Tuesday, March 30, 2010
Social Security and Me
I got my Social Security statement today. Through 2008, I paid in $218,028 in FICA taxes (and $124,451 in Medicare taxes btw) over the last 40 years or so. In return, I am estimated (not promised mind you, ESTIMATED) to get $28,440/year if I "retire" at 66 and $38,412 if I wait until I am 70. At some really simplistic level this doesn't seem so bad. If I start collecting at 66, I will recoup my "investment" by the time I am 73, and if I wait until I am 70, I will do so by the time I am 75. Of course, as with any lifetime annuity, it pays to live forever, so if I live to be 100, I will collect 4.6 times what I paid in if I start collecting at 66 and 5.5 times what I paid in if I wait until 70 to start. But these calcs ignore a few things. Like the fact that the government is not compensating me for the use of my money for 40 years or so. Nor does it account for the fact that the government will treat their repayment of my loan to them not as a return of capital but as income subject to at 15% to 28% tax (depending on how successful I am at generating income after I retire and assuming taxes on people like me don't go up -- a tenuous assumption at best). Bottom line? SS is a SHITTY investment. It is, in large part, a transfer payment pure and simple, and it should be accepted as such. I'm actually OK with that. I just wish someone somewhere would say "thank you," rather than TAX THE RICH!!!
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5 comments:
Actually, I wish GWB had been able to sustain a national conversation on privatizing a portion of social security program. At the time lots of people (those damned knee-jerk Democrats!) pointed out that that would expose the "investors" to more risk. Of course it would have, and over the last couple of years people would have seen the value of their SS investments tumble. But the upside is significant, and to me seems like the only realistic way to allow the SS trust fund to recoup the loans that have been taken against it in previous years when it ran a surplus.
Rob
Voila! If you an I ran the world, Rob, heaven would need to apply for admission!
It seems to me, at my fragile young age, that the primary issue with most of our social programs is that they have unarguable premises yet we insist on arguing their premises, not their implementation.
Will we allow poor people (or middle people or rich people who chose not to buy health insurance) who go to the ER and are unable to pay for their lifesaving care to die? No, so we pay for it.
Will we allow elderly folks, like Patberg, to become homeless and hungry if they didn't save for retirement? No. What if he saved but did so primarily on the basis of mortgage backed securities, which had the same net effect as not saving? What if we did allow privatization of SS and the market tanked big time? Would we let seniors to suffer on the streets? I doubt it.
My point is that on things where we've collectively decided an unwavering outcome (saving lives, housing and feeding seniors) we need unwavering means of achieving said outcomes. Hence taxes versus investments.
It's a slippery slope from here to Robin Hood, but we seem to have predetermined boundaries for our redistribution of wealth already drawn. We will allow poor vs. rich to be cavalier vs. corvette or studio apartment vs. lake-home, but we won't allow it to be hungry vs. fat, homeless vs. mansion, or dead vs. alive. (At least not in public.) Let's budget for the hierarchy we know is there (but will not speak of) then argue about the programs, not the reasons they exist.
On a side note, I am amazed that the payback on Patberg's SS investment is only 5-7 years. We should clearly raise his taxes.
One more side note - just discovered that I now live in Michele Bachmann's district.
Perfect.
lmao.
That's hardly a "payback." Figure the IRR for me big guy project manager. If you can, that is. Hard to figure anything that involves dividing by zero.
But at all kidding aside, you're right: However much we pay lip service to the idea of "free markets" and "moral hazard," I dont really think we believe it in extremis. We cannot, will not, accept for the many the consequences of the folly of the few.
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