Is social security a savings plan or an insurance policy?

[TheFarseer]

Poll question: Is social security a savings plan or an insurance policy?

IF it's a savings plan then private accounts make sense. You get your own account and you can invest it as you want, and you can pass it on to your kids if you don't live long enough to utilize it.

If it is an insurance plan against old age, then it makes sense that you don't get anything if you die at 55, and it makes sense that you don't get to invest it yourself. I'm not saying what I think so as to keep the poll unbiased. But I think this is an important question in determining what action to take.

[LiberalVoice]

1. How many people here know of someone who relies only on SS?

I certainly don't...It cant possibly be used to singly support someone.

Edit: Some people think my comments were supposed to mean that no seniors rely only on SS. That isn't what i'm saying...I meant that I don't think that on average seniors who do receive SS as their only income can live a comfortable life. I don't think its enough.

[amazona]

3. oh come on lots of people live solely on Social Security!

And they live very, very well.

There are two types of Social Security.

I agree that disability payments are way too low and very tough for people to live on. The people I know on SSI do indeed struggle financially to make ends meet.

However, I know a great many seniors living on Social Security who have terrific lives. Keep in mind when you are over 65, your house is paid off (no house or rent note), you can get Medicare (no more health insurance payment), so your expenses are quite a bit lower than they were before you turned 65.

I spend a great deal of time hanging out with real seniors and you would be amazed at how far $1,200 a month goes when it is almost all "disposable" income. At least if you live in a low cost state like mine. Seniors are not living on dogfood when relying on Social Security. Not here anyway.

[ClassicDem]

6. I don't believe SS was ever intended as a retirement plan.

It's an assistance plan. The best advice I have ever been given about SS was to live life expecting never to see a dime of it, put money away in my personal savings and investments and when I hit 65 if there is any money in SS left use the money to fund expensive vacations in Europe and cruises.

[Lars39]

7. Not everyone receives that much.

The average is $895.

My dad pays out approx. $300/month for prescriptions.

http://www.census.gov/Press-Release/www/releases/archives/facts_for_features/001583.html

$895
Average monthly Social Security benefit check for retired workers in 2002. This compares with $834 for disabled workers and $861 for widows and widowers. (Source: soon-to-be-released Statistical Abstract of the United States: 2003.)

[TheFarseer]

8. Yeah, I bet lots of people can live off that.

I heard Rush howling about people living off $1,500 or $2,500 dollars a month. That didn't sound so bad to me! That's more than I make and I get by. Of course I don't have any perscriptions, but I pay rent and some other things that most seniors probably don't spend money on. He was bitching that between SS and Medicare he pays almost seven figures in taxes. I wish I made so much money that I was paying seven figures in taxes! I would so grateful to have such problems.

[Bridget Burke]

12. Plenty of seniors pay rent.

Even in the "Ownership Society"--not everybody is a homeowner. And homeowners have expenses, as well, although some get breaks on property taxes.

Then, there are the medical expenses...

[GrapesOfWrath]

5. If I am missing the sarcasm please ignore my post

but, I certainly DO know someone who relies solely on SS and it ain't so easy, let me tell you.

[LiberalVoice]

9. Not sarcastic...

I don't know any serniors that receive the average amount of SS and can live comfortably. Maybe its just their specific circumstance but I don't think its enough money.

[GrapesOfWrath]

13. We are in agreement that it is not enough money, but unfortunately

for many, especially widows, it is all they have...so they have no choice but to survive on it.

[teakee]

11. Come on....

I have been divorced for years, a mom of 3 kids and worked my a$$ off then became disabled from a new condition along with the screwed-up back I had since I was 20. I was 42 years old. I worked since I was 14 and paid in to SS. I had enough credits. We live at the poverty level before and now it is even worse.

There are probably millions like me that are disabled, under 55, and wondering what the hell do we do? See, SSA likes to make sure you are almost homeless, broken of pride and dignity before they okay your case. And the lawyers seem to have a partnership with SSA, they get $5300 of your settlement.

We are not dishonest, and if you had savings you would not be collecting, the SSA wants to know EVERYTHING about your life. I had Aflac but that duck wouldn't quack for me. Sorry no previous condition.

So, yes there are many people who depend on SS, not just the disabled but with over 36 million Americans at the poverty level, you tell me.

And I read the other day, 4.2 million more Americans joined the poverty ranks since Bush took office. Hmmmm....

[woodsprite]

17. My mom and dad got screwed by dad's company

in his retirement plan. The bigwigs took it all and divy'd it up between the 7 vp's. Everyone else in the company had to start over again. Dad had only 7 yrs to put back into his retirement plan before he was forced to retire due to illness. He lost 31 yrs worth of savings. He took less SS because he wanted my mom, a stay at home mom and caregiver, to have more when he eventually died. Even at that, she had a rough time making ends meet.

She received about $2200/mo plus $500 from a mortgage she held on her house that she sold. Even without the mortgage figured in, if she had been making $1200 less, she could have qualified for subsidized care and meds, and medicaid subsidized assisted living. Instead we limped by with Medicare to pay med bills and diabetes supplies, no prescription plan (hubby and I paid the meds bills of $700-$800 per month above her diabetes needs). Her SS and mortgage income went totally to assisted living.

When she became more dependent, we couldn't afford the nursing home that had openings, so her SS covered most of the cost of a part-time nurse. It was a nasty catch 22. I had to work to help pay her bills, I couldn't be her caregiver because then we wouldn't have been able to afford her meds and supplies.

The hazards of parents who have kids late in life - especially if you're an only child.

It was 2 yrs after she passed away before we had all her bills paid off, but now it's been a year and we're starting to get back on OUR feet again as a family and we are working to make sure we have a decent retirement so our daughter and son don't have the same issues with us. We're not planning on counting on SS, but using it to supplement our retirement funds. I certainly wouldn't want to be throwing that money away or just handing that over to the government for * or his cronies to reach in and grab a handful whenever he wanted it.

[LiberalVoice]

19. Absolutly terrible!

A perfect example of what this govt. wants...

[jackster]

2. it doesn't MATTER what we THINK

SS is INSURANCE plain and simple

anyone can call it what they like, doesn't change the fact

The Social Security program that would eventually be adopted in late 1935 relied for its core principles on the concept of "social insurance." http://www.ssa.gov/history/briefhistory3.html

[TheFarseer]

4. That's the response I thought I would get

I believe it was meant as insurance also, but I see this being debated in conservative circles.

[Beetwasher]

10. The Gov't CALLS it INSURANCE for a Reason

Because it's insurance. Duh.

[fairfaxvadem]

14. It's not a retirement plan.

And as far as I know, it was never meant to be the only thing you relied on as you approached retirement age, but as a Supplement. For many Americans, unfortunately, it has turned out to be the only pension-type income they have.

My mom's SS check is extremely small, but it supplements my dad's retirement income that she still gets. There is no way she'd survive on the SSI check alone, that's for sure.

It is truly a social safety net, and that is the only reason we are having this discussion. The Republicans do not like any form of social welfare and therefore, Social Security is an evil that must be destroyed. Period.

I heard some idiot on the radio the other day say "Well, this is my responsibility. If I don't have enough to retire on, then that's my fault and my problem."

Well, I'm sure his grandparents or great-grandparents would have begged to differ if he'd lived their lives in the 1910s, 1920s and 1930s. Most Americans did work their asses off and it didn't protect them from the winds of misfortune coming from Wall Street in 1929 and it's not going to be any different now.

[geniph]

15. The myth of Social Security as a savings plan

Social Security is not a 401(k), IRA, or any other type of retirement account. The money in your 401(k) or IRA is yours -- the government can't take it or borrow it (though it can certainly be taxed).

Social Security, however, is not a savings account. You do not have an envelope at the Social Security Administration in which your taxes are deposited. The taxes taken out of your paycheck today become a retiree's benefit check tomorrow. For now, the government is collecting more money than it is paying out, so a trust fund was established for the extra payments.

Those trust funds are invested in special-issue Treasury investments, which are the safest investments in the world. However, they also represent a loan that must be repaid. In other words, instead of billions of dollars' worth of reserves, the trust fund represents billions of dollars' worth of debt. How will the government be able to pay this debt, i.e., pay the Social Security benefits that won't be funded by tax receipts? By borrowing more money or raising taxes.

If the money you were paying into Social Security was a savings account, maybe it'd make sense to allow people more control over the investment of the funds. YOUR payroll taxes aren't being set aside for YOU. They're being used to help those in need TODAY. If they don't hose it up, you'll be able to draw on the funds generated by those still working and paying into the system when you retire.

Private investment of the money doesn't make sense for one simple reason: If the economy grows fast enough to generate a rate of return that makes privatization work, it will also yield sufficient payroll tax revenue that will keep the current system sound for generations to come.

[The Magistrate]

16. It Is, Mr. Seer

Actually more in the nature of a life and health annuity, purchased over time and payable under certain conditions. As such it compares very favorably with products offered privately. The chief attractive feature is the guarantee of a fixed payment for an indefinite period of time with no ceiling on total payment. This makes the product essentially risk free for the purchaser, as the only risk that person runs is that of the ordinary vicissitudes of life causing an early death, a thing increasingly less likely. It is in the nature of things that a low risk "investment" brings a lower return. But the current reactionary prattle about "higher returns" obscures the basic fact of risk and markets: risk is real, and those who gain by successful risk taking do so at the expense of those who fail at it. The total return on total capital invested at higher risk will be roughly the same as that on total capital invested at lower risk; the difference is that that average in the former instance will be achieved by balancing those who have gained more with those who have lost more, and if capital is invested at higher risk, some people will certainly have not greater but negative returns. In other words, a number of people investing in markets with private accounts will go bust, and if these investments are to be their provision for retirement, they will retire with less than they would have had had they chosen less risky investments. No privatization proposal makes any provision for the inevitable situation that many will thus have no provision for retirement under the plan, or at least have a greatly straitened provision relative to what they would have under the existing program.

[Silverhair]

18. Neither. NT

[AirAmFan]

20. BINGO! It's SOCIAL INSURANCE, which is quite different from both

savings and private insurance, though private insurance is much closer than savings.

Before the 1980s, there was practically no element of savings to Social Security. Payroll tax rares were continually adjusted to make current FICA cash flow just enough to pay current reitree and disability benefits. Now about one FICA dollar out if six is "saved" in the form of "loans" to Congress.

Private insurance that would duplicate Social Security benefits would have to be based on the expected mortality and morbidity of an employee, his spouse, and his children. Social Security depends on those factors and, in addition, on the mortality, morbidity, and job prospects of everyone who works or has worked since the 1930s.

This is the factor that really galls Dubya and other "virtue of selfishness" Republicans. CBS News just replayed part of Dubya's new Social Security stump speech: "When you die, why shouldn't your heirs get your benefits, rather than someone you don't know? It isn't fair!" (that's the gist, not a verbatim quote).