RZehr wrote: ↑Thu Dec 07, 2023 3:10 pm
When Social Security was implemented in 1935, the general life expectancy was around 60 years. And the benefits were set to begin at age 65. It looks to me that its intention was not to allow for people to live long lives of luxury and leisure for the last 20 or so years of their lives.
So if Social Security was adjusted for life expectancy inflation along with monetary inflation, todays life expectancy of about 76 years would mean that social security benefits would kick in around 81 years of age.
This is not true. Or, perhaps more accurately, general life expectancy isn't the relevant statistic because it is distorted by infant moralities. The more relevant statistic is the average remaining life expectancy of someone who was 65 years old in 1935. Here are the stats for each decade: https://www.ssa.gov/history/lifeexpect.html
As you can see, a 65 year old man in 1940 could expect to live until age 77 and a 65 year old women could expect to live until age 79.
Those numbers have gone up over time but not dramatically so. What really happened is that infant mortality was MUCH higher in the past. But all those infants and children who were dying at higher numbers in the 1930s and 1940s that brought the average life expectancy down to 60 aren't really relevant since they neither pay into nor take money out of social security.
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A fool can throw out more questions than a wise man can answer. -RZehr
mike wrote: ↑Thu Dec 07, 2023 3:55 pm
The difference of course between the privately-run program I described (by memory and probably getting facts wrong) and Social Security, is that it will probably be much better run than SS with an actual chance that the participants will get back all of their investment with a return.
The total administrative costs of the entire social security program are about 0.5% of payouts. That is lower than any other private pension or investment fund you will find anywhere. Most investment funds or financial managers charge about 1% of investment holdings in management fees. And that is only for the investment management. There are other costs of administering a pension program such as tracking payments, eligibilities, mailing monthly checks, etc. Most smaller government pension plans like state teacher or police pensions are around 1% administrative costs. And most private pension funds are usually at 2% or higher in costs. There is no retirement plan anywhere in the US that has lower administrative costs than social security in percentage terms.
Social security is intentionally progressive in that it pays out a higher percentage to poor workers than rich workers. So if you are a minimum wage or low wage worker you will get a much higher percentage of your contributions back than if you are a wealthy doctor making $250,000/year. That is a policy choice by the designers of the program. But it means that the program is much more generous to the poor and lower middle class than to the wealthy. Most of the people who complain about low payouts are wealthy.
Social security is a very generous program for someone of modest means who lives for the current average lifespan for their age cohort. It is even more generous for women who tend to live longer and earn less. And it is especially generous for married couples with a stay-home wife.
It is not generous if you are single and die early or are very high income. And it doesn't leave any legacy for your children like a private inheritance will. Once you die the payments stop. Your children need to work themselves to earn their own benefit.
Last edited by Ken on Thu Dec 07, 2023 5:08 pm, edited 1 time in total.
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A fool can throw out more questions than a wise man can answer. -RZehr
mike wrote: ↑Thu Dec 07, 2023 3:55 pm
The difference of course between the privately-run program I described (by memory and probably getting facts wrong) and Social Security, is that it will probably be much better run than SS with an actual chance that the participants will get back all of their investment with a return.
The total administrative costs of the entire social security program are about 0.5% of payouts. That is lower than any other private pension or investment fund you will find anywhere. Most investment funds or financial managers charge about 1% of revenues in fees. And that is only for the investment management. There are other costs of administering a pension program such as tracking payments, eligibilities, etc. Most smaller government pension plans like state teacher or police pensions are around 1% administrative costs. And most private pension funds are usually at 2% or higher in costs. There is no retirement plan anywhere in the US that has lower administrative costs than social security in percentage terms.
Social security is intentionally progressive in that it pays out a higher percentage to poor workers than rich workers. So if you are a minimum wage or low wage worker you will get a much higher percentage of your contributions back than if you are a wealthy doctor making $250,000/year. That is a policy choice by the designers of the program. But it means that the program is much more generous to the poor and lower middle class than to the wealthy. Most of the people who complain about low payouts are wealthy.
Social security is a very generous program for someone of modest means who lives for the current average lifespan for their age cohort. It is even more generous for women who tend to live longer and earn less. And it is especially generous for married couples with a stay-home wife.
It is not generous if you die early or are very high income. And it doesn't leave any legacy for your children like a private inheritance will. Once you die the payments stop. Your children need to work themselves to earn their own benefit.
And that's where a private savings program would be much better. The money would still be there and could go to a person's heirs.
0 x
Remember the prisoners, as though you were in prison with them, and the mistreated, as though you yourselves were suffering bodily. -Heb. 13:3
mike wrote: ↑Thu Dec 07, 2023 3:55 pm
The difference of course between the privately-run program I described (by memory and probably getting facts wrong) and Social Security, is that it will probably be much better run than SS with an actual chance that the participants will get back all of their investment with a return.
The total administrative costs of the entire social security program are about 0.5% of payouts. That is lower than any other private pension or investment fund you will find anywhere. Most investment funds or financial managers charge about 1% of revenues in fees. And that is only for the investment management. There are other costs of administering a pension program such as tracking payments, eligibilities, etc. Most smaller government pension plans like state teacher or police pensions are around 1% administrative costs. And most private pension funds are usually at 2% or higher in costs. There is no retirement plan anywhere in the US that has lower administrative costs than social security in percentage terms.
Social security is intentionally progressive in that it pays out a higher percentage to poor workers than rich workers. So if you are a minimum wage or low wage worker you will get a much higher percentage of your contributions back than if you are a wealthy doctor making $250,000/year. That is a policy choice by the designers of the program. But it means that the program is much more generous to the poor and lower middle class than to the wealthy. Most of the people who complain about low payouts are wealthy.
Social security is a very generous program for someone of modest means who lives for the current average lifespan for their age cohort. It is even more generous for women who tend to live longer and earn less. And it is especially generous for married couples with a stay-home wife.
It is not generous if you die early or are very high income. And it doesn't leave any legacy for your children like a private inheritance will. Once you die the payments stop. Your children need to work themselves to earn their own benefit.
And that's where a private savings program would be much better. The money would still be there and could go to a person's heirs.
Honestly I think the combination of both is the best. Social Security is insurance against poverty in your old age since it is inflation-indexed and will never run out. Private savings are for building wealth and a legacy for your children. Two different objectives.
My wife and I certainly aren't depending on social security, either to fund our retirement or to leave a legacy for our children. We have our own private savings for that such as they are. Our main objective in life isn't to build a legacy for our children. They will likely get something but won't get rich off of our labor. But I also have two unmarried brothers who have been working mostly lower wage and itinerant work their whole lives. And I'm glad they will have social security since I doubt they will have very much else saved up.
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A fool can throw out more questions than a wise man can answer. -RZehr
mike wrote: ↑Thu Dec 07, 2023 3:53 pmDemographic changes are coming for the plain people. They have been having smaller and smaller families along with the rest of society. This is going to matter in the coming years, as fewer young people will be working to support the number of retirees in their communities. It's a problem everywhere, and plain folks are no exception.
It would be more accurate to say that "people who are choosing to be less plain will experience demographic change like mainstream society does". The plainest groups aren't experiencing demographic change (such as my favourite discussion topic, the Swartzentrubers). The more-conservative groups of Amish still have larger families, and have fewer children leaving the plain world, and who continue to take care of the parents in old age.
The less-conservative groups that are rapidly becoming more and more worldly will end up being exactly like Mennonite Church USA adherents now are: with lots of well-funded nursing and retirement homes, congregations where the average age is 65, and no young people sticking around. But at least they have Social Security checks and 401(k)s to rely on!
Ken wrote: ↑Thu Dec 07, 2023 4:57 pmSocial security is a very generous program for someone of modest means who lives for the current average lifespan for their age cohort. It is even more generous for women who tend to live longer and earn less. And it is especially generous for married couples with a stay-home wife.
Which makes it rather amusing to me when people who think the government should promote traditional families will also rail against why social security needs replaced with essentially a 401(k)-only system (which is quite punishing towards a stay-at-home wife-and-mother family).
I am afraid there is some disinformation here ,several of you are slap wrong....Any credits earned before you get exempt ,never ever count again ....never....A close relative tryed rejoining again in 2018 ,and is now not able to work at all ....They rejected his claim , we went pretty far up the "Chain" , even hired a private lawyer ,to look into it , and no, he's out of luck , unless he works another 5 years ,to get 40 new credits,(he has or had plenty of credits from before he went exempt, which was a bad idea ).......... since he re-joined the system in 2018 ......And he can't work healthwise ....
Last edited by Jeff Altweg on Thu Dec 07, 2023 5:53 pm, edited 2 times in total.
mike wrote: ↑Thu Dec 07, 2023 3:53 pmDemographic changes are coming for the plain people. They have been having smaller and smaller families along with the rest of society. This is going to matter in the coming years, as fewer young people will be working to support the number of retirees in their communities. It's a problem everywhere, and plain folks are no exception.
It would be more accurate to say that "people who are choosing to be less plain will experience demographic change like mainstream society does". The plainest groups aren't experiencing demographic change (such as my favourite discussion topic, the Swartzentrubers). The more-conservative groups of Amish still have larger families, and have fewer children leaving the plain world, and who continue to take care of the parents in old age.
The less-conservative groups that are rapidly becoming more and more worldly will end up being exactly like Mennonite Church USA adherents now are: with lots of well-funded nursing and retirement homes, congregations where the average age is 65, and no young people sticking around. But at least they have Social Security checks and 401(k)s to rely on!
And big expensive churches that are half empty.
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Remember the prisoners, as though you were in prison with them, and the mistreated, as though you yourselves were suffering bodily. -Heb. 13:3
Jeff Altweg wrote: ↑Thu Dec 07, 2023 5:31 pm
I am afraid there is some disinformation here ,several of you are slap wrong....Any credits earned before you get exempt ,never ever count again ....never....A close relative tryed rejoining again in 2018 ,and is now not able to work at all ....They rejected his claim , we went pretty far up the "Chain" , even hired a private lawyer ,to look into it , and no, he's out of luck , unless he works another 5 years ,to get 40 new credits,(he has or had plenty of credits from before he went exempt, which was a bad idea ).......... since he re-joined the system in 2018 ......And he can't work healthwise ....
I'm not familiar with exactly how the details of the exemption work. But for the social security administration it is a pretty simple calculation. They just pull up a year-by-year record of your earnings history and then run the numbers according to a pretty simple formula. Anyone can log into the program's web site and see what their earnings record is. And then calculate what their future benefit will be.
So apparently what you are saying is that if you file for a religious exemption then they erase your earnings history from that point backwards and once it is erased it is gone forever.
People need to make prudent decisions and understand the actual rules before they elect out. Social Security isn't a voluntary program. It is a mandatory tax for all working Americans. So those who opt out for religious reasons are being accommodated but there is a price. And the consequences of changing your mind down the road are severe.
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A fool can throw out more questions than a wise man can answer. -RZehr
Jeff Altweg wrote: ↑Thu Dec 07, 2023 5:31 pm
I am afraid there is some disinformation here ,several of you are slap wrong....Any credits earned before you get exempt ,never ever count again ....never....A close relative tryed rejoining again in 2018 ,and is now not able to work at all ....They rejected his claim , we went pretty far up the "Chain" , even hired a private lawyer ,to look into it , and no, he's out of luck , unless he works another 5 years ,to get 40 new credits,(he has or had plenty of credits from before he went exempt, which was a bad idea ).......... since he re-joined the system in 2018 ......And he can't work healthwise ....
Jeff,
What kind of person would earn credits before they get exempt? A typical Amish person works in a family business or for another Amishman before he is baptised and joins the church casually, and they usually join around age 16 - 18, and would file their 4029 paperwork then. It is very rare a person joins an Amish church who has already accumulated at least 10 years' worth of Social Security taxes.
And the paperwork on a 4029 is very clear before signing it. It says you give up claiming benefits - ever. So I'm not sure why they would expect any different. (If they are poor / unable to work, they should be asking the church they joined for help - or did they end up leaving their Amish or Beachy or whatever church?) And they also saved all that money on taxes over the years, which in theory they could have saved, or otherwise spent.
As far as "disinformation" goes, the average Amish person and family is far better prepared for retirement than the average American family, which, keep in mind, doesn't even have $1,000 in an emergency fund and the average American now lives paycheck to paycheck. Most Amish are in better financial shape than that.
