<BreadWithSpam[at]fractious.net> wrote in message
news:yobk6ck1wpr.fsf_-_[at]panix3.panix.com...
- quote -

If means-tested, it then becomes 'welfare' rather than a pension system.
That would get killed fast, leaving people with no means, because politics
in this country have redefined welfare recipients simply as cheats and
parasites.

Better to keep it universal and adjust the benefits and age qualifications
to something sustainable.
--
Chris Cowles
Gainesville, FL


======================================= MODERATOR'S COMMENT:
Please keep posts within the context of financial planning.

In article <k8NCf.7886$vU2.1456[at]newsread3.news.atl.earthlink.net> ,
"Elle" <honda.lioness[at]earthlink.net> wrote:

- quote -

Yes...but this was a reply to someone who was commenting
on the number of payers versus the number of collectors.
I was talking about that balance, not a dollars in and
dollars out accounting balance. When social security was
first created, there were a large number of payers for
every collector. Over time, that ratio has dwindled, and
is heading towards 1 payer to 1 collector. That is what
we need to put back to its original balance.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

"John A. Weeks III" <john[at]johnweeks.com> wrote
- quote -

You posted on Jan 27th: "To put the system back in balance,
the Social Security retirement age would need to be moved to
age 79." That's when I first responded to your comments.

SS benefits are paid to, among others, the widows and
children of formerly breadwinning fathers who die young.
Life expectancy is one variable in the calculation of the SS
benefit, but there are many others. It is a complicated
calculation.

I hear the moderators beckoning to get this thread more
focused on financial planning. <grin!> Google has plenty of
information on the history of Social Security. That's all
from me on the subject.

In article <lNCCf.1296$Nv2.1158[at]newsread1.news.atl.earthlink.net> ,
"Elle" <honda.lioness[at]earthlink.net> wrote:

- quote -

I am not talking about putting the system back in balance.
I am talking about returning it to its original purpose
as a safety net for the oldest of the old rather than being
a national pension plan.

When social security was created, 65 was picked because
so very few ever reached that age when they were born.
Today, when born, most people make it to 65 and live
far beyond that age. As a result, people now view social
security as a pension plan so you don't have to save
for retirement. That is a completely different view of
social security from what it was when it was created.

If we want to return social security back to its original
purpose where only 1 in 25 ever reached the age where you
can draw, that age is going to have to be pretty high.
In fact, it has to be around the number that is the life
expectancy at birth, maybe just a little higher. And it
has to be adjusted as life expectancy changes, something
that has never really been done with the existing social
security program.

If the US government wants to provide a national pension
plan, then congress should vote in such a program, and it
should be designed as a pension program. What we have today
is an accidental pension program that is organized in a
very poor manner that has the potential to be a financial
disaster in the future.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

"John A. Weeks III" <john[at]johnweeks.com> writes:

- quote -

Life expectancy AT BIRTH.

Life expectancy at 65 is a much more relevant number
since it tells us approximately what the average time
someone will be a recipient of SS funds will be.

Life expectancy at birth is severely skewed by the
drop in the death rates due to childhood illness
over the 20th century. Someone who died before the
age of, say, 20, never really paid anything into SS and
of course will never get back a cent either - but
if you use life expectancy at birth, you are counting
him in coming up with a retirement age.

- quote -

And the average person who reached 65 was likely to
live another 12 years or so.

- quote -

Today, the average person who reached 65 is likely to
live another 18 or 19 years.

- quote -

Nope. More like 70. Maybe 72. Life expectancy of a
65 year old has increased from 12 or 13 to 18 or 19 -
an extension of 6 or 7 years. *Very* different from the
extension of life expectancy at birth, which has increased
a lot more (from about 65 to 79 or 80, an extension of 14 or 15
years).

- quote -

This is true. The "therefore" which should follow it
is not "therefore the age should be raised to 80" but
instead, "therefore the benefits ought to be means-tested".
And, if it's means-tested, it ought to be paid out of
general revenues, not payroll deductions - thus breaking
folks away from what I call "the myth of IN" - whereby
they think that they paid "in" to the system, rather
than having simply paid a tax. Folks who pay "in"
expect a pay "out" regardless of means-tests and all
the rest. Folks need to learn that there is no "in".
But that's a different discussion.

- quote -

A bit less than that, but when SS was first implemented,
if someone started drawing at 65, he was also likely to
draw for over a decade.


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"John A. Weeks III" <john[at]johnweeks.com> wrote
- quote -

John, you insisted that to put the SS system "back in
balance" would require moving the SS retirement age to 79.
- quote -

balance. You meant that moving the retirement age to 79
would duplicate the original SS system insofar as paying
benefits starting at the life expectancy average of the
population, roughly. That doesn't at all necessarily ensure
the system will be in balance. AFAIC, it is a complicated
calculation, as long as one is talking abour financial
"balance."

I have not seen such a high age (79) proposed for putting
today's SS system in the black for the long-term. For the
short-term, SS expenses are projected to be less than
revenues for at least a decade more. So currently, the
annual budget of the system may be said to be in balance.

In article <pItCf.7505$vU2.4490[at]newsread3.news.atl.earthlink.net> ,
"Elle" <honda.lioness[at]earthlink.net> wrote:

- quote -

There are no "red flags" or complicated calculations,
just a chain of logic:

1) when the Social Security system was created, the
male life expectancy was in the low 60's.

2) when Social Security system was created, the age
to start drawing was 65.

3) today, the male life expectancy is right about 80.

4) if you want the system to work today like it did
when it was created, then you need the retirement age
to be about the same as the life expectancy.

5) therefore, if you want the system to work today like
it did when it was created, the retirement age today
should be about 80.

I picked 79 because was my favorite number of the day.

Social Security was created to be a safety net for the
oldest of the old to keep them from starving in the
streets. It wasn't an old-age pension or a retirement
plan. It was charity for the oldest of the oldest of
the population.

Today, 65 is still middle age for most people. If you
start drawing at that age, you might draw 25 years. That
isn't a safety net, that is a national government pension
plan. That is what we have evolved by not adjusting the
age where people can draw.

Note that I am not making a moral judgement about the
system or the age limits, nor am I stating an opinion
on the system. Rather, I pointing out that the system
is different today than what it was when it was first
created. If one wanted to fix the system by returning
it back to its original purpose, we know how to do that.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

iarwain_8[at]hotmail.com wrote:
- quote -

Here's a aggregate of the data from U.S. census for 2005 population (in
millions):
ages 20-39: 81.5
40-59: 82.6
60+: 49.7

You can see that currently, the 20-39 age group is *already* about the
same size as the boomers (40-59). If you think about it, that makes
sense. If the baby boomers average 2 children per couple, then the next
generation should be the same size. Maybe it's a myth or
misunderstanding that the next generation would be much smaller,
because it's clearly not.

- quote -

Now let's look at the census projections for 2025:
20-39: 89.6
40-59: 83.3
60+: 84.6

Here's where the social security crisis is. In 2005, the ratio of 40-59
to 60+ is 1.7. In 2025, the ratio will only be 1.0. That's a huge
difference.

http://www.census.gov/cgi-bin/ipc/id...ax=250&yr=2005
http://www.census.gov/cgi-bin/ipc/id...ax=250&yr=2025

<BreadWithSpam[at]fractious.net> wrote
- quote -

Google. Plenty have.

- quote -

Right, that number being so close to life expectancy,
especially for men, was the red flag that went up for me
upon seeing John's post. Of course it's a complicated
calculation as to what it should be, but one of the starting
points of course is life expectancy.

"Elle" <honda.lioness[at]earthlink.net> writes:

- quote -

It's a little more complicated than that, but for
what it's worth, life expectancy at birth for both sexes:
1900: 47.3 yrs
1950: 68.2 yrs
2002: 77.3 yrs

Life expectancy at 65 yrs (how much longer
a 65 year old will live):
1950: 13.9 (ie. to age 78.9)
2002: 18.2 ( 83.2)

- quote -

Nobody's proposed it. There'd be riots.
There was a hue uproar when it was adjusted from 65 to 67.

Based on the life expectancy at 65, it looks like the
retirement age might reasonably be adjusted another year or two
upwards, but to 78 or 79 is absurd.

Life expectancy at birth isn't a very reasonable number
to use - many die(d) young, and it doesn't have much
bearing on the worker/retiree ratio.

(numbers above from http://www.cdc.gov/nchs/fastats/lifexpec.htm )

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"John A. Weeks III" <john[at]johnweeks.com> wrote
- quote -

Is that a rough number, off the top of your head?

Because I haven't seen such a high retirement age being
proposed to put the federal SS system back in balance.

I welcome a citation for your claim but also urge those who
are interested to google on the subject, since different
authorities may make different claims. From my reading, the
claims put proposed new retirement ages higher, but not that
high.

In article <1138366973.274803.88940[at]g49g2000cwa.googlegroups.com> ,
iarwain_8[at]hotmail.com wrote:

- quote -

Actually, the issue with Social Security is that when the
boomers paid in, there were few people living long enough
to collect a lot from the system. When the system was created,
age 65 was picked because it was the life expectancy number,
and few people were expected to live past that age.

Over the years, life expectancy has increased, but Social
Security has not been adjusted. The result is that many
years ago, there were 20 or more payers for everyone who
drew money out. Today, it is more like 2 or 3 payers per
person drawing money out. That ratio could even end up
backwards in the future, with a payer supporting more than
one person.

To put the system back in balance, the Social Security
retirement age would need to be moved to age 79.

The net-net is that what started as a safety net to keep
the oldest of the old from starving has been gradually
mutated into a national pension plan for older than average
workers, those who in many cases still have 10 years of
productive work life left in them. But at the same time,
the financial aspects of the plan have not been adjusted
to meet this new role--it is still a transfer payment plan
rather than an investment based plan.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

- quote -

This confuses me. How are there going to be more people 40-55 when the
boomers retire than there are now? Presumably, these people would be
there children of the boomers. It's always been said the generation
following the baby boomers was smaller. So how does this happen?
Immigration? I'm sure there's a logical explanation for it (assuming
your figures are right), but I don't see what it is. I mean the whole
idea of the Social Security crisis is based on the fact that the
boomers will retire and there won't be enough workers to pay into the
system.

I do think that more peole in the younger generations will start to
save after being told that SS won't be around. It's good to start
saving as soon as you can anyway. If it becomes a trend, perhaps SS
will once agains become a "safety-net" for Americans, not something
that lots of people depend on.

"zxcvbob" <zxcvbob[at]charter.net> wrote
- quote -

I'm sure he meant the latter. One can go to the Social
Security site, and a calculator there will give one IIRC
three or so ways of estimating one's SS benefit. None of
them ask for personal savings (IRA or otherwise)
information. In addition, one may note that the yearly
mailing from the SS department giving one's expected benefit
at retirement or disability yada also says nothing about
personal savings being a factor.

Not that one should rely on Social Security to be
significant income during retirement.

iarwain_8[at]hotmail.com wrote:
- quote -

According to census projections in my other post, there will be enough
population within the U.S. to compensate. There will be more people
between the ages of 40-55 during the boomers retirement years than
there are boomers now.

Steve M wrote:
- quote -

The point was, the withdraws from a traditional would reduce the SS
benefits -- I'm not sure if he meant actually reduce the benefits or
just cause the benfits to be taxed (which effectively doubles your
marginal tax rate) The balance in your accounts doesn't have much to do
with it other than dictating your minimum yearly draw once you reach
something like 70 1/2.

Bob

On Tue, 24 Jan 2006 14:51:46 -0600, zxcvbob <zxcvbob[at]charter.netwrote:

- quote -

Why would having a qualified (traditional) IRA have to do with you SS
benefits? Unless you tell them, how does the government know how much
you have in your IRA?

On Wed, 25 Jan 2006 12:33:12 -0600, "joe.spam.weinstein[at]gmail.com"
<joe.weinstein[at]gmail.com> wrote:

- quote -

Besides risk tolerance, I suspect that a lot of this will turn on the
adequacy of the investor/retiree's nest egg. If their income need is
such that the current yield on stock dividends (for their nest egg)
isn't enough, then they will be forced to sell stocks and seek
higher-yielding alternatives like bonds and other fixed-type choices.
The negative of this, of course, is the old inflation bugaboo over the
coming decades of retirement.

But for those whose nest egg is sufficient, drawing stock dividends
while keeping the stocks to hopefully keep pace with inflation is a
tempting proposition for many.



-HW "Skip" Weldon
Columbia, SC

In article <1138271168.040371.234840[at]f14g2000cwb.googlegroups.com> ,
iarwain_8[at]hotmail.com wrote:

- quote -

I have heard this conspiracy story for years about the big
stock market crash when the boomers cash out. I think it is
all bunk. Consider that (1) not all the boomers retire the
same day, so there will not be a run on the market. (2) A
boomer will not pull all their money out on day one. They
will trickle the money out over time to cover living expenses.
(3) More and more people are using IRAs and 401K's, so money
is flowing into Wall Street. (4) Many boomers continue to
work after age 62 or 65, so they are not drawing down their
money as soon as the retire, but rather, many continue to
contribute to their retirement funds. (5) A good chunk of
the boomer money is slated to be handed down to the next
generation. They are just as likely to keep the money
invested, so that share isn't going to be pulled out, either.
(6) People are living longer and longer, so to compensate
for the risk of outliving their money, more and more boomers
are keeing their money invested in the stock market late
in life rather than moving it to more conservative investments.

As a result, I don't see the run on the stock market, nor
do I see a big crash coming due to the boomers hitting 65.

- quote -

A trend that seems to be developing is that as older folks
end up in the "empty nest" phase of life, they are selling
off the big starter castles, and moving to places where
they have 1 level living and all the maintenance is done
for them. That is causing the prices on condos and townhouses
to go up relative to the market, and it is starting to leave
the bigger starter castles and urban mansions in an over-supply
situation.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================