Wednesday, November 20, 2013

Social SECURITY "entitlement?" Ya think?

this came in an email the other day and I wondered what you thought:

Remember, not only did you and I contribute to Social Security but your employer did, too.  It totaled 15% of your income before taxes. If you averaged only $30K over your working life, that's close to $220,500.  
Read that again; Did you see where the Government paid in one single penny?
We are talking about the money you and your employer put in a Government bank to ensure you and I that we would have a retirement check from the money we put in, not the Government.
Now they are calling the money we put in an entitlement when we reach the age to take it back.

If you calculate the future invested value of $4,500 per year (yours & your employer's contribution) at a simple 5% interest (less than what the Government pays on the money that it borrows), after 49 years of working you'd have $892,919.98.
If you took out only 3% per year, you'd receive $26,787.60 per year and it would last better than 30 years (until you're 95 if you retire at age 65) and that's with no interest paid on that final amount on deposit!  If you bought an annuity and it paid 4% per year, you'd
have a lifetime income of $2,976.40 per month.
Another thing with me.... I have two deceased husbands who died in their 50's, (one was 51 and the other one was 59 before one percent of their social security could be drawn. I worked all my life and am drawing 100% on my own social security).   Their S.S. money will never have one cent drawn from what they paid into S.S. all their lives.
Entitlement my foot, I paid cash for my social security insurance!
Just because they "borrowed the money for other government spending" (raided the Social Security fund), doesn't make my benefits some kind of charity or handout!!
Remember Congressional benefits? --- free healthcare, outrageous retirement packages, 67 paid holidays, three weeks paid vacation, unlimited paid sick days. 
Now that's welfare, and they have the nerve to call my social security retirement payments entitlements?
We're "broke" and we can't help our own Seniors, Veterans, Orphans, or Homeless.
They call Social Security and Medicare an entitlement even though most of us have been paying for it all our working lives, and now, when it's time for us to collect, the government is running out of money.
Why did the government borrow from it in the first place? It was supposed to be in a locked box, not part of the general fund.

Z:  I'm no expert on the subject of Social I wanted you to chime in today.............this sounds right.    Got any answers for the questions?



American Jihad said...

Satisfying infantile claims to entitlement, indulgence and compensation! Like spoiled, angry children, they rebel against the normal responsibilities of adulthood and demand that a parental government meet their needs from cradle to grave.
It's like all the liberals views. They discriminate, but they want to pretend that they don’t. Liberals will throw fits, call you a bigot, stomp their feet throwing a hissy fit, but statistics don't lie. But liberals want you do live in denial like they do. The ugly faces of the screeching progressives are at it once wonder their rating are in the toilet

Craig said...

... and they have the nerve to call my social security retirement payments entitlements?

Well, yeah. You're entitled to that money, you paid in. If you're really offended by the word "entitlement", remember who uses it as a pejorative. Republicans who want entitlement reform, aka, reducing retiree's benefits.


It goes to survivor benefits. If you are widowed and have children under 16, you get survivor benefits. If your spouse dies and you are disabled, you get 'em. You can get partial benefits at age 60 and full survivor benefits, as well as your own SSI payments, at age 65. I'm not sure how it works with multiple deceased spouses.

Moving on to your tortured math. First of all, SSI contributions are 6.2% for employer and employee for a total of 12.4%, not 15%. Your calculations based on $30K over 49 years? The median income now is @ $50K, half the population earns less than that. The number of people averaging %30K over 49 years is tiny. Think about it, a 16 year old, or a 26 year old making $10 or $15K 49 years ago? That's about what it would take for a person at the median to average $30K. 31 years ago the the contribution nearly doubled, the Reagan tax hike, so, for the first 18 years of your 49 years the contribution was a combined 8%.

According to Pete Peterson, Alan Simpson and the catfood Oligarchs, most people burn through their accrued benefits in 7 years. The 8th year after retirement you are a lazy sponge at the govt. teat. a simple 5% interest

Your calculation is based on compounded, not simple, interest. Averaging 5% over 49 years would make you an investment genius. 5% a year would involve some risk. By law, SSI surpluses must be held in T-notes. It's a little less than 2% but is guaranteed by the full faith and credit of the U.S. At least until the Republicans started playing chicken with it.

I'm always amazed at how you can muster outrage over the most benign things. The most successful social program in the history of the U.S., it's lifted millions out of poverty, saved countless lives and you gripe about it. Then, while complaining it doesn't pay enough, vote for those that want to tear it down. Amazing.

sue hanes said...

Z - I'm not good at math so I won't attempt to say if I think your figures are right. I just hope social security is the right thing and it is helping people.

JonBerg said...

Once again I direct your attention to the USA DEBT CLOCK; In particular, to the UNFUNDED LIABILITIES.

From the FAQ:

"What are "unfunded liabilities"? Suppose you have no assets (no house, savings etc.), and you promise to pay me $1000 per month for a year. Your "unfunded liability" is $12,000 (12 months times $1000). The Federal Government has made similar promises for Medicare, Social Security, Medicare Part D (the Prescription Drug Plan) while not setting aside any money for these programs. Eventually the bill will come due and the government will have to pay those promises by law - or change the law."

How will we ever get out of this mess?

Z said...

American Jihad..."live in denial"? Or accept and live with the lies that are coming to us seemingly every single day, right?

Craig, you need to read it again. To mess with the word "entitlement" and apparently purposefully ignore that we are ENTITLED and our gov't shouldn't call it entitlement is hilarious.
Ya, read it again.

Sue, I didn't write this...I need to go back and put that in my blog.
Social Security does help many people. It used to be that it was their money, now it's a feeling we get that we get to have the government's money! wrong.

JonBerg; we won't.
Meanwhile, the pres is getting ready to apologize to Afghanistan. Start praying now that letter doesn't get written!

skudrunner said...

You pay into SS, not by choice in most cases, and when you take Your money out, you pay tax on it.

SS is considered an entitlement but should be a bad investment.

Mustang said...

Social Security is an entitlement for two reasons: first, the government said so. Second, becomes an entitlement because you paid into it. Sadly, over the years, government has changed this somewhat. Now we must distinguish between earned entitlements, and unearned entitlements. We should examine all entitlements, but the “unearned” entitlements should be taken off the table immediately. Single mothers with fifteen bastards and a bad knee problem should not be entitled to federal stipends. People looking for handouts because they somehow couldn’t keep their legs together should petition the citizens of their states and the state legislature for sympathy, not the federal government.

Borrowing against trust accounts is completely dishonest, in my view … but not unlike what the unions do. They borrow heavily against union dues and one hopes that by the time a union worker gets to retirement age, there is anything at all left for he and his wife. Meanwhile, just like the politicians, union bosses are driving around in expensive caddies, wearing $1,000.00 suits, and taking expensive vacations to the Bahamas …

One wonders, why do the American people put up with this? Bernie Madoff must be fuming.

Duckys here said...

Seems a little overwrought.

The question of when the phrase "entitlements" came into common usage to refer to SS and Medicare is a worthwhile question but it is by no means clear that it wasn't a right wing meme to label a social insurance program an "entitlement".

On a more general scope the case is easily made that extensive deficit spending as practiced by Reagan and Bush particularly is a right wing strategy to cripple SS and Medicare.

But leave it to the right to want to destroy a very successful program.

We build a financial system is simply bets on bets on bets to the tune of several multiples of the world economy. It goes poopy and devalues most everyone's home and the right starts complaining that a system that the solution is to bankrupt seniors.
You folks have been listening to too much Pete Peterson.

Bob said...

Craig says, " Averaging 5% over 49 years would make you an investment genius."

Well, I guess anybody in the stock market is an investment genius. The standard for the market is 9%+ per year, and by all means compound it. hat's the way money works. Only simpletons calculate the future value of money with simple interest.

My portfolio is all mutual funds, and it does a bit better than 9%. Of course, there are bad years, but the good more than make up for the bad. Over a thirty year working career, people are MUCH better off by doing private plans than by putting money into Social Security.

AS an example, my wife retired last year with thirty years service in the Fulton County Teachers system. She never paid Social Security. Her defined pension is more than twice my Social Security income, and I did the maximum in my career.

The reason Social Security is called the most successful social program is because for most people participation is forced. If given a choice intelligent people would rely on their own savings and investments.

As far as why the SS fund has been spent dry, by law all revenues have to go into the general fund. The SS Trust fund is given Treasuries to hold, which is just a government bond. Money is money in the general fund, and it has been convenient for our government leaders, Democrat and Republican, to use those funds to fund their over-budget whims. All we have is a pile of Treasuries in the fund that the government will have to finance with additional taxes to pay us back.

Remember that the US Government credit rating has been lowered once, and stands a real chance of it happening again.

There is almost no scenario where a citizen would not come out ahead by investing the equivalent of their Social Security contributions into a diversified portfolio. It is not magic, nor is it unavailable to anyone. Heck, computers do a pretty good job in managing portfolios.

Duckys here said...

@Bob --
My portfolio is all mutual funds, and it does a bit better than 9%.
You must enjoy paying sucker fees.

Bob said...

Ducky said, "You must enjoy paying sucker fees."

Good point, Ducky. However, the funds I chose have pretty small fees. They are not far from the fees of iShares ETF's.

It is not so much the absolute level of the fees that matters so much, it is the Net Asset Value of the fund. It is easy to stay away from those funds that charge way too much, but you are mistaken to think that somebody else can manage a portfolio without collecting some fees.

All an adviser has to do is beat your personal returns by 1% to pay for himself/herself, and that's not hard to do. It is usually worth it to pay a nominal fee for some financial advice.