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  1. #11
    Order Now! pure_mercury's Avatar
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    It sounds morbid, but most of the Baby Boomers will have to die off before there is serious reform. Generation X is much smaller. Of course, there was a mini-boomlet throughout the 1980s (including myself), of the Boomers' children. If nothing is reformed significantly within the next 35-40 years, SS will be the vast majority of the government's expenditures. I really, really wish I could just opt out and invest my money on my own. A) It's unfair to force people into the system; and B) I could an outrageously better return investing the money myself. I am sure any future employers would love to be rid of the paper-eating charade of their contribution, too. Fortunately, I should qualify for 401(k) matching in the future. Shouldn't someone in his/her 20s be rewarded for taking steps to provide for their retirement so early?
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  2. #12
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    Quote Originally Posted by ygolo View Post
    I didn't realize that these were "expert" suggestions.
    I was also under the impression that people believed those "fixes" were not satisfactory.

    I think the younger generations are concerned that things like:
    • raising the retirement age of the currently eligible retirees,
    • or raising taxes on social security being doled out now,
    will not be implemented because it is not palatable to those in power (namely the boomers).

    If I did the calculations right, I've already paid a 100K into SS after working only 10 years. I doubt when I retire (and I am not waiting till 75 or whatever, since that nears my own life-expectancy), that SS will make a dent in my expenses. I am not counting on SS, and I suppose that is the Gen X&Y solution (to become financially secure by their own means).



    I am really curious to see how actual solutions played out in history. I don't want to wait for Japan and Europe to screw-up before realizing we have nothing either.

    Any sources would be useful. I am not at all aware of past successes in similar situations, and all the rhetoric I hear is more than a bit gloomy.

    Something meaty as a counterpoint would be helpful.
    Okay, fair enough. I'm giving you broad trends; you want something more authoritative and specific. That's a good attitude. I like people who don't mind doing the research themselves in order to get to the bottom of things.

    A couple points:

    1) Just one more "broad-trend" consideration: PAYG systems, in fact, are rarely in alignment. IOW, it's rare that pay-ins exactly match pay-outs--there are always demographic shifts occurring. Handling misalignments is central to the normal management of PAYG systems. So it should be no surprise that governments have ways of dealing with the slow-moving, predictable demographic shifts that affect PAYG systems. (Again, that's just another "broad-trend" consideration to show that dealing with PAYG misalignments is normal and not some sort of big crisis.)

    2) As for getting hold of some studies and facts and figures on pension systems, I suggest the web site of the International Monetary Fund. The IMF deals with macroeconomics and international flows of money. Big pools of money (pension funds, social security funds, sovereign wealth funds, etc.) are studied by the IMF because they need to be invested somewhere and thus tend to cross international borders and affect countries' balance of payments. Also, the IMF helps developing countries set up their social safety net systems, which means they do a lot of research into what constitutes the best kinds of pension/social security systems for different countries.

    So the IMF is probably the best place for neutral (non-political) broad overviews (at the international level) of social safety nets on a real-time (up-to-date) basis. Go to the home page and type in "payg" (without the quotes) in the search engine and you'll probably get hundreds or even thousands of studies on the issue. Some studies will be primers and overviews, and some will be very specific and technical. The IMF's home page is at: IMF -- International Monetary Fund Home Page

    Also, people who are interested in the state of the US and world economy can go to the IMF's home page for broad economic data and predictions. I would suggest investigating the latest edition of the "World Economic Outlook" publication on-line and the "Country Info" section on specific countries.

    The IMF website has an excellent search engine. Use it liberally.

    Enjoy!

  3. #13
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    Quote Originally Posted by ygolo View Post
    I was also under the impression that people believed those "fixes" were not satisfactory.

    I think the younger generations are concerned that things like:
    • raising the retirement age of the currently eligible retirees,
    • or raising taxes on social security being doled out now,
    will not be implemented because it is not palatable to those in power (namely the boomers).
    Quote Originally Posted by pure_mercury View Post
    It sounds morbid, but most of the Baby Boomers will have to die off before there is serious reform.
    This is a commonly-held opinion of the Social Security system: That the Boomers will somehow let it crash before they'll let anyone tinker with it. But if you think about it, it would clearly never happen. Why would the Boomers crash their own retirement savings system and impoverish themselves?

    In practice, Boomer intransigence about "fixes" to the Social Security system merely precludes anything being done in the early stages when the problem is apparent but still a ways off. Boomers figure that if they hold out and dig in their heels, someone else will pay.

    But when the crisis draws near, the Boomers will cave. If it's a choice between crashing the system and putting up with some changes, Boomer will put up with changes.

    Frankly, that's just "politics as usual." Most problems in America have to be left to fester until they turn into crises, especially when there's big money at stake. Everyone sees problems coming for years and even decades, but it's impossible to get any movement on them till they turn into genuine crises on the front doorstep. Then suddenly a solution is cobbled together.

    Again, that's just politics as usual. It's one of the drawbacks of democracy--it's tough to build consensus until problems become severe enough that effectively every single person has a stake in finding a solution. [shrugs shoulders]

  4. #14

    Default From the horse's mouth...

    I realize we have completely created a second topic, at this point. But I figure to mods will do the needful.

    Here is something off of the Social Security Administration's own website:
    THE Summary of the 2007 Annual Reports

    We are increasingly concerned about inaction on the financial challenges facing the Social Security and Medicare programs. The longer we wait to address these challenges, the more limited will be the options available, the greater will be the required adjustments, and the more severe the potential detrimental economic impact on our nation.

    Social Security

    The annual cost of Social Security benefits represented 4.2 percent of Gross Domestic Product (GDP) in 2006, is projected to increase to 6.2 percent of GDP in 2030, and then rise slowly to 6.3 percent of GDP in 2081. The projected 75-year actuarial deficit in the combined Old-Age and Survivors and Disability Insurance (OASDI) Trust Fund is 1.95 percent of taxable payroll, down from 2.02 percent in last year's report. This decrease is due primarily to revisions in key assumptions and to changes in methods. Although the program passes our short-range test of financial adequacy, it continues to fail our long-range test of close actuarial balance by a wide margin. Projected OASDI tax income will begin to fall short of outlays in 2017, and will be sufficient to finance only 75 percent of scheduled annual benefits in 2041, when the combined OASDI Trust Fund is projected to be exhausted.

    Social Security could be brought into actuarial balance over the next 75 years in various ways, including an immediate increase of 16 percent in payroll tax revenues or an immediate reduction in benefits of 13 percent or some combination of the two. Ensuring that the system is solvent on a sustainable basis beyond the next 75 years would require larger changes. To the extent that changes are delayed or phased in gradually, larger adjustments in scheduled benefits and revenues would be required that would be spread over fewer generations.

    Accept the past. Live for the present. Look forward to the future.
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  5. #15
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    Quote Originally Posted by ygolo View Post
    I realize we have completely created a second topic, at this point. But I figure to mods will do the needful.

    Here is something off of the Social Security Administration's own website:
    THE Summary of the 2007 Annual Reports
    Exactly. The SSA trumpets the dangers and even puts out some gloom and doom scenarios, then it points out the fixes (pretty much the same ones that I already described.)

    The Boomers fight the changes, but in fact politicians are already tinkering with the system and doing some fixes around the edges. (Remember Bush tried to amnesty Mexican workers already in the U.S. a year or two ago, for example. It would have boosted the pay-ins by creating a new pool of citizens.) If the fixes are inadequate by the time things start to get dire, then the Boomers will simply have to swallow big changes whether they want them or not.

    FWIW, we've already been through this a number of times in past decades. The Social Security has gone through a number of "fixes" in the past, and it will continue to do so in the future. It's just that a lot of noise is made each time a new "fix" is required. There's a big pool of money at stake, so a lot of noise gets made.

    "Politics as usual" is the operative phrase.

  6. #16
    Senior Member cafe's Avatar
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    Don thinks that the system could be fixed if we made people pay social security tax on their earnings beyond their first $100K, which seems relatively painless considering.

    We don't really expect to get social security when we retire and we certainly do not want to depend on it, so we are socking money into a 401K as high as his company will match.

    I do not mind if it isn't there when we retire. My grandma lived on her social security checks and in order to do so, she had to live in subsidized housing and pinch every penny. I do not want to retire like that. What I would mind is paying social security tax so high that we couldn't contribute to our 401K at the rate we are now.
    “There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.”
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  7. #17

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    Quote Originally Posted by FineLine View Post
    "Politics as usual" is the operative phrase.
    What you call "politics as usual," I call a "bad habit."

    IMO, habituation is something we need to be wary of.

    Maybe it is politics as usual, but in the same way we can speed for years and years, and know say "I've always done it, and never gotten into an accident." We say that, till we do. Sometimes experience is a poor teacher. It doesn't always lead to wisdom, though it will always lead to habits.

    Chernobyl had some of the most experienced technical staff working there when the disaster struck, but the disaster was compounded because of their experience, not in spite of it. At least, that is the case according to The Logic of Failure

    Quote Originally Posted by FineLine View Post
    Oh well, I have to take a break and get other things done. FWIW, I strongly recommend use of the IMF's website for current data, forecasts, and studies of many of the topics raised in this thread. The IMF studies all these issues at the national and international level.

    The IMF has been made controversial by globalization foes, since the IMF formulates and implements the rules for globalization; but few people doubt its overall integrity when it comes to crunching the numbers. And there's a huge library of info available right at the website, via the search engine.

    Website: IMF -- International Monetary Fund Home Page
    I have been looking, but there is an awful lot there, and I run into requests for subscriptions, requests for becoming a member, and other such things.

    I may do some library research since I need to go there anyway.

    Accept the past. Live for the present. Look forward to the future.
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    "As our island of knowledge grows, so does the shore of our ignorance." John Wheeler
    "[A] scientist looking at nonscientific problems is just as dumb as the next guy." Richard Feynman
    "[P]etabytes of [] data is not the same thing as understanding emergent mechanisms and structures." Jim Crutchfield

  8. #18
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    Quote Originally Posted by ygolo View Post
    What you call "politics as usual," I call a "bad habit."
    It's also called "democracy" and "consent of the governed." Not the most effective way to do things, but it has its strengths.

  9. #19

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    Quote Originally Posted by FineLine View Post
    It's also called "democracy" and "consent of the governed." Not the most effective way to do things, but it has its strengths.
    I suppose, only writing letters directly to the boomer's actually in power can possibly make a difference. Still, even our little debate, is democracy in action. At least we still have interested parties.

    I hope you are right, and we will be able to pull the system from the brink once again. But, it only takes one slip-up during brinksmanship...to go over the brink.

    I like to be one of those who sounds the alarm for making the appropriate changes to avert disaster, than to simply say we will avert it because we have in the past.

    Accept the past. Live for the present. Look forward to the future.
    Robot Fusion
    "As our island of knowledge grows, so does the shore of our ignorance." John Wheeler
    "[A] scientist looking at nonscientific problems is just as dumb as the next guy." Richard Feynman
    "[P]etabytes of [] data is not the same thing as understanding emergent mechanisms and structures." Jim Crutchfield

  10. #20
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    Quote Originally Posted by ygolo View Post
    I suppose, only writing letters directly to the boomer's actually in power can possibly make a difference. Still, even our little debate, is democracy in action. At least we still have interested parties.

    I hope you are right, and we will be able to pull the system from the brink once again. But, it only takes one slip-up during brinksmanship...to go over the brink.

    I like to be one of those who sounds the alarm for making the appropriate changes to avert disaster, than to simply say we will avert it because we have in the past.
    Like I said in the other thread, I have to take a break. But I just wanted to point out: The SSA quote contains a couple different timelines for action. One of the main timelines by which the SSA measures success or failure is a 75-year window (mentioned in both paragraphs). In other words, this is a long-term, multi-generational issue. The SSA is doing its job keeping the issue out in front of the public, which is good. But the system is hardly on the edge of collapse. Again, these are slow, predictable demographic shifts.

    They definitely have to be addressed eventually. But I think it is important to stress that the system is hardly teetering on the edge of collapse at this very moment. It's just that the system has to be watched. Like I said, misalignments are actually part of the design of the PAYG system, which means a constant process of tinkering with the system across the generations.

    Otherwise, great post and good debate, Ygolo! I enjoyed myself this afternoon.

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