A question about Social Security

[yvr girl]

Social Security is roughly equivalent to what Canadians know as Old Age Pension, if I'm not mistaken. It's not enough to live on. Years ago, our government decided to encourage people to save more for their retirement by introducing RRSP's (Registered Retirement Savings Plans)

We are allowed to contribute 18% of our income upto $14,500 per year to a tax-sheltered retirement account. We can also carry unused portions forward. I believe this is more generous than your equivalent plan. I don't see this solution entering the debate at all. Have I missed something?

[shoelace414]

1. We already have

IRA's and 401(k)'s

IRA are putting money in "the bank" and it becomes tax free money until it's paid out.. then there's roth IRA where you can put your money "in the bank" and you get it back without paying taxes (you paid taxes when you got the money) and a 401(k) is money taken out of yuor paycheck and you never pay income tax on it. (until you start collection on it after you retire)

[yvr girl]

2. We have pension plans (401K's) too

Aren't your limits on IRA's really low?

[flamin lib]

3. Yes, you've missed the insurance aspect of SS.

SS does more than aid at retirement. There are survivor's benefits for minor children of deceased workers. A working parent can receive benefits accrued by a deceased spouse for children under the age of 18 regardless of the survivor's age. It may be means tested, but I'm not sure.

That is why the reduction in benefits is so troubling. The change in calculation Bush is proposing would cut benefits to survivors and retirees by 25% now and up to 50% in 20 years.

That SUX.

[yvr girl]

8. I'm pretty sure we have something similar

We are a social safety net country, after all. I remember a friend who's dad died when she was in high school, she received a government benefit.

Don't get me wrong, I'm not arguing that Bush is right. I just wonder why people don't counter his private accounts with a more robust IRA option.

[bryant69]

4. Well in part

If I'm reading you right this would be taking Bush's personal savings plans and putting them on top of Social Security. A lot of Democrats might support that plan, at least in theory. But that's not what President Bush and his cronies are suggesting. They are suggestiong personal accounts instead of Social Security. There is a big difference.

Of course Social Security isn't enough to live comfortably on (and it probably shouldn't be). But it does make the difference for many between living ok and living poorly.

Bryant
Check it out --> http://politicalcomment.blogspot.com

[yvr girl]

11. I know what Bush wants to do

I just think arguing whether or not Social Security is viable for X years is not the most effective approach. Let's face it, the average person's eyes glaze over with too many deeply actuarial arguments.

Why don't democrats come up with a better plan. It won't win over the fat cats, but they're not really in play. Make sense to Mom & Dad in middle America.

[bryant69]

12. We do have better plans, several of them

Raising the cap, for example. Getting the rest of the budget out of the red so that there is less pressure on the Social Security System. Means testing. Obviously not perfect plans but tools to address the problem.

That isn't the debate we are having just now. The debate is on whether to save Social Security as a Guarenteed benefits program or replace it with something else (possibly nothing).

Consider this. Imagine Joe Democrat and Joe Republican are standing in front of the Social Security House. Joe Republican says, in effect, "That house is a terrible eyesore, and should never have been built. Let's tear it down and build this new house I have." Is it reasonable for the Democrat to start talking about fixing the roof giving it a new paint job? Or should the Democrat defend the house and the ideas behind teh house?

I ripped that analogy off of Talking Points Memo ( http://www.talkingpointsmemo.com ) but probably garbled it a little).

Bryant

[yvr girl]

13. I think you can do both

Defend the house. It has has historical significance. It's invaluable to many in the community. Maybe it looks a little weathered - let's do some minor repairs and paint it. Why don't we also build a secure fence around it to protect it from vandals in the future.

[CindyDale]

5. Unfortunately, this isn't about saving

This is about trying to divide seniors, Baby Boomers, and younger people so they can loot the money the Boomers paid in to SS.

Our SS is actually very little money, too, but many people do need it to survive in old age.

We do have tax-free retirement accounts available already as the previous poster said.

[ChairOne]

6. US-style, SS is *supposed* to be 1 leg of 3.....

... the other 2 are:

(2) personal savings
(3) company pension

The system worked passingly well, until pensions started disappearing, and now gdub wants to kick another leg away....

[Inland]

7. That's not too different.

SS is pretty much poverty level.

If your employer participates in a 401(k) plan, you can put up to 15% or 13,000 or so a year in, but only of wage income. and we can't carry unused portions forward.

Then, there are other contributions to make, but smaller.

Bush has suggested making new savings accounts that don't depend on its source, up to $30k a year, with deferred income. But it's been noted that all that would do is cause wealthy people to switch savings to tax friendly accounts rather than create more savings, meaning it would only be a windfall for the rich---not that Bush has a problem with that. Bush's long term goal is to make all non-wage income tax-free, because working for a living is contrary to the good of American society.

[CindyDale]

9. LOL

[flamin lib]

10. From an email I sent to my action address list:

Last Friday when promoting social security reform with 'regular' citizens in Omaha, Nebraska, President Bush walked into an awkward unscripted moment in which he stated that carrying three jobs at a time is 'uniquely American.'

While talking with audience participants, the president met Mary Mornin, a woman in her late fifties who told the president she was a divorced mother of three, including a 'mentally challenged' son.

The President comforted Mornin on the security of social security stating that 'the promises made will be kept by the government.'

But without prompting Mornin began to elaborate on her life circumstances.

Begin transcript:

MS. MORNIN: That's good, because I work three jobs and I feel like I contribute.

THE PRESIDENT: You work three jobs?

MS. MORNIN: Three jobs, yes.

THE PRESIDENT: Uniquely American, isn't it? I mean, that is fantastic that you're doing that. (Applause.) Get any sleep? (Laughter.)

Is this man out of touch or what? Fantastic that a single mother of three would have to work three jobs? Crack a joke? I am so embarrassed by this poor caricature of a human being. Compassionate conservative my effing butt.

But that’s not the worst of it. He lied to her when he said the promises would be kept under his plan.

The following is from an analysis by the New York Times:

Under the Bush plan beginning immediately the SS payments will be calculated on cost of goods indexing instead of national income indexing. That will result in a 25% reduction in benefits TODAY. That would include the survivor benefits Ms Mornin’s three kids would get should she die before retirement. Remember that Social Security is an insurance program as well as a retirement assistance plan.

Moreover the SS fund her retirement is based on would be cut by the amount contributed to the personal account, plus a sum that reflects the gains from investing it at a rate of return of 3 percent above inflation, the return guaranteed by the US bonds that the SS trust holds.

The Bush plan is based on the assumption that the private accounts will average a 6.8% rate of return. However, because of the very conservative package of mutual funds and bonds in the Bush plan it is unlikely that it will return more than 4.6% (information from the SS actuaries) . That means that after the deduction of the monies put in the private account plus 3% income for the standard SS return and .3% for management fees the return would only be a 1.3% increase which would net a DECREASE in the payout over existing policy plus the 25% decrease because of the change in payment calculation. Estimates are that total payout would be cut by 50%. Incidentally, the management fees will probably be 1% or greater if US private accounts are as efficient as the British program.

To top it all off the White House is under no illusions that private accounts will have any effect on the SS deficit. "In a long term sense," a White House official said speaking on terms of confidentiality, "the personal accounts would have a net neutral effect on the fiscal situation of the Social Security and on the federal government."

Next thing you know we’ll be hearing that SS has WMD . . .

[yvr girl]

14. I heard today that our system (in Canada) looks good for the next 75

years. Of couse we don't have all those pesky wars to fight.

I understand why fat cats vote for Bush. I don't respect it, but I understand it. Why does the average Joe vote against their own best interest?