Entitlements to go: They went up too much

What does this have to do with NY residential real estate?

Riversider. assuming I am a 65 year old who contributed to both Social Sec. and Medicare for the last 40 years. assuming i have always contributed the max as well as continued to contribute to Medicare (no cap) up to my 800K salary. Can you calculate the value of my personal annuity so your claim that the 18K+11K is more than what one should get? Alternatively, can you calculate the value of the personal refund in today's value of all of the money I potentially contributed? Please give me specific data (no averages or ideological arguments). It would help me being convinced and switch.

Real Time, Social Security is not a retirement plan and can't be compared to one.

The social Security Act was enacted on August 14th, 1935. On January 31, 1940, the first monthly retirement check was issued to Ida May Fuller of Ludlow, Vermont, in the amount of $22.54. Miss Fuller, a Legal Secretary, retired in November 1939. She started collecting benefits in January 1940 at age 65 and lived to be 100 years old, dying in 1975.

So if Social Security is not a Government sponsored pension plan, then what is it? Best place is to describe it's macro effects.

1) Discourages Savings in favor of Consumption. People who believe they have a government benefit are less likely to engage in private savings. Consumption is now roughly 70% of GDP. Our country has an abysmal savings rate.
2) Encourages older workers to leave the system and make room for younger workers. In other words, is it any wonder this program began in the Depression when the government felt a need to create jobs.

But let's get back to your question as to why you should favor privately saving for your retirement.
1) If you were born in 1937 you got full social security at age 65. If you were born after 1960 its been raised to 67 and is set to rise further
2) Uncertain upkeep with inflation. Prior to 1972 Social Security payments only increased by acts of congress after which they were indexed to cost of living adjustments, but then Boskin/Clinton came around and changed the CPI calculation to lower the cost of living adjustments.

Realistically, Social Security cannot serve as the basis of retirement funds. This reality is more clear than ever. At best it can serve as part of a triad, the other two legs being a private retirement account and other savings. And at least with private savings, you know the government can't change the terms on you by tinkering with retirement age, creating means testing or changing or eliminating a cost of living adjustment formula.

Social security also has an "insurance" feature. If someone becomes disabled (physically or mentally), payment also starts. Payment also extends to underage children and spouse caring for the children. I have crunched the number myself a while back and don't remember the exact figures, but I clearly remember it being a reasonably good deal for everyone, including those who pays the max each year ***and gets the max*** each year. It only sucks for those who drops dead early, but isn't that always the case. Increasing the retirement age gradually makes sense since people are living longer.

Btw, paying the max in social security for the past 40 years doesn't add up to as much as one might think. Assuming a 3% tax free return each year, it adds up to about $200K; assume 5% and it's still under 300K. Someone retiring at 66 who has paid the max in the past 40yr would get over $28K a year in social security. Good deal or bad deal?

"Social Security is not a retirement plan and can't be compared to one."

Actually, it IS, and that's exactly what it was billed as when it was originally sold to the American Taxpayer.

By the way, using the "metric" of comparing SSI increases against the CPI works only if the SSI recipients don't have to pay for taxes, food, electricity, and heating fuel -- the four LARGEST expenses of SSI recipients in their retirement.

it is fantastic! I ask a simple hypothetical question to understand how much one put in Vs how much one will get out and you get demagoguery. i guess republican do not know math!

The value of your personal annuity depends on how long you intend to live. However Social Security will mail you a benefit statement quarterly... Or you can pull up Excel and do a present value analysis.

"Can't see the public agreeing to major tax increases..."

In your libertarian utopia that might be the case. But not in reality:

http://www.cbsnews.com/8301-503544_162-20024494-503544.html

The poll finds that 53 percent of Americans want the Bush-era tax cuts extended only for households earning less than $250,000 per year.

Another 14 percent of Americans say the cuts should expire for all Americans.

In other words, 67% of Americans believe in raising taxes.

Not so fast with the SSI quarterly benefit statements...I was told at the Social Security Office that those are going away due to cost cutting. You will have to look your benefits up on line for now on.

Medicare and health care benefits for retirees in the public sector are the 2 big benefits that will have to be drastically cut back, not the SS check. means-testing is coming, no doubt, but the SS is already smaller than the medicare $ spent per beneficiary (same thing w/ retirees in the public sector). cuts on health care benefits hurt retirees less than cuts on a tiny check that allows them to buy food and pay utilities. end of life health spending is where most of the cuts can be made imho, it's tricky politically but a no-brainer nonetheless.

"Can't see the public agreeing to major tax increases..."

this is anecdotal evidence, but all the people i heard talking about this topic WANT the rich to pay more. sure, when those rich people try to shape public discourse they will try to instate fear of socialism and class warfare. but people understand that it's where the money is, they are the ones that benefited during the last decade and a half. there's at least as much fear of income inequality than of socialism, rightly so imho.

the rich managed to have tiny inheritance taxes thanks to framing it as a "death tax", let's see how can they get away from higher taxes now, the "success tax"?

The people wanting the rich to pay more are people who think they don't qualify as the rich. Who wouldn't want another group to carry the burden. That's a no-brainer. Just because something is popular doesn't mean its good policy.

> The people wanting the rich to pay more are people who think they don't qualify as the rich. Who wouldn't want another group to carry the burden. That's a no-brainer. Just because something is popular doesn't mean its good policy.

sure, those make up 85% of the population. it's a democracy with lower social mobility, you do the math. preventing income inequality is good policy though, doing it pre-tax (through very high marginal rates at the top) as it used to be might be the best way to achieve this. democracy with a 3er world country type of income distribution doesn't really work.

The U.S. has a history of failed policies that don't grow the economy. Recently it seemed easier to give people access to credit than increase their incomes. Simply redistributing money does not increase the G.D.P. If it did putting more people on welfare would be a very simple solution to higher per capita GDP. But there are too many corporations and private individuals who pay no taxes, so a flat tax does remove the ability to escape paying income taxes regardless of bracket.

But if we're trying to raise the standard of living for those at the lower end of the scale, it will be by increasing job opportunities through gov't policies that don't restrict opportunities, raising the skill set so that workers are not competing against the unskilled and making sure an industry isn't getting monopolistic profits against the interests of the greater economy.

> The U.S. has a history of failed policies that don't grow the economy. Recently it seemed easier to give people access to credit than increase their incomes. Simply redistributing money does not increase the G.D.P

that's the point, increasing the GDP at any cost is not smart, many times it increases due to bad accounting (taking into account higher econ activity due to asset inflation but not the cost of the inevitable crash, for example). it doesn't necessarily increase welfare in the economic sense when all it achieves is higher income inequality. there are too many areas for improvement when it comes to gov policies, but basically equating higher taxes on the rich with less jobs for the poor is a fallacy (just check out the unemployment rates in nordic countries). don't fall for it.

In my opinion what creates the most inequality is our Financial system. Banks are able to charge 20% interest on loans, exact egregious over-draft fees ,user agreements that nobody can understand etc etc. This comes from a failure of our government to go after monopolies, enforce and maintain good consumer laws and ensure that the average Joe can deal fairly with the big guys he's forced to do business with.

We have two companies essentially controlling the credit card market, student loan debt that in some cases shackles the borrower with no way out, banking fees that hit double digits and fees to buy and sell real estate that hold at 5-6% even though home prices are higher and the cost of doing business has declined. And add to that our system of property recording has been utterly destroyed and falling just slightly behind on a payment subjects a delinquent home owner to huge fees.

It's not taxes.

"The U.S. has a history of failed policies that don't grow the economy."

Like tax cuts. Despite cutting taxes, Bush did not create a single private sector job in 8 years. In Jan. 2009, there were 650,000 FEWER private sector jobs than in Jan. 2001. Not a single job has ever been created by cutting taxes.

There is a great way to reduce Medicare costs that NOBODY ever talks about. It's a simple solution that only contains 6 words:

Doctors should share in the sacrifice

http://www.dailykos.com/story/2011/05/29/980287/-Doctors-should-share-in-the-sacrifice?via=blog_1

"Easy, liberals say. If Washington would just force cuts in prescription drug prices and insurance company profits, plenty of money would be left over to cover the uninsured. Conservatives prefer to argue that the answer lies in forcing people to pay more of their own medical costs. But many health care economists say both sides are wrong. These economists, some of whom are also doctors, say the partisan fight over insurers and drug makers is a distraction from a bigger problem: the relatively high salaries paid to American doctors, and even more importantly, the way they are compensated."

The article makes a huge mistake here. Educators largely are employed by municipalities. Doctors on the other hand are employed in the private sector and bill the gov't.

How is that any different? Both teachers and doctors get their income from the govt. It does not matter who employs them.

Specialists should get a 25$ pay cut. In exchange, medical school would be free.

*25% pay cut*

So the answer is a cheaper education toward a career that pays less well? Sounds like a brilliant way to create a shortage of trained medical personnel.

Of course we could automate record keeping, allow importation of foreign medicines and have the insured bear more of the responsibility for obtaining low cost procedures. And let's not forget banning those drug commercials on TV that have misinformed the public since Bill Clinton approved them.

"Sounds like a brilliant way to create a shortage of trained medical personnel."

Just like we have now:

Shortage of surgeons pinches U.S. hospitals

http://www.usatoday.com/news/health/2008-02-26-doctor-shortage_N.htm

Medical Schools Can't Keep Up
As Ranks of Insured Expand, Nation Faces Shortage of 150,000 Doctors in 15 Years

http://online.wsj.com/article/SB10001424052702304506904575180331528424238.html

There are currently TWICE as many law schools in the US as there are medical schools. Hmmm, I wonder how we can lower halth care costs. I wonder what would happen if we had twice as many medial schools as law schools. Hmmmmm....

"And let's not forget banning those drug commercials on TV that have misinformed the public since Bill Clinton approved them."

A libertarian wants more laws and bigger govt?

>The poll finds that 53 percent of Americans want the Bush-era tax cuts extended only for households earning less than $250,000 per year.
Another 14 percent of Americans say the cuts should expire for all Americans.
In other words, 67% of Americans believe in raising taxes.

If we strip out the people who aren't paying any income taxes that are the subject of the question here, that 67% becomes what?