Social Security.... 62 or 65???

cowboydoc · May 27, 2004

I'm surprised nobody has mentioned the fact that social security is the worst investment vehicle that there is. It's nothing more really than a tax. The money is used for other projects and never even saved. There was a study that I read that said if all the money had been invested in the safest vehicle out there at a modest 5% that the Social Security fund would be viable to the year 2400 even at todays money. The money put into social security by the avg. person was only about 35% to what you would have made in just a simple savings account.

fivestring · May 27, 2004

"I'm surprised nobody has mentioned the fact that social security is the worst investment vehicle that there is." 

I was thinking that same thing, Richard.
The next worst thing is the savings bond.

I personally don't think there'll be a social security when I turn old enough to start drawing (about 20 years).
Too many freeloaders abusing the system now.

Franklin Roosevelt introduced the Social Security (FICA)
Program. He promised:
1.) That participation in the Program would be completely
voluntary,
2.) That the participants would only have to pay 1% of the first $1,400 of their annual incomes into the Program,
3.) That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year,
4.) That the money the participants put into the independent "Trust fund" rather than into the General operating fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other
Government program, and,
5.) That the annuity payments to the retirees would never be taxed as income.
Since many of us have paid into FICA for years and some are now receiving a Social Security check every month -- and then finding that you are getting taxed on 85% of the money you paid to the Federal government to "put away," you may be interested in the following:
Lyndon Johnson took Social Security from the independent "Trust" fund and put it into the General fund so that Congress could spend it.
Al Gore cast the "tie-breaking" deciding vote as President of the Senate, while he was Vice President of the U.S. that started taxing Social Security annuities.
It was Jimmy Carter's administration that decided to start giving annuity payments to immigrants after moving into this country, and at age 65, begin to receive SSI Social Security
payments!

Bottom line:
Take what you can get NOW before it is all given away!!!! /forums/images/graemlins/mad.gif

KubotaSteve · May 27, 2004

I'm with you on this one. I doubt Social Security will be around when I retire.
It is only a bad investment vehicle for the ones who are actually working. For the freeloaders it was an excellent investment!!!! /forums/images/graemlins/blush.gif

MikePA · May 27, 2004

Too many freeloaders abusing the system now. 
Gary and Steve, please define freeloaders. Just curious who you think these freeloaders are and how the system would be better off if they were eliminated.

Junkman · May 27, 2004

( .........................Since many of us have paid into FICA for years and some are now receiving a Social Security check every month -- and then finding that you are getting taxed on 85% of the money you paid to the Federal government to "put away," you may be interested in the following:
Lyndon Johnson took Social Security from the independent "Trust" fund and put it into the General fund so that Congress could spend it.
Al Gore cast the "tie-breaking" deciding vote as President of the Senate, while he was Vice President of the U.S. that started taxing Social Security annuities.
It was Jimmy Carter's administration that decided to start giving annuity payments to immigrants after moving into this country, and at age 65, begin to receive SSI Social Security
payments!

Bottom line:
Take what you can get NOW before it is all given away!!!! /forums/images/graemlins/mad.gif

)

Please keep in mind that all the above things that have happened were by Democrats. The one thing to also keep in mind, with the exception of the one tie breaking vote by Al Gore, that there were Republicans that also voted to allow all these things to happen. It doesn't matter, Democrat or Republican, they both want your money and believe that they know how to spend it and dispense it better than the people that earn it. I don't know of any other job that people would invest millions of their own dollars to get a job that pays so poorly by comparison. It is the perks that go with the job that they are after. I haven't seen a poor National politician in more years than I can remember. Even if they were poor when they were elected, they became rich before they left National government. Wonder why Ralph Nader is running for President even though he knows that he has no chance of winning??? It is for the money that he gets to keep at the end of the campaign process. Thieves, the whole lot of them. Democrats, Republican, and Independents alike. /forums/images/graemlins/mad.gif /forums/images/graemlins/mad.gif
Now the bigger question is whether this will be deleted by a moderator that doesn't like what I have posted. If a moderator does delete this, please have the courtesy of advising me.... thanks .....

MikePA · May 27, 2004

Now the bigger question is whether this will be deleted by a moderator that doesn't like what I have posted. 
Junkman, the issue is not, and never has been, whether the Moderators agree with you, or anyone else for that matter. The issue is, and always has been, whether the post met the Terms of Service and the forum posting rules. If it does, it stays. If it doesn't, it gets moderated. Simple, really. /forums/images/graemlins/smirk.gif

Libertine · May 27, 2004

Junkman:

Interesting you ask the question . . . I've been getting notices from the Feds that I can go on welfare next year and start ripping off the younger folks (just as I was ripped). Anyway, a week or so I asked one of my ex-wives that very question (she is a CPA). She said that for most folks the breakeven point, after figuring average taxes, opportunity cost & etc. etc. is around 12 years.

So . . . If you don't need the money & know you're going to live into your 80s+ wait. If you need the money, or, if you're not certain when you're going to die, grab it now.

JEH

fivestring · May 27, 2004

Freeloaders are ones that have never put into the system but are drawing from the system.
First-hand knowledge of one (I work with):
Has a sister with 2 kids... no dad.
Never had a job because the first kid was born while she was in school. She gets a SS check every month.
Spoke with a guy the other day (looked like a bum/homeless). He said he gets a disability check every month. I asked him what company he worked for. His reply - no company, the disability check is from the US Government.
I wanted to ask more questions but knew better than to bother. /forums/images/graemlins/frown.gif

"Thieves, the whole lot of them. Democrats, Republican, and Independents alike." Junkman

Truer words have not been spoken on TBN! /forums/images/graemlins/blush.gif

frank_f15 · May 27, 2004

( I'm surprised nobody has mentioned the fact that social security is the worst investment vehicle that there is. It's nothing more really than a tax. )

why are u suprised? that was not the question. SS as we all know is not an investement, it is a tax, and it is the law, no way out of it. i would rather of had all the funds i put into it, to invest i as i saw fit.

Henro · May 27, 2004

I was thinking that same thing, Richard.
The next worst thing is the savings bond.


Hummm...

Maybe so...but...check CD rates VS US Gov. I bonds. Also I bonds interest are tax deferred. And inflation protected. And liquid, although you need to hold them for a year before you can cash them now. And if you time your purchase right, the penalty is only 2 months interest if you cash within the first five years...much better than penalties for early CD withdrawls...

Oh, and one of the best guarantees that your funds will be there when you want them too...

Sure not the same payback as an investment with risk attached, but not too shabby in todays market if you want 100% security (or as close to that as you can get) and money available without penalty (or without much penalty) and tax deferred, plus no state or local tax on the interest ever...

As I get older the I bonds are more and more attactive. Less time to wait for a recovery if things go bad... /forums/images/graemlins/smile.gif

Frankly, for me they are one of the best investments at my point in life, where I don't need risk, I need security...and a fair return.

Guess I don't agree with your opinion of the savings bond, at least with respect to the I Bond...the other savings bonds are less attractive...

Junkman · May 27, 2004

I always looked at all savings bonds as great. The reason for that is because I never purchased one, but growing up, relatives always gave them to me for presents. If they had given me cash or toys, they both would have been gone quickly... either spent or worn out. With savings bonds, you just kept them for that rainy day. For me, that rainy day came in September 1966 when I ordered my new car. The next day, I got my draft notice. Another long story, that I won't go into. I held onto many of the bonds long enough that I had a down payment on a home in 1970. Without those bonds, it wouldn't have been possible. That home was parlayed many times into much more. Some of that original money is presently in my current home. Bonds are good. /forums/images/graemlins/wink.gif

Alan L. · May 28, 2004

I think it would be better to take the SS early because it takes a long time to recover those 3 years of benefits. However for those who need significant earned income to live it won't be possible to take it early because you can only earn a small amount to supplement the social security, and this small amount combined with the ss benefit might not be enough to live on for some.

For the ones in that boat, continuing to earn as much as they can up to regular retirement age, then getting the higher benefit is probably the only alternative.

Also, medicare benefits don't kick in until age 65, medical insurance will have to be paid from these meager benefits and meager earnings.

fivestring · May 28, 2004

You are correct in the security of the savings bonds.
There is really no risk for those that are at or near retirement.
And right now, 4% isn't bad.

I don't know anything about the "I" bonds.
I learn something new every day!
I was referring to the EE bonds. EE are the bonds most people buy, whether as gifts or for investments.

Ah, but look at the history of interest rates.
CD rates won't stay low all the time. Plus, the more money invested for a longer time equals a higher interest rate.
Savings bonds do not fluctuate. It takes a set number of years to double your money. The government won't sell anything unless it is profitable for them.
I don't know what it is now, but it used to be somewhere between 12 and 18 years for maturity on EE savings bonds. (I sold my last one 3 or 4 years ago).
$100 invested 18 years ago in a savings bond would be worth $200 now.
That same $100, if it was invested in a CD, would be worth much more.
Interest rates on CD's have only been below 4% for the last 2 or 3 years.
When I sold insurance and annuities, I was taught the rule of 72:
Money should double when: interest rate times the number of years equal 72. Any combo works. If someone says they'll pay you 12% compound interest, your money should double it's value in 6 years.
Our EE savings bond example would be 72 divided by 18 years = 4% interest. (12 year maturity = 6% interest) That's not bad in the last three to five year market.
If savings bonds are cashed in before maturity, the interest is taxed (federally). There is a separate IRS form to fill out for sales of savings bonds. When they are cashed, the bank notifies the FEDS.

Henro · May 28, 2004

I don't know anything about the "I" bonds.
I learn something new every day! 

Just in case someone could be interested...

I Bonds are US Savings bonds on which the interest rate is adjusted every six months to account for inflation. They are relatively new, only have been around for about six years I think. Since I have been watching/buying them their interest rates at the time of purchase have been as good or better than CDs with a term of about 3 years or less.

Like anything and everything they have +'s and -'s...

Here is a link that gives all the details...

I like them because they tend to follow the CD market, are tax deferred until cashed, and are exempt from state and local taxes on the interest. And if inflation takes off, the interest rate will move up, unlike fixed rate CDs.

I think there is a connection to the social security question because of the tax deferred aspect of these savings bonds...

rozett · May 28, 2004

Let me first say, that I agree that SS is a VERY poor investment, and I am not supporting it, or the Democrats (heavan forbid!!) in this response. Also, I am not trying to pick on or attack fivestring, 'cause I'm sure he got this from a popular urban legend going around.....

But most of what is in this entry is untrue.

( Franklin Roosevelt introduced the Social Security (FICA) Program. He promised:
1.) That participation in the Program would be completely voluntary,
2.) That the participants would only have to pay 1% of the first $1,400 of their annual incomes into the Program, )

If you use the inflation calculator from here you will see that what we pay into FICA today is a bargin compared to 1% of $1400 in 1939 dollars.

( 3.) That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year, )

There was never any provision of law making the Social Security taxes paid by employees deductible for income tax purposes. In fact, the 1935 law expressly forbid this idea, in Section 803 of Title VIII.

( 4.) That the money the participants put into the independent "Trust fund" rather than into the General operating fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other Government program, and,

5.) That the annuity payments to the retirees would never be taxed as income.
Since many of us have paid into FICA for years and some are now receiving a Social Security check every month -- and then finding that you are getting taxed on 85% of the money you paid to the Federal government to "put away," )

The taxation of SS benefits was a proposal which came from the Greenspan Commission appointed by President Reagan and chaired by Alan Greenspan, who is presently serving as Chairman of the Federal Reserve. The basic rule put in place was that up to 50% of Social Security benefits could be added to taxable income, if the taxpayer's total income exceeded certain thresholds. The legislation taxing the benefits was signed into law by President Reagan in April 1983 and passed the Congress in 1983 on an overwhelmingly bi-partisan vote.

In 1993, legislation was enacted which had the effect of increasing the tax put in place under the 1983 law. It raised from 50% to 85% the portion of Social Security benefits subject to taxation; but the increased percentage only applied to "higher income" beneficiaries. Beneficiaries of modest incomes might still be subject to the 50% rate, or to no taxation at all, depending on their overall taxable income.

( you may be interested in the following:
Lyndon Johnson took Social Security from the independent "Trust" fund and put it into the General fund so that Congress could spend it. Al Gore cast the "tie-breaking" deciding vote as President of the Senate, while he was Vice President of the U.S. that started taxing Social Security annuities.)

The Social Security Trust Fund has never been put into the general fund of the government. Most likely this confusion comes the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no affect on the actual operations of the Trust Fund itself.

( It was Jimmy Carter's administration that decided to start giving annuity payments to immigrants after moving into this country, and at age 65, begin to receive SSI Social Security payments!)

Neither immigrants nor anyone else is able to collect Social Security benefits without paying Social Security payroll taxes into the system. The question confuses the Supplemental Security Income (SSI) program with Social Security. SSI is a federal welfare program and no contributions, from immigrants or citizens or anyone else, is required for eligibility. Under certain conditions, immigrants can qualify for SSI benefits. The SSI program was an initiative of the Nixon Administration and was signed into law by President Nixon on October 30, 1972. But it is not connected with the Social Security program in any way.

Again, my purpose here is only to bebunk some of the the myths.....

fivestring · May 28, 2004

Here is a overview of the SS programs:
http://www.ssa.gov/history/pdf/histdev.pdf

Page 6 shows a timeline of the changes to the system.

Here is one of the best SS sites:
http://www.ssa.gov/OP_Home/ssact/comp-toc.htm

The laws pertaining to SS are as confusing as IRS laws. /forums/images/graemlins/frown.gif

Our city fire department employees do not contribute to SS in any way, shape or form due to the complexity of the law.

Keep in mind, what was posted (the 5 promisses) was what was originally promissed to the people by the President at that time.
What he promised and what was delivered were two different things. (usually is with politicians!) /forums/images/graemlins/grin.gif
SSI is a part of the SS program/system. It is outlined on p. 6 of the first site listed.

SS program is a broad program. It emcompasses everything from disability to immigrants to food stamps, etc.

"The SSI program was an initiative of the Nixon Administration and was signed into law by President Nixon on October 30, 1972. " 
Senate was Dem. controlled House Dem. control
1971–1973 54 Dem. 44 Rep. 2 Ind. 255 Dem. 180 Rep.

"The legislation taxing the benefits was signed into law by President Reagan in April 1983 and passed the Congress in 1983 on an overwhelmingly bi-partisan vote. "

Senate was Rep. control House was Dem. control
1981–1983 46 Dem. 53 Rep. 242 Dem. 192 Rep. 1 Ind.
1983–1985 46 Dem. 54 Rep. 269 Dem. 166 Rep.

"In 1993, legislation was enacted which had the effect of increasing the tax put in place under the 1983 law." 
Senate Dem. control House Dem. control
1991–1993 56 Dem. 44 Rep. 267 Dem. 167 Rep. 1 Ind.
1993–1995 57 Dem 43 Rep. 258 Dem. 176 Rep. 1 Ind.

Henro · May 28, 2004

Rozett and Fivestring,

I can't help but think that the system is what it is...

And that the question was 62 or 65? When to take whatever is there...

If we get into debating what the system is, or what it should be/could be, this thread will probably meet a timely end... /forums/images/graemlins/crazy.gif

Been there, done that, found out that is the way things work here...as I'm sure you know as well... /forums/images/graemlins/blush.gif

rozett · May 29, 2004

Don't worry, Henro. I've said all I'm going to on this subject. /forums/images/graemlins/grin.gif

shade2u2 · May 29, 2004

When I sold insurance and annuities, I was taught the rule of 72:
That sounds like "A.L. Williams"... /forums/images/graemlins/ooo.gif

slowrev · May 29, 2004

Henro,
I have about 12-15 years to go for SS. But I don't think it matters much because I believe I am on the WTD retirement plan which the gummit likes very well. WTD = Work Till Death.

The politicorp has declared that SS will be there for me and I believe them. I also believe that my monthly payout might be in the neighborhood of $25.00, but it will be there /forums/images/graemlins/smile.gif