"According to Social Security actuaries, the generational theft runs deep. Young people now entering the workforce will actually lose 4.2% of their total lifetime wages because of their participation in Social Security. A typical third-grader will get back (in present value terms) only 75 cents for every dollar he contributes to Social Security over his lifetime. Meanwhile, many seniors with greater means nearing retirement age will pocket a handsome profit. Health-care spending through Medicare represents an even less equitable story."

Nu?

Social Security has been sold to us since Year One (or at least Year 1935) as a government-administered defined-benefits pension program (a lie of this magnitude would cause Pinocchio to fall over from the weight of his nose, but I'm talking about people with less intelligence than a wooden marionette). That means a fixed payment is made to the pensioner regardless of capital inflows or earnings.

There's a reason why defined-benefit pension plans, guaranteed investments, and the like have become very unpopular in the private sector. Let every proposal for SS/Medicare reform begin with an understanding of that reason.

"Young people now entering the workforce will actually lose 4.2% of their total lifetime wages because of their participation in Social Security. A typical third-grader will get back (in present value terms) only 75 cents for every dollar he contributes to Social Security over his lifetime."

Yah. No sh*t. I saw this when I got my first paycheck in the summer of 1978.

"Wait, where's the rest of my money. Deductions? Oh, right. Federal Income Tax. Okay. I like the army. Army good. Keeps the Russians away. State Income Tax? Well, I drive on the roads. Roads are good. And schools. I still go to school. I guess that's fair."

(Actually the roads and schools are paid for by different taxes. I was 11. Cut me a break.)

"But who is this FICA bastard and who said he could have any of MY MONEY?!?"

For thirty years I've been paying INTO that federally mandated Ponsi scheme. And I remember thinking, "This can't last. I wouldn't mind paying off the people who are dependent on it now if it would mean future generations could get out from under it.

But that wasn't the deal. And don't anybody DARE call it an "entitlement" like welfare. I PAID for those benefits. It's not a charity. So yeah, I'm DAMN WELL entitled to them. And after every election, every SOTU address, I write my congresscritters and remind them: I vote, and I will FIRE the son of a b*tch who even suggests touching my benefits.

Yeah. There's a problem. And DC can fix it without touching the benefits I paid for.

I'm PROUDLY part of the problem.

I was going to write a rant here, but there's no point... I've said it all before. Sigh.

"There's a reason why defined-benefit pension plans, guaranteed investments, and the like have become very unpopular in the private sector. Let every proposal for SS/Medicare reform begin with an understanding of that reason."

If I had been in charge of it back in 1935, here's how I would have set up the program: The FICA taxes collected would have been bundled up into investment contracts, which would then be put out for bid. Banks and investment houses would bid on the rate of return that they could provide on these contracts; highest bid wins for each one. The contracts are for a fairly short term, say three years. As each one ends, the gains are rolled into the trust fund and new bundles are put together for new contracts to be bid. Bidders who failed to meet their bid rates of return would be punished by not being allowed to bid on new contracts for some period of time, depending on how badly they missed.

We could, in fact, start running Social Security this way at any time. However, it would never pass because Congress wouldn't be able to raid the trust fund.

It is worse than you think, and a good deal more complicated. My mother, still alive at 87, is one of the few people I know that actually provided for her retirement.
She still pays over 7000 a year for health insurance.

She has a modest pension, social security, and income from her investments, In 2007, those investments brought in nearly 15,000 in extra income. Because these investments put my mother into a higher tax bracket, she also paid taxes on a portion of her Social security.

In 2011 my mother made only 4k off her investments, and paid around two thousand in income taxes.

In 2012 the investments brought in 1300 bucks,
and her medical expenses and other deductions pushed her below the floor where she had any tax liability at all.
The government monetary policies have pauperized the prudent elderly making them more dependent on SS, while the government prints money and erodes the value of those benefits at about ten percent a year. It is a house of cards, and pretty soon, it will come crashing down

Reminds me of the time the politicians tried to tell us Japanese/Mexicans/Chinese/scary outsiders took r jobs.

Or the time politicians tried to tell us the poor were unfairly waging a class war against the uber-wealthy who had bought our Congress and courts.

Or the time politicians tried to tell us 47% of us were slackers and freeloaders pulling down the good, decent, hard-working 53%.

The heart of the matter is this: our politicians bankrupted us and want us to turn our attention against our neighbors, families, co-workers - anyone but them as they continue to loot the country.

"Look! The denooberation of the penny has risen 4.0017 percent, and it's granny's fault yer children are gonna eat cardboard for dinner!".

Yeah, right.

"Or the time politicians tried to tell us 47% of us were slackers and freeloaders pulling down the good, decent, hard-working 53%."

Well, somebody is voting for the politicians who promise all those entitlement programs. I get your point, but... the people have had other choices available to them.

I was going to write a rant here, but there's no point... I've said it all before. Sigh.

Make that a double sigh from me, Cousin Dave. I shouldn't repeat what I've said before either. But Australia has gone even further than you suggest. A percentage of my income is diverted by law into a private investment account. Which I can't access until retirement (there are exceptions for extreme hardship, but the bar is high).

Bear in mind, this is not a tax, to be paid back to me by the government. It's still my money, I'm just not allowed to withdraw it. But I can choose where it goes (my employer has to pay into the fund of my choice) and I can pick investment strategies for my money. I can even set up a self managed fund of my own, and providing I meet the probity requirements, my employer has to pay into that. The point is, it's actual investment of your own money, not a tax that creates a sense of entitlement. And yes, Lamont Cranston, I *am* calling it an entitlement. You believed it (and presumably voted for it) all these years, that's your fuckup. It can't be paid now. Too late. You can write to anyone you like, but you won't get your money back.

The idea is we're funding our own retirement, which SS has failed on utterly. This started in 1984, but some of the stuff I mentioned (choosing your fund, etc) came along later. The rate needs to go up a bit too. But if SS had been similarly transformed back then, this problem wouldn't exist now - and there were plenty of people telling everyone the emperor had no clothes. The previous generation would have been grandfathered in and the coming retirees would have their own savings. 30 years wasted.

Gog_Magog - bullshit. You voted for something that can't work, you take the consequences.

"The heart of the matter is this: our politicians bankrupted us and want us to turn our attention against our neighbors, families, co-workers - anyone but them as they continue to loot the country"

I tend to view this kind of statement with the same bitter mirth with which I view those around me that voted for the current administration and all of a sudden start complaining when their taxes went up.

In both instances, my response is as follows.

You voted for this shit, now suck it. Suck it long, suck it hard.

I rolled over my 401K over last year. After taxes, I lost money.

Several times over the years I have invested in the stock market and have been burned every time.

I'm now buying silver. I don't know the answer, but I should always have some value.

I know exactly what you mean Jim P.

I cashed out my TSP account (401k for GIs) and no longer keep much cash in the bank.

Everythng I can spare I put into buying land, both here in Texas and in the Philippines through my wife and in-laws.

I'm avoiding houses because of the liabilities, but I may buy some down the road at foreclosure auctions in order to rent them out for income stream.

I take the view that cash is pretty much worthless along with stocks that are not based on commodities. I'll use it when I have to, but it's not something to rely on.

I will be leasing out my land to ranchers and farmers for a split of money and food.

I will also use barter when I can. They can't tax what they can't track.

Jim P., I'll bet you were loving yesterday's prices! My local coin shop was a madhouse.

"But if SS had been similarly transformed back then, this problem wouldn't exist now - and there were plenty of people telling everyone the emperor had no clothes. The previous generation would have been grandfathered in and the coming retirees would have their own savings. 30 years wasted."

Ltw, what you write about Australia's system is actually very impressive. And you are absolutely right; the alarm has been raised concerning SS since the 1970s. Back then, Pat Moynihan (a Democrat!) was arguing that either the system needed to be privatized or the FICA tax needed to be cut, because at the time the SS trust fund was over-funded (on paper), and his contention was that something had to be done to stop Congress from using SS as a slush fund. He was brutally mocked for this; I recall seeing satire portraying as a drunken libertine who wanted old people to die. (And a lot of that satire was written by the same group of people who were, at the same time, saying "Never trust anyone over 40.")

I will FIRE the son of a b*tch who even suggests touching my benefits.

Hope your time machine works. The "trust" fund was raided back in the 60s and the government has been doing it ever since. You've already spent the money, and you won't get to spend the same money twice, no matter how much bitching you do.

I hear this kind of thing from old assholes all the time. 'I paid into the program my whole life and it's the GOVERNMENT who screwed us, and I want my money back!'

Like you didn't elect that government.

Like the government has its own money that it can use to pay you when you quit working.

This is sucks "Or the time politicians tried to tell us 47% of us were slackers and freeloaders pulling down the good, decent, hard-working 53%."