Social Security is often touted as a crucial safety net that protects American retirees from abject poverty. In reality, Social Security has made it harder for retirees to grow wealthier by reducing their ability to save and thus has contributed to poverty in old age, argues Texas A&M economist and Independent Institute Research Fellow Edgar K. Browning in a new op-ed based on his article for the summer 2008 issue of The Independent Review.
For those retiring in 2008, Social Security returned an average of slightly less than 3 percent on retirees' contributions, adjusting for inflation. Had they invested their contributions in a balanced portfolio (60 percent stocks, 40 percent bonds), those retirees would have earned, on average, 5.5 percent--a huge difference when compounded over a lifetime. "In fact, the annual retirement income provided by a 5.5 percent return is double than that provided by the 3.0 percent return of Social Security," writes Browning. "Even more compelling, an investment in the stock market averages a 7 percent real return, which would mean an annual income of three times what Social Security provides."
The yield from Social Security looks even worse when you consider that savings fuel investment and economic growth. "When this cost is taken into account," Browning continues, "the real return from Social Security to those retiring today is actually negative!" Social Security's low returns will fall even lower after policymakers cut benefits or raise payroll taxes to deal with the growing number of retirees compared to the number of Social Security contributors. "The elderly poor, as well as the rest of us, are ill served by politicians who systematically downplay the huge costs of Social Security and delay confronting what is indeed a true crisis," concludes Browning.
http://www.independent.org/newsroom/article.asp?id=2302
Social Security would be a great investment if everyone were taxed at the same rate. Warren Buffet earns the majority of his money through investments which are taxed at 15%, and do not include social security tax. I'm not sure on the maximum taxable rate, but it was $82k a few years ago. If the tax were flat and the same rate regardless of income or source, it would be a great investment for 99% of those on it. Its only 1% of the population that would not see good returns. Seems like a good plan to me😀
Originally posted by duecerIn addition to the loss of present-day income by today's workers (to pay for today's retirees), and the retarded earnings potential (loss of money in the future), Social Security doesn't leave anything for the heirs of those who die before they reach full retirement. For example: My old man and two uncles worked a lifetime paying into the system and they died at age 64, 62 and 55 respectively. All that money was lost to me, my mom, my aunts and cousins. Until the system is privatized, there is no way I will ever support it.
Social Security would be a great investment if everyone were taxed at the same rate. Warren Buffet earns the majority of his money through investments which are taxed at 15%, and do not include social security tax. I'm not sure on the maximum taxable rate, but it was $82k a few years ago. If the tax were flat and the same rate regardless of income or source, ...[text shortened]... . Its only 1% of the population that would not see good returns. Seems like a good plan to me😀
Originally posted by duecerIt makes no sense that all taxes should be at the same rate as rasing some taxes (such as capital gains) would have more of an effect on frequency of transactions (and revenue collected than others).
Social Security would be a great investment if everyone were taxed at the same rate. Warren Buffet earns the majority of his money through investments which are taxed at 15%, and do not include social security tax. I'm not sure on the maximum taxable rate, but it was $82k a few years ago. If the tax were flat and the same rate regardless of income or source, ...[text shortened]... . Its only 1% of the population that would not see good returns. Seems like a good plan to me😀
Furthermore, city tax, FICA, commuting tax, parking tax, estate taxes are all at different rates why do you quibble over capital gains? Buffet pays plenty of taxes and does not tap into entitlement programs. I think the bigger problem is we do not have more people like Buffet paying insane amount of taxes, not that his tax big is too small.
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Originally posted by der schwarze RitterI understand your position but you do know that SS was not designed to be inheritance, right?
For example: My old man and two uncles worked a lifetime paying into the system and they died at age 64, 62 and 55 respectively. All that money was lost to me, my mom, my aunts and cousins.
Originally posted by der schwarze Ritterblah blah blah. blah. blah blah
Social Security is often touted as a crucial safety net that protects American retirees from abject poverty. In reality, Social Security has made it harder for retirees to grow wealthier by reducing their ability to save and thus has contributed to poverty in old age, argues Texas A&M economist and Independent Institute Research Fellow Edgar K. B s," concludes Browning.
http://www.independent.org/newsroom/article.asp?id=2302
Same argument made over and over by Bush when he tried to reform SS a few years back.
Simple truth is you can't rely on the stock market to give you consistent returns. It's a blind faith and if the markets turn down just as you reach retirement and you need to draw out your money because you have no income when you retire, then you are not going to be able to recoup the money you have lost as the market eventually rises.
SS provides exactly what it is designed to do. Regardless of market conditions you are guaranteed a set amount of money.
It's a trade off between a stable income when you retire vs the uncertainty of higher or lower returns.
Prudent fiscal planning for retirement for all. Sounds too commie-ish for dsr is my bet. Plus all the goldman sachs and money investment companies would love to get their hands on all the fees they could charge to people to handle their retirement funds.......hmm, do we smell the real reason for this idea??
Originally posted by duecerWhen the US tax system was designed, they considered a flat tax because it was the easiest to administer.
Social Security would be a great investment if everyone were taxed at the same rate. Warren Buffet earns the majority of his money through investments which are taxed at 15%, and do not include social security tax. I'm not sure on the maximum taxable rate, but it was $82k a few years ago. If the tax were flat and the same rate regardless of income or source, ...[text shortened]... . Its only 1% of the population that would not see good returns. Seems like a good plan to me😀
Why do you think they rejected it and went for a graduated tax rate instead?
It's a trade off between a stable income when you retire vs the uncertainty of higher or lower returns.
No, it is a trade off between a forced savings and the possibility of simply using the money to live higher on the hog.
Even if you were forced to put your money in government bonds, most people who have jobs would get a better return than they are going to get from Social Security.
Originally posted by EladarUm, you say no and then say EXACTLY THE SAME THING I SAID????
[b]It's a trade off between a stable income when you retire vs the uncertainty of higher or lower returns.
No, it is a trade off between a forced savings and the possibility of simply using the money to live higher on the hog.
[/b]
Sure, the words are different but it's the same frickin thing there cupcake.
Originally posted by leepoundI wasn't arguing the merit of flat taxes, just the injustice in the current SS tax.
It makes no sense that all taxes should be at the same rate as rasing some taxes (such as capital gains) would have more of an effect on frequency of transactions (and revenue collected than others).
Furthermore, city tax, FICA, commuting tax, parking tax, estate taxes are all at different rates why do you quibble over capital gains? Buffet pays plenty of ...[text shortened]... t have more people like Buffet paying insane amount of taxes, not that his tax big is too small.
Originally posted by der schwarze Ritterwrong, if your parents are married at the time of death, the wife gets a claim on that income at a prorated rate. If you had a company sponsored pension, the same thing would happen.
In addition to the loss of present-day income by today's workers (to pay for today's retirees), and the retarded earnings potential (loss of money in the future), Social Security doesn't leave anything for the heirs of those who die before they reach full retirement. For example: My old man and two uncles worked a lifetime paying into the system ...[text shortened]... my aunts and cousins. Until the system is privatized, there is no way I will ever support it.