The Democrat Thread

[bigruss]

They have a lower administration % perhaps, but how is that money invested? Where does it go? Does it just sit in an account somewhere?

Funny thing is, it's probably a lower return and higher fees than something like Vanguard's S&P 500 market fund (this is totally just a guess, Vanguard's fees are ridiculously low.).

Edited February 6, 2013 by bigruss22

[StrangeSox]

They have a lower administration % perhaps, but how is that money invested? Where does it go? Does it just sit in an account somewhere?

It goes to current beneficiaries or to buy special treasuries when there is a surplus. It's not invested anywhere.

[StrangeSox]

Funny thing is, it's probably a lower return and higher fees than something like Vanguard's S&P 500 market fund (this is totally just a guess, Vanguard's fees are ridiculously low.).

It's not really an investment, it doesn't have a rate-of-return.

[iamshack]

It's not really an investment, it doesn't have a rate-of-return.

And what are special treasuries?

[Balta1701]

And what are special treasuries?

A way of storing the small overpayments that were generated by the system deliberately to prepare for the baby boom.

[iamshack]

A way of storing the small overpayments that were generated by the system deliberately to prepare for the baby boom.

They're not investments?

[StrangeSox]

Not really. They are SS treasuries that can't be sold. They exist solely to hold the intentional overpayments to the system since the 1980's reform in anticipation of payroll tax shortfalls as the baby boomers retire. Remember Gore's "lockbox"?

 

http://www.ssa.gov/oact/progdata/fundFAQ.html

Edited February 7, 2013 by StrangeSox

[iamshack]

Not really. They are SS treasuries that can't be sold. They exist solely to hold the intentional overpayments to the system since the 1980's reform in anticipation of payroll tax shortfalls as the baby boomers retire. Remember Gore's "lockbox"?

 

http://www.ssa.gov/oact/progdata/fundFAQ.html

By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.

In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash.

 

Data on trust fund investments provide a breakdown by interest rate and trust fund for any month after 1989.

 

As stated above, money flowing into the trust funds is invested in U. S. Government securities. Because the government spends this borrowed cash, some people see the trust fund assets as an accumulation of securities that the government will be unable to make good on in the future. Without legislation to restore long-range solvency of the trust funds, redemption of long-term securities prior to maturity would be necessary.

Far from being "worthless IOUs," the investments held by the trust funds are backed by the full faith and credit of the U. S. Government. The government has always repaid Social Security, with interest. The special-issue securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government.

 

Seems like they are investments to me...

[iamshack]

Why is this any different than just putting my own money into a savings account?

[StrangeSox]

Are you a sovereign nation that prints it's own currency and collects taxes?

 

They're special treasuries created solely as somewhere to place the excess tax revenues. It's the government "investing" in its own treasuries, not sticking it in someone else's bank.

[iamshack]

Are you a sovereign nation that prints it's own currency and collects taxes?

 

They're special treasuries created solely as somewhere to place the excess tax revenues. It's the government "investing" in its own treasuries, not sticking it in someone else's bank.

I'm not disputing that...but if the monies are going to current beneficiaries or into special treasuries, what is the real difference between my money going there or into a bank, where it is federally insured by that same US Gov't?

 

Additionally, if the problem is the person who makes $50k and cannot afford to save, how is taking more money out of that person's paycheck going to help them?

[Balta1701]

I'm not disputing that...but if the monies are going to current beneficiaries or into special treasuries, what is the real difference between my money going there or into a bank, where it is federally insured by that same US Gov't?

 

Additionally, if the problem is the person who makes $50k and cannot afford to save, how is taking more money out of that person's paycheck going to help them?

The federal government only insures what, $250k of bank deposits?

[iamshack]

The federal government only insures what, $250k of bank deposits?

Are we really worried about those who are exceeding this amount? Aren't they usually going to be sophisticated enough to find better investment vehicles? I thought this was about the guy who can't save any money?

[StrangeSox]

I'm not disputing that...but if the monies are going to current beneficiaries or into special treasuries, what is the real difference between my money going there or into a bank, where it is federally insured by that same US Gov't?

 

Additionally, if the problem is the person who makes $50k and cannot afford to save, how is taking more money out of that person's paycheck going to help them?

You aren't a current beneficiary relying on that income is the difference, your money isn't being loaned out for private profit with public risk, and you have a guaranteed income for your eventual retirement.

 

Ss benefits could be raised in a variety of ways that wouldn't affect the median income earner, such as raising the cap.

[iamshack]

You aren't a current beneficiary relying on that income is the difference, your money isn't being loaned out for private profit with public risk, and you have a guaranteed income for your eventual retirement.

 

Ss benefits could be raised in a variety of ways that wouldn't affect the median income earner, such as raising the cap.

But you told me this was money they could not afford to save...so how can they afford to have it taken out of their paycheck?

[StrangeSox]

Are we really worried about those who are exceeding this amount? Aren't they usually going to be sophisticated enough to find better investment vehicles? I thought this was about the guy who can't save any money?

Why introduce unnecessary inefficiencies and risk for the sake of private (the banks) profit?

 

I don't really know where you're going with this.

[StrangeSox]

But you told me this was money they could not afford to save...so how can they afford to have it taken out of their paycheck?

I don't know what you're talking about anymore.

 

Everyone with wage income currently pays the regressive payroll tax. Their employers also pay this.

 

If you want to increase benefits, you can do it without raising taxes on the $50k level. Eliminate the regressive cap is one way.

 

It is nothing like a private savings account at a bank.

[StrangeSox]

Are we really worried about those who are exceeding this amount? Aren't they usually going to be sophisticated enough to find better investment vehicles? I thought this was about the guy who can't save any money?

It is about every American having a guaranteed retirement income.

[Balta1701]

Are we really worried about those who are exceeding this amount? Aren't they usually going to be sophisticated enough to find better investment vehicles? I thought this was about the guy who can't save any money?

One would have thought that too, even at lower levels, until indymacbank went down in 2008 and a lot of people got hit by that limit.

[iamshack]

I don't know what you're talking about anymore.

 

Everyone with wage income currently pays the regressive payroll tax. Their employers also pay this.

 

If you want to increase benefits, you can do it without raising taxes on the $50k level. Eliminate the regressive cap is one way.

 

It is nothing like a private savings account at a bank.

Oh, so why should I subsidize the social security earmarked for others then?

 

Essentially what you and Balta are arguing is that we increase the social security program, instead of allowing those with savings to invest it themselves, do so, correct?

 

Ultimately, I am having more of my money taken from me so that I have less to invest on my own, and paying more so that others who earn less can have more money in retirement, correct?

[StrangeSox]

Yes, essentially.

 

would you accept a .5% increase if it meant 1 million more retirees would be able to have a modest retirement instead of a harsh one or none at all?

[StrangeSox]

One would have thought that too, even at lower levels, until indymacbank went down in 2008 and a lot of people got hit by that limit.

You'd need a lot more than $250k to retire at 65.

[iamshack]

Yes, essentially.

 

would you accept a .5% increase if it meant 1 million more retirees would be able to have a modest retirement instead of a harsh one or none at all?

I'm not sure...because what you're telling me is that it is darn near impossible to assure a modest retirement myself.

[Balta1701]

You'd need a lot more than $250k to retire at 65.

That buys a lifetime annuity approximately $1200 a month at age 65. Effectively that would leave social security as 50% of a persons retirement.

[iamshack]

You'd need a lot more than $250k to retire at 65.

The point I was making is that I don't see any significant difference between losing my money in a bank over the social security system going to s***. Even when banks fail, the gov't finds other banks to buy the failed banks, and you don't lose your money. Of course, Balta brings up the guy with more than $250k in the bank...as if this person isn't sophisticated enough to invest their money in other vehicles.

 

However, if what you're ultimately saying is that we need to raise the social security tax because lower income folks are unable to save enough money, that is quite a different issue than saying should we increase the social security tax because private investment is too risky.

 

I would be willing to chip in more to support lower income folks.

 

However, I don't want to replace or reduce the ability I have to invest my own discretionary income because private investment is too risky.