published Tuesday, September 13th, 2011

Treading the Social Security minefield

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    Trays of printed Social Security checks wait to be mailed from the U.S. Treasury's Financial Management services facility in Philadelphia. (AP File Photo/Bradley C Bower, File)

Few issues are as sensitive to so many Americans as Social Security.

That's because today about 155 million Americans are paying Social Security taxes -- and about 54 million are getting monthly Social Security benefits.

But Social Security replaces only about 40 percent of the average worker's income after retirement, and the Social Security Administration warns it "was never meant to be the only source of income for people when they retire. ... [M]ost financial advisors say retirees will need 70 percent or more of pre-retirement earnings to live comfortably."

OK, so we know Social Security alone isn't enough to support most retirees comfortably. But will even the limited benefits that it is supposed to provide be there for future retirees?

An AP-GfK poll shows that 70 percent of Americans consider Social Security very important to their financial well-being when they retire. But there is enormous doubt about whether the benefits will be waiting for them. Only 35 percent of the people polled believe Social Security benefits are extremely or very likely to last throughout their retirement. Thirty percent believe it is somewhat likely to be there, and 35 percent believe it is not too or not at all likely to provide expected payments.

The leading Republican presidential candidate, Gov. Rick Perry of Texas, warns -- as economists and others warn -- that Social Security is unsustainable under current conditions. In fact, the Social Security trustees reported that in 2010, the program spent nearly $50 billion more on benefits than it took in from payroll taxes. As The New York Times reported, analysts see that as a "tipping point -- the first step of a long, slow march to insolvency ... ." By some estimates, Social Security will be unable to meet its obligations by 2036 -- and Medicare much sooner than that.

So Perry noted in a recent GOP debate, "It is a Ponzi scheme to tell our kids that are 25 or 30 years old today, you're paying into a program that's going to be there."

What is a Ponzi scheme? The expression relates to Charles Ponzi, who in the 1920s had a bogus investment operation that paid investors not with returns from legitimate investments but with money from people who came into the scheme later. The later you get in on such a scam, the more likely you are to lose your "investment."

Well, with current workers investing in Social Security without any certainty that the program will last through their retirement, is it so controversial that Perry called it a Ponzi scheme? Or that he said, "Anybody that's for the status quo with Social Security today is involved with a monstrous lie to our kids, and it's not right"?

Everybody wants Social Security benefits to be there for them, but few Americans -- and fewer still in Washington -- want to talk about how to sustain those benefits.

We don't know whether Perry has the answers, but he is right to raise the question.

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EaTn said...

If we had listened to the knee-jerk right wingers over time, the safety net retirement system would have been killed long ago and replaced with blanket and soup lines. There are many ways to keeping the system solvent but the nay-sayers as usual don't bring any solutions to the table.

September 13, 2011 at 6:05 a.m.
conservative said...

Conservatives have known for decades that Socialism Security was a Ponzi scheme. Even such lieberals as Chris Matthews and Ruth Marcus have now admitted such. Most other lieberals don't have a clue as their source of news has been ABC,CBS,NBC,CNN etc. which have promoted such false beliefs as a Socialism Security Trust Fund, that people's contributions earn interest, that there is no problem with the "fund" (phony), the "fund" is solvent for __ years to come, and that an annual cost of living increase is part of their contributions. Perry has finally gotten lieberals engaged in the discussion and has moved them from a there is "no problem" with Socialism Security position to what is the "solution"?

September 13, 2011 at 7:56 a.m.
nucanuck said...

So, conservative, tell us YOUR plan. Do you favor abolition or reform for Social Security and please elaborate.

September 13, 2011 at 10:31 a.m.
hambone said...

I know there is little chance of Congress paying back into SS what they have raided in the past. Their raiding is what made them able to give all those tax cuts.

However if this raiding can be stopped and with a little tweaking SS can be made solvent from now on with very little pain.

September 13, 2011 at 10:35 a.m.
nucanuck said...

I'm with you hambone.

September 13, 2011 at 11:34 a.m.
conservative said...

nucanuck- First, you must agree that what I wrote is true.

September 13, 2011 at 1:43 p.m.
Legend said...

conservative said... Conservatives have known for decades that Socialism Security was a Ponzi scheme

A ponzi scheme they and their GOP leaders didn't think twice about dipping into over the years? What? Reagan hit the social security trust up for over 5 trillion? They want to end social security so they can have those debts forgiven, and before social security starts calling in all those loans they made to support their other pet projects.

September 13, 2011 at 2:25 p.m.
nucanuck said...

conservative, truth comes in many shades of gray. Our SS system, like our pension plans and our banks, has its ponzi aspects, but I doubt that you would want to shut them all down. SS funding has been sufficient until recently whereas our military spending has skyrocketed without the taxes to cover.

I would say that your version of the truth is not very relevant to a solution.

September 13, 2011 at 3:03 p.m.
conservative said...

nucanuck- I couldn't have made it more simple. Perhaps you have someone you trust who can explain it to you.

September 13, 2011 at 4:06 p.m.
nucanuck said...

Your simplicity in quite evident...but that is your problem, not mine.

September 13, 2011 at 7:20 p.m.
TrishaP said...

The Social Security has been a controversial institution. I have heard lots of complaints about it. But the newest news can be a good news for some, particularly for retirees. Due to the cost of living, Social Security benefits will go up in January. Social Security benefits have not gone up since 2009. The increase is good news for retirees in this slow economic climate. Many seniors, however, will see much of that boost devoured by increased Medicare premiums. Source for this article: Social Security benefits to increase for the first time since 2009.

October 21, 2011 at 5:57 a.m.
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