www.CostaRicaTicas.com

I can't speak for him but think he maybe meant that the far out years worth of SS obligations for the younger folks (say less than 45) cannot be met unless they cut the payouts at some point. That would be major suckage as the avg. payment right now isn't that high. When I hopefully draw it in 20+ yrs. I currently don't expect to draw the full amount they send me in my benefit statement every year. If I get even 75% would be amazed but who knows?

I think SS is a great safety net for the many people who aren't rich barons. It was created after the Great Depression of the 30s to stem poverty and is helping the econ. today as well.

SS can become very political real quickly but to say it is a Ponzi scheme is disingenuous at best.

A couple of points.

SS was never meant to be a persons sole retirement income.

When it was adopted life expectancy was far less then today.

Medicare was not part of the original plan.

Even if all three of those things are added into the original plan SS would be solvent if there was no cap on SS contributions after earning an arbitrary figure each year and if Congress did raid the SS trust fund.

_________________
Pura Vida
Only Irish coffee provides in a single glass all four
essential food groups:
alcohol, caffeine, sugar and fat.
Alex Levine

When I said that the SS system was a Ponzi scheme I definitely was being a bit disingenuous. Maybe I should have added an emoticon.

A COUPLE of points:

1) Whether SS was ever meant to be a person's sole retirement income or not is really completely irrelevant to the question of whether it is a Ponzi scheme. Was the money invested with Madoff or the Villalobos Bros. meant to be the investors' sole source of retirement income in all cases? However, it IS a good point that whatever SS was meant to be, given the unreliability of future benefits it would certainly be a good idea to have some back-up source of income now more than ever.

2) A much shorter life expectancy beyond retirement age at the inception of the program than what exists today DOES have a bearing on the SOLVENCY of the program but does NOT really change the fact that the earlier "investors" received far more in benefits than they ever put in even figuring on some reasonable return on their contributions. Ida May Fuller was the first social security recipient. She paid in a total of $24.75, retired in 1939 (after working just 3 years under SS), lived to be 100 years old in 1975, and in the process collected $22,888.92 in benefits (nearly 1000 times what she put in). In contrast, even without a long retirement life, its highly doubtful that those paying into the system today will ever receive anything close to a reasonable rate of return on their "investment" assuming the SS system doesn't even go bankrupt.

3) So what if Medicare was not part of the original plan? No one was specifying anything about the Medicare program and it is the SS program itself which has been described by some as the "Ponzi scheme".

4) The fact is that, as the SS system is currently structured, current contributions go LARGELY to paying earlier participants. SOME of the money, probably a large part but certainly not enough, goes to building up the reserve for when those current contributors retire, but its mainly invested in relatively low yield US govt. bonds which are used to finance or federal govt budget deficit. So the rate of return on past contributions is far less than what would be needed to cover current benefit amounts, ESPECIALLY considering the likely period those benefits will be paid out given current life expectancies.

5) The definition of a Ponzi Scheme is "a fraudulent investment operation that pays returns to investors from their own money or money paid by subsequent investors rather than from any actual profit earned." The last part of that definitely applies to the SS system even if SOME of those returns did come from actual profit earned on your own contributions. Most of what is being paid now is coming from the current contributions of OTHERS. HOWEVER, the first part of that does NOT really apply to the SS system, namely that there is anything fraudulent about what they are doing or where they get the money to pay benefits. A lot of people may not REALIZE how it actually works, but that is not the fault of the government and their goal with the program is not to fool anyone or to make some illegal personal profit. So the SS system is not REALLY a Ponzi Scheme. Call it "Ponzi-like" in some respects.

6) IF there was no cap on SS contributions after earning an arbitrary figure each year and IF Congress did raid the SS trust fund and, to be fair and make all parties pay equally, IF the retirement age was made later to reflect longer life expectancies and IF there was a lower cap on benefits PAID to higher income retirees with other sources of income, the SS system WOULD be more solvent. But that wouldn't change the fact that current beneficiaries have received more than their contributions really earned.

7) When I criticize the SS system, I'm not faulting any of the current beneficiaries who are taking advantage of it. If I were in their shoes, I'd be doing the exact same thing. Even for me, I'm close enough to retirement age and SS should last long enough that I should get some halfway reasonable amount out of it. In order for that to happen however, the contributions of the younger generation will have to go to pay my benefits since there is probably not enough in the SS Trust Fund to cover it and there won't be anything put away for them. If you look at it objectively and remove your personal bias because you happen to benefit from the current system, most people would see how incredibly unfair the SS system is to the younger generation. (I notice none of the solutions offered by ID would effect the amount HE paid in or will get out).

8 ) ID and I actually had more than just a "couple of points"

That other guy did his best to thoroughly corrupt an entire country (Antigua), a monument to his ego.

_________________
"A man accustomed to hear only the echo of his own sentiments, soon bars all the common avenues of delight, and has no part in the general gratification of mankind"--Dr. Johnson
"Amen, brother"-ED

Talk about something being irrelevant that statement has to take the prize.

I applaud my parents for having the foresight to have had their Ch*ldren earlier enough in the life of SS to make it seem likely they will collect the full benefit for their entire life.

_________________
Pura Vida
Only Irish coffee provides in a single glass all four
essential food groups:
alcohol, caffeine, sugar and fat.
Alex Levine

In China they just executed a few guys who did schemes like this.

_________________
I believe in moderation in everything except excess.
I phuck 'em just to see the look on their face.
Klatu, berata, nicto.

Again, in my opinion, it is the biggest ponzi scheme in the world. Not that it was started out to be but due to politician greed and wasting the money it has become just that.

Now, just wait when very shortly, this government adds SS deductions to income with no limit. Think that will not happen.....it's coming your way and real soon. You will be taxed much more. As a self-employed individual, I will have to pay the increase double SS cost which will be based on my business income. The total FICA is just over 15% now but will get hiked up and with no limits.

I sincerely hope that none of you are self employed and will have to straddle this barbaric increase. I am considering closing down my business and discarding employees when this is enacted by the IRS.

There are creepy things going on that penalize the small business business owner. If you doubt this.....read further into the legislation being rammed through congress at a break neck speed.

Not political......just the actual happenings going on.

I fear for small business men/women. We will not be able to exist with the new taxes and gov. regulations. NTM, Cap and Trade....that effects my business also.

Mule

True as a general statement but hardly accurate as to what % you actually should be paying. This is an explanation of what a self employed person actually pays if their accountant does the job you are paying him for. When I was self employed my FICA ( aka SE tax) was never anywhere near 15%.

"A tax similar to the FICA tax is imposed on the earnings of self-employed individuals, such as independent contractors and members of a partnership. This tax is imposed not by the Federal Insurance Contributions Act but instead by the Self-Employment Contributions Act of 1954, which is codified as Chapter 2 of Subtitle A of the Internal Revenue Code, 26 U.S.C. § 1401 through 26 U.S.C. § 1403 (the "SE Tax Act"). Under the SE Tax Act, self-employed people are responsible for the entire percentage of 15.3% (= 12.4% [Soc. Sec.] + 2.9% [Medicare]); however, the 15.3% multiplier is applied to 92.35% of the business's net earnings from self-employment, rather than 100% of the gross earnings; the difference, 7.65%, is half of the 15.3%, and makes the calculation fair in comparison to that of regular (non-self-employed) employees. It does this by adjusting for the fact that employees' 7.65% share of their SE tax is multiplied against a number (their gross income) that does not include the putative "employer's half" of the self-employment tax. In other words, it makes the calculation fair because employees don't get taxed on their employers' contribution of the second half of FICA, therefore self-employed people shouldn't get taxed on the second half of the self-employment tax. Similarly, self-employed people also deduct half of their self-employment tax (schedule SE) from their gross income on the way to arriving at their adjusted gross income (AGI). This levels the amount paid by self-employed persons in comparison to regular employees, who don't pay general income tax on their employers' contribution of the second half of FICA, just as they didn't pay FICA tax on it either.[7][8]

These calculations are made on Schedule SE: Self-Employment Tax, although that is not readily apparent to novice self-employed taxpayers, owing to the schedule's rather opaque name, which makes it sound like it is part of the general federal income tax. Some taxpayers have complained that Schedule SE's title should be changed to something such as "Self-Employment FICA Tax", so that its separateness from the general income tax is apparent,[9], perhaps not realizing that the SE tax is not imposed by the Federal Insurance Contributions Act (FICA) at all, and that neither SE taxes nor FICA taxes are "income taxes" imposed under Chapter 1 of the Internal Revenue Code."

_________________
Pura Vida
Only Irish coffee provides in a single glass all four
essential food groups:
alcohol, caffeine, sugar and fat.
Alex Levine

Medicare and Social Security have nothing in common except the collection and distribution point. The Federal Government's collection and distribution point for our 401(k) equivalent is the Dept. of Agriculture since they have the mechanisms in place to do so cheaply and efficiently. Same same Medicare and SS. What has dragged SS down are 2 other programs bleeding it--Survivor's insurance and disability insurance. If these were taxed separately--no problem for SS. Now about the income-max that's taxed--that was set into place to make SS politically palatable. Take that off and again SS problems distinctly lessen.'
The whole SS thing is shuck-and-jive for all groups most especially Black folks that don't tend to live long enough to collect much. Remember you get the money out of SS that you've paid in in 3-5 years--only after that are you on somebody else's dime.

_________________
"A man accustomed to hear only the echo of his own sentiments, soon bars all the common avenues of delight, and has no part in the general gratification of mankind"--Dr. Johnson
"Amen, brother"-ED

ID:

Apparently you live in a different world than myself. I am going to get taxed big time. My CPA has done the numbers. Perhaps you welcome the new administration's tax and spend.

I certainly hope that you do not get hurt by it. I will.

Mule

Yeah....let's not forget that the people who invested with Madoff were, in my view, greedy SOB's anyway; thought they were part of an "exclusive club" due to the requirements associated with dealing with the guy and need to accept the responsibility for their own stupid actions; particularly if they put all their eggs in that basket. Makes me laugh...and most certainly, ain't no tears being shed on this keyboard for the folks who got taken to the cleaners. What? They never had heard of a safe deposit box or a mattress?! hahahahahaahaha.......yeah....no interest to be earned in those things....but then again....who needs the interest when there's enuff in the thing as it is? How much is enough?

The larger laugh, though, is that for some reason, people actually feel sorry for the dopes who lost "...their lifes' savings....." and dare to get indignant at what their being offerred by Uncle Sam in "compensation." Let 'em eat cake and please, get out of the way.....

"Billy is in the mountains with his back to the sea. He sees a blood red dragon on a field of green. He hears the Vienna Boys choir singing, Billy Come Home".

_________________
"Actual happiness always looks pretty squalid in comparison with the over-compensations for misery. And, of course, stability isn't nearly so spectacular as instability. And being contented has none of the glamour of a good fight against misfortune, none of the picturesqueness of a struggle with temptation, or a fatal overthrow by passion or doubt. Happiness is never grand."
- Aldous Huxley, Brave New World, Ch. 16

Yup....that's what happens to employees these days....they're DISCARDED as the rich seemingly just keep getting richer and yet cry they're getting poorer. I guess it's a relative kind of thing......

Bring on that SS tax; keep it coming; don't allow for a maximum income cap and even DISCARD benefits for those who can't meet a MEANS TEST!!!

_________________
"Actual happiness always looks pretty squalid in comparison with the over-compensations for misery. And, of course, stability isn't nearly so spectacular as instability. And being contented has none of the glamour of a good fight against misfortune, none of the picturesqueness of a struggle with temptation, or a fatal overthrow by passion or doubt. Happiness is never grand."
- Aldous Huxley, Brave New World, Ch. 16