The Fallacy of Social Security

Reichstolz 2012/06/27 13:49:57
 It is mine, I don't care if I didn't pay for it I'll just move back in with my family.
You!
I find it laughable when the entitled, think "I paid in so it is mine to take out"

Let us do some simple math shall we.

Social security withholding equals at best 3.5% of your income.

The average household income in the nation is currently \$49,777
http://www.census.gov/compendia/statab/2012/tables/12s0690.pdf

The average years worked prior to retirement 40.

[3.5%(49,777)]40=\$69,687 total contribution to Social security

Average monthly benefit for a Social Security retiree \$1,230

Annual entitlement for a Social Security retiree \$1,230x12= \$14,760

Average length of retirement prior to death 13 years
Total entitlement for the average Social Security retiree= \$14,760x13=\$191,880

Here is where the laughable disconnect comes in.
The average worker contributed at best \$69,687 yet they will receive \$191,880 in benefits.( for those of you who aren't good at math that is almost 3 times the amount you paid in)

For those who think "I paid in, I should get mine" you are correct you should retire about 5 years before you die. But that is not the case.

Feel free to comment.

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• sjalan 2012/07/08 04:12:37
It is mine, I don't care if I didn't pay for it

But your calculations are off by quite a bit.

First off, 7.5 % came directly out of my check each payday. My employer applied an additional 7.5% making a total of 15% applied to my SS Account EACH PAYDAY.

I worked for over 45 years with wages which topped out at over \$130K for 20 of those 45 years. By my calculations I have over \$585000 accrued to MY account including principle and interest.

I withdraw from my account at a rate of \$1653. per month. Now if I live until I am 90 which is more than reasonable because BOTH my parents are over 100 I will draw a total of just under \$535,575.

My question is WHERE IS MY OTHER \$50000???
• Reichstolz sjalan 2012/07/08 07:25:47
There is no interest on Social Security, the money is not invested, it is spent immediately upon confiscating it from you. At 130K you have 24K that isn't confiscated. Your calculations are off.
• sjalan Reichstolz 2012/07/09 01:49:09
The SS fund buys treasury bonds and notes. They earn interest. The fund carries that interest on the books like any other investment fund.

Sorry to disappoint you but I had my accountant check on it, and he said I was correct in my figures and especially on the 15%. During the last years it HAS be reduced to 4.2 % for employees. For employers it remained the 7.65%. If no extended it will go BACK to the 7.65% for employees and employers.

http://www.ssa.gov/pressoffic...

I suggest you do your homework before you make silly wild claims here. There are some of us that really do our research and
• Reichstolz sjalan 2012/07/09 01:52:14
Have you seen the latest yields on T bills? 0.19 as of this month http://www.bankrate.com

There are some of you who are stupid enough not to structure your income to avoid the tax for dullards, sorry I won't be one of you.
• Joe The... sjalan 2012/07/09 03:39:06
"The SS fund buys treasury bonds and notes. They earn interest. The fund carries that interest on the books like any other investment fund."

SS buys government bonds with excess payroll taxes which exceed the benefit outflow. That is a pretty small portion of the payroll taxes. The system has collected about 15 trillion(ish) and distributed 13 trillion(ish), leaving 2.7 trillion for the Trust Fund.

Again, while payroll taxes are 15.3%, the taxes fund separate programs. You are calculating the pot as though it funds only one - OAS.
• Joe The... sjalan 2012/07/08 19:17:45
Some of his numbers are wrong, but your number of 15% is not accurate either.

You need to factor out Medicare and Disablity which do not contribute to your retirement benefits. While payroll taxes have been 15.3%, only 10.6% went to Social Security OAS (retirement). You also have to consider that payroll taxes were substantially less prior to 1990. The 15.3% tax rate has been around for about 20 years. Long story short, use your actual contributions rather than imputed contributions.

Reich will tell you that your contribution does not accrue interest. He and I disagree. I work with "Fix Social Security Now". We tend to look at lost-savings. Your contribution is significantly higher than \$585,000 if you look at lost-savings. On any basis, high-wage workers do not get back what they put in.

SSA provides you theoretical numbers if you would like to see them in their moneys-worths studies. Those studies have some problems. These reports do not factor in that you had two parents that you would have had to support without Social Security. Your contribution to SS went to your parents - who didn't begin to pay the full cost of the system. If you are 65 today, your parents were among the generations that inflicted the greatest cost to the system. If your parents collected f...

Some of his numbers are wrong, but your number of 15% is not accurate either.

You need to factor out Medicare and Disablity which do not contribute to your retirement benefits. While payroll taxes have been 15.3%, only 10.6% went to Social Security OAS (retirement). You also have to consider that payroll taxes were substantially less prior to 1990. The 15.3% tax rate has been around for about 20 years. Long story short, use your actual contributions rather than imputed contributions.

Reich will tell you that your contribution does not accrue interest. He and I disagree. I work with "Fix Social Security Now". We tend to look at lost-savings. Your contribution is significantly higher than \$585,000 if you look at lost-savings. On any basis, high-wage workers do not get back what they put in.

SSA provides you theoretical numbers if you would like to see them in their moneys-worths studies. Those studies have some problems. These reports do not factor in that you had two parents that you would have had to support without Social Security. Your contribution to SS went to your parents - who didn't begin to pay the full cost of the system. If you are 65 today, your parents were among the generations that inflicted the greatest cost to the system. If your parents collected from the system until they were 100 - you personally have made-out like a bandit. When you compare your situation with someone whose parents didn't collect, it is a completely different situation.

Email me if you want the link to the latest studies.
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• sjalan Joe The... 2012/07/09 01:50:24
• Joe The... sjalan 2012/07/09 03:33:17

From the link that you provided :

"NOTE: The 7.65% tax rate is the combined rate for Social Security and Medicare. The Social Security portion (OASDI) is 6.20% on earnings up to the applicable taxable maximum amount (see below). The Medicare portion (HI) is 1.45% on all earnings."

HI is medicare not your retirement insurance. DI is disability again this is not funding your retirement benefits. The only thing that funds your retirement benefits is OAS. Old-Age Survivors.
• Roblem BN-0 2012/07/08 00:10:28
I'll just move back in with my family.
You seem intelligent enough but I think you may be in denial.

You have been fortunate. Many others do not share the same good fortune. Many people are not savvy or smart enough to run their own business and invest their money. That is HOW other people get rich in the first place... because they can use the labor from those that don't have the aptitude or drive to get beyond a regular or low paying job. There are reasons everyone isn't wealthy/rich.

Imagine those who invested with Madoff. What about the unfortunate situations of medical illness. People can and do lose their savings/investments every day. SS was an idea to assist people who need it. If you were fortunate enough to make it out of slave wages then great. Many never do.

Your judgmental attitude and belittlement of others screams of a much more elitist/entitlement attitude than many I have come across.
• Reichstolz Roblem ... 2012/07/08 01:08:30
And?
Social security was nothing more than a tax on dullards, and still is today. If many do not make it out of slave wages, why is it the responsibility for society to do for them what they are unwilling to do for themselves?
• Roblem ... Reichstolz 2012/07/08 01:19:35
That is my point... even though people can "make it" many are unable to for a variety of reasons. Some people just don't think the same as others. While other people simply lose everything along the way for other reasons. Sure some are self inflicted while many others have not had the good fortune that others have had. There is a certain amount of luck involved. I'm almost 50 and "lucky" (fortunate or both) to be alive.
• Reichstolz Roblem ... 2012/07/08 01:21:08
Only those who do not know what it takes to be successful think there is "luck" involved.
• Roblem ... Reichstolz 2012/07/08 02:05:17
Really?

You truly have no idea how lucky you are. That is like saying when you are driving down the street and the truck jumps across the highway there is no luck involved with whether you live or die. Many small happenings must line up for people to make it.

So, how many successful musicians of the tens of thousands who wish to be. How many actors, financial market people, etc, etc. How many people are lucky enough to get into college... and then find a good career. Sure there are opportunities but not everyone has those chances... or the mindset to make them happen.

I wish you the best.
• Reichstolz Roblem ... 2012/07/08 07:27:43
Musicians, actors, marketing, you honestly think those are financially sound career paths, where any wealth can be built?
Life is what you make it, too many make it a set of circumstances they deem out of their control, it is an excuse, nothing more.
• Roblem ... Reichstolz 2012/07/08 15:32:44
You can't be serious. If you think you are in control, I stand by my initial statement.

Of course we can make things happen but there are things that happen beyond our control.

The child who gets tumors and cancers because of some toxins placed in the soil or water had no control over that. The patient lying on the operating table who just got infected and will die soon had no control. That truck that killed my friend had no control over her end. The kids killed by drunk drivers had no control over that outcome either. You can work real hard and do everything "right" and still not make it... or perish along the way.

When you were young you happened to have the right things happen at the right time to lead you to where you are.

Like I said... you sound like someone who has been very fortunate but does not realize it.
• Reichstolz Roblem ... 2012/07/08 15:54:19
Without going into my whole life story, lets just take the bullet points
-born with a birth defect
-told I wouldn't walk beyond 18
-told I should find something to do with my hands because I wasn't college material
-dropped out got married
-bought another business went back to college
-started another business got a masters
-kept that business, started another, went to medical school
-moved to CA, ER residency sued 3 times
-started own practice, cash only, no insurance or government payment.
-completed PhD, started consulting firm, along with running the practice
-retired from medicine
-started venture capital projects

All this accomplished by a son who was raised by two parents who never graduated high school, never made more than 30K combine their whole working lives, and wouldn't let me feel sorry for myself because of the pain I have daily with every step. If you find luck being a contributing factor in my life I would love to see it. That is why I can honestly say ANYONE, YES, ANYONE can do what I have done, and they don't need a lucky charm to do it.
• Roblem ... Reichstolz 2012/07/08 16:02:06 (edited)
Thanks for sharing that. Commendable, of course.

Like I said. We can/do make things happen. I don't disagree with that, nor do I say people can't make it and do well. But some have done very well... and then lost everything. I know people who were "set for life". Now they are wondering what they are going to do to survive.

Circumstances beyond our control DO effect what happens to us. Obviously you worked very hard as do many people but they were not in the right place at the right time. You had things happen to you that helped you to make certain decisions at certain times in your life. Those things were outside of your control.

Do you think you did that all on your own? Do you realize how many and who helped you along the way?
• Reichstolz Roblem ... 2012/07/08 16:23:22
Help and inspiration is not luck. Seeking out the best in their fields to study from, is not luck. Being able to recognize opportunity in situations that most look past is not luck. Circumstances are what happen to you. For those who have planned and prepared they do not effect us in the manner they affect those who think the wealthy are lucky. The main thrust of your commentary is those of us who have succeeded were lucky and in the right place and right time. That is where we part ways. There is no right place or right time, it may look simple once we have accomplished all we have. It is planning, preparation, and ambition that separates those of us with accumulated wealth from the rest, nothing more.

My uncle was the Engineering Department chair at Vanderbuilt, a bastard of a man, but he told me the most important lesson I have learned at my sister's wedding when I was twelve. He said "everyone has the capacity to solve common man problems, the trouble is no one wants to be common." When I started my first business I was uncommon, doing common things, common people didn't want to do. You may consider that "right place, right time" but the fact is it is always the "right place and right time" do common things in uncommon ways.
• Roblem ... Reichstolz 2012/07/08 16:34:04
I think you missed the point... and you just stated it.

You prepared in one way and others have done this as well. Again... doing everything they believed to be correct and they worked hard. Loss happens. Fortunately for you it never took your finances.

I get it... you know/believe it was all you. I believe/know it wasn't. We will disagree.

I wish you the best.
• Reichstolz Roblem ... 2012/07/08 16:42:27
If a person looses all, they have nothing but a lack of preparation to blame.
• Roblem ... Reichstolz 2012/07/08 17:04:22
That is certainly one way to look at it.

What do you think would have happened had that "bastard" not said those words but asked you to come outside and then proceeded to do the unthinkable? How do you think that would have affected you? You didn't leave that place and then get abducted and molested by some nutjob.

You see... you don't seem to understand how lucky you are.
• Reichstolz Roblem ... 2012/07/08 18:34:14
If you consider having anything not happen to you, luck, I guess every breath for you is lucky.
• Roblem ... Reichstolz 2012/07/08 19:39:55
That is my point... it is... and if you don't think so then what? You're in control? Like when you car breaks down? Did you make that happen? Did the people on the Space Shuttle say Hey let's all blow up now? NO things happen that shape us.

That is why I say you are lucky as well as fortunate as well as intelligent. You were able to make some excellent things happen for yourself as do many others. There are also many others who have not been that fortunate, They may suffer from mental illness etc. So, as human being living in a society I believe it is MY responsibility to help others and that includes programs like health care and SS.
• Reichstolz Roblem ... 2012/07/08 22:31:27
So you think it is your responsibility to provide for those who won't, correct. Why then is it your right to force me to serve your perceived obligation? If you want to give your money to the least efficient and least effective entity we have, that is yours to do. I will never voluntarily support that kind of forced waste of my labor. Government is not compassionate or charitable, it must first destroy to redistribute. We became the most prosperous nation known to man, without a single hammock program for the slothful.
• Roblem ... Reichstolz 2012/07/09 01:31:04
That is funny... there are plenty of rich sloths that waste and destroy as much or more than poor people. Just like I must pay for a 40 year drug war and a fictitious war on terrorism which I view as a massive wastes of my money we all pay for things we don't agree with.
• Reichstolz Roblem ... 2012/07/09 01:53:12
Then let us both agree to limit government to its constitutional requirements only, then we both won't have to watch them waste our labor.
• Roblem ... Reichstolz 2012/07/09 03:34:53
LOL... indeed!

I do think there will always be disagreement with how the country "should" be run and the direction it takes. Even a room with 5 people in it will rarely agree on all things.

Can you imagine being a congress person?

There is some serous funding I know many of us would like to start limiting right there.
• Reichstolz Roblem ... 2012/07/09 05:47:05
There is no way I can imagine being a politician, I do not lie.
• Roblem ... Reichstolz 2012/07/09 21:35:38
LOL

You could start a whole new system!!
• Reichstolz Roblem ... 2012/07/10 03:18:50
Nah, too many people don't want to hear what they need to hear.
• Roblem ... Reichstolz 2012/07/10 04:49:08
Oh come on now... brainwashing is brainwashing.

If it was done correctly (my way of course ;-) ) then people would be honest, compassionate, hard working, generous, selfless, and tolerant. They would also listen more than they spoke. All politicians would have non-political careers and go back to those after they served a term or two.

Nothing wrong with a little dreaming... I'll wake up in a bit.
• Reichstolz Roblem ... 2012/07/10 13:36:57
Yep, you'll wake up to the entitled nightmare we live in.
• Roblem ... Reichstolz 2012/07/10 14:57:46
Yes.

There will always be selfish people and criminals at all financial and social levels... right? The balance are the people who are honest, law abiding and willing to actually work for their earnings... and there are plenty of them too. We get to raise our children and give them those values. With a little "luck" they will make good decisions, use those tools, and pass them on. But we don't have any control over that. :-)
• Reichstolz Roblem ... 2012/07/10 14:59:59
Yes it is really that bad, the latest data I looked at stated that over 60% of our population receives some form of government assistance. Time for the free lunch to end.
• Roblem ... Reichstolz 2012/07/10 22:46:27
OUCH! That seems excessive and hard to believe. I know the welfare and food stamp numbers are high at something like 20% -25% but I also know that times are tough for a lot of people. The ones who abuse that system make it difficult for those who actually need it.

I run across so many people who just seem to want to "get over" on the system and/or other people. Seems like that selfish behavior as become the norm. :-(
• Reichstolz Roblem ... 2012/07/11 00:01:35
You are forgetting Medicare, Social Security, Medical(or what ever it is called in our state), school lunch, tuition subsidies, etc. I would say if you really put the numbers to it, more than likely 60% is very low.
• Roblem ... Reichstolz 2012/07/11 00:59:44
Well... technically we could say then... every one who ever went to a public school receives assistance. Education is a good thing. I have a niece who is attending a university who could never afford it without assistance. With rising costs/prices I don't think only the well off should have the privilege to better themselves at good schools.

Where is the line?

Like I alluded to earlier I actually think health care is a worth while program. I know many disagree. Maybe not the greatest in it's current form but a lot of people benefit from it who do need it. Am I thrilled that people take advantage? No but we will get that in every situation.
• Reichstolz Roblem ... 2012/07/11 05:59:45 (edited)
Yes we could. And as we have seen that education is not worth 10% of what we are paying for.

I tried to send my daughter to a public school, and was told on her first day of first grade, by her overpaid union monkey of a teacher that I was putting too much pressure on my child.

Here is the story
The overpaid union monkey went around the room asking each child to tell her what they wanted to be when they grew up. My daughter answered, " I want to be an artist, after I go to college"
Three weeks into the school year was the first open house, my wife and I attended. The overpaid union monkey went through the lame curriculum and asked if there were any questions. My wife and I both asked why math and science were not present in the lesson plans she offered. We were told by the overpaid union monkey that "in her 15 years of experience that first graders don't seem to get excited about math and science." Granted we both raised our eyebrows and waited for overpaid union monkey to conclude.
We walked up to the overpaid union monkey to inquire about her lack of trying to educate kids when it is prime time to introduce many topics. During our conversation she asked which child was ours and then she stated "I don't think it is responsible parenting to put such expectations on a child...

Yes we could. And as we have seen that education is not worth 10% of what we are paying for.

I tried to send my daughter to a public school, and was told on her first day of first grade, by her overpaid union monkey of a teacher that I was putting too much pressure on my child.

Here is the story
The overpaid union monkey went around the room asking each child to tell her what they wanted to be when they grew up. My daughter answered, " I want to be an artist, after I go to college"
Three weeks into the school year was the first open house, my wife and I attended. The overpaid union monkey went through the lame curriculum and asked if there were any questions. My wife and I both asked why math and science were not present in the lesson plans she offered. We were told by the overpaid union monkey that "in her 15 years of experience that first graders don't seem to get excited about math and science." Granted we both raised our eyebrows and waited for overpaid union monkey to conclude.
We walked up to the overpaid union monkey to inquire about her lack of trying to educate kids when it is prime time to introduce many topics. During our conversation she asked which child was ours and then she stated "I don't think it is responsible parenting to put such expectations on a child that she attend college" I asked the overpaid union monkey, when she thought it appropriate to raise our child with the expectations we hold her to, the overpaid union monkey said "maybe in early high school" We spent the remainder of the year interviewing prospective private schools that placed similar values on education that we instill in our daughter.

If your niece couldn't afford it without paying for it herself she shouldn't go. I never borrowed a dime for all four of my degrees, I ran businesses that I either started or purchased while obtaining my degrees. And don't tell me that was a different time because I complete my PhD in 2001.

As a physician who sold his practice once this law hit committee, I can guarantee you the further you involve government, the higher the costs will be and the lower the quality will be. Government is the issue with health care as it is currently managed. I don't know about you but I have never once in my business or personal life found the solution to a problem inside the problem itself.
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• Roblem ... Reichstolz 2012/07/11 15:56:45
Hmmm... that is a sad story about that teacher. I know it is not that way everywhere. I don't understand why a person would think that. My daughter was seeing patterns are a very young age. There was no other teacher available? I think I might have had some discussions with the principle and/or started attending some school board meetings.

Where I live that is not even remotely what happens. I worked with my daughter before she ever went to school (as I am assuming you probably did). Her birthday was beyond the cut off so we had to have her assessed so she could start kindergarten. If she wasn't allowed in, she would not have even needed it by the next year.

In our area they did teach math, science, etc. It is/was a well rounded curriculum (she is going into 4th grade). I volunteered and actually assisted children with their math in kindergarten and first grade. There is a lot of parent involvement in my community.

I will say as far as college goes... I want my daughter to attend but I will let her decide. My goal is to raise an adult who is capable of making her own decisions and living with the consequences of those decisions.

Yes, we certainly will certainly disagree with that college education issue. I think it would only add to a further economic and social divide. But that ...

Hmmm... that is a sad story about that teacher. I know it is not that way everywhere. I don't understand why a person would think that. My daughter was seeing patterns are a very young age. There was no other teacher available? I think I might have had some discussions with the principle and/or started attending some school board meetings.

Where I live that is not even remotely what happens. I worked with my daughter before she ever went to school (as I am assuming you probably did). Her birthday was beyond the cut off so we had to have her assessed so she could start kindergarten. If she wasn't allowed in, she would not have even needed it by the next year.

In our area they did teach math, science, etc. It is/was a well rounded curriculum (she is going into 4th grade). I volunteered and actually assisted children with their math in kindergarten and first grade. There is a lot of parent involvement in my community.

I will say as far as college goes... I want my daughter to attend but I will let her decide. My goal is to raise an adult who is capable of making her own decisions and living with the consequences of those decisions.

Yes, we certainly will certainly disagree with that college education issue. I think it would only add to a further economic and social divide. But that is JMHO.

I think one major problem is the way people immediately up charge when insurance companies are involved. Then add in the "billing" companies. I know of a billing company that charge 1000 percent for their "services". I am all for people getting ahead but the greed/selfishness is just way out there these days.

The costs of health care have been consistently rising many years before the latest act was voted on and passed. I don't think it went far enough. Since when should people go into medicine for other reasons than to heal the sick? What happened to THAT notion?
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• Reichstolz Roblem ... 2012/07/12 00:56:57
The rise in health care costs can be directly correlated with farther government intrusion. As a physician I have seen the farther government expands the worse care becomes and the more expensive the system is.