Originally Posted by Toby

What does the federal goverment do with your social security when you are not using it?

Originally Posted by raytri

But your SS premiums vanish if you die before collecting: the money is used to fund the retirements of longer-lived retirees.

Originally Posted by raytri

Pays it out to current retirees. What isn't needed immediately is put into T-bills, which essentially lets the government borrow it to fund government operations.

Social Security works a bit like reverse life insurance. You pay your premiums, in exchange for which you get a monthly payment upon retirement, guaranteed to last as long as you live. If you die early, you get no payout. But if you live a moderate time after retirement -- I think the current number is seven years -- you hit the point where you've taken out more than you put in.

It's different from an investment program in three ways:

1. All the risk is borne by the government. If you live to be 100, you make a killing. You never have to worry about the money running out.

2. The monthly payout is higher than for a similar amount of private investment, because it can be based on *average* lifespan, not *potential* lifespan. If you have a $1 million retirement fund, you have to be conservative with it to ensure it lasts for your whole lifetime. That often means assuming you'll live 30 years beyond retirement, so you have to divide that $1 million by 30 to find out your annual income. Social Security can take that same $1 million and pay it out to you over seven years, the average length of time people live after retirement.

3. The trade-off is that you don't have a balance that belongs to you. If you die early, your privately invested retirement funds become part of your estate and can be handed down to your heirs. But your SS premiums vanish if you die before collecting: the money is used to fund the retirements of longer-lived retirees.

So basically, you're transferring investment and longevity risk to the government in exchange for not having an ownership claim on your premiums.

Originally Posted by Craigers

In 2007, Medicare Part A benefit payments began to exceed the program’s tax revenue.

In 2011, the Medicare Part A Trust Fund begins to decline as benefits exceed payroll taxes and trust fund interest.

In 2017, Social Security benefit payments will begin to exceed the program’s tax revenue.

In 2019, Medicare Part A Trust Fund assets will not be enough to pay full benefits. Under current law, benefits would be reduced to 79 percent of scheduled benefits in 2019, declining to 29 percent by 2081.

In 2027, Social Security Trust Funds begin to decline as benefits exceed tax revenue and trust fund interest.

In 2040, federal debt held by the public will exceed the historical high of 109 percent of GDP.

In 2041, Social Security Trust Funds’ assets will not be enough to pay full benefits. Under current law, benefits for all retirees would be reduced to 75 percent of scheduled benefits in 2041, declining to 70 percent by 2081.

In 2080, total government cost will be more than three times revenue.

http://www.fms.treas.gov/frsummary/frsummary2007.pdf

You consider this great success?

What's even better, if I where to invest the amount I lost to SS last year (not including the amount my employer pays) into my company matched 401(k) and continue to do so until I retire and NOT account for any pay raises, I will have $1.5 Million in the account. How much will SS give me when I retire if it is even around? A few thousand a year?

Lets not forget the 'reform' we've gotten on SS over the years:

> Franklin Roosevelt, a Democrat, introduced the Social Security (FICA)
> Program. He promised:
>
> 1.) That participation in the Program would be Completely voluntary,
>
> 2.) That the participants would only have to pay 1% of the first $1,400
> of their annual incomes into the Program,
>
> 3.) That the money the participants elected to put into the Program
> would be deductible from Their income for tax purposes each year,
>
> 4.) That the money the participants put into the independent "Trust Fund"
> rather than into the General Operating Fund, and therefore, would only
> be used to fund the Social Security Retirement Program, and no other
> government program, and,
>
> 5.) That the annuity payments to the retirees would never be taxed as
> income. Since many of us have paid into FICA for years and are now
> receiving a Social Security check every month -- and then finding that
> we are getting taxed on 85% of the money we paid to the Federal
> Government to put away for our use upon retirement -- you may be
> interested in the
> following:
>
>
> Q: Which Political Party took Social Security from the independent
> "Trust Fund" and put it into the General Fund so that Congress could spend it?
>
> A: It was Lyndon Johnson and the democratically Controlled House and
> Senate.
>
> Q: Which Political Party eliminated the income tax deduction for
> Social Security (FICA) withholding?
>
> A: The Democratic Party.
>
> Q: Which Political Party started taxing Social Security annuities?
>
> A: The Democratic Party, with Al Gore casting the "tie-breaking"
> deciding vote as President of the Senate, while he was Vice President of the US.
>
> Q: Which Political Party decided to start giving annuity payments to
> immigrants?
>
> A: That's right! Jimmy Carter and the Democratic Party. Immigrants
> move into this country, and at age 65, began to receive Social
> Security payments! The Democratic Party gave these payments to them,
> even though they never paid a dime into it!
>
> Then, after violating the original contract (FICA), the Democrats
> turn around and tell you that the Republicans want to take your Social
> Security away! And the worst part about it is, uninformed citizens believe it!

Why on earth would I want these people running my healthcare?

Do you even live in the US?

Originally Posted by Toby

And yes social security is nothing more but than the goverment making you save money for your own retirement. It is an investment because the goverment pays interest on it. However they force you to invest money in social security when you could be making a killing investing somewhere else!

Originally Posted by raytri

Unless you consider insurance premiums "investments", you're wrong. You don't have a balance at SS that is yours, upon which the government pays interest. Just like, when you pay premiums for term life insurance, you don't have a balance at the insurance company that is yours, upon which the insurance company pays interests. You pay your premiums and the insurance company keeps them -- in exchange for agreeing to pay out a set amount of money if you die.

Investments are about taking risks in order to earn a higher rate of return. Insurance is about minimizing or managing risks by paying someone else to shoulder that risk for you.



A lot can happen in 50 years. But I'd say the odds are in your favor. If you retire at age 72, that'll happen in 2054. Even if nothing at all is done to prop up SS, you'll get 75% of scheduled benefits for your full retirement. That means your break-even point moves from 7 years to 9 years. So live to be 81 and you'll get back every dime you put into SS. Every month you live after that increases the "return" you earn on your "investment" in SS.

Originally Posted by Toby

Originally Posted by Toby

Originally Posted by Toby

And why does the federal goverment make us pay for social security against our own free will?

Originally Posted by raytri

Social Security doesn't provide a rich lifestyle; it merely guarantees that nobody has to live on cat food in retirement.