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How is this different from what they do with social security?

f5moab

Mr. Beretta
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1,986
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Hiding in a potato patch in Idaho
If, the government, since the day of social security's inception, had invested the money taken in, there would be no problem with the payout to people. However, our government didn't do that, and spent the money via the general fund.

In addition, social security was originally setup as a SUPPLEMENT to retirement, not an actual retirement. Then they added insult to injury by using social security as a payout for disability benefits. Not saying disability payments are good or bad, but it should have come out of a totally different fund.

However, I get a big kick out of Perry running around FL knocking SS and from what I have read, he has not stressed that those on it will continue to receive it, and it needs to be changed for those around 50 years of age. Wrong state to scream about SS since it is the biggest retirement state in the USA. And I'm not saying Perry is good or bad, just saying wrong state to knock SS and expect to get the people to vote for him.

(Personally, I know who I want to run, but in the long run, I will vote for ANYONE who runs against Obama.) End of politcal rant.:wink:

And YES, SS has been a ponzi sceam since the day SS was started.
 

Portager

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1,506
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Silverado
Technically, Social Security is a pay as you go scheme, where today's workers are paying in to cover the benefits of today's retirees. A Ponsi scheme has a multiplier where you get paid more than you pay in so you need to increase the base geometrically to have income exceed payouts. Social Security would be stable as long as the number of workers is greater than or equal to the number of retirees and life expectancy remains constant. So the main issues with Social Security are when the baby boomers retire the expenses will exceed income and with longer life expectancy people are collecting for more years. That is why they increased the age when you can start collecting. Another issue for balancing the Social Security books is high unemployment. Unemployed people are not paying in but the payouts remains constant or even go up when unemployed people decide to start collecting early.
 

f5moab

Mr. Beretta
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1,986
Location
Hiding in a potato patch in Idaho
Dictionary...
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation.

I think from day one, SS was set up as a Ponzi scheme.

The original idea was that investors (people paying into SS) would receive an amount back in payments from what they their employers put into the system, as well as money from those paying into SS.

One problem is, what was paid into the system was spent in the general fund over the past 60 years; and that money is gone. Then, with the decrease in birth rates in the USA, there will eventually be less paying into the system than receiving or received money from the system.

And to add to that problem, retirees live longer that originally projected; thus the majority will, earn more in SS payments then they and their employers paid into SS over the years.

And now, more people are starting to draw SS at 62, when first eligible vs. waiting for full retirement benefits at age 65 or 66 (depending on year of birth). By drawing at age 62, with life expectancy going up, means people will draw even more out of SS then paid into the system.

Portager makes a good point with the number of unemployed going up and up, this lowers income into the system to pay for the baby boomers or even the next couple of generations.

Sad part is, if I had been allowed to take what I paid in, plus what my employers paid into the system, and invest over the past 40 years at an average of 5% ROI, I would have more than doubled what was paid into SS by me and my employers.

Not sure if anyone has the answer.

(Interesting fact is Ponzi is named after Charles Ponzi, who was also arrested using an alias of Charles Ponsi.)
 

Portager

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Messages
1,506
Location
Silverado
Dictionary...
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation.


I think from day one, SS was set up as a Ponzi scheme.

The original idea was that investors (people paying into SS) would receive an amount back in payments from what they their employers put into the system, as well as money from those paying into SS.

One problem is, what was paid into the system was spent in the general fund over the past 60 years; and that money is gone. Then, with the decrease in birth rates in the USA, there will eventually be less paying into the system than receiving or received money from the system.

And to add to that problem, retirees live longer that originally projected; thus the majority will, earn more in SS payments then they and their employers paid into SS over the years.

And now, more people are starting to draw SS at 62, when first eligible vs. waiting for full retirement benefits at age 65 or 66 (depending on year of birth). By drawing at age 62, with life expectancy going up, means people will draw even more out of SS then paid into the system.

Portager makes a good point with the number of unemployed going up and up, this lowers income into the system to pay for the baby boomers or even the next couple of generations.

Sad part is, if I had been allowed to take what I paid in, plus what my employers paid into the system, and invest over the past 40 years at an average of 5% ROI, I would have more than doubled what was paid into SS by me and my employers.

Not sure if anyone has the answer.

(Interesting fact is Ponzi is named after Charles Ponzi, who was also arrested using an alias of Charles Ponsi.)

I don't want to argue the semantics of Ponzi schemes, pyramid schemes and pay as you go schemes. The differences are small but significant. You can read all about it at http://www.ssa.gov/history/ponzi.htm . If you don't think ssa.gov is unbiased, then google social security and ponzi scheme and there are a lot of independent assessments. Some are more bias than others so be careful to select a reputable source.

It is not true that FICA tax dollars are merely transferred to the general fund and spent. The Federal Government borrows the money from the Social Security fund through Federal bonds. I would prefer that the Federal Government borrow from the SS fund instead of borrowing from overseas investors at a higher rate. According to wikipedia, "Assets in 2010 were $2.6 trillion" http://en.wikipedia.org/wiki/Social_Security_(United_States) It is true that you would have more money if you were allowed to invest at 5% ROI since the US Bonds typically pay closer to 3% ROI. However, if the government weren’t borrowing at the lower rate we would be paying higher taxes or going into debt even faster, so would we be any better off?

Relative to drawing at an early age, that really has no effect. "As a general rule, early retirement will give you about the same total Social Security benefits as full retirement over your lifetime, but in smaller amounts to take into account the longer period you will receive them." http://www.ssa.gov/pubs/retirechart.htm

Longer life expectance was taken into consideration when they extended the age at which we can start collecting full benefits (see link above).

Here is the full quote from wikipedia on the SS financial report, "The 2011 annual report by the program's Board of Trustees noted the following: in 2010, 54 million people were receiving Social Security benefits, while 157 million people were paying into the fund; of those receiving benefits, 44 million were receiving retirement benefits and 10 million disability benefits. In 2011, there will be 56 million beneficiaries and 158 million workers paying in. In 2010, total income was $781.1 billion and expenditures were $712.5 billion, which meant a total net increase in assets of $68.6 billion. Assets in 2010 were $2.6 trillion, an amount that is expected to be adequate to cover the next 10 years. In 2023, total income and interest earned on assets are projected to no longer cover expenditures for Social Security, as demographic shifts burden the system. By 2035, the ratio of potential retirees to working age persons will be 37 percent — there will be less than three potential income earners for every retiree in the population. The trust fund would then be exhausted by 2036 without legislative action."

I believe the problems with Social Security can be easily resolved by increasing the age that future retirees can start collecting benefits. It also pays to stop listening to Politian’s.
 

f5moab

Mr. Beretta
Messages
1,986
Location
Hiding in a potato patch in Idaho
I don't want to argue the semantics of Ponzi schemes, pyramid schemes and pay as you go schemes. The differences are small but significant. You can read all about it at http://www.ssa.gov/history/ponzi.htm . If you don't think ssa.gov is unbiased, then google social security and ponzi scheme and there are a lot of independent assessments. Some are more bias than others so be careful to select a reputable source. I'm not going to argue period. You have your description, I have mine. We will have to agree to disagree.

It is not true that FICA tax dollars are merely transferred to the general fund and spent. The Federal Government borrows the money from the Social Security fund through Federal bonds. I would prefer that the Federal Government borrow from the SS fund instead of borrowing from overseas investors at a higher rate. According to wikipedia, "Assets in 2010 were $2.6 trillion" http://en.wikipedia.org/wiki/Social_Security_(United_States) It is true that you would have more money if you were allowed to invest at 5% ROI since the US Bonds typically pay closer to 3% ROI. However, if the government weren’t borrowing at the lower rate we would be paying higher taxes or going into debt even faster, so would we be any better off? I was being general on how the money was being used. But regardless of what the method is, they are still taking the money that was supposed to put aside for SS and using it. For the general economy of the USA, it would be preferrable to use the SS vs Chinese dollars, but it is stil being taken from the SS bucket and used for other purposes.

Relative to drawing at an early age, that really has no effect. "As a general rule, early retirement will give you about the same total Social Security benefits as full retirement over your lifetime, but in smaller amounts to take into account the longer period you will receive them." http://www.ssa.gov/pubs/retirechart.htm NOTE: GENERAL RULE. It is beneficial to the government to say this. And it is probably based upon an average of payouts. However, many of us in the top tier of SS benefits, who have a guess of what their end age will be, are opting to start early at the age of 62. I did an excel sheet on this same fact, and I can tell you that at the age of 75 (and I would be surprised I make it that long...so will a lot of other people:giggle:), I will have earned a year in more money. Now that is at the very top end of the benefit scale. And I'm sure those at the bottom end will not opt for the early benefits due to the fact that it will not make much of a difference.
And another interesting fact...if you start to draw at 62, and continue to work, the first 14,150 of SS is untouched and after that it is a reduction of one dollar for every two made. However, the one factor many forget to note is that the amount of money that SS takes out for your 2 for 1, adds up and your montly benefit in later years will be increased.

Longer life expectance was taken into consideration when they extended the age at which we can start collecting full benefits (see link above). Yes it was, never said it wasn't, but when SS was first created they did not expect it was going to be as great a leap as it has ended up to be, and it will only get longer and that is why the age will eventually be moved up and up as time progresses.

Here is the full quote from wikipedia on the SS financial report, "The 2011 annual report by the program's Board of Trustees noted the following: in 2010, 54 million people were receiving Social Security benefits, while 157 million people were paying into the fund; of those receiving benefits, 44 million were receiving retirement benefits and 10 million disability benefits. In 2011, there will be 56 million beneficiaries and 158 million workers paying in. In 2010, total income was $781.1 billion and expenditures were $712.5 billion, which meant a total net increase in assets of $68.6 billion. Assets in 2010 were $2.6 trillion, an amount that is expected to be adequate to cover the next 10 years. In 2023, total income and interest earned on assets are projected to no longer cover expenditures for Social Security, as demographic shifts burden the system. By 2035, the ratio of potential retirees to working age persons will be 37 percent — there will be less than three potential income earners for every retiree in the population. The trust fund would then be exhausted by 2036 without legislative action."

That is today's projection. However, like you brought out in your first post, this projection will go down due to the number of people out of work and they and the employers are not paying into the system. And with today's projection on the economy, regardless of who is our next president, the unemployment in this country will probably remain above six percent for many years to come. If I remember right, about six or seven years ago, the projected date of exhausted funds was around 2040.

I believe the problems with Social Security can be easily resolved by increasing the age that future retirees can start collecting benefits. It also pays to stop listening to Politian’s.

I agree with your last line's first sentence. That is one way, the other is to delete the cap on earnings. Right now, after about 106K, SS is no longer deducted from the pay. But we have to listen to politicians and try and pick the best one at that time to keep this country great. If we completely stopped listening to them, how would we be able to make a semi-intelligent decision on who to vote for? Agreed, most lie, and it is very hard to listen to most of the $HIT that is spewed from their mouths (I say this as I listen the the debate:wink:) but at least we can get a jest of what they do stand for by listening and reading their record. The problem with this county and the voters is not that people listen or don't listen to poltiicans, it is they vote them in due to pressure from a group (AARP, Unions, etc.) or worse, they vote a person into office based on their color, how tall they are, or their doo. That is what happened in the last election; too many people voted for Obama due to his color than I believe voted against him for this color. Black voted him by what 97%? Independent voted for him because they thought he could bring HOPE AND CHANGE to DC and they have or are learning his hope and change was nothing but bull****.

Good discussion. Now I'll step out and let someone else jump in. Where is Brodie, he started this?:thumbs:
 

Paladine71

ΜΟΛΩΝ ΛΑΒΕ
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1,483
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Tallmansville, WV
I bought some silver two years ago for only around $14 an ounce, now it's hovering around $40 and I believe that it's being suppressed intentionally. Imagine those folks that picked up an ounce of gold for about $250 just a few years ago and now it's playing around $1800-$1900. Of course the shape of the global markets and the debt make it likely to climb even higher. Gun sales are soaring. If you buy smart, hold a while and sell them right, you can make huge profits. Screw paper and equities.
 
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