Friday, January 29, 2016

SS Benefits: What is in Your Wallet?

17 comments:

Laurie said...

I think there will be great need for low income senior housing in the future as many people try to live and pay rent out of their social security checks.

John said...

I think the bigger challenge is how to get older people to downscale their housing costs earlier. Especially when their spouses have passed and they are alone in a 3+ bedroom home that has large heating and maintenance costs.

By staying there longer they burn down any investments they have too fast. Then they run out early.

John said...

Here is a house for you... Maybe one of your kids or a friend will let you set it in a corner of their lot. :-)

John said...

Here is a better link

Laurie said...

It is my plan to move into a small place to live one day, but maybe not that small. The house where I currently live is really not that big either, ~1700 sq. ft. Maybe I will just stay here except, I don't like to do lawn cutting or snow removal.

Laurie said...

The dangerous deficits our candidates aren’t talking about

I thought you would be interested in considering SS from its impact on the national debt. It seems to me we need to raise the salary cap for starters, to reduce the annual deficits.

John said...

Why do you think I am obsessed with our out of control deficits and national debt...

Your proposal is the most socialistic option and it changes SS and Medicare from a benefit that people have earned during their life even further towards a "welfare system".

Other options:
- cut the benefits for all to match what people actually paid for.
- raise the payroll tax rate (ie premiums) to match the expected benefit.
- Turn it into "welfare" by only giving benefits to the poor. Retirees get nothing until they have spent their savings down to some point.

jerrye92002 said...

Or you could slowly transition to a system of private accounts that would let people retire earlier with higher incomes, while rapidly growing the economy. Fold the welfare component in with the welfare system, after reforming welfare, ALSO a boon to the economy.

John said...

Not viable... Too much "insurance" / welfare aspect to the system.

jerrye92002 said...

Sorry, I don't understand. Too much what to which system? Are you saying that we can't reform either welfare or SS because too many wacko liberal politicians will demagogue to death any such effort? That our only choice is to let the whole furshlugginer mess collapse of its own unsustainable weight?

John said...

SS, SS Disability and Medicare finances are based on some people dying early, which means they pay in, and never collect or collect far less than they paid in. Meaning it is in essence a long term care insurance policy.

If people had actual accounts with money in them that would transfer to their dependents upon death... The whole system would fail immediately. Insurance Act

Just like my long term disability payments. Some people get disbursements and other don't.

jerrye92002 said...

Still not clear, unless you are saying that SS is NOT insurance and NOT an investment, in that you have no guarantee of even getting back what you paid in. Private accounts are insurance, in that your heirs receive it, and investments in that your money grows over time. Phased in gradually, this system survives and thrives, with greater benefits for everybody. What's the problem, other than the political one?

John said...

I am saying that "Federal Insurance Contributions Act" is insurance, not an investment. It is a risk management tool.

No one person can save for 40 years of "disability payments", "severe or chronic medical care payments", etc. That is why it is an insurance program and not an investment program.

Everyone pools their money, some get a lot back and others don't. Just like every other insurance program in the world.

jerrye92002 said...

Almost every insurance policy I know of, except for term life, has a guaranteed payout in the event that the incident insured against occurs. I suppose, under the common rubric of "Old Age and Survivors Insurance" you might say that SS qualifies, since if you do not reach "old age" you get nothing and if you get to REALLY old age you may get more than your premiums back. But it is a terrible insurance program, and not one I would buy for myself if I had the choice. Individuals should buy insurance against risks that they cannot personally afford, such as health insurance, life insurance, and maybe disability insurance on the private market. If government wanted to offer premium support for health insurance or case-managed subsidies for true disabilities, that should be more than enough to eliminate the grossly mismanaged SS system.

John said...

I am not sure what you are talking about. FICA has guaranteed payouts
- if you die, your survivors get some benefit
- if you become disabled, you get payments
- you can start collecting SS payments and Medicare benefits when you reach the agreed to age

That is actually the problem, they guaranteed more than they collected premiums for. Now the citizens will need to determine if they want to honor the guarantee or change the benefits.

If you think FICA is expensive, I think you should price a policy that provides life insurance (ie survivor's benefit), long term disability insurance, long term care insurance, long term health insurance and provides a monthly cash benefit after you reach a given age.

jerrye92002 said...

I'm pretty sure that if the whole country was kicking in 14% of their pay, I could afford about anything I needed in the retirement/insurance line. Now before you tell me that the 14% is for yourself, find out how much is actually in your "Social Security account." It doesn't even contain what you paid in.

By the way, the SS death benefit is $255. If you live long enough.

Tyron Tanaka said...

Thanks for posting this. I had no idea of what the details of social security benefits were. I have been working out of the country and so have been exempt from paying taxes and now I am finding that it will effect the benefits I receive. I wish they would have taught this stuff in high school. Thanks for posting.

Tyron Tanaka @ Low And Canata