in this manner. You can pick up the tab for me in either welfare or prision costs too when I get too freaking old to work. I already struggle to because poverty (surprise! surprise!) takes a physical toll and I'm working with arthritis and physical ailments of my own following an emergency operation the day after my grandson was born. No wonder so many prefer scamming the system or breaking the law to a hard days' labor if our society says screw you when that labor has depleted you. Would that I had a house to sell!!
Donna at October 24, 2007 9:23 AM
Frankly, when you come right down to it, Social Security is insurance for our old age. Is this the same crowd who attack those who don't have health insurance? And what the hell's wrong Pirate Jo with not having to work when you're old and wore out and at death's door. Frankly, anyone who has worked and contributed for decades has earned the right to take it easy instead of trying to keep up with 20 year olds when they're 75.
Donna at October 24, 2007 9:29 AM
I have no right to the fruits of anybody else's labor. How about you put away money for your old age, and I put away money for mine?
Amy Alkon at October 24, 2007 9:37 AM
Exactly, a sob story is not a claim on my life. I don't recognize it. And the only reason we have to have this discussion is because the government is pointing a gun at me and is taking my dollars to give to the needy.
Donna, you call that insurance?
I call that robbery.
Stu calls it human decency.
I call it depravity.
newjonny at October 24, 2007 9:44 AM
I'm for charity being voluntary. There are people and causes I help and have helped. If you want to pay for random others in their old age, go right ahead.
Amy Alkon at October 24, 2007 10:03 AM
I have no problem with the abolishment of the social security system....provided, of course, that I get back all of the money that I have paid into it since I stared working.
Social security will be shutting down about the time I would be taking advantage of it. So I'm going to get screwed, big time.
Best to minimize the damage and shut it down NOW. Either that or I just drink myself to death long before I need it.
RedPretzel in LA at October 24, 2007 10:03 AM
The problem is, we have a mentality that's very socialist, and a vast number of people find the idea that they'd have to provide for themselves, or should, incomprehensible.
Amy Alkon at October 24, 2007 10:24 AM
"I have no problem with the abolishment of the social security system....provided, of course, that I get back all of the money that I have paid into it since I stared working."
That's my first choice too but I'm willing to hold a memorial service for my long lost dollars if it means a bad program gets flushed. Take the money on hand (snicker) and try to do something for the high-profile sob stories. After that, everyone should call a good investment firm and tell them how you want to live when you are xx years old.
martin at October 24, 2007 11:12 AM
Shit happens and not everything is within everyone's control 100% of the time. Hence the arguments everyone was using for someone self employed not gambling on not buying health insurance in another blog. We're not talking now about someone making $80,000 a year expecting me to foot the bill for their children's health care or even the out of control woman that went on Oprah. I have skills, a high school education and experience. I'm making a living. But let's face it, the opportunities aren't there for the kids today that were there for us in the '70's and if you don't have skills, education and a good family backing you up, you may have to take that crappy retail job. I notice that all of you Starbucks' enthusiasts view that as health insurance employment, not making the rent and putting a decent amount of food and buying a buss pass employment. Reality check. I recommend reading Nickel and Dimed by Barbara Ehrenreich. It's not a sob story. It's the facts. I make a better living than minimum wage. Little over $31,000 a year and I just barely make it. Kids or no kids, I defy you to make it on minimum wage, even if you do get the 40 hours a week that retail doesn't like to hand out. We do live in a society and part of the price of society is taking care of the truly needy. Or are you all so naive to think that the crime rate is so high only because those criminals are too lazy to work? No, it's because you get sick of roaches, rats, cold, illness and starving. Someone put in that health insurance blog that you have to wonder why people work if there's a handout. The opposite is also true. What's the incentive to work if you only wind up old and broke and kicked to the curb? Sob story? No, I don't think so. I've held my own and never asked for a handout and am not doing so now. I'm just asking for what's mine and I have rightfully coming to me. And, damn it, yes, because I've never resorted to crime or welfare and took care of me and mine, perhaps, yes, this society does owe me something for being a contributing member of it instead of a drain on it. The least thank you that a society whose rules I've played by can give me is to do something to ensure I'm not living in a roach motel and eating dog food in my old age. I, frankly, deserve better than that.
Donna at October 24, 2007 11:26 AM
"if you make enough to save and are educated on how to do so" - donna
No, no, no! I realize that most persons don't have the ability to enroll in private investments beyond what they're paying already for SS.
Donna, I assume you have a job. If you DO have a job then you already are paying into *a system*. I proposed a different system. You are ALREADY having money TAKEN from your paycheck. Instead of that money going from your paycheck to an old person, that money should go into a private retirement account which is then invested.
This isn't about saving in addition to what is taken from your check - it's about redirecting what's already being deducted.
What pisses me off is that people are accustomed to the idea that once they retire they'll get a check every month and the idea of doing it oneself is somehow offensive. How is offensive to take responsibility for your own future?
Again, I don't have a solution. I don't think people should be left to fend for themselves totally - learning about managing money for retirement is overwhelming and confusing. Since people have been dependent upon SS, pensions and 401ks (all pretty brainless) it's really scary to suddenly be faced with having to take care of all of it.
I see nothing wrong with each state helping to create accounts for people to be paid out after age X.
P.S: Below a certain income level (ie the poverty level) are people exempt from paying SS?
Gretchen at October 24, 2007 11:35 AM
Donna, you have the biggest, most misplaced sense of entitlement I have encountered all year. Here's a thought - if you can barely afford to take care of yourself, don't freakin' HAVE kids. Condoms cost a quarter in a vending machine, and less if you buy them by the box. Quit whining. You've made some dumb decisions in life, so just suck it up and admit it rather than twist yourself into knots trying to justify why you should be able to raid someone else's wallet.
And Nickeled and Dimed sucked big donkey balls. Barbara Ehrenreich is a self-absorbed twat who thinks she's keepin' it real by slumming with poor folks for a while. Yet in her book she admits that most of them had the money to chainsmoke, and she looks down her nose at people who shop at Wal-Mart to save money, even though these are the very same poor people she is supposedly championing.
Stop hiding behind the "society owes me something" crap. Society = OTHER PEOPLE, and you are basically saying other people owe you something just for taking up space and breathing air. I'm glad you've stayed off welfare, but enough with the sob stories already.
Pirate Jo at October 24, 2007 11:41 AM
"anyone who has worked and contributed for decades has earned the right to take it easy instead of trying to keep up with 20 year olds when they're 75"
Only if you've saved your money, baby.
Pirate Jo at October 24, 2007 11:44 AM
How is offensive to take responsibility for your own future?
I believe not taking it, and feeling you don't need to take it because the big titty of the state will be stretched down to you, causes learned helplessness.
Barbara Ehrenreich's son emergency room shopped for his girlfriend, Ofelia Cuevas, who gambled that she could go without health insurance and then went to County USC for care. She wouldn't answer my e-mails, but I'd love it if somebody would investigate whether we taxpayers paid for her medical care. I'm guessing we did.
Barbara Ehrenreich showed zero shame at raising a son who was shameless about the "other people will pay" model versus personal responsibility.
Pirate Jo is exactly right about kids. If you can't afford them, don't have them. If you want them badly enough, and you'll be the one paying for them, you'll find a way.
I see getting SS in my old age as a possibility, and an unlikely one at that, and I plan accordingly.
In fact, I think I'm about as likely to be left a big pile of money by a rich uncle...and no, I don't actually have a rich uncle.
Amy Alkon at October 24, 2007 1:00 PM
Gretchen -- I think Donna mentioned that if they didn't take that money from her cheque before she saw it, she wouldn't be investing it. She'd spend it now. So, because she would choose K-Mart (I didn't know they had K-Mart in the US....or are you talking about CPP Donna?) instead of the Salvation Army now, she must be forced to pay into government run insurance.
This does suggest bad choices. It is unfortunate that neither Donna's daughter's dad or her grandson's dad is around to help out with anything. Damn those random sperm floating through the air.
I think there needs to be a phasing out of SS and CPP. Some formula based on how long people have been paying in and what they're lifetime earnings have been might be fair. Those with no other means of saving, getting what they would have got under the old system, those with other means, a scaled down amount. I know, its a socialist formula, but since we've allowed such socialism, I think we need to wean ourselves from it gradually.
I've been paying into CPP for 24 years....but I expect nothing when I retire. In fact, barring any illness (for which I have insurance, thank you) I'm not sure if I'll ever get to totally retire. I don't intend to compete with 20 years olds, but the demographics say I may be needed for a while, so maybe I can subsidize my own savings with some less demanding job.
moreta at October 24, 2007 1:44 PM
If you don't trust induhviduals (sic) to make the "right" choices, (as in saving for retirement) what makes you think we can trust the government? They are stealing our future not only by consuming our social security contributions along with our income taxes (via LBJ's unified budget, perhaps the grandest act of larceny ever perpetrated) they are also devaluing our fiat money through deficit spending and our massive trade imbalance. The price of gasoline isn't going up, the value of our money is going down.
People in developing countries where there is no dependable way to store wealth have many children in the hope that a couple at least will survive and take care of them in their old age. If a culture is to avoid overpopulation that way there has to be a stable way to conserve wealth, and that means the money has to be backed by something of more value that the government's unreliable word or the vagaries of the equity and real-estate markets. Of course the whole charade would fall apart if we were to go back on the gold standard.
Some politicos would have you believe that they are investing a lot of our tax money in infrastructure. The problem is that once created and once people start to depend on that infrastructure (like to get to work) it has to be maintained, and the cost of maintenance is never included in the appropriated cost of the project. It is safe to ignore that until the bridges start falling down from lack of maintenance and the roads are so beaten up that driving on them damages your car and your spine.
Jim H. at October 24, 2007 2:05 PM
You know, it is really strange to hear people say the government must make me do something, because otherwise I wouldn't be disciplined enough to do it of my own volition. Like, it's a good thing heroin is illegal or I'd become a raving addict! Or, it's a good thing I'm forced to pay into social security, because otherwise I'd blow all my money on lattes and manicures! Or, it's a good thing God would punish me for wrongdoing because otherwise I might become an axe murderer!
People who say these things sound as though they have long ago abandoned the idea of becoming a functioning, self-owning, responsible adult and dwell in a state of perpetual childlike dependence. I cannot respect them. The paternalism in forcing someone to save for retirement, even if they'd be too stooopid to do it for themselves, can never be worth the cost of taking people's liberty away.
But all that aside, Gretchen makes a great point that the money we pay into SSI is just being bilked from us in a big pyramid scheme. If it was really about forcing the stupid to invest in their own futures, the money confiscated from our paychecks would at least be going into private accounts. Don't ever think the government got us into this mess to protect us from ourselves - this was about gaining power over us all along.
Pirate Jo at October 24, 2007 2:54 PM
If you don't trust induhviduals (sic) to make the "right" choices, (as in saving for retirement) what makes you think we can trust the government?
Great point, since the government is into bottomless spending much worse than that shopping-as-crack-whore with the uninsured six kids at the link above.
Amy Alkon at October 24, 2007 3:06 PM
Most people are not terribly wise when it comes to saving for retirement. If Social Security is abolished, I'm going to start buying stock in Purina and Alpo, because that's what most people over 65 will probably be eating.
Lena at October 24, 2007 3:29 PM
nothing like changing the rules on folks after 60 or 70 years. It's rather heartless, just like Ayn Rand was.
moe99 at October 24, 2007 3:58 PM
I don't think you can fight hand-out-ism so directly. Especially where "the elderly" are concerned. They are a protected and coddled group like "the children", such that any politician that does anything that takes previously promised monies aimed at those folks away, will suffer at the polls.
It's not right, it's not reasonable, and it's unfair, but that's the way it is. Maybe if people in their 20s and 30s voted in the same numbers that people over the age of 65 voted, you'd see a change.
I offered a modest proposal to fix this problem a few months ago, long version, follow the link, short version, if people want to receive benefits from the government for retirement and be treated like children, codify that childlike relationship into law. Social Security transfer payments can't go to anyone over the age of 50, just as payments for children don't go directly to the child but their guardian. That'd shake things up, but good.
xwl at October 24, 2007 4:25 PM
I think part of the reason people aren't personally responsible is that we haven't expected them to be personally responsible for decades. ("Expected" in terms of putting out the message that YOU have to save for your retirement.) Social Security is supposed to take care of us. As we're all living to be 120 and beyond. Do the math.
Amy Alkon at October 24, 2007 4:59 PM
You know what I dont understand, if your life is such utter hell why dont they kill themself?
Apperently they have nothing left to lose anyway. How hard is it, espesially for an older person, to get ahold of some insulin and send themselves into a nice comfortable coma?
Or sell your body on the black market and give the money to your familly - if your life is really such a shit hole that you cant stand it, then why are you still around.
Either put as much effort into supporting your life as you do in avoiding death. Or put as much effort in to offing yourself as you put into justifying why society owes you anything
lujlp at October 24, 2007 5:05 PM
"You know what I dont understand, if your life is such utter hell why dont they kill themself?"
That's the roughly the plot, lujlp, of the recent novel Boomsday by the satirist Christopher Buckley.
(It's funny in parts.)
Jody Tresidder at October 24, 2007 6:31 PM
A little history that's oft forgotten in this debate. Social Security was started because millions of people who HAD been responsible and HAD saved for retirement lost everything almost overnight during the stock market and bank crashes leading into the Great Depression.
Just sayin'.
(And before all you Randies jump all over me, I contribute the max to my 401K and save on top of that and we're leaving the equity in our home alone for a rainy day. I'm not counting on Social Security, but Maude bless it right now because otherwise my crazy mother would be living with me.)
deja pseu at October 24, 2007 7:35 PM
Scenario one. I had saved up all my life for my old age, and guess what? I lived longer than planned, and I can't afford to live as long as it looks I'm going to live. Who'd have guessed I'd reach 90? Still, here I am, 80 years old, healthy, but not so spry any more, and I need a job. Who's going to employ me?
Scenario two. OK, I worked hard and put away money for a rainy day. Here I am, 70 years old, and the value of my investents has just plunged. I was never really bright enough to understand the markets, so perhaps it's my fault; perhaps I'm just an innocent victim of circumstances. Whatever. Buddy, can you spare a dime?
There's an element of insurance in social security. Everyone puts in, not everyone takes out. That's how _all_ insurance works. It evens out some of the difficulties caused by an uncaring universe.
Norman at October 25, 2007 2:18 AM
"Like, it's a good thing heroin is illegal or I'd become a raving addict! Or, it's a good thing I'm forced to pay into social security, because otherwise I'd blow all my money on lattes and manicures! Or, it's a good thing God would punish me for wrongdoing because otherwise I might become an axe murderer!"
Pirate Jo!! You ROCK! I'm giggling away here, thanks! :-}
Gretchen at October 25, 2007 4:18 AM
Pirate Jo, you're a clueless ass! For you and the rest of the hopelessly naive (and, therefore, totally selfish) just because you've been lucky, I did have my daughter when I'd been working for the State government six years and was making good money. Shit happened three years after her birth that fucked us up big time and was totally out of my control and totally not something I bargained for that depleted my savings etc and sent us into hardship. Sob, sob, sob! But instead of sobbing or turning criminal, no, I continued to take care of her and me. Though don't get me started on that turkey, grandbaby's daddy is around. Child support is on again, off again on the whims of the court but -- this will make you all real happy -- he's been carrying him on his health insurance for the last three years. Because we have a work ethic (and anyone who is working poor -- news flash -- has one or they wouldn't bother for such little reward) my daughter and I are working. She's well enough now that she's adding hours and health insurance through her employer. News flash, at most jobs you have to work a certain number of hours before you can even receive it. Hopefully, there's no relapse because providing for her and my grandson is the only reason I can't afford lattes and manicures now. That said if I could afford lattes and manicures -- never had either one in my life and have no desire for either (if you can wrap your mind around that, you privileged asshole) -- I would put that money into savings for my old age. If she does relapse though all bets are off but I guess I'll ignore her need and horde it. Guess I'd better figure out which is more important in my old age -- a daughter or a bank account. Next time, let her die. My grandson? What's he need a mommy for anyway? He's four. Let's send him to work in a factory making Nikes or something. Kid gets hyper as hell with a teaspoon of sugar so if we just feed him soda instead of water or milk... Because I can guarantee you his daddy would not take him 24/7. Only did when Mom was in the hospital because he didn't know how to squirm out of it with any social grace and (I suspect) his parents and his girlfriend said he should. If it comes down to it, I'll take him but I'm 50 with health problems so we better start training him because if I'm trying to keep up with a very active little boy 24/7, it definitely increases my chances on not making it 'til he's 18 and we wouldn't want him to be a drain on society or ask anything from you privileged assholes, would we? Oh, that's right. I guess the three of us should all just kill ourselves because we can't afford lattes and manicures. That was just plain sick and fucked up lujlp and I do point out that I never claimed to be unhappy, just admitted to having had some problems in recent months. Seek psychiatric help now before you turn into a serial killer though I gues if you kill off anyone on the public dole, you'd just be performing a public service... and the kid does go to a public school after all. Why should you pay for an education for someone else's kid? Thanks to those of you who also (vainly I suspect with this selfish bunch who fails to realize they wouldn't have either their lifestyles or their opportunities to hoard money if not for people like me and those who flip burgers at McDonald's; at least, Barbara E realizes that!) mentioned the realities of life. Why should I be entitled to the fruits of your labor, Amy? Well, first of all, I'm not even asking for that (unless you count my grandson's public school). If I collect Social Security, it's the fruits of my labor -- decades of it. But even if it were, because you and everyone like you are reaping the benefits of the working poor and living your life of ease because of people who provide basic goods and services for very little reward. Without us, you literally wouldn't have a pot to piss in, paper to wipe your ass on let alone the computer to rail against us on.
Donna at October 25, 2007 6:15 AM
Donna, I can see that you're emotional on this topic - as would most people. But I don't think you're being fair to PJo, et al.
This is what people are saying:
1) there may not be any money for you when you get there
2) that fucking sucks, but it's not our fault, so don't kill the messengers. we're gonna get screwed, too.
3) If there IS money, then you should fucking get it b/c you paid into the system. That's how it works right now, for any of us to get screwed out of our REFUND is immoral and why most of us are discussing how/why the system needs to change (see #5). Let me reiterate: no one is saying you don't have dibs on the money you've forked over.
4) you have no idea how much money any of us have, so save the assumptions. I'd be willing to bet you aren't the only person on this blog who struggles. I'm just glad I get to surf the web while I'm at work - a lovely benefit.
5) No one is calling you lazy. No one is saying you don't work hard enough. Bad shit happens to good people. Duly noted. Welcome to the club. Stop being defensive, no one is attacking your work ethics, just your view on how SS operates.
6) SS is taken from you every month (*beating dead horse with a stick*). The system isn't self-propagating and the "unforeseen" failure is bullshit, anyone here buying it?!
YOUR money would serve YOU better if it was dealt with in more fiscally intelligent way. If you need government guidence to accomplish that then I bet you aren't alone. But either way
****YOU HAVE TO PUT YOUR MONEY ASIDE FOR YOURSELF**** If you don't put anything aside then you starve in the streets for being stupid...
luckily...
you're already saving RIGHT NOW. Why are you upset by the notion that, instead of the government pick-pocketing your paycheck, the same amount of money is automatically deducted and funneled into a nifty account that grows at a real rate of 7%/year? ...w/o government intervention?
Gretchen at October 25, 2007 6:44 AM
"Without us, you literally wouldn't have a …computer to rail against us on."
Hey Donna, did the little “irony” light on your computer blink a warning when you typed this part?
You are my neighbor and I promise I won't let you and your family starve. But are we allowed to discuss the best way to do that? Soc.Sec. is broken, got it?
martin at October 25, 2007 8:17 AM
I have a computer and all the rest, not because poor people got them for me, but because I wake up at 4am and 5am to write, and work seven days a week.
Amy Alkon at October 25, 2007 8:21 AM
Donna first off my comment was not directed at you personally, and given my age the boat has sailed on the seiral killer front.
While I can empathize with just about any persons position, I wonder if you ever tried looking at this from the point of view of those who wont be getting anything out of the system.
We may as well fush cash down the toliet for all the good it will do us paying into social security
lujlp at October 25, 2007 11:48 AM
"If you don't put anything aside then you starve in the streets for being stupid..."
Oh, lovely. So civilized.
Lena at October 25, 2007 12:51 PM
Am I the only one who's old enough to remember the days of double digit inflation?
Example: $10,000 was a decent, middle-class income in 1970, but by 1980, it was poverty level.
You can earn a decent wage (for the era), save, invest, and still end up impoverished through no fault of your own. Should people whose savings are depleted through inflation starve?
JoJo at October 25, 2007 2:14 PM
Donna wrote: "I make a better living than minimum wage. Little over $31,000 a year and I just barely make it."
That's where you lost me. You make more money than I do. And yet here you are, bemoaning how poor you are and how tough it is to live your life. In fact, you make nearly as much as a Professional Librarian's starting pay. How are you living so close to poverty?
I mean, I don't live the high life, but I get by. Comfortably, in fact. I have a good apt, in a nice neighborhood. I don't have Internet at home, but that's no loss. I have a cell phone, and I go out to eat (probably too often, in fact) and while I eat an awful lot of Ramen, don't have a lot of luxuries, and can only dream of having a new car instead of my beater, I live pretty well.
Granted, I'm not supporting a sick adult with a four year old. But I'm not making as much as you, either. I COULD support a child on my income, as many of coworkers actually do. (Single moms, no less).
I gotta say, you must live in a pretty expensive town.
CornerDemon at October 25, 2007 2:39 PM
Again with the "starve." Any discussion of changing an entitlement program instantly brings up images of Schindler's List. Isn't that a little dramatic when we have the world's richest "poor" people?
I apologize for sounding heartless but there is an important difference between starving to death and not having the standard of living you think you deserve. And I've built houses in rural Kentucky so bite me, I've seen poor. Let's take care of the truly destitute.
The only reason currency is worth anything is because it represents a little slice of actual GDP. A retirment account works because the funds are INVESTED; the value of the deposits increases along with the means of production they helped build. Social Security fails to work because the money is SPENT almost as quickly as it is brought in, there is no growth.
One of the few govt. intrusions I'd be willing to stomach is one where a person is required to show they have a private retirement fund. Invest in nuclear death rays, invest in rainbows and lollipops, your choice. Once you reach a certain balance in your acct. you can tell the govt. to piss off and let you mind your own business.
Otherwise, the govt. keeps pestering you to make contributions to your acct. Somebody could try to persuade me that my tax dollars should go to prop up somebody else’s retirement acct but I'd want to see some serious incentives in place for people to not let that happen.
And I'd also like to see mandatory economics and investment classes in public schools.
Mainly, I'd like to see a serious discussion of how to fix the shit instead of apocalyptic wailing.
martin at October 25, 2007 2:54 PM
There are so many different agendas in the SS debate, it's going to be mighty difficult to fix everybody's gripes, especially with the economy the way it is and the debt at the level it is.
For what it's worth, my own parents (mid-40s) worked out a novel solution for themselves. They chose to rely on one middle-class income with excellent health care benefits (my dad's) and put absolutely no money away for retirement. How do they expect to live, with SS down the drain by the time they retire and no savings? They invested everything in raising ten children in a loving and supportive household, and providing the best education the US could offer. They figure they'll be well provided for in retirement (so far the system has turned out a college professor and an engineer), and incidentally happier...
NOT something many people could do, and definitely not something I'm going to do myself! But I wonder how many similarly inventive approaches will be tried, as SS goes into the red...
Megan at October 25, 2007 9:43 PM
"The only reason currency is worth anything is because it represents a little slice of actual GDP. A retirment account works because the funds are INVESTED; the value of the deposits increases along with the means of production they helped build. Social Security fails to work because the money is SPENT almost as quickly as it is brought in, there is no growth."
Martin, you have appealed to the geek in me. That little tidbit is going to be my brain earworm for weeks!
And Megan - I'm not planning on having kids to take care of me either, and I agree that's not realistic for very many people. But your parents' story - I have a feeling it's going to work for them, and it put me in a good mood. Thanks for your post.
Pirate Jo at October 25, 2007 10:17 PM
My problem with private accounts is that the average person is financially illiterate. Look at the number of people who are losing their homes because they didn't understand the difference between an ARM and a fixed rate mortgage.
Do you really think that Joe Sixpack will invest wisely? Keep in mind, these are the same idiots who believe in astrology and fall for the Nigerian scammers.
JoJo at October 25, 2007 10:18 PM
I agree with you, JoJo, but I also feel that the "solution" we have isn't a solution at all, and helps to incapacitate people (in terms of having a sense of personal responsibility).
Beyond the problem, though, of the broke 20-year-old financing the elderly rich (or even elderly not-so-rich or elderly poor), there's this comment Martin makes:
"Social Security fails to work because the money is SPENT almost as quickly as it is brought in, there is no growth."
Social security isn't a solvent program. We just don't really think how insolvent it is, and how much trouble it will soon be in because there are always more taxpayer dollars where those came from, and our legislaturds can just pile on and pile on on the national debt.
For a 20-year-old having his paycheck sucked out to SS that he will likely never see, this is the financial version of "original sin."
Amy Alkon at October 26, 2007 1:37 AM
"Do you really think that Joe Sixpack will invest wisely?"
No JoJo, he definitely won't - which is why we have Roth IRAs. You're only eligible to invest in one if you're below a certain income level so they're made for the everyman. When you put your money into it it's invested in a mutual fund which 1) reduces confusion of picking individual stocks to invest in 2) reduces risk b/c your investment is spread out across companies and even sectors. It's pretty brainless, the money is automatically deducted from my checking acct. every month. There's a $4k/year cap, too.
Mr. Natural Ice doesn't have to read the WSJ. I would support state-level groups to help educate the public - and I'm w/ Martin on educating high school kids. One of the most useful classes I ever took wasn't Ancient History or Classic Lit, it was called Real World and we learned how to balance a check book and create a budget.
I may go as far to say the government should have a hand in where the money is directed - it could be an opt in for people who don't want to do it themselves. For others who want complete control they could opt out of the government directed savings/investment program and do it themselves - but must show they're doings something.
Lena - I was trying to make a point and did so badly. Donna isn't starving in the streets, but she may have to work into her later years. And her grandson isn't starving. It's one thing to work your ass off and be proud, but if it's so dire get food stamps to feed the child. I totally support such programs for kids whose parents work hard but shit happened.
"For a 20-year-old having his paycheck sucked out to SS that he will likely never see, this is the financial version of "original sin."
Today is payday. Bittersweet. $60 for my 401K, $60 to my 68 year old next door neighbor. Enjoy my money, while you hang out in your $1.3 million house...and your fat ass pension. You earned it! *Gritting teeth*
Gretchen at October 26, 2007 5:38 AM
We definitely are doing something wrong by not having classes to educate kids about money. My parents didn't do it, except for telling us not to spend more than we have (valuable), and to save. Good advice, but a bit detail-free!
Amy Alkon at October 26, 2007 7:10 AM
These organizations are both out to get more econ curriculum into schools. They get some opposition from people who think Economics is the science of balancing your checkbook on the backs of the poor but such is life.
(standard preamble)fte.o-r-g
and
(standard preamble)ncee.n-e-t
(did I fool your spam filter?)
I've been teaching my kids econ from day one. When my daughter was just a little squirt, she hollered, afraid, from the next room "Daddy, there's a bug in here!" Not wanting her to be a little sissy, I answered, "bring it here and I'll give you a quarter." Short pause, little footsteps, "here, give me my quarter." That's my girl.
martin at October 26, 2007 9:42 AM
You did fool my spam filter, and thank you for that.
Amy Alkon at October 26, 2007 9:48 AM
Er... *raises hand* I graduated HS in '00, and there WAS (and had been for at least a decade prior to me reaching HS,) a mandatory personal finance class for graduation in my school. (Not a state requirement, just a purely local one.) That said, I honestly did find the class immensely helpful and invaluable, and kept the materials from the class through the first few years I lived on my own. The class taught everything from balancing a checkbook to filing your taxes to paying utility bills, writing receipts to other people, and much more. It really WAS an awesome idea, and the teacher and materials were equally terrific. Here's the rub, though: Almost NOBODY else in my class or any other took that mandatory personal finance class seriously in the least, thinking it a lame and uncool waste of time. Consequently, most of the kids that took the class skated by w/a barely passing grade or just learned the material long enough to pass the test. Mandatory personal finance education in school sounds like a fab idea on paper, but no matter how good the class/materials are, you're gonna wind up w/a lot of financially illiterate slackasses graduating school just as you would have without it. Sad but true.
Kim at October 26, 2007 2:19 PM
Social Security is not a hand out to lazy scalawags who can't be bothered to fund their own retirement.
It's one of a handful of policies that keeps the American economy rolling forward.
When people fear for their future, they stop spending. If they don't have money or access to credit, they stop spending. When they don't have a job or a home or a place to live, they stop spending.
Ha, good for them! They got what they deserved.
Yeah, but if it's 280 million people, all at once, then we are all of us, including the 20 million bootstrap libertarians out there, going to get caught in a Depression. And then we will be screwed. It doesn't matter how much you've got socked away, if the economy around you has ground to a halt, you are fucked. There's a reason why so many governments were overthrown during the 20s and 30s. If FDR hadn't pulled off a borderline miracle, the US would have been no different than Germany.
I wish it were about personal responsibility. I wish it were about planning for the future. It's not. It's about keeping 300 million people believing in a brighter future, buying that extra case of Diet Coke @ Costco, signing up for that 36 month lease on a new Jetta.
Harriet at October 27, 2007 12:11 PM
I've seen a couple of comments about not investing wisely, or running out of money in retirement. Most companies are now offering 401K options that automatically move money into more stable, but slower growing options. Contribute the maximum and tell them how old you are. You'll do OK and you don't need to be a financial genius.
For those worrying about running out of money, buy an annuity with half of what's in your 401K at retirement. Income for life, plus you've got half your capital left. Die the next day, your heirs get something. Social Security? Unless you've got a surviving spouse, Uncle Sam gets it all.
I never had the nicest house, or the fanciest cars. I don't have a flat screen tv. But my kids all went to college, and my retirement is going to be OK financially. It's all about choices and balance and being happy with what you have. Unless you're Bill Gates, there's someone out there with more.
MarkD at October 30, 2007 9:01 AM
You have a point about Social Security, but on the other hand so do MILLIONS of other AMERICANS thathave no acess to LORD nows what amount it would take just to SURVIVE in this WORLD. I do not know what your AGE is but I DO KNOW THIS, it was the BUNCH on WALL ST that started what you HATE SO MUCH and that is why WELFARE, FOOD STAMPS, AND ALL the 'FREE' give away programs got where they are today. '1929' and the STOCK MARKET CRASH started it ALL and that was BY SPECULATORS and they didn't even have COMPUTERS TO PULL IT OFF WITH LIKE TODAY. I have said it before and I will state it again 'to correct the mess YOU START AT THE TOP AND WORK DOWNWARD, you do not take away some ELDERLY OLD PERSONS LIVELY HOOD AWAY FROM THEM. There is a whole lot of people in this COUNTRY that NEED HELP and can not get SOCIAL SECURITY AND 'NEED' IT.GET the FREE ride BUNCH THAT CAN WORK AND WON'T OFF AND GET THE PLUSH POLITCIANS OFF OF THE TAX DOLLARS and you have done something WORTH WHILE. THE U.S. DOLLAR BILL has been going DOWN HILL in VALUE since 1939 and is now worth MAYBE $0.02 IN BUYING P0WER and you CANNOT PUT THE 'BLAME' on "ANY POLITICAL PARTY YHEY ARE """ALL"" TO BLAME FOR THIS MESS, BECAUSE BOTH OF THEM HAVE BEEN IN WASHINGTON D.C. To sum it all up it is what you call 'GREED' GARY M. FRANKLIN SR.
Gary M. Franklin Sr. at September 15, 2009 9:39 AM
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