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Thread: 2014 Social Security Trustees Report

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by azgreg View Post
    I hope you're right, but at the moment I don't share your optimism.
    I do not see data in terms of optimism and pessimism. The numbers are radically changing. Optimism and pessimism deal with people's response to it. The real question becomes when do 50 and 60 year-olds wake to the fact that they will be alive and well in the crisis. They are not paying attention now, and I think that feeds your view of the data.

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by JoeTheEconomist View Post
    I do not see data in terms of optimism and pessimism. The numbers are radically changing. Optimism and pessimism deal with people's response to it. The real question becomes when do 50 and 60 year-olds wake to the fact that they will be alive and well in the crisis. They are not paying attention now, and I think that feeds your view of the data.
    My thoughts come from the idea that politicians are more interested in votes than governing. I'm one of those 50 year olds you are talking about and since I see what's happening I have taken my retirement into my own hands. I will not need my SS benefits to get by. If they are there than nice, but I'm not counting on it.
    I have CDO, it's like OCD but the letters are in alphabetical order like they should be.

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    Re: 2014 Social Security Trustees Report

    So we have nearly 20 years to raise taxes/cut benefits before benefits get automatically cut to a smaller amount?

    I guess I'm not really that alarmed.

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by Slyfox696 View Post
    So we have nearly 20 years to raise taxes/cut benefits before benefits get automatically cut to a smaller amount?

    I guess I'm not really that alarmed.
    You will be, when you look at the basic statistics and review the track record of government doing that type of cutting.

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by joG View Post
    You will be, when you look at the basic statistics and review the track record of government doing that type of cutting.
    Nonsense. If the Trust Fund were to run out in 2033, we could still pay over 75% of the benefits under current law. Hell, it was only in the last few years (when the economy turned bad) when the Trust Fund actually began paying out, after decades of taking in more than was spent on benefits.

    We have 20 years to raise SS taxes to the point where we again take in as much as we take out. Like I said, I'm not really that alarmed.

    Source: http://fas.org/sgp/crs/misc/RL33514.pdf

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by JoeTheEconomist View Post
    The Trustees have released their report the summary is found here : News, the full report is found here : The 2014 OASDI Trustees Report

    The focus continues to be on the length of the fuse ("The projected point at which the combined trust fund reserves will become depleted, if Congress does not act before then, comes in 2033") rather than the size of the bomb which is found on .... page 192. The unfunded obligation grew to $24.9 trillion in present value. Or in Trustee speak : " If the assumptions, methods, and starting values had not changed, moving the valuation date forward by 1 year would have increased the unfunded obligation by about $0.9 trillion, to $24.0 trillion. The net effects of changes in assumptions, methods, law, and starting values increased the infinite horizon unfunded obligation by an additional $0.9 trillion, to $24.9 trillion in present value."

    The highlights : the system's shortfall grew by more than the system collected SOLELY because of the change in year.

    Today more than 50% of the public expects to retire after the Trust Fund is exhausted.

    Someone retiring today at normal retirement age has a longer life expectancy than Social Security expects to pay scheduled benefits.
    There was another part of the report which should have been even more concerning. The disability part of social security will be broke in two years. What has happened in the past is that congress reshuffles the deck to put more funding into disabilities and less into the retirement fund.

    This thing will never go broke, as there will be a fix when things get desperate. Perhaps one fix would be how this long term asset is invested. No retirement fund would be 100% in government treasuries, the lowest return going. Fix that you go a long way to fixing the funding problem.

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by Slyfox696 View Post
    Nonsense. If the Trust Fund were to run out in 2033, we could still pay over 75% of the benefits under current law. Hell, it was only in the last few years (when the economy turned bad) when the Trust Fund actually began paying out, after decades of taking in more than was spent on benefits.

    We have 20 years to raise SS taxes to the point where we again take in as much as we take out. Like I said, I'm not really that alarmed.

    Source: http://fas.org/sgp/crs/misc/RL33514.pdf
    Do the math and we can talk again. I admit that I looked at the German and British systems in detail and only cursorily at the US, but the dynamics are very similar. Only the US is a bit better off than Germany, because birthrates kept up longer. The Brits were best off, because they had large reserves, though, I do not know what the bubbles did.
    20 year might sound like a lot to someone that is not into investment strategy and national accounts. But believe me. It is not.

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by Slyfox696 View Post
    Nonsense. If the Trust Fund were to run out in 2033, we could still pay over 75% of the benefits under current law. Hell, it was only in the last few years (when the economy turned bad) when the Trust Fund actually began paying out, after decades of taking in more than was spent on benefits.

    We have 20 years to raise SS taxes to the point where we again take in as much as we take out. Like I said, I'm not really that alarmed.

    Source: http://fas.org/sgp/crs/misc/RL33514.pdf
    Right, and before a single retiree misses a check the appropriate measures will be made.

    Think about what the political disaster there would be to those in power at the time.


    David Cay Johnston:

    With the coming bulge in retirees, Social Security will start to pay out more than it takes in 2021, according to projections in the latest annual report. Under current law the program would be able to pay only about three-quarters of promised benefits starting in 2033. But that scenario can easily be avoided through a combination of four policy changes that would ensure full benefits continue to be paid, though I fear Congress will continue to do nothing.

    One would be restoring the Reagan standard that 90 percent of wages are covered by the Social Security tax, which now applies to only 83 percent of wages. If we went back to the Reagan standard, the Social Security tax would apply to close to $200,000 of wages this year instead of $110,100.

    Two would be raising the Social Security tax rate by two percentage points. That tax hike could be smaller or even avoided if, three, we reignited the growth in wages. Median wages have fallen in 2010 back to the level of 1999. And, four, it would help just as much if we created millions more jobs, which since 2000 have grown at only a fifth the rate of population increases.


    Social Security is not going broke | David Cay Johnston
    When a man lies, he murders some part of the world.

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by joG View Post
    Do the math and we can talk again.
    Um, what math? I gave you the math. What math are you talking about?
    I admit that I looked at the German and British systems in detail and only cursorily at the US
    So why would I look at the math, if you admit you're not sure what the math is?

    20 year might sound like a lot to someone that is not into investment strategy and national accounts. But believe me. It is not.
    20 years is plenty of time when you understand how Social Security works. Congress could pass a law tomorrow which would make the Trust Fund solvent for the next ~75 years, which shows you how little of a problem this truly is, as long as Congress does their job. And since Social Security is a pay as you go system, there really isn't much of a danger for the next 15+ years.

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    Re: 2014 Social Security Trustees Report

    Quote Originally Posted by washunut View Post
    There was another part of the report which should have been even more concerning. The disability part of social security will be broke in two years. What has happened in the past is that congress reshuffles the deck to put more funding into disabilities and less into the retirement fund.

    This thing will never go broke, as there will be a fix when things get desperate. Perhaps one fix would be how this long term asset is invested. No retirement fund would be 100% in government treasuries, the lowest return going. Fix that you go a long way to fixing the funding problem.
    The 2033 date is the combined Trust Funds. It assumes that the retirement fund will be bled for the disability side. The system has 2.8 trillion to invest and unfunded liabilities of 24 trillion. That is basically a dime to pay a dollar. No legal investment is going to fix that.

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