Comments on: Can You Count on Social Security?

By: Joe The Economist

Joe The Economist — Thu, 01 Jan 1970 00:00:00 +0000

Greg, The history of Social Security shows that the problem wasn’t Ida Fuller. The problem has been Congress. The original law called for 6% payroll taxes. It started the tax at 2%, and would increase every three years to the 6% level. By 1944, Congress was repeatedly told that 6% would not be sufficient, and yet Congress waived all of the increases. Then Congress passed substantial increases in benefits in 1952, 1956, and 1958. Social Security was used as a re-election fund. Benefits were increased again in 1961, 1962, and 1965. Yet payroll taxes were not increased to 7% until the mid 60s.

The problem isn’t Ida Mae. The problem is that we had 40 years of Ida Fullers. Today the unfunded obligation of Social Security is 17.9 Trillion according to the Social Security Administration. No year – not one in more than 70 – has Social Security maintained an actuarily sound intake of cash vs outgo.

By: Joe The Economist

Joe The Economist — Thu, 01 Jan 1970 00:00:00 +0000

@Philip Taylor

The problem is the word “full benefit”. To receive a “full benefit”, you would have to be born in 1960 or before assuming that life expectancy is 76 because those born in 1961 will live long enough to have benefits cut. Say life expectancy is 77, you would have to be born in 1959 or before to get your full benefits. That assumes that 2036 is a good number.

It is an important calcuation because 2010 was the first year in which a majority of Americans can expect to get substantially less from the system than has been promised. 2012 it will be a majority of registered voters. 2014 it will be a majority of registered/active voters. This is why you see politicians emerging willing to call the system a “ponzi scheme” instead of the “3rd rail.”

By: Philip Taylor

Philip Taylor — Thu, 01 Jan 1970 00:00:00 +0000

@Joe The Economist I didn’t make any calculations, Joe. I just presented Government data from the 2009 report. I would agree that most projections are based on some assumptions. No one can predict the future.

By: Joe The Economist

Joe The Economist — Thu, 01 Jan 1970 00:00:00 +0000

Phil, I think your calcuation is off. You will only receive your full benefit up to 2036 (2011 report). If you are 42 you will retire the year that the system hits zero. If life expectancy is 76 (and it is higher for people who live to 50), you need to be 51 this year to ‘expect’ to get full benefits. “If you go by the 2009 report, it looks like if you are retiring in less than 27 years (age 40 or older) you will receive your full benefit. Of course, I can’t imagine the 2010 report being better than 2009, so we’ll have to see if that holds up.” All of this is based on some very generous economic assumptions.

By: Joseph

Joseph — Thu, 01 Jan 1970 00:00:00 +0000

SS was not intened to be a total retirement income. It was designed ti supplement your retirement income. I would suggest that the amount one is to recieve to be in perportion to what was put in for the 10 year period. After 10 years it should be prorated done to a standard minumum. I do not exspect to drawn SS and it would effect my retirement plans. There has been a lot of people that have never married and died that payed in to SS and a lot of marryed people that have paid into SSS that have died and have not drawn SS. It would not hurt my feelings if they did awhile with the program all together and put the responsability back on the people to provide for themselves.

By: 10 Ways to Screw Up Your Retirement

10 Ways to Screw Up Your Retirement — Thu, 01 Jan 1970 00:00:00 +0000

[...] Social security should be see as icing on the cake for most of us. At best, you should only count on social security helping you with about 30% of your retirement income [...]

By: Carnival of Financial Planning – Edition #152 – July 30, 2010

Carnival of Financial Planning – Edition #152 – July 30, 2010 — Thu, 01 Jan 1970 00:00:00 +0000

[...] presents Can You Count on Social Security? posted at Prime Time Money, saying, “Can you count on the government’s social security [...]

By: PT

PT — Thu, 01 Jan 1970 00:00:00 +0000

I looked into that study I referenced a bit more and it seemed to suggest that the change to ss that people would be most likely to accept is an increase in the cap on taxable earnings. Most people were strongly against the age move. And as we age into our late 40s and 50s I think we’ll have similar feelings.

By: Kimberly

Kimberly — Thu, 01 Jan 1970 00:00:00 +0000

I don’t see myself benefiting from Social Security either. I figure by the time my parents’ generation (baby boomers) is through with it, there won’t be a whole lot left. I think you’re right to play it conservatively and not count on it at all as part of retirement. Even if you were guaranteed to receive $1,100, if it already puts people below the poverty line, imagine what it will be worth in 43 years (when I will be 67). And anyway, by that time the normal retirement age for full Social Security benefits will probably be in the 80s!

By: Kris

Kris — Thu, 01 Jan 1970 00:00:00 +0000

I’m certainly not counting on SS, but I hope to get some return from the money I’ve put into the system for the last 20+ years. I’d much prefer to have all the money back and invest it myself, but since that’s not possible, we’ll just have to wait and see. I wonder how long people have really been wondering about the future of SS?