🚀 go-pugleaf

In ca.general Robert Sturgeon <rsturge@inreach.com> wrote:
> On Sun, 26 Jun 2005 21:07:17 +0000 (UTC), Merlin Dorfman
> <dorfman@green.rahul.net> wrote:

...

>>> Btw...being allowed to put 3-4% of your social security funds in a
>>> private account is hardly "destroying the system"
>>
>>    It's not 3-4% of "your" Social Security funds, it's 1/3.  You
>>see, Social Security is about 12% of "your" funds (6% from you and
>>6% from your employer, unless you happen to be self-employed, in
>>which case you have the honor to put the entire 12% in yourself.).
>>    So 3% of "your" funds would be 1/4 of Social Security, and 4%
>>would be 1/3 of Social Security.
>>    But that's really beside the point.  The point is that the
>>purpose of Social Security is to provide a minumum guaranteed
>>income to everybody, regardless of the state of the economy, or the
>>state of the stock or bond market, or the quality of investment
>>choices made by the individual.  Social Security should do just 
>>that--take the minimum in taxes necessary to provide that absolute
>>floor of retirement income.  Individuals should have the complete
>>responsibility for providing for themselves above and beyond that.
>>The government should help, with tax deferral for IRAs, 401k's,
>>etc., but that's all.

> That's a very cogent argument.  But here's the problem - SS
> is not actuarially sound.  It could be made so, but only
> through changes (like lowering the benefits, increasing the
> retirement age, etc.) that SS's biggest supporters oppose.
> Private SS accounts would be actuarially sound, for obvious
> reasons, but SS's biggest supporters oppose them, too.

     SS is actuarially sounder than Medicare, which is where we
should really be focusing our attention (instead of on things
like constitutional amendments prohibiting flag-burning).  But
another thing that hasn't been said often enough or loud enough
is that private acocunts do NOTHING to improve the financial
situation of Social Security, in fact they make it worse by a
trillion or two in transition costs.
     The "biggest supporters" of SS have made it clear that they
understand the need for reform--lowering benefits, increasing
intake, etc.--and that as soon as Bush takes private accounts off
the table, serious negotiations can begin on the serious problems
that need to be addressed.  No response so far from the White
House.

> Anyone who still has time had better have a strategy for
> later life beyond SS.  You'd best consider SS like a
> waitress considers her hourly pay - nice, but you can't
> actually live on it.  Of course, it wasn't originally meant
> to be something to live on - it was meant to be a buffer to
> the problems of old age - not the solution.  In the past,
> old people typically "retired" to live with younger family
> members.  The old poor brought nothing with them.  SS
> changed that and allowed all the old to bring something with
> them.  Now some of us expect SS, by itself, to provide the
> old with an independent living.  It wasn't meant to do that;
> it never has; and it probably never will.  To do so would
> place a very heavy burden on the working young - probably
> more than would be politically supportable.

     Anybody who expects SS to provide more than a subsistence
income is in for a shock.  Which is why private accounts are
a bad idea--most people will increase their SS check, but some
will lose, and if the economy or the stock or bond market go
south, many will lose, and will not have that subsistence
income.  People should use 401Ks, IRAs, ordinary savings, etc.,
to give them more than subsistence.