The Selfishness of Thinking Ahead
Justin Katz
Financial columnist Michelle Singletary pauses amid the economic crisis to give a hard kick to the notion of privatizing Social Security as a method of preserving its long-term prospects.
The column resists selective quoting, so I recommend that you read the whole thing, but the essence is that Singletary describes retirement planning as a three-legged stool:
One leg of the stool is supposed to represent retirement savings. In the past, this meant a company pension. Now for many workers, it's a retirement plan they fund themselves, such as a 401(k).
The second leg represents personal savings, such as cash bank accounts or certificates of deposit. The savings component might also include other assets, such as your home.
The third leg is Social Security, which provided at least half the income for 64 percent of seniors in 2006.
She goes on to admit that fewer people have any sort of pension plan or retirement savings, and more and more people, far from saving, are in debt. As for Social Security, it "remains problematic":
"Social Security's current annual surpluses of tax income over expenditures will begin to decline in 2011 and then turn into rapidly growing deficits as the baby boom generation retires," the report said.
Growing annual deficits are projected to exhaust Social Security reserves in 2041.
That doesn't quite tell the whole story, as I recall, because the "Social Security reserves" aren't actually money. They're IOUs that the government — debt-laden, itself — is going to have to raise revenue to make whole. In other words, either taxes are going up or benefits are going down. By the time I reach the age at which this and previous generations have retired, the likelihood is that my financial stool won't have three "wobbly legs," but no legs at all.
And yet Singletary offers no solutions. She calls President Bush's attempt to allow workers investment access to some of the thousands of dollars that they pay into the system "selfishness." Social Security, she writes, "isn't just about you." It's about establishing "a net that [is] in place for times like what we're going through now."
Actually, at times like this, the social security net resembles a trawler in shallow waters. It takes from generations with a precarious future in order to pay out to older generations that are doing and have done better financially. Personally, I'm in that teeter-totter position at which the hundreds of dollars taken from my family's paychecks for social security would be enough to cover bills that we currently can't pay, making it more difficult to avoid increasing an already crushing debt. Apparently, though, altruism requires that we continue to struggle, with no real prospects of retirement, so that the Baby Boomers can sit pretty in their Golden Years.
The problem is that we live too long. And we want to retire earlier. The coverage requirements therefore are stretched two ways. Age to collect in the 1940's was the same as life expectancy. Now life expectancy is 10 years +/- beyond age to collect. If you perform hard physical work, I don't see how you work longer as an option.
As a Boomer, I may be sitting pretty, but that's due to my hard work, not anticipation of a SS benefit. I probably will be gifting mine away to my kids to help compensate for the SS payroll tax burden on them. But my circumstance isn't any more typical of boomers than it is of other generations. Do people buy expensive toys they can't afford? Do carpenters benefit from building overly expensive houses the owners/mortgagees can't afford? Of course they do. Still, I get the feeling that 20- and 30-somethings are so, so screwed. And will be more so if the Obamamessiah does get his mandate for national savings with government bonds the only option as a way to prop up SS.
I BELIEVE THAT I OF THE AGE NOW ELIGIBLE TO JOIN AARP, BUT I NEVER WILL.
1) AARP and its lobbying is the primary reason why I have been kept trapped in the Social Security system all these years.
2) It knows that Social Security is currently unstable, and destined for massive reduction for those who involuntarily "contributed" their entire working years ... if not destined for total collapse. Yet it vehemently supports and lobbies for the status quo.
3) It knows that individuals have no property / vesting right in Social Security benefits, and so are subject to "benefit" reductions at the whim of Congress. (As has already occurred with raising the retirement age and making "benefits" subject to income taxation.) Yet it vehemently opposes converting to individual accounts in which people would own their "benefits" - or even letting individuals choose that option.
4) It doesn't really represent the best interests of "seniors" - see Nos. 1-3. Also, did you ever notice AARP's total silence regarding one of the most pressing issues facing "seniors" - property taxes driving them out of their homes? Have you ever heard of the RI AARP affiliate going to the mat at the General Assembly about this????
Odd that what peddles itself as a senior advocacy organization would be silent on this most pressing issue, isn't it?
That is because in reality the AARP has two main missions.
One is generating revenue licensing its name and logo to insurance and finance companies who in turn market "AARP Endorsed" products to gullible seniors who've been spun into believing that AARP is looking out for them.
The other main mission is to serve as a front group for the Democratic Party. AARP "advocacy" is invariably of the "scare the seniors" / "Mediscare" ilk, advocating for more / expanded government programs, the Democrat's agenda and raison d'etre.
That explains why AARP is conspicuously silent about property taxes, for the Democrats oppose any reduction in government revenue.
"Also, did you ever notice AARP's total silence regarding one of the most pressing issues facing "seniors" - property taxes driving them out of their homes?"
Huh. I never thought of that.
Move to Southern costal Alaska where the weather is like Massachusetts or warmer and you receive each year an oil check for each member of your family approximately $1,500 to $2,000 (maybe that’s why Palin has so many children.).
ALASKA
Sales Taxes:
State Sales Tax: The state currently does not have a sales and use tax. However, some jurisdictions impose local sales taxes that range up to 7%. Anchorage does not have a sales tax.
Gasoline Tax: 8 cents/gallon
Diesel Fuel Tax: 8 cents/gallon
Cigarette Tax: $2.00/pack of 20 (Anchorage - add $1.32)
Personal Income Taxes:
No state income tax
Retirement Income: Not taxed.
Property Taxes:
Property taxes are assessed in 25 of 161 municipalities. Homeowners 65 and older (or surviving spouses 60 and older) are exempt from municipal taxes on the first $150,000 of the assessed value of their property. This also applies to disabled veterans. Intangible personal property is exempt from taxation.
Inheritance and Estate Taxes:
There is no inheritance tax and the estate tax is limited to federal estate tax collection.
Source:
Retirement Living Information Center:
http://www.retirementliving.com
Check out the Rhode Island taxes
Click here for the new Anchor Rising & Ocean State Current page
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The problem is that we live too long. And we want to retire earlier. The coverage requirements therefore are stretched two ways. Age to collect in the 1940's was the same as life expectancy. Now life expectancy is 10 years +/- beyond age to collect. If you perform hard physical work, I don't see how you work longer as an option.
Posted by: chuckR at October 28, 2008 4:01 PMAs a Boomer, I may be sitting pretty, but that's due to my hard work, not anticipation of a SS benefit. I probably will be gifting mine away to my kids to help compensate for the SS payroll tax burden on them. But my circumstance isn't any more typical of boomers than it is of other generations. Do people buy expensive toys they can't afford? Do carpenters benefit from building overly expensive houses the owners/mortgagees can't afford? Of course they do. Still, I get the feeling that 20- and 30-somethings are so, so screwed. And will be more so if the Obamamessiah does get his mandate for national savings with government bonds the only option as a way to prop up SS.
I BELIEVE THAT I OF THE AGE NOW ELIGIBLE TO JOIN AARP, BUT I NEVER WILL.
1) AARP and its lobbying is the primary reason why I have been kept trapped in the Social Security system all these years.
2) It knows that Social Security is currently unstable, and destined for massive reduction for those who involuntarily "contributed" their entire working years ... if not destined for total collapse. Yet it vehemently supports and lobbies for the status quo.
3) It knows that individuals have no property / vesting right in Social Security benefits, and so are subject to "benefit" reductions at the whim of Congress. (As has already occurred with raising the retirement age and making "benefits" subject to income taxation.) Yet it vehemently opposes converting to individual accounts in which people would own their "benefits" - or even letting individuals choose that option.
4) It doesn't really represent the best interests of "seniors" - see Nos. 1-3. Also, did you ever notice AARP's total silence regarding one of the most pressing issues facing "seniors" - property taxes driving them out of their homes? Have you ever heard of the RI AARP affiliate going to the mat at the General Assembly about this????
Odd that what peddles itself as a senior advocacy organization would be silent on this most pressing issue, isn't it?
That is because in reality the AARP has two main missions.
One is generating revenue licensing its name and logo to insurance and finance companies who in turn market "AARP Endorsed" products to gullible seniors who've been spun into believing that AARP is looking out for them.
The other main mission is to serve as a front group for the Democratic Party. AARP "advocacy" is invariably of the "scare the seniors" / "Mediscare" ilk, advocating for more / expanded government programs, the Democrat's agenda and raison d'etre.
That explains why AARP is conspicuously silent about property taxes, for the Democrats oppose any reduction in government revenue.
Posted by: Tom W at October 28, 2008 6:39 PM"Also, did you ever notice AARP's total silence regarding one of the most pressing issues facing "seniors" - property taxes driving them out of their homes?"
Huh. I never thought of that.
Posted by: Monique at October 28, 2008 9:15 PMMove to Southern costal Alaska where the weather is like Massachusetts or warmer and you receive each year an oil check for each member of your family approximately $1,500 to $2,000 (maybe that’s why Palin has so many children.).
ALASKA
Sales Taxes:
State Sales Tax: The state currently does not have a sales and use tax. However, some jurisdictions impose local sales taxes that range up to 7%. Anchorage does not have a sales tax.
Gasoline Tax: 8 cents/gallon
Diesel Fuel Tax: 8 cents/gallon
Cigarette Tax: $2.00/pack of 20 (Anchorage - add $1.32)
Personal Income Taxes:
No state income tax
Retirement Income: Not taxed.
Property Taxes:
Property taxes are assessed in 25 of 161 municipalities. Homeowners 65 and older (or surviving spouses 60 and older) are exempt from municipal taxes on the first $150,000 of the assessed value of their property. This also applies to disabled veterans. Intangible personal property is exempt from taxation.
Inheritance and Estate Taxes:
There is no inheritance tax and the estate tax is limited to federal estate tax collection.
Source:
Retirement Living Information Center:
http://www.retirementliving.com
Check out the Rhode Island taxes
Posted by: Ken at October 29, 2008 1:39 AM