MORE ON MSN MONEY
VIDEO ON MSN MONEY
There you go- a system that is full of virtual air. The article explains very well how the system works (or doesn't).
Collect, spend and be happy.
Until it runs out. Check the magic year of 2018.
Then something will have to be done.
Are you sure you paid in and didn't take out for disability or something? Wow!
Who is spoon feeding you lies about the republicans shooting down cost of living adjustments for social security. Social security COLA is pegged to the consumer price index which measures inflation. No political party has anything to do with giving more or less. Due to the CPI showing no inflation and actually negative for a while you received no increases. Before the recession you had received very large increases because of the CPI, so really you are lucky that your payments don't go down along with the CPI and can only go up.
By the way, the people who complain that SS receipients get more than they paid in, are full of you know what. These bonds issued by the government to cover social security pay interest. If you continually put money in a savings account at a bank for 50 years do you expect to only get back what you put in. Hell no, you get what you paid in plus compound interest over your lifetime.
200 dollars a month payed into social security over 50 years amounts to only 120,000. However, with 4 percent interest compounded monthly you end up with 391,200. That's the way it works since the SS bonds from the government pay interest.
The idea that we can draw down the principal without killing the system is ridiculous, it can survive if it only pays out it's interest every year or less. That seems to be ignored, this is a controlled crash. Why are we are concerned about futile remedies when it is unsustainable indefinitely? The only real focus is on who will be forced to pay more or receive less, with the insane assumption that some generation within this century will get shafted altogether. That type of landfill thinking is quite vexing. I refuse to start with that assumption, regardless of the impact on me. If this was water, what would we do? Set the date to run out altogether?
Finally someone who will tell the truth about social security. It is a great program. It is not broke and will be around when the young retire and everyone will be glad it's there. It is not a Ponzi scheme since all are required to pay into it thus it can't have the "chain broken" unless it's privatized as some would do. (hint: Republicans). It only requires a minor tweek which would hurt no one and it will pay full benefits til the sun quits shining. It's time the public told the politicians to quit talking about it when it comes to deficit reduction.
Finally, without the 2.6 Trillion dollars in overpayments by social security participants the Federal Government would be 2.6 Trillilon more dollars in debt.
Here's a reasonably easy fix. First let's reset the system to what it was supposed to be... an insurance policy. So let's try a means test. Say if on your retirement date, you have accumulated X amount in assets, this can be adjusted. But let's say 1 million to start. You get no SS benefits. You WILL however get your premiums back. Payed to you over 20 years. That way you at least get back what you "Paid In". Now maybe you only got 1/2 a million. YOu might get a prorated amount of SS, possibly a 1/3 or 1/2 of what the normal benefit would be, or your premium back whichever is greater. The SS system was supposed to be a last ditch fallback for those whose lives didn't quite workout as planned. Maybe an illness, death of spouse, what have you. Most people treat it like their 401K plan. Treat it like an insurance policy that you hope you never have to collect on. Now many will find holes to shoot in this plan. It is not perfect, it is a starting point that lowers the lifetime payouts to those who are more than financially well off. This would extend the life of the fund and yet allow those who did well to at least get their premiums back instead of saying you make too much you get none even though you paid in. If we all think about it for awhile, It could work.. Not only that but 10 15 years down the road, this system might actually allow the total taken out per person to be lowered as the draw down on the account would be lowered.
It's just an idea.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.