Social Security to start cashing Uncle Sam's IOUs

[johnhughthom]

I know a lot of you Americans get very touchy about tax raises.

[Gregoshi]

I know a lot of you Americans get very touchy about tax raises.

We like to argue about taxes over tea.

[Xiahou]

Aren't people going to have less kids over time, and the economy increase? That would seem to make it not quite a ponzi scheme.

Having less kids puts a higher burden on them when they become taxpayers supporting us. All the current workers are paying for current retirees, under the assumption that it'll be our turn on the top of the pyramid once we retire. However, the fund is forecast to be completely bankrupt well before my retirement age. I've been paying in for my entire working life and, as it stands, am likely to receive no benefit. Sounds like a ponzi scheme.

"A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going.

The system is destined to collapse because the earnings, if any, are less than the payments to investors."

I know a lot of you Americans get very touchy about tax raises.

Bear in mind that their additional income that isn't taxed to SS also does not factor in when benefits are paid....

"A worker's retirement income benefit is based on his Primary Insurance Amount, or PIA. The PIA is the average of the highest 35 years of the worker's covered earnings (before deduction for FICA). Covered earnings in any year are limited by that year's Social Security Wage Base, the maximum earnings that could be subject to the OASDI portion of FICA payroll tax ($106,800 in 2010 [59]). If the worker has fewer than 35 years of covered earnings, zeros are used to bring the total number of years of earnings up to 35. Years of covered work more than 2 years before the year the worker turns 62 are indexed upward to reflect the increase in the national wage via the average wage index (AWI) from the time at which the earnings were covered in the past to the value of the AWI two years before the worker turns 62 (which is the most recent year available at the date the worker turns 62). One-twelfth of this 35-year average is the average indexed monthly earnings (AIME). The PIA then is 90% of the AIME up to the first (low) bendpoint, and 32% of the excess of AIME over the first bendpoint but not in excess of the second (high) bendpoint, plus 15% of the AIME in excess of the second bendpoint. Bendpoints designate the point at which the rates of return on a beneficiary's AIME change.[60][61] In 2008, the bendpoints for calculating the PIA are a change from 90% to 32% at $711 and a change to 15% at $4,288.[61][62] This PIA is then adjusted by automatic cost-of-living adjustments annually starting with the year the worker turns 62. Similar computations based on career average earnings determine disability and survivor benefits. These alternate computations average less years of earnings when the worker dies or is disabled before age 62 and use different base years for the inflation adjustments."

[Sasaki Kojiro]

Having less kids puts a higher burden on them when they become taxpayers supporting us. All the current workers are paying for current retirees, under the assumption that it'll be our turn on the top of the pyramid once we retire. However, the fund is forecast to be completely bankrupt well before my retirement age. I've been paying in for my entire working life and, as it stands, am likely to receive no benefit. Sounds like a ponzi scheme.

Yeah, I had that backwards somehow. I was thinking about someone how someone in the last thread mentioned that the baby boomers retiring was putting a strain on it. If there was a bump in babies that dissipated it would help the system out it seems.

Although life expectancy will probably increase as well, especially with the drop in smoking.

But the forecast is a "if the current system doesn't change" forecast, yeah?

[drone]

I knew 20 years ago that I would never see a dime back from my FICA "payments". The boomers are going to suck the teat dry, the last act of the worst generation.

[a completely inoffensive name]

The problem is self correcting in the long run, necessary taxation precautions need to be taken to survive the baby boom hump before social security sees a return to a stable multi generational birth level at which point changes can be made back to pre baby boomer status.

[KukriKhan]

The problem is self correcting in the long run, necessary taxation precautions need to be taken to survive the baby boom hump before social security sees a return to a stable multi generational birth level at which point changes can be made back to pre baby boomer status.

I can see that. You 18-35'ers need to get out there are make moar babeez. Makes Grampa proud, and gives him beer money.

[drone]

The problem is self correcting in the long run, necessary taxation precautions need to be taken to survive the baby boom hump before social security sees a return to a stable multi generational birth level at which point changes can be made back to pre baby boomer status.

If it was just the boomer retirement years, Social Security would survive. The main problem is that the social security fund has been raided by Congress for other projects, now the bill is coming due. This is not so much a demographic problem, but a bad government problem. What would normally be a funded entitlement is now a debt liability on top of the mess we already have.