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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 58833  
Subject: Re: Such different conclusions Date: 2/19/2007 11:53 PM
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The very first beneficiary made out like a bandit:

The fact that Ida May Fuller "made out like a bandit" does NOT make it a Ponzi scheme. If you live to 104, YOU will make out like a bandit. The person who dies on their 62nd birthday after having paid in for years will make nothing. That's insurance, no different than you paying your homeowners insurance your whole life without a claim, or conversely, paying in on Tuesday and having your house burn down on Wednesday.

Please go back and READ what a "Ponzi scheme" is. Social Security isn't. http://en.wikipedia.org/wiki/Ponzi_scheme our constant use of false and inflammatory language only demonstrates the thinness of your argument.

Incidentally, SS taxes began being paid in 1937. The first benefits were provided in 1940, so it's not as though some people got a completely free ride. Everybody paid in something. Ida May was an outlier, who did better than most. Some people die early and do worse. That's insurance for you.

That is it takes money from a large group of individuals (current workers) and distributes it to a smaller group of people (current beneficiaries).

Yeah, like "insurance."

As time passes, the number of current workers has fallen and the number of beneficiaries has risen. This has lead the constant decline in the ratio of benefits received vs. the money paid.

I do not dispute that the ratios have changed. So what? I pay more for my insurance today than I did - for equivalent service - a decade ago. I pay for "maternity benefits" for other people, since I have no children, and Mrs. Goofy is beyond childbearing age. If you are looking for perfect symmetry, you are not going to find it. In many things - not just Social Security.

In my own case my very rough estimates are that I'll pay out >$2 (in pre-2000 dollars) for every dollar (in 2028 dollars) according to the current payout formula. After accounting for inflation the actual payout is much MUCH worse.

That's entirely possible. The same would be true if you purchased a life insurance annuity product with a disability benefit. You are playing the "it must work out evenly for me" game, even as we all agree (except you, apparently) that Social Security does not work that way. You may come out ahead. It depends how long you live, and what your best earning quarters are.

BTW, did you include in your calculation the very real benefit of having a disability insurance product for your entire working life? No? Quell surprise.

However, there is some very sobering information in this wikipedia article: From 2004 to 2030, the combined spending on Social Security and Medicare is expected to rise from 7% of national income (gross domestic product) to 13%. Two-thirds of the increase occurs in Medicare.

Yes, that is "sobering." What is sobering is that you have focused entirely on Social Security, when the real problem is Medicare.

The "return" from Social Security depends on many things, and if you want to know whether you will get back what you put in, there are several threads which explain it - (which is dependent on when you start taking, how long you live, and so on.)

Start here:
http://boards.fool.com/Message.asp?mid=23720653
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