"Entitled Selfishness": Great article on the dismal future of Social Security

[dvcgirl]

http://www.msnbc.msn.com/id/16562633/site/newsweek/

Boy, what a mess we have in store for us going forward. Anyone banking on Social Security and Medicare in its current form.....keep dreaming.

 

[NY Disney fan]

I'm 33. I think we should stop crying about the baby boomers and focus on how to build retirement wealth. As a country we should preserve SSI for the truly disabled and preserve Medicare/Medicaid. But GET RID of SS as a retirement tool from here on out!

 

[dvcgirl]

I'm 33. I think we should stop crying about the baby boomers and focus on how to build retirement wealth. As a country we should preserve SSI for the truly disabled and preserve Medicare/Medicaid. But GET RID of SS as a retirement tool from here on out!

Oh, I totally agree with you that we should all be focusing on building our own retirement nest egg. However, the real fact of the matter is that not many of us are doing that. And those who are, well, most of them aren't doing nearly enough. A full 2/3 of *all* retirment accounts (401ks and all IRAs) has a balance of less than $50,000. 77% of those accounts have an average account balance less than 100K.

The government throws out a random nest egg number of around 350K for the average person to shoot for.....likely basing that on the median income of around 45K. The person making 45K would get roughly 14K from SS (in its current form) and another 17.5K a year from the nest egg (at a 5% per year withdrawl rate). Together, those two numbers represent about 70% of their income when working. This person who has saved 350K won't be jetting off to Europe, but they won't starve either. The problem is....most people aren't saving anything close to that. And with defined pension plans disappearing at an alarming rate, well, people had better wake up.

And the really bad news is that Medicare is in much worse shape than SS.

 

[NY Disney fan]

The problem is....most people aren't saving anything close to that.

Still doesn't mean government should provide benefits. As we see, its a disaster. Governement should focus on public initiatives to get the word out for people to save and invest at all levels. Create a new kind of awareness.

 

[dvcgirl]

Still doesn't mean government should provide benefits. As we see, its a disaster. Governement should focus on public initiatives to get the word out for people to save and invest at all levels. Create a new kind of awareness.

I don't know how much more this issue could possibly be in the news. I mean, you'd have to be living in a cave to not hear of the impending baby boomer retirement onslaught. People just don't want to think about retirement. They'd rather watch American Idol on their new plasma TV that they purchased on a Best Buy Credit Card. We're a nation of ostriches with our heads in the sand.

 

[ducklite]

I'm a tail-end boomer. While I'm not planning on *needing* social security to retire, I'm going to be mighty PO'ed if I've paid into it for 50 years and there's nothing there for me when I retire. As of right now, I've personally paid about $100,000 into it over the past 30 years. That's a lot of money that had I been able to invest it on my own, it would have netted me a nice nest egg at retirement.

Frankly it's highly doubtful that I'll live long enough after I retire at 67 to come close to recouping with the governemnt has taken from me all these years with the promise of a payout in my senior years. The end year boomers are the ones who will have paid in the longest and gotten nothing for it--the ones who will get screwed.

Anne

 

[pearlieq]

I understand the point the author is making, but I still vehemently oppose means testing, which the author implies when he says "But much of the adjustment should come from increasing eligibility ages (ultimately to 70) and curbing payments to wealthier retirees. "

If we ALL pay in, we should ALL have equal chance to collect.

I won't support any initiative that penalizes me for being disciplined and saving through all these years!

 

[meandtheguys2]

I'm a tail-end boomer. While I'm not planning on *needing* social security to retire, I'm going to be mighty PO'ed if I've paid into it for 50 years and there's nothing there for me when I retire. As of right now, I've personally paid about $100,000 into it over the past 30 years. That's a lot of money that had I been able to invest it on my own, it would have netted me a nice nest egg at retirement.

Anne

That is how I feel also.

 

[dvcgirl]

I agree with all of you...ducklite and pearliq, but guess what...we're going to probably see a combination of means testing, benefit cuts *and* tax hikes to pay for it.

Unfortunately pearlieq, I think that we will be penalized for being disciplined savers, but I'll still take my lot over what those what haven't saved will be getting.

Anne....I think the Gen Xers will get screwed worse than the youngest boomers, and those who come after us will have it even worse.

In my gut I feel like we have reached the point where we may begin to see our quality of life start to ever so slightly trend downward. Of course, this is based on the fact that our collective "quality of life" is achieved by spending more than we actually make....

 

[ducklite]

I won't support any initiative that penalizes me for being disciplined and saving through all these years!

Absolutely. I know a couple who do'nt have a dime in the bank. They spend it faster than it comes in. They rent, don't own outright either car. She doesn't have $5 aved for retirement, he's going to be getting a small pension and has a small annuity that they'll blow through on something frivolous within a month of getting it.

They are expecting to get by on social security. Considering that he's collected unemployment through 30% of his adult life, and she's either collected welfare of unemplyment at least 50% of hers, it pisses me off to no end that I've worked my butt off, often with two or more jobs to be able to save for my future, and then get penalized because of lazy people who couldn't be bothered.

It completely disrespects those of us who conducted ourselves in a responsible manner, and makes people think"why bother." Frankly I'll dump it all in an irrevocable trust and grub like the rest of 'em if it comes down to it. It's not entitlement, it's just equity.

Anne

 

[ducklite]

BTW--If the feds want to give me back every dime I've paid into social security and never collect a dime of it from me again, I'd be happy to sign off on ever receiving a penny from them after I retire. They can even keep my employers share, as well as any accrued interest. I'd still be better off.

Anne

 

[dvcgirl]

Absolutely. I know a couple who do'nt have a dime in the bank. They spend it faster than it comes in. They rent, don't own outright either car. She doesn't have $5 aved for retirement, he's going to be getting a small pension and has a small annuity that they'll blow through on something frivolous within a month of getting it.

They are expecting to get by on social security. Considering that he's collected unemployment through 30% of his adult life, and she's either collected welfare of unemplyment at least 50% of hers, it pisses me off to no end that I've worked my butt off, often with two or more jobs to be able to save for my future, and then get penalized because of lazy people who couldn't be bothered.

It completely disrespects those of us who conducted ourselves in a responsible manner, and makes people think"why bother." Frankly I'll dump it all in an irrevocable trust and grub like the rest of 'em if it comes down to it. It's not entitlement, it's just equity.

Anne

Again, I agree, but at the same time, I sure as heck don't want to see my taxes go sky high in order to keep SS and Medicare untouched and in some fictional "lockbox". If left untouched, SS and Medicare will make up an astounding 75% of the *entire* federal budget by 2030.....some very big changes will need to be made.

I say cut the benefits now...across the board, from top to bottom. And raise the age for full benefits to 70, 68 for partial benefits. However, one way or another our government needs to do something now....so that those of us who will be relying on SS (nearly everyone!) have time to prepare. I'm glad that we never factored SS into our retirement planning, but I'll admit that I will surely be peeved if benefits are decreased and taxes are raised. Unfortunately, I think that's exactly what will happen.

 

[ducklite]

Again, I agree, but at the same time, I sure as heck don't want to see my taxes go sky high in order to keep SS and Medicare untouched and in some fictional "lockbox". If left untouched, SS and Medicare will make up an astounding 75% of the *entire* federal budget by 2030.....some very big changes will need to be made.

I say cut the benefits now...across the board, from top to bottom. And raise the age for full benefits to 70, 68 for partial benefits. However, one way or another our government needs to do something now....so that those of us who will be relying on SS (nearly everyone!) have time to prepare. I'm glad that we never factored SS into our retirement planning, but I'll admit that I will surely be peeved if benefits are decreased and taxes are raised. Unfortunately, I think that's exactly what will happen.

But how much is SS direct cash payments versus Medicare? My bet is that Medicare eats up 60% or more of it. So maybe the problem is to do something about spiraling healthcare costs.

You walk into the ER needing stitches in your finger and they want to do a CAT scan to make sure you didn't fracture your spine in the kitchen paring knife incident. Of course they want to cover themselselves in the medical community because people sue because the doctor missed the brain tumour while he was stitching the finger.

Maybe that's where we need to start--the absolutely absurd personal injury system in this country. If a doctor operates while drunk and removes the wrong kidney, yes, that's a serious offense and the victim deserves millions. But if the baby is born with Down's Syndrome, we should sue the doctor because OUR genes gave our child a congenital defect? I just don't get it.

Anne

 

[dvcgirl]

But how much is SS direct cash payments versus Medicare? My bet is that Medicare eats up 60% or more of it. So maybe the problem is to do something about spiraling healthcare costs.

You walk into the ER needing stitches in your finger and they want to do a CAT scan to make sure you didn't fracture your spine in the kitchen paring knife incident. Of course they want to cover themselselves in the medical community because people sue because the doctor missed the brain tumour while he was stitching the finger.

Maybe that's where we need to start--the absolutely absurd personal injury system in this country. If a doctor operates while drunk and removes the wrong kidney, yes, that's a serious offense and the victim deserves millions. But if the baby is born with Down's Syndrome, we should sue the doctor because OUR genes gave our child a congenital defect? I just don't get it.

Anne

Great points. I just looked this up and found that out of every dollar we send to Social Security:


69 cents goes to a trust fund that pays retirement and survivors benefits;
19 cents goes to a trust fund that pays Medicare benefits; and
12 cents goes to a trust fund that pays disability benefits.

So while I thought you had a good guess there....I would have thought that medicare was much higher as well, but it appears that the bulk of the money is going directly to the retirement portion of SS. And remember, medicare receipients pay a premium for health and prescription coverage. Look for those numbers to go way, way up. I believe that they went up as high as 17% (for...you guessed it, the highest earners), this past year.

 

[MrsPete]

I'm 33. I think we should stop crying about the baby boomers and focus on how to build retirement wealth. As a country we should preserve SSI for the truly disabled and preserve Medicare/Medicaid. But GET RID of SS as a retirement tool from here on out!

No one's ever said that Social Security should be a stand-alone retirement plan, but as long as the government takes money from us every month, they OWE US something back. That's not "crying about the baby boomers", it's just expecting the government to honor their part of a contract which they forced upon us.

I'm a tail-end boomer. While I'm not planning on *needing* social security to retire, I'm going to be mighty PO'ed if I've paid into it for 50 years and there's nothing there for me when I retire. As of right now, I've personally paid about $100,000 into it over the past 30 years. That's a lot of money that had I been able to invest it on my own, it would have netted me a nice nest egg at retirement.

I guess I'm a tail-end boomer too. I was born in 1966 (so I just turned 40), and some statisticians call me the last of the Boomer generation, others call me part of the Boomer echo or even the earliest possible Gen Xer.

I agree with you entirely: I would be glad to give up my Social Security -- but I've been working and paying in for 24 years now, and if I'm not going to get something out of it, I would like a refund of what I've paid in (of course, we all know that's impossible). While I don't have an exact figure, 7.5% of everything I've ever earned is a pretty penny, and you'll have to excuse me if I'm not willing to walk away from it.

Social security isn't a government hand-out; it's MY money, which they took from me, and I want it back in 15 or 20 years.

 

[C.Ann]

Social security isn't a government hand-out; it's MY money, which they took from me, and I want it back in 15 or 20 years.

--------------------

And that's precisely how it should be..

 

[staceyfe]

Well, I'm a genXer and am hoping for a little SS, but I won't be surprised if I get screwed. I was all for the personal retirement investments that Bush was pushing a few years back, but like others have said, so many people would be up a creek if that happened. So the senators and congressmen would never vote it in. Unfortunately, a lot of us are most likely never going to see what we put in, so I'd rather just save for it myself. I've felt the past 5-6 years that the good ole US of A is on it's way down, and I think SS is just the beginning...

 

[roadtripper]

I'm sure I'm in the minority on this, but I don't feel "entitled" to the FICA money I paid out while scooping ice cream, making Mrs.Fields cookies, and waitressing in high school, college, and grad school. As far as I'm concerned, those who really need it can have it. I am expecting to collect a fixed pension (one of the few still around!) upon retirement- and I am trying to sock away a good sum for retirement if the pension doesn't materialize. (Now THAT would really frost my cookies).
I have gotten a lot from the govt-- including the student loans that helped me get through college and grad school so that I could get the job with the pension. I'm all set if they want my FICA money.

 

[disneysteve]

A lot of people don't realize it (because they don't earn enough to notice), but the SS tax has increased every year. The tax rate may be the same, but the amount of income subject to the tax keeps going up. I think it is $97,500 this year. I recall when it was somewhere in the mid to upper 80K range. That cap rises a lot faster than incomes rise, so with each passing year, higher wage earners pay a larger percentage of their income to SS. This is one way they've been getting the higher wage earners to pay a larger share without actually raising the tax for everyone.

 

[MrsPete]

I'm sure I'm in the minority on this, but I don't feel "entitled" to the FICA money I paid out while scooping ice cream, making Mrs.Fields cookies, and waitressing in high school, college, and grad school. As far as I'm concerned, those who really need it can have it. I am expecting to collect a fixed pension (one of the few still around!) upon retirement- and I am trying to sock away a good sum for retirement if the pension doesn't materialize. (Now THAT would really frost my cookies).
I have gotten a lot from the govt-- including the student loans that helped me get through college and grad school so that I could get the job with the pension. I'm all set if they want my FICA money.

Well, then you're a nicer person than I am.

I pay LOTS of money in federal and state taxes, and that money pays for my "portion" of the government's services (and someone else's too); that pays my social obligations quite heartily. I do resent the social security that they'll probably never pay back to me.