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dwot (99.54)

Social Insecurity

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January 07, 2009 – Comments (19)

I had this post linked on my last blog.

To me this shows the degree to which unsustainable beliefs are ingrained.  The author will eat these words:

It all comes down to this--if given the choice between having more "control" over my retirement funds, and being guaranteed a certain retirement income, I'll take the certainty any time. As the years go on, and as millions realize their 401k (if they have one) is inadequate to the task, this country is going to be in some pickle!

By the way, Social Security hiked benefits 5.8 percent this month as its cost-of-living adjustment. Did anyone out there see growth of 5.8 percent in their portfolio this year? Does anyone expect such growth this year?

There are no guarantees and the burden of the socialized retirement payments are not affordable or sustainable.  It has only worked so far because of the pyramid dynamic of the population and the relatively low level of government debt that once existed.  A lot of things have to give and choices are rapidly declining.

19 Comments – Post Your Own

#1) On January 07, 2009 at 10:21 AM, outoffocus (24.48) wrote:

I see both social security and medicare going by the wayside...

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#2) On January 07, 2009 at 10:44 AM, Option1307 (30.56) wrote:

Another person who feels entitled...Wow what a surprise.

Thanks for the link Dwot.

I think this article shows some of the fundamental problems us Americans have. Many people don't understand that we are massively in debt, they simply want "their share". Regardless of whether they worked and saved on their own or the cost to future generations. It's rather sad the lack of foresight people have about the topic.

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#3) On January 07, 2009 at 10:46 AM, guiron (21.32) wrote:

outtoffocus, Social Security in the US is well funded. Medicare might have some issues, however.

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#4) On January 07, 2009 at 10:50 AM, guiron (21.32) wrote:

dwot, I can't see the population allowing the social safety net to vanish in a time when the economy is collapsing. That's untenable from a political standpoint. The social safetly nets were put in place in a time quite like this one, not when we were overflowing with prosperity. And, contrary to popular belief, Social Security in the US is not in danger. Medicare and Medicaid are not as assured, however. But privatizing SS like Bush wanted to do would clearly have been a major disaster.

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#5) On January 07, 2009 at 10:57 AM, DaretothREdux (60.53) wrote:

guiron,

You're right. Letting me keep my money and allowing me to save on my own...that would be disasterous. Tell me this: if social security is so well funded then how come ever major expert says that in ten to twenty years anywhere from half to all the U.S. budget will have to go just to pay for social security? Or, are you assuming we can continue to keep it fully funded by printing the money?

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#6) On January 07, 2009 at 11:18 AM, chk999 (99.98) wrote:

Memo to self: Don't let Sam Friedman handle sharp objects. Bless his heart.

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#7) On January 07, 2009 at 11:19 AM, guiron (21.32) wrote:

You're right. Letting me keep my money and allowing me to save on my own...that would be disasterous.

That's not what I said. I said privatizing social security would have been disastrous, which is not meant to be an investment as much as it is social insurance. Of course the money can't simply sit in a vault, but it's not invested in the stock market.

As far as the budget, the only thing that matters right now is keeping the economy from collapsing entirely. The worst thing the government could do is too little. People love to quote Roubini here, because he was right where so many others were wrong, but they hardly mention that he is prescribing the same thing. Pulling the safety net won't help and could be the devastating blow. It sounds like a cliche, but deficits don't matter, nor does ideology right now.

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#8) On January 07, 2009 at 11:35 AM, FleaBagger (31.23) wrote:

deficits don't matter

So there's no downside to borrowing (printing) trillions of dollars to fund all of the goodies Obama promised us? I wonder why no one noticed that before. We'll all be rich by 2010!

By the way, I was thinking about posting more or less the exact thing Option1307 said, but I didn't get around to it. It's nice to know someone else is pro-responsibility.

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#9) On January 07, 2009 at 12:16 PM, unvrsldeflation (73.60) wrote:

I think the only way privatization of Social Security can work is if people are allowed to privately invest over the amount that is being taken in taxes for the current system as they choose. They should be able to set that money aside pre-tax. That way they would personally have the current system's payments as a base and whatever they can make for themselves on top of that. That and structural rules that prevent a huge transfer of wealth to the ex-investment bankers by way of fees and fine print penalties might make it possible for the people as a whole to participate and get some kind of reasonably expected return..

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#10) On January 07, 2009 at 1:12 PM, guiron (21.32) wrote:

So there's no downside to borrowing (printing) trillions of dollars to fund all of the goodies Obama promised us? I wonder why no one noticed that before. We'll all be rich by 2010!

Of course there is a downside. The problem is that the larger downside is not doing enough to stave off a depression. Deficits don't matter as much as the collapse of the economy. This is emergency policy, not ideological policy. It's not about supply side vs. demand side. Also, a hell of a lot of money has evaporated in the last few months to a year. We're not overinflating. The trick with injecting money to increase liquidity is to know when to stop. We're not even close to that point yet.

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#11) On January 07, 2009 at 3:08 PM, Harold71 (27.86) wrote:

I don't want to privatize Social Security.  I don't want it, at all.  I see it as the one major tether to a nanny government.  Feed me, change me, support my economy!  What has America become?  We used to be a nation of free and independent people, and we were damn good at it. 

The USA did not become a great nation by relying on government, running gigantic deficits, or by inflating the money supply -- so what makes us think that these are the solutions to our problems today?  All of these factors are, in fact, some of the main reasons that we are in this "crisis."

I'm an adult.  And I'm quite capable of managing my own financial affairs.  Perhaps many others would become capable if nanny didn't shove her way to the front and offer you no choice before giving her "assistance."  I don't need a babysitter -- the government's ridiculously flawed programs can go away now.  The "entitlement mentality" is what really needs to be replaced.

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#12) On January 07, 2009 at 3:09 PM, imothep (< 20) wrote:

Judging from your stellar CAPS performance, you have nothing to worry about, regarding your pension. Not being an American, I don't know whether it is possible to accumulate such wealth by being short in your 401K account. (That is obviously where you have earned the majority of your CAPS points)

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#13) On January 07, 2009 at 4:45 PM, MikeMark (30.48) wrote:

Interestingly, true social security isn't created by "spreading the wealth". It's created by protecting the people and their ownership of private property. In a truly protective system there is really no need for a government program to provide retirement benefits. The savings of the people wouldn't be appropriated for misuse.

Currently, governments around the world are executing a hidden tax on all citizens, especially the middle and lower classes, by printing money and giving it to those with special first access to the money supply. This will actually have the effect of prolonging the current economic problems due to effectively reduced funds available to those with the greatest need.

A properly protective system would instead call that an unlawful act. Thereby protecting the people with the most to loose.

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#14) On January 07, 2009 at 4:46 PM, Entrepreneur58 (53.80) wrote:

If people can't afford to retire, doesn't that mean they will have to keep working?  And if they keep working, doen't that mean they will have to keep paying taxes into the system?  The Social Security system seems to be self-sustaining in this way.

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#15) On January 07, 2009 at 5:16 PM, eldemonio (98.72) wrote:

Harold - I agree with where you are coming from.  But, I think one thing has not been mentioned that would explain why people feel "entitled." 

When you put money in the bank, do you feel entitled to be able to withdraw that money?  After putting tens of thousands of dollars into Social Secuity, why am I not entitled to get my money back?  I don't want to government to support me, but I want my money back.

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#16) On January 07, 2009 at 6:24 PM, Option1307 (30.56) wrote:

eldemonio

After putting tens of thousands of dollars into Social Secuity, why am I not entitled to get my money back?

I'm betting that the for the amjority of Americans, they are demanding more than they actually put into the social security account. You have a valid point in terms of a bank account, but I really don't believe people only want the amount they put in, they want more. Much more.

And that is the "entitlement" problem. Feeling as you deserve something more than you worked for, or more than you originally contributed, or even the feeling that you are owed anything in general. No one owes you anything...

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#17) On January 07, 2009 at 7:21 PM, usmilitiadude (33.45) wrote:

Social Security is not needed. Why can't people save for their own retirement and buy their own disability and life insurance? It is during the economic times we are in that laws are made that take away our freedoms. Stealing is against the law, unless the government makes it legal. Where in the Constitution are these powers given to take from people, to give to others? Government should not be charity, because the people administering it don't have the same passion as someone in a private sector charity.

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#18) On January 07, 2009 at 11:55 PM, dwot (99.54) wrote:

Wow, seems I touched another hot spot...

Option1307, I agree whole heartedly.

guiron, I don't know the history of the US social safety net, but when I was researching Canada's I discovered that once upon a time there was a means test and it was not applied universally.  I can't see policy of the ages being that grossly divergent that the US had a social safety net as generous as the one today, nor are the demographics the same.  The aging population is massive by comparison.

Harold71, in June of 07 I visited the Hoover Dam and the history of the project is remarkable.  You mention a great nation, and I think the Hoover Dam represents what the nation was, the men worked so hard and competed to get the most done.  The project was completed quite early and way under budget.  Seems to me a public works job today is an excercise in milking the system for as much as one can get at all levels.  It seems very broken today...

imothep, as a Canadian I don't invest in US stocks, I just play caps.  And I am not vested at this time.  I went almost 100% underperform on my picks when I left the market about 14-15 months ago and I have repeatedly stood behind my reasons for going entirely underperform.  I couldn't see the market sustaining itself and found it to be grossly over valued.  I was late to investing for myself.  I am in term deposits and Canada Savings Bonds at this time.

eldemonio, the problem with social security is that people seem to be getting much, much, much more back then they ever paid into it.  I completely agree that people should get their money back.  If the program is adjusted to be in line with what people have paid into it the problem is solved. 

Option1307, well said. 

 

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#19) On January 08, 2009 at 12:33 PM, eldemonio (98.72) wrote:

Option -

You may be right about other peoples' entitlement.  Although I agree with you in principle, don't you feel that our government owes us an explanation of where our money is going?  

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