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chargeradio Offline
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Post: #1
Social Security
What if instead of Social Security, it was the law of the land that everyone must withhold 6.2% (4.95% until 1977) for their retirement? You would have your choice of where you could invest it - stocks, bonds, CDs, whatever - but it could only be used for retirement. The self employed would have a similar requirement in place of Self-Employment Tax. Assume that the current employer portion of the tax is passed on to the employee as a matching contribution to the same investment vehicle as the employee portion.

As such, the government would be out of the retirement benefit business for non-disabled workers. The Department of Labor would have responsibility for enforcement issues similar to governing deposits for 401(k) and other employer-sponsored plans, although in 2018, all of this could happen with direct deposit - in theory there would be no penalties for late deposits to EFTPS aside from Federal Income Tax and FUTA (the latter of which is only paid by employees). The replacement for Social Security would not count against the contribution limits for 401(k), IRA, or other similar plans - if you make $50,000 per year, you would be required to contribute $3,100 to your retirement in lieu of Social Security, and you could contribute up to $18,000 or $24,000 to a combination of IRA and/or employer-sponsored plans depending on your age, filing status, and choice of account.

Would you approve of this change? Would the country be better off?
04-01-2018 08:06 PM
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JerseyDevil Offline
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RE: Social Security
How do you propose this be enforced? Is there oversight? What about people that are not physically able to work at all. How do they get by after they hit 70? How do they get by at all?

WHo enforces a company match and what happens if you are sick and out of work for a few months. Is that same amount still required and does the employer still match disability?

How about those that are self-employed and have no one to match what they put in?

Just asking is all.
04-01-2018 08:38 PM
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chargeradio Offline
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RE: Social Security
(04-01-2018 08:38 PM)JerseyDevil Wrote:  How do you propose this be enforced? Is there oversight? What about people that are not physically able to work at all. How do they get by after they hit 70? How do they get by at all?
It would be enforced through the same avenues as compliance that employer-sponsored plans are now by the Deprtment of Labor. You also have the added layer of a company’s own employees being able to see the payments going into their retirement accounts in essentially real time, so any issues would be the same as an issue with a traditional paycheck - the HR department deals with it, and if it can’t be resolved internally, or if something illegal is going on, it goes to the state or US Department of Labor.

For those who are not able to work, those programs administered by the Social Security Administration (SSDI and Supplemental Security) would remain.

Given we can’t go back in time and eliminate FDR, there ultimately will be some transition with both systems in place. Older workers would likely want to stay the course. Younger workers could essentially ask for their contributions back and then invest them at their discretion, and likely enjoy a much higher return than they would enjoy with Social Security, which is typically around zero. There are a ton of disparities invloving race, marital status, and whether both spouses work that affect one’s rate of return from Social Security; some of these are caused by the program (like spousal benefits) and some are the result of demographic differences.

Quote:WHo enforces a company match and what happens if you are sick and out of work for a few months. Is that same amount still required and does the employer still match disability?
It would work the same way as the matching portion of Social Security tax - if you don’t work, you don’t get the match. It normally is invisible to you (unless if you are self-employed or do payroll), but an employer pays Social Security tax equal to the amount it withholds from its employees. In this system your retirement account gets both sets of funds, the 6.2% of your current gross pay, and a matching amount equal to 6.2% of your gross pay that your employer remits directly to Uncle Sam.

This may make disability insurance more attractive, given there is now a direct correlation to how much you earn and how much is available to you at retirement.

The IRS would modify Form 941, a quarterly return filed by employers, to breakout the matching contribution and employee withholding, and like the current return, it would be subject to audit.

Quote:How about those that are self-employed and have no one to match what they put in?
The self-employed are currently paying both the employer’s half and employee’s half of Social Security and Medicare. It is called Self Employment Tax, and the 15.3% rate is the same amount as it would be if one were not self-employed; 7.65% is withheld from an employee’s gross pay, and the employer pays in another 7.65%. The only difference is that the employer and employee are the same person. Since one only pays SE tax on profits, they would just need to fund their retirement instead and be able to demonstrate it on their tax return. The final rule would probably resemble IRA contributions in that one would have until the following April 15 to make the contribution, although this would encourage estimated payments during the year since the taxpayer will see it as “my money” instead of “Uncle Sam’s money”. Any excess could be treated as an IRA contribution, and if someone blows through the IRA limit then it is just a post-tax retirement contribution.

Obviously since Medicare is a separate program, SE tax still exists, it just goes down to 2.9%.
04-01-2018 09:26 PM
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ODUsmitty Offline
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Post: #4
RE: Social Security
I actually would love my government-sponsored retirement benefits to be a lock-box under my control. However, please explain to me how one's race has any effect on investment portfolio results. I cannot recall the "check the box if you are black" section of the latest investment with which I got involved.
04-01-2018 10:05 PM
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banker Offline
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RE: Social Security
Pointless to discuss really. We are so far along in the Ponzi scheme that is SS that there is no turning back or ability to change. It would take, at best, a multi-generational phase out where the individual and company contributions are scaled back with the difference going to something like you are discussing. With the scale back, people in that pool would also get a scaled back SS benefit. However, even that would have to be disproportionate, i.e. the scaled back benefit would be impacted higher than the scaled back contribution.

The unfunded liability associated with social security is almost beyond the mental grasp of most people.
04-01-2018 10:22 PM
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stinkfist Offline
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RE: Social Security
(04-01-2018 10:22 PM)banker Wrote:  Pointless to discuss really. We are so far along in the Ponzi scheme that is SS that there is no turning back or ability to change. It would take, at best, a multi-generational phase out where the individual and company contributions are scaled back with the difference going to something like you are discussing. With the scale back, people in that pool would also get a scaled back SS benefit. However, even that would have to be disproportionate, i.e. the scaled back benefit would be impacted higher than the scaled back contribution.

The unfunded liability associated with social security is almost beyond the mental grasp of most people.

every single bit of ^^^^^

I'm 14 yrs away from drawing a pittance and don't even give it a glance.....my crew knew 35 yrs ago it was a joke....

you simply can't overcome the increase in lifespan/cost in numbers....

the wealth siphon of a socialized nation is upon us.....it's simply a matter of when the shite hits it.....
04-02-2018 12:39 AM
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JerseyDevil Offline
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RE: Social Security
You answered my concerns now....

Congress has effectively raised when you can collect SS using when you were born; making it later in life in exponential increments. Would this be a factor in the said scenario or can people decide to retire when they so choose? IOW - I effectively retired at 62 but get only 40% until I hit 66 and 4 months. Under this plan would I choose how much I take out a month, which may vary, or will there be a fixed percent?

What happens if, god forbid, the banks and markets crash? Am I guaranteed this money (I am really not into finances so I'm not savvy on what are and aren't protected funds)

It does take away Congress's ability to raid these funds with no intent to pay back. It also, hopefully, takes away their ability to say you get no increase because you control your own nest egg. Is this correct?
It also gives them no scapegoat to backfill budget increases they irresponsibly pass with no other options to pay for them with.
04-02-2018 11:46 AM
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UofMTigerTim Offline
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Post: #8
RE: Social Security
SS, Medicare, Welfare, are all good intentions gone wrong. (The road to Hell is paved with good intentions.)

I can understand the thinking of the WWII generation and why they implemented these programs. They didn't want to go through what their parents went through and they didn't want their children to go through what they went through.

The mistake was they gave government the keys and trusted government to do the right thing. Even when it was clear the government was raiding the coffers the WWII generation didn't hold the government accountable.

I have had this discussion with some older people and the comment is always the same. "I paid that money in so I deserve it". I then counter with the suggestion the government ends the SS program and immediately distribute the money you have contributed. The conversation stops there because they know they have received more benefits than what they have paid in.

I am still a few years from retirement and I don't expect to get anything or very little. My kids will be footing the bill and receiving nothing.

There are only two things that will correct this mess. Total economic collapse or world war.
(This post was last modified: 04-02-2018 03:11 PM by UofMTigerTim.)
04-02-2018 03:09 PM
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chargeradio Offline
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Post: #9
RE: Social Security
(04-01-2018 10:05 PM)ODUsmitty Wrote:  I actually would love my government-sponsored retirement benefits to be a lock-box under my control. However, please explain to me how one's race has any effect on investment portfolio results. I cannot recall the "check the box if you are black" section of the latest investment with which I got involved.
There’s data that shows African-American men born after 1959 have a worse return from Social Security because their earnings during their lifetime were depressed relative to their white peers, and that the the average return for low income African American males is around negative 12%.
04-02-2018 04:31 PM
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THE NC Herd Fan Offline
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Post: #10
RE: Social Security
(04-01-2018 08:06 PM)chargeradio Wrote:  What if instead of Social Security, it was the law of the land that everyone must withhold 6.2% (4.95% until 1977) for their retirement? You would have your choice of where you could invest it - stocks, bonds, CDs, whatever - but it could only be used for retirement. The self employed would have a similar requirement in place of Self-Employment Tax. Assume that the current employer portion of the tax is passed on to the employee as a matching contribution to the same investment vehicle as the employee portion.

As such, the government would be out of the retirement benefit business for non-disabled workers. The Department of Labor would have responsibility for enforcement issues similar to governing deposits for 401(k) and other employer-sponsored plans, although in 2018, all of this could happen with direct deposit - in theory there would be no penalties for late deposits to EFTPS aside from Federal Income Tax and FUTA (the latter of which is only paid by employees). The replacement for Social Security would not count against the contribution limits for 401(k), IRA, or other similar plans - if you make $50,000 per year, you would be required to contribute $3,100 to your retirement in lieu of Social Security, and you could contribute up to $18,000 or $24,000 to a combination of IRA and/or employer-sponsored plans depending on your age, filing status, and choice of account

Would you approve of this change? Would the country be better off?

Would employer's still put in 6.2% as well? If so I think it would be better than what is in place, but without a safety net there probably should be limits on investment choices so people end up losing their money. The downside to this is employers might try to phase out 401k match if SSI became a self directed investment account.
(This post was last modified: 04-02-2018 05:47 PM by THE NC Herd Fan.)
04-02-2018 04:32 PM
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Post: #11
RE: Social Security
(04-01-2018 08:06 PM)chargeradio Wrote:  What if instead of Social Security, it was the law of the land that everyone must withhold 6.2% (4.95% until 1977) for their retirement? You would have your choice of where you could invest it - stocks, bonds, CDs, whatever - but it could only be used for retirement. The self employed would have a similar requirement in place of Self-Employment Tax. Assume that the current employer portion of the tax is passed on to the employee as a matching contribution to the same investment vehicle as the employee portion.

As such, the government would be out of the retirement benefit business for non-disabled workers. The Department of Labor would have responsibility for enforcement issues similar to governing deposits for 401(k) and other employer-sponsored plans, although in 2018, all of this could happen with direct deposit - in theory there would be no penalties for late deposits to EFTPS aside from Federal Income Tax and FUTA (the latter of which is only paid by employees). The replacement for Social Security would not count against the contribution limits for 401(k), IRA, or other similar plans - if you make $50,000 per year, you would be required to contribute $3,100 to your retirement in lieu of Social Security, and you could contribute up to $18,000 or $24,000 to a combination of IRA and/or employer-sponsored plans depending on your age, filing status, and choice of account.

Would you approve of this change? Would the country be better off?

W. wanted self-managed accounts for younger people. The Democrats demagogued it to death.
04-02-2018 04:59 PM
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VA49er Offline
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Post: #12
RE: Social Security
(04-02-2018 04:59 PM)bullet Wrote:  
(04-01-2018 08:06 PM)chargeradio Wrote:  What if instead of Social Security, it was the law of the land that everyone must withhold 6.2% (4.95% until 1977) for their retirement? You would have your choice of where you could invest it - stocks, bonds, CDs, whatever - but it could only be used for retirement. The self employed would have a similar requirement in place of Self-Employment Tax. Assume that the current employer portion of the tax is passed on to the employee as a matching contribution to the same investment vehicle as the employee portion.

As such, the government would be out of the retirement benefit business for non-disabled workers. The Department of Labor would have responsibility for enforcement issues similar to governing deposits for 401(k) and other employer-sponsored plans, although in 2018, all of this could happen with direct deposit - in theory there would be no penalties for late deposits to EFTPS aside from Federal Income Tax and FUTA (the latter of which is only paid by employees). The replacement for Social Security would not count against the contribution limits for 401(k), IRA, or other similar plans - if you make $50,000 per year, you would be required to contribute $3,100 to your retirement in lieu of Social Security, and you could contribute up to $18,000 or $24,000 to a combination of IRA and/or employer-sponsored plans depending on your age, filing status, and choice of account.

Would you approve of this change? Would the country be better off?

W. wanted self-managed accounts for younger people. The Democrats demagogued it to death.

Yep, still no idea why that died other than partisan nonsense. Makes so much sense to me.
04-03-2018 08:28 AM
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Post: #13
RE: Social Security
Social Security isn't an investment device it is a safety net.

The laws provide several tax deferred and post-tax investment vehicles for retirement.

Social Security exists to insure that when a person becomes too old to work or physically unable to work, they can replace about 1/3rd of their earnings (unless a high earning individual).

Unlike traditional welfare programs it is tied to your earnings. Bill Gates can draw more than Joe Smith who worked sporadically at low wage jobs.

It is insurance not welfare and not an investment.
04-03-2018 02:21 PM
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bullet Offline
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Post: #14
RE: Social Security
(04-03-2018 02:21 PM)arkstfan Wrote:  Social Security isn't an investment device it is a safety net.

The laws provide several tax deferred and post-tax investment vehicles for retirement.

Social Security exists to insure that when a person becomes too old to work or physically unable to work, they can replace about 1/3rd of their earnings (unless a high earning individual).

Unlike traditional welfare programs it is tied to your earnings. Bill Gates can draw more than Joe Smith who worked sporadically at low wage jobs.

It is insurance not welfare and not an investment.

Its not really insurance. Its a pension. Since Congress was taking and using the money that people put in, W. wanted to give them ownership. The Democrats didn't like that.
04-03-2018 02:50 PM
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THE NC Herd Fan Offline
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Post: #15
RE: Social Security
(04-03-2018 02:21 PM)arkstfan Wrote:  Social Security isn't an investment device it is a safety net.

The laws provide several tax deferred and post-tax investment vehicles for retirement.

Social Security exists to insure that when a person becomes too old to work or physically unable to work, they can replace about 1/3rd of their earnings (unless a high earning individual).

Unlike traditional welfare programs it is tied to your earnings. Bill Gates can draw more than Joe Smith who worked sporadically at low wage jobs.

It is insurance not welfare and not an investment.

The problem with the model is its fully backed by US Debt the only growth in contributions is interest paid on Treasury Notes. It might work if there weren't so many ways for people who don't contribute to draw benefits. One example a person can blow through 3 or 4 marriages to non-working spouses, as long as the marriage lasted 10 years each spouse can draw 50% benefit from the one working spouse without ever contribution anything. Everyone drawing benefits are mainly paid from current contributions which makes feel like a Ponzi scheme. IF payouts ever have to come from the accumulated Treasury Notes backing the system it will be insolvent since it means borrowing money to payoff borrowed money. The only way it becomes insurance if contributions and set up in individual accounts and backed by private sector investments the government isn't obligated to pay. Since SSI is the biggest holder of US Debt and needed to fund the gubment budget it will never be in a "LOCKBOX".
(This post was last modified: 04-03-2018 05:54 PM by THE NC Herd Fan.)
04-03-2018 05:51 PM
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dfarr Offline
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RE: Social Security
(04-03-2018 02:21 PM)arkstfan Wrote:  Social Security isn't an investment device it is a safety net.

The laws provide several tax deferred and post-tax investment vehicles for retirement.

Social Security exists to insure that when a person becomes too old to work or physically unable to work, they can replace about 1/3rd of their earnings (unless a high earning individual).

Unlike traditional welfare programs it is tied to your earnings. Bill Gates can draw more than Joe Smith who worked sporadically at low wage jobs.

It is insurance not welfare and not an investment.

It’s bs is what it is. It’s pure theft and widely abused. Save for your own retirement. Not the governments job.
04-03-2018 09:37 PM
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Claw Offline
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RE: Social Security
What is it with you people that just beg to give the government control of your money?

401K's. Medical Savings Accounts. Now government mandated retirement accounts.

My God, what is wrong with you people? It is YOUR MONEY. Quit giving them more control over you.
04-03-2018 09:46 PM
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chargeradio Offline
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Post: #18
RE: Social Security
(04-03-2018 09:46 PM)Claw Wrote:  What is it with you people that just beg to give the government control of your money?

401K's. Medical Savings Accounts. Now government mandated retirement accounts.

My God, what is wrong with you people? It is YOUR MONEY. Quit giving them more control over you.
You actually are making my argument. By replacing Social Security, I am proposing that government give you back control of your money. The only difference is that by transitioning from a tax to mandatory retirement savings, one never incurs any additional burden - your paycheck doesn’t go down, and you have control over your retirement funds.

In the purest sense, a 401(k) and Health Savings Accounts are not giving government control of your money anyway, but the setup is cumbersome and generally favors those who work for others - the self-employed, business owners, and those who choose to work part-time may not always have access to those options due to their tax treatment. The proposed replacement for Social Security still keeps those options on the table.

The present system allows government to borrow against your Social Security benefits, which as noted above are only designed to replace a certain percentage of your income. This keeps the rest of the government out of the cookie jar, meaning your funds plus whatever earnings they accumulate will be there when you retire, whether it’s at 59.5, 62, 67, or 77.

Keep in mind what I also propose eliminates the employer side of the tax and gives those funds to wage earners (and likewise, the self-employed aren’t paying as much SE tax, and getting those funds directed to their retirement).

In other words, if you like your retirement plan, you can keep your retirement plan. And my proposal gives your more money to put into it.

For those who may not need to put 22.4% of their gross pay into retirement (12.4% from the former tax, plus 10% on their own), this would potentially free up billions of dollars into the economy for other spending.
04-03-2018 10:18 PM
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