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Thread: Social Security To Go Bust By 2030: CBO

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    Re: Social Security To Go Bust By 2030: CBO

    Quote Originally Posted by iguanaman View Post
    Voters? Since when do we have votes on social programs? No candidate would be stupid enough to campaign on a platform that ends Social Security either. You are dreaming.
    That was true in the past. Today roughly 60% of the voting public expects to retire after the Trust Fund is exhausted. You are dreaming to think that politicians will ignore that voting block forever.

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    Re: Social Security To Go Bust By 2030: CBO

    Quote Originally Posted by JoeTheEconomist View Post
    The Ponzi scheme has been dead for nearly 50 years. People born in 1960 expect to get less back from SS than they contribute. If the ratio is the problem, why did SS reach insolvency in 1983? Who are you talking about when you say that people have been added?
    Whoops there goes any semblance of credibility you may of had, Social Security is not a Ponsi scheme. Ponzi scheme promise large payouts to attract new investors and ultimately do go bust because of the lack of new investors. Social Security doesn't have that problem, its a pay as you go system.


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    Re: Social Security To Go Bust By 2030: CBO

    Quote Originally Posted by rhinefire View Post
    How can something manged by the fed. govt. be going broke?
    Simple. The system has defined inputs and defined outputs. The latter is bigger than the former. How much? Well the Trustees project that the system has a negative net worth of 23 trillion. That is nearly $1.50 of broken promises for every dollar that the system has ever collected.

    Who would have imagined that a machine managed by politicians would over promise what it could deliver.

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    Re: Social Security To Go Bust By 2030: CBO

    Quote Originally Posted by pbrauer View Post
    Whoops there goes any semblance of credibility you may of had, Social Security is not a Ponsi scheme. Ponzi scheme promise large payouts to attract new investors and ultimately do go bust because of the lack of new investors. Social Security doesn't have that problem, its a pay as you go system.
    Social Security gave a couple retiring in 1960 an expected retire of roughly $8 for every dollar contributed on an INVESTMENT adjusted basis. Is that outsized enough for you? It paid those benefits by promising a couple retiring in 1985 about $3 of benefits for every dollar contributed. Is that outsized enough for you? In 2010, the system hit a milestone, new retirees expected to contribute more than the expected to collect.

    My point is that there is no outsized payouts. There are no investors because the government legally mandates participation. So you can parse words and say that it isn't a Ponzi-scheme.

    Quote Originally Posted by pbrauer View Post
    Social Security doesn't have that problem, its a pay as you go system.
    Social Security has a pay as you go problem.

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    Re: Social Security To Go Bust By 2030: CBO

    Quote Originally Posted by JoeTheEconomist View Post
    Social Security gave a couple retiring in 1960 an expected retire of roughly $8 for every dollar contributed on an INVESTMENT adjusted basis. Is that outsized enough for you? It paid those benefits by promising a couple retiring in 1985 about $3 of benefits for every dollar contributed. Is that outsized enough for you? In 2010, the system hit a milestone, new retirees expected to contribute more than the expected to collect.

    My point is that there is no outsized payouts. There are no investors because the government legally mandates participation. So you can parse words and say that it isn't a Ponzi-scheme.
    No parsing of words are required., Social Security isn't a Ponsi scheme, it can never go bust like they do. Social Security is an insurance program.

    Social Security has a pay as you go problem.
    Yes it does, there are fixes that are needed. We need another commission like the Greenspan commission we had in 1983.


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    Re: Social Security To Go Bust By 2030: CBO

    Quote Originally Posted by JoeTheEconomist View Post
    Social Security gave a couple retiring in 1960 an expected retire of roughly $8 for every dollar contributed on an INVESTMENT adjusted basis. Is that outsized enough for you?
    Life expectancy in 1960 was 70 years -- only 66 for men, who were still the primary breadwinner then.

    Life expectancy now is 78 years, and women have been increasingly paying into the system (which increases household benefits). That's a lot more to pay out.


    In 2010, the system hit a milestone, new retirees expected to contribute more than the expected to collect.
    Not for everyone. E.g. lower-income married couples, and married couples with one worker, both receive more in benefits than they pay in. And when we include Medicare, everyone receives more than they paid in taxes.


    My point is that there is no outsized payouts. There are no investors because the government legally mandates participation. So you can parse words and say that it isn't a Ponzi-scheme.
    It isn't a Ponzi scheme. Just saying so suggests that you don't understand how Social Security works, or how Ponzi schemes work, or are just using an inaccurate insult because it's politically expedient.

    A Ponzi scheme is a fraudulent system where the organizer uses funds collected by the later "investors" to pay off the new "investors." No matter how fast it grows, it is unsustainable. Social Security, in contrast, is a pay-as-you-go system, so current revenues pay for current outlays. Surpluses from the year's collections went into the trust fund. It's been sustainable for about 80 years so far, albeit with a few tweaks.

    Given the major demographic shifts since the 1930s (significantly longer lifespans, women working in larger numbers, changes in birth rates) and the lack of adjustments to Social Security, it really shouldn't be a surprise that the system needs further refinements at regular intervals.

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    Re: Social Security To Go Bust By 2030: CBO

    Quote Originally Posted by Visbek View Post
    Life expectancy in 1960 was 70 years -- only 66 for men, who were still the primary breadwinner then.

    Life expectancy now is 78 years, and women have been increasingly paying into the system (which increases household benefits). That's a lot more to pay out.
    That is life expectancy of a baby - which is a completely irrelevant data point in a pension system. This is an article that I wrote which explains some of the impacts of life expectancy on Social Security. Some are plus and some are minus. The standard material that you read is either based on irrelevant data or incomplete analysis. I haven't seen any research that looks that the issue correctly.

    The Impact of Life Expectancy on Social Security : FedSmith.com




    Quote Originally Posted by Visbek View Post

    Not for everyone. E.g. lower-income married couples, and married couples with one worker, both receive more in benefits than they pay in. And when we include Medicare, everyone receives more than they paid in taxes.



    It isn't a Ponzi scheme. Just saying so suggests that you don't understand how Social Security works, or how Ponzi schemes work, or are just using an inaccurate insult because it's politically expedient.

    A Ponzi scheme is a fraudulent system where the organizer uses funds collected by the later "investors" to pay off the new "investors." No matter how fast it grows, it is unsustainable. Social Security, in contrast, is a pay-as-you-go system, so current revenues pay for current outlays. Surpluses from the year's collections went into the trust fund. It's been sustainable for about 80 years so far, albeit with a few tweaks.

    Given the major demographic shifts since the 1930s (significantly longer lifespans, women working in larger numbers, changes in birth rates) and the lack of adjustments to Social Security, it really shouldn't be a surprise that the system needs further refinements at regular intervals.
    You continue to quote research that you do not understand. It is possible to say that Social Security now delivers a negative return for average workers based on the UI research. The UI research confirms this statement. That fact that the assumptions of UI overstate the economic returns does change the core finding.

    Suggesting that it says : "And when we include Medicare, everyone receives more than they paid in taxes." Suggests that you haven't read the disclosures.
    Last edited by JoeTheEconomist; 07-16-14 at 04:54 PM.

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    Re: Social Security To Go Bust By 2030: CBO

    Quote Originally Posted by Anthony60 View Post
    But you expect to be paid until you die? What if that date goes beyond what you have paid in? At least in a private plan, you get a better return and know exactly what you have.
    I'm in my seventies, so the chances I'll be around after 2030 doubtful.
    "Being President doesn't change who you are, it reveals who you are"

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    Re: Social Security To Go Bust By 2030: CBO

    Quote Originally Posted by Montecresto View Post
    The ratio between those paying in and those drawing isn't what it was 40-50 years ago. If it truly was pay as you go, why would it only be solvent until 2087, why not in perpetuity?
    Are you claiming Social Security doesn't work mostly as a pay as you go system?

    The fact is today's payroll taxes pay for today's beneficiaries. Unlike what most people think, which is my contributions today go to my retirement tomorrow, Social Security is essentially a pay as you go system. Why is there a deadline on solvency? Because the amount being paid out is/will be greater than what's taken in. However, there's nothing which says it must continue that way. That was the point of the link, if I'm not mistaken.
    Quote Originally Posted by JoeTheEconomist View Post
    Today the system has a negative return.
    Yes, after a long history of more being paid in than was paid out. I suspect it will continue to go back and forth over time, where payouts and taxes are adjusted as needed.

    People contribute more to it than the expect to collect from it, and your solution is to throw another 25% more at the system.
    It is? When did I offer any solution? No, my point from the very beginning was that your headline was entirely misleading and that Social Security is not, and theoretically cannot be, going bust.

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    Re: Social Security To Go Bust By 2030: CBO

    Quote Originally Posted by Slyfox696 View Post
    Are you claiming Social Security doesn't work mostly as a pay as you go system?

    The fact is today's payroll taxes pay for today's beneficiaries. Unlike what most people think, which is my contributions today go to my retirement tomorrow, Social Security is essentially a pay as you go system. Why is there a deadline on solvency? Because the amount being paid out is/will be greater than what's taken in. However, there's nothing which says it must continue that way. That was the point of the link, if I'm not mistaken.
    Yes, after a long history of more being paid in than was paid out. I suspect it will continue to go back and forth over time, where payouts and taxes are adjusted as needed.

    It is? When did I offer any solution? No, my point from the very beginning was that your headline was entirely misleading and that Social Security is not, and theoretically cannot be, going bust.

    Economic returns are not a cashflow measure. Today the system has a negative return, meaning that statistically a worker will not collect his contributions in benefits.

    The idea that workers can put 16% of payrolls into Social Security is possible. I don't see them doing it, but maybe future voters will be willing to pay the taxes that we didn't. You never what is possible.

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