Here is how it COULD BE DONE:
Ditch Social Security. Doing so would leave payroll tax payers over 15% of income formerly paid to the Black Hole of Social Security (half paid by employee and employer). Saving an additional 10% would be a breeze. The government would no longer have a pot of money to squander around the trough, We The People would be able to fund ourselves as we see fit. Are we really so incapable? Do you REALLY trust the government to be more responsible with OUR savings?
Were the Republicans so wrong to attempt to privatize Social Security? Just because the market took a dump? I don't think so. In fact, I think both sides were merely moving incrementally where towards their agenda. The Dems won (always easy to gain support for seizing other peoples assets) and Federal government spending as a percentage of GDP went from 3% less than 1 lifetime ago to 26% today.
The really crazy thing is that the "American Dream" which is not only owning a home, but educating 2 or 3 kids at top private schools and then having $1.5 million in financial assets (not including the home and hardware) left over at retirement is attainable only by the 1 in 10, or perhaps only 1 in 2o, (5% to 10%) families. Worse, even if you get there, there is no guarantee that you enjoyed the ride or didn't lose your health in the effort. Lastly, given our whopping divorce rate (what is it? over 50% of first marriages?) and its financial burdens this was NEVER, NEVER, NEVER going to happen.
That means that it was all a mirage... and that people have needlessly worried about something they had absolutely NO CONTROL OVER. The fact that a very small group of people from a very narrow window in time lived in a country that had room to grow, had no competition from the ROW (destroyed during WWII), and had an increasing population to pick up the tab for an absurd, ridiculous, fallacious, flaky, nutty, cretinous, and just plain nonsensical set of social program/ponzi scheme does NOT mean that those set of circumstances were sustainable.
Yet we bawl, wail, and moan over the loss of something that never really existed, or if it did exist it did so in such a narrow space of place and time as to make the memory and claim of it nothing more than fantasy.
16 comments:
How did Bureaucrat thru his ancestors get to be the very lucky, upper-middle class boy he is today? I'm sure some of you remember these tunes ..
Family came here, did the farm thing, one grandparent went to college, got bought out of his share of the business in 1982, invested it at JUST THE RIGHT TIME in dividend-paying stocks, both parents go to college, dad worked for oil industry, all 3 kids went to college, everyone terrified of debt, grandparents paid for college, little Bureaucrat was denied cable TV, a pool, a summer home, vacations in planes. Bureaucrat gets lucky and joins Fed Govt. in 1989 which has 2-3% increases in pay each year for last 21 years.
LOTS AND LOTS of luck.
But the major themes remain:
No debt (until recently), living cheaply (more or less), picking up every penny you see on the ground, driving an 18 year old Buick, no new clothes in 5 years, maxxing out the 401k, running on treadmill, walking (even in 90 degree Chicago heat), fruits and vegetables, etc. etc.
The world just doesn't seem to want to learn!!
Bur,
You're starting to scare me. You said something I agree with.
Average divorce rate for first time marriages ranges from 41 to 50%. It goes up dramatically to like 75% after 2 marriages. Overall divorce rate is back to around 50% more or less which seems odd accept there is a much larger percentage of never married couples these days.
In 1988 47% of all households (according tot he census) were single that has certainly gone up by a large amount since.
I have read claims that the actual real wealth of females is several times that of men yet finding hard facts seems elusive. One MRM site I frequent had a good article on it if I can ever find it again.
Again though I still wonder how much of what we currently call wealth is going to transfer out of the perpetual growth cheap energy era.
The American dream changed with the rise of oil, it will change with it's decline.
The majority of people don't have the knowledge, education, intelligence, long-term view, whatever to save for their future/children/retirement. I has always been so.
But bear in mind that for a single person on basic wage working 50 hours a week is around $300. After taxes, bills and rent there is less than nothing left, and even worse if you have kids. 'Savings' or pensions don't even come into it.
You're right that Gov't schemes are Ponzi scams. My preference would be a lifetime personal bank account. You get it automtically as a child for deposits only (Xmas, birthday gifts, etc) and you get stats and graphs and visual representations which show how much you have to live on, to invest in kids, pay taxes, pay bills, and how much you have or need to retire. A proportion of your income automatically goes into it, but you (or anyone else) can contribute more as you wish.
After age 20 you can borrow against a portion of it under regulated conditions for education or investment in your own business. Otherwise its sacrosanct.
This is information some few people have the capability to work out for themselves. For the rest it would provide a window into one's personal financial reality which would do more to educate individual behaviour than political policy, taxes or grandstanding.
Hello Donal:
You are as sensible as ever, but with a European perspective.
Take most of Asia. With a couple of exceptions most of Asia does not have the equivalent of Social Security - and they have the most prodigious savings rates on the planet. Coincidence? I really don't think so. I do not think Westerners are congenitally financially inept in comparison... they would figure it out.
Our system screws the VAST majority of people to prevent ruin for the few. I reject this as one more silly attempt to make life fair.
Life is NOT fair, and we cannot legislate this fact away. LUCK, is more than half of Life - far more - in my humble opinion. Some are lucky enough to be born into a wealthy family, some are born good looking, some are born to be depressed and unhappy irrespective of the best of everything... GO FIGURE.
Europe had an interesting social experiment, but it is unraveling even now. I am disinclined to follow it. Unfortunately, nobody asked me!
I'm a great believer in luck and I find the harder I work, the more I have of it.
~Thomas Jefferson
We did not become the preeminent nation on earth by luck. We worked hard, saved, applied the assembly line to every industry, on time delivery in manufacturing, invested, found and used amazing amounts of oil, low taxes, small government, created and what we did not create we improved. We have chosen to reverse or suspend every single thing mentioned above and as such should only conclude that it was going to reverse itself. We will fail because as in the course of human events all things are cyclical.
"The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage."
~Unknown
Greg; re "I do not think Westerners are congenitally financially inept in comparison...
Are you talking about The Masses?
Or about politicians??
Or about Bankers???
Hang on, that doesn't leave many other people.... ;-)
If you think employers are going to pass that 15% (or even their 7.5 % share) along to their employees, then I have a bridge that I know you'd be interested in.
BTW, have you ever owned a Treasury Bond? Does it keep you up at night, worrying about the government handling your savings?
Well, I would pass the 7.5% on to this employee--since if you have your own business you don't have an "employer" to pay the other portion of S.S.
Talking here about social security alternatives is really just trying to grasp the wind, its just an intellectual exercise (a futile one).
Social security will just go insolvent that will be the end game for it, or they will use actuary tables to make people basically statistically dead before receiving it. Medicare/M-Aid is still the big issue, far bigger than S.S. in the near term.
I have no plans to receive any social security in what 30yrs++. I don't think this current incarnation of civilization will exist beyond 20 years anyway, it will be something very different--what that might be, only time will tell.
-Meiyo
Meiyo,
Right there with you. There is nothing in it for me (I am 29). It will be a earth shattering moment when it fails, but it was never going to last anyways. My one fear is that the old will come together and force through another major increase in the social security tax. Take it to 16-20% to try to save it, bankrupting their children and grand children who are already heading into a much more dangerous and scary world than these retirees lived in. BY the way your post on the previous article were really good and articulated a lot of my own thoughts.
Gentlemen, even at the WORST end of the possibilities, Social Security will continue to pay out at least 75% of your promised benefits, though changes to the program are long overdue (I"m not sure how we will be doing as a country with 75 year olds having to stay in the workforce, but anyway ...)
Don't let your gloom-and-dooom take over your good sense. The world isn't going to end anytime soon. Sorry. :)
Bur:
Your analysis is taken from someone that cannot count very well.
And Meiyo is correct - Medicare dwarfs SS... when I say SS I really do mean all of the federal retirement social programs.
A note on government Ponzi schemes and population growth. There is a vast difference in available funding for Social Security associated with a seeming small range of growth rates in population. Consider that if the population grows at 3% per year, it will double every 23 or so years. That means that every 70 year old retiree has two 46 year olds and four 23 year olds to support him. If all are to have an equal share, each of the seven would get 1/7th of the earnings of the working six. Social Security tax would be 14%. Of course attrition improves the situation for the survivors, but this is just for example.
If there is zero population growth, each 70 year old retiree has one 46 year old and one 23 year old to support him. In this case, each would get 2/3rds of the earnings of the working two and SS tax would be 33%.
If population declines by 3% per year, four seventy year old retirees would have two 46 year olds and one 23 year old to support them. Each would get 1/7th of the combined earnings of the working three, and the SS tax would have to be 57%. This is what China has done with their one baby rule.
The implications of exponential math are astounding and ignored and misunderstood.
Regards,
Coal Guy
Agreed Coal guy, everyone should watch that Dr. Bartlett video on exponential growth--I think its still on youtube?
The doubling rule sounds nice if its your bank account, but not so nice if it involves resource scarcity/consumption rates on a finite world.
-Meiyo
I already have my tin hat on bur,
Cost overruns of original CBO projections
Medicaid 917%
Medicare hospital 744%
Medicare hospital subsidy 1700%
Medicare homecare250%
Schip 126%
Medicare rx 86%
Just remember that OBama Care will save money. HEHEHEHAHAHAA
As for SS
Social security might go negative this yr slightly. 29 billion this yr and unless hiring picks up every yr gets worse because of babyboomer retirments. We are now facing this problem. No more pushing it out 10, 20 or 40 yrs. We are going to go from something like 52 million receiving it to almost 80 million. Good luck with that. It is okay though because the trust has 2.8 trillion in bonds from the government hahahahaha.
Some quick facts bur,
1. When today's college students reach retirement (about 2054), Social Security alone will require a 16.6 percent payroll tax, one-third greater than today's rate.
2. When Medicare Part A is included, the payroll tax burden will rise to 25.7 percent - more than one of every four dollars workers will earn that year.
3. If Medicare Part B (physician services) and Part D are included, the total Social Security/Medicare burden will climb to 37 percent of payroll by 2054 - one in three dollars of taxable payroll, and twice the size of today's payroll tax burden!
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