Retirement

[Brute 23]

Social Security benefits are projected to have a 24% shortfall in 2034.
Who knows what changes or measures will be taken to remedy the problem.
Historically changes have been slowly phased in and those born in 1964 or before should most likely be the least affected by any reforms.

But, imo any born in 1965-1972 will be the most affected, as they are closer to retirement than those born in 1973-1980 but both groups should at least plan on or budget for a 10-20% decrease in total benefits received. But I think congress will act to keep any decline in benefits to the single digits by increasing payroll taxes.

We have not been able to get ss reform in through for years because the older generations keep voting against some thing thing that wont even effect them. Its beyond aggravating.

So now we will have to clean up the mess with payroll out of our checks when we dont want it to start.

 

[sstterry]

We have not been able to get ss reform in through for years because the older generations keep voting against some thing thing that wont even effect them. Its beyond aggravating.

So now we will have to clean up the mess with payroll out of our checks when we dont want it to start.

We would not have needed it if the Congresses (all of them) from the 60's on, had not started "borrowing" from the SS Trust Fund"

 

[Caustic Burno]

Eisenhower opened SS to bail out the Post office first.
LBJ ripped the lid off the box and turned it upside down to pay for his enslavement called the Great Society.

 

[ccr]

We have not been able to get ss reform in through for years because the older generations keep voting against some thing thing that wont even effect them. Its beyond aggravating.

Brute, exactly what do you mean when you say "the older generations keep voting against some thing that wont even effect them."

So now we will have to clean up the mess with payroll out of our checks when we dont want it to start.

Feel your pain amigo, didn't want social security taken out of my check starting 50 years ago.

 

[Brute 23]

Any SS reform will grandfather in the people closest to retirement which for the longest time controlled the vote.

The older generations continue to vote down reform because they listen to the propaganda that says it will effect them even though it wont. That propaganda is put out by the people with their hands in the cookie jar.

Its mind boggling that for this many years grown adults have not seen that SS is a scam. You gave the govt thousands and thousands and thousands so that... under the right circumstances... if you meet all the requirements... fill out the paper work... and dont die first... the govt may let you have a little bit of it back.

 

[greybeard]

Based on 2016 data provided by the SSA (when the maximum taxable earnings figure was $118,500), the average American wound up paying $2,463 into the OASI each year. If one worked for 42 years, (age 20-age 62), the average American would have paid in $98,520.

The average SS benefit recipient gets $1543/month. X 12 months, they get $18,560 per year. It would only take 5.3 years of benefits to equal what that average American worker contributed (paid in) out of his paycheck.

No?

 

[Brute 23]

Based on 2016 data provided by the SSA (when the maximum taxable earnings figure was $118,500), the average American wound up paying $2,463 into the OASI each year. If one worked for 42 years, (age 20-age 62), the average American would have paid in $98,520.

The average SS benefit recipient gets $1543/month. X 12 months, they get $18,560 per year. It would only take 5.3 years of benefits to equal what that average American worker contributed (paid in) out of his paycheck.

No?

If I walked up to you and offered you the same exact return on a retirement plan through a private company would you do it?

So if I take your numbers and the govt would have privatized SS that persons retirement account would be worth $1,400,000 at a 10% return (which is what the stock market averaged the last 40-50 years). If you only lived off the interest of that, at age 62, until you died it would bring you in $140K a year.

The govt could have pocketed all our principal, all the interest, and only promised to pay you the interest your contribution earned annually and it would be 7X more than what they pay you now.

If only half of Americans contributed and half didnt they could still pay you $70K a year and give $70K to some one who contributed nothing.

The average lifespan of an American is 79 years. You let the govt work you to death for 40+ years so they could give you less than $20K a year for the last 15-20 years of your life.

It is crimal that this govt program is in the shape it's in. It took blatant mismanagement and a blind lack of accountability for it to be in the shape it is in. It's time for the American people to wake up and start paying attention to what is going on.

Every school in US needs a finance class that explains basic finances so maybe we can turn the tide for future generations rather than hanging them with the bill.

 

[Brute 23]

Just think if you were a private company and could sucker people in to sending you $2500 dollars a year, for 40 years, and all you have to do is promise them $20K a year until they die for every year over 60 years of age. You would be filthy rich.

Even if they lived to 120 years old... you would only pay them $120K while you made $1.4M off their money.

Only priests and politicians can get away with that kind of deal. The rest of us would be in jail... or worse.

 

[jltrent]

If I walked up to you and offered you the same exact return on a retirement plan through a private company would you do it?

So if I take your numbers and the govt would have privatized SS that persons retirement account would be worth $1,400,000 at a 10% return (which is what the stock market averaged the last 40-50 years). If you only lived off the interest of that, at age 62, until you died it would bring you in $140K a year.

The govt could have pocketed all our principal, all the interest, and only promised to pay you the interest your contribution earned annually and it would be 7X more than what they pay you now.

If only half of Americans contributed and half didnt they could still pay you $70K a year and give $70K to some one who contributed nothing.

The average lifespan of an American is 79 years. You let the govt work you to death for 40+ years so they could give you less than $20K a year for the last 15-20 years of your life.

It is crimal that this govt program is in the shape it's in. It took blatant mismanagement and a blind lack of accountability for it to be in the shape it is in. It's time for the American people to wake up and start paying attention to what is going on.

Every school in US needs a finance class that explains basic finances so maybe we can turn the tide for future generations rather than hanging them with the bill.

Every school in US needs a finance class that explains basic finances so maybe we can turn the tide for future generations rather than hanging them with the bill.


I have said that for years as people don't have a clue when it comes to finances. It would be a lot more beneficial than a lot that is taught.

 

[Atimm693]

Every school in US needs a finance class that explains basic finances so maybe we can turn the tide for future generations rather than hanging them with the bill.


I have said that for years as people don't have a clue when it comes to finances. It would be a lot more beneficial than a lot that is taught.

Personal finance has been a high school requirement in Missouri since 2010.

 

[D2Cat]

Does personal finance take a class in school? It what's taught there is not applied it's worthless.

It all goes back to the parents. Show them how to do things (work) when they are very young. They could pick up sticks in the yard, rake leaves, or just help doing whatever the parent is doing. Give them a reward for the effort (some money) and show them where the money needs to go (save, give, spend).

It's not complicated. When your outgo exceeds your income your upkeep becomes your downfall!

Well, maybe it does take a class in school, because not many parents understand what is necessary to teach them and have no personal experience!!

Because many adults do not understand the rule of 72, probably never heard of it, they don't start saving and have no concept of what it will become. So, they have no foundation to teach to anyone. Where did that bridge fall into the river?

 

[TexasBred]

Just think if you were a private company and could sucker people in to sending you $2500 dollars a year, for 40 years, and all you have to do is promise them $20K a year until they die for every year over 60 years of age. You would be filthy rich.

Even if they lived to 120 years old... you would only pay them $120K while you made $1.4M off their money.

Only priests and politicians can get away with that kind of deal. The rest of us would be in jail... or worse.

Actually you'd pay them $1.2 million if they lived to 120 but still a pretty good profit for them. And everybody thought FDR was the savior and always thinking of the people. As I sometimes say "I'm not screwed unless I think I'm screwed".

 

[farmerjan]

$2500 per year, paid in for 40 years is $100,000 . If you paid them back $20,000 for 30 years, you are paying back $600,000..... This is not taking into account any interest or investment or anything.... So if a person worked and paid in for 40 years, and then retired and lived for 30 years, they would get back 6x what they paid in.....
So accounting for interest, I still don't see where the gov't is making a killing....
I am not in favor of the gov't using the money since they certainly can't take care of their own finances in this country... and I have been, and continue to pay in, SS for nearly 50 years now.....so I feel like I am entitled to get back from having this forced savings account that I could not even make choices on how to invest and believe me I am very conservative with my choices through work....
Granted more people do not live and get SS for 30 years .... but still....

Is my math wrong?

 

[Brute 23]

Actually you'd pay them $1.2 million if they lived to 120 but still a pretty good profit for them. And everybody thought FDR was the savior and always thinking of the people. As I sometimes say "I'm not screwed unless I think I'm screwed".

You are right. It still wouldnt be a problem considering on avg they only lived 15 more years.

 

[Brute 23]

$2500 per year, paid in for 40 years is $100,000 . If you paid them back $20,000 for 30 years, you are paying back $600,000..... This is not taking into account any interest or investment or anything.... So if a person worked and paid in for 40 years, and then retired and lived for 30 years, they would get back 6x what they paid in.....
So accounting for interest, I still don't see where the gov't is making a killing....
I am not in favor of the gov't using the money since they certainly can't take care of their own finances in this country... and I have been, and continue to pay in, SS for nearly 50 years now.....so I feel like I am entitled to get back from having this forced savings account that I could not even make choices on how to invest and believe me I am very conservative with my choices through work....
Granted more people do not live and get SS for 30 years .... but still....

Is my math wrong?

The interest is every thing... especially when you talk about compound interest on an investment. Look at the chart below. Only 8% is your original money, the principal, you put in. The stock market is an amazing thing. Any one can pick up their phone and participate in this at any moment. Type investment calculator in to any search engine and it will bring up a ton of these where you can play around and see what you can earn.

Remember that 10% is not coming from some fancy investment strategy, it's no wild of wallstreet deal, its buying S&P 500 for the last 40 years and not listening to the idiots down at the DQ, or the news, or some other nonsense.

Politicians and their groupies will tell you... the people dont know enough about investing... yall cant keep up with your money... yall cant do this... yall cant do that... that why you need to trust the US govt to do it. Look where that got us. The real reason the politicians dont want SS privatized is when your money is in private investments... they cant reach over and take from it or borrow against it as they please. It makes your money... not accessible to them... which is exactly why it needs to be done.

 

[jltrent]

This is one of the handiest calculator I have ever owned. When I worked in the banking business I had one and still have it. You can program any formula and just key in the amounts. There is probably a phone app now that has taken its place.

HP 19BII Financial Calculator for sale online | eBay

Find many great new & used options and get the best deals for HP 19BII Financial Calculator at the best online prices at eBay! Free shipping for many products!

www.ebay.com

 

[acefire]

If I walked up to you and offered you the same exact return on a retirement plan through a private company would you do it?

So if I take your numbers and the govt would have privatized SS that persons retirement account would be worth $1,400,000 at a 10% return (which is what the stock market averaged the last 40-50 years). If you only lived off the interest of that, at age 62, until you died it would bring you in $140K a year.

The govt could have pocketed all our principal, all the interest, and only promised to pay you the interest your contribution earned annually and it would be 7X more than what they pay you now.

If only half of Americans contributed and half didnt they could still pay you $70K a year and give $70K to some one who contributed nothing.

The average lifespan of an American is 79 years. You let the govt work you to death for 40+ years so they could give you less than $20K a year for the last 15-20 years of your life.

It is crimal that this govt program is in the shape it's in. It took blatant mismanagement and a blind lack of accountability for it to be in the shape it is in. It's time for the American people to wake up and start paying attention to what is going on.

Every school in US needs a finance class that explains basic finances so maybe we can turn the tide for future generations rather than hanging them with the bill.

I cannot get close to 10% interest anywhere. It is more like 1%.

 

[greybeard]

The interest is every thing... especially when you talk about compound interest on an investment.

But, that was not your original point, and it was the following that I was replying to.
You said:

You gave the govt thousands and thousands and thousands so that... under the right circumstances... if you meet all the requirements... fill out the paper work... and dont die first... the govt may let you have a little bit of it back

I don't think SS is anywhere near the best way for a person to ensure they will have retirement income, since there is such a low roi compared to private investment programs, but the fallacy that most people don't get back anywhere near what they pay in is exactly that, a fallacy.

Most of us paid in around 6.2%. (our employers paid in a like amount for our benefit but that is beside the point regarding this discussion)

What's your rate of return on Social Security?

Is Social Security a good deal? Many Americans worry that they will put more money into the system via payroll taxes during their working years than they will ever get back in benefits - and their concerns help fuel the ongoing push by Republicans to transform Social Security into a privatized...

www.reuters.com

 

[Brute 23]

I cannot get close to 10% interest anywhere. It is more like 1%.

S&P 500 has been doing it since its inception. People will debate modern returns and all this stuff but its 8-12% no matter how you cut it so that's where 10% comes from. That is why it is the standard for all other investments. Places like Goldman Sachs will admit they only avg 9ish%.

Here is a great chart on it that shows why you have to stay in through the ups and down. It also shows with a little time investment you could increase your returns buy not buying more in high times and then jumping in in lows. It's no different than what people do on here with cattle.

 

[Brute 23]

@greybeard

Where does your money go when you die? If you are self-employed you will pay the full 13% your entire life.

We have discussed this numerous times on here before. Social Security is a really crappy, whole life type, retirement policy. If all your numbers line up you may beat the house... if they dont... you will have nothing to show for it.