StrangeSox

QUOTE (Y2HH @ Apr 25, 2013 -> 10:50 AM) Even the lower income workers are showing 80's...that's the point. When SS began, they were in the late 50's. Life expectancy at 65 has only increased a few years since the 40's and was expected to do so when the program was designed. http://www.ssa.gov/history/lifeexpect.html

QUOTE (southsider2k5 @ Apr 25, 2013 -> 10:40 AM) That isn't fully true. Only about a quarter of states do that. Illinois is one of them, but they force teachers to put in 50% more than what they would to SSDI to get their pension. Didn't know that, thanks for the clarification.

QUOTE (Y2HH @ Apr 25, 2013 -> 10:14 AM) While all these suggestions sound wonderful, I'm not sure they'd solve the retirement problem. People tend to have a spending problem. They often spend far more than they make, and never bother planning for the future. Some can't, but most simply claim they can't. Fact is, they don't really want too. Even those that make 100k tend to do this, possibly to an even greater extent, and will end up no better off in the end than the person struggling to get by on 45k. I don't think a government can solve this simply because of the number of people living longer they'd have to tend too. The answer is education, once again, and though you can lead a horse to water, you can't make them drink it. There are finite resources and an increasing number of people that are becoming reliant on those resources, leaving less for everyone else. It's a complex problem, and I don't think a few simple changes in the tax code is going to fix it. Science is awesome, but it's also what caused the problem in the first place. People are living so long, the resources to care for them have been spread so thin they've moved into non-existence. First, the increase in average lifespan has bifurcated based on class: So the people who rely the most on SS and Medicade are not really living longer, which is what makes the calls for increased retirement ages so callous and stupid. Increased financial education is definitely important, but so is just having some income. It seems like the $30k level would provide sufficient base income for a modest living. If you're talking about an overall Malthusian resource scarcity, sure, I think the whole house of cards will probably collapse within a hundred years. If you're talking about wealth scarcity, no, there's plenty of that, it's just been increasingly horded by a select few in recent decades.

QUOTE (Jenksismyb**** @ Apr 25, 2013 -> 10:17 AM) You used the word "base." I thought in these examples SS would be the only retirement income. Are you saying you'd be fine with 30k total being good enough for retirement? With no other income? Yes, a $30k base from SS would seem to me to provide a comfortable retirement. Certainly more comfortable than the median right now, about 50% more. Any other pensions or investments on top of that would just be gravy. There's multitudes of reasons that overall spending is generally expected to decline in retirement. Medical costs are obviously an important factor, and we could certainly use a much more robust public health care system like most of the rest of the world. Most retirement planning counts on you spending less and less each year. If that's not true, than our "become your own investment banker!" model of retirement is even more flawed. $30k/year for a single adult would also provide a modest living (maybe outside of NYC, SF, etc.), at least a "livable wage." Two adults making that would be above the median family-of-four household income. I think there's merit both morally and economically to a basic income for all adults, which is sort of what the EITC is but in a roundabout way but I don't know enough about it conceptually to go into any detail. One big positive is that it removes a lot of coercive power that employers have in that employees no longer have to rely on selling their labor to avoid destitution and so their agency is greatly increased.

QUOTE (Jenksismyb**** @ Apr 25, 2013 -> 10:12 AM) I understand it benefits higher mortgage amounts more, so why would you want to take away that benefit from the poor/middle class? Because the poor get essentially zero benefit and the middle class gets very little. Eliminating the entire program and using the funds to more directly benefit them is preferable. Yes, it'll have a negative impact on home prices. ~4% long-term. It'll have a 0.1% long-term GDP impact, or close enough to zero as to be meaningless. This means that housing becomes more affordable price-wise, even if you aren't getting back-end deductions. Teachers are probably the worst comparison here as they don't get SS benefits, but overall shifting the tax expenditures that pay for the MID to something designed to directly benefit lower- and middle-income households would be a net benefit. The CBPP link examines alternative housing-oriented programs that would do so, but it's not related to SS. That's what raising or eliminating the payroll tax cap does.

QUOTE (Jenksismyb**** @ Apr 25, 2013 -> 10:02 AM) And what does that mean? Are you expecting people to save their own money or "invest" it at a risk to fund their retirement!? What? Current median SS benefits are ~$15k. Double that, and we're at $30k. I thought that was pretty clear?

QUOTE (Jenksismyb**** @ Apr 25, 2013 -> 09:59 AM) How many people under 10-20k/year own a home? I'm not sure if it includes something like second-order rental effects e.g. my rental property is subsidized so I can afford to charge you lower rents, but let's go right back to the origin of this discussion: retirees. The median retiree income is somewhere right about $19k IIRC. Many of these people will own a house and might have a mortgage on it but still have very little income. Or it could be in areas of very cheap housing or could be condos (e.g. my in-law's condo that is probably going to sell for $44k). I liked this example from the linked CBPP article: Why should we be subsidizing usury payments to private banks?

QUOTE (Y2HH @ Apr 25, 2013 -> 09:47 AM) Wait, wait, wait. Are you suggesting the burden be placed on employers? And you think they'd actually just accept/swallow these losses and be ok with it? Because...well...I don't think they'd be ok with it, and they'd pass the costs onto their employees, or the consumers. Employers get deductions for running employee 401k plans. Eliminate those deductions and those plans (and their associated administrative costs) will largely be eliminated. That's a reduced burden on employers, much in the same way that a Medicare-for-everyone healthcare system would substantially reduce the administrative burden on employers who provide health insurance benefits. Employees would be losing retirement benefits from their employer, but would be receiving more retirement benefits via SS. The burden gets shifted from thousands of individual employers' plans to SS.

QUOTE (Jenksismyb**** @ Apr 25, 2013 -> 09:41 AM) Is 30k a year enough for retirement? If you answer anything but yes, my point is proven. Yes, I think that would provide a modest, comfortable base retirement income. Middle class americans aren't buying $1M or $750k homes. They also aren't claiming on two homes, like you can now. Why should we be subsidizing a $1M home at all? The benefit goes overwhelmingly to the upper income earners. http://www.cbpp.org/cms/?fa=view&id=3948

QUOTE (Jenksismyb**** @ Apr 25, 2013 -> 09:43 AM) Because we all know employers are so generous with their money that if they get nothing in return they'll still give more to their employees. No, employers would drop 401k matching, but employees would be getting increased SS benefits. The impact on the employers should net out to zero or maybe even positive if they're not administering employee retirement plans in the long run (same is true but even more so for health care!)

QUOTE (Y2HH @ Apr 25, 2013 -> 09:38 AM) Because it would take FAR more than simply eliminating 401k subsidies to do what you're suggesting with SS. I'm betting it wouldn't do much of anything for the people, regardless of it's intention. They'd most likely benefit more off getting a paltry sum from a failed 401k strategy than they would if it was eliminated completely. I'm pretty positive our government wouldn't take that saved subsidy and give it back to the people. Right, the article estimated that the 401k subsidies account for about $126b in tax expenditures each year. That's about 20%, the payroll cap would be another 50%, and the mortgage deduction about 15%. The law changing the 401k subsidies would have to do something with the payroll taxes directly because that's how SS is funded, but it could be done to guarantee that it's going straight to SS. SS taxes are just a revolving door right now anyway.

Here's a paper that's actually looked into the effects of eliminating the MID all on its own: http://news.rice.edu/2013/01/16/eliminatin...ce-study-finds/

QUOTE (Y2HH @ Apr 25, 2013 -> 09:33 AM) Of course it does...this is what happens when every elected official in congress is rich. And they all are. I don't see what economic impact would come from eliminating tax subsidies for businesses for 401k's. If they lost that subsidy, they'd most likely just stop offering 401k contributions. Which would be ok from the employee's perspective because they're getting increased benefits elsewhere.

QUOTE (Y2HH @ Apr 25, 2013 -> 09:27 AM) I made an edit, but basically: That article basically fixes social security by ignoring the economic impacts of the changes it's proposing. Such as removing the business deductions for 401k's, or IRA's, and eliminating mortgage deductions. Right, because none of that would impact the economy whatsoever. Well, yeah, it's an article in a magazine, not a 500 report from Brookings Tax Policy Center or something. 401k's and IRA's are one way we subsidize retirement right now, but it primarily benefits the upper-end.

QUOTE (Jenksismyb**** @ Apr 25, 2013 -> 09:26 AM) Yeah really. Great, I get an extra 800 bucks a month in retirement but my house is now worth nothing because the housing market completely dropped. Also, i'm 100% positive that even if SS doubles, or hell, triples, we'll still be arguing that for some people it's simply not enough to live on. I gotta buy my flat screen and smartphone. That data plan is a b**** to afford! It's great that you assume future bad-faith arguments as a way to dismiss current arguments that maybe $15k/year isn't really enough to get by on. So should we keep the mortgage interest deduction around because it artificially inflates home prices and does so in a non-linear fashion i.e. more expensive homes get larger deductions and more inflated prices?

QUOTE (Y2HH @ Apr 25, 2013 -> 09:22 AM) It takes a lot of fuzzy math and shifting of deductions to do something that it would never actually do. Eliminating the payroll cap gets you half-way there. Even a 50% increase in benefits would make a huge different to the quality of life of millions of seniors to rely primarily on SS income in retirement. tangent Instead, we're talking about cutting the program because deficits, even though it doesn't affect the deficit at all /tangent It primarily benefits six-figure households and inflates home prices since many filers don't have enough deductions to itemize.

The linked article I edited in gives an estimate of $650b/year in increased costs and three steps to get there: raising the cap ($377b), eliminating business deductions for 401k's ($126b), and eliminating the mortgage deduction ($100b). That gets us to $603b. edit: also Defense could get by with less than $682b

QUOTE (Y2HH @ Apr 25, 2013 -> 09:03 AM) ...and who is paying for this? You'd have to increase income tax huge to pay for this, leaving people less money now for more money then. I'm not sure that solved the problem. QUOTE (StrangeSox @ Apr 25, 2013 -> 09:00 AM) Double SS benefits by some combo of raising the payroll tax cap and maybe reducing 401k/IRA tax subsidies, ensuring every American who puts in a lifetime of work (since your SS benefits are calculated off of that) receives a modest retirement. The payroll tax cap is somewhere around $115k for an individual. Eliminating the tax subsidies for 401k's and IRA's (which weren't originally created to be the main vehicle for a majority of American's retirement income) wouldn't effect current income much now, and would do so very little or not at all for the many households under $50k who don't have 401k's as an option and don't have IRA's on their own. 401k and IRA subsidies primarily benefit higher-income earners anyway, not those who are going to depending primarily on SS benefits in retirement. edit: this is not my own, original thought http://www.theatlantic.com/politics/archiv...uble-it/266095/

QUOTE (Y2HH @ Apr 25, 2013 -> 08:57 AM) So, your suggestion to solve this is what? To complain? Double SS benefits by some combo of raising the payroll tax cap and maybe reducing 401k/IRA tax subsidies, ensuring every American who puts in a lifetime of work (since your SS benefits are calculated off of that) receives a modest retirement.

QUOTE (Y2HH @ Apr 25, 2013 -> 08:53 AM) It's 5x it's former value. Of couse it's not 5x what they paid for it. That's f***ing retarded. In your 8:38 post you literally said "5x what they paid for it," I think that's what ss2k5 is reacting to so strongly.

QUOTE (Y2HH @ Apr 25, 2013 -> 08:52 AM) It's funny, but you know what I've noticed about most people, it doesn't matter what they make, they tend to spend more than that. Friends of mine take home 120k between them, and are up the ceiling in debt, despite having a mortgage that's half of what mine is. Meanwhile, I make far less than them, live on a single income, support a family, and still somehow have money to save! I know, I must be doing some sort of freaky magic, right? Most of that, across the board, is self inflicted. Let's examine what these people are spending their money on and I bet we can solve the problem, even if they're making 50k. There money is going somewhere, and believe me, it's NOT all going to living expenses. I bet a LOT of it's being wasted. Yeah probably not very accurate to compare people making more than twice the median household income to people making the median or the 50% of people that are making less. Even if we go down the "personal responsibility" narrative path, we still end up at "holy s*** there's an awful lot of people at or near retirement with little or no retirement assets, hope they can survive on $15k/year SS benefits that we also seem desperate to cut!" In engineering, a system that's designed well mechanically and electrically but keeps failing because human factors weren't taken into account is considered a bad system, even if the errors are the 'fault' of the operators and not of the machine itself.

QUOTE (Y2HH @ Apr 25, 2013 -> 08:46 AM) When the S&P dropped by half, shares in S&P index funds also dropped by half, if not more. For example, my fund is selling shares at 102$ right now. Upon the collapse, and all the way back up, I was buying shares at a > 50% discount, then a 40% discount, etc...stockpiling the number. A few years ago I was able to buy 2 shares for what one costs now. Compound that over the years. In 2008, when the market collapsed my 401k was worth about 15k. It's worth almost 80k now. That's > 5X. that's not "5X what they paid for it," though.

QUOTE (Y2HH @ Apr 25, 2013 -> 08:43 AM) Perhaps we should have one like Greece, or Spain, or Portugal? There are no easy answers, other than to educate yourself and plan for the future. I know, that's hard. Nobody wants to do that. Meanwhile, spend 2 weeks researching your next smartphone purchase, right? But f*** researching your 401k or retirement. Some people have bad luck, and I get that. People bankrupted by medical bills, or health issues, etc. We aren't talking about that. What we're talking about here is 100% self inflicted. They always have time to research granite countertops, or televisions, or cars they're going to buy, but they never bother researching their financial future. And somehow, that's my fault? Somehow, that's their companies fault? I don't think so. That's their own fault. You seem to be speaking mostly about middle-class-and-up professionals, not the majority of working Americans here who likely don't even have employer-sponsored retirement benefits let alone 5-10% of their weekly paycheck to put aside for 30-40 years from now because they've gotta figure out how to cover the bills coming next week.

QUOTE (Y2HH @ Apr 25, 2013 -> 08:40 AM) They could always develop cancer too. Why all the doomsday scenarios? How come everyone has to lose their job? You do realize far more people are employed than not, right? Well that one is more anecdotal because it's what has happened to my wife's uncle, but he's far from the only one.

QUOTE (Y2HH @ Apr 25, 2013 -> 08:38 AM) The problem with the market is, people can't handle the swings. What happened with these people is in 2000, when they had 15 years left before retirement, they sold their 401k at it's low, stopped investing in it, and here we are...stagnant growth. Had they simply stayed the course, they'd not only have every dime of their original investment back, but all the compounded investment they added too it over time would be worth 5X what they paid for it along the way. If people really can't handle investment swings and 40 year financial predictions, maybe we shouldn't have a retirement system based around the assumption that they can?