Social Security
I was browsing around on the US Department of Labor website today and came across an interesting report that gave a breakdown of expenditures of our citizens for 2002, 2003, and 2004. I'll be writing about several of the interesting facts that I found but number one was the expenditure on social security.
The average American spend $43,395 in 2004. Of this amount, $4,433 of it was spent on social security. That's 10.2% of our total expenditures! The best part? That was an increase from 2003 social security expenditures of $4,658...a 21.2% increase!
Come on...are you kidding me?
I got a little curious and decided to crunch the numbers... If social security expenses kept their current level (they won't...it will increase more) and one kept putting away $4,433/yr ($367.42/mth) that compounded at just 4% interest(current money market rate)...then, I tried 8% (stock market return) here's the breakdown... You can try it yourself on this calculator.
The amount after 40 years....
At 4%: $456,174.68 or enough money to take out $2,764.32/mth ($33,171.84 annually) for 20 years if the money kept earning 4% interest in cash accounts.
At 8%: $1,390,270.02 or enough money to take out $8,424.76/mth ($101,097.12 annually) for 20 years if the money kept earning 4% interest in cash accounts.
What is privitized social security?
I decided to google up some arguments against social security...I do have an open mind...
Top google result:
"What you get will depend on whether you retire when the market is up or down."
Idiotic statement. Ever heard of CDs? Bonds? Money markets? The approach would be simple. The traditional rule for investing is to invest 120 minus your age in stocks. That means that a 50 year old should have 70% of his money in stocks...easy enough...the system would have a preset limit of 80 minus your age so no matter what...you'd have a majority of your income in fixed investments. Economic recession? Economic boom? Who cares? Your money is invested in stocks while you are young and can take more risks and in mostly cash when you retire.
"Young people would be worse off"
Right...because the zero dollars that I'm currently standing to get is so much better than a change in the system that could have me retire with a pretty large chunk of change.
The best part? The author immediatly launches into a speel about George W. Bush. I'm not largely against the guy...I'm not largely for him...my opinion and the author's opinion og Bush is totally irrelevant. This is about THE IDEA of privatizing social security. It is much larger than one president...it is a change that would take DECADES to fully show the results of...the author merely decides to bash Bush in order to get the support of the masses. Sorry Greg...you're wrong on this.
And then...the arguments that argue for changes in social security:
One of the best
"There’s a $45-trillion gap, in present value terms, between the future money the government is expected to take in and what it’s promised to pay out, with Social Security and Medicare accounting for virtually all of the shortfall. That’s according to economists Kent Smetters and Jagadeesh Gokhale, who studied the issue for the U.S. Treasury Department"
Just to put that in perspective...as of 2:33PMN EST today, the national debt is at $8,680,607,671,207.50. That's six trillion, six hundred and eighty billion, six hundred and seven million two hundred and seven dollars and fifty cents...$28,873.68 for each American citizen.
That $8.6 trillion isn't looking so bad in comparison to what it will be ifUncle Sam is true to his word.
"Net tax rates would have to double to pay for all the benefits promised, Kotlikoff and Burns say. If you think you pay too much now, think about handing over twice as much."
And you think it is bad now.
Just remember, when you hear people talking about social security, who supports it...who doesn't... it is all irrelevant. It is plain and simple math.
We wrote a check that cannot possibly be cashed...and your future may be riding on it. Do you think that it might even be a little possible to think about maybe taking an itzy bitzy look at how the system might change when our current system is so obviously on a course that simply cannot end well?
At 8%: $1,390,270.02 or enough money to take out $8,424.76/mth ($101,097.12 annually) for 20 years if the money kept earning 4% interest in cash accounts.
If you are ok with people tossing away your 1.3 million dollars in your golden years...I can't even finish that statement...noone is ok with tossing away 1.3 million dollars...and if you were...donate it to charity...
Plain and simple, society would be much better in a privitized system.
Until next time,
Thor
PS: 1.3 million dollars!!! 1.3 MILLION DOLLARS!!!
The average American spend $43,395 in 2004. Of this amount, $4,433 of it was spent on social security. That's 10.2% of our total expenditures! The best part? That was an increase from 2003 social security expenditures of $4,658...a 21.2% increase!
Come on...are you kidding me?
I got a little curious and decided to crunch the numbers... If social security expenses kept their current level (they won't...it will increase more) and one kept putting away $4,433/yr ($367.42/mth) that compounded at just 4% interest(current money market rate)...then, I tried 8% (stock market return) here's the breakdown... You can try it yourself on this calculator.
The amount after 40 years....
At 4%: $456,174.68 or enough money to take out $2,764.32/mth ($33,171.84 annually) for 20 years if the money kept earning 4% interest in cash accounts.
At 8%: $1,390,270.02 or enough money to take out $8,424.76/mth ($101,097.12 annually) for 20 years if the money kept earning 4% interest in cash accounts.
What is privitized social security?
I decided to google up some arguments against social security...I do have an open mind...
Top google result:
"What you get will depend on whether you retire when the market is up or down."
Idiotic statement. Ever heard of CDs? Bonds? Money markets? The approach would be simple. The traditional rule for investing is to invest 120 minus your age in stocks. That means that a 50 year old should have 70% of his money in stocks...easy enough...the system would have a preset limit of 80 minus your age so no matter what...you'd have a majority of your income in fixed investments. Economic recession? Economic boom? Who cares? Your money is invested in stocks while you are young and can take more risks and in mostly cash when you retire.
"Young people would be worse off"
Right...because the zero dollars that I'm currently standing to get is so much better than a change in the system that could have me retire with a pretty large chunk of change.
The best part? The author immediatly launches into a speel about George W. Bush. I'm not largely against the guy...I'm not largely for him...my opinion and the author's opinion og Bush is totally irrelevant. This is about THE IDEA of privatizing social security. It is much larger than one president...it is a change that would take DECADES to fully show the results of...the author merely decides to bash Bush in order to get the support of the masses. Sorry Greg...you're wrong on this.
And then...the arguments that argue for changes in social security:
One of the best
"There’s a $45-trillion gap, in present value terms, between the future money the government is expected to take in and what it’s promised to pay out, with Social Security and Medicare accounting for virtually all of the shortfall. That’s according to economists Kent Smetters and Jagadeesh Gokhale, who studied the issue for the U.S. Treasury Department"
Just to put that in perspective...as of 2:33PMN EST today, the national debt is at $8,680,607,671,207.50. That's six trillion, six hundred and eighty billion, six hundred and seven million two hundred and seven dollars and fifty cents...$28,873.68 for each American citizen.
That $8.6 trillion isn't looking so bad in comparison to what it will be ifUncle Sam is true to his word.
"Net tax rates would have to double to pay for all the benefits promised, Kotlikoff and Burns say. If you think you pay too much now, think about handing over twice as much."
And you think it is bad now.
Just remember, when you hear people talking about social security, who supports it...who doesn't... it is all irrelevant. It is plain and simple math.
We wrote a check that cannot possibly be cashed...and your future may be riding on it. Do you think that it might even be a little possible to think about maybe taking an itzy bitzy look at how the system might change when our current system is so obviously on a course that simply cannot end well?
At 8%: $1,390,270.02 or enough money to take out $8,424.76/mth ($101,097.12 annually) for 20 years if the money kept earning 4% interest in cash accounts.
If you are ok with people tossing away your 1.3 million dollars in your golden years...I can't even finish that statement...noone is ok with tossing away 1.3 million dollars...and if you were...donate it to charity...
Plain and simple, society would be much better in a privitized system.
Until next time,
Thor
PS: 1.3 million dollars!!! 1.3 MILLION DOLLARS!!!
posted by Thor @ 12:21 PM
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