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Nearly 1 in 4 Americans think they have a personal social security account

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Re: Nearly 1 in 4 Americans think they have a personal social security account

#41

Post by b_t_s »

mikewarot wrote: post #39

Your benefits amounts are tied to lifetime earnings , and you get less per month if you start early , so it is effectively a personal account, regardless of the details. CATO is being pendantic.

It's a weird hybrid. There is a connection to a persons earnings but it's far from what most people mean by a personal account(savings, 401k, IRA). It's closer to an annuity, but a very generous/flexible one that no private company would offer. The difference is minor for the never married but not for most people, and there are unusual cases. I know a guy who retired overseas, married a young wife and had kids. They get like 180% his benefit till the kids hit 18. Then assuming he's passed, the wife gets 100% survivor benefit at 60. I figure his SS account will probably pay out around 3x what it would if he was a bachelor, and that's strictly needs based not contribution based. If, instead, it was a 401k or a personal lifetime annuity at his personal benefit amount, their financial situation would be a whole lot uglier.

Re: Nearly 1 in 4 Americans think they have a personal social security account

#42

Post by loco5niner »

while_true_ wrote: post #40

CATO gets it wrong too. Social Security is an insurance program. Employer and employee payments function as insurance premiums. Like most insurance policies if you don't qualify for a disbursement you don't get your premiums back (e.g., you die before 62). Unlike normal insurance, Soc Sec has no coverage limit, so if you live to 105 you can collect far more than you paid in. Since Soc Sec is income insurance, I am op…

I think of Social Security as an annuity, or reverse life insurance.

Re: Nearly 1 in 4 Americans think they have a personal social security account

#43

Post by estimator7292 »

bluGill wrote: post #21
abeppu wrote: post #6

The juxtapositions in here are interesting: - Most Americans don't know how social security is funded but - An overwhelming majority of nonretired adults (79%) do not believe they will receive their full scheduled Social Security benefits when they retire. - About three in four adults (77%) have heard that Social Security is projected to run short of money by 2033. If you thought you had an individual account, and yo…

How much should I put in isn't knowable - if I have known many who died before 62, and others who lived to 104. then there is various health that affects what you can spend - both ways, low health may mean spend nothing since you can't do anything or it may mean expensive nursing homes

It's very knowable. You pick an arbitrary retirement age, decide how much you want to have then, and run the compound interest formula backwards.

Aka, how all retirement accounts are handled.

Re: Nearly 1 in 4 Americans think they have a personal social security account

#44

Post by amanaplanacanal »

rpdillon wrote: post #16
amanaplanacanal wrote: post #11

I've been told by the libertarians since the early 80s that social security was running out of money, and back then I fully believed that the program would be gone by the time I retired. Yet somehow Congress manages to tweak it as necessary to keep it solvent. I expect they will continue to do so.

In 2034, it will be insolvent. We'll either increase contributions or raise the age to compensate. It's not going to be pretty.

They have done both before.

Re: Nearly 1 in 4 Americans think they have a personal social security account

#45

Post by bluGill »

estimator7292 wrote: post #43
bluGill wrote: post #21

Earlier quoted context omitted.

How much should I put in isn't knowable - if I have known many who died before 62, and others who lived to 104. then there is various health that affects what you can spend - both ways, low health may mean spend nothing since you can't do anything or it may mean expensive nursing homes

It's very knowable. You pick an arbitrary retirement age, decide how much you want to have then, and run the compound interest formula backwards. Aka, how all retirement accounts are handled.

your need your death date, inflation, and other details about your life after retirement to get that number.

Re: Nearly 1 in 4 Americans think they have a personal social security account

#46

Post by tzs »

A while back I did the math on if Social Security did work by just taking my contributions and investing them on my behalf what shape would my account be in now.

What I found is that if they took my contributions and my employer's contributions on my behalf each month and put them into one year T-bills, with maturing bills rolled over into new one year T-bills, if I retired now (a couple years before my full retirement age) there would be enough to pay out something like 90-95% of my monthly benefit for the rest of my expected lifetime.

I didn't try to find the actual amounts of contributions for each month. I just took that total for the year and assumed it was spread equally across all 12 months. For T-bill rates I used the rate from the last day of the month.

I did a similar calculation for Medicare. With the same kind of setup my Medicare account would have had enough when I turned 65 to pay the unsubsidized monthly premium for a good marketplace plan on my state's ACA marketplace for the rest of my expected lifetime.

This suggests that a system that works like they say 1 in 4 thinks it works could be viable. Make it so if someone dies before their account runs out the remainder is used to pay people who have lived longer than their expected lifetimes.

Re: Nearly 1 in 4 Americans think they have a personal social security account

#47

Post by bluGill »

gedy wrote: post #38
bluGill wrote: post #29

Earlier quoted context omitted.

401k already covers more people than pensons ever did. and that is before we account for the pre-reform cases where the pension lost it all. (Though some 401k is lost to scams)

"covers" is pulling a lot of weight here, I know a lot of folks with pretty small balances, and/or who "had" to withdraw due to medical or other emergencies. They need a govt pension, otherwise we are going to have a lot of people on the streets.

I do not know how to get data for how much people have in 401ks. I do know a lot of people didn't have a useful pension back in the day too. Government pensions are too one size fits none though. If you want to retire when you are still able to work you have to save for yourself, nobody else will take care of you like you want.

Re: Nearly 1 in 4 Americans think they have a personal social security account

#48

Post by gedy »

bluGill wrote: post #47
gedy wrote: post #38

Earlier quoted context omitted.

"covers" is pulling a lot of weight here, I know a lot of folks with pretty small balances, and/or who "had" to withdraw due to medical or other emergencies. They need a govt pension, otherwise we are going to have a lot of people on the streets.

I do not know how to get data for how much people have in 401ks. I do know a lot of people didn't have a useful pension back in the day too. Government pensions are too one size fits none though. If you want to retire when you are still able to work you have to save for yourself, nobody else will take care of you like you want.

I think we are in agreement on your points, I'm only stressing that we can't take an attitude of "sucks to be you!" if Social Security "runs out of money". Many folks will need this, no matter how they got to that point.

Re: Nearly 1 in 4 Americans think they have a personal social security account

#49

Post by amypetrik8 »

ashleyn wrote: post #13
y-curious wrote: post #7

Earlier quoted context omitted.

I was just having a conversation (argument) with my MIL about this. She claims that people have felt that SS would run out of money before they retire her entire life. Has this sentiment been tracked at all? I certainly feel like I (aged mid-30s) will not be benefitting, but the common argument is that the Ponzi scheme will find a way to perpetuate for longer

Impossible to tell, but there's factors making it more likely to happen this time than in previous generations. Probably the biggest factor is the declining population, which no government around the world has been able to materialise an answer to. My personal retirement plans assume no social security. Anything I may get in old age is a nice bonus, but in my planning, it's not the beef.

>which no government around the world has been able to materialise an answer to.

I disagree. The whole hot political topic of "illegal immigration" is as a side effect - seemingly a successful solution to motivate (foreign) people to bump the population. Specifically - "if you have a kid in the US, the kid is automatically a citizen, you don't have to pay taxes, you don't need a green card, you work under the table so make $0 on paper and thus qualify for free food and housing (welfare) and free healthcare (medicaid)".

Honestly if we gave such a deal to young non-foreign american women free and clear, likely we'd be seeing a lot more childbirths.

Despite all the economic burden and political strife this program has caused, it may in fact extend the life of the nation and welfare.

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