Social Security surplus dwarfed by future deficit
WASHINGTON (AP) - As millions of baby boomers flood Social Security with applications for benefits, the program's $2.7 trillion surplus is starting to look small.
For nearly three decades Social Security produced big surpluses, collecting more in taxes from workers than it paid in benefits to retirees, disabled workers, spouses and children. The surpluses also helped mask the size of the budget deficit being generated by the rest of the federal government.
Those days are over.
Since 2010, Social Security has been paying out more in benefits than it collects in taxes, adding to the urgency for Congress to address the program's long-term finances.
"To me, urgent doesn't begin to describe it," said Chuck Blahous, one of the public trustees who oversee Social Security. "I would say we're somewhere between critical and too late to deal with it."
The Social Security trustees project the surplus will be gone in 2033. Unless Congress acts, Social Security would only collect enough tax revenue each year to pay about 75 percent of benefits, triggering an automatic reduction.
Lawmakers from both political parties say they want to avoid such a dramatic benefit cut for people who have retired and might not have the means to make up the lost income. Still, that scenario is more than two decades away, which is why many in Congress are willing to put off changes.
But once the surplus is spent, the annual funding gaps start off big and grow fast, which could make them hard to rein in if Congress procrastinates.
The projected shortfall in 2033 is $623 billion, according to the trustees' latest report. It reaches $1 trillion in 2045 and nearly $7 trillion in 2086, the end of a 75-year period used by Social Security's number crunchers because it covers the retirement years of just about everyone working today.
Add up 75 years' worth of shortfalls and you get an astonishing figure: $134 trillion. Adjusted for inflation, that's $30.5 trillion in 2012 dollars, or eight times the size of this year's entire federal budget.
In present value terms, the Social Security Administration says the shortfall is $8.6 trillion. That means the agency would need to invest $8.6 trillion today, and have it pay returns of 2.9 percent above inflation for the next 75 years, to produce enough money to cover the shortfall.
That's the rate of return Social Security expects to get from its trust funds. The problem, of course, is that Social Security doesn't have an extra $8.6 trillion to invest.
Social Security Commissioner Michael J. Astrue said he is frustrated that little has been done to solve a problem that is only going to get harder to fix as 2033 approaches. If changes are done soon, they can be spread out over time, perhaps sparing current retirees while giving workers time to increase their savings.
"It won't be easy but it's just going to get harder the longer they wait," Astrue said.
There is no consensus in Washington on how pressing the problem is.
President Barack Obama created a deficit-reduction commission in 2010 but didn't embrace its plan for Social Security: raising the retirement age, reducing benefits for medium- and high-income workers and raising the cap on the amount of wages subject to the payroll tax, all very gradually.
The issue has been largely absent from this year's presidential election. Neither Obama nor his Republican opponent, Mitt Romney, has made it a significant part of the campaign.
Blahous, a Republican, warns that the magnitude of the problem is becoming so great that "Social Security's days as a self-financing program are numbered" if Congress doesn't act in the next few years. Democrat Robert Reischauer, Social Security's other public trustee, is less dire in his predictions but has told Congress that it needs to act within five years.
Others express less urgency.
"I would like to see Congress move on this tomorrow but we do have 22 years before there is any cut in Social Security benefits," said Sen. Bernie Sanders, a liberal independent from Vermont who heads the Senate Social Security caucus. "Compared to other crises - the collapse of the middle class, real wages falling for American workers, 50 million people having no health insurance - how would I rate the Social Security situation? Nowhere near as serious as these and many other problems."
AARP, the nation's most powerful lobbying group for older Americans, agrees.
"I'm not suggesting we need to wait 20 years but we do have time to make changes to Social Security so that we can pay the benefits we promised," said David Certner, AARP's legislative policy director. "Let's face it. Relative to a lot of other things right now, Social Security is in pretty good shape."
Social Security is financed by a 12.4 percent tax on wages. Workers pay half and their employers pay the other half. Self-employed workers pay the full amount.
The tax is applied to the first $110,100 of a worker's wages, a cap that rises each year with inflation. For 2011 and 2012, the tax rate for employees was reduced to 4.2 percent but is scheduled to return to 6.2 percent in January.
Social Security's finances are being hit by a wave of demographics as aging baby boomers reach retirement, leaving relatively fewer workers behind to pay into the system. In 1960, there were 4.9 workers paying Social Security taxes for each person getting benefits. Today, there are about 2.8 workers for each beneficiary, a ratio that will drop to 1.9 workers by 2035, according to projections by the Congressional Budget Office.
About 56 million people collect Social Security benefits, and that is projected to grow to 91 million in 2035. Monthly benefits average $1,235 for retired workers and $1,111 for disabled workers.
Marge Youngs, a 77-year-old widow from Toledo, Ohio, said Social Security makes up most of her income. She's reasonably sure that Social Security's financial problems won't affect her benefits but worries about her children and grandchildren.
"We might not have to worry about it, but it's the next generation coming up that will," Youngs said.
Corryn Grace Freeman, 22, a recent college graduate from Columbia, Md., said she understands the federal government must address its growing budget problems but worries that her generation will be "penalized" for being born late.
"It's like we're paying for the current elderly, we have to save more for ourselves, and we don't get any help in the future," Freeman said. "And not to mention we're facing one of the toughest job markets that the U.S. has been faced with."
For nearly three decades Social Security produced big surpluses, collecting more in taxes from workers than it paid in benefits to retirees, disabled workers, spouses and children. The surpluses also helped mask the size of the budget deficit being generated by the rest of the federal government.
Those days are over.
Since 2010, Social Security has been paying out more in benefits than it collects in taxes, adding to the urgency for Congress to address the program's long-term finances.
"To me, urgent doesn't begin to describe it," said Chuck Blahous, one of the public trustees who oversee Social Security. "I would say we're somewhere between critical and too late to deal with it."
The Social Security trustees project the surplus will be gone in 2033. Unless Congress acts, Social Security would only collect enough tax revenue each year to pay about 75 percent of benefits, triggering an automatic reduction.
Lawmakers from both political parties say they want to avoid such a dramatic benefit cut for people who have retired and might not have the means to make up the lost income. Still, that scenario is more than two decades away, which is why many in Congress are willing to put off changes.
But once the surplus is spent, the annual funding gaps start off big and grow fast, which could make them hard to rein in if Congress procrastinates.
The projected shortfall in 2033 is $623 billion, according to the trustees' latest report. It reaches $1 trillion in 2045 and nearly $7 trillion in 2086, the end of a 75-year period used by Social Security's number crunchers because it covers the retirement years of just about everyone working today.
Add up 75 years' worth of shortfalls and you get an astonishing figure: $134 trillion. Adjusted for inflation, that's $30.5 trillion in 2012 dollars, or eight times the size of this year's entire federal budget.
In present value terms, the Social Security Administration says the shortfall is $8.6 trillion. That means the agency would need to invest $8.6 trillion today, and have it pay returns of 2.9 percent above inflation for the next 75 years, to produce enough money to cover the shortfall.
That's the rate of return Social Security expects to get from its trust funds. The problem, of course, is that Social Security doesn't have an extra $8.6 trillion to invest.
Social Security Commissioner Michael J. Astrue said he is frustrated that little has been done to solve a problem that is only going to get harder to fix as 2033 approaches. If changes are done soon, they can be spread out over time, perhaps sparing current retirees while giving workers time to increase their savings.
"It won't be easy but it's just going to get harder the longer they wait," Astrue said.
There is no consensus in Washington on how pressing the problem is.
President Barack Obama created a deficit-reduction commission in 2010 but didn't embrace its plan for Social Security: raising the retirement age, reducing benefits for medium- and high-income workers and raising the cap on the amount of wages subject to the payroll tax, all very gradually.
The issue has been largely absent from this year's presidential election. Neither Obama nor his Republican opponent, Mitt Romney, has made it a significant part of the campaign.
Blahous, a Republican, warns that the magnitude of the problem is becoming so great that "Social Security's days as a self-financing program are numbered" if Congress doesn't act in the next few years. Democrat Robert Reischauer, Social Security's other public trustee, is less dire in his predictions but has told Congress that it needs to act within five years.
Others express less urgency.
"I would like to see Congress move on this tomorrow but we do have 22 years before there is any cut in Social Security benefits," said Sen. Bernie Sanders, a liberal independent from Vermont who heads the Senate Social Security caucus. "Compared to other crises - the collapse of the middle class, real wages falling for American workers, 50 million people having no health insurance - how would I rate the Social Security situation? Nowhere near as serious as these and many other problems."
AARP, the nation's most powerful lobbying group for older Americans, agrees.
"I'm not suggesting we need to wait 20 years but we do have time to make changes to Social Security so that we can pay the benefits we promised," said David Certner, AARP's legislative policy director. "Let's face it. Relative to a lot of other things right now, Social Security is in pretty good shape."
Social Security is financed by a 12.4 percent tax on wages. Workers pay half and their employers pay the other half. Self-employed workers pay the full amount.
The tax is applied to the first $110,100 of a worker's wages, a cap that rises each year with inflation. For 2011 and 2012, the tax rate for employees was reduced to 4.2 percent but is scheduled to return to 6.2 percent in January.
Social Security's finances are being hit by a wave of demographics as aging baby boomers reach retirement, leaving relatively fewer workers behind to pay into the system. In 1960, there were 4.9 workers paying Social Security taxes for each person getting benefits. Today, there are about 2.8 workers for each beneficiary, a ratio that will drop to 1.9 workers by 2035, according to projections by the Congressional Budget Office.
About 56 million people collect Social Security benefits, and that is projected to grow to 91 million in 2035. Monthly benefits average $1,235 for retired workers and $1,111 for disabled workers.
Marge Youngs, a 77-year-old widow from Toledo, Ohio, said Social Security makes up most of her income. She's reasonably sure that Social Security's financial problems won't affect her benefits but worries about her children and grandchildren.
"We might not have to worry about it, but it's the next generation coming up that will," Youngs said.
Corryn Grace Freeman, 22, a recent college graduate from Columbia, Md., said she understands the federal government must address its growing budget problems but worries that her generation will be "penalized" for being born late.
"It's like we're paying for the current elderly, we have to save more for ourselves, and we don't get any help in the future," Freeman said. "And not to mention we're facing one of the toughest job markets that the U.S. has been faced with."
Thanks to that damn Bush !
Lies, lies, and more lies. That's what the GOP want you to buy -hook, line, and sinker as they plunder our entitlements. In the mean time, tax cuts to the corporations, the millionaires, and billionaires!!! Â More and more spending on a grossly overinflated military. Yeah, we can't afford those darn entitlements to the middle working class Americans. My name is Mitt Romney and I endorse this message!Â
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 @ein_verit unlike
 @ein_verit It's the left?  It's the GOP primarily. Case in point, have you heard of the Ryan plan (Romney's VP)? He'd gut SS, medicare, and medicaid, etc.
2033 is urgent?lol
A minor issue that can easily fixed by congress. Raise the tax a couple of pennies and all is well. Close the loophole for the rich where they don't have to pay SSI taxes above $200,000. Pretty simple.
The biggest problem has become of the elites tanking the economy a lot of people are filling early on medical disability so that adds more people to the rolls. There's a lot of us out there that would work if the economy could support it and if we had decent working conditions. But some of us have gotten pretty beat up from working 40 years in unsafe working conditions.
How about creating a maximum income ceiling for collecting benefits. Do millionaires collect SSI after retirement age? Why?
Easy fix. Make it a tax instead of a down payment on old age. A tax is based on a percentage of income, not a stipend paid each year (albeit by small paycheck withdrawals, it's still an annual stipend!). We live longer, some of us, so we draw more than we put in. The wages we put into Social Security now may not even cover buying gasoline for our great-grandchildren let alone living expenses. Much like the old pyramid games, where only the top square cashed in.Â
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Why we have a "flat tax" on SS when every one thought we were offering communism into America a few years back bringing up a flat tax change for Federal Income tax is beyond me! What a debate that created! And why don't we have a flat tax on our Income tax you ask? Well, the politicians, in power, shot down that idea because there's not enough money generated. Hello??Â
I'd rather my 12.4% go into an interest bearing CD account even earning .2% I'd make more over the long run.
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So let's say you make $100k, $12,400 goes in each yer by you and your employer, say you work 40 years, that's $496k, but we all know noone starts out making $100k per year so reduce the total accumulated paid in to $400k. Now take that $400k and divide it out by how many months life expectancy at retirement...approx 20 years....$400k divided by 240 months is $1666 per month...can anyone survive on under $2,000 per month?
Well I see it more this way...if I am not going to have it by the time I get to my retirement age I feel I should be able to REMOVE ALL my contributions to it... besides why should I be obligated to pay into something no one else will pay for me....let the buisness's of america contribute payroll taxes to Social Secuirty ... ALL those BONUS's Executives get should be taxed at 50% to social security.... why should I lose 6.2% of my potential income for something I will NOT GET... why don't you just put a gun to my head for when corporate america finishes using me up and I become too old to work.... I sincerely hope I die before I get that old becuase I don't think this country will do a darn thing for me as they cannot even balance a darn budget!
How will this Nation manage the senior population after the conservatives have taken the POTUS, the Congress (conservatives already control the SCOTUS) and SS funds dry up? Well there is the soylent solution.
@left-center  In the last sixty five years the Republicans have controlled the Senate for twenty years and the House for sixteen years. With the Democrats controlling both houses for two thirds of that time. I guess I shouldn't be surprised that the liberal left still wants to place the blame for everything that's gone wrong since WWII on the minority party.Â
 @Mej47 Oh, GAWD!!
 @Mej47 Even CNN (or as us progressives call it FOX Lite) is reporting that the Ryan plan is too extreme: more tax breaks for millionaires and billionaires, "paid for by tax hikes on the middle class, and massive cuts to investments that strengthen the middle class--priorities like education, health care, energy and scientific and medical research." The report goes on and identifies demographic groups to be hardest hit, such as college students, veterans and seniors. "The Romney-Ryan plan is bad news. It would have devastating real-world effects on people young and old across the country. They close the report with this statement: "Ryan may appeal to the Republican Party's Tea Party base, but will completely alienate independent voters, especially in battleground states. If CNN recognizes the Romney-Ryan ticket is a danger to the middle class those of us that make up the middle class should take heed.
@left-center You really believe the Clinton News Network is a right wing media mouthpiece? What planet have you been living on for the last twenty years?
 @left-center  @Mej47 Chicken Noodle News (CNN) is about as liberal as they come.
Why hasn't the Obama administration made this part of their many reforms?Â
Maybe the gov. should only issue checks to the people that contribute to S.S. a lot of people are collecting that have put zero to nothing into it...
SS - Socialized Slavery
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SS - Sorry Suckers
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SS - So-long Savings
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SS - Stolen Security
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Time for some very hard decisions to be made and pay back what has been stolen out of the SS funds!
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It amazes me how many "brilliant minds" can not balance and protect even one entitlement program!!??
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New requirement for ALL politicians - they must show us their checkbooks for the past 10 years to prove they know what a budget is and how to balance and keep balanced a simple checkbook.
 @Truth Percolates Sorry, Truth, but it is NOT an "entitlement program". I paid into it all my working life. It is bought and paid for and is NOT a gift.
Â
Proposed 28th Amendment to the United States Constitution:
"Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators and/or Representatives; and, Congress shall make no law that applies to the Senators and/or Representatives that does not apply equally to the citizens of the United States."
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 @GlassmanThe problem is that as a nation, we've allowed law to become something else again. Don't matter what Amendment we'd try now, it's already holeshot all to hell with the perversions of 'law' that have already been added. You think your Amendment would stand up against the patriot Act? They are immune, from ANYTHING, just for saying they are. No recourse. While citizens can be overpowered, hooded, and permanently disappeared. That's the reality. So what then?Â
 @FreeCoffeeNow! No argument from me.
Wait for it.
The politicians will see it as a cash cow and raid it (again).
 @Glassman Already done. You don't think there is anything other than IOU's in the SS account, do you?
 @LockesChild Nope. LBJ saw to that.
Maybe I should plan on dying before 2033.
Fixing Social Security will be a hard job and will require people to make sacrifices and hard decissions.
Very few politicians will even talk about it because they can't make sound bites that work on TV and it doesn't buy enough votes for the next election. Besides, by time the whole system collapses they'll be retired to their country estates with the millions they picked up along the way and whoever happens to be in office then can always blame it on the previous administration.
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@Mej47 "Fixing Social Security will be a hard job" How about raise the cap and leave it alone?
 @T_BONE_WALKER  @Mej47 Because that's not enough.Because screwing higher earners out of even more of their money will tend to make them produce less, because the marginal increase isn't worth it, so ALL tax revenue will fall. Because there are to many not paying into it, but still expecting to draw from it. Because the retirement age has not been adjusted upward to account for increase in life expectancy.Because the "trust fund" has been spent, and replaced with IOUs, to buy past votes, and will now have to be paid back with general income tax collections (meaning less availible for everything else).
Raise the cap from $110,000 a year to $250,000.Â
Any politician that seeks a solution is a sociopathic racist and should be not only booted from office but removed to a small deserted island where they may collect their non-existent Social Security in retirement.
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I mean, who could have foreseen that a massive entitlement would be bankrupted by shifting demographics?
I guess "SID's Retirement Security System" ain't looking so bad after all. (an offshoot "Sid's Workers of the World Corporate Takeover Plan")
 @Sid Vishess And the government thanks you for your generous donation.
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So let me get this straight, so I understand. You've paid 6.2% of your paycheck into the "system," sans the last two years at 4.2%. Your employer has matched you dollar for dollar another 6.2% with no cap. In other words if you make more than the $110,000 cap this year (it goes up each year typically at the same rate of inflation) your employer continues to contribute.
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What about that self-starter, go getter, self employed dude that depends on no one! NO ONE!!! Well, unless they are lying to the taxman, but what good citizen would do that - they are on the hook for all 12.4% (right now 10.4%) themselves.
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So 12.4% of your pay - LIFETIME - taken away from you and your employer and you go, "oh, that's an entitlement program."
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This isn't "welfare" or food stamps - you paid into the system. If you make $100K a year you're paying into the system $10,400 - a YEAR. Work for 40 years and that's $416,000 assuming the government stuffed it in a mattress and it didn't grow a dime.
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But nope - that $416K was a gift - and to have the temerity to expect any of it back and sucking off the government teat you non-self-reliant lazy lout you.
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A full 39% of working Americans have no access to any retirement plan. No 401K. No pension. No annuity or stock or other vehicles. Their options are IRA - and have you seen the growth rates on them? Oh play the stock market - that's worked out so well for the average investor.
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And lets talk about 401K's Sid. So lets say you're the good little citizen making your $100K a year in the above example. Lets say you're luckier than most, and your employer matches your 401K at 50% up to 3%. So if you put in 6%, they are putting in 3%. Lets keep it simple too - no vesting. It's yours right away. We're already into fantasy land for the average taxpayer but hey, I'll play along. Lets say you squirrel away another 10% on your behalf, your employer matches at 3% - so $13,000 a year - close to maxxed out.
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You know how much is taken off the top of 401K plans over the lifetime of the work in fees and service charges? Oh about 30%. So I'm really saving $9,100 a year - and if I don't have a great plan with great investment choices, growth is going to be slow - and you can't set and forget. If you work 40 years, $156K is robbed from you in those, ehem, fees - that assumes zero growth. If you grow, which it will that number gets bigger with the value of your 401K.
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So who would be interested in seeing Social Security gone and it all rolled into say a voucher system that allowed independent investment? Who would win by taking a rather efficient investment vehicle and moving it to the volatile, inefficent private sector?
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Why - the big banks sure would be winners - 30% right off the top baby! Money, money, money. Never mind the poverty rate will skyrocket. Because you've bought into the big lie. 12.4% of your salary, being taken from you is an "entitlement."
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Open your eyes man - it's a big lie.
 @Howard Beale Or, more succinctly, it's a Ponzi scheme that's nearing the end, and ROI will start to drop sharply.
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Oh, BTW - there is no *right* to your SSI bennies. But I'm sure you knew that.
 @RN1 A Ponzi Scheme? Why... that's CRAZY talk! If SS were ended today, you could collect your contribution from the Federal Government PLUS interest because they have invested it in... in... IOU's?
@Howard Beale
"Work for 40 years and that's $416,000 assuming the government stuffed it in a mattress and it didn't grow a dime."
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OK... I'll bite. Where IS the money "invested?"Â
Â
 Stocks or stock index's? Non-government bonds? Energy index funds? REITS? Gold or precious metals? Piggy bank for the Feds? Ding-ding-ding!
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 @Howard Beale Sorry, your 30% "off the top" figure is bogus.The fees for managing large sector  index funds are somewhere between  almost zero and 1 1/2 %.
Under my plan, you would not be able to contribute more than that 12.4% or less.
You could not sell your investment under age 60 (or so) and then only  some fraction of that thereafter.
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And for the coup de grace and for any whales out there, lets make some calculations using your numbers:
Â
Go to http://www.401kcalculator.org/
Enter that $100,000 salary
Enter 6.2 contribution
Enter 100% Employer match
Enter current age 25
Enter zero current balance
Enter 65 retirement age
Enter 7% rate of return (about what conservative Public Pensions calculate)
Enter 2% annual salary increase
Enter 100% employer max
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The figure at 65 is $3,125,219
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Your Social Security number is $416,000?
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And, that sum is inheritable! What do your heirs get if you croak at 64? Zip.
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 Read 'em and weep...
 @Howard Beale Did I forget to mention my replacement plan for SS would be voluntary? If you like your SS, you can keep it. Although,  payouts will have to be adjusted to be actuarially sound with no increase in contributions.
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 @Howard Beale Even cranky retired DOT workers take advantage of that 7.5%  PERS.  If someone thinks that the state should not invest in  corporations that make a profit, they should check that box on their new employee forms at orientation.
@Howard Beale
"Washington presumes a 8.00% return rate on its pension investments.[11]Â In Oct. 2011, however, the Pension Funding Council unanimously agreed to lower its assumption of future earnings on pension investments from 8 percent to 7.9 percent in 2013-15. State actuary Matt Smith recommended a 7.5 percent rate to guide earnings over the next 50 years.[16]
From 2001 through 2010, the state's rate of return on pension investments was 3.92%.[15]
Read more:Â http://sunshinereview.org/index.php/Washington_public_pensions#ixzz23SGqjbAD
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 @Howard Beale Public pension funds with a defined benefit have to use some number to base that on. I used 7%. If you want to use 2%, the number would be $1,059,859. I attempted to mimic as much as possible the Social Security contributions. (6.2% plus employer match).
By the way, I never called it an entitlement program. Don't know where you got that but it was not me.Â
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I refer to as it as "The Government Mandated Annuity Program."
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And as an annuity? Not such a good deal.Â
 @Sid Vishess Oh, and Sid, on those hidden fees:
Â
http://money.cnn.com/2012/07/02/retirement/401k-fee-disclosure/index.htm
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...And while they may seem small, these costs can really add up. A study by research group Demos earlier this year found that overall, the average median-income household with two income-earners pays nearly $155,000 over the course of their lifetime in 401(k) fees -- shrinking their investment returns by about one-third...
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Just shrinking things by a third -- hey, but the banks sure do thank you!!!
 @Sid Vishess My social security number was pure contribution not payout or growth Sid. Don't be disingenuous with trying to drive your agenda.
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7% rate of return on your 401K? Rate of return over the last twenty years has been - about 0% for the average investor. Where are you getting 7%? Bonds? HA! Treasuries! HA! HA! Stock market? Ya, only been wiped out twice in the last 12 years - notice how not a single politician is talking about how stock market growth for Social Security is better after the dotcom collapse.
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Your 2% salary increase is outpaced by inflation (CPI/non-CPI combined). Look at the cost of education, healthcare, and energy for starters. So it becomes increasingly harder.
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You also assumed a completely laughable 100% employer match to my 6.2%. NO employer does that. Not even Microsoft. I though this plan was going to help businesses, not put out of business?
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You also go with current age 25. What exactly do you tell the 55 year old? Well too bad but you're eating cat food in your twilight years but thanks for paying?
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But Sid, if you want to play - lets play! Lets show growth for that $416,000 since you tried and twist that number for your own purposes.
Â
Playing with your calculator. This "entitlement" program as you call it - that takes 10.4% from my pocket and my employers pocket combined, like it or not (but you call that an entitlement). We'll assume the 4.2% employee contribution goes on forever.
Â
$100K a year
10% contribution (your calculator won't do 10.4%)
40 years contribution
3% rate of annual return (any financial planner will tell you that that is vastly more realistic than your 7%)
2% salary increase (because middle class salaries haven't kept up with inflation for two decades)
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$416K = $1.07 million at retirement. The government doesn't hand me a check for $1.07 million, right Sid. They pay me out at say, 40 years from now, maybe $4,000 a month (inflation Sid, inflation). So that's $48K. I have to live for another 22-1/4 years before this becomes an, ehem, entitlement. That 87 years old Sid and if you haven't been keeping up with current events, that is longer the average lifetime. Oh my God - you mean even today the math's not broken.
Â
And as you noted - won't allow the .4 so the return is - better. Also my math of 22-1/4 years assumes zero growth, bad assumption, so the real math is closer to 30 years. Hmmm. Social Security shouldn't be broke. Maybe it's all that raiding of the coffers instead.
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Nah - couldn't be that.
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But entitlement - no.
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7% ROI annualized? You're getting that from the S&P 500 average from 1950 to 2009 - but you ignore that the 70's and 00's have had negative growth. Your plan if implement 20 years ago would have your citizens upside down? What then Sid? How do you explain that to them??? So sorry the plan didn't work out - your broke - go eat cat food?
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2% salary increase - as noted, is outstripped by inflation and won't remotely keep up with education, health care, or energy.
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But hey - you twist those numbers Sid to paint the picture you want.
Â
Doesn't change the fact that 12.4% of someone's pay (10.4% with the current tax cut) is not an entitlement program when you go, hey, I want my money back.
Â
 @Howard Beale Seems that calculator won't allow 6.2% so it enters 6%.  That makes the return  even better.
 @Howard Beale "Oh play the stock market - that's worked out so well for the average investor."
Hasn't it, really...did well for the sharks though...
 @Howard Beale "In other words if you make more than the $110,000 cap this year (it goes up each year typically at the same rate of inflation) your employer continues to contribute."
A problem most people have never had...
I get so tired of these BS stories about SS being broke. If the government were to pay back the funds that President Johnson "borrowed" [political term for stolen] to finance the war in Vietnam the fund would have enormous excesses. The corrupt leadership in this country are thugs, thieves and liars. It's time to start charging political barristers with treason.
If I ran an investment firm the way SS is, I'd be charged with running a Ponzi Scheme. The Gov't though people couldn't save wisely by themselves. It should be treated like a bank account, you can only draw what you put in.
 @Xirxious "It should be treated like a bank account, you can only draw what you put in."
Despite what we see now, bank savings used to pay something called "interest"...would you really take that away from people?
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 @OrcasThunder I'd rather they told me that I have to put away that 12.5% to a certain list of accounts. Even if they are all low yield (my savings is under %1 now) it is still my money under my control. The way it was passed into law and the way it is used now are way off base. This wasn't supposed to be a socialist program.
 @Xirxious That would be fine - as long as you know what you are doing when it comes to choosing a fund.
The vast majority of people in this country have not one ounce of understanding on how to make such a choice - and that is why the choice (that is intended to be a foundation of retirement, NOT the ONLY retirement) should not be in their hands.
The markets are inherently unfair. They are designed and intended as the way to take money from unknowing inexperienced people and move it into the hands of those who do know and have the ability to use that to get rich. Point of fact: The markets could not survive if everyone knew what they were doing - because there would be no suckers to bet their money against the real players. Most people have no business playing the markets - especially now that there is so much technology out there that thinks faster and without caring beyond the profit to be made. The "average Joe investor" is a loser. He has to be, otherwise the Big Johns of the banks and investment firms would not have the money to buy TP...
Want to play, fine - but first put it somewhere that you CAN'T touch it...because you can always find a reason to reach out and touch...today's disaster is always more immediate and urgent that your retirement years.
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"it is still my money under my control."...and that's the problem - YOU have control of it...and the ability to spend it long before it should be. And, if you have no funds in your golden years, it's up to the rest of us to take care of you.