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Social Security Proposal - End (or phase out) Social Security althogether

Posted by davidckaplan • 11/21/08 • Subscribe to this Discussion [RSS] • Report This Topic
Topics: crisis, fica, medicare, social security, solution, ssi

Here's a solution to the Social Security crisis.

"Get some smart actuarial minds in a room together to figure out the right age, and then make a deal with the American people--end Social Security as of a date and age-certain.

Let's call it 1970. Everyone born on 1/1/70 or later would have to continue to pay into the Social Security coffers at a rate of, say, 4% until the age of 65. With an employer match, the individual burden would be 8%. That's 4.4% less than people pay now. What a great deal right?

Actually, what would happen is that these people would get NOTHING as a result of their payments. The money would go directly to...

Anyone born before 1/1/70. For these people, the payroll tax would remain at 12.4% (6.2% employee, 6.2% employer), and they would continue to receive Social Security benefits for the remainder of their lives. After all, these are the same people who have voted for politicians who have been so fiscally prudent for all of these past 30 years or so."

Read more... www.pragmaticpundit.com/2008/11/social-security-modest-proposal.html

User Comments

11/21/08

csiunatc

Well the proposal does have some merit,

It would be more prudent to phase it out. dropping it in stages for ages between 1970 and 1990. Those born 1991 have yet to really enter the workforce and should not be affected in this at all. They should however be clearly educated on retirement savings.

[reply]
11/21/08

davidckaplan

True. The main problem in this country is that the right thing to do for the economy will not be the popular thing. Ever.

[reply]
11/21/08

csiunatc

Absolutely not, and anything government managed will be hard to get rid of. It immediately creates a dependancy. That dependancy automatically creates a problem where something might have to get worse before it gets better. And regardless of how much better it can get, short term fear blocks peoples minds.

SS is the perfect example, it's been a mess basically since its inception. And instead of seeing it for the faliure it is, people are constantly looking for ways to fix it. The mere notion of getting rid of it, like you would with something else that is broken beyond repair is just not showing up in peoples minds.

[reply]
1. 11/21/08
  
  MadameX
  
  I think the bigger problem in getting a proposal like this passed isn't the phasing out--everyone knows that's coming, and the people who would be most immpacted have many years left in the workforce. The big problem would be all of those people asked to pay in for the remaining years without the expectation of getting anything back. Americans simply are not willing to pay for anything that does not provide a direct benefit to them personally.
11/21/08

csiunatc

Well. the 700 billion could be better served taking care of the ones that are in the system now.

The best way of doing it would be to turn the system into a personal one. Each one has their account. Then hand those over incrementally to private sectors. With some regulation on how they can treat them with regards to risk etc.

[reply]
11/21/08

NewBlogger2008

I think that Social Security fixes go beyond just Social Security itself. We need a total overhaul of our welfare system. Whether that means throwing things out, starting new programs (I hope not), or fixing what we have, the government needs a serious overhaul before welfare collapses. If the system collapses before it is overhauled, we will have an even bigger problem than what we have now. People cannot be allowed to become too dependent on the government for their personal well being.

[reply]
1. 11/21/08
  
  MadameX
  
  When you say "our welfare system",to which programs do you refer?
2. 11/21/08
  
  NewBlogger2008
  
  MadameX- none in particular. Everything from medicare and medicaid to social security and other government based assistance programs.
11/21/08

satijournal

SS is a good program and the majority of the people here don't want it to end. It could use some fixes, like not paying benefits to wealthy people, but it's a popular program and it's not going anywhere. If it were to end, THAT would create a crisis.

[reply]
1. 11/21/08
  
  csiunatc
  
  not paying benefits to wealthy people.
  
  What about those that have become wealthy through their own work, and have been paying into the system all their lives?
2. 11/21/08
  
  satijournal
  
  It's like insurance. You pay for it even if you never use it.
3. 11/21/08
  
  csiunatc
  
  All except insurance you choose to buy or not.
4. 11/21/08
  
  MadameX
  
  That's a valid distinction, CSI, but we do all pay taxes for unemployment insurance, whether we like it or not, and most of us never use it.
5. 11/21/08
  
  csiunatc
  
  Yep.. and you can probably guess what I think about that....
6. 11/21/08
  
  satijournal
  
  All except insurance you choose to buy or not.
  Car insurance is required. But even if it wasn't, SS is good for the country.
  
  People get wealthy because of our economic structure and therefore, should be required to contribute a little more to keep our economy going.
7. 11/21/08
  
  csiunatc
  
  Car insurance isn't required. It's only required if you choose to have a car.
  
  And where you and I differ, is that there I don't believe that government controlled social security is any better for the economy than private would be.
11/22/08

wehireu

The problem with private social security and these kinds of things in general is that 80% of people lose in the stock market. This is the reality. A private program would not work. We are experiencing what happens when you leave your retirement money up to the market. Lots of people have had their 401Ks totalled. Right now in New York, the state budget has collapsed because a large portion of the budget was determined by Wall Street. New York is asking to be bailed out. Privatizing social security is not a good answer.

The point of social security is not just to pay for people who are competent. A lot of social security is for people who are disabled and are incapable of working. I don't so much mind letting go of the portion which the able bodied can handle, but the other part is another question.

[reply]
1. 11/23/08
  
  csiunatc
  
  How are the 10y CD's losing value? oh.. they're not? wow.. whodathunkit.
  
  You don't have to invest in high risk just because you are "private".
2. 11/23/08
  
  NewBlogger2008
  
  wehireu, actually historically the stock market always goes up. It only loses value for short periods of time but it seems to always recover and our economy always figures out a way to come out stronger. More people than just 20% actually make money in the stock market. Unless you are investing in high risk stuff, historically just about anyone can make money.
3. 11/23/08
  
  csiunatc
  
  Another excellent point. Most people work for 40odd years. The stockmarket is still more than 800% up over that timeframe.
4. 11/23/08
  
  satijournal
  
  The market was had fairly steady growth until the advent of the Web and online trading. Ever since, it's been volatile. We don't know what it's going to do in the future, but if you bought in around the year 2000, you'd have a pretty hefty loss right now.
11/23/08

wehireu

The returns of the stock market do not reflect what the average investor returns between 1987 and 2001 4.5%, less than that for many investors. People often get better returns in short term cds and bonds if they pay attention. moneyover55.about.com/od/howtoinvest/a/averageinvestor.htm

There are other fallacies which you probably believe, invest your money for 40 years in a company and you make money. Most companies die within 20 years. You have to pay attention or lose everything with the stock market. The majority of people aren't equipped to do this.

It is very much like lawyers, brokers always collect their fees. They make more money if they trade more. If you lose money, you are likely to trade more because of automatic stops in the market. It would be a huge cash cow for brokers if you were told that you could invest your money in government accounts. Rampant abuse would occur. Wherever government and business intersect is where the most corruption is likely to occur.

An awful lot of accepted financial advice is not advice but a way to make money for banks and brokers.

[reply]
1. 11/23/08
  
  csiunatc
  
  Now, before you get too snotty. Ask youself if i ever said to invest in ONE company for 40 years? OR if my point is what the article you posted says. That the market is indeed constantly showing a long term up trend.
  Even though you have an average down this year. You still have an average up over a longer timeframe. Taken over a 40 year investment cycle. You should be seeing well above what any CD can produce.
  
  Like the article you posted shows, the reason average investors don't follow trends is because they are not on the ball.
  
  We can agree on that most people aren't well educated enough to invest their own money. Where i differ though is that this is hardly anyone elses problem than their own. It isn't like a full education can't be had for 20 bucks in late-fees at your local library.
  
  I spend between 20 and 40 minutes a day managing my investments. On an average day, I only field about 60% of the available funds. Therefore a bad call won't wipe me out.
  
  If more people would turn off American Idol, and give themselves a chance to learn this, it would stop being a mystery. And that hour can make all the difference between the 4.5 and 12% that your article is discussing.
  
  And why shouldn't brokers make their share? They are providing the service. If someone indeed is dumb enough not to evaluate any "advise" based on the source, there isn't much anyone can do to help in any case.