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What Happens To The Soc. Sec. Money Of People That Die Before Collecting?

And speaking of people paying in to SS but not collecting, don't forget our illegal immigrant workforce. Besides raising the SS tax, Reagan also exonerated all businesses from any legal recourse for hiring illegal aliens if they had a SS card. So these people pay SS taxes for benefits they will never receive. Its called the Earnings Suspense File.

SSA’s ESF has reached $1.2 trillion in uncredited wages associated with 333 million W-2s for TYs 1937 to 2012

http://oig.ssa.gov/sites/default/files/audit/full/pdf/A-03-15-50058.pdf

so we've collected over a trillion dollars for benefits no one will collect. Mucho gracias amigos.
 
rhinefire said:
How many people die before collecting the SS money they have earned and how is that money budgeted in to our govt.?
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People dying early is a huge part of what is counted on to keep this Ponzi Scheme semi sullivant. Dead peoples money is paid to the living.
 
joG said:
Nope. But since you begin with "Sorry but that is a ridiculous comparison" instead of being tolerably less rude and by showing an ignorance probably driven by bias, I do not think I am interested in pursuing the topic with you. But you should look at the economics of these things, if you do not want to look like uneducated. A justifying argument in a technical discussion like: "Social Security and Medicare are necessary" is really quite embarrassing.
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I get that it is far easier for you to take the cowardly route, rather than actually argue your position... it's what one can expect from you. In reality, social insurance like Social Security is funded by current taxes, accumulated tax + interest proceeds, and if need be the sale of sovereign debt. Even in the event that current inflows go to zero, it will still be honored by the full faith and credit of the U.S. government. A characteristic not shared by any investment scheme.
 
holbritter said:
Which is why they always want to raise the age of eligibility. Hoping more people die before they have to pay out.
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they? don't you mean republicans? Reagan raised it from 65 to 67. And the GOP house is proposing making it 69.
 
austrianecon said:
It's all a ponzi scheme.
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Nope! S.S. has legal standing that is upheld by both the tax code and the Treasury. Investment schemes do not carry the same characteristics.
 
Kushinator said:
I get that it is far easier for you to take the cowardly route, rather than actually argue your position... it's what one can expect from you. In reality, social insurance like Social Security is funded by current taxes, accumulated tax + interest proceeds, and if need be the sale of sovereign debt. Even in the event that current inflows go to zero, it will still be honored by the full faith and credit of the U.S. government. A characteristic not shared by any investment scheme.
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I am sorry I reacted as I did, but it is annoying to have someone tell you rudely that you should 'prove' general knowledge in an area of your profession.
So, Have you ever done the calculations? The only thing redeeming the American vs most other countries' pension systems is that the payments are no longer considered to be guaranteed so that government can reduce them, when USSC becomes too expensive. But this has been known for decades and there is plenty of long and precise literature on it and we are already seeing the drama unfold albeit in the slow motion demographics prescribe.
 
joG said:
I am sorry I reacted as I did, but it is annoying to have someone tell you rudely that you should 'prove' general knowledge in an area of your profession.
So, Have you ever done the calculations? The only thing redeeming the American vs most other countries' pension systems is that the payments are no longer considered to be guaranteed so that government can reduce them, when USSC becomes too expensive. But this has been known for decades and there is plenty of long and precise literature on it and we are already seeing the drama unfold albeit in the slow motion demographics prescribe.
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No, it has not been known for decades. The truth is there are several ways to guarantee SS payments, including raising taxes or financing the payments.
 
rhinefire said:
How many people die before collecting the SS money they have earned and how is that money budgeted in to our govt.?
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Your question reveals the common error most people make about what Social Security is.
 
sangha said:
No, it has not been known for decades. The truth is there are several ways to guarantee SS payments, including raising taxes or financing the payments.
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I am afraid you haven't done the math.
 
sangha said:
I am not surprised to see that you are in denial about the truth
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I did the math. If your truth is not in the math? Present it.
 
Vern said:
they? don't you mean republicans? Reagan raised it from 65 to 67. And the GOP house is proposing making it 69.
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No. It's talked about every couple of years
 
Kushinator said:
Nope! S.S. has legal standing that is upheld by both the tax code and the Treasury. Investment schemes do not carry the same characteristics.
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Kush, I am saying the whole system is a ponzi scheme. As in how run the whole system. We borrow from the future to pay for the now. That's all.
 
ttwtt78640 said:
Would this proposed NIT be based on age/disability or simply a fixed (random?) amount made available to anyone that decided working to fully support themselves and their dependents was too much of a hassle? Obviously, to have a NIT would require significantly increasing the PIT which already falls short of covering even the current federal spending.
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1) NIT would be based on everybody over 18. The point of NIT is to replace all the federal programs thus giving people a minimum living standard. So if you aren't working, you'd get say $15,000 (bare minimum) which if you aren't disabled, you are already getting close to that.

2) PIT doesn't really have to rise that much but rather a restructuring of tax code. Roll up FICA taxes into income tax and you'll get what I am talking about.
 
SouthernDemocrat said:
Nonsense. Do you realize what a medical insurance premium would be for a senior? Do you think we would have NIT transfers to 65 year old seniors of over 20k a year? To 70 year old seniors of over 35k a year? To 80 year old seniors of in excess of 50k a year?

You might could replace Social Security with a NIT, but you sure could not replace Medicare with it.
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For a senior who is automatically enrolled into Medicare if they take SS?
 
austrianecon said:
Kush, I am saying the whole system is a ponzi scheme. As in how run the whole system. We borrow from the future to pay for the now. That's all.
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We have been running the system on deficit spending for over 200 years. Explain to me how or where we are paying today for the government's past spending.

Real debt repayment would take the form of expended labor or other resources. Today, we pay less in taxes then we get back, so there is no net repayment in labor. Even when interest is taken into account, taxes still aren't paying for that - the govt. still spends more into the economy than we pay in taxes.

If we, as a country, were really in debt, we would have to be consuming less than we are producing at some point. I just don't see where that is true, or going to be true in the future.
 
austrianecon said:
1) NIT would be based on everybody over 18. The point of NIT is to replace all the federal programs thus giving people a minimum living standard. So if you aren't working, you'd get say $15,000 (bare minimum) which if you aren't disabled, you are already getting close to that.

2) PIT doesn't really have to rise that much but rather a restructuring of tax code. Roll up FICA taxes into income tax and you'll get what I am talking about.
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A household with two (young?) adults that elected not to work (on the books) would get $30K (about 200% of the FPL) and yet a household with a single non-working parent with two kids would get $15K (about 65% of the FPL). The obvious complaint would be that you would hurt many poor families (and seniors) to help the loafing class remain quite comfortable.

All of this is just to get an increase in the cost of federal entitlement programs and taxation of those that do work.
 
holbritter said:
No. It's talked about every couple of years
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Your post makes no sense. Reagan raised it to 67 and the current GOP is discussing raising it to 69. Whether or not "It's talked about every couple of years" doesn't change the facts I posted. I can only guess you think if you post "No" it magically changes the facts. And the facts that you seem to be trying to change is that its Reagan who raised the retirement age and its the republicans discussing doing it again.

The chairman of the House Ways and Means Social Security Subcommittee, Rep. Sam Johnson, R-Texas, has introduced legislation to make changes in Social Security, including raising the retirement age.
The Social Security Reform Act of 2016 would gradually update the full retirement age at which workers can claim benefits. It would raise the age to 69 for those who qualify for "early retirement age" after Dec. 31, 2029.

https://www.accountingtoday.com/news/new-legislation-would-raise-retirement-age-to-69
 
holbritter said:
Which is why they always want to raise the age of eligibility. Hoping more people die before they have to pay out.
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The system depends on current workers funding current beneficiaries - when revenue is less than expenses then you must reduce benefits and/or increase revenue. Since here are fewer folks getting benefits, than there are folks paying taxes to support them, it is more politically safe to reduce benefits.
 
sangha said:
Aside from the fact that everything you said there is wrong, you are 100% right

SS money does go into a fund, the money in the fund is invested, and it earns interest
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And that is not quite true.

SS money that earns interest is considered "overage", and it earns this interest by buying government bonds. By law, this fund overage must be invested, which means that if people are paying into the SS fund over and above what the fund is currently using (which is the case right now), this overage is transfered the the federal government by way of intragovernmental debt. The government takes that money, spends it however it wants, and gives the SS Trust Fund an IOU.

So, yes, the fund is owed a certain amount of money, plus interest... by the federal government, i.e. the taxpayers. Since the government runs in the red every single year (including the Clinton years, by this very mechanic), one could view the SS Trust Fund as insolvent.

What happens when more are withdrawing from the fund than contributing to it? Why, the fund has to cash bin those bonds, putting the taxpayer on the hook for the wild increase in deficit spending.
 
sangha said:
Aside from the fact that everything you said there is wrong, you are 100% right

SS money does go into a fund, the money in the fund is invested, and it earns interest
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That looks good on paper but if one pays more interest than they earn then interest is still a net expense. Earning $20 of interest on a savings account does not make much sense if you are paying $400 of interest on credit card debt.
 
It is not a Ponzi scheme but just a rather average insurance plan. Money is taken in from all contributors and just like health care insurance some people need it more than others. If you don't need it, because you died before you collected than you haven't lost anything and more than you lost something if you never get sick or had to tap into your health insurance. It is not "your" money because it is put into a pool.

I "lost" a lot of money on private health insurance as my premiums greatly exceeded the amount paid out on my behalf and I am over 65 so will never recoup those "loses". I expect to benefit on Medicare as that program is poorly constructed and the government doesn't take in enough to pay for it. They should take out more in payroll taxes. And I hope to break even on SS. But who knows at this point.

I have also lost at homeowners insurance and about broke even on auto insurance (son had a significant accident while on my policy). Win some lose some.
Also I lost on gambling.
 
sangha said:
Aside from the fact that everything you said there is wrong, you are 100% right

SS money does go into a fund, the money in the fund is invested, and it earns interest
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Yeah, maybe a little of it. During those "surplus" years at the end of Clinton administration the baby boomers were putting a lot into SS and SS receipts exceeded SS expenses. Unfortunately the government spent all of that. We never had a surplus during those years as government just tapped into those SS funds. Total debt when up every year as we "borrowed" on the SS credit card instead of the China credit card.
 
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