Opting out of Social Security

[Explodicle]

Do the math on that; 30 years life with no need to work in return for 3 extra years work.  Isn't that a good deal?

Whether or not it's a good deal depends entirely on
A) if you actually want to stop working
B) if there are even better investments available

If it is such a good deal, then it could be made optional and only a few fools would suffer, right?


And please forgive this science fiction tangent, but what if human life expectancy goes up a lot more due to a medical breakthrough? What if it becomes possible for the rich to live indefinitely? What if population growth worldwide plummets? What if a new financial system significantly limits which taxes are feasible? Who should foot the bill for these risks - the taxpayer or the investor?

Because I don't trust a bunch of bloodthirsty short-sighted voters to make the best choices on my behalf. The next 30 years might get pretty damn confusing.

[Hawker]

...snip...

About 11,683 people are born each day in the US and 6,815 daily deaths.

Nope, can't continue offer Social Security as it is.

The problem with your logic is that it assumes that no-one noticed the baby boom and that no provision has been made for it.  In fact, Ronald Reagan reformed social security in the 1980s and the baby boomers are provided for.  Social security will have it worst year around 2037 and its outgoings will fall from then on as the boomer bulge dies off.  

If nothing is done to fix it, it will pay out 75% of due benefits from 2037. But if you add 3 years to the retirement age, there is never a problem.

The puzzle to me is that social security looks like a good deal.  If you didn't have it, you would have to buy a private pension plan which has higher admin costs and payout is not guaranteed.  Why would you even consider anything other than taking the extra 3 years work?

[JusticeForYou]

...snip...

About 11,683 people are born each day in the US and 6,815 daily deaths.

Nope, can't continue offer Social Security as it is.

The problem with your logic is that it assumes that no-one noticed the baby boom and that no provision has been made for it.  In fact, Ronald Reagan reformed social security in the 1980s and the baby boomers are provided for.  Social security will have it worst year around 2037 and its outgoings will fall from then on as the boomer bulge dies off.  

If nothing is done to fix it, it will pay out 75% of due benefits from 2037. But if you add 3 years to the retirement age, there is never a problem.

The puzzle to me is that social security looks like a good deal.  If you didn't have it, you would have to buy a private pension plan which has higher admin costs and payout is not guaranteed.  Why would you even consider anything other than taking the extra 3 years work?

No, it was kind of hard to miss the Baby Boom. It's nice that Regan made provisions for it. (lol)  

Do you think the government just puts it into an account and keeps it for you? They borrow against it all the time and don't repay. But lets suppose they did pay even a modicum of interest on their borrowings. Unless they can at least keep its value on par with inflation, there is a problem.

Entitlement spending has become the Gorilla in the room. It is eating up more and more of our money. No problem just print more says the Keynsian. (I actually expect this, thanks cause I have made provisions for that).

So what is the easiest way to keep social security, it will be pay everyone with 'Zimbabwe' dollars at the cost of increased inflation. It's a trick, you think your getting your benefits but because the cost of everything increased they have actually decreased your benefits. The 'sheep' will never notice.

Everybody knows what Social Security is, but since it is the government doing it, it must be ok and it'll work.

I am from the government and I am here to help.

Tell ya what, why don't you try setting up the same system but with private funds from private people. You'll get arrested.

Social Security will go down as one of the greatest schemes ever perpetrated on the public. They will re-write history books about it.

My logic may just be flawed though. I do expect the government to NOT admit its failure and to 'make provisions' (lol) for it. Those 'provisions' will make people a lot of money because they are so predictable.

[Hawker]

...snip...

About 11,683 people are born each day in the US and 6,815 daily deaths.

Nope, can't continue offer Social Security as it is.

The problem with your logic is that it assumes that no-one noticed the baby boom and that no provision has been made for it.  In fact, Ronald Reagan reformed social security in the 1980s and the baby boomers are provided for.  Social security will have it worst year around 2037 and its outgoings will fall from then on as the boomer bulge dies off.  

If nothing is done to fix it, it will pay out 75% of due benefits from 2037. But if you add 3 years to the retirement age, there is never a problem.

The puzzle to me is that social security looks like a good deal.  If you didn't have it, you would have to buy a private pension plan which has higher admin costs and payout is not guaranteed.  Why would you even consider anything other than taking the extra 3 years work?

No, it was kind of hard to miss the Baby Boom. It's nice that Regan made provisions for it. (lol)  

Do you think the government just puts it into an account and keeps it for you? They borrow against it all the time and don't repay. But lets suppose they did pay even a modicum of interest on their borrowings. Unless they can at least keep its value on par with inflation, there is a problem.

Entitlement spending has become the Gorilla in the room. It is eating up more and more of our money. No problem just print more says the Keynsian. (I actually expect this, thanks cause I have made provisions for that).

So what is the easiest way to keep social security, it will be pay everyone with 'Zimbabwe' dollars at the cost of increased inflation. It's a trick, you think your getting your benefits but because the cost of everything increased they have actually decreased your benefits. The 'sheep' will never notice.

Everybody knows what Social Security is, but since it is the government doing it, it must be ok and it'll work.

I am from the government and I am here to help.

Tell ya what, why don't you try setting up the same system but with private funds from private people. You'll get arrested.

Social Security will go down as one of the greatest schemes ever perpetrated on the public. They will re-write history books about it.

My logic may just be flawed though. I do expect the government to NOT admit its failure and to 'make provisions' (lol) for it. Those 'provisions' will make people a lot of money because they are so predictable.

Your logic isn't flawed.  Your problem is that you are ignoring the facts and ranting. The fund will be fine if 3 years are added to the retirement age and your response is "Social Security will go down as one of the greatest schemes ever perpetrated on the public."  From what I see, social security has worked as intended for 80 or so years.  It will carry on doing so for another 20 or so.  Thats a century of success.   Add the 3 years to the retirement age and it works as intended forever.  

So you have a system that is cheap to run and that works as intended.  What exactly is your problem?  Is it the 3 years added to retirement age?

[JusticeForYou]

I have many problems with it.

You say the fix is just add 3 years. Hmm.. Lets look at that. It was 60, 62, 65, 67, and now lets just add another 3 to get to 70. Ok, I will concede the fact raising the age helps extend its use. So lets just raise it until have the people die before they will be eligible to receive any of it. Why stop at 70, go for 100 and give caveats to the program. If you make it here, your first check includes an all expenses paid trip around the world.

Yes of course raising the age helps the program. But be careful of what you wish for because you might just get it and its consequences. 

I say to not raise the age but lower it BUT take people off of the program that does not need it. People still think the money they paid into it was for them. It wasn't. It's not 'their' money that 'they' get back.

SS is not a retirement system. It's a safety net. The fall should still hurt when you hit the net though. You have millionaires collecting social security.

The government shouldn't have to fix it if they were doing their jobs. They should have prevented people from ever needing it, but that takes some power and control away from the government. They don't like to do that. They could've have easily just applied that tax and provisioned it as the contributors 'own' money and invested it for them. Even people at minimum wage that contributed for 50+ years would've had a nice chunk of change for retirement. But NO, they want control of the money and how and where it is to be spent.

In general, I am not for government programs that go into ∞ and effect generations that didn't even get a say in its original passing.

If the government felt it was necessary at the time, sure go ahead and pass it but within a generational timeframe so that it needs to be renewed in order for the program to continue. e.g. Congress must renew the program every 30 years or so. That way the next generation can't be burdened with the previous generations mistakes with out them voting on it.

[Hawker]

BTC_Bear - teh baby boom "bulge" is the cause of the present issue.  Its not likely to happen again as modern contraception means that educated people are less likely to have kids.  So the 3 years is a one off fix to a one off problem.

I agree its strange that rich and poor all get the same benefit. In fact, if you means test the social security benefit, then there will never be a need to to add the 3 years provided you find a cost effective way of means testing.

I also understand your multi-generational point.  But you guys have elections every 2 years and no politician who even hints at changing social security seems to get anywhere.  That suggests the system as it stands is very popular and that its popularity is reinforced every 2 years.

[Explodicle]

The problem with using means testing to deny benefits to rich people is that it could create perverse incentives on the margin. It's similar to how some people are better off staying on welfare/unemployment because getting a job would reduce their total income. Old people who are REALLY good at something might decide to stop very early if they value a dependable safety net.

IMHO we should replace all this red tape with an equal basic income for all citizens, all ages. Since it doesn't punish anyone for getting a job, the resulting drop in employment isn't as big as you might guess. If this basic income isn't enough for everyone, the government could fund a public health insurance option.

[JusticeForYou]

BTC_Bear - teh baby boom "bulge" is the cause of the present issue.  Its not likely to happen again as modern contraception means that educated people are less likely to have kids.  So the 3 years is a one off fix to a one off problem.

I agree its strange that rich and poor all get the same benefit. In fact, if you means test the social security benefit, then there will never be a need to to add the 3 years provided you find a cost effective way of means testing.

I also understand your multi-generational point.  But you guys have elections every 2 years and no politician who even hints at changing social security seems to get anywhere.  That suggests the system as it stands is very popular and that its popularity is reinforced every 2 years.

Yes, the elections are an issue. The problem with a Democracy is people don't act until it's to late unless there is a 'leader' that gives people what they need rather than what they want. The Republic did well for awhile, the Democracy is not doing so well. True Democracies are a disaster. We are at the part of Rome where its leaders give the mob what they want to prevent them from revolting. As Rome found out, that wasn't the best thing to do. Actually the comparisons are scary. Power was consolidated in Caesar because the Senate didn't want to shoulder the blame. Caesar took that power and ran amuck, making the Senate just a token without any real power.
Congress willingly gives up its power to the Executive branch for political reasons.

I have hope however, we have a Judicial Branch that should come to its senses but if that fails, the U.S. isn't really a Country but an agreement of States to act as a country. So as things go wrong, the power will fall back to individual states. Those states that get it right will prevail and those that get it wrong will fail and copy those that get it right. The U.S. is centralized decentralization. California is learning that its ways are running them into the ground and there is no money form the FED to help them.

[stochastic]

Yeah nice stop paying so when something bad happens to you you will be fucked. Or maybe you will do like that father who went in a hospital with a pistol to have help for his son who required medical assistance (but since they were poor and could not pay the insurance, no help for you, you poor, you die)

/facepalm

Get disability and life insurance.  Save for your retirement.  Problem solved and no need for the Social Security Program.

[stochastic]

...If retirement age is raised to 68 from 65, the system will pay 100% of expected benefits forever.

Do the math on that; 30 years life with no need to work in return for 3 extra years work.  Isn't that a good deal?

For those born after 1959 the "normal retirement age" is 67 years old.  It probably should be raised to 70.

People can start collecting at 62 but their benefit would be reduced.

The problem with SS, is that when it first started it did a good job to help older people get out of poverty.  As living expenses and people's expectations of what makes normal living has increased, the social security benefit becomes paltry.  The average social security benefit in 2012 is $1,230.

66% of Americans do not save enough for retirement.  This means that 25% reduction in the expected social security benefit will be very bad for the future elderly.

So what can we do?  I agree that getting rid of the Social Security program would just have people take their extra money and spend it on more things they don't need.  They won't buy disability insurance, they won't buy long term care insurance for their parents, and they won't save for retirement.

Often, people are told to do more for other people, but I say first people need to take responsibility for themselves.  If people went to a financial advisor and they did not have life or disability insurance, then most financial advisors would require their clients buy this insurance.  If the client refused, then the financial advisor would refuse to serve the client.  Our government could do the same thing.

[Hawker]

Yeah nice stop paying so when something bad happens to you you will be fucked. Or maybe you will do like that father who went in a hospital with a pistol to have help for his son who required medical assistance (but since they were poor and could not pay the insurance, no help for you, you poor, you die)

/facepalm

Get disability and life insurance.  Save for your retirement.  Problem solved and no need for the Social Security Program.

You are absolutely right.  But you left out the essential part:  "If you have opted out of social security and you are starving in the street, then die in the gutter and stop bothering the rest of us."

Also, the private pension system is way more expensive to run than social security.

Good luck persuading people to vote for either of these ideas.

[JusticeForYou]

Yeah nice stop paying so when something bad happens to you you will be fucked. Or maybe you will do like that father who went in a hospital with a pistol to have help for his son who required medical assistance (but since they were poor and could not pay the insurance, no help for you, you poor, you die)

/facepalm

Get disability and life insurance.  Save for your retirement.  Problem solved and no need for the Social Security Program.

You are absolutely right.  But you left out the essential part:  "If you have opted out of social security and you are starving in the street, then die in the gutter and stop bothering the rest of us."

Also, the private pension system is way more expensive to run than social security.

Good luck persuading people to vote for either of these ideas.

It seems you have a heart, as do I, so lets just ask this: Do you think the Government is the appropriate institution to run Social Security?

I despise Government run programs. Dole out money, yea. They are good at that, but managing the money? No, not so good at that.

I'm for a limited government, pretty darn limited Government. I realize that means a lot of people will lose their jobs but the government shouldn't have hired them in the first place.

I am also against 'career' politicians. I am for 'representatives' being like jury members: you don't want to do it because you have a life but you have to do it because it's a civic duty.

There shouldn't be a Congressional Retirement Plan (Seriously?).

I'd prefer, Joe the Plumber in the White House especially since he'd know what to do with all the BS people will tell him.

There is a reason the founding fathers put American Citizen age 35 or greater. NO requirement for Ivy League University and Foreign Affairs Experience, or having life experience as a 'community organizer'.

Social Security, as it was written, provided/provides a good safety net so people aren't dying in the gutter as you put it. However, it has run amuck and needs serious review. Maybe even scrapping and a re-write. I am thinking a means testing on a yearly basis. If you're below the poverty line you get it, if not you don't. The 'grey area' will just have to suck it up and make a little more or a little less.

But just raising the age requirement is a travesty. It's a trick so they can say: We fixed it.  When actually they screwed the pooch and mismanaged it so badly that they need more people to die before they get it. So, NO, the government is saying: Die in the gutter if you didn't make it to our required age.

LOWERING the required age requirement would show good management not raising it.

Sorry... I do tend to rant on certain subjects. I try to wake up 'the sheep' (people that act on emotion and believe everything that is told to them and don't bother to find out anything themselves.)

[stochastic]

Yeah nice stop paying so when something bad happens to you you will be fucked. Or maybe you will do like that father who went in a hospital with a pistol to have help for his son who required medical assistance (but since they were poor and could not pay the insurance, no help for you, you poor, you die)

/facepalm

Get disability and life insurance.  Save for your retirement.  Problem solved and no need for the Social Security Program.

You are absolutely right.  But you left out the essential part:  "If you have opted out of social security and you are starving in the street, then die in the gutter and stop bothering the rest of us."

Also, the private pension system is way more expensive to run than social security.

Good luck persuading people to vote for either of these ideas.

When SS first started it was just a fixed life annuity.  When the US government started to add disability coverage and survivorship to children coverage, that is when the time to insolvency started to emerge.

People have to purchase private insurance for life and disability anyway.  They also have to save for retirement.  There is absolutely no financial advisor that would tell people to not purchase private insurance or to save for retirement and to only rely on Social Security.  Since people have to go to the private insurance market and save for retirement themselves anyway, then what is the purpose of SS?  It is just an extra thing in case the person never planned, didn't planned enough, or their plans failed.  If that is the case, then SS should not be paid to those with a certain high income level and instead should be given to low income retirees, disabled persons, or survivors of a deceased parent or spouse.

[Hawker]

...snip...

It seems you have a heart, as do I, so lets just ask this: Do you think the Government is the appropriate institution to run Social Security?

I despise Government run programs. Dole out money, yea. They are good at that, but managing the money? No, not so good at that.

...snip...

Social security is exactly the type of thing government is good at.

There are things that people know they should do.  For example, not driving after a few drinks.  Or saving for retirement.  Or wearing seatbelts and putting babies in special car seats.  A righteous minority do these things because they know that its right.  A small group won't do them no matter what you say.  The majority will do it if they are forced to.

That same majority will vote for laws that forces them to do the right thing.  Social security is a perfect example of this.

Is government the right institution to run social security?  That I don't know.  In the UK, it would be run by a private company and one of our ongoing issues is "fat cats" that run these companies making ridiculous salaries regardless of success.  Brits say that the private companies do the same work for less money than having civil servants do it because you can't fire incompetent civil servants.  Most of the guys who say that publicly are part of a magic circle that bounces between these big companies and parliament so they have a vested interest.  I really don't know.  

[JusticeForYou]

Social security is exactly the type of thing government is good at.

There are things that people know they should do.  For example, not driving after a few drinks.  Or saving for retirement.  Or wearing seatbelts and putting babies in special car seats.  A righteous minority do these things because they know that its right.  A small group won't do them no matter what you say.  The majority will do it if they are forced to.

That same majority will vote for laws that forces them to do the right thing.  Social security is a perfect example of this.

Governments that mandate savings, wearing seat belts, or putting babies in seats, while good intentioned, are not good ideas.

Don't wear your seat belt then take the risk to die.

Why stop at mandating seat belts? There are plenty of things that can be mandated to 'save' lives. Make everyone move out of flood zones, Make eating a pound of bacon illegal, get rid of McDonald's.

Governments shouldn't replace personal responsibility nor should it try.  It should guide not mandate. Create voluntary programs, publish statistics (real ones), offer programs to change behavior, etc... there are tons of examples.

This whole debate and argument is moot though. Entitlements just can't be saved as they are. People can debate about it all they want, just like the families debating over Steak or Spam with $2 to spend.

[Hawker]

Social security is exactly the type of thing government is good at.

There are things that people know they should do.  For example, not driving after a few drinks.  Or saving for retirement.  Or wearing seatbelts and putting babies in special car seats.  A righteous minority do these things because they know that its right.  A small group won't do them no matter what you say.  The majority will do it if they are forced to.

That same majority will vote for laws that forces them to do the right thing.  Social security is a perfect example of this.

Governments that mandate savings, wearing seat belts, or putting babies in seats, while good intentioned, are not good ideas.

Don't wear your seat belt then take the risk to die.

Why stop at mandating seat belts? There are plenty of things that can be mandated to 'save' lives. Make everyone move out of flood zones, Make eating a pound of bacon illegal, get rid of McDonald's.

Governments shouldn't replace personal responsibility nor should it try.  It should guide not mandate. Create voluntary programs, publish statistics (real ones), offer programs to change behavior, etc... there are tons of examples.

This whole debate and argument is moot though. Entitlements just can't be saved as they are. People can debate about it all they want, just like the families debating over Steak or Spam with $2 to spend.

Then you are part of the righteous minority who do things because they make sense.  But you have to accept that there are a lot of people who are not like you, that those people vote and they make laws to force themselves to do the right thing.  In the case of social security, people want it and the scheme seems to be a huge success.  I wish we had something that good here...the UK pension is about only $100 per week and above that you have to rely on savings/pensions which have been gutted over the last 15 years.

[FirstAscent]

Governments that mandate savings, wearing seat belts, or putting babies in seats, while good intentioned, are not good ideas.

Don't wear your seat belt then take the risk to die.

Wearing seat belts wasn't practiced too rigorously until it became mandated. Perhaps you're too young to remember? The law requiring you to wear seat belts is exactly what has made it a natural habit to put one's seat belt on when they drive.

It wasn't always like that. You have the law to thank for what is now considered a norm.

[ribuck]

Wearing seat belts wasn't practiced too rigorously until it became mandated. Perhaps you're too young to remember? The law requiring you to wear seat belts is exactly what has made it a natural habit to put one's seat belt on when they drive.

It wasn't always like that. You have the law to thank for what is now considered a norm.

That's not accurate. Seat belt wearing became the norm, not because of the law change (which just rode on the coat-tails of increasing awareness of road safety), but because the inertia-reel seat belt was invented. This reduced the inconvenience of seat-belt wearing.

I was a child in the 1960s, and our family car came without seat belts. We voluntarily fitted after-market seat belts, long before there were any laws. But they were the old type that had to be adjusted for each person, which was a real nuisance.

Even today, if there were no seat belt laws, most people would wear them because insurance companies would charge much higher rates for non-wearers. But those few people who didn't want to wear them would retain that freedom.

[Hawker]

Wearing seat belts wasn't practiced too rigorously until it became mandated. Perhaps you're too young to remember? The law requiring you to wear seat belts is exactly what has made it a natural habit to put one's seat belt on when they drive.

It wasn't always like that. You have the law to thank for what is now considered a norm.

That's not accurate. Seat belt wearing became the norm, not because of the law change (which just rode on the coat-tails of increasing awareness of road safety), but because the inertia-reel seat belt was invented. This reduced the inconvenience of seat-belt wearing.

I was a child in the 1960s, and our family car came without seat belts. We voluntarily fitted after-market seat belts, long before there were any laws. But they were the old type that had to be adjusted for each person, which was a real nuisance.

Even today, if there were no seat belt laws, most people would wear them because insurance companies would charge much higher rates for non-wearers. But those few people who didn't want to wear them would retain that freedom.

I once had a white shirt ruined in Turkey when I put a seat belt on and no-one had used it before.  It was an inertia reel seat belt and the damn thing had years of dust on it.

Same people use seat belts all the time now as its illegal not to. 

[ribuck]

I once had a white shirt ruined in Turkey when I put a seat belt on and no-one had used it before.  It was an inertia reel seat belt and the damn thing had years of dust on it.

Cute anecdote, but it doesn't mean anything. Perhaps the driver doesn't normally have a passenger. Maybe you'll now claim that it was a taxi that had been plying the streets for five years, but I don't care.

The seat belt was available for you to use. Why advocate violent compulsion?