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Investing/Strategies / Retirement Investing
|Subject: Re: Clinton Retirement Plan||Date: 10/11/2007 6:47 PM|
|Author: hockeypop||Number: 59610 of 77568|
canonian: "I agree but as a TMFPMarti posted the original thought behind SS seems to have been changed over time. I'm actually confused, was SS originally created just to keep people from hitting poverty"
Yes; and, as another poster noted, to encourage retirement so that the young could obtain jobs.
"or was it created to allow people to put money in to take out later when they do retire?"
NO. It was designed to be pay as you go and there were never personal accounts with any money that could be taken out later.
I have NO solution for this discussion, but will note that the present SS bears little resemblance to what was originally passed. Age 65 retirement in the 1940's was near death for most males. There were HUGE problems with poverty at retirement and at the time of its passage it solved a national disgrace.
I can't find the graph any more, but the early social security WAS a very small percentage of the total retirement income for most Americans. So, although predicted by some in the debate and possibly not attributable directly to SS, a "perfect storm" began to happen where Americans gradually began saving less, so that SS became a greater percentage of the retirement savings of MORE Americans. That has happened for almost every year since its beginning.
ALSO, the retirement year 65 stuck, even as the longevity of Americans began to increase each year, and (horrors) women entered the workforce making 65 an even more relatively young age. Women did add more workers to the SS pool, which made things look good for a number of years (and I agree with the voodoo accounting) while ignoring the ultimate problem with their retirement and a longevity even greater than men.
Finally two other demographics are taking their toll. First, more students are going to college, thus delaying their entry into the social security pool. Rather than providing space for them to work, they are now opting out of the workforce and eventually entering it with more debt to boot. This reduces the number of working years by about 8-10% and makes it difficult to add retirement funds at a key early investment time because they are paying down loans. In addition, with a booming stock market, more Americans at relatively high paying jobs are retiring early, again reducing the SS pay-in pool.
For my prediction, I've said other places that I believe that there will be an increase in retirement age (at least eliminating early retirement) for younger workers, and greater means testing for existing retirees (graduated taxation of SS benefits). The SS tax either for individuals or businesses can't go up much more without seriously reducing productivity IMO.
As more and more retirees DO see it as a program for poverty, it will have less sensitivity in the majority's own pocketbook, be less of a "middle rail" issue, and the benefits will be squeezed down until the program does become more self-sustaining, perhaps with more of the taxes going toward the larger healthcare issue.
But, who knows. I was on a social security commission about 20 years ago and there were ALL of these issue then. Talk = 100, action = 0
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