View Poll Results: Is Social Security a Ponzi Scheme?

Voters
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  • Yes - absolutely

    41 42.71%
  • Yes - it's more-or-less the same as

    35 36.46%
  • No - but it's pretty close

    5 5.21%
  • No - not even close

    24 25.00%
  • Social Security is safe and secure, please stop scaring people.

    14 14.58%
  • This is a crummy question with no relevance.

    1 1.04%
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Thread: Is Social Security a Ponzi Scheme?

  1. #141
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by scourge99 View Post
    1) whats the "return rate" of SS now? I.E., adjusted for inflation, if i paid X amount of dollars into the system, when will i break even once i start to receive benefits (assume i dont start taking benefits early).
    2) With only 76% of those payments, how far does that move out the break even point?
    This is a hard question to pin-point because social security is not really meant to provide a rate of return, so to speak. Social Security is meant to indemnify you against the loss of income due to old age, disability, or being the survivor of a deceased worker (if you are dependent). The main part everyone is talking about is your retirement benefit. There are several things that will affect your payment:
    • The primary insurance amount, aka your monthly payment, is based on your average indexed monthly earnings. Basically SS takes the average of your earnings applies a progressive index that is calculated by actuaries each year to reflect the change in wages in the country. If you have a low income, more of your earnings will be replaced than if you have a high income. They say it is about 56% of earnings for low income workers, and about 28% for high income. So this depends upon your income and the growth of wages.
    • Also, the amount you get will depend upon when you start to take benefits. You can start at the early retirement age with reduced benefits and also be subject to an earnings test that can reduce your benefit, you can wait until the full retirement age to get your whole monthly benefit, or you can delay retirement to receive higher payments later.
    • Also, there are automatic cost of living adjustments to take into account inflation that is linked to the CPI.
    • Finally, it will also depend upon your life span as well as others life spans and ages. Remember social security is meant to protect you against a loss of income. If you die you are obviously done getting money. If you live to be 100 you will probably get a pretty good amount of money when it is all said and done. You may also have a spouse, a child, a disabled dependent, etc that can still draw after you die. So this part is extremely variable and depends upon you, your spouses, or your dependents life span/age.
    Then of course their are survivors and disability benefits but those are not the main thing being talked about here which will also provide some payments if you meet the criteria. Rate of return is a poor language to use to describe this though as it is meant to indemnify you against a loss of income, not provide a profit.

  2. #142
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by scourge99 View Post
    what net worth qualifies as "high"? What percentage of SS are these "high net worth individuals" siphoning off?
    Semantics will not work with me....

    Consider.that there are significantely fewer wealthy people than the.middle and poor. Seems like dropping them would be a drop in the bucket (or maybe a tea cups worth).
    Are you assuming the wealthy and poor senior receive the same level of disbursement?
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

  3. #143
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by scourge99 View Post
    what net worth qualifies as "high"? What percentage of SS are these "high net worth individuals" siphoning off?

    Consider that there are significantely fewer wealthy people than the middle and poor. Seems like dropping them would be a drop in the bucket (or maybe a tea cups worth).

    What makes you think it was never designed for everyone? Did everyone just forget until now?
    Typically social insurance is going to be concerned with adequacy rather than individual equity. Basically this means that your benefits will be "loosely" tied to your contributions, but they are more concerned with maintaining a certain standard of living for everyone. However, you are correct that we don't subject people to a means test, everyone is eligible for benefits, at varying degrees though.

  4. #144
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by Goldenboy219 View Post
    Semantics will not work with me....
    You gave a vague term "high income". I was asking for you to elaborate on that. It was an honest question.
    Is 200k income high?
    How about 750k? 1 million? 5 million? 10million?

    If you are going to be overly defensive and antagonistic then dont bother responding. I'll just discuss it with other people.



    Quote Originally Posted by Goldenboy219 View Post
    Are you assuming the wealthy and poor senior receive the same level of disbursement?
    No.
    If you believe in the Supernatural then you can become a millionaire!

    Questioning or criticizing another's core beliefs is inadvertently perceived as offensive and rude.

  5. #145
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by Goldenboy219 View Post
    Nonsense. Look up "survivor benefits". You would think people would research topics they do not know about prior to making political statements.
    is that what passes an an argument?

    why would I look up survivor benefits?.. are these benefits guaranteed , by contract, to be meted out to beneficiaries?, do these beneficiaries have a rights to any accrued benefits?... the answer is no, they are not.


    It was designed , for a valid purpose, not to be an insurance program... a design that was upheld, and explained , in Flemming V Nestor.


    In the future, I would , if i were you, withhold my assumptions about what people know and what they don't know.. many people are older and not-as -ignorant-as-you wish-them-to-be.... take this free advise and run with it as you will.

  6. #146
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by drz-400 View Post
    Here is the problem. You are thinking like many people do about SS as an investment. It is not. It is an insurance program. The money you pay is a premium. You will be paid if you reach retirement age. If you do not you get nothing. If you die after 1 payment, that's it. If you live to be 100 you will get more. It is essentially an aleatory contract. We can calculate with pretty good certainty the amount of people that will retire, die, etc, each year and be eligible for the program based on its current age restrictions and how much it will cost based on the current payment rules. Just like we can calculate how many houses will be destroyed for property and casualty and how much to pay based on the amount insured. Using this information we can decide how much to tax ourselves. Sadly, we have chosen not to tax enough for the program. Actually we have, but the rest of the government has not saved money. The idea of a government sponsored "saving account" always makes me laugh. Does anybody think the government is going to actually save money, spend less than it takes in? I want to know. How the hell does anyone actually think a government private "saving" account will actually work?
    But an insurance company, unlike the government, keeps some amount of liquid and invested assets (that it could liquidate) in order to cover those insured expenses.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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  7. #147
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by Harry Guerrilla View Post
    But an insurance company, unlike the government, keeps some amount of liquid and invested assets (that it could liquidate) in order to cover those insured expenses.
    and beneficiaries have specific rights to those insurance benefits, by contract...SS recipients, present and future, don't

    SS was built to be flexible, which is why it is not an insurance policy.

    Congress could, this very day, cut off all benefits.... and still collect payroll taxes.... can an insurance company do the same without being liable for the benefit disbursements?... the answer is no.

  8. #148
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by Thrilla View Post
    and beneficiaries have specific rights to those insurance benefits, by contract...SS recipients, present and future, don't

    SS was built to be flexible, which is why it is not an insurance policy.

    Congress could, this very day, cut off all benefits.... and still collect payroll taxes.... can an insurance company do the same without being liable for the benefit disbursements?... the answer is no.
    Basically, you just described estoppel. Social insurance prescribes benefits by law, and and regular insurance does so by contract. One is compulsory and the other is not. If congress cut off all benefits SS would no longer exist, so that is kinda a moot point. Then all we would have is a payroll tax and no social security program.

    Insurance is basically the pooling of losses that can happen by chance. Insurance transfers this risk from the insured to the insurer, and insurers agree to indemnify them for their loss. That's the distinguishing factor.

  9. #149
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by Thrilla View Post
    why would I look up survivor benefits?.. are these benefits guaranteed , by contract, to be meted out to beneficiaries?, do these beneficiaries have a rights to any accrued benefits?... the answer is no, they are not.
    Who is eligible for survivors benefits

    • A widow or widower -- full benefits at full retirement age, or reduced benefits as early as age 60
    • A disabled widow or widower -- as early as age 50
    • A widow or widower at any age if he or she takes care of the deceased's child who is under age 16 or disabled, and receiving Social Security benefits
    • Unmarried children under 18, or up to age 19 if they are attending high school full time. Under certain circumstances, benefits can be paid to stepchildren, grandchildren, or adopted children.
    • Children at any age who were disabled before age 22 and remain disabled.
    • Dependent parents age 62 or older
    source


    It was designed , for a valid purpose, not to be an insurance program... a design that was upheld, and explained , in Flemming V Nestor.
    You are attempting to frame the "property right" argument around contract law. Your premise might carry validity, but it does not support your argument for the fact that the courts can (and do) allow a rejection of any guaranteed contract via chapter 11 reorganization, or chapter 7 liquidation. Does this mean that private property does not exist? Of course not.

    Social insurance differs considerably from private insurance.

    In the future, I would , if i were you, withhold my assumptions about what people know and what they don't know.. many people are older and not-as -ignorant-as-you wish-them-to-be.... take this free advise and run with it as you will.
    My point stands.... S.S. benefits can (and are) paid to survivors of those who have worked and paid into the system.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

  10. #150
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by scourge99 View Post
    You gave a vague term "high income". I was asking for you to elaborate on that. It was an honest question.
    Is 200k income high?
    How about 750k? 1 million? 5 million? 10million?

    If you are going to be overly defensive and antagonistic then dont bother responding. I'll just discuss it with other people.
    Actually, i stated "high net worth".

    Quote Originally Posted by Goldenboy219 View Post
    The program was never designed to provide high net worth individuals a secondary stream of cash-flow during retirement.
    High net worth individuals (or investors) are those with non-primary-residential assets in excess of either $500,000 or $1,000,000 depending on the particular definition an institution puts forth. In most cases, it is $1,000,000.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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