1/26 Riddle me this: Congress jumpstarted SS, and then contributors got
out what they put in, plus interest. How does this turn into "our
grandparents are robbing us"?
\_ It is because the payout is based on wage increase and not on
inflation. So someone retired today that is collecting SS is
getting paid based on todays wages. The other way to do it is
to base it on inflation. That is bad though because you are
then expecting retires today to live off of 1940 wages. An
example is that the average SS receipent today gets about
1200/month. If SS was based on inflation the payout would be
around 300/month. That is not enough...
\_ I think the argument is, the SS system is a progressive one, and
we can't opt out. Old folks are currently the ones getting SS
money. Therefore, old folks are robbing us.
Kind of lame logic, but that's what some sodans think.
\_ No, the logic is that the old folks are taking out more than what
they put in plus interest. Therefore we're just keeping them
afloat, with really nothing set aside for ourselves. So, in
essence, by the time we're old, there'll be nothing left.
\_ How does this jibe with the notion that if there weren't
a baby boom hump, social security would be fine?
\_ jibe, maybe?
\_ oops, learn something every day!
\_ corrupted into a giant ponzi scheme
\_ ... how does this jibe with the notion that if there weren't
a baby boom hump, social security would be fine?
\_ look, it's a combination of things, like baby boom and the
increase of medical technology that allowed the boomers to
live 10-15 years longer than expected. Personally I don't
see the point of extending lives of 70-80 yr old people
so that they can live another 10 miserable years, but then
I digress
\_ The actuaries who helped devise SS prepared for extended
lifespans. They actually predicted the increase would be
larger than it has been. The ass-talkers are out in force.
\_ Did they account for a baby boom bump?
\_ No, but there have been adjustments in the last few
decades to work on it, and the most conservative
estimates put the date of needing to reduce benefits
at 2042.
\_ 2042 is the year the SSA estimates that the
cumulative surplus (after the IOUs/bonds are
redeemed) will be drawn to zero, while
simultaneously needing to pay more to old folks
than we take in social security taxes.
This is assuming nothing is done.
\_ And the CBO estimates that will not happen\
until 2052. Even at that point, SS will be
able to meet 75% of its payments on its own.
The worst thing that could happen would be
that benefits would be cut by 1/4.
\_ So, SS wasn't devised as a ponzi scheme when it was
created, but the system has a solvency problem with the
unexpected baby-boom generation and increased longevity?
\_ The point in extending lives may become clearer once you
reach 70-80, as in, Q: "who would want to live to be 80"
A: "someone who is 79" |